UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12 (b) or (g) of The Securities Exchange Act of 1934
CIRO INTERNATIONAL, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Nevada 13-3963499
(State of Incorporation or Organization) (I.R.S. Employer Identification No.)
445 Fifth Avenue, Suite 11 A
New York, New York 10016
(Address of Principal Executive Offices) (Zip Code)
(212) 481-1322
(Issuer's Telephone Number)
Securities to be registered pursuant to Section 12 (b) of the Act.
None
Securities to be registered pursuant to Section 12 (g) of the Act.
COMMON STOCK, $0.001 PAR VALUE
(Title of Class)
<PAGE>
Ciro International, Inc.
CROSS REFERENCE SHEET
Item Number and Caption in Form 10-SB Caption in Form 10-SB
1. Item 101. Description of Business............... Description of
Business
2. Item 303. Management's Discussion
and Analysis or Plan of Operation.................. Management's
Discussion and Analysis
3. Item 102. Description of Property............... Description of
Properties
4. Item 403. Security Ownership
of Certain Beneficial Owners and Management......... Security Ownership of
Certain Beneficial
Owners and Management
5. Item 401. Directors, Executives Officers,
Promoters and Control Persons ...................... Directors, Executives
Officers, Promoters and
Control Persons
6. Item 402. Executive Compensation.................... Executive Compensation
7. Item 404. Certain Relationships and Related
Transactions........................................ Certain Relationships
and Related
Transactions
8. Item 103. Legal Proceedings......................... Legal Proceedings
9. Item 201. Market for Common Equity and
Related Stockholder Matters ........................ Market for Common
Equity and Related
Stockholder Matters
10. Item 701. Recent Sales of Unregistered
Securities ......................................... Recent Sales of
Unregistered Securities
11. Item 202. Description of Securities................. Description of
Securities
12. Item 702. Indemnification of Directors and
Officers ........................................... Indemnification
of Directors and
Officers
13. Item 310. Financial Statements...................... Financial Statements
14. Item 304. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure ......................................... Changes in and
Disagreements with
Accountants and
Financial Disclosure
15. Item 601. Index to Exhibits......................... Index to Exhibits
<PAGE>
Ciro International, Inc.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS...............................................1
PART I ..................................................................1
ITEM 1. DESCRIPTION OF BUSINESS................................1
BUSINESS DEVELOPMENT..........................1
BUSINESS OF ISSUER............................2
PRODUCTS; TRADEMARKS; LICENSES................3
COMPETITION...................................5
REPORTS TO SECURITY HOLDERS...................6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
AND RESULTS OF OPERATION......................6
RESULTS OF OPERATIONS.........................6
LIQUIDITY AND CAPITAL RESOURCES ..............7
SEASONALITY...................................9
YEAR 2000 COMPLIANCE..........................9
ITEM 3. DESCRIPTION OF PROPERTY.......................9
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.............10
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS,
AND CONTROL PERSONS..........................11
ITEM 6. EXECUTIVE COMPENSATION................................11
ITEM 7. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS.........................12
ITEM 8. DESCRIPTION OF SECURITIES.............................12
DIVIDENDS....................................13
VOTING RIGHTS................................13
PREEMPTIVE RIGHTS............................13
ANTI-TAKEOVER PROVISIONS.....................13
TRANSFER AGENT...............................13
PART II ................................................................13
ITEM 1. MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS..................13
ITEM 2. LEGAL PROCEEDINGS.....................................14
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.......14
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES. .............14
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.............15
PART F/S ...............................................................17
FINANCIAL STATEMENT...................................17
PART III ...............................................................18
ITEM 1. INDEX TO EXHIBITS.....................................18
INDEX TO FINANCIAL STATEMENTS ..........................................20
SIGNATURES .............................................................21
<PAGE>
FORWARD-LOOKING STATEMENTS
The Company cautions readers regarding certain "forward-looking
statements", within the meaning of the Private Securities Litigation Reform Act
of 1995, in the following discussion and elsewhere in this registration
statement or any other statement made by, or on the behalf of the Company,
whether or not in future filings with the Securities and Exchange Commission.
Forward-looking statements are statements not based on historical information
and which relate to future operations, strategies, financial results or other
developments. Forward-looking statements are necessarily based upon estimates
and assumptions that are inherently subject to significant business, economic
and competitive uncertainties and contingencies, many of which are beyond the
Company's control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements make by, or on behalf of, the Company. The
Company disclaims any obligation to update forward-looking statements.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
Ciro International, Inc. was originally incorporated in the State of
Florida on June 14, 1990 as Mid-Way Medical Diagnostic Center, Inc. ("Mid-Way
(Florida)"). In September of 1996, Mid-Way (Florida) amended its articles of
incorporation to increase the authorized number of common shares from 100 to
50,000,000 and to reduce the par value to $.001. Also in September of 1996,
Mid-Way (Florida) forward split its outstanding shares of Common Stock
10,000-for-one, increasing the number of outstanding shares from 100 to
1,000,000.
Mid-Way (Florida) was initially engaged in the business of attempting to
establish and operate medical and diagnostic centers. During 1991, Mid-Way
(Florida) abandoned its efforts to engage in such business.
In September of 1997, Mid-Way (Florida) entered into a Stock Purchase
Agreement with Mr. David Cohen in which Mid-Way (Florida) agreed to issue
10,000,000 shares of its Common Stock to Mr. Cohen for $100,000. Mr. Cohen was
subsequently appointed the sole officer and director of Mid-Way (Florida). The
funds paid to Mid-Way (Florida) were used by Mid-Way (Florida) to pay legal
expenses and finder's fees in connection with the aforementioned transaction.
1
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In November 1997, Mid-Way (Florida) entered into a reorganization agreement
with Ciro Jewelry, Inc. ("Ciro Jewelry (Delaware)"), a Delaware corporation, in
which Ciro Jewelry (Delaware) agreed to merge with and into Mid-Way Acquisition
Corp. ("Merger Sub"), a wholly owned Nevada corporation created by Mid-Way
(Florida) solely for the purpose of merging with Ciro Jewelry (Delaware). By
virtue of the merger, all of the assets, liabilities, and business of Ciro
Jewelry (Delaware) became the assets, liabilities, and business of the Merger
Sub.
The closing of the reorganization occurred on December 2, 1997, and Mid-Way
(Florida) issued 2,500,000 post-forward split shares to Mr. Murray A. Wilson,
the sole shareholder of Ciro Jewelry (Delaware), in return for all of the
outstanding stock of Ciro Jewelry (Delaware). As a result of the merger, the
Merger Sub changed its name to Ciro Jewelry, Inc. ("Ciro Jewelry"); Mr. Cohen
resigned as the sole officer and director of the Company and of Ciro Jewelry and
simultaneously appointed Mr. Wilson as the sole director of each entity.
In connection with the aforementioned reorganization, Mr. Cohen canceled
9,400,000 of the 10,000,000 pre-forward split shares held by him. He also sold
260,000 of his pre-forward split shares to Mr. Wilson for $26,000 and 140,000 of
his pre-forward split shares to Mr. Laszlo Schwartz, a former officer of the
Company, for $14,000.
In December 1997, Mid-Way (Florida) changed its name to Ciro International,
Inc. ("Ciro" or, "the Company") at the same time the Company merged with Mid-Way
Medical and Diagnostic Center, Inc., a Nevada corporation, which was established
solely for the purpose of changing the domicile of the Company from the State of
Florida to the State of Nevada.
BUSINESS OF ISSUER
The Company exists primarily as a holding company, and accordingly, the
operations described in this document, unless otherwise specified, are those of
its operating subsidiary, Ciro Jewelry. The Company's main source of income is
as a result of the licensing of the CIRO name.
Ciro Jewelry currently has five licensees in the United States, Korea,
Israel, Portugal, Mexico, and Russia, which operate approximately 20 retail
fashion jewelry stores using the CIRO name. In addition, Ciro Jewelry holds a
number of trademarks and trade names relating to the CIRO name throughout the
world. The license agreements, trademarks and trade names were acquired by Ciro
Jewelry from Merchants T&F, Inc. ("MT&F"), a corporation controlled by Mr.
Wilson, an officer, director, and a controlling shareholder of the Company. See
"Related Transactions". In 1994 Ciro, Inc., Ciro of Bond Street, Inc., and Ciro
Creations, Inc. (hereinafter collectively referred to as, "Former Ciro") filed
for protection under Chapter 11 of the U.S. Bankruptcy Code. On February 5,
1995, for $1,475,000, MT&F purchased certain assets from Mr. Alan Cohen, as
Trustee in the bankruptcy of Former Ciro. These assets included real property
leases for various store locations previously operated by Former Ciro together
with the security deposits thereunder, the personal property in the stores
merchandise inventory, computer equipment and software used in connection with
the operation of Former Ciro, and the agreements between Former Ciro and all of
its franchisees. MT&F, using the services of Ciro Jewelry, subsequently sold off
substantially all of the assets purchased from the bankruptcy court, but
retained the trademarks, trade names and licensing agreements. MT&F transferred
these license agreements, trademarks and trade names to Ciro Jewelry in 1995 as
a capital contribution for 1,500 shares of Ciro Jewelry. Neither MT&F, Ciro
Jewelry, nor the officers, directors, or affiliates of such entities, had any
affiliation with Former Ciro.
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The Company currently does not own or hold leases to any stores. All
individual licensees are responsible for owning their own stores as well as
securing their own merchandise. The Company does not manufacture or distribute
the products sold under the CIRO name, nor does it secure the source or
availability of materials used to manufacture the Ciro products. These
responsibilities are left up to the individual licensees. As such, the Company
bears no research and development costs.
PRODUCTS; TRADEMARKS; LICENSES
Before filing for protection under federal bankruptcy laws, Former Ciro was
a significant retailer of high quality imitation jewelry and cultured and
imitation pearls under the name CIRO, Ken Lane, Kenneth Jay Lane, and Daniel
Swarovski trade names. The items sold under these names included all types of
jewelry set with imitation, man-produced diamonds, imitation pearls, cultured
pearls and wide range of necklaces, rings, brooches, earrings, bracelets, and
watches. In December of 1993, Former Ciro owned a total of 146 retail stores, of
which 47 were located in the United States, 75 in the United Kingdom, 13 in
Germany, 5 in Austria, and 6 in France. At such time Former Ciro employed a
total of 623 people at these locations. In addition, it had 14 licensing
arrangements. Ciro Jewelry has serviced the remaining licensees and collected
royalty payments therefrom since 1995.
The Company intends to expand its licensing arrangements and expand into
14K gold and semi-precious stones. Ciro Jewelry presently has licensing
arrangements with entities throughout the world, entitling them to use the CIRO
trade name in connection with their retail stores, subject to certain quality
control requirements enforced by Ciro Jewelry. The licensees are entitled to
open as many stores as they wish within the territory for which their licenses
are granted. Each license agreement is for an initial term of five years,
renewable at the option of Ciro Jewelry.
The following table sets forth: (1) the location for which a licensee has
rights to open stores; (2) whether the licensees' development rights are
exclusive or non-exclusive to the licensee; (3) the total number of stores
opened as of December 31, 1999; and, (4) the year in which the present license
agreement shall expire:
Exclusive/ Total Stores License
Location Non-Exclusive Open at 12/31/99 Expiration Date
- -------- ------------- ---------------- ----------------
Mexico Exclusive 3 December 2002
Russia Exclusive 0 December 2002
USA Non-exclusive 2 December 2002
3
<PAGE>
The Company currently has no leases. On December 23, 1998, Hamilton
Jewelry, Inc., Oldco Bijoux, Inc. and KJL Vegas, Inc. (collectively "U.S.
Licensees") and Company (collectively the "Parties") agreed to close the United
States stores in a Rescission Agreement (the "Rescission Agreement"). Under the
terms of the Rescission Agreement, the Company and its U.S. Licensees agreed
that all documents executed by the May 1, 1998 agreement are canceled and are
null and void.
In furtherance of the Rescission Agreement, the U.S. Licensees and the
Company agreed to that the U.S. Licensees shall repay, as per separate agreement
to be negotiated by the Parties, the advance of $310,000.00 forwarded to the
U.S. Licensees by the Company for the purposes of the Jewelry Business. Under
this Rescission Agreement, the U.S. Licensees and the Company agreed to each
release and discharge their respective party from all causes of actions relating
to the agreement for the repayment of the $310,000.00, royalty arrangements
concerning use of the Ciro trademark and lease purchase agreement with respect
to the lease for the Ciro shop at Caesar's Palace Hotel.
Ciro Jewelry's registered trademark is "Ciro 7." MT&F originally purchased
several trade names and trademarks in the bankruptcy of the Former Ciro. In
1995, MT&F assigned all of its rights, title, and interests in the trade names
and trademarks to Ciro Jewelry, subject to existing license agreements. Set
forth below is a list of the trademarks and trade names currently owned by Ciro
Jewelry.
Country Mark Application Number Registration Number
- ------- ---- ------------------ -------------------
Bolivia CIRO 1361
Chile CIRO 421866
Hungary CIRO 137946
Israel CIRO 80209
CIRO 80210
CIRO in Hebrew 80058
CIRO in Hebrew 80059
Japan CIRO 63006/1993
Macao CIRO 11006-M
CIRO 11515-M
Mexico CIRO 416046
CIRO 421337
Monaco CIRO 9314680
Panama CIRO (stylized) 54820
CIROLITE 54821
Philippines CIRO 85612-PN
Portugal CIRO 276161
CIRO 280206
Russia CIRO 95703549
South Korea CIRO 262281
CIRO 262282
CIRO 265017
CIRO 265158
U.S.A. CIRO 327696
CIRO 826855
CIRO 1794011
CIRO 1668523
CIRO (stylized) 601862
CIRO and crown 74/350726
CIROLITE 949790
Crown device 74/350876
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<PAGE>
COMPETITION
The Jewelry business is highly competitive, with competition from other
independent jewelry stores, department stores, and others operating in leased
concession department stores. Many of the Company's competitors have greater
technical expertise, financial resources and marketing capabilities than the
Company. Many have been in existence longer and have a much more established
market presence and substantially greater financial, marketing and other
resources. The Company competes with a variety of other retail jewelry
businesses in the industry, and income is dependent upon the various license
arrangements with others to use the Ciro name. There is no assurance that the
rights to such name are adequately protected, although the Company has attempted
to contact various federal and foreign agencies to protect the exclusive use of
the "Ciro" name.
REPORTS TO SECURITY HOLDERS
Prior to filing this Form 10-SB, the Company had not been required to
deliver annual reports. The press releases or letters to shareholders have been
issued. However, once the Company becomes a reporting company, the Company shall
deliver annual reports to securities holders as required by the Securities
Exchange Act of 1934 (the "Exchange Act"). Additionally, the Company shall
deliver annual reports to securities holders as required by the rules or
regulations of any exchange upon which Ciro's shares may be traded. If the
Company is not required to deliver annual reports, it is not likely that the
Company will go to the expense of producing and delivering such reports. If the
Company is required to deliver annual reports, such reports will contain audited
financial statements as required.
Prior to the filing of this Form 10-SB, the Company had not filed reports
with the Securities and Exchange Commission (hereinafter the "Commission").
However, once the Company becomes a reporting company, management anticipates
that Forms 3, 4, 5, 10-K-SB, 10Q-SB, 8-K and Schedules 13D along with
appropriate proxy materials will have to be filed as they come due. If the
Company issues additional shares, then it may file additional registration
statements for those shares. The public may read and copy any materials Ciro
files with the Commission at the Commission's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. The public may obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. The Commission maintains an Internet site that contains reports,
proxy and information statements, and other information regarding issuers that
file electronically with the Commission. The Internet address of the
Commission's Web site is (HTTP://WWW.SEC.GOV).
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS - COMPARISON OF YEARS DECEMBER 31, 1999 AND DECEMBER 31,
1998.
Revenue for the year ended December 31, 1999 was $58,337, a 73% decrease
from $213,244 during the year ended December 31, 1998. The decrease in revenue
of $154,907 is due to reduced level of business activity in 1999.
Operating costs consisting of selling, general and administrative expenses
for the year ended December 31, 1999 were $155,464 compared to $432,160 from the
year ended December 31, 1998. The decrease of $276,696 in expenses reflects
lower bad debt expense and reduced business activity.
Loss from operations for the year ended December 31, 1999 were $97,127
compared to $218,916 from the year ended December 31, 1998. The decrease of
$121,789 in losses reflects the decrease in operating costs from 1999 to 1998.
Other income for the year ended December 31, 1999 was $4,595 compared to
other expenses of $309,600 for the year ended December 31, 1998. The majority of
the other expenses in 1998 related to an acquisition advance reserve. The
reserve was necessary because advances given to a potential acquisition partner
of $310,000 have doubt as to their recoverability due to a recission agreement
of the proposed merger. The recission agreement states that the $310,000 is to
be repaid in full.
Net loss for the year ended December 31, 1999 was $93,255 compared to
$529,261 for the year ended December 31, 1998. The decrease in loss of $436,006
reflects lower bad debt and acquisition expenses and a reduced level of business
activity in 1999.
LIQUIDITY AND CAPITAL RESOURCES
Working capital at December 31, 1999 increased to $1,630 from working
capital of $494 at December 31, 1998. The increase in working capital was
primarily due to a reduced level of business activity in 1999.
6
<PAGE>
ITEM 3. DESCRIPTION OF PROPERTY.
The Company's physical facilities presently consists of only its main
location at 445 Fifth Avenue, Suite 11A, New York, New York 10016. This facility
is leased by MT&F who is in the eighth year of a 10 year lease with Mr. Murray
A. Wilson. See "Related Transactions". The facility used by the Company is
approximately 1000 square feet. Currently, this facility is used as the
Company's corporate headquarters, billing sites and company offices.
Currently, Ciro Jewelry does not own any property. All stores where Ciro
Jewelry is sold are owned by individual licensees.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth the beneficial ownership of shares of voting
stock of Ciro, as of December 31, 1999, of (i) each person known by Ciro to
beneficially own 5% or more of the shares of outstanding common stock; (ii) each
of Ciro's executive officers and directors; and (iii) all of Ciro's executive
officers and directors as a group. Except as otherwise indicated, all shares are
beneficially owned, and investment and voting power is held by the persons named
as owners.
<TABLE>
<CAPTION>
==================================================================================================================
Title of Class Name and Address of Beneficial Owner Amount and Nature of Percentage of
Beneficial Owner Class
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Murray A. Wilson (1) (2) 3,500,000 48.88%
- ------------------------------------------------------------------------------------------------------------------
Common Max Bloch (3) (4) -0- -0-
- ------------------------------------------------------------------------------------------------------------------
Common CEDE & CO (5) 814,000 11.37%
- ------------------------------------------------------------------------------------------------------------------
Common All officers and directors as a 3,500,000 48.88%
group (2 persons)
==================================================================================================================
</TABLE>
- ----------
(1) The address for Murray A. Wilson is 445 Fifth Avenue, New York, NY 10016.
(2) Murray A. Wilson serves as the Company's President, Chief Executive
Officer, Director and Secretary.
(3) The address for Max Bloch is Buchstrasse 2, Endingen, Switzerland 5304.
(4) Max Bloch serves as Ciro's Vice President.
(5) The address for CEDE & CO is PO Box 222 Bowling Green Station, New York, NY
10274.
7
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ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS.
Set forth below are the names and ages of and the positions and offices
held by each of the Directors and Executive Officers of the Company.
Positions and Offices
Name Age With The Company
---- --- ---------------------
Murray A. Wilson 60 Director; Chief Executive Officer;
President & Secretary
Max Bloch 48 Vice President
Murray A. Wilson has served as Ciro's President, Chief Executive Officer,
Director and Secretary since December 1, 1997. In addition, Mr. Wilson has
served as President and the Chief Operating Officer of MT&F, Inc. since 1990.
From 1994 to present, Mr. Wilson has served as President of Grossingers
Trademark.
Max Bloch has been a partner in Berlowitz Bloch & Partner, located in
Zurich, Switzerland, a portfolio management firm, since 1996. From 1994 to 1996,
he was the Deputy Manager and a director of Giro-Credit Bank, located in Zurich,
Switzerland, and from 1993 to 1994, he was the Deputy Manager and a director of
Uto Bank AG, located in Zurich, Switzerland.
8
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ITEM 6. EXECUTIVE COMPENSATION.
The following information sets forth the cash and other compensation paid
or accrued by Ciro during the last fiscal year, with respect to services
performed by Murray A. Wilson and Max Bloch for services as officers and
director of the Company.
Neither Mr. Wilson nor Mr. Bloch has received any compensation for their
respective services rendered unto the Company, nor have they received such
compensation in the past. They have agreed to act without compensation until
authorization by the Board of Directors, which is not expected to occur until
the Company has generated revenues.
The following table sets forth information concerning all remuneration paid
by the Company as of December 15, 1999 to the Company's Directors and all
Executive Officers as a group:
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
=====================================================================
AWARDS PAYOUTS
=====================================================================================================================
Name and Principal Year Salary Bonus ($) Other Restricted Securities LTIP All Other
Position ($) Annual Stock Underlying Payouts Compensation
Compensation Award(s) Options/ ($) ($)
($) ($) SARs (#)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Murray A. Wilson 1998 0 0 0 0 0 0 0
(Director; C.E.O.; 1999 0 0 0 0 0 0 0
President; Secretary)
- ---------------------------------------------------------------------------------------------------------------------
Max Bloch 1998 0 0 0 0 0 0 0
(Vice President) 1999 0 0 0 0 0 0 0
=====================================================================================================================
</TABLE>
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<PAGE>
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Murray A. Wilson, Director, Chief Executive Officer, President and
Secretary of the Company is also the sole shareholder of Merchants T&F, Inc.
("MT&F"), the former parent of Ciro Jewelry (Delaware). Effective August 1,
1997, MT&F entered into a one-year consulting agreement ("Consulting Agreement")
with Ciro Jewelry (Delaware). As compensation under such agreement, Ciro Jewelry
(Delaware) agreed to pay MT&F the greater of $5,000 per month or 20% of the
gross royalty income. In return, MT&F provided management and organizational
services on a part-time basis. This agreement was not entered into in an arms'
length transaction and although management believes the terms are fair, no
independent determination of fairness has ever been obtained. The Consulting
Agreement between MT&F and Ciro Jewelry (Delaware) expired July 31, 1998. The
Company intends to renew this consulting agreement.
ITEM 8. DESCRIPTION OF SECURITIES.
The following description is qualified in all respects by reference to the
Company's Certificate of Incorporation and all amendments thereto and the
Company's Bylaws, copies of which are attached hereto as exhibits.
The Company's Articles of Incorporation, as amended, currently authorizes
50,000,000 shares of Common Stock, $0.001 par value. As of December 15, 1999,
7,160,000 shares of the Company's Common Stock were issued and outstanding to
twenty-seven shareholders.
Dividends. The Company has not declared any dividends since its inception.
Because the Company intends to retain future earnings to fund the development
and growth of its business, it does not anticipate paying cash dividends on the
Common Stock in its foreseeable future. Any payments of dividends in the future
is in the sole discretion of the Board of Directors of the Company. The
Company's decision will be dependent upon the Company's financial condition,
results of operations and other factors the Board deems relevant.
Voting Rights. Holders of shares of Common Stock will vote as a single
class together on all matters submitted to a vote of stockholders, with each
share of Common Stock entitled to one vote, except as otherwise provided by law.
Preemptive Rights. The holders of Common Stock are not entitled to
preemptive or subscription rights.
Anti-Takeover Provisions. Although management is not presently aware of any
takeover attempts, our Certificate of Incorporation defers to provisions in the
Nevada General Corporation Laws which may be deemed to be "anti-takeover" in
nature in that such provisions may deter, discourage or make more difficult the
assumption of control of the Company by another entity or person.
Transfer Agent. The transfer agent for the shares of Common Stock of the
Company is Interwest Transfer Company, Inc., with an address of 1981 East 4800
South, Suite 100, Salt Lake City, Utah 84117, and telephone number (801)
272-9294.
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<PAGE>
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
On October 21, 1999, the Company's Common Stock was no longer eligible to
be quoted on the OTC-Bulletin Board for failure to comply with NASD Eligibility
Rule 6530 (the "Rule"). After being de-listed from the OTC-Bulletin Board, the
Company's Common Stock is now quoted in the "Pink Sheets" under the symbol
"CIRR". The Pink Sheets are a static paper quotation medium operated by the
National Quotation Bureau. While it is anticipated that the Company will apply
to be re-listed on the OTC-Bulletin Board after this registration statement is
declared effective by the Commission, the Common Stock may not be or remain
eligible to trade under the Rule, which could result in an illiquid market in
the Common Stock.
The following table sets forth, for the fiscal quarters indicated, the high
and low bid prices for the Company's Common Stock as reported on the
OTC-Bulletin Board. The quotations reflect inter-dealer prices without retail
mark-up, markdown or commission, and may not represent actual transactions.
FISCAL YEAR ENDED December 31, 1999:
Quarter High Low
- ----------------------------------------------------------------------------
First Quarter $ 7/8 $ 5/8
- ----------------------------------------------------------------------------
Second Quarter $ 5/8 $ 1/4
- ----------------------------------------------------------------------------
FISCAL YEAR ENDED December 31, 1998:
Quarter High Low
- ----------------------------------------------------------------------------
First Quarter $ 11/2 $ 7/8
- ----------------------------------------------------------------------------
Second Quarter $ 2 3/8 $ 1 3/8
- ----------------------------------------------------------------------------
Third Quarter $ 2 $ 1 1/8
- ----------------------------------------------------------------------------
Fourth Quarter $ 11/4 $ 3/4
- ----------------------------------------------------------------------------
As of December 15, 1999, the Company had approximately 27 shareholders of
record. The Company has never declared or paid any dividends on its Common
Stock. The Company currently intends to retain any earnings for use in its
business and therefore does not anticipate paying any dividends in the near
future.
ITEM 2. LEGAL PROCEEDINGS.
Neither Ciro nor any of its properties, is a party to any material pending
legal proceedings or government actions, including any material bankruptcy,
receivership, or similar proceedings. Management of Ciro does not believe that
there are any material proceedings to which any director, officer, or affiliate
of the Company, any owner of record of the beneficially or more than five
percent of the common stock of Ciro, or any associate of any such director,
officer, affiliate of the Company, or security holder is a party adverse to Ciro
or has a material interest adverse to Ciro.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements with independent accountants over any item
involving the Company's financial statements.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
Private Placement. In 1998, Ciro sold 660,000 shares of common stock, $.001
par value, at $.66 per share pursuant to Rule 504 of Regulation D Promulgated
under the Securities Act of 1933, as amended, to twelve (12) investors for a
total consideration of $435,600 net of commission
II-1
<PAGE>
and offering costs. The shares were issued as follows:
PURCHASER NUMBER OF DATE
COMMON SHARES
- --------------------------------------------------------------------------
ZINA COLOVAC 100,000 04/02/98
- --------------------------------------------------------------------------
GARY FEOLA 37,000 03/09/98
- --------------------------------------------------------------------------
SHIRLEY GIBBONS 100,000 05/13/98
- --------------------------------------------------------------------------
KEVIN LUBIC 35,000 03/13/98
- --------------------------------------------------------------------------
REGINA MAHER 75,000 03/31/98, 04/01/98
& 04/02/98
- --------------------------------------------------------------------------
KURT SUTER 100,000 06/10/98
- --------------------------------------------------------------------------
LARRY HUTCHER 30,000 03/12/98
- --------------------------------------------------------------------------
VINCENT MARTINEZ 30,500 03/10/98
- --------------------------------------------------------------------------
R. FARESS 12,500 03/24/98
- --------------------------------------------------------------------------
L. DEVITTO 10,000 04/01/98
- --------------------------------------------------------------------------
TODI INTERNATIONAL 30,000 04/02/98
- --------------------------------------------------------------------------
G. HYMAN 100,000 06/26/98
- --------------------------------------------------------------------------
There have been no other offerings other than the Rule 504 offering in
1998.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Ciro's Certificate of Incorporation and By-laws contain provisions which
reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. We are unaware
of any pending or threatened litigation against Ciro or its directors that would
result in any liability for which such director would seek indemnification or
similar protection.
Such indemnification provisions are intended to increase the protection
provided to directors and, thus, increase our ability to attract and retain
qualified persons to serve as directors. With directors liability insurance only
available at considerable cost and with low dollar limits of coverage and broad
policy exclusions, we do not currently maintain a liability insurance policy for
the benefit of our directors, although we may attempt to acquire such insurance
in the future. We believe that the substantial increase in the number of
lawsuits being threatened or filed against corporations and their directors and
the general unavailability of directors liability insurance to provide
protection against the increased risk of personal liability resulting from such
lawsuits have combined to result in a growing reluctance on the part of capable
persons to serve as members of boards of directors of companies, particularly of
companies which intend to become public companies. We also believe that the
increased risk of personal liability without adequate insurance or other
indemnity protection for our directors could result in overcautious and less
effective direction and management of Ciro. Although no directors have resigned
or have threatened to resign as a result of our failure to provide insurance or
other indemnity protection from liability, it is uncertain whether Ciro's
directors would continue to serve in such capacities if improved protection from
liability were not provided.
II-2
<PAGE>
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to Ciro and its stockholders, but eliminate personal liability
for monetary damages for breach of that duty. The provisions do not eliminate or
limit the liability of a director for failing to act in good faith, for engaging
in intentional misconduct or knowingly violating a law, for authorizing the
illegal payment of a dividend or repurchase of stock, for obtaining an improper
personal benefit, for breaching a director's duty of loyalty to Ciro or its
stockholders, or for violations of the federal securities laws. The provisions
also limit or indemnify against liability resulting from grossly negligent
decisions including grossly negligent business decisions relating to attempts to
change control of Ciro.
The provisions regarding indemnification provide that we will indemnify our
directors against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred in connection with
any action, suit or proceeding arising out of the director's status as a
director of Ciro, including actions brought by or on behalf of Ciro (stockholder
derivative actions). The provisions do not require a showing of good faith.
Moreover, they do not provide indemnification for liability arising out of
willful misconduct, fraud, or dishonesty, for "short-swing" profits violations
under the federal securities laws, or for the receipt of illegal remuneration.
The provisions also do not provide indemnification for any liability to the
extent such liability is covered by insurance. One purpose of the provisions is
to supplement the coverage provided by such insurance. However, we do not
currently provide such insurance to our directors, and there is no guarantee
that we will provide such insurance to our directors in the near future,
although Ciro may attempt to obtain such insurance.
The above mentioned limitations of liability do not affect the availability
of equitable remedies such as injunctive relief or rescission.
To date, we have not entered into any indemnification agreements with our
officer and director. Indemnification agreements may require a company, among
other things, to indemnify its officers and directors against certain
liabilities (other than liabilities arising from willful misconduct of a
culpable nature) that may arise by reason of their status or service as
directors or officers. Such agreements may require a company to advance the
expenses of its directors or officers incurred as a result of any proceeding
against them as to which they could be indemnified. In addition, such agreements
may require a company to obtain directors' and officers' insurance if available
on reasonable terms. We reserve the right to enter into indemnification
agreements in the future with our directors and officers.
II-3
<PAGE>
PART F/S
ITEM 1. FINANCIAL STATEMENT
For information regarding this item, reference is made to the "Index of
Financial Statements."
II-4
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS
Assigned
Number Description of Exhibit
2.1 Agreement and Plan of Reorganization between Mid-Way Medical and
Diagnostic Center, Inc., a Florida corporation, Mid-Way
Acquisitions Corp., a Nevada Corporation and Ciro Jewelry, Inc.,
a Delaware corporation, dated November 12, 1997.
2.2 Plan and Agreement of Merger of Ciro Jewelry, Inc., a Delaware
corporation, into Mid-Way Acquisitions Corp., a Nevada
corporation dated November 12, 1997.
2.3 Plan and Agreement of Merger of Mid-Way Medical and Diagnostic
Center, Inc., a Florida corporation into Mid-Way Medical and
Diagnostic Center, Inc., a Nevada corporation dated November 12,
1997.
3.1 Articles of Incorporation of Ciro International, Inc. (f/k/a
Mid-Way Medical and Diagnostic Center, Inc.), a Nevada
corporation dated November 11, 1997.
3.2 Certificate of Incorporation of Ciro Jewelry, Inc. (Del) dated
June 28, 1994.
3.3 Certificate of Amendment of Certificate of Incorporation of Ciro
Jewelry, Inc., a Delaware corporation, dated September 23, 1997.
3.4 Articles of Incorporation of Mid-Way Acquisitions Corp. (NV)
dated November 11, 1997.
3.5 Articles of Incorporation of Mid-Way Medical and Diagnostic
Center, Inc., a Florida corporation dated June 6, 1990.
3.6 Amendment to Articles of Incorporation of Mid-Way Medical and
Diagnostic Center, Inc., a Florida corporation dated August 22,
1996.
3.7 Amendment to Articles of Incorporation of Mid-Way Medical and
Diagnostic Center, Inc., a Florida corporation dated July 8,
1997.
3.8 Articles of Merger of Ciro Jewelry, Inc., a Delaware corporation,
into Mid-Way Acquisitions Corp. (NV) dated December 1, 1997.
3.9 Articles of Merger of Mid-Way Medical and Diagnostic Center,
Inc., a Florida corporation into Mid-Way Medical and Diagnostic
Center, Inc., a Nevada corporation dated December 1, 1997.
II-5
<PAGE>
3.10 Bylaws of Mid-Way Acquisitions Corp., a Nevada corporation
adopted November 12, 1997.
3.11 Bylaws of Mid-Way Medical and Diagnostic Center, Inc., a Nevada
corporation adopted November 12, 1997.
3.12 Bylaws of Ciro Jewelry, Inc., a Delaware corporation, adopted
February 3, 1995.
9.1 Stock Purchase Agreement dated September 1997, between Mid-Way
Medical and Diagnostic Center, Inc., a Florida corporation and
David Cohen.
9.2 Stock Purchase Agreement between Merchants T&F and Murray A.
Wilson dated August 1, 1997.
10.1 Bill of Sale between Merchants T&F and Ciro Jewelry, Inc. for the
exchange of the rights to the Ciro name for and in consideration
of 1,500 shares of common stock of Ciro Jewelry, Inc. This sale
was dated November 10, 1997 to be effective February 3, 1995.
10.2 Consignment Agreement between Merchants T&F and Ciro Jewelry,
Inc., a Delaware corporation, dated November 10, 1997.
10.3 Consultation Agreement between Merchants T&F and Ciro Jewelry,
Inc., a Delaware corporation, dated November 10, 1997.
10.4 Consultation Agreement between Merchants T&F and Ciro
International dated August 29, 1997.
10.5 Promissory Note whereas Murray A. Wilson promises to pay
Merchants T&F $393,432 with 8% interest dated August 28, 1997.
10.6 Asset purchase agreement between Alan Cohen and Merchants T&F
dated February 2, 1995.
10.7 Assignment of Franchise and License Agreements by and among Alan
Cohen and Merchants T&F dated February 2, 1995.
10.8 Termination of Exclusive License Agreement by and among Ciro
Jewelry, Inc. and Merchants T&F and Hyman License, Inc. dated
March 19, 1997.
99.1 Ciro International, Inc., Limited Offering Memorandum dated
January 14, 1998.
99.2 Supplement No. 1 to the Limited Offering Memorandum dated January
14, 1998 of Ciro International, Inc. dated February 27, 1998.
99.3 Supplement No. 2 to the Limited Offering Memorandum dated January
14, 1998 of Ciro International, Inc. dated March 31, 1998.
99.4 Supplement No. 3 to the Limited Offering Memorandum dated January
14, 1998 of Ciro International, Inc. dated June 29, 1998.
99.5 Form D for the Limited Offering Memorandum dated January 14, 1998
of Ciro International, Inc. dated April 2, 1998.
99.6 Confirmation of Rescission of (i) Asset Purchase Agreement dated
as of May 1, 1998 among Hamilton Jewelry, Inc., Oldco Bijoux,
Inc. and KJL Vegas, Inc. (collectively "Sellers") and Ciro
International, Inc. ("Buyer") and of (ii) the purchase
transaction consummated thereunder. The rescission is dated
December 23, 1998.
99.7 Mid-Way Medical and Diagnostic Center, Inc., Private Placement
Memorandum/Information Statement dated November 12, 1997.
II-6
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report F-1
Financial Statements:
Consolidated Balance Sheets F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Changes in Shareholders' Equity F-4
Consolidated Statements of Cash Flows F-5
Notes to Consolidated Financial Statements F-6 - F-10
II-7
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company has duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: March 29, 2000
CIRO INTERNATIONAL, INC.
By: /s/ Murray A. Wilson
-------------------------------------------
Murray A. Wilson, President, Chief Executive
Officer, Director and Secretary
II-8
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
- CONTENTS -
Page(s)
Independent Auditors' Report 1.
Financial Statements:
Consolidated Balance Sheets 2.
Consolidated Statements of Operations 3.
Consolidated Statements of Changes in Shareholders' Equity 4.
Consolidated Statements of Cash Flows 5.
Notes to Consolidated Financial Statements 6. - 10.
<PAGE>
INDEPENDENT AUDITORS' REPORT
To The Shareholders of
Ciro International, Inc. and Subsidiary
Salt Lake City, Utah
We have audited the accompanying consolidated balance sheet of Ciro
International, Inc. and Subsidiary as of December 31, 1999 and the related
consolidated statements of operations, shareholders' equity and cash flows for
the years ended December 31, 1999 and 1998. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements, referred to above,
present fairly, the financial position of Ciro International, Inc. and
Subsidiary as of December 31, 1999 and 1998 and the results of its operations
and cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in Note 2 to the financial statements, certain conditions indicate
that the Company may be unable to continue as a going concern. The accompanying
financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
/S/LAZAR LEVINE & FELIX LLP
---------------------------
LAZAR LEVINE & FELIX LLP
New York, New York
February 5, 2000
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999
- ASSETS -
CURRENT ASSETS:
Cash $ 930
Interest receivable 700
-----------
TOTAL CURRENT ASSETS 1,630
-----------
OTHER ASSETS:
Loans receivable - shareholders (Note 5) 57,977
Loans receivable - other 5,000
Goodwill, net of accumulated amortization (Note 3f) 738,459
Trademarks, net of accumulated amortization (Note 3e) 246,323
-----------
1,047,759
-----------
TOTAL ASSETS $ 1,049,389
===========
- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) -
CURRENT LIABILITIES:
Accounts payable $ --
-----------
TOTAL CURRENT LIABILITIES --
-----------
COMMITMENTS AND CONTINGENCIES (Notes 5 and 6)
SHAREHOLDERS' EQUITY (Note 4):
Common stock--$.001 par value, 50,000,000 shares authorized,
7,160,000 shares issued and outstanding 7,160
Additional paid-in capital 1,786,440
Accumulated deficit (744,211)
-----------
1,049,389
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,049,389
===========
The accompanying notes are an integral part of these financial statements.
Page 2.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
--------- ---------
REVENUES:
Royalty income $ 58,337 $ 213,244
--------- ---------
TOTAL REVENUES 58,337 213,244
OPERATING COSTS:
Selling, general and administrative expenses 155,464 432,160
--------- ---------
(LOSS) FROM OPERATIONS (97,127) (218,916)
--------- ---------
OTHER INCOME (EXPENSE):
Acquisition advance reserve (Note 6) -- (310,000)
Interest income 4,595 400
--------- ---------
4,595 (309,600)
--------- ---------
(LOSS) BEFORE PROVISION FOR INCOME TAXES (92,532) (528,516)
Provision for taxes (Note 3d) 723 745
--------- ---------
NET (LOSS) $ (93,255) $(529,261)
========= =========
EARNINGS (LOSS) PER SHARE (NOTE 3j)
Basic $ (.01) $ (.08)
========= =========
Diluted $ (.01) $ (.08)
========= =========
The accompanying notes are an integral part of these financial statements.
Page 3.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional Total
---------------------------- Paid-in Accumulated Shareholders
Shares Amount Capital Deficit Equity
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1998 6,500,000 $ 6,500 $ 1,351,500 $ (121,695) $ 1,236,305
Net proceeds from issuance of additional
shares of common stock (Note 4) 660,000 660 434,940 -- 435,600
Net (loss), December 31, 1998 -- -- -- (529,261) (529,261)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1998 7,160,000 7,160 1,786,440 (650,956) 1,142,644
Net (loss), December 31, 1999 -- -- -- (93,255) (93,255)
----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1999 7,160,000 $ 7,160 $ 1,786,440 $ (744,211) $ 1,049,389
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 4.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (93,255) $(529,261)
Adjustments to reconcile net (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 98,684 98,684
Bad debt provision 33,490 205,625
Changes in assets and liabilities:
(Increase) in accounts receivable (33,490) (192,135)
(Increase) in interest receivable (300) (400)
(Decrease) increase in accounts payable -- (3,005)
--------- ---------
Net cash provided by (used in) operating activities 5,129 (420,492)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to shareholders (4,295) (15,211)
--------- ---------
Net cash (used) by investing activities (4,295) (15,211)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock -- 435,600
--------- ---------
Net cash provided by financing activities -- 435,600
--------- ---------
NET INCREASE (DECREASE) IN CASH 834 (103)
Cash, at beginning of year 96 199
--------- ---------
CASH, AT END OF YEAR $ 930 $ 96
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 723 $ 3,745
</TABLE>
The accompanying notes are an integral part of these financial statements.
Page 5.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 1 - NATURE OF BUSINESS:
On November 12, 1997, Mid-Way Medical and Diagnostic Center, Inc.
("Mid-Way Medical") a Florida corporation, changed its domicile state
to Nevada and changed is name to Ciro International, Inc. ("the
Company"). On December 2, 1997, Mid-Way Acquisition Corp. ("Mid-Way"),
a wholly-owned subsidiary of Mid-Way Medical, merged with Ciro
Jewelry, Inc.
At the closing, Jewelry's sole shareholder was issued 2,500,000 shares
of the Company's stock in exchange for all the outstanding shares of
the subsidiary. As a result of the merger all the assets, liabilities
and the business of the subsidiary became the assets, liabilities and
business of Mid-Way. At the same time, the former majority shareholder
of Mid-Way Medical canceled and/or sold a vast majority of his shares
in the Company. After the merger Mid-Way changed it's name to Ciro
Jewelry, Inc.
Ciro Jewelry Inc. (subsidiary) owns a trademark for the "Ciro" jewelry
name in the following countries: Bolivia, Chile, Hungary, Israel,
Japan, Macao, Mexico, Monaco, Panama, Philippines, Portugal, South
Korea, Russia and the United States. The Company licenses its
trademark and receives royalties from the licensees.
NOTE 2 - GOING CONCERN UNCERTAINTY:
The accompanying consolidated financial statements have been prepared
on a going concern basis which contemplates the realization of assets
and liquidation of liabilities in the ordinary course of business. For
the year ended December 31, 1999, the Company incurred a loss of
$93,255, which increased the accumulated deficit to $744,211. In
addition the Company's main source of royalty income did not pay
royalties due for the year ended December 31, 1999 and has only paid a
nominal amount as of December 31, 1999, and the ongoing relationship
is in question (See Note 6).
In view of these matters, realization of the assets of the Company is
dependent upon the Company's ability to generate royalty income from
its trademark, and the success of its future operations. The financial
statements do not include adjustments relating to the recoverability
and classification of recorded asset amounts and classification of
liabilities that might be necessary should the Company be unable to
continue in existence. The Company believes that the trademark has
value and will market it to other sources going forward.
Page 6.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
(a) Principles of Consolidation:
The accompanying consolidated financial statements include the
accounts of "Ciro International, Inc." and its wholly owned subsidiary
"Ciro Jewelry, Inc". All material intercompany balances and
transactions have been eliminated in consolidation.
(b) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management
does not expect such variances, if any, to have a material effect on
the financial statements.
(c) Concentration at Credit Risk/Fair Value:
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash. The
Company, from time to time, may maintain cash balances which exceed
the federal depository insurance coverage limit. The Company performs
periodic reviews of the relative credit rating of its bank to lower
its risk. The carrying amounts of cash and accounts receivable
approximate fair value due to the short-term nature of these items.
(d) Income Taxes:
The Company utilizes Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes" ("SFAS 109"), which requires
the use of the asset and liability approach of providing for income
taxes. SFAS 109 requires recognition of deferred tax liabilities and
assets for the expected future tax consequences of events that have
been included in the financial statements or tax returns. Under this
method, deferred tax liabilities and assets are determined based on
the difference between the financial statement and tax basis of assets
and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. Under SFAS 109, the
effect on deferred tax assets and liabilities of changes in tax rates
is recognized in income in the period that includes the enactment
date.
The Company has a net operating loss carryforward as of its year end,
December 31, 1999, of approximately $705,000 which may be applied
against future taxable income, and which expires in the years
beginning in 2018. Since there is no assurance that the Company will
generate future taxable income to utilize the deferred tax asset
resulting from the net operating loss carryforward, the Company has
not recognized this asset.
Page 7.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(e) Trademarks:
Trademarks are being amortized over a 15 year period.
(f) Goodwill:
Goodwill is being amortized using the straight-line method based upon
the remaining useful life of the trademark, which is 12 years. The
Company's policy is to review long-lived assets for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable as per SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of." The Company establishes guidelines for
determining fair value based on future net cash flows for the use of
the assets and for the measurement of an impairment loss. Any
impairment loss is recorded in the period in which the recognition
criteria are first applied and met. To date, the Company has not
reflected any impairment.
(g) Cash Equivalents:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
(h) Accounts Receivable:
For the years ended December 31, 1999 and 1998 the Company has
reserved the entire balance of accounts receivable in the amount of
$239,566 and $205,625, respectively. The receivable represents amounts
due from a customer with which the Company had a merger agreement that
was later rescinded (see Note 6).
(i) Comprehensive Income:
In 1998, the Company adopted Financial Accounting Standards Boards
Statement No. 130, "Reporting Comprehensive Income", which prescribes
standards for reporting other comprehensive income and its components.
The Company had no items of other comprehensive income in any period
presented and accordingly is not required to report a statement of
comprehensive income.
Page 8.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(j) Earnings Per Share:
The Company has adopted Financial Accounting Standards Board Statement
No. 128 "Earnings Per Share" ("SFAS 128"), which has changed the
method for calculating earnings per share. SFAS 128 requires the
presentation of basic and diluted earnings per share on the face of
the statement of operations. Earnings per common share is computed by
dividing net income by the weighted average number of common shares
and for diluted earnings per share also common equivalent shares
outstanding.
The following average shares were used for the computation of basic
and diluted earnings per share:
Years Ended December 31, 1999 1998
------------------------ --------- ---------
Basic 7,160,000 6,926,339
Diluted 7,160,000 6,926,339
NOTE 4 - STOCKHOLDERS' EQUITY:
Private Placement Offering:
During 1998, the Company commenced selling common stock through a
private placement memorandum. The offering was for the sale of a
maximum of 1,500,000 shares of common stock at a price of $.66 per
share. As of December 31, 1998, 660,000 shares were sold and the
Company received net proceeds of $435,600.
NOTE 5 - RELATED PARTY TRANSACTIONS:
Effective January 1, 1999, loans receivable - shareholder are interest
bearing at 8% per annum and have no formal repayment terms.
As of August 1, 1997, a consulting agreement was entered into between
the subsidiary and its then parent company, Merchants T & F, Inc. The
agreement was for one year whereby the Company would pay the greater
of $5,000 per month or 20% of the gross royalty income it earns to its
parent, who would provide management consulting services. The
agreement was not renewed due to the merger with Ciro International,
Inc. Management fees of $0 and $40,000 were paid in 1999 and 1998,
respectively.
The Company pays rent for business property to Merchants T & F, Inc.
Total rent for the years ended December 31, 1999 and 1998 was $19,000
and $24,000, respectively.
Page 9.
<PAGE>
CIRO INTERNATIONAL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
NOTE 6 - CONTINGENCIES:
In May 1998, the Company entered into an agreement to purchase the
assets of Hamilton Jewelry, Inc., Oldco Bijoux, Inc. and KJL Vegas. In
accordance with the signing of the agreement the Company advanced
$310,000 in anticipation of the consummation of the acquisition.
Subsequently, there was a mutual recision of this agreement. Although
the Company plans to vigorously pursue its recoupment of the $310,000
advance, there is no certainty that it will be able to do so and
accordingly, the Company has reserved against the full amount of the
advance.
Page 10.
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization (the "Agreement"), entered into
this 12th day of November 1997, is by, between, and among Mid-Way Medical and
Diagnostic Center, Inc., a corporation organized and existing under the laws of
the state of Florida ("Mid-Way"), Mid-Way Acquisitions Corp., a corporation
organized and existing under the laws of the state of Nevada ("Mid-Way
Acquisitions"), and Ciro Jewelry, Inc., a corporation organized and existing
under the laws of the state of Delaware ("Ciro").
RECITALS:
WHEREAS, Mid-Way Acquisitions is a wholly owned subsidiary of Mid-Way;
WHEREAS, Ciro desires to merge with and into Mid-Way Acquisitions, and
Mid-Way desires to merge Mid-Way Acquisitions with Ciro, so that Ciro will be
the surviving corporation, all upon the terms and subject to the conditions of
this Merger Agreement and in accordance with the laws of the States of Delaware
and Nevada;
WHEREAS, the terms and conditions of the Merger, the mode of carrying the
same into effect, the manner of converting the capital stock of Ciro into the
right to receive common stock of Mid-Way and such other terms and conditions as
may be required or permitted to be stated in this Merger Agreement are set forth
below; and
WHEREAS, for federal income tax purposes, it is intended by the parties
hereto that the Merger shall qualify as a reorganization within the meaning of
Sections 368(a)(l)(A) and (a)(2)(D) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that this Merger Agreement shall constitute a "Plan of
Reorganization" for purposes of Section 368 of the Code;
NOW, THEREFORE, based upon the stated premises, which are incorporated
herein by reference, and for and in consideration of the mutual covenants and
agreements set forth herein, the mutual benefits to the parties to be derived
herefrom, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Mid-Way, Mid-Way Acquisitions, and Ciro approve
and adopt this Agreement and Plan of Reorganization and mutually covenant and
agree with each other as follows:
1. Merger of Ciro into Mid-Way Acquisitions.
1.1 Incorporation of Agreement of Merger. The agreement of merger attached
hereto as Exhibit "A" is incorporated herein by reference. Mid-Way, Mid-Way
Acquisitions, and
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Ciro agree to take such action to execute and deliver such further instruments
as may be necessary to carry out the terms of said agreement of merger.
1.2 Shares to be Issued. On the effective date of the merger, 2,500,000
shares of Mid-Way's common stock shall be delivered to the sole shareholder of
Ciro.
2. Representations and Warranties of Ciro. Ciro represents and warrants to
Mid-Way and Mid-Way Acquisitions as set forth below. These representations and
warranties are made as an inducement for Mid-Way and Mid-Way Acquisitions to
enter into this Agreement and, but for the making of such representations and
warranties and their accuracy, such entities would not be parties hereto.
2.1 Organization and Authority. Ciro is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to enter into and perform the transactions
contemplated by this Agreement.
2.2 Capitalization. As of the date of the closing, Ciro will have a total
of no more than 1,500 shares of common stock issued and outstanding. All of the
shares will have been duly authorized and validly issued and will be fully paid
and nonassessable. There are no options, warrants, conversion privileges, or
other rights presently outstanding for the purchase of any authorized but
unissued stock of Ciro.
2.3 Performance of This Agreement. The execution and performance of this
Agreement and the transaction contemplated hereby have been authorized by the
board of directors of Ciro.
2.4 Financials. True copies of the financial statements of Ciro consisting
of the balance sheets as of the fiscal years ended December 31, 1996 and 1995,
and the six months ended June 30, 1997, and statements of operations and cash
flow for each of the fiscal years ended December 31, 1996, 1995, and 1994, and
the six months ended June 30, 1997, and statement of changes in stockholder's
equity from inception to June 30, 1997, have been delivered by Ciro to Mid-Way
and Mid-Way Acquisitions. The year-end statements have been examined and
certified by Lazar, Levine & Company LLP, Certified Public Accountants. Said
financial statements are true and correct in all material respects and present
an accurate and complete disclosure of the financial condition of Ciro as of
June 30, 1997, and the earnings for the periods covered, in accordance with
generally accepted accounting principles applied on a consistent basis.
2.5 Liabilities. There are no material liabilities of Ciro, whether
accrued, absolute, contingent or otherwise, which arose or relate to any
transaction of Ciro, its agents or servants occurring prior to June 30, 1997,
which are not disclosed by or reflected in said financial statements. As of the
date hereof, there are no known circumstances, conditions, happenings, events or
arrangements, contractual or otherwise, which may hereafter give rise to
liabilities, except in the normal course of business of Ciro.
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2.6 Absence of Certain Changes or Events. Except as set forth in this
Agreement, since June 30, 1997, there has not been (i) any material adverse
change in the business, operations, properties, level of inventory, assets, or
condition of Ciro, or (ii) any damage, destruction, or loss to Ciro (whether or
not covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or conditions of Ciro.
2.7 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding against
or involving Ciro or its subsidiaries, if any, or their assets, properties, or
business, nor does Ciro or its subsidiaries know, or have reasonable grounds to
know, of any basis for any such proceedings, investigations or inquiries,
product liability or other claims, judgments, injunctions or restrictions. In
addition, there are no material proceedings existing, pending or reasonably
contemplated to which any officer, director, or affiliate of Ciro is a party
adverse to Ciro or any of its subsidiaries or has a material interest adverse to
Ciro or any of its subsidiaries.
2.8 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which are
due and payable have been duly reported, fully paid and discharged as reported
by Ciro, and there are no unpaid taxes which are, or could become a lien on the
properties and assets of Ciro, except as provided for in the financial
statements of Ciro, or have been incurred in the normal course of business of
Ciro since that date. All tax returns of any kind required to be filed have been
filed and the taxes paid or accrued.
2.9 Accuracy of All Statements Made by Ciro. No representation or warranty
by Ciro in this Agreement, nor any statement, certificate, schedule, or exhibit
hereto furnished or to be furnished by or on behalf of Ciro pursuant to this
Agreement, nor any document or certificate delivered to Mid-Way and Mid-Way
Development by Ciro pursuant to this Agreement or in connection with actions
contemplated hereby, contains or shall contain any untrue statement of material
fact or omits or shall omit a material fact necessary to make the statement
contained therein not misleading.
3. Representations and Warranties of Mid-Way and Mid-Way Acquisitions.
Mid-Way and Mid-Way Acquisitions, jointly and severally, represent and warrant
to Ciro as set forth below. These representations and warranties are made as an
inducement for Ciro to enter into this Agreement and, but for the making of such
representations and warranties and their accuracy, Ciro would not be a party
hereto.
3.1 Organization and Good Standing.
a. Mid-Way is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida with full power and authority to
enter into and perform the transactions contemplated by this Agreement.
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b. Mid-Way Acquisitions is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada with full power and
authority to enter into and perform the transactions contemplated by this
Agreement.
3.2 Capitalization.
a. The authorized capital stock of Mid-Way consists of 50,000,000 shares of
common stock, $0.00 1 per share par value. As of the date of this Agreement,
Mid-Way has a total of 11,000,000 shares of common stock outstanding. As of the
date of the closing, taking into account the cancellation of 9,400,000 and a
2.5-for-one forward split of the outstanding shares as described below, Mid-Way
will have a total of no more than 4,000,000 shares of common stock issued and
outstanding. All of the shares will have been duly authorized and validly issued
and will be fully paid and nonassessable. Except for Mid-Way's obligations
hereunder with respect to the shares to be issued pursuant to subsection 1.2
hereof, there are no options, warrants, conversion privileges, or other rights
presently outstanding for the purchase of any authorized but unissued stock of
Mid-Way.
b. The authorized capital stock of Mid-Way Acquisitions consists of 10,000
shares of common stock, $0.001 per share par value. As of the date of this
Agreement, Mid-Way Acquisitions has a total of 10 shares of common stock
outstanding, all of which are owned by Mid-Way. All of the outstanding shares
have been duly authorized and validly issued and are fully paid and
nonassessable. There are no options, warrants, conversion privileges, or other
rights presently outstanding for the purchase of any authorized but unissued
stock of Mid-Way Acquisitions.
3.3 Performance of This Agreement. The execution and performance of this
Agreement and the transaction contemplated hereby have been authorized by the
boards of directors of Mid-Way and Mid-Way Acquisitions.
3.4 Financials. True copies of the financial statements of Mid-Way
consisting of the balance sheets as of the fiscal years ended December 31, 1996
and 1995, and the three months ended March 31, 1997, and statements of
operations and cash flow for each of the fiscal years ended December 31, 1996,
1995, and 1994, and the three months ended March 31, 1997, and statement of
changes in stockholder's equity from inception to March 31, 1997, have been
delivered by Mid-Way to Ciro. The financial statements have been examined and
certified by Barry L. Friedman, P.C., Certified Public Accountant. Said
financial statements are true and correct in all material respects and present
an accurate and complete disclosure of the financial condition of Mid-Way as of
March 31, 1997, and the earnings for the periods covered, in accordance with
generally accepted accounting principles applied on a consistent basis.
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3.5 Liabilities.
a. There are no material liabilities of Mid-Way, whether accrued, absolute,
contingent or otherwise, which arose or relate to any transaction of Mid-Way,
its agents or servants which are not disclosed by or reflected in said financial
statements. As of the date hereof, there are no known circumstances, conditions,
happenings, events or arrangements, contractual or otherwise, which may
hereafter give rise to liabilities, except in the normal course of business of
Mid-Way.
b. Mid-Way Acquisitions has no liabilities in the aggregate in excess of
$1,000.
3.6 Litigation. There are no legal, administrative or other proceedings,
investigations or inquiries, product liability or other claims, judgments,
injunctions or restrictions, either threatened, pending, or outstanding against
or involving Mid-Way or Mid-Way Acquisitions, or their subsidiaries, if any, or
their assets, properties, or business, nor does Mid-Way or Mid-Way Acquisitions
or their subsidiaries know, or have reasonable grounds to know, of any basis for
any such proceedings, investigations or inquiries, product liability or other
claims, judgments, injunctions or restrictions. In addition, there are no
material proceedings existing, pending or reasonably contemplated to which any
officer, director, or affiliate of Mid-Way or Mid-Way Acquisitions is a party
adverse to either entity or any of their subsidiaries or has a material interest
adverse to such entities or any of their subsidiaries.
3.7 Taxes. All federal, state, foreign, county and local income, profits,
franchise, occupation, property, sales, use, gross receipts and other taxes
(including any interest or penalties relating thereto) and assessments which are
due and payable have been duly reported, fully paid and discharged as reported
by Mid-Way and Mid-Way Acquisitions, and there are no unpaid taxes which are, or
could become a lien on the properties and assets of Mid-Way or Mid-Way
Acquisitions, except as provided for in the financial statements of Mid-Way, or
have been incurred in the normal course of business of Mid-Way or Mid-Way
Acquisitions since that date. All tax returns of any kind required to be filed
have been filed and the taxes paid or accrued.
3.8 Legality of Shares to be Issued. The shares of common stock of Mid-Way
to be issued by Mid-Way pursuant to this Agreement, when so issued and
delivered, will have been duly and validly authorized and issued by Mid-Way and
will be fully paid and nonassessable.
3.9 Accuracy of All Statements Made by Mid-Way and Mid-Way Acquisitions. No
representation or warranty by Mid-Way or Mid-Way Acquisitions in this Agreement,
nor any statement, certificate, schedule, or exhibit hereto furnished or to be
furnished by Mid-Way or Mid-Way Acquisitions pursuant to this Agreement, nor any
document or certificate delivered to Ciro pursuant to this Agreement or in
connection with actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits to state or shall omit to state a
material fact necessary to make the statement contained therein not misleading.
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4. Covenants of the Parties.
4.1 Corporate Records.
a. Simultaneous with the execution of this Agreement by Ciro, such entity
shall deliver to Mid-Way and Mid-Way Acquisitions copies of the articles of
incorporation, as amended, and the current bylaws of Ciro, and copies of the
resolutions duly adopted by the board of directors of Ciro approving this
Agreement and the transactions herein contemplated.
b. Simultaneous with the execution of this Agreement by Mid-Way and Mid-Way
Acquisitions, such entities shall deliver to Ciro copies of the articles of
incorporation, as amended, and the current bylaws of Mid-Way and Mid-Way
Acquisitions, and copies of the resolutions duly adopted by the boards of
directors of Mid-Way and Mid-Way Acquisitions approving this Agreement and the
transactions herein contemplated.
4.2 Access to Information.
a. Mid-Way and Mid-Way Acquisitions and their authorized representatives
shall have full access during normal business hours to all properties, books,
records, contracts, and documents of Ciro, and Ciro shall furnish or cause to be
furnished to Mid-Way and Mid-Way Acquisitions and their authorized
representatives all information with respect to its affairs and business as
Mid-Way and Mid-Way Acquisitions may reasonably request. Mid-Way and Mid-Way
Acquisitions shall hold, and shall cause their representatives to hold
confidential, all such information and documents, other than information that
(i) is in the public domain at the time of its disclosure to Mid-Way and Mid-Way
Acquisitions; (ii) becomes part of the public domain after disclosure through no
fault of Mid-Way or Mid-Way Acquisitions; (iii) is known to Mid-Way or Mid-Way
Acquisitions or any of its officers or directors prior to disclosure; or (iv) is
disclosed in accordance with the written consent of Ciro. In the event this
Agreement is terminated prior to closing, Mid-Way and Mid-Way Acquisitions
shall, upon the written request of Ciro, promptly return all copies of all
documentation and information provided by Ciro hereunder.
b. Ciro and its authorized representatives shall have full access during
normal business hours to all properties, books, records, contracts, and
documents of Mid-Way and Mid-Way Acquisitions, and Mid-Way and Mid-Way
Acquisitions shall furnish or cause to be furnished to Ciro and its authorized
representatives all information with respect to their affairs and business as
Ciro may reasonably request. Ciro shall hold, and shall cause its
representatives to hold confidential, all such information and documents, other
than information that (i) is in the public domain at the time of its disclosure
to Ciro; (ii) becomes part of the public domain after disclosure through no
fault of Ciro; (iii) is known to Ciro or any of its officers or directors prior
to disclosure; or (iv) is disclosed in accordance with the written consent of
Mid-Way and Mid-Way Acquisitions. In the event this Agreement is terminated
prior to closing, Ciro shall, upon the written request of Mid-Way or Mid-Way
Acquisitions, promptly return all copies of all documentation and information
provided by Mid-Way or Mid-Way Acquisitions hereunder.
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4.3 Actions Prior to Closing. From and after the date of this Agreement and
until the closing date:
a. Mid-Way and Mid-Way Acquisitions and Ciro shall each carry on its
business diligently and substantially in the same manner as heretofore, and
neither party shall make or institute any unusual or novel methods of purchase,
sale, management, accounting or operation.
b. Neither Mid-Way or Mid-Way Acquisitions nor Ciro shall enter into any
contract or commitment, or engage in any transaction not in the usual and
ordinary course of business and consistent with its business practices.
c. Neither Mid-Way or Mid-Way Acquisitions nor Ciro shall amend its
articles of incorporation or bylaws or make any changes in authorized or issued
capital stock, except as provided in this Agreement.
d. Mid-Way and Mid-Way Acquisitions and Ciro shall each use its best
efforts (without making any commitments on behalf of the company) to preserve
its business organization intact.
e. Neither Mid-Way or Mid-Way Acquisitions nor Ciro shall do any act or
omit to do any act, or permit any act or omission to act, which will cause a
material breach of any material contract, commitment, or obligation of such
party.
f. Mid-Way and Mid-Way Acquisitions and Ciro shall each duly comply with
all applicable laws as may be required for the valid and effective issuance or
transfer of stock contemplated by this Agreement.
g. Neither Mid-Way or Mid-Way Acquisitions nor Ciro shall sell or dispose
of any property or assets, except products sold in the ordinary course of
business.
h. Mid-Way and Mid-Way Acquisitions and Ciro shall each promptly notify the
other of any lawsuits, claims, proceedings, or investigations that may be
threatened, brought, asserted, or commenced against it, its officers or
directors involving in any way the business, properties, or assets of such
party.
4.4 Shareholders' Consent. Mid-Way and Mid-Way Acquisitions and Ciro shall
promptly submit this Agreement and the transactions contemplated hereby for the
approval of their respective stockholders by written consent and, subject to the
fiduciary duties of the Boards of Directors of Mid-Way and Mid-Way Acquisitions
and Ciro under applicable law, shall use their best efforts to obtain
stockholder approval and adoption of this Agreement and the transactions
contemplated hereby. In connection with such consents of stockholders, Mid-Way
and Mid-Way Acquisitions and Ciro shall prepare an information statement to be
furnished to their respective shareholders setting forth information about this
Agreement and the transactions contemplated
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hereby. Mid-Way and Mid-Way Acquisitions and Ciro shall promptly furnish to the
other all information, and take such other actions, as may reasonably be
requested in connection with any action to be taken in connection with the
immediately preceding sentence. Mid-Way and Mid-Way Acquisitions and Ciro shall
have the right to review and provide comments to the information statement
furnished to the shareholders of the other prior to mailing.
4.5 No Covenant as to Tax or Accounting Consequences. It is expressly
understood and agreed that neither Mid-Way or Mid-Way Acquisitions nor its
officers or agents has made any warranty or agreement, expressed or implied, as
to the tax or accounting consequences of the transactions contemplated by this
Agreement or the tax or accounting consequences of any action pursuant to or
growing out of this Agreement.
4.6 Indemnification. Ciro shall indemnify Mid-Way and Mid-Way Acquisitions
for any loss, cost, expense, or other damage (including, without limitation,
attorneys' fees and expenses) suffered by Mid-Way and Mid-Way Acquisitions
resulting from, arising out of, or incurred with respect to the falsity or the
breach of any representation, warranty, or covenant made by Ciro herein, and any
claims arising from the operations of Ciro prior to the closing date. Mid-Way
and Mid-Way Acquisitions, jointly and severally, shall indemnify and hold Ciro
harmless from and against any loss, cost, expense, or other damage (including,
without limitation, attorneys' fees and expenses) resulting from, arising out
of, or incurred with respect to, or alleged to result from, arise out of or have
been incurred with respect to, the falsity or the breach of any representation,
covenant, warranty, or agreement made by Mid-Way or Mid-Way Acquisitions herein,
and any claims arising from the operations of Mid-Way or Mid-Way Acquisitions
prior to the closing date. The indemnity agreement contained herein shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any party and shall survive the consummation of the transactions
contemplated by this Agreement.
4.7 Publicity. The parties agree that no publicity, release, or other
public announcement concerning this Agreement or the transactions contemplated
by this Agreement shall be issued by any party hereto without the advance
approval of both the form and substance of the same by the other parties and
their counsel, which approval, in the case of any publicity, release, or other
public announcement required by applicable law, shall not be unreasonably
withheld or delayed.
4.8 Expenses. Except as otherwise expressly provided herein, each party to
this Agreement shall bear its own respective expenses incurred in connection
with the negotiation and preparation of this Agreement, in the consummation of
the transactions contemplated hereby, and in connection with all duties and
obligations required to be performed by each of them under this Agreement.
4.9 Further Actions. Each of the parties hereto shall take all such further
action, and execute and deliver such further documents, as may be necessary to
carry out the transactions contemplated by this Agreement.
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4.10 Change of Domicile. Prior to the closing date, Mid-Way shall have
obtained shareholder approval to change the domicile of Mid-Way to the State of
Nevada.
4.11 Change of Name. Prior to the closing date, Mid-Way shall have obtained
shareholder approval to change the name of such entity to "Ciro International,
Inc.," or some other name suggested by Ciro. Prior to the closing date, Mid-Way
Acquisitions shall have obtained shareholder approval to change the name of such
entity to "Ciro Jewelry, Inc.," or some other name suggested by Ciro.
4.12 Forward Split. Prior to the closing date, Mid-Way shall have
accomplished a forward split of its outstanding stock at the rate of 2.5 shares
for each one share outstanding prior to closing.
4.13 Cancellation of Shares. Prior to the closing date, Mid-Way shall have
caused the cancellation of 9,400,000 shares held by David Cohen.
4.14 Sale of Shares. Prior to closing Mid-Way shall have caused David Cohen
to offer and sell 260,000 of his shares of Mid-Way to Murray A. Wilson for
$26,000 and 140,000 shares to Laszlo Schwartz for $14,000.
5. Conditions Precedent to Mid-Way and Mid-Way Acquisitions's Obligations.
Each and every obligation of Mid-Way and Mid-Way Acquisitions to be performed on
the closing date shall be subject to the satisfaction prior thereto of the
following conditions:
5.1 Truth of Representations and Warranties. The representations and
warranties made by Ciro in this Agreement or given on its behalf hereunder shall
be substantially accurate in all material respects on and as of the closing date
with the same effect as though such representations and warranties had been made
or given on and as of the closing date.
5.2 Performance of Obligations and Covenants. Ciro shall have performed and
complied with all obligations and covenants required by this Agreement to be
performed or complied with by it prior to or at the closing.
5.3 Officer's Certificate. Mid-Way and Mid-Way Acquisitions shall have been
furnished with a certificate (dated as of the closing date and in form and
substance reasonably satisfactory to Mid-Way and Mid-Way Acquisitions), executed
by an executive officer of Ciro, certifying to the fulfillment of the conditions
specified in subsections 5.1 and 5.2 hereof.
5.4 No Litigation or Proceedings. There shall be no litigation or any
proceeding by or before any governmental agency or instrumentality pending or
threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions contemplated by
this Agreement or which seeks substantial damages in respect thereof.
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5.5 No Material Adverse Change. As of the closing date there shall not have
occurred any material adverse change, financially or otherwise, which materially
impairs the ability of Ciro to conduct its business or the earning power thereof
on the same basis as in the past.
5.6 Shareholders' Approval. The holders of not less than a majority of the
outstanding common stock of Mid-Way shall have voted for authorization and
approval of this Agreement and the transactions contemplated hereby and
shareholders of Mid-Way holding no more than 5% of the outstanding common stock
of Mid-Way shall have exercised dissenters' rights pursuant thereto.
6. Conditions Precedent to Obligations of Ciro. Each and every obligation
of Ciro to be performed on the closing date shall be subject to the satisfaction
prior thereto of the following conditions:
6.1 Truth of Representations and Warranties. The representations and
warranties made by Mid-Way and Mid-Way Acquisitions in this Agreement or given
on their behalf hereunder shall be substantially accurate in all material
respects on and as of the closing date with the same effect as though such
representations and warranties had been made or given on and as of the closing
date.
6.2 Performance of Obligations and Covenants. Mid-Way and Mid-Way
Acquisitions shall have performed and complied with all obligations and
covenants required by this Agreement to be performed or complied with by them
prior to or at the closing.
6.3 Officer's Certificate. Ciro shall have been furnished with a
certificate (dated as of the closing date and in form and substance reasonably
satisfactory to Ciro), executed by an executive officer of Mid-Way and Mid-Way
Acquisitions, certifying to the fulfillment of the conditions specified in
subsections 6.1 and 6.2 hereof
6.4 No Litigation or Proceedings. There shall be no litigation or any
proceeding by or before any governmental agency or instrumentality pending or
threatened against any party hereto that seeks to restrain or enjoin or
otherwise questions the legality or validity of the transactions contemplated by
this Agreement or which seeks substantial damages in respect thereof.
6.5 No Material Adverse Change. As of the closing date there shall not have
occurred any material adverse change, financially or otherwise, which materially
impairs the ability of Mid-Way or Mid-Way Acquisitions to conduct its business.
6.6 No Liabilities of Mid-Way and Mid-Way Acquisitions. As of the closing
date the total liabilities of Mid-Way and Mid-Way Acquisitions shall not exceed
$1,000 in the aggregate.
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7. Securities Law Provisions. At closing Ciro shall deliver to Mid-Way a
representation form from the shareholder of Ciro (the "Shareholder") providing
representations essentially as follows:
7.1 Restricted Securities. The Shareholder represents that he is aware that
the shares issued to him will not have been registered pursuant to the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
act, and thus will be restricted securities as defined in Rule 144 promulgated
by the Securities and Exchange Commission (the "SEC"). Therefore, under current
interpretations and applicable rules, he will probably have to retain such
shares for a period of at least one year and at the expiration of such one year
period his sales may be confined to brokerage transactions of limited amounts
requiring certain notification filings with the SEC and such disposition may be
available only if the issuer is current in its filings with the SEC under the
Securities Exchange Act of 1934, as amended, or other public disclosure
requirements.
7.2 Non-distributive Intent. The Shareholder covenants and warrants that
the shares received are acquired for his own account and not with the present
view towards the distribution thereof and he will not dispose of such shares
except (i) pursuant to an effective registration statement under the 1933 Act,
or (ii) in any other transaction which, in the opinion of counsel acceptable to
the issuer, is exempt from registration under the 1933 Act, or the rules and
regulations of the SEC thereunder. In order to effectuate the covenants of this
subsection 7.2, an appropriate legend will be placed upon each of the
certificates of common stock of issued pursuant to this Agreement, and stop
transfer instructions shall be placed with the transfer agent for the
securities.
7.3 Evidence of Compliance with Private Offering Exemption. The Shareholder
hereby represents and warrants that he, either individually or together with his
representative, has such knowledge and experience in business and financial
matters that he is capable of evaluating the risks of this Agreement and the
transactions contemplated hereby, and that the financial capacity of such party
is of such proportion that the total cost of such person's commitment in the
shares would not be material when compared with his, her, or its total financial
capacity. Upon the written request of the issuer of the securities issued or
transferred pursuant to this Agreement, the Shareholder shall provide such
issuer with evidence of compliance with the requirements of any federal or state
exemption from registration. Mid-Way and Mid-Way Acquisitions and Ciro shall
each file, with the assistance of the other and its respective legal counsel,
such notices, applications, reports, or other instruments as may be deemed by
each of them to be necessary or appropriate in an effort to document reliance on
such exemptions, unless an exemption requiring no filing is available in the
particular jurisdiction, all to the extent and in the manner as may be deemed by
such parties to be appropriate.
8. Change of Management. Upon and as a condition of closing this Agreement:
8.1 Prior to closing Mid-Way and Mid-Way Acquisitions will present to its
shareholders for approval the election of Murray A. Wilson as the sole director
of Mid-Way and
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Mid-Way Acquisitions effective immediately following the closing of this
Agreement. Prior to closing Ciro will furnish material information of Mr. Wilson
as nominees to be elected by the shareholders of Mid-Way and Mid-Way
Acquisitions. Mid-Way and Mid-Way Acquisitions reserves the right to refuse to
cause the nomination of such person as the director of Mid-Way and Mid-Way
Acquisitions if, after review of the foregoing information concerning said
person, it is the opinion of Mid-Way and Mid-Way Acquisitions that the election
of such person would not be in the best interests of Mid-Way and Mid-Way
Acquisitions.
8.2 Ciro reserves the right to terminate this Agreement if the nominee
selected by it is not elected or appointed as set forth above.
9. Closing.
9.1 Time and Place. The closing of this transaction ("closing") shall take
place at 57 West 200 South, Suite 310, Salt Lake City, Utah, at 1:00 p.m.,
December 2, 1997, or at such other time and place as the parties hereto shall
agree upon. Such date is referred to in this Agreement as the "closing date."
9.2 Documents To Be Delivered by Ciro. At the closing Ciro shall deliver to
Mid-Way and Mid-Way Acquisitions the following documents:
a. A dully executed copy of the agreement of merger in form as set forth in
Exhibit "A."
b. The representation forms of the Shareholder described in Section 7
hereof.
c. The certificate required pursuant to subsection 5.3 hereof.
d. A certified copy of the duly adopted resolutions of Ciro's shareholder
authorizing this Agreement and the transactions contemplated hereby.
e. Such other documents of transfer, certificates of authority, and other
documents as Mid-Way and Mid-Way Acquisitions may reasonably request.
9.3 Documents To Be Delivered by Mid-Way and Mid-Way Acquisitions. At the
closing Mid-Way and Mid-Way Acquisitions shall deliver to Ciro the following
documents:
a. A dully executed copy of the agreement of merger in form as set forth in
Exhibit "A."
b. Certificates for the number of shares of common stock of Mid-Way as
determined in sub-section 1.2 hereof.
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c. The certificate required pursuant to subsection 6.3 hereof.
d. Certified copies of the duly adopted resolutions of Mid-Way and Mid-Way
Acquisitions's shareholders authorizing this Agreement and the transactions
contemplated hereby.
e. Such other documents of transfer, certificates of authority, and other
documents as Ciro may reasonably request.
10. Termination. This Agreement may be terminated by Mid-Way and Mid-Way
Acquisitions or Ciro by notice to the other if, (i) at any time prior to the
closing date any event shall have occurred or any state of facts shall exist
that renders any of the conditions to its or their obligations to consummate the
transactions contemplated by this Agreement incapable of fulfillment, or (ii) on
December 15, 1997, if the closing shall not have occurred. Following termination
of this Agreement no party shall have liability to another party relating to
such termination, other than any liability resulting from the breach of this
Agreement by a party prior to the date of termination.
11. Miscellaneous.
11.1 Notices. All communications provided for herein shall be in writing
and shall be deemed to be given or made when served personally or when deposited
in the United States mail, certified return receipt requested, addressed as
follows, or at such other address as shall be designated by any party hereto in
written notice to the other party hereto delivered pursuant to this subsection:
Mid-Way and
Mid-Way Acquisitions: 1600 Market Street
33rd Floor
Philadelphia, PA 19103
Attn: David Cohen, President
with copy to: Kimble & Associates
311 South State Street
Suite 440
Salt Lake City, UT 84111
Attn: Thomas G. Kimble
Ciro: 445 Fifth Avenue
16th Floor
New York, NY 10016
Attn: Murray A. Wilson, President
-13-
<PAGE>
with copy to: Ronald N. Vance
Attorney at Law
57 West 200 South
Suite 310
Salt Lake City, UT 84101
11.2 Default. Should any party to this Agreement default in any of the
covenants, conditions, or promises contained herein, the defaulting party shall
pay all costs and expenses, including a reasonable attorney's fee, which may
arise or accrue from enforcing this Agreement, or in pursuing any remedy
provided hereunder or by the statutes of the State of Utah
11.3 Assignment. This Agreement may not be assigned in whole or in part by
the parties hereto without the prior written consent of the other party or
parties, which consent shall not be unreasonably withheld.
11.4 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, their heirs, executors,
administrators, successors and assigns.
11.5 Partial Invalidity. If any term, covenant, condition, or provision of
this Agreement or the application thereof to any person or circumstance shall to
any extent be invalid or unenforceable, the remainder of this Agreement or
application of such term or provision to persons or circumstances other than
those as to which it is held to be invalid or unenforceable shall not be
affected thereby and each term, covenant, condition, or provision of this
Agreement shall be valid and shall be enforceable to the fullest extent
permitted by law.
11.6 Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, and preliminary
agreements between the parties hereto relating to the subject matter of this
Agreement.
11.7 Interpretation of Agreement. This Agreement shall be interpreted and
construed as if equally drafted by all parties hereto.
11.8 Survival of Covenants. Etc. All covenants, representations, and
warranties made herein to any party, or in any statement or document delivered
to any party hereto, shall survive the making of this Agreement and shall remain
in full force and effect until the obligations of such party hereunder have been
fully satisfied.
11.9 Further Action. The parties hereto agree to execute and deliver such
additional documents and to take such other and further action as may be
required to carry out fully the transactions contemplated herein.
-14-
<PAGE>
11.10 Amendment. This Agreement or any provision hereof may not be changed,
waived, terminated, or discharged except by means of a written supplemental
instrument signed by the party or parties against whom enforcement of the
change, waiver, termination, or discharge is sought.
11.11 Full Knowledge. By their signatures, the parties acknowledge that
they have carefully read and fully understand the terms and conditions of this
Agreement, that each party has had the benefit of counsel, or has been advised
to obtain counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.
11.12 Headings. The descriptive headings of the various sections or parts
of this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
11.13 Counterparts. This Agreement may be executed in two or more partially
or fully executed counterparts, each of which shall be deemed an original and
shall bind the signatory, but all of which together shall constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto executed the foregoing Agreement and
Plan of Reorganization as of the day and year first above written.
Mid-Way: Mid-Way Medical and Diagnostic Center, Inc.
By /s/ David Cohen
----------------------------------
David Cohen, President
Mid-Way Acquisitions: Mid-Way Acquisitions Corp.
By /s/ David Cohen
----------------------------------
David Cohen, President
Ciro: Ciro Jewelry, Inc.
By /s/ Murray A. Wilson
----------------------------------
Murray A. Wilson, President
-15-
PLAN AND AGREEMENT OF MERGER
OF
CIRO JEWELRY, INC.
(A Delaware Corporation)
INTO
MID-WAY ACQUISITIONS CORP.
(A Nevada Corporation)
This Plan and Agreement of Merger (hereinafter called "Merger Agreement")
dated this 12th day of November 1997, is by, between, and among Mid-Way Medical
and Diagnostic Center, Inc., a corporation organized and existing under the laws
of the State of Florida (herein after sometimes referred to as "Mi-Way"),
Mid-Way acquisitions Corp., a corporation organized and existing under the laws
of the State of Nevada (hereinafter sometimes referred to as "Mid-Way
Acquisitions"), and Ciro Jewelry, Inc., a corporation organized and existing
under the laws of the state of Delaware (hereinafter sometimes referred to as
"Ciro").
RECITALS:
WHERAS, Mid-Way Acquisitions is a wholly owned subsidiary of Mid-Way;
WHERAS, Ciro wishes to merge with and into Mid-Way Acquisitions;
WHERAS, Section 92A.190 of the Nevada Revised Statutes and Section 252 of
the General Corporation Law of the State of Delaware each authorize the merger
of Ciro and Mid-Way Acquisitions;
NOW, THEREFORE, the merging corporations have agreed, and do hereby agree,
each with the other in consideration of the remises and mutual agreements,
provisions, covenants and grants herein contained and in accordance with the
laws of the State of Nevada, and in accordance with the laws of the State of
Delaware, that Ciro and Mid-Way Acquisitions be merged into a single corporation
and that Mid-Way Acquisitions shall be the continuing and surviving corporation
and do hereby agree upon and prescribe that the terms and conditions of the
merger hereby agreed upon and the mode of carrying the same into effect and the
manner of converting the presently outstanding shares of Ciro into the shares of
Mid-Way are and shall be hereinafter set forth:
Article I
Manner of Conversion of Shares
The manner and basis of converting the shares of Ciro into shares of
Mid-Way are as follows: at the effective time of the merger, all 1,500
outstanding shares of common stock of Ciro shall thereupon be converted into
2,500,000 shares of Mid-Way. Each holder of outstanding common stock of Ciro
upon surrender to Mid-Way Acquisitions of one or more certificates for such
shares for cancellation shall be entitled to receive one or more certificates
for the number of shares of common stock of Mid-Way represented by the
certificates of Ciro so surrendered for cancellation by such holder. Until so
surrendered, each such certificate representing outstanding shares of common
stock of Ciro shall represent the ownership of a like number of shares of
Mid-Way for all corporate and legal purposes.
Article II
Effective Time
The effective time of the merger shall be upon the filing of the Merger
agreement (or a certificate in lieu thereof) in accordance with Nevada Revised
Statuettes and the General Corporation Law of the State of Delaware. Prior to
said date, this Merger Agreement shall (1) have been submitted to and approved
by the board of directors of each of the merging corporations; (2) have been
approved by the stockholders of each of the merging corporations in accordance
with law.
<PAGE>
Article III
Effect of Merger
When the merger shall have been effected:
(i) The merging corporations shall be a single corporation known as "Ciro
Jewelry, Inc." a Nevada corporation
(ii) The separate existence of Ciro shall cease.
(iii) Mid-Way Acquisitions shall have all rights, privileges, immunities
and powers and shall be subject to all the duties and liabilities of a
corporation organized under the Nevada Statutes.
(iv) Mid-Way Acquisitions shall thereupon and thereafter possess all the
rights, privileges, immunities and franchises of a public as well as of a
private nature of each of the merging corporations and all property, real,
personal and mixed, and all debts due on whatever account, including
subscriptions to shares and all other choses in action, and all and every other
interest of and belonging to or due to each of the merging corporations shall be
taken and deemed to be transferred to and vested in Mid-Way Acquisitions without
further act or deed, and the title to any real estate or any interest therein
vested in either of the merging corporations shall not revert or be in any way
impaired by reason of the merger.
(v) Mid-Way Acquisitions shall thenceforth be responsible and liable for
all the liabilities and obligations of each of the merging corporations and any
claim existing or action or proceeding pending by or against either of the
merging corporations may be prosecuted to judgment as if such merger had not
taken place or Mid-Way Acquisitions may be substituted in its place. Neither the
rights of creditors nor any liens upon the property of either of the merging
corporations shall be impaired by reason of the merger.
(vi) After the effective time of the merger, the earned surplus of Mid-Way
Acquisitions shall equal the aggregate of the earned surpluses of the merging
corporations immediately prior to the effective time of the merger. The earned
surplus determined as above provided shall continue to be available for payment
of dividends by Mid-Way Acquisitions.
(vii) The certificate of incorporation of Mid-Way Acquisitions as in effect
on the date of the merger, except as provided for in this Merger Agreement,
shall continue in full force and effect as the certificate of incorporation of
the corporation surviving this merger.
(viii)The bylaws of Mid-Way Acquisitions as they shall exist on the
effective date of this Merger Agreement shall be and remain the bylaws of the
surviving corporation until the same shall be altered, amended or repealed as
therein provided.
(ix) The directors and officers of Mid-Way Acquisitions shall continue in
office until the next annual meeting of stockholders and until their successors
shall have been elected and qualified.
Article IV
Termination
If, at any time prior to the effective date hereof, events or circumstances
occur which in the opinion of a majority of the board of directors of either
constituent corporation renders it inadvisable to consummate the merger, this
Merger Agreement shall not become effective even though previously adopted by
the shareholders of the corporation as herein before provided. The filing of the
merger documents shall conclusively establish that no action to terminate this
plan has been taken by the board of directors of either corporation.
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<PAGE>
Article V
Amendment to Merger Agreement
The boards of directors of the constituent corporations may amend this
Merger Agreement at any time prior to the filing of the Merger Agreement (or a
certificate in lieu thereof) with the States of Delaware and Nevada provided
that an amendment made subsequent to the adoption of the Merger Agreement by the
stockholders of any constituent corporation shall not (1) alter or change the
amount of any kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of such constituent corporation, except to correct
manifest error as may be permitted by law; (2) alter or change any term of the
Certificate or Articles of Incorporation of the surviving corporation to be
effected by the merger; or (3) alter or change any of the other terms and
conditions of the Merger Agreement if such alteration or change would adversely
affect the holders of any class or series thereof of such constituent
corporation.
Article VI
Amendments to the Articles of Incorporation
The following amendment shall be made to the Articles of Incorporation of
Mid-Way Acquisitions:
1. Amend Article I to read as follows: The name of the corporation shall be
Ciro Jewelry, Inc.
IN WITNESS WHEREOF, Ciro Jewelry, Inc., a Delaware corporation, has caused
this Plan and Agreement of Merger to be signed by its president and its
secretary in accordance with the requirements of the General Corporation Law of
the State of Delaware, Mid-Way Medical and Diagnostic Center, Inc., a Florida
Corporation, has caused this Plan and Agreement of Merger to be signed by its
president and its secretary in accordance with the requirements of the Florida
Business Corporation Act, and Mid-Way Acquisitions Corp., a Nevada corporation,
has caused this Plan and Agreement of Merger to be signed by its president and
its secretary in accordance with the requirements of the Nevada Business
Corporation Act, all as of the day and year first above written.
Attest: Ciro Jewelry, Inc.
A Delaware Corporation
/s/ Laszlo Schwartz By /s/ Murray A. Wilson
- ---------------------------- -------------------------------------------
Laszlo Schwartz Murray A. Wilson, President
Attest: Mid-Way Acquisitions Corp.
A Nevada Corporation
/s/ David Cohen By /s/ David Cohen
- ---------------------------- -------------------------------------------
David Cohen, Secretary David Cohen, President
Attest: Mid-Way Medical and Diagnostic Center, Inc.
A Florida Corporation
/s/ David Cohen By /s/ David Cohen
- ---------------------------- -------------------------------------------
David Cohen, Secretary David Cohen, President
-3-
PLAN AND AGREEMENT OF MERGER
OF
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A Florida Corporation)
INTO
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A Nevada Corporation)
Plan and Agreement of Merger (hereinafter called "Merger Agreement") dated
this 12th day of November 1997, by and between Mid-Way Medical And Diagnostic
Center, Inc., a corporation organized and existing under the laws of the state
of Florida (hereinafter sometimes referred to as "Mid-Way (FL)") and Mid-Way
Medical And Diagnostic Center, Inc., a corporation organized and existing under
the laws of the state of Nevada (hereinafter sometimes referred to as "Mid-Way
(NV)"). These two parties are herein sometimes referred to collectively as the
"merging corporations," witnesseth:
WHEREAS, Mid-Way (NV) is the wholly owned subsidiary of Mid-Way (FL);
WHEREAS, Mid-Way (FL) wishes to change the state of its domicile by merging
into Mid-Way (NV): and
WHEREAS, Section 92A.190 of the Nevada Revised Statutes and Section
607.1104 of the Florida Business Corporation Act each authorize the merger of
Mid-Way (FL) and Mid-Way (NV);
NOW, THEREFORE, the merging corporations have agreed, and do hereby agree,
each with the other in consideration of the premises and the mutual agreements,
provisions, covenants and grants herein contained and in accordance with the
laws of the State of Nevada, and in accordance with the laws of the State of
Florida, that Mid-Way (FL) and Mid-Way (NV) be merged into a single corporation
and that Mid-Way (NV) shall be the continuing and surviving corporation and do
hereby agree upon and prescribe that the terms and conditions of the merger
hereby agreed upon and the mode of carrying the same into effect and the manner
of converting the presently outstanding shares of each of the merging
corporations into the shares of Mid-Way (NV) are and shall be hereinafter set
forth:
Article I
Manner of Conversion of Shares
1. The manner and basis of converting the shares of Mid-Way (FL) into
shares of Mid-Way (NV) are as follows: at the effective time of the merger, each
share of common stock of Mid-Way (FL) shall thereupon be converted into one
share of Mid-Way (NV). Each holder of outstanding common stock of Mid-Way (FL)
upon surrender to Mid-Way (NV) of one or more certificates for such shares for
cancellation shall be entitled to receive one or more certificates for the
number of shares of common stock of Mid-Way (NV) represented by the certificates
of Mid-Way (FL) so surrendered for cancellation by such holder. Until so
surrendered, each such certificate representing outstanding shares of common
stock of Mid-Way (FL) shall represent the ownership of a like number of shares
of Mid-Way (NV) for all corporate and legal purposes.
2. As of the effective time of the merger, all of the outstanding shares of
common stock of Mid-Way (NV) which shares are held by Mid-Way (FL), shall be
redeemed by Mid-Way (NV) for the sum of one dollar ($1) and such redeemed shares
shall be canceled and returned to the status of authorized and unissued shares.
None of such redeemed shares shall be retained by Mid-Way (NV) as treasury
shares and such shares shall be reissued in accordance with paragraph 1 of this
Article I.
<PAGE>
Article II
Effective Time
The effective time of the merger shall be upon the filing of the Merger
Agreement (or a certificate in lieu thereof) in accordance with Nevada Revised
Statutes and the Florida Business Corporation Act. Prior to said date, this
Merger Agreement shall (1) have been submitted to and approved by the board of
directors of each of the merging corporations; (2) have been approved by the
stockholders of each of the merging corporations in accordance with law.
Article III
Effect of Merger
When the merger shall have been effected:
(a) The merging corporations shall be a single corporation known as "Ciro
International, Inc.," a Nevada corporation, as set forth below.
(b) The separate existence of Mid-Way (FL) shall cease.
(c) Mid-Way (NV) shall have all rights, privileges, immunities and powers
and shall be subject to all the duties and liabilities of a corporation
organized under the Nevada Statutes.
(d) Mid-Way (NV) shall thereupon and thereafter possess all the rights,
privileges, immunities and franchises of a public as well as of a private nature
of each of the merging corporations and all property, real, personal and mixed,
and all debts due on whatever account, including subscriptions to shares and all
other choses in action, and all and every other interest of and belonging to or
due to each of the merging corporations shall be taken and deemed to be
transferred to and vested in Mid-Way (NV) without further act or deed, and the
title to any real estate or any interest therein vested in either of the merging
corporations shall not revert or be in any way impaired by reason of the merger.
(e) Mid-Way (NV) shall thenceforth be responsible and liable for all the
liabilities and obligations of each of the merging corporations and any claim
existing or action or proceeding pending by or against either of the merging
corporations may be prosecuted to judgment as if such merger had not taken
place, or Mid-Way (NV) may be substituted in its place. Neither the rights of
creditors nor any liens upon the property of either of the merging corporations
shall be impaired by reason of the merger.
(f) After the effective time of the merger, the earned surplus of Mid-Way
(NV) shall equal the aggregate of the earned surpluses of the merging
corporations immediately prior to the effective time of the merger. The earned
surplus determined as above provided shall continue to be available for payment
of dividends by Mid-Way (NV).
(g) The certificate of incorporation of Mid-Way (NV) as in effect on the
date of the merger, except as provided for in this Merger Agreement, shall
continue in full force and effect as the certificate of incorporation of the
corporation surviving this merger.
(h) The bylaws of Mid-Way (NV) as they shall exist on the effective date of
this Merger Agreement shall be and remain the bylaws of the surviving
corporation until the same shall be altered, amended or repealed as therein
provided.
(i) The sole director of Mid-Way (NV) shall be changed as set forth below
and this new director shall continue in office until the next annual meeting of
stockholders and until his successors shall has been elected and qualified.
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<PAGE>
Article IV
Service of Process; Rights of Dissenting Shareholders
Mid-Way (NV) hereby agrees that it may be served with process in the State
of Florida in any proceeding for enforcement of any obligation of Mid-Way (FL),
and in any proceeding for the enforcement of the rights of a dissenting
shareholder of Mid-Way (FL). Mid-Way (NV) irrevocably appoints the director of
the Division of Corporations and Commercial Code as its agent to accept service
of process in any such proceeding. The address to which a copy of the process
may be mailed is 445 Fifth Avenue, Room 11A, New York, NY 10016. Mid-Way (NV)
will promptly pay to the dissenting shareholders of Mid-Way (FL) the amount, if
any, to which they shall be entitled under the provisions of the Florida Revised
Business Corporation Act with respect to the rights of dissenting shareholders.
Article V
Termination
If, at any time prior to the effective date hereof, events or circumstances
occur which in the opinion of a majority of the board of directors of either
constituent corporation renders it inadvisable to consummate the merger, this
Merger Agreement shall not become effective even though previously adopted by
the shareholders of the corporation as herein before provided. The filing of the
merger documents shall conclusively establish that no action to terminate this
plan has been taken by the board of directors of either corporation.
Article VI
Amendment
The boards of directors of the constituent corporations may amend this
Merger Agreement at any time prior to the filing of the Merger Agreement (or a
certificate in lieu thereof) with the States of Florida and Nevada provided that
an amendment made subsequent to the adoption of the Merger Agreement by the
stockholders of any constituent corporation shall not (1) alter or change the
amount of any kind of shares, securities, cash, property and/or rights to be
received in exchange for or on conversion of all or any of the shares of any
class or series thereof of such constituent corporation, except to correct
manifest error as may be permitted by law; (2) alter or change any term of the
Certificate or Articles of Incorporation of the surviving corporation to be
effected by the merger; or (3) alter or change any of the other terms and
conditions of the Merger Agreement if such alteration or change would adversely
affect the holders of any class or series thereof of such constituent
corporation.
Article VII
Amendments to the Articles of Incorporation
The following amendment shall be made to the Articles of Incorporation of
Mid-Way Acquisitions:
1. Amend Article I to read as follows: The name of the corporation shall
be Ciro International, Inc.
2. Amend Article VI to read as follows: The business of this corporation
shall be managed by its Board of Directors. The number of such
directors shall be not less than one (1) and, subject to such minimum
may be increased from time to time in the manner provided in the
Bylaws. The initial Board of Directors shall consist of one person,
the name and address of whom is set forth as follows: Murray A.
Wilson, 445 Fifth Avenue, Room 11A, New York, NY 10016.
IN WITNESS WHEREOF, Mid-Way Medical And Diagnostic Center, Inc., a Nevada
corporation, has caused this Plan and Agreement of Merger to be signed by its
president and its secretary in accordance with the requirements of Nevada
Revised Statutes, and Mid-Way Medical And Diagnostic Center, Inc., a Florida
corporation, has caused this
-3-
<PAGE>
Plan and Agreement of Merger to be signed by its president and its secretary in
accordance with the requirements of Section 607.1104 of the Florida Business
Corporation Act all as of the day and year first above written.
Attest: Mid-Way Medical And Diagnostic Center, Inc.
A Florida Corporation
/s/ David Cohen By /s/ David Cohen
- --------------------------- --------------------------------------
David Cohen, Secretary David Cohen, President
Attest: Mid-Way Medical And Diagnostic Center, Inc.
A Nevada Corporation
/s/ David Cohen By /s/ David Cohen
- --------------------------- ---------------------------------------
David Cohen, Secretary David Cohen, President
-4-
ARTICLES OF INCORPORATION
OF
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
The undersigned, a natural person being more than eighteen years of age,
acting as incorporator of a corporation pursuant to the provisions of (lie
General Corporation Laws of the State of Nevada, does hereby adopt (lie
following Articles of Incorporation for such corporation:
Article I
Name
The name of the corporation is Mid-Way Medical and Diagnostic Center, Inc.
Article II
Duration
The duration of the corporation is perpetual.
Article III
Purposes
The purpose for which this corporation is organized is to transact any
lawful business, or to promote or conduct any legitimate object or purpose,
under and subject to the laws of the State of Nevada.
Article IV
Capitalization
Section 1. The number and class of shares which the corporation is
authorized to issue is 50,000,000 shares of common voting stock only and the par
value of all such shares is to be $0.001 per share
Section 2. The shareholders shall have no preemptive rights to acquire
additional or treasury shares of this corporation.
<PAGE>
Article V
Registered Agent and Office
The street and mailing address of the initial registered office of the
corporation is 1 East First Street, Reno, Nevada 89501, and the name of the
registered agent of the corporation at that address is The Corporation Trust
Company of Nevada.
Article VI
Directors
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not less than one (1) and,
subject to such minimum may be increased from time to tome in the manner
provided in the Bylaws. The initial Board of Directors shall consist of one
person, the name and address of whom are set forth as follows: David Cohen 1600
Market Street, 33rd Floor, Philadelphia, PA 19103.
Article VII
Incorporator
The name and address of the incorporator is: Ronald N. Vance, 57 West 200
South, Suite 310, Salt Lake City, UT 84101.
Article VIII
Limitation of Liability
No director or officer shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director or officer. Notwithstanding the foregoing sentence, a
director or officer shall be liable to the extent provided by applicable law,
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of distributions in violation
of NRS 78.300. Notwithstanding anything contained in the Articles of
Incorporation to the contrary, the personal liability of the directors or
officers of the Corporation is hereby eliminated to the fullest extent permitted
by the applicable provisions of the Nevada Revised Statutes, as the same may be
amended and supplemented.
Article IX
Indemnification
The Corporation shall, to the fullest extent permitted by Sections 78.751
et seq. of the Nevada Revised Statutes, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said sections from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said sections, and
the indemnification provided for herein shall not be deemed exclusive of any
other rights to which those
-2-
<PAGE>
indemnified may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office, and shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.
Article X
Shareholders
Section 1. Acquisition of Controlling Interest. The provisions relating to
any control share acquisition as contained in Sections 78.378 et seq. of the
Nevada Revised Statutes now or hereafter amended, and any successor provisions
shall not apply to the corporation.
Section 2. Ouorum. The holders of shares entitled to one-third of the votes
at a meeting of shareholders shall constitute a quorum.
Dated this 11th day of November 1997.
/s/ Ronald N. Vance
---------------------------
Ronald N. Vance
State of Utah )
) ss.
County of Salt Lake )
On the 11th day of November, 1997, personally appeared before me, a Notary
Public, Ronald N. Vance who acknowledged that he had executed the foregoing
Articles of Incorporation of Mid-Way Medical and Diagnostic Center, Inc.
/s/ Anna Ashby
[SEAL] ---------------------------
Notary Public Notary Public
ANNA ASHBY
2200 South State
Salt Lake City, Utah 84115
My Commission Expires
January 30, 2000
State of Utah
-3-
CERTIFICATE OF INCORPORATION
OF
Ciro Jewelery, Inc.
FIRST: The name of the Corporation is Ciro Jewelery, Inc.
SECOND: Its registered office is to be located at Chemical Bank Plaza, Suite
1600, 1201 N. Market St., Wilmington, DE 19801, Country of New Castle. The
registered agent is Registered Agents, Ltd. whose address is the same as above.
THIRD: The nature of business and purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the
Delaware General Corporation Laws.
FOURTH: The total number of shares of stock which the corporation shall have
authority to issue is one thousand five hundred (1,500). All such shares are to
be without par value and are to be of one class.
FIFTH: The name and mailing address of the Incorporator are as follows:
Owen Joyce
Chemical Bank Plaza, Suite 1600
1201 N. Market St.
Wilmington, DE 19801
SIXTH: The powers of the undersigned incorporator will terminate upon filing of
the certificate of incorporation. The name and mailing address of the persons
who will serve as initial directors, who may, after the filing of this
certificate, be referred to as the incorporators until the first annual meeting
of stockholders or until a successor(s) is elected and qualified are:
Laszlo Schwartz
445 5th Ave.
Suite 11A
New York, NY 10016
SEVENTH: Each person who serves or has served as a director shall not be
personally liable to the corporation or its stockholders for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not eliminate or limit the liability of a director: (i) for any breach of
loyalty to the corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payment of dividend or unlawful stock purchase or
redemption as such liability is imposed under Section 174 of the General
Corporation Laws of Delaware; or (iv) for any transaction from which the
director derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws of
the State of Delaware, do make, file and record this Certificate, and do certify
that the facts stated herein are true, and I have accordingly hereunto set my
hand.
/s/ ILLEGIBLE
-------------------
INCORPORATOR
Certificate of Amendment
of
Certificate of Incorporation
Ciro Jewelery, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware, DOES HEREBY
CERTIFY:
FIRST: That by unanimous written consent of the Board of Directors of Ciro
Jewelery, Inc. the following resolution was duly adopted setting forth a
proposed amendment of the Certificate of Incorporation of said corporation,
declaring said amendment to be advisable and calling a special meeting of the
stockholders of said corporation for consideration thereof. The resolution
setting forth the proposed amendment is as follows:
RESOLVED, that the Certificates of Incorporation of this corporation be
amended by changing the Article thereof numbered "FIRST" so that, as amended,
said Article shall be and read as follows:
The name of the corporation is Ciro Jewelry, Inc.
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the Stockholders of the said corporation, by unanimous written consent in lieu
of a special meeting in accordance with Section 228 of the General Corporation
Law of the State of Delaware, the necessary number of shares as required by
statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or
by reason of said amendment.
IN WITNESS THEREOF, said Ciro Jewelry, Inc., has caused this certificate to
be signed by ___________, its President, this __________ day of September, 1997.
By: /s/ Murray [ILLEGIBLE]
----------------------
President
ARTICLES OF INCORPORATION
OF
MID-WAY ACQUISITIONS CORP.
The undersigned, a natural person being more than eighteen years of age,
acting as incorporator of a corporation pursuant to the provisions of the
General Corporation Laws of the State of Nevada, does hereby adopt the following
Articles of Incorporation for such corporation:
Article I
Name
The name of the corporation is Mid-Way Acquisitions Corp.
Article II
Duration
The duration of the corporation is perpetual.
Article III
Purposes
The purpose for which this corporation is organized is to transact any
lawful business, or to promote or conduct any legitimate object or purpose,
under and subject to the laws of the State of Nevada.
Article IV
Capitalization
Section 1. The number and class of shares which the corporation is
authorized to issue is 50,000,000 shares of common voting stock only and the par
value of all such shares is to be $0.001 per share
Section 2. The shareholders shall have no preemptive rights to acquire
additional or treasury shares of this corporation.
<PAGE>
Article V
Registered Agent and Office
The street and mailing address of the initial registered office of the
corporation is 1 East First Street, Reno, Nevada 89501, and the name of the
registered agent of the corporation at that address is The Corporation Trust
Company of Nevada.
Article VI
Directors
The corporation shall be governed by a Board of Directors and shall have
not less than one (1) nor more than seven (7) directors as determined, from time
to time, by the Board of Directors. The initial Board of Directors shall consist
of one person, the name and address of whom are set forth as follows: David
Cohen 1600 Market Street, 33rd Floor, Philadelphia, PA 19103.
Article VII
Incorporator
The name and address of the incorporator is: Ronald N. Vance, 57 West 200
South, Suite 310, Salt Lake City, UT 84101.
Article VIII
Limitation of Liability
No director or officer shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
person as a director or officer. Notwithstanding the foregoing sentence, a
director or officer shall be liable to the extent provided by applicable law,
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of distributions in violation
of NRS 78.300. Notwithstanding anything contained in the Articles of
Incorporation to the contrary, the personal liability of the directors or
officers of the Corporation is hereby eliminated to the fullest extent permitted
by the applicable provisions of the Nevada Revised Statutes, as the same may be
amended and supplemented.
Article IX
Indemnification
The Corporation shall, to the fullest extent permitted by Sections 78.751
et seq. of the Nevada Revised Statutes, as the same may be amended and
supplemented, indemnify any and all persons whom it shall have power to
indemnify under said sections from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said sections, and
the indemnification provided for herein shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or disinterested
-2-
<PAGE>
directors, or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
Dated this 11th day of November 1997.
/s/ Ronald N. Vance
---------------------------
Ronald N. Vance
State of Utah )
) ss.
County of Salt Lake )
On the 11th day of November, 1997, personally appeared before me, a Notary
Public, Ronald N. Vance who acknowledged that the had executed the foregoing
Articles of Incorporation of Mid-Way Acquisitions Corp.
/s/ Anna Ashby
---------------------------
Notary Public
[SEAL]
Notary Public
ANNA ASHBY
2200 South State
Salt Lake City, Utah 84115
My Commission Expires
January 30, 2000
State of Utah
-3-
ARTICLES OF INCORPORATION
OF
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
ARTICLE I - NAME
The name of this Corporation is Mid-Way Medical and Diagnostic Center, Inc.
ARTICLE II - DURATION
The corporation shall have perpetual existence commencing on the date of
this filing of these Articles with the Department of State.
ARTICLE III - PURPOSE
The purpose of this corporation is to engage in any or all lawful business
for which corporation may be incorporated under Chapter 607, Florida Statutes,
as new exists or may after be amended, and any other activities or business
permitted under the Laws of the United States and Florida.
ARTICLE IV - CAPITAL STOCK
The corporation is authorized to issue 100 shares of One Dollar ($1.00) par
value common stock which shall be designated as "Common Shares."
ARTICLE VI - CUMULATIVE VOTING
Shareholders of this Corporation may vote their stocks cumulatively. Each
shareholder shall have the total number of votes which is equal to the number of
shares of stock with voting rights which such shareholder holds multiplied by
the number of directors to be elected. The shareholder may give all of their
votes to one candidate or distribute them among as many candidates as the
shareholder may wish. Notice must be given by any shareholder to the President
or Vice President of the Corporation not less than 24 hours prior to the time
set for the holding of a shareholders meeting for the election of directors that
such shareholder intends to cumulate his vote at said election.
ARTICLE V - PREEMPTIVE RIGHTS
Every shareholder, upon the sale for cash of any new stock of this
corporation, shall have the right to purchase his pro-rata share thereof (as
nearly as may be done without issuance of fractional shares) at the price at
which it is offered to others.
<PAGE>
ARTICLE VI - INITIAL REGISTERED OFFICE AND AGENT
The initial registered office of this corporation is:
7935 N.W. Second Street
Miami, Florida 33126
[ILLEGIBLE] registered agent of this Corporation at such [ILLEGIBLE] is Oscar
Murphy.
ARTICLE VII - INITIAL BOARD OF DIRECTORS
This corporation shall have one (1) Director constituting the initial Board
of Directors. The number of directors may be [ILLEGIBLE] from time to time by
the bylaws; however [ILLEGIBLE] less than one Director nor more than two.
[ILLEGIBLE] and address of the initial Board of Directors of the [ILLEGIBLE].
Oscar Murphy
President
Vice-President
7935 N.W. Second Street
Miami, Florida 33126
ARTICLE VIII - INCORPORATORS
The name and street address of the Incorporator signing these articles is:
Oscar Murphy
7935 N.W. Second Street
Miami, Florida 33126
ARTICLE IX - INDEMNIFICATION
The corporation shall indemnify any Officer or Director or any former
officer or director, to the full extent permitted by law.
ARTICLE X - AMENDMENT
The corporation reserves the right to amend or repeal any [ILLEGIBLE] in
these Articles of Incorporation, or any [ILLEGIBLE] by a majority vote of the
Board of Directors, [ILLEGIBLE] upon the shareholders is subject to this
[ILLEGIBLE].
2
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation on 6-8, 1990.
/s/ OSCAR MURPHY
----------------
Oscar Murphy
Incorporator
STATE OF FLORIDA
COUNTY OF DADE
BEFORE ME, a Notary Public authorized to take acknowledgments in the State
and County set forth above, personally appeared OSCAR MURPHY, known to be and
known by me to be the person who executed the foregoing Articles of
Incorporation, and he acknowledged before me that he executed those Articles of
Incorporation.
IN WITNESS WHEREOF, I have set my hand and seal in the State and County
above, this 8th day of June, 1990.
/s/ Kathy Miller
- -------------------------------
NOTARY PUBLIC, State of Florida
My Commission Expires:
AMENDMENT TO
ARTICLES OF INCORPORATION
OF
MID-WAY MEDICAL AND DIAGNOSTIC CENTER. INC.
THE UNDERSIGNED, being the sole director of MID-WAY MEDICAL AND DIAGNOSTIC
CENTER INC. does hereby amend the Articles of Incorporation of MID-WAY MEDICAL
AND DIAGNOSTIC CENTER. INC., as follows:
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares,
$.OO1 par value of Common Stock.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on August 13. 1998 and that the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on August 22, 1996.
/s/ Lane Abraham
- ---------------------------------------------------
Lane Abraham President and Sole Director
The foregoing instrument was acknowledged before me this 22nd day of
August, 1998, by Lane Abraham, who is personally known to me, or who has
produced ___________________________ as identification.
/s/ [ILLEGIBLE]
---------------------------
Notary Public
[SEAL]
My commission expires:
ARTICLES OF AMENDMENT TO
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC..
THE UNDERSIGNED, being the sole director and president of MID-WAY MEDICAL
AND DIAGNOSTIC CENTER, INC., does hereby amend the Articles of Incorporation of
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC. as follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation is MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
ARTICLE III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares of
common stock, $.O01 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in the
State of Florida shall be 1428 Brickell Avenue, 8th Floor, Miami, FL 33131. The
Board of Directors may at any time and from time to time move the principal
office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not be less than one (1) and,
subject to such minimum
1
<PAGE>
may be increased or decreased from time to time in the manner provided in the
By-Laws.
ARTICLE VII
DENIAL OF PREEMPTiVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1. Inspection of Books. The board of directors shall make reasonable
rules to determine at what times and places and under what conditions the books
of the Corporation shall be open to inspection by shareholders or a duly
appointed representative of a shareholder.
9.2. Control Share Acquisition. The provisions relating to any control
share acquisition as contained in Florida Statutes now, or hereinafter amended,
and any successor provision shall not apply to the Corporation.
9.3. Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4. Required Vote. Acts of shareholders shall require the approval of
holders of 50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extent permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake
2
<PAGE>
to indemnify the officers and directors of this corporation against any
contingency or peril as may be determined to be in the best interests of this
corporation, and in conjunction therewith, to procure, at this corporation's
expense, policies of insurance.
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on July 7,1997 and that the number
of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on July 8,1997.
/s/ Lane Abraham,
- ------------------------------------
Lane Abraham, President
The foregoing instrument was acknowledged before me on July 8, 1997 by Lane
Abraham, who is personally known to me.
/s/Isabel J. Cantera
---------------------------
Notary Public
My commission expires:
[SEAL]
ISABEL J. CANTERA
MY COMMISSION # CC 42(ILLEGIBLE)
EXPIRES: February 25, 1998
Bonded Thru Notary Public Underwriters
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 17 1997
No C25239-97
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF MERGER
of
CIRO JEWELRY, INC.
(A Delaware Corporation)
INTO
MID-WAY ACQUISITIONS CORP.
(A Nevada Corporation)
The undersigned officers, the respective presidents and secretaries of Ciro
Jewelry, Inc., a Delaware corporation ("Ciro"), and Mid-Way Acquisitions Corp.,
a Nevada corporation ("Mid-Way"), hereby certify that the Plan and Agreement of
Merger dated November 12,1997, (hereinafter the "Plan") was approved by the sole
shareholder of Ciro by unanimous written consent dated November 11, 1997, and
was approved by the sole shareholder of Mid-Way by unanimous written consent
dated November 12,1997.
1. The number of shares outstanding of each class of each corporation
which were entitled to vote on the Plan, and the number of shares of each class
of each corporation consenting and not consenting to the Plan, is as follows:
Number of
Shares Number of Shares
Class Outstanding Consenting Not Consenting
----- ----------- ---------- -------------
Ciro Common Stock 1,500 1,500 -0-
($.OOl par value)
Mid-Way Common Stock 10 10 -0-
($.001 par)
2. The number of votes cast for the Plan by each constituent entity was
sufficient for approval of the Plan. Each constituent entity has adopted the
Plan of Merger.
3. A copy of the complete executed Plan is attached hereto and incorporated
herein.
4. The following amendments to the Articles of Incorporation of Mid-Way
were duly approved by the shareholders of each constituent entity and are hereby
made to the Articles of Incorporation of Mid-Way:
a. Amend Article I to read as follows: The name of the corporation shall
be Ciro Jewelry, Inc.
IN WITNESS WHEREOF, Ciro Jewelry, Inc., a Delaware corporation, and Mid-Way
Acquisitions Corp., a Nevada corporation, have caused these Articles of Merger
to be executed in
<PAGE>
their respective corporate names by their respective presidents and their
respective secretaries this lst day of December 1997.
Attest: Ciro Jewelry, Inc.
A Delaware Corporation
/s/ Laszlo Schwartz By /s/ Murray Wilson
- --------------------------- -------------------------
Laszlo Schwartz, Secretary Murray A. Wilson, President
Attest: Mid-Way Acquisitions Corp.
A Nevada Corporation
/s/ David Cohen By /s/ David Cohen
- --------------------------- -------------------------
David Cohen, Secretary David Cohen, President
State of New York )
) ss.
County of )
On the 10th day of December 1997, personally appeared before me, a Notary
Public, Murray A. Wilson and Laszlo Schwartz the president and secretary,
respectively, of Ciro Jewelry, Inc., who acknowledged that they had executed the
foregoing Articles of Merger.
/s/ Moshe E. Malik
---------------------------
NOTARY PUBLIC
MOSHE E. MALIK
State of PA ) Notary Public, State of New York
) ss. No. 4931979
County of PHILA. ) Qualified in Rockland County
Commission Expires February 12, 1998
On the 10th day of December 1997, personally appeared before me, a Notary
Public, David Cohen, the president and secretary of Mid-Way Acquisitions Corp.,
who acknowledged that he had executed the foregoing Articles of Merger.
/s/ Rachel Krantz Hanoufa
---------------------------
NOTARY PUBLIC
[SEAL]
NOTARIAL SEAL
RACHEL KRANTZ HANOUF [ILLEGIBLE]
City of Philadelphia, [ILLEGIBLE]
My Commission Expires [Illegible]
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 09 1997
No. C25237-97
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF MERGER
of
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A Florida Corporation)
into
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A Nevada Corporation)
The undersigned officers, the respective presidents and secretaries of
Mid-Way Medical and Diagnostic Canter, Inc., a Florida corporation ("Mid-Way
(FL)"), and Mid-Way Medical and Diagnostic Center, Inc., a Nevada corporation
("Mid-Way (NV)"), hereby certfiy that the Plan and Agreement of Merger dated
November 12, 1997, (hereinafter the "Plan") was approved by the shareholders of
Mid-Way (FL) by a written consent dated November 12, 1997, and was approved by
unanimous written consent of the sole shareholder of Mid-Way (NV) on November
12, 1997.
1. The number of shares outstanding of each class of each corporation which
were entitled to vote on the Plan, and the number of shares of each class of
each corporation consenting and not consenting to the Plan, is as follows:
Number of
Shares Number of Shares
Class Outstanding Consenting Not Consenting
----- ----------- ---------- --------------
Mid-Way (NV) Common Stock
($.001 par value) 10 10 -0-
Mid-Way (FL) Common Stock 11,000,000 10,000,000 -0-
($.00l par)
2. The number of votes cast for the Plan by each constituent entity was
sufficient for approval of the Plan. Each constituent entity has adopted the
Plan of Merger.
3. All of the presently outstanding shares of Mid-Way (NV) are owned and
held by Mid-Way (FL)
4. A copy of the complete executed Plan is attached hereto and incorporated
herein.
5. The following amendments to the Articles of Incorporation of Mid-Way
(NV) were duly approved by the shareholders of each constituent entity and are
hereby made to the Articles of Incorporation of Mid-Way (NY):
a. Amend Article I to read as follows: The name of the corporation shall
be Ciro International, Inc.
b. Amend Article VI to read as follows: The business of this corporation
shall be managed by its Board of Directors. The number of such
directors shall be
<PAGE>
not less than one (1) and, subject to such minimum may be increased
from time to time in the manner provided in the Bylaws. The initial
Board of Directors shall consist of one person, the name and address
of whom is set forth as follows: Murray A. Wilson. 445 Fifth Avenue,
Room 1lA., New York, NY 10016.
IN WITNESS WHEREOF, Mid-Way Medical and Diagnostic Center, Inc., a Florida
corporation, and Mid-Way Medical and Diagnostic Center, Inc., a Nevada
corporation have caused these Articles of Merger to be executed in their
respective corporate names by their respective presidents and their respective
secretaries this 1st day of December 1997.
Attest: Mid-Way Medical and Diagnostic Center. Inc.
A Florida Corporation
/s/ David Cohen By /s/ David Cohen
- ----------------------- ----------------------------------------
David Cohen, Secretary David Cohen, President
Attest: Mid-Way Medical and Diagnostic Center. Inc.
A Nevada Corporation
/s/ David Cohen By /s/ David Cohen
- ----------------------- ------------------------------------------
David Cohen, Secretary David Cohen, President
State of PA )
) ss.
County of Phila )
On the 2nd day of December 1997, personally appeared before me, a Notary
Public David Cohen, the president and secretary, respectively, of Mid-Way
Medical and Diagnostic Center Inc., a Florida corporation, and Mid-Way Medical
and Diagnostic Center, Inc., a Nevada corporation, who acknowledged that he had
executed the foregoing Articles of Merger.
/s/ Rachel Krantz Hanoufa
---------------------------
NOTARY PUBLIC
[SEAL]
NOTARIAL SEAL
RACHEL KRANTZ HANOUFA, Notary Public
City of Philadelphia, Phila. County
My Commission Expires Dec. 14, 1998
-2-
MID-WAY ACQUISITIONS CORP.
BYLAWS
ARTICLE I--OFFICES
Section 1.1 Office
The principal office of the corporation within the State of Nevada shall be
located at such place as shall be designated by the Board of Directors.
Section 1.2 Other Offices
The corporation may also have such other offices, either within or without
the State of Nevada, as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II--STOCKHOLDERS
Section 2.1 Annual Meeting
An annual meeting of the stockholders, for the selection of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at a location and at such
time each year as designated by the Board of Directors.
Section 2.2 Special Meetings
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of
Directors, the Chairman, if any, the President, the chief executive officer, or
their holders of not less than one-tenth of all the shares entitled to vote at
the meeting, and shall be held at such place, on such date, and at such time as
they or he shall fix.
Section 2.3 Notice of Meetings
Written notice of the place, date and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the laws of the State of Nevada or the Articles of Incorporation).
<PAGE>
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 2.4 Quorum
At any meeting of the stockholders, the holders of a majority of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes. unless or except to the
extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of the stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 2.5 Organization
The Chairman or, if none, such other person as the Board of Directors may
have designated or, in the absence of such a person, the highest ranking officer
of the corporation who is present shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the Secretary
of the corporation, the secretary of the meeting shall be such person as the
chairman appoints.
Section 2.6 Conduct of Business
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order.
Section 2.7 Proxies and Voting
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his name on the record date for the meeting, except
as otherwise provided herein or required by law.
-2-
<PAGE>
All voting, except on the election of directors and where otherwise
required by law, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or his proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors appointed by the chairman
of the meeting.
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the stockholders, unless the vote of a greater number or voting by
class is required by law, the Articles of Incorporation, or these Bylaws.
Section 2.8 Stock List
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
name, shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 2.9 Participation in Meetings by Conference Telephone
Any action, except the election of directors, which may be taken by the
vote of the stockholders at a meeting, may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power; provided:
(a) That if any greater proportion of voting power is required for such
action at a meeting, then such greater proportion of written consents
shall be required; and
(b) That this general provision shall not supersede any specific provision
for action by written consent required by law.
ARTICLE III--BOARD OF DIRECTORS
Section 3.1 Number and Term of Office
The number of directors who shall constitute the whole board shall be such
number not less than one (1) nor more than seven (7) as the Board of directors
shall at the time have designated. Each director
-3-
<PAGE>
shall be selected for a term of one year and until his successor is elected and
qualified, except as otherwise provided herein or required by law.
Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.
Section 3.2 Vacancies
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his successor is elected and
qualified.
Section 3.3 Regular Meetings
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 3.4 Special Meetings
Special meetings of the Board of Directors may be called by one-third of
the directors then in office by the Chairman, if any, or by the chief executive
officer and shall be held at such place, on such date and at such time as they
or he shall fix. Notice of the place, date and time of each such special meeting
shall be given by each director by whom it is not waived by mailing written
notice not less than three days before the meeting or by telegraphing the same
not less than eighteen hours before the meeting. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at a special meeting.
Section 3.5 Ouorum
At any meeting of the Board of Directors, a majority of the total number of
the whole board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting, a majority of those present may adjourn the meeting
to another place, date or time, without further notice or waiver thereof.
Section 3.6 Participation in Meetings by Conference Telephone
Members of the Board of Directors or of any committee thereof, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meting to hear each other. Such participation shall
constitute presence in person at such meeting.
-4-
<PAGE>
Section 3.7 Conduct of Business
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 3.8 Powers
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(a) To declare dividends from time to time in accordance with law;
(b) To purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(c) To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in connection therewith;
(d) To remove any officer of the corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(e) To confer upon any officer of the corporation the power to appoint,
remove and suspend subordinate officers and agents;
(f) To adopt from time to time such stock option, stock purchase, bonus or
other compensation plans for directors, officers and agents of the corporation
and its subsidiaries as it may determine;
(g) To adopt from time to time such insurance, retirement and other benefit
plans for directors, officers and agents of the corporation and its subsidiaries
as it may determine; and
(h) To adopt from time to time regulations, not inconsistent with these
Bylaws, for the management of the corporation's business and affairs.
Section 3.9 Compensation of Directors
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
directors.
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Section 3.10 Loans
The corporation shall not lend money to or use its credit to assist its
officers, directors or other control persons without authorization in the
particular case by the stockholders, but may lend money to and use its credit to
assist any employee, excluding such officers, directors or other control persons
of the corporation or of a subsidiary, if such loan or assistance benefits the
corporation.
ARTICLE IV--COMMITTEES
Section 4. 1 Committees of the Board of Directors
The Board of Directors, by a vote of a majority of the whole board, may
from time to time designate committees of the board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the board and shall, for those committees and any other provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternative members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend or to authorize the issuance of stock if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his place, the member or members of the
committee present at the meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may by unanimous vote appoint another member
of the Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Section 4.2 Conduct of Business
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by any
committee without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
such committee.
ARTICLE V--OFFICERS
Section 5. 1 Generally
The officers of the corporation shall consist of a president, one or more
vice-presidents, a secretary, a treasurer and such other subordinate officers as
may from time to time be appointed by the Board of Directors. The corporation
may also have a chairman of the board who shall be elected by the board and who
shall be an officer of the corporation. Officers shall be elected by the Board
of Directors,
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which shall consider that subject at its first meeting after every annual
meeting of stockholders. Each officer shall hold his office until his successor
is elected and qualified or until his earlier resignation or removal. Any number
of offices may be held by the same person, except that the offices of president
and secretary shall not be held by the same person.
Section 5.2 Chairman
The chairman of the board shall, subject to the direction of the Board of
Directors, perform such executive, supervisory, and management functions and
duties as may be assigned to him form time to time by the Board of Directors. He
shall, if present, preside at all meetings of the stockholders and of the Board
of Directors.
Section 5.3 President
Unless otherwise designated by the Board of Directors, the president shall
be the chief executive officer of the corporation. Subject to the provisions of
these Bylaws and to the direction of the Board of Directors, he shall have the
responsibility for the general management and control of the affairs and
business of the corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him by the Board of Directors. He shall have power to signa all
stock certificates, contracts and other instruments of the corporation which are
authorized. He shall have general supervision and direction of all of the other
officers and agents of the corporation.
Section 5.4 Vice-President
Each vice-president shall perform such duties as the Board of Directors
shall prescribe. In the absence or disability of the President, the
vice-president who has served in such capacity for the longest time shall
perform the duties and exercise the powers of the president.
Section 5.5 Treasurer
The treasurer shall have the custody of the monies and securities of the
corporation and shall keep regular books of account. He shall make such
disbursements of the funds of the corporation as are proper and shall render
from time to time an account of all such transactions and of the financial
condition of the corporation.
Section 5.6 Secretary
The secretary shall issue all authorized notices from, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He
shall have charge of the corporate books.
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Section 5.7 Delegation of Authority
The Board of Directors may, from time to time, delegate the powers or
duties of any officer to any other officers or agents, notwithstanding any
provision hereof.
Section 5.8 Removal
Any officer of the corporation may be removed at any time, with or without
cause, by the Board of Directors.
Section 5.9 Action with Respect to Securities of Other Corporation
Unless otherwise directed by the Board of Directors, the president shall
have power to vote and otherwise act on behalf of the corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this corporation may hold
securities and otherwise to exercise any and all rights and powers which this
corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE VI--INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
Section 6.1 Generally
The corporation shall indemnify its officers, directors, and agents to the
fullest extent permitted under Nevada law.
Section 6.2 Expenses
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 6.1 of this Article, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 6.3 of this Article upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 6.3 Determination by Board of Directors
Any indemnification under Section 6.1 of this Article (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the
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director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Nevada law.
Section 6.4 Not Exclusive of Other Rights
The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or interested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 6.5 Insurance
The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Section 6.6 Violation of Law
Nothing contained in this Article, or elsewhere in these Bylaws, shall
operate to indemnify any director or officer if such indemnification is for any
reason contrary to law, either as a matter of public policy, or under the
provisions of the Federal Securities Act of 1933, the Securities Exchange Act of
1934, or any other applicable state or federal law.
Section 6.7 Coverage
For the purposes of this Article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
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ARTICLE VII--STOCK
Section 7.1 Certificates of Stock
Each stockholder shall be entitled to a certificate signed by, or in the
name of the corporation by, the President or a Vice-president, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
certifying the number of shares owned by him. Any of or all the signatures on
the certificate may be facsimile.
Section 7.2 Transfers of Stock
Transfers of stock shall be made only upon the transfer books of the
corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 7.4 of Article VII of these
Bylaws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 7.3 Record Date
The Board of Directors may fix a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
stockholders who are entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof; to express consent to corporate action
in writing without a meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any rights with respect
of any change, conversion or exchange of stock or with respect to any other
lawful action.
Section 7.4 Lost. Stolen or Destroyed Certificates
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 7.5 Regulations
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
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ARTICLE VIII--NOTICES
Section 8.1 Notices
Whenever notice is required to be given to any stockholder, director,
officer, or agent, such requirement shall not be construed to mean personal
notice. Such notice may in every instance be effectively given by depositing a
writing in a post office or letter box, in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram, addressed to such stockholder, director,
officer, or agent at his or her address as the same appears on the books of the
corporation. The time when such notice is dispatched shall be the time of the
giving of the notice.
Section 8.2 Waivers
A written waiver of any notice, signed by a stockholder, director, officer
or agent, whether before or after the time of the event for which notice is
given, shall be deemed equivalent to the notice required to be given to such
stockholder, director, officer or agent. Neither the business nor the purpose of
any meeting need be specified in such a waiver.
ARTICLE IX--MISCELLANEOUS
Section 9. 1 Facsimile Signatures
In addition to the provisions for the use of facsimile signatures
elsewhere specifically authorized in these Bylaws, facsimile signatures of any
officer or officers of the corporation may be used whenever and as authorized by
the Board of Directors of a committee thereof.
Section 9.2 Corporate Seal
The Board of Directors may provide a suitable seal, containing the name
of the corporation, which seal shall be in the charge of the secretary. If and
when so directed by the Board of Directors or a committee thereof, duplicates of
the seal may be kept and used by the treasurer or by the assistant secretary or
assistant treasurer.
Section 9.3 Reliance Upon Books, Reports and Records
Each director, each member of any committee designated by the Board of
Directors, and each officer of the corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the corporation, including reports made to the corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
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Section 9.4 Fiscal Year
The fiscal year of the corporation shall be as fixed by the Board of
Directors.
Section 9.5 Time Periods
In applying any of these Bylaws which require that an act be done or not
done a specified number of days prior to an event or that an act be done during
a period of a specified number of days prior to an event, calendar days shall be
used, the day of the doing of the act shall be excluded and the day of the event
shall be included.
ARTICLE X--AMENDMENTS
Section 10.1 Amendments
These Bylaws may be amended or repealed by the Board of Directors at any
meeting or by the stockholders at any meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
assistant secretary of Mid-Way Acquisitions Corp., a corporation duly organized
and existing under and by virtue of the laws of the State of Nevada; that the
above and foregoing Bylaws of said corporation were duly and regularly adopted
as such by the Board of Directors by unanimous consent on the 12th day of
November 1997; and that the above and foregoing Bylaws are now in full force and
effect.
Dated this 12th Day of November 1997
/s/ David Cohen
-------------------------
David Cohen, Secretary
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MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
BYLAWS
ARTICLE I--OFFICES
Section 1.1 Office
The principal office of the corporation within the State of Nevada shall be
located at such place as shall be designated by the Board of Directors.
Section 1.2 Other Offices
The corporation may also have such other offices, either within or without
the State of Nevada, as the Board of Directors may from time to time determine
or the business of the corporation may require.
ARTICLE II--STOCKHOLDERS
Section 2.1 Annual Meeting
An annual meeting of the stockholders, for the selection of directors to
succeed those whose terms expire and for the transaction of such other business
as may properly come before the meeting, shall be held at a location and at such
time each year as designated by the Board of Directors.
Section 2.2 Special Meetings
Special meetings of the stockholders, for any purpose or purposes
prescribed in the notice of the meeting, may be called by the Board of
Directors, the Chairman, if any, the President, the chief executive officer, or
their holders of not less than one-tenth of all the shares entitled to vote at
the meeting, and shall be held at such place, on such date, and at such time as
they or he shall fix.
Section 2.3 Notice of Meetings
Written notice of the place, date and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time by
the laws of the State of Nevada or the Articles of Incorporation).
<PAGE>
When a meeting is adjourned to another place, date or time, written notice
need not be given of the adjourned meeting if the place, date and time thereof
are announced at the meeting at which the adjournment is taken; provided,
however, that if the date of any adjourned meeting is more than thirty days
after the date for which the meeting was originally noticed, or if a new record
date is fixed for the adjourned meeting, written notice of the place, date, and
time of the adjourned meeting shall be given in conformity herewith. At any
adjourned meeting, any business may be transacted which might have been
transacted at the original meeting.
Section 2.4 Quorum
At any meeting of the stockholders, the holders of one-third of all of the
shares of the stock entitled to vote at the meeting, present in person or by
proxy, shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law.
If a quorum shall fail to attend any meeting, the chairman of the meeting
or the holders of a majority of the shares of the stock entitled to vote who are
present, in person or by proxy, may adjourn the meeting to another place, date
or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, then except as otherwise required by law, those
present at such adjourned meeting shall constitute a quorum, and all matters
shall be determined by a majority of the votes cast at such meeting.
Section 2.5 Organization
The Chairman or, if none, such other person as the Board of Directors may
have designated or, in the absence of such a person, the highest ranking officer
of the corporation who is present shall call to order any meeting of the
stockholders and act as chairman of the meeting. In the absence of the Secretary
of the corporation, the secretary of the meeting shall be such person as the
chairman appoints.
Section 2.6 Conduct of Business
The chairman of any meeting of stockholders shall determine the order of
business and the procedure at the meeting, including such regulation of the
manner of voting and the conduct of discussion as seem to him in order.
Section 2.7 Proxies and Voting
At any meeting of the stockholders, every stockholder entitled to vote may
vote in person or by proxy authorized by an instrument in writing filed in
accordance with the procedure established for the meeting.
Each stockholder shall have one vote for every share of stock entitled to
vote which is registered in his name on the record date for the meeting, except
as otherwise provided herein or required by law.
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All voting, except on the election of directors and where otherwise
required by law, may be by a voice vote; provided, however, that upon demand
therefor by a stockholder entitled to vote or his proxy, a stock vote shall be
taken. Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. Every vote taken by
ballots shall be counted by an inspector or inspectors appointed by the chairman
of the meeting.
If a quorum is present, the affirmative vote of the majority of the shares
represented at the meeting and entitled to vote on the subject matter shall be
the act of the stockholders, unless the vote of a greater number or voting by
class is required by law, the Articles of Incorporation, or these Bylaws.
Section 2.8 Stock List
A complete list of stockholders entitled to vote at any meeting of
stockholders, arranged in alphabetical order for each class of stock and showing
the address of each such stockholder and the number of shares registered in his
name, shall be open to the examination of any such stockholder, for any purpose
germane to the meeting, during ordinary business hours for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The stock list shall also be kept at the place of the meeting during the
whole time thereof and shall be open to the examination of any such stockholder
who is present. This list shall presumptively determine the identity of the
stockholders entitled to vote at the meeting and the number of shares held by
each of them.
Section 2.9 Participation in Meetings by Conference Telephone
Any action, except the election of directors, which may be taken by the
vote of the stockholders at a meeting, may be taken without a meeting if
authorized by the written consent of stockholders holding at least a majority of
the voting power; provided:
(a) That if any greater proportion of voting power is required for such
action at a meeting, then such greater proportion of written consents
shall be required; and
(b) That this general provision shall not supersede any specific provision
for action by written consent required by law.
ARTICLE III--BOARD OF DIRECTORS
Section 3.1 Number and Term of Office
The number of directors who shall constitute the whole board shall be such
number not less than one (1) nor more than nine (9) as the Board of directors
shall at the time have designated. Each director
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shall be selected for a term of one year and until his successor is elected and
qualified, except as otherwise provided herein or required by law.
Whenever the authorized number of directors is increased between annual
meetings of the stockholders, a majority of the directors then in office shall
have the power to elect such new directors for the balance of a term and until
their successors are elected and qualified. Any decrease in the authorized
number of directors shall not become effective until the expiration of the term
of the directors then in office unless, at the time of such decrease, there
shall be vacancies on the board which are being eliminated by the decrease.
Section 3.2 Vacancies
If the office of any director becomes vacant by reason of death,
resignation, disqualification, removal or other cause, a majority of the
directors remaining in office, although less than a quorum, may elect a
successor for the unexpired term and until his successor is elected and
qualified.
Section 3.3 Regular Meetings
Regular meetings of the Board of Directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 3.4 Special Meetings
Special meetings of the Board of Directors may be called by one-third of
the directors then in office by the Chairman, if any, or by the chief executive
officer and shall be held at such place, on such date and at such time as they
or he shall fix. Notice of the place, date and time of each such special meeting
shall be given by each director by whom it is not waived by mailing written
notice not less than three days before the meeting or by telegraphing the same
not less than eighteen hours before the meeting. Unless otherwise indicated in
the notice thereof, any and all business may be transacted at a special meeting.
Section 3.5 Quorum
At any meeting of the Board of Directors, a majority of the total number of
the whole board shall constitute a quorum for all purposes. If a quorum shall
fail to attend any meeting, a majority of those present may adjourn the meeting
to another place, date or time, without further notice or waiver thereof.
Section 3.6 Participation in Meetings by Conference Telephone
Members of the Board of Directors or of any committee thereof, may
participate in a meeting of such board or committee by means of conference
telephone or similar communications equipment that enables all persons
participating in the meeting to hear each other. Such participation shall
constitute presence in person at such meeting.
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Section 3.7 Conduct of Business
At any meeting of the Board of Directors, business shall be transacted in
such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 3.8 Powers
The Board of Directors may, except as otherwise required by law, exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation, including, without limiting the generality of the foregoing,
the unqualified power:
(a) To declare dividends from time to time in accordance with law;
(b) To purchase or otherwise acquire any property, rights or privileges on
such terms as it shall determine;
(c) To authorize the creation, making and issuance, in such form as it may
determine, of written obligations of every kind, negotiable or non-negotiable,
secured or unsecured, and to do all things necessary in connection therewith;
(d) To remove any officer of the corporation with or without cause, and
from time to time to devolve the powers and duties of any officer upon any other
person for the time being;
(e) To confer upon any officer of the corporation the power to appoint,
remove and suspend subordinate officers and agents;
(f) To adopt from time to time such stock option, stock purchase, bonus or
other compensation plans for directors, officers and agents of the corporation
and its subsidiaries as it may determine;
(g) To adopt from time to time such insurance, retirement and other benefit
plans for directors, officers and agents of the corporation and its subsidiaries
as it may determine; and
(h) To adopt from time to time regulations, not inconsistent with these
Bylaws, for the management of the corporation's business and affairs.
Section 3.9 Compensation of Directors
Directors, as such, may receive, pursuant to resolution of the Board of
Directors, fixed fees and other compensation for their services as directors,
including, without limitation, their services as members of committees of the
directors.
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Section 3.10 Loans
The corporation shall not lend money to or use its credit to assist its
officers, directors or other control persons without authorization in the
particular case by the stockholders, but may lend money to and use its credit to
assist any employee, excluding such officers, directors or other control persons
of the corporation or of a subsidiary, if such loan or assistance benefits the
corporation.
ARTICLE IV--COMMITTEES
Section 4.1 Committees of the Board of Directors
The Board of Directors, by a vote of a majority of the whole board, may
from time to time designate committees of the board, with such lawfully
delegable powers and duties as it thereby confers, to serve at the pleasure of
the board and shall, for those committees and any other provided for herein,
elect a director or directors to serve as the member or members, designating, if
it desires, other directors as alternative members who may replace any absent or
disqualified member at any meeting of the committee. Any committee so designated
may exercise the power and authority of the Board of Directors to declare a
dividend or to authorize the issuance of stock if the resolution which
designates the committee or a supplemental resolution of the Board of Directors
shall so provide. In the absence or disqualification of any member of any
committee and any alternate member in his place, the member or members of the
committee present at the meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may by unanimous vote appoint another member
of the Board of Directors to act at the meeting in the place of the absent or
disqualified member.
Section 4.2 Conduct of Business
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; a majority of the members shall
constitute a quorum unless the committee shall consist of one or two members, in
which event one member shall constitute a quorum; and all matters shall be
determined by a majority vote of the members present. Action may be taken by any
committee without a meeting if all members thereof consent thereto in writing,
and the writing or writings are filed with the minutes of the proceedings of
such committee.
ARTICLE V--OFFICERS
Section 5.1 Generally
The officers of the corporation shall consist of a president, one or more
vice-presidents, a secretary, a treasurer and such other subordinate officers as
may from time to time be appointed by the Board of Directors. The corporation
may also have a chairman of the board who shall be elected by the board and who
shall be an officer of the corporation. Officers shall be elected by the Board
of Directors,
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which shall consider that subject at its first meeting after every annual
meeting of stockholders. Each officer shall hold his office until his successor
is elected and qualified or until his earlier resignation or removal. Any number
of offices may be held by the same person, except that the offices of president
and secretary shall not be held by the same person.
Section 5.2 Chairman
The chairman of the board shall, subject to the direction of the Board of
Directors, perform such executive, supervisory, and management functions and
duties as may be assigned to him form time to time by the Board of Directors. He
shall, if present, preside at all meetings of the stockholders and of the Board
of Directors.
Section 5.3 President
Unless otherwise designated by the Board of Directors, the president shall
be the chief executive officer of the corporation. Subject to the provisions of
these Bylaws and to the direction of the Board of Directors, he shall have the
responsibility for the general management and control of the affairs and
business of the corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him by the Board of Directors. He shall have power to signa all
stock certificates, contracts and other instruments of the corporation which are
authorized. He shall have general supervision and direction of all of the other
officers and agents of the corporation.
Section 5.4 Vice-President
Each vice-president shall perform such duties as the Board of Directors
shall prescribe. In the absence or disability of the President, the
vice-president who has served in such capacity for the longest time shall
perform the duties and exercise the powers of the president.
Section 5.5 Treasurer
The treasurer shall have the custody of the monies and securities of the
corporation and shall keep regular books of account. He shall make such
disbursements of the funds of the corporation as are proper and shall render
from time to time an account of all such transactions and of the financial
condition of the corporation.
Section 5.6 Secretary
The secretary shall issue all authorized notices from, and shall keep
minutes of, all meetings of the stockholders and the Board of Directors. He
shall have charge of the corporate books.
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Section 5.7 Delegation of Authority
The Board of Directors may, from time to time, delegate the powers or
duties of any officer to any other officers or agents, notwithstanding any
provision hereof.
Section 5.8 Removal
Any officer of the corporation may be removed at any time, with or without
cause, by the Board of Directors.
Section 5.9 Action with Respect to Securities of Other Corporation
Unless otherwise directed by the Board of Directors, the president shall
have power to vote and otherwise act on behalf of the corporation, in person or
by proxy, at any meeting of stockholders of or with respect to any action of
stockholders of any other corporation in which this corporation may hold
securities and otherwise to exercise any and all rights and powers which this
corporation may possess by reason of its ownership of securities in such other
corporation.
ARTICLE VI--INDEMNIFICATION OF DIRECTORS,
OFFICERS AND OTHERS
Section 6.1 Generally
The corporation shall indemnify its officers, directors, and agents to the
fullest extent permitted under Nevada law.
Section 6.2 Expenses
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 6.1 of this Article, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorney's fees) actually and reasonably incurred by him in
connection therewith. Expenses incurred in defending a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized in the manner
provided in Section 6.3 of this Article upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article.
Section 6.3 Determination by Board of Directors
Any indemnification under Section 6.1 of this Article (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the
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director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Nevada law.
Section 6.4 Not Exclusive of Other Rights
The indemnification provided by this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled under any bylaw,
agreement, vote of shareholders or interested directors or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 6.5 Insurance
The corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this Article.
The corporation's indemnity of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
reduced by any amounts such person may collect as indemnification (i) under any
policy of insurance purchased and maintained on his behalf by the corporation or
(ii) from such other corporation, partnership, joint venture, trust or other
enterprise.
Section 6.6 Violation of Law
Nothing contained in this Article, or elsewhere in these Bylaws, shall
operate to indemnify any director or officer if such indemnification is for any
reason contrary to law, either as a matter of public policy, or under the
provisions of the Federal Securities Act of 1933, the Securities Exchange Act of
1934, or any other applicable state or federal law.
Section 6.7 Coverage
For the purposes of this Article, references to "the corporation" include
all constituent corporations absorbed in a consolidation or merger as well as
the resulting or surviving corporation so that any person who is or was a
director, officer, employee or agent of such a constituent corporation or is or
was serving at the request of such a constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise shall stand in the same position under the provisions
of this Article with respect to the resulting or surviving corporation as he
would if he had served the resulting or surviving corporation in the same
capacity.
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ARTICLE VII--STOCK
Section 7.1 Certificates of Stock
Each stockholder shall be entitled to a certificate signed by, or in the
name of the corporation by, the President or a Vice-president, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer,
certifying the number of shares owned by him. Any of or all the signatures on
the certificate may be facsimile.
Section 7.2 Transfers of Stock
Transfers of stock shall be made only upon the transfer books of the
corporation kept at an office of the corporation or by transfer agents
designated to transfer shares of the stock of the corporation. Except where a
certificate is issued in accordance with Section 7.4 of Article VII of these
Bylaws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefor.
Section 7.3 Record Date
The Board of Directors may fix a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for the other
action hereinafter described, as of which there shall be determined the
stockholders who are entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof; to express consent to corporate action
in writing without a meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any rights with respect
of any change, conversion or exchange of stock or with respect to any other
lawful action.
Section 7.4 Lost, Stolen or Destroyed Certificates
In the event of the loss, theft or destruction of any certificate of stock,
another may be issued in its place pursuant to such regulations as the Board of
Directors may establish concerning proof of such loss, theft or destruction and
concerning the giving of a satisfactory bond or bonds of indemnity.
Section 7.5 Regulations
The issue, transfer, conversion and registration of certificates of stock
shall be governed by such other regulations as the Board of Directors may
establish.
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ARTICLE VIII--NOTICES
Section 8.1 Notices
Whenever notice is required to be given to any stockholder, director,
officer, or agent, such requirement shall not be construed to mean personal
notice. Such notice may in every instance be effectively given by depositing a
writing in a post office or letter box, in a postpaid, sealed wrapper, or by
dispatching a prepaid telegram, addressed to such stockholder, director,
officer, or agent at his or her address as the same appears on the books of the
corporation. The time when such notice is dispatched shall be the time of the
giving of the notice.
Section 8.2 Waivers
A written waiver of any notice, signed by a stockholder, director, officer
or agent, whether before or after the time of the event for which notice is
given, shall be deemed equivalent to the notice required to be given to such
stockholder, director, officer or agent. Neither the business nor the purpose of
any meeting need be specified in such a waiver.
ARTICLE IX--MISCELLANEOUS
Section 9.1 Facsimile Signatures
In addition to the provisions for the use of facsimile signatures elsewhere
specifically authorized in these Bylaws, facsimile signatures of any officer or
officers of the corporation may be used whenever and as authorized by the Board
of Directors of a committee thereof.
Section 9.2 Corporate Seal
The Board of Directors may provide a suitable seal, containing the name of
the corporation, which seal shall be in the charge of the secretary. If and when
so directed by the Board of Directors or a committee thereof, duplicates of the
seal may be kept and used by the treasurer or by the assistant secretary or
assistant treasurer.
Section 9.3 Reliance Upon Books, Reports and Records
Each director, each member of any committee designated by the Board of
Directors, and each officer of the corporation shall, in the performance of his
duties, be fully protected in relying in good faith upon the books of account or
other records of the corporation, including reports made to the corporation by
any of its officers, by an independent certified public accountant, or by an
appraiser selected with reasonable care.
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Section 9.4 Fiscal Year
The fiscal year of the corporation shall be as fixed by the Board of
Directors.
Section 9.5 Time Periods
In applying any of these Bylaws which require that an act be done or not
done a specified number of days prior to an event or that an act be done during
a period of a specified number of days prior to an event, calendar days shall be
used, the day of the doing of the act shall be excluded and the day of the event
shall be included.
ARTICLE X--AMENDMENTS
Section 10.1 Amendments
These Bylaws may be amended or repealed by the Board of Directors at any
meeting or by the stockholders at any meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
assistant secretary of Mid-Way Medical And Diagnostic Center, Inc., a
corporation duly organized and existing under and by virtue of the laws of the
State of Nevada; that the above and foregoing Bylaws of said corporation were
duly and regularly adopted as such by the Board of Directors by unanimous
consent on the 12th day of November 1997; and that the above and foregoing
Bylaws are now in full force and effect.
Dated this 12th Day of November 1997
/s/ David Cohen
-------------------------------
David Cohen, Secretary
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BYLAWS
OF
CIRO JEWELERY, INC.
ARTICLE I
OFFICES
Section 1. The principal office in the State of Delaware shall be located
at the offices of the registered agent for the corporation in the State of
Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine as the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held at such place as may be fixed from time to time by the board of
directors, either within or without the State of Delaware. Meetings of
stockholders for any other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice of the meeting
or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at times
designated by the board of directors, and at such meetings the stockholders
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting shall be given to each
stockholder entitled to vote thereat at least ten days and not more than sixty
days before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every election of
directors, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, during ordinary business hours, for a period
of at least ten days prior to the election, either at a place within the city,
town or village where the election is to be held and which place shall be
specified in the notice of the meeting, or if not specified, at the place where
said meeting is to be held, and the list shall be produced and kept at the time
and place of election during the whole time thereof, and subject to the
inspection of any stockholder who may be present.
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Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president or the chairman, and shall be
called by the president or secretary at the request in writing of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting of stockholders, stating the
time, place and object thereof, shall be given to each stockholder entitled to
vote thereat, at least ten days before the date fixed for the meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 10. Each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital stock
having voting power held by such stockholder, but no proxy shall be voted on
after six months from its date, and, except where the transfer books of the
corporation have been closed or a date has been fixed as a record date for the
determination of its stockholders entitled to vote, no share of stock shall be
voted on at any election for directors which has been transferred on the books
of the corporation within twenty days next preceding such election of directors.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken in connection with any corporate action by any
provisions of the statutes or of the certificates of incorporation, the meeting
and vote of stockholders may be dispensed with, if all the stockholders who
would have been entitled to vote upon the action if such meeting were held,
shall consent in writing to such corporate action being taken.
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ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than one and not more than seven, as determined from time to
time by the Board of Directors. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this article,
and each director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these bylaws directed or required to be exercised or done by
the stockholders.
Meetings of the Board of Directors
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held immediately following the final adjournment of the annual meeting of the
stockholders. No notice of such a meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and such place as shall from time to time be determined by
the board.
Section 7. Special meetings of the board may be called by the president on
forty-eight hours notice to each director, either personally or by mall or by
telegram setting forth the time and place thereat; special meetings shall be
called by the president or secretary in like manner and on like notice on the
written request of two directors.
Section 8. At all meetings of the board a majority of the directors then in
office shall constitute a quorum for the transaction of business and the act of
a majority of the directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
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adjourn the meeting from time to time, without notice other than an announcement
at the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these bylaws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
members of the board or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
of these bylaws, members of the board of directors or any committee designed by
the board may participate in a meeting of such board or committee by means of a
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting in this manner shall constitute presence in person at such meeting.
Committees of Directors
Section 11. The directors may appoint an executive committee from their
number. The executive committee may make its own rules of procedure and shall
meet where and as provided by such rules, or by a resolution of the directors. A
majority shall constitute a quorum, and in every case the affirmative vote of a
majority of all the members of the committee shall be required for the adoption
of any resolution.
Section 12. During the intervals between the meetings of the directors, the
executive committee may exercise all the powers of the directors in the
management and direction of the business of the corporation, in such manner as
such committee shall deem best for the interest of the corporation, and in all
cases in which specific directions shall not have been given by the directors.
Section 13. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more other committees, each committee to
consist of two or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation
and may authorize the seal of the corporation to be affixed to all papers which
may require it. Such committee or committees shall have such name or names as
may be determined from time to time by resolution adopted by the board of
directors.
Compensation of Directors
Section 14. Directors shall not receive any stated salary for their
services as directors, but by resolution of the board, a fixed fee and expenses
of attendance may be allowed for attendance at each meeting. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any capacity as an officer or otherwise and receiving
compensation therefor.
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ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing in the books of the corporation. Notice by mall shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and treasurer.
The corporation may also have a chairman of the board who shall be elected by
the board and who shall be an officer of the corporation. The board of directors
may also choose additional vice-presidents, and one or more assistant
secretaries and assistant treasurers. Two or more offices may be held by the
same person, except where the offices of president and secretary are held by the
same person, such person shall not hold any other office.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
The President
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Section 6. The president shall be the chief executive officer of the
corporation. shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall have power to call meetings of the directors and
stockholders in accordance with these bylaws, appoint and remove, subject to the
approval of the directors, servants, agents and employees of the corporation and
fix their compensation, make and sign contracts and agreements in the name and
on behalf of the corporation; he shall see that the books, reports, statements
and certificates required by the statute under which the corporation is
organized or any other laws applicable thereto are properly kept, made and filed
according to law; and he shall generally do and perform all acts incident to the
office of president, or which are authorized or required by law.
The Vice-Presidents
Section 7. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
The Secretary and Assistant Secretaries
Section 8. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and the board of directors in a book to be kept
for that purpose and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all meetings of the
stockholders and special meetings of the board of directors, and shall perform
such other duties as may be prescribed by the board of directors or president,
under whose supervision he shall be. He shall have custody of the corporate seal
of the corporation and he, or an assistant secretary, shall have authority to
affix the same to any instrument requiring it and when so affixed, it may be
attested by his signature or by the signature of such assistant secretary. The
board of directors may give general authority to any other officer to affix the
seal of the corporation and to attest the affixing by his signature.
Section 9. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform such other duties and
exercise the powers of the secretary and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
The Treasurer and Assistant Treasurers
Section 10. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the
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corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the corporation in such depositories as may be designated
by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meeting, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 13. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
Chairman
Section 14. The chairman of the board shall, subject to the direction of
the board of directors, perform such executive, supervisory, and management
functions and duties as may be assigned to him form time to time by the board of
directors. He shall, if present, preside at all meetings of the stockholders and
of the board of directors.
Indemnification
Section 15. The corporation shall indemnify and reimburse each present and
future director and officer of the corporation for and against all or part of
the liabilities and expenses imposed upon or reasonably incurred by him in
connection with any claim, action, suit or proceeding in which he may be
involved or with which he may be threatened by reason of his being or having
been a director or officer of the corporation or of any other corporation of
which he shall at the request of this corporation then be serving or theretofore
have served as a director or officer, whether or not he continues to be a
director or officer, at the time such liabilities or expenses are imposed upon
or incurred by him, including but without being limited to attorney's fees,
court costs, judgments and reasonable compromise settlements; provided, however,
that such indemnification and reimbursement shall not cover: (a) liabilities or
expenses imposed or incurred in connection with any matter as to which such
director or officer shall be finally adjudged in such action, suit or proceeding
to be liable by reason of his having been derelict in the performance of his
duty as such director or officer, or (b) liabilities or expenses (including
amounts paid in compromise settlements) imposed or incurred in connection with
any matter which shall be settled by compromise (including
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settlement by consent decree or judgment) unless the board of directors of the
corporation by resolution adopted by it (i) approves such settlement and (ii)
finds that such settlement is in the best interest of the corporation and that
such director or officer has not been derelict in the performance of his duty as
such director or officer with respect to such matter. These indemnity provisions
shall be separable, and if any portion thereof shall be finally adjudged to be
invalid, or shall for any other reason be inapplicable or ineffective, such
invalidity, inapplicability or ineffectiveness shall not affect any other
portion or any other application of such portion or any other portion which can
be given effect without the invalid, inapplicable or ineffective portion. The
rights of indemnification and reimbursement hereby provided shall not be
exclusive of other rights to which any director or officer may be entitled as a
matter of law or by votes of stockholders or otherwise. As used in this
paragraph, the terms "director" and "officer" shall include their respective
heirs, executors and administrators.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
president or a vice-president or a vice-president and the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him in the corporation.
Section 2. Where a certificate is signed (1) by a transfer agent or an
assistant transfer agent (other than the corporation or a transfer clerk who is
an employee of the corporation) or (2) by a registrar (other than the
corporation or its employee), all other signatures may be a facsimile. In case
any officer or officers, transfer agent, or registrar, who has signed or whose
facsimile signature or signatures have been used on a certificate shall cease to
be such officer, transfer agent or registrar, whether because of death,
resignation, or otherwise, before such certificate or certificates have been
delivered by the corporation, such certificate or certificates may nevertheless
be adopted by the corporation and be issued and delivered as though the person
or persons who signed such certificate or certificates or whose facsimile
signature or signatures have been used thereon had not ceased to be such
officer, transfer agent or registrar.
Transfer Agent and Registrar
Section 3. The corporation may have such transfer agents and registrars as
the board of directors may designate and appoint.
Lost Certificates
Section 4. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been
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lost or destroyed, upon the making of an affidavit of the fact by the person
claiming the certificate of stock to be lost or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require and/or
to give the corporation a bond in such sum as it may direct as indemnity against
any claim that may be made against the corporation with respect to the
certificate alleged to have been lost or destroyed.
Transfers of Stock
Section 5. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Closing of Transfer Books
Section 6. The board of directors may close the stock transfer books of the
corporation for a period not exceeding forty-five days preceding the date of any
meeting of stockholders or the date for payment of any dividend or the date for
the allotment of rights or the date when any change or conversion or exchange of
capital stock shall go into effect or for a period of not exceeding forty-five
days in connection with obtaining the consent of stockholders for any purpose.
In lieu of closing the stock transfer books as aforesaid, the board of directors
may fix in advance a date, not exceeding forty-five days preceding the date of
any meeting of stockholders, or the date for payment of any dividend, or the
date for the allotment of rights, or the date when any change or conversion or
exchange of capital stock shall go into effect, or a date in connection with
obtaining such consent, as a record date for the determination of the
stockholders entitled to notice of, and to vote at, any such meeting, and any
adjournment thereof, or entitled to receive payment of any such dividend, or to
any such allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of capital stock, or to give such consent and in
such case such stockholders and only such stockholders as shall be stockholders
of record on the date so fixed shall be entitled to such notice of, and to vote
at, such meeting and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be notwithstanding any transfer of any
stock on the books of the corporation after any such record date fixed as
aforesaid.
Registered Stockholders
Section 7. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and
-9-
<PAGE>
shall not be bound to recognize any equitable or other claim to or interest in
such share or shares on the part of any other person. whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VII
GENERAL PROVISIONS
Dividends
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation. if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
Resignations
Section 3. Any director, member of any committee or other officer may
resign at any time. Such resignation shall be made in writing, and shall take
effect at the time specified therein, and if no time be specified therein at the
time of its receipt by the president or secretary, the acceptance of a
resignation shall not be necessary to make it effective.
Checks
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
Fiscal Year
Section 5. Directors. The fiscal year of the corporation shall be as
determined by the Board of Directors.
-10-
<PAGE>
Seal
Section 6. The corporate seal, if any, shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered or repealed at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the board of directors if notice of such alteration or
repeal be contained in the notice of such special meeting.
CERTIFICATE OF SECRETARY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned does hereby certify that the undersigned is the
secretary of Ciro Jewelery, Inc., Inc., a corporation duly organized and
existing under and by virtue of the laws of the State of Delaware; that the
above and foregoing Bylaws of said corporation were duly and regularly adopted
as such by the Board of Directors of said corporation by unanimous consent dated
February 3, 1995; and that the above and foregoing Bylaws are now in full force
and effect.
Dated this 3rd day of February 1995.
/s/ Laszlo Schwartz
---------------------------------
Laszlo Schwartz, Secretary
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STOCK PURCHASE AGREEMENT
AGREEMENT, entered in to effective as of the __ day of September, 1997, by
and between Mid-Way Medical and Diagnostic Center, Inc., a Florida corporation
hereinafter referred to as "Issuer"; and David Cohen, hereinafter referred to as
"Purchaser."
WITNESSETH:
WHEREAS, the Issuer is desirous of selling 10,000,000 shares of its
restricted $.001 par value common stock to Purchaser; and
WHEREAS, Purchaser is willing and desirous to purchase shares of restricted
common stock of Issuer pursuant to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein and other good and valuable consideration, the sufficiency of which
is hereby acknowledged, it is agreed as follows:
1. Purchase and Sale of Stock.
(a) The Issuer does hereby sell and the Purchaser does hereby purchase,
subject to the terms of this Agreement, 10,000,000 shares of the restricted
$.001 par value common stock ("Stock") of Issuer.
(b) The Stock is represented by a certificate which is delivered herewith,
or will be issued as soon as practicable hereafter, duly issued by Issuer to
Purchaser with all necessary signatures of corporate officers of Issuer and
counter signatures of Issuer's transfer agent.
<PAGE>
(c) Upon the execution hereof issuer will cause its current officers and
directors to resign after causing Purchaser to be appointed as the sole officer
and director of Issuer.
2. Purchase Price.
(a) The Purchaser hereby agrees to pay a total consideration of $100,000
for the Stock.
(b) The purchase price will be paid to Issuer by Purchaser as follows:
(i) The sum of $100,000 in cash coincidentally with the delivery of
the stock to be transferred hereunder.
(ii) Should issuer not have entered into a letter of intent with a
suitable candidate for a merger or reorganization within thirty (30) days
from the date hereof then Issuer shall cancel all 10,000,000 of the shares
issued to Purchaser, Issuer shall refund the sum of $50,000 to Purchaser,
and Purchaser shall have no further obligation under this agreement.
Purchaser shall also thereupon resign as an officer and director after
causing the former officers and directors of Issuer to be appointed as
officers and directors.
(iii) Purchaser acknowledges that Issuer will have spent the sum of
$50,000 on legal fees, and/or finders fees to persons introducing Issuer to
Purchaser, and therefore such amount will not be refunded to Purchaser.
3. Representations of the Issuer.
(a) The shares of Stock being issued hereunder will be free and clear of
any liens, encumbrances, or claims of any kind whatsoever, and Issuer warrants
free,
2
<PAGE>
clear and marketable title to said shares to the Purchaser, subject to said
shares being restricted under the securities laws.
(b) Issuer has no knowledge of any restrictions by contract, operation of
law or otherwise prohibiting this sale or the transfer of these shares into the
name of the Purchaser, subject only to the provision of the securities laws
governing restricted stock.
(c) There have been no changes in the capital structure of Company
including outstanding shares, options, warrants or related matters since the
March 31, 1997, financial statements which have been provided to Purchaser.
There also have been no material items of expense or income incurred or accrued
since such date.
(d) The Issuer has been duly organized, is validly existing and is in good
standing under the laws of the State of Florida.
(e) The Issuer is, to the best of Issuer's knowledge and belief, in
compliance in all material respects with all applicable laws and regulations of
Federal, State and local government agencies having jurisdiction over it.
(f) The Issuer's articles of incorporation specifically exclude Issuer from
the Control Share Acquisition Provisions contained in Section 607.0902 of the
Corporation Law of Florida or Issuer is otherwise excepted from said provisions
such that the issuance of these shares to Purchaser as contemplated by this
agreement will not be affected by such provisions and Purchaser shall have the
full unaffected right to vote all shares purchased hereunder.
3
<PAGE>
(g) The Stock will be duly authorized, validly issued, fully paid and
non-assessable and the delivery to Purchaser of the Stock pursuant to the
provisions of this Agreement will constitute valid title in said stock, free and
clear of all liens, encumbrances, restrictions, claims and commitments of every
kind.
(h) The execution and delivery of this Agreement and the Stock does not
violate any provision of the law applicable to the Issuer or conflict with or
result in a breach or termination of any provision of, or constitute a default,
or will result in the creation of any lien, charge or encumbrance upon any of
the property or assets of the Issuer pursuant to or under any corporate charter,
by-laws, mortgage, deed of trust, indenture or other agreement or instrument, or
any order, judgment, decree, statute, regulation or any other restriction of any
kind or character to which the Issuer is a party or by which any of the assets
of the Issuer may be bound with or without the giving of notice, the passage of
time or both, except with respect to applicable laws affecting creditors'
rights.
(i) Subsequent to the execution of this agreement and prior to the
appointment of Purchaser as sole officer and director, Issuer will ensure that
no person takes any action on behalf of Issuer except as contemplated herein.
(j) Issuer will have caused all corporate action necessary to appoint
Purchaser as the sole officer and director of Issuer to be taken and upon such
action Purchaser will be the sole officer and director of Issuer with all
necessary authority to act on behalf of Issuer.
4
<PAGE>
(k) Issuer has taken all corporate action necessary to issue the subject
shares of stock to Purchaser.
(l) Issuer shall turn all books and records of Issuer to Purchaser upon the
execution hereof.
4. Representations of Purchaser.
(a) The Purchaser recognizes that the Stock is restricted and can be
publicly sold only under the provisions of Rule 144 or if it is registered by
Issuer.
(b) The Purchaser represents and warrants that the Stock is being purchased
for investment and will not be transferable in such a manner as to cause a
public distribution thereof and is purchased solely for the Purchaser's own
account.
(c) The Purchaser further acknowledges that it is fully aware of the
applicable limitations on the resale of the Stock. These restrictions for the
most part are set forth in Rule 144. The Rule permits sales of "restricted
securities" upon compliance with the requirements of such Rule. If the Rule is
available to the Purchaser, the Purchaser may make only routine sales of
securities, in limited amounts, in accordance with the terms and conditions of
that Rule.
(d) Any and all certificates representing the Stock and any and all
securities issued in replacement Thereof or in exchange therefore, shall bear an
appropriate restrictive legend.
(e) Purchaser shall use its best efforts to assist Issuer in locating a
suitable candidate with which to enter into a merger or reorganization within
thirty (30)
5
<PAGE>
days from the date hereof For all purposes under this agreement Purchaser's
reasonable opinion as to what constitutes such a suitable candidate shall
control.
(f) The Issuer shall issue no further shares and there shall be no further
changes in the capital structure of Issuer until Issuer enters into a definitive
reorganization agreement with a suitable candidate or as a part of such a
reorganization.
5. Delivery of Shares.
Upon execution hereof, the Issuer will deliver certificates for the Stock
to Purchaser, free and clear of all claims and encumbrances but subject to the
terms hereof.
6. Nature and Survival of Representations.
All representations, warranties and covenants made by any party in this
Agreement shall survive the closing hereunder and the consummation of the
transactions contemplated hereby for so long as the applicable statute of
limitations shall remain open. Each of the parties hereto is executing and
carrying out the provisions of this Agreement in reliance solely on the
representations, warranties and covenants and agreements contained in this
Agreement or at the closing of the transactions herein provided for and not upon
any investigation upon which it might have made or any representations,
warranty, agreement, promise or information, written or oral, made by the other
party or any other person other than as specifically set forth herein and
therein.
7. Miscellaneous.
(a) Further Assurances. At any time, and from time to time, after the
effective date, each party will execute such additional instruments and take
such action
6
<PAGE>
as may be reasonably requested by the other party to confirm or perfect title to
any property transferred hereunder or otherwise to carry out the intent and
purposes of this Agreement.
(b) Waiver. Any failure on the part of any party hereto to comply with any
of its obligations, agreements or conditions hereunder may be waived in writing
by the party to whom such compliance is owed.
(c) Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given if delivered in person sent by
prepaid first class registered or by certified mail, return receipt requested.
(d) Headings. The section and subsection headings in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(f) Governing Law. This Agreement is being contracted for in the State of
Florida, and shall be governed by the laws of the State of Florida, and the
securities being issued herein are being issued in the State of Florida in
accordance with an applicable exemption from registration.
(g) Binding Effect. This Agreement shall be binding upon the parties hereto
and inure to the benefit of the parties, their respective heirs, administrators,
executors, successors and assigns.
7
<PAGE>
(h) Entire Agreement. This Agreement constitutes the entire agreement of
the parties covering everything agreed upon or understood in the transaction.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
(i) Time. Time is of the essence.
(j) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
(k) Default Costs. In the event any party hereto has to resort to legal
action to enforce any of the terms hereof such party shall be entitled to
collect attorney's fees and other costs from the party in default.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ISSUER:
By: /s/ Lane Abraham
------------------------
Lane Abraham, President
PURCHASER:
---------------------------
David Cohen
L45(a)atkprugr.mmd
8
<PAGE>
(h) Entire Agreement. This Agreement constitutes the entire agreement of
the parties covering everything agreed upon or understood in the transaction.
There are no oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements to the
execution hereof.
(i) Time. Time is of the essence.
(j) Severability. If any part of this Agreement is deemed to be
unenforceable the balance of the Agreement shall remain in full force and
effect.
(k) Default Costs. In the event any party hereto has to resort to legal
action to enforce any of the terms hereof, such party shall be entitled to
collect attorney's fees and other costs from the party in default.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
ISSUER:
By:
------------------------
Lane Abraham, President
PURCHASER:
/s/ David Cohen
---------------------------
David Cohen
8
STOCK PURCHASE AGREEMENT
This Agreement, entered into this 1st day of August 1997, is by and between
Merchants T&F, Inc., a New York corporation (the "Seller"), and Murray A.
Wilson, an individual (the "Purchasers").
RECITALS:
WHEREAS, the Seller is the owner of 1,500 shares of common stock of Ciro
Jewelery, Inc., a Delaware corporation (the "Issuer"); and
WHEREAS, the Seller is willing to sell, and the Purchaser wishes to buy,
said shares pursuant to the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth herein, the parties hereto agree as follows:
1. Shares to be Sold. Seller hereby bargains, sells, transfers, and assigns
to Purchaser, and Purchaser hereby acquires from the Seller, 1,500 shares of
common stock of the Issuer (hereinafter the "Shares").
2. Consideration. In payment for the Shares, the Purchaser hereby pays to
Seller $393,432, in the form of a promissory note (the "Note") payable not later
than one year from the date of this Agreement together with interest at the rate
of eight percent (8%) per annum. The receipt and sufficiency of the Note is
hereby acknowledged by the Seller. A copy of the form of the Note is attached
hereto as Exhibit "A" and incorporated herein.
3. Representations and Warranties of the Seller. Seller represents and
warrants as follows:
a. The Seller has good and marketable title to the Shares subject to no
pledge, lien, encumbrance, security interest, or charge.
b. This Agreement has been duly authorized by all necessary corporate
actions of Seller, and has been validly executed and constitutes a valid and
binding obligation enforceable in accordance with its terms. The execution,
delivery, and performance by Seller of the Agreement will not (i) conflict with
or result in any breach or violation of or default (or give rise to any right or
termination, cancellation, or acceleration) under its bylaws or its charter or
any amendments thereto, or any note, bond, mortgage, indenture, lease, license,
permit, agreement, or other instrument
<PAGE>
or obligation to which Seller is a party or by which it is bound; or (ii)
violate any law, order, rule, or regulation applicable to Seller. No consent or
approval by any governmental authority is required in connection with the
execution, delivery and performance of this Agreement by Seller.
c. The terms and conditions of this Agreement and all other instruments and
agreements to be delivered by Seller to Purchaser pursuant to the terms of this
Agreement are valid, binding, and enforceable against Seller in accordance with
their terms, subject only to the applicable bankruptcy, moratorium, and other
laws generally affecting the rights and remedies of creditors.
d. The Seller represents that no commission is due from Seller or Purchaser
to any brokers, agents, or finders as a result of the sale of the Shares.
e. No representation or warranty made to Purchaser, nor any written
statement or certificate furnished or to be furnished to Purchaser in connection
with the transaction contemplated by this Agreement, contains or will contain,
to the knowledge of Seller or its officers, any untrue statement of a material
fact, or omits or will omit to state, to the knowledge of Seller or its
officers, any material fact necessary to make the representations, warranty,
written statement or certificate not misleading.
4. Representations and Warranties of the Purchaser. Purchaser represents
and warrants as follows:
a. Purchaser understands and acknowledges that the Shares have not been
registered and are restricted securities as that term is defined in Rule 144
promulgated by the Securities and Exchange Commission.
b. Purchaser is not acquiring the Shares with a view to, or for sale in
connection with, any distribution thereof under such circumstances as would
constitute a public offering within the contemplation of the Securities Act of
1933, as amended (the "Securities Act"). Purchaser shall not sell or otherwise
dispose of the Shares unless a registration statement under the Securities Act
is in effect with respect thereto, or unless he shall receive an opinion from
counsel that the contemplated sale or other disposition will not require
registration under the Securities Act.
c. No representation or warranty made to Seller, nor any written statement
or certificate furnished or to be furnished to Seller in connection with the
transaction contemplated by this Agreement, contains or will contain, to the
knowledge of Seller or its officers, any untrue statement of a material fact, or
omits or will omit to state, to the knowledge of Seller, any material fact
necessary to make the representations, warranty, written statement or
certificate not misleading.
5. Seller's Indemnity. Seller shall defend, indemnify, and hold harmless
Purchaser, his agents, servants, and employees, and their respective heirs,
personal and legal representatives, guardians, successors and assigns, from and
against any and all claims, threats, liabilities, taxes, interest, fines,
penalties, suits, actions, proceedings, demands, damages, losses, costs, and
expenses
-2-
<PAGE>
(including attorneys' and experts' fees and court costs) of every kind and
nature arising out of, resulting from, or in connection with:
a. Any misrepresentation or breach by Seller of any representation or
warranty contained in this Agreement.
b. Any non-performance, failure to comply or breach by the Seller of any
covenant, promise, or agreement of Seller contained in this Agreement.
c. Any debts, obligations, duties, and/or liabilities of the Seller.
6. Purchaser's Indemnity. Purchaser shall defend, indemnify, and hold
harmless Seller, its officers, directors, shareholders, agents, servants, and
employees, and their respective heirs, personal and legal representatives,
guardians, successors and assigns, from and against any and all claims, threats,
liabilities, taxes, interest, fines, penalties, suits, actions, proceedings,
demands, damages, losses, costs, and expenses (including attorneys' and experts'
fees and court costs) of every kind and nature arising out of, resulting from,
or in connection with:
a. Any misrepresentation or breach by Purchaser of any representation or
warranty contained in this Agreement.
b. Any non-performance, failure to comply or breach by the Purchaser of any
covenant, promise, or agreement of Purchaser contained in this Agreement.
7. Governing Law. This Agreement and the rights and duties of the parties
hereto shall be construed and determined in accordance with the laws of the
State of New York, and any and all actions to enforce the provisions of this
Agreement, shall be brought in a court of competent jurisdiction in the State of
New York and in no other place.
8. Successors and Assigns. This Agreement shall be binding upon the parties
and their successors and assigns and shall inure to the benefit of the other
parties and successors and assigns.
9. Counterparts. This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one instrument.
10. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, and preliminary
agreements between the parties hereto relating to the subject matter of this
Agreement.
11. Survival of Covenants. Etc. All covenants, representations and
warranties made herein shall survive the making of this Agreement and shall
continue in full force and effect until the obligations of this Agreement have
been fully satisfied.
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<PAGE>
12. Partial Invalidity. If any term of this Agreement shall be held to be
invalid or unenforceable, such term shall be deemed to be severable and the
validity of the other terms of this Agreement shall in no way be affected
thereby.
13. Headings. The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
document effective the day and year first above written.
Seller: Merchants T&F, Inc.
By /s/ Laszlo Schwartz
-------------------------------
Laszlo Schwartz, Vice-President
Purchaser: /s/ Murray A. Wilson
-------------------------------
Murray A. Wilson
-4-
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that Merchants T&F, Inc., a New York
corporation ("Seller") for and in consideration of 1,500 shares of common stock
of Ciro Jewelery, Inc., a Delaware corporation ("Buyer") paid by the Buyer,
receipt of which is acknowledged, has bargained, sold, granted, and conveyed and
by these presents does bargain, sell, grant, and convey unto Buyer and Buyer's
successors and assigns the goods and chattels described in Exhibit "A" attached
hereto and incorporated herein;
TO HAVE AND TO HOLD the same unto Buyer and Buyer's successors and assigns
forever.
Seller covenants and agrees to warrant and defend title to the goods and
chattels sold against any person, firm, corporation, or association.
IN WITNESS WHEREOF, Seller has caused these presents to be signed this 10th
day of November 1997 to be effective the 3rd day of February 1995.
Merchants T&F, Inc.
By /s/ Laszlo Schwartz
--------------------------------
Laszlo Schwartz, Vice-President
CONSIGNMENT AGREEMENT
This Agreement is entered into by and between Merchants T&F, Inc., a New
York corporation ("Merchants"), and Ciro Jewelery, Inc., a Delaware corporation
("Ciro").
RECITALS:
WHEREAS, Merchants has acquired certain assets pursuant to that certain
Asset Purchase Agreement between Alan Cohen, as Chapter 11 Trustee for Ciro
Inc., Ciro of Bond Street, Inc. and Ciro Creations, Inc., as seller, and
Merchants T&F, Inc. as purchaser, (hereinafter the "Asset Purchase Agreement"),
a portion of which assets were transferred to Ciro as a capital contribution in
which Ciro became a wholly owned subsidiary of Merchants; and
WHEREAS, Merchants wishes to place with Ciro certain of the remaining
assets acquired pursuant to the Asset Purchase Agreement to sell on behalf of
Merchants for a commission as set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. Placement of Assets. Merchants agrees to place with Ciro from time to
time certain of the assets of Merchants purchased in the Asset Purchase
Agreement. Ciro hereby agrees to use its best efforts to sell the assets at
prices designated by Merchants.
2. Compensation. Merchants shall pay to Ciro a commission of 90% of all
assets sold by Ciro pursuant to this Agreement.
3. Return of Unsold Items. If Ciro is unable to sell a particular asset
within a reasonable time, Ciro shall return the asset to Merchants.
4. Taxes and Other Liabilities. Ciro acknowledges and agrees that it is an
independent contractor and not an employee of Merchants. As such, Ciro
acknowledges that it is responsible for all self-employment and other tax
payable to any federal, state, or local authority and any other obligation or
liabilities arising from its engagement and compensation hereunder.
5. Effective Date of Agreement. The effective date of this Agreement shall
be February 3, 1995, and any and all actions taken by the parties prior to the
execution and delivery of this agreement are hereby approved and ratified in all
respects.
6. Term. The term of this Agreement shall be for a period of 2 years from
the effective date of this Agreement.
<PAGE>
7. Waiver and Amendment. Neither this Agreement nor any provision hereof
may be changed, waived, terminated or discharged orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, termination or discharge is sought.
8. Governing Law. This Agreement and the rights and duties of the parties
hereto shall be construed and determined in accordance with the laws of the
State of New York, and any and all actions to enforce the provisions of this
Agreement, shall be brought in a court of competent jurisdiction in the State of
New York and in no other place.
9. Successors and Assigns. This Agreement shall be binding upon the parties
and their successors and assigns and shall inure to the benefit of the other
parties and successors and assigns.
10. Counterparts. This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one instrument.
11. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, and preliminary
agreements between the parties hereto relating to the subject matter of this
Agreement.
12. Headings. The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
13. Further Assurances. At any time, and from time to time, after the
effective date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property interests transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
document the 10th day of November 1997.
Merchants T&F, Inc.
By /s/ Murray A. Wilson
-------------------------------
Murray A. Wilson, President
Ciro Jewelery, Inc.
By /s/ Laszlo Schwartz
-------------------------------
Laszlo Schwartz, Vice-President
-2-
CONSULTING AGREEMENT
This Agreement is entered into by and between Merchants T&F, Inc., a New
York corporation ("Merchants"), and Ciro Jewelery, Inc., a Delaware corporation
("Ciro").
RECITALS:
WHEREAS, Ciro desires to obtain assistance in the management and
organization of its ongoing business interests; and
WHEREAS, Merchants is willing to assist Ciro in its ongoing business
interests;
NOW, THEREFORE, in consideration of the mutual terms and conditions set
forth below, the parties hereto agree as follows:
1. Duties and Involvement.
Ciro hereby engages Merchants for the purpose of assisting Ciro in the
management and organization of the ongoing business of Ciro, such assistance to
be used in the expansion of the business of Ciro or for any other purposes as
Ciro so desires.
Merchants acknowledges that it is not an agent or employee of Ciro's and
that it will not commit or bind Ciro to any action. Any and all arrangements or
agreements that Merchants may negotiate for Ciro will be subject to acceptance
by Ciro, to be evidenced by the execution by an authorized officer of Ciro.
Merchants shall devote such of its time and effort to the duties hereunder
and shall use its best efforts to fulfill its obligations hereunder; however,
Ciro acknowledges that Merchants is engaged in other business activities and
that such activities will continue during the term of this Agreement.
2. Compensation. As full compensation for Merchants' advisory services
hereunder, Ciro shall pay to Merchants a monthly cash payment of the greater of
five thousand dollars ($5,000) or twenty percent (20%) of the gross royalty
income generated by Ciro.
3. Taxes and Other Liabilities. Merchants acknowledges and agrees that it
is an independent contractor and not an employee of Ciro. As such, Merchants
acknowledges that it is responsible for all self-employment and other tax
payable to any federal, state, or local authority and any other obligation or
liabilities arising from its engagement and compensation hereunder.
<PAGE>
4. Effective Date of Agreement. The effective date of this Agreement shall
be August 1, 1997, and any and all actions taken by the parties prior to the
execution and delivery of this agreement are hereby approved and ratified in all
respects.
5. Term. The term of this Agreement shall be for a period of one year from
the effective date of this Agreement.
6. Waiver and Amendment. Neither this Agreement nor any provision hereof
may be changed, waived, terminated or discharged orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, termination or discharge is sought.
7. Governing Law. This Agreement and the rights and duties of the parties
hereto shall be construed and determined in accordance with the laws of the
State of New York, and any and all actions to enforce the provisions of this
Agreement, shall be brought in a court of competent jurisdiction in the State of
New York and in no other place.
8. Successors and Assigns. This Agreement shall be binding upon the parties
and their successors and assigns and shall inure to the benefit of the other
parties and successors and assigns.
9. Counterparts. This Agreement may be executed in any number of
counterparts and all such counterparts taken together shall be deemed to
constitute one instrument.
10. Entire Agreement. This Agreement constitutes the entire understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all negotiations, representations, prior discussions, and preliminary
agreements between the parties hereto relating to the subject matter of this
Agreement.
11. Headings. The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
12. Further Assurances. At any time, and from time to time, after the
effective date, each party will execute such additional instruments and take
such action as may be reasonably requested by the other party to confirm or
perfect title to any property interests transferred hereunder or otherwise to
carry out the intent and purposes of this Agreement.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
document the 10th day of November 1997.
Merchants T&F, Inc.
By /s/ Murray A. Wilson
-------------------------------
Murray A. Wilson, President
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<PAGE>
Ciro Jewelery, Inc.
By /s/ Laszlo Schwartz
-------------------------------
Laszlo Schwartz, Vice-President
-3-
CONSULTING AGREEMENT
This agreement is effective as of August 29, 1997, by and between Ciro
International, Inc. ("Ciro") and Merchants T & F, Inc. ("Merchants")
(concurrently, the "Parties").
Ciro desires to obtain assistance in the management and organization of its
ongoing business interests. Merchants desires to assist Ciro in its ongoing
business interests. The parties agree to the terms set forth below.
1. DUTIES AND INVOLVEMENT
a. Ciro hereby engages Merchants for the purpose of assisting Ciro in the
management and organization; such assistance is to be used in the expansion of
business or any other purpose as Ciro so desires.
b. Merchants acknowledges that it is not an agent or employee of Ciro's
and, that it will not commit Ciro to any action. Any and all arrangements or
agreements that Merchants may negotiate for Ciro will be subject to acceptance
by Ciro, to be evidenced by the execution by an authorized officer of Ciro's.
Merchants represents that it does not have, through stock ownership or
otherwise, the power to control Ciro.
c. Merchants shall devote such of its time and effort to the duties
hereunder and shall use his best efforts to fulfill its obligations hereunder;
however, Ciro acknowledges that Merchants is engaged in other business
activities and that such activities will continue during the term of this
Agreement.
2. TERM
This Agreement shall continue for a term of one year from the effective
date hereof
3. COMPENSATION
a. As full compensation for Merchants advisory services hereunder, Ciro
shall pay to Merchants a nominal cash payment of the greater of Five Thousand
Dollars ($5,000) per month or Twenty percent (20%) of the gross royalty income.
4. TAXES AND OTHER LIABILITIES
Merchants acknowledges and agrees that it is an independent contractor and
not an employee of Ciro. As such, Merchants acknowledges that it is responsible
for all self-employment and other tax payable to any federal, state or local
authority and any other obligation or liabilities arising from his engagement
and compensation hereunder.
<PAGE>
The undersigned hereby acknowledges receipt of an executed original of this
Consulting Agreement and accepts the terms and conditions hereof
MERCHANTS T & F, INC.
By: /s/ Murray Wilson
----------------------------
Murray Wilson
President
CIRO INTERNATIONAL, INC.
By: /s/ Murray Wilson
----------------------------
President
EXHIBIT A
PROMISSORY NOTE
$393,432 New York, New York
Date: August ___, 1997
FOR VALUE RECEIVED, MURRAY WILSON ("Borrower") promises to pay to MERCHANTS
T & F, INC., a New York corporation ("Lender"), in one or more payments within
one year from the date of this Agreement (the "Maturity Date"), the principal
sum of THREE HUNDRED NINETY THREE THOUSAND FOUR HUNDRED THIRTY TWO DOLLARS
($393,432), with EIGHT percent (8%) interest.
Prepayment. Borrower shall have the right to prepay this Note at any time
and from time to time in whole or in part without penalty.
Late Fee. Upon default in the payment of the balance on the Maturity Date,
Borrower shall pay to Lender upon demand, in addition to all the other amounts
payable hereunder, a late charge equal to two percent of the amount so overdue
(but in no event higher than the maximum allowed by New York law).
Accleration Upon Default. Each of the following shall be deemed an "Event
of Default":
A. If one of the following acts of insolvency occurs with respect to
Borrower or the property of Borrower:
insolvency; assignment for the benefit of creditors or calling of a
meeting of creditors preliminary thereto; appointment of a receiver,
conservator, rehabilitator or similar officer for Borrower or any
material portion of the property of Borrower, which appointment shall
not be removed within 30 days after the appointment; the issuance of
any attachment against any material portion of the property of
Borrower, which shall not be removed or bonded within 30 days of such
issuance; or the taking of possession of, or assumption of control
over, all or any substantial part of the property of Borrower by the
United States Government, foreign government (de facto or de jure) or
any agency thereof; the filing of a voluntary petition in Bankruptcy
by Borrower; or the commencement of any proceeding by Borrower under
any bankruptcy or debtor's law (or similar law analogous in purpose or
effect) for the relief or reorganization of Borrower or for
composition, extension, arrangement or readjustment of any of the
obligations of Borrower; or the filing of any involuntary petition in
bankruptcy against Borrower, which filing is not dismissed within 60
days of such
<PAGE>
filing.
B. If a judgement is entered or a tax lien filed against Borrower or the
property of Borrower which is not paid or bonded on or before the 30th
day following the entry of judgement or filing of lien.
C. If Borrower fails to collect, remit or pay any tax assessment,
withholding or deficiency on or before the 30th day following the due
date.
D. The dissolution of Borrower.
Upon an Event of Default, the entire principal balance of this Note then
remaining unpaid, together with any late charges thereon, shall, at the option
of Lender, become immediately due and payable, without demand or notice,
together with all costs of collection, including reasonable attorney's fees.
Failure to exercise this option shall not constitute a waiver of the right to
exercise the same in the event of any subsequent default or breach.
Waiver; Indulgence. All parties now or hereafter liable for payment of any
of the indebtedness evidenced by this Note, by executing and endorsing this Note
or by entering into or executing any agreement to pay any indebtedness hereby
evidenced: (a) agree to waive presentment for payment, demand, notice, protest
and diligence in collection or bringing suit; and (b) agree that Lender shall
have the right, without notice and without in any way affecting the liability of
Borrower, to (i) accept partial payment, (ii) exchange or release security or
collateral, (iii) deal in any way at any time with any parties liable for the
indebtedness evidenced by the Note, or (iv) grant us to any party any extensions
of time for payment of any said indebtedness or any other indulgences or
forebearances whatsoever.
Severability. If any provision of this Note shall be deemed by court having
jurisdiction thereon invalid or unenforceable, the balance of this Note shall
remain in effect; if any provision of this Note is deemed by any such court to
be unenforceable because such provision is too broad in scope, such provision
shall be construed to be limited in scope to the extent such court deems
necessary to make it enforceable; and if any provision is deemed inapplicable by
any such court to any person or circumstance, it shall nevertheless be construed
to apply to all other persons and circumstances.
<PAGE>
Governing Law; Effect. This document shall be governed by and construed in
accordance with the substantive law of the State of New York, without giving
effect to the conflicts or choice of law provisions of New York or any other
jurisdiction, and shall have the effect of a sealed instrument.
BORROWER:
/s/ Murray Wilson
-----------------------
Murray Wilson
PAYEE:
MERCHANTS T & F,
By: /s/ Laszlo Schwartz
-------------------
Date: 8/28/97
<PAGE>
EXHIBIT "A"
PROMISSORY NOTE
$393,432.00
New York, New York
August 1, 1997
THE UNDERSIGNED hereby promises to pay to the order of Merchants T&F, Inc.,
a New York corporation at 445 Fifth Avenue, Room 1lA, New York, NY 10016, or at
such other place as the holder hereof may designate in writing, the sum of three
hundred ninety-three thousand four hundred thirty-two dollars ($393,432.00),
with interest thereon at the rate of eight percent (8%) per annum, payable as
follows: Principal and interest on or before July 31, 1998.
Prepayment of this note with interest to date of payment may be made at any
time without penalty.
If default is made in the payment when due of any part or installment of
interest, then the whole sum of principal and interest shall become immediately
due and payable at the option of the payee, without notice.
In the event of commencement of suit to enforce payment of this note, the
undersigned agree to pay such additional sum as attorney's fees as the court may
adjudge reasonable.
/s/ Murray A. Wilson
-----------------------
Murray A. Wilson
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated February 2, 1995, by and among Alan Cohen,
as Chapter 11 Trustee for CIRO INC., CIRO OF BOND STREET, INC., and CIRO
CREATIONS, INC. (collectively, "Trustee") and MERCHANTS T&F, INC., a New York
corporation, with offices at 445 Fifth Avenue, New York, New York 10016
("Purchaser").
WITNESSETH
WHEREAS, Trustee is the Chapter 11 Trustee in certain Chapter 11 cases
jointly administered as Case No. 94-B-43389 (the "Cases") pending in the United
States Bankruptcy Court, Southern District of New York (the "Court"); and
WHEREAS, Trustee has succeeded by operation of law to all right, title and
interest previously enjoyed by Ciro Inc., Ciro of Bond Street, Inc., and Ciro
Creations, Inc., the debtors in the Cases (collectively, the "Debtors") in and
to the business and assets of the Debtors; and
WHEREAS, Trustee desires to sell and transfer to Purchaser, and Purchaser
desires to acquire from Trustee, all of Trustee's right, title and interest in
and to said assets, all on the terms and conditions set forth herein; and
WHEREAS, the sale and transfer of said assets by Trustee to Purchaser was
approved by an Order Authorizing Sale of Assets Pursuant to 11 U.S.C. 363(b),
(f) of the Court dated January 23, 1995, and this Agreement is pursuant thereto
and not in limitation thereof;
<PAGE>
NOW, THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements herein set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE OF ASSETS
1.1 Subject Assets. (a) Subject to the terms and conditions of this
Agreement, Trustee hereby sells and transfers to Purchaser, and Purchaser hereby
purchases from Trustee, all of Trustee's right, title and interest in and to the
assets, properties, rights and claims of every type and nature and wherever
situated, real, personal, tangible, intangible or contingent, previously owned
or held by the Debtors and used in the conduct of the Debtors' business (the
"Business") and currently owned or held by Trustee, other than the Excluded
Assets (collectively, the "Subject Assets"), including, without limitation, all
of Trustee's right, title and interest, if any, in the following assets,
properties or rights which are or were used or held for use in the Business and
which on the date hereof are owned or held by Trustee:
(i) the machinery, equipment, furniture, tools, supplies and other
tangible personal property wherever located;
(ii) the inventory, raw materials, work-in-process and finished goods,
and stores, supplies and spare parts,
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<PAGE>
wherever located (including, without limitation, inventory in transit);
(iii) all foreign, federal, state and local governmental licenses,
permits, approvals and authorizations, whether foreign or domestic, which
are assignable;
(iv) all trade names, trademarks and service marks, patents, patent
rights, copyrights, whether domestic or foreign (as well as applications,
registrations or certificates for any of the foregoing), inventions, trade
secrets, proprietary processes, software and other intellectual property
rights, including, without limitation, those listed on Schedule 1.1(a) (iv)
hereto;
(v) all license agreements and franchise agreements listed on Schedule
1.1(v) hereto (the "Assumed Contracts");
(vi) all books and records, including computerized records and any
associated software and documentation, including, without limitation, books
and records relating to sales or marketing information, customer lists and
information, sales invoices and personnel records for the employees of
Debtors, except that the Trustee or its representatives shall have the
right of access to all of the foregoing and to make copies thereof upon
reasonable notice;
(vii) all purchase order forms, other forms, labels, stationery,
shipping materials, catalogues, brochures,
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<PAGE>
artwork mechanicals, artwork used or held for use in connection with the
business, photographs and advertising materials;
(viii) prepaid expenses and tax refunds;
(ix) all stock in subsidiaries, securities of any kind and interests
in joint ventures and partnerships, which are listed on Schedule 1.1(a)
(xii) hereto; and
(xiii) all other tangible and intangible properties owned by Trustee.
(b) The inclusion of an item on any Schedule hereto shall not be deemed a
representation or affirmation by Trustee that Trustee in fact has any rights in
or with respect to such item, Trustee makes no such representation or
affirmation, and Trustee hereby expressly disclaims any implied representation
or affirmation to the contrary. Trustee has prepared the Schedules entirely on
the basis of information and documents provided by third parties without
independent investigation or verification of such information or documents by
Trustee. Trustee is selling, and Purchaser is acquiring, the Subject Assets
pursuant to the order of the Court dated January 23, 1995, free and clear of all
liens, claims and encumbrances, with such liens, claims and encumbrances, if
any, to attach to the proceeds of such sale, and Trustee gives no independent
warranty or representation as to title, merchantability, fitness for a
particular purpose, validity, completeness, condition or any other
characteristic of the Subject Assets.
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<PAGE>
1.2 Excluded Assets. Trustee shall not sell, and Purchaser shall not
purchase, any of the following (the "Excluded Assets")
(a) all leases of real and personal property, subject to the
acquisition of certain leases of real property by Oldco Bijoux, Inc. by
payment under Section 2.1(c) hereof (the "Oldco Bijoux Purchase");
(b) all accounts receivable, including without limitation all accounts
receivable of the Debtors which represent amounts due from any subsidiary
of the Debtors;
(c) all deposits of cash with third parties for performance due from
such parties to the Debtors or the Trustee;
(d) all claims and choses in action, except that the parties agree to
determine subsequent to the Closing the disposition of any claims against
Deloitte & Touche;
(e) all cash and cash equivalents;
(f) all preference claims of the estates of the debtors in the Cases
which may be asserted under Section 547 of the Bankruptcy Code; and
(g) all other contracts which are not assumed and assigned to
Purchaser.
1.3 Liabilities. It is expressly agreed that Trustee is not transferring
and Purchaser is not acquiring, assuming or otherwise in any manner becoming
responsible for any liabilities, debts, commitments or other obligations of the
Debtors or
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<PAGE>
Trustee, whether or not related to the Subject Assets, whether absolute or
contingent, due or unmatured, direct or indirect, or of any kind whatsoever,
including without limitation the following listed liabilities and obligations:
(a) all liabilities for foreign, federal, state and local income and
franchise taxes incurred by the Debtors or Trustee with respect to periods
ending on or prior to the Closing Date or incurred by Trustee with respect
to any of the transactions contemplated hereby;
(b) all liabilities and obligations, whether civil or criminal in
nature, arising out of any actual or alleged violation by Trustee, or by
any previous owner of any of the Subject Assets, of any foreign, federal,
state or local law, rule, regulation, judicial or administrative order,
judgment or decree, or governmental permit, license, approval or
authorization (each a "Violation"), if such Violation occurred prior to the
Closing Date;
(c) all liabilities and obligations arising under the Assumed
Contracts and Leases if the rights of Trustee are, for any reason, not
transferred to, or the benefits thereunder are not otherwise made available
to, Purchaser at the Closing; and
(d) all liabilities and obligations of the Debtors or Trustee for
which claims have been made under the Debtors' or Trustee's insurance
contracts or policies prior to the Closing Date.
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<PAGE>
ARTICLE II
CLOSING; PURCHASE PRICE
2.1 Purchase Price. The purchase price for the Subject Assets (the
"Purchase Price") shall be $1,475,000.00, of which $190,000 was previously
deposited with the Trustee on January 23, 1995, all of which Purchase Price
(including such deposit) shall be paid to Trustee at the Closing (as defined
below) as follows:
(a) purchaser's certified or bank check for $230,000;
(b) attorney's check of Finkel, Goldstein, Berzow & Rosenbloom for
$380,000;
(c) check from Oldco Bijoux, Inc in the amount of $500,000;
(d) release of deposit for $190,000;
(e) check from Galleria Limited for $125,000; and
(f) check from 677 Fifth Avenue Corporation for $50,000.
2.2 Closing Date. The Closing under this Agreement (the "Closing") shall
take place at the offices of Pryor, Cashman, Sherman & Flynn, 410 Park Avenue,
New York, New York 10022 on the date hereof (sometimes referred to herein as the
"Closing Date")
2.3 Trustee Closing Documents. At the Closing, Trustee shall execute and
deliver or use its best efforts to cause to be executed and delivered to
Purchaser the following:
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<PAGE>
(a) Such bills of sale, assignments, trademark assignments (in
recordable form) and other instruments of transfer as shall be necessary or
required to transfer to Purchaser all of Trustee's right, title and
interest in and to all of the Subject Assets; and
(b) Such other instruments of transfer and other documents as counsel
to Purchaser shall determine are reasonably necessary in order to
effectuate the purposes of the transactions contemplated herein.
2.4 Purchaser Closing Documents. At the Closing, Purchaser shall execute
and deliver to Trustee such documents as counsel to Trustee shall determine are
reasonably necessary in order to effectuate the purposes of the transactions
contemplated herein.
2.5 Proceedings. All proceedings which shall be taken and all documents
which shall be executed and delivered by the parties on the Closing Date shall
be deemed to have been taken and executed simultaneously, and no proceeding
shall be deemed taken nor any documents executed or delivered until all have
been taken, executed and delivered.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF Trustee
Trustee hereby represents and warrants to Purchaser as follows:
3.1 Authority. This Agreement, and each other document contemplated by this
Agreement, has been duly executed
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<PAGE>
and delivered by Trustee and constitutes a legal, valid and binding obligation
of Trustee enforceable against it in accordance with its terms. Pursuant to the
Order, Trustee has the authority to sell and transfer the Subject Assets to the
Purchaser in accordance with the terms of this Agreement.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Trustee as follows:
4.1 Due Organization, Etc. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York,
and has all necessary corporate power and authority to own and operate the
Business and the Subject Assets.
4.2 Effect of Agreement, Etc. This Agreement and each other document
contemplated by this Agreement has been duly authorized by all necessary
corporate action of Purchaser. This Agreement and each other document
contemplated by this Agreement has been duly executed and delivered by Purchaser
and constitutes a legal, valid and binding obligation of Purchaser enforceable
against it in accordance with its terms.
4.3 No Violation. The execution, delivery and performance by Trustee of
this Agreement and each other document contemplated by this Agreement will not
violate, conflict with or otherwise constitute a default under (a) the
Purchaser's
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<PAGE>
Certificate of Incorporation or by-laws; (b) any agreement or instrument to
which Purchaser is a party or by which it or its properties are bound; or (c)
any law, rule, regulation, judgment, order or decree of any government or
governmental agency or instrumentality to which Purchaser or its properties are
bound.
4.4 Acknowledgement. Purchaser hereby acknowledges that (a) it understands
and accepts the provisions of Section 1.1(b) hereof, (b) it has conducted, to
the extent it has deemed it desirable or necessary, its own investigation of the
Subject Assets, (c) Trustee has cooperated, to the extent requested, in such
investigation, (d) its execution, delivery and performance of this Agreement
have not been done in reliance on any representation or warranty of Trustee
except those expressly set forth in Article III hereof, and (e) notwithstanding
such investigation, the entire risk of the existence of disclosed and
undisclosed claims and/or disputes relating to the Subject Assets shall be borne
by Purchaser and Trustee shall have no liability there for.
ARTICLE V
POST-CLOSING MATTERS
5.1 Further Assurances. If, at any time after the Closing, Purchaser shall
consider or be advised that any further assignments, conveyances, certificates,
filings, instruments or documents or any other things are necessary or desirable
to vest, perfect or confirm in Purchaser title to the Subject Assets, or
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<PAGE>
to consummate any of the transactions contemplated by this Agreement, then to
the extent that Trustee is legally able to do so without incurring liability,
Trustee shall, upon reasonable request from Purchaser, promptly execute and
deliver all such proper deeds, assignments, certificates, filings, instruments
and documents and do all things reasonably necessary and proper to vest, perfect
or confirm title in Purchaser and to otherwise carry out the purposes of this
Agreement.
5.2 The Trustee shall provide in any order dismissing the Cases that the
Court shall retain jurisdiction to authorize and/or direct the Trustee to
execute such documents as the Purchaser may reasonably require under Section
5.1.
ARTICLE VI
MISCELLANEOUS
6.1 Waivers and Amendments. (a) This Agreement may be amended, modified or
supplemented only by a written instrument executed by the parties hereto. The
provisions of this Agreement may be waived only by instrument in writing
executed by the party granting the waiver. No action taken pursuant to this
Agreement shall be deemed to constitute a waiver by the party of compliance by
any other party with any representation, warranty, covenant, or agreement
contained herein. The waiver by any party hereto of a breach of any provision of
this Agreement shall not operate or be construed as a further or continuing
waiver of such breach or as a waiver of any other or subsequent breach.
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<PAGE>
(b) No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other for further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
6.2 Notices. All notices, requests, demands and other communications which
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given or made: if by hand, immediately upon
delivery; if by telex, telecopier, telegram or similar electronic device,
immediately upon sending, provided it is sent on a business day, but if not,
then immediately upon the beginning of the first business day after being sent;
if by Federal Express, Express Mail or any other reputable overnight delivery
service, upon confirmation of delivery by such carrier. All notices, requests
and demands are to be given or made to the parties at the following addresses
(or to such other address as either party may designate by notice in accordance
with the provisions of this paragraph).
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<PAGE>
If to Purchaser: Merchants T&F, Inc.
445 Fifth Avenue
New York, New York 10016
Telephone: (212) 481-1322
Telecopier: (212) 686-4888
Attention: Laszlo Schwartz,
Vice President
With a copy to: Harold S. Berzow, Esq.
Finkel, Goldstein, Berzow and Rosenbloom
26 Broadway, Suite 711
New York, New York 10004
Telephone: (212) 344-2929
Telecopier: (212) 422-6836
If to Trustee: Mr. Alan Cohen
Alco Capital Group, Inc.
745 Fifth Avenue, Suite 1506
New York, New York 10151
Telephone: (212) 751-9150
Telecopier: (212) 371-2768
With a copy to: Harold D. Jones, Esq.
Pryor Cashman Sherman & Flynn
410 Park Avenue
New York, New York 10022
Telephone: (212) 421-4100
Telecopier: (212) 326-0806
6.3 Entire Agreement. With the exception of the record made at the hearing
of the Court held on January 23, 1995, before Judge Jeffrey Gallet, this
Agreement and the schedules and exnibits hereto set forth the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, letters of intent,
understandings or arrangements between the parties hereto with respect to the
subject matter hereof.
6.4 Binding Effect; Benefits. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing
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<PAGE>
in this Agreement, expressed or implied, is intended to confer on any person
other than the parties hereto, or their respective successors, any rights,
remedies, obligations or liabilities under or by reason of this Agreement
provided that the parties acknowledge the rights of Oldco Bijoux, Inc. under the
Oldco Bijoux Purchase.
6.5 Non-Assignability. This Agreement and any rights pursuant hereto shall
not be assignable by either party hereto and any such purported assignment shall
be null and void provided that the parties acknowledge the rights of Oldco
Bijoux, Inc. under the Oldco Bijoux Purchase.
6.6 Applicable Law; Venue. This Agreement and the legal relations between
the parties hereto shall be governed by and construed in accordance with the
laws of the State of New York, applicable to contracts made and to be enforced
in such state. Any action brought by either party with respect to the
enforcement of this Agreement or damages from a breach hereof shall be commenced
exclusively in the United States Bankruptcy Court for the Southern District of
New York, and Purchaser consents to the jurisdiction of such Court. Each party
hereby waives its right to a trial by jury in such a proceeding.
6.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
6.8 Section and Other Headings. All headings of the Sections of this
Agreement are for convenience of reference only and do not form a part thereof
and shall not be used in any way to interpret or construe the terms hereof or
the intention of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
PURCHASER: MERCHANTS T&F, INC.
By:
-----------------------------
Name:
Title:
See next page for signature of Trustee.
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<PAGE>
/s/ Alan Cohen
----------------------------------
Alan Cohen, Chapter 11 Trustee
of Ciro, Inc., et al.
ASSIGNMENT OF FRANCHISE AND LICENSE AGREEMENTS
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, made, executed and delivered on
the 2nd day of February, 1995, by Alan Cohen, as Chapter 11 Trustee for Ciro
Inc., Ciro of Bond Street, Inc., and Ciro Creations, Inc. (herein called
"Trustee") to Merchants T&F, Inc., a New York corporation (herein called
"Buyer").
WHEREAS, Trustee is the Chapter 11 Trustee in certain Chapter 11 cases
jointly administered as Case No. 94--B-43389 (the "Cases") pending in the United
States Bankruptcy Court, Southern District of New York; and
WHEREAS, Trustee has succeeded by operation of law to all right, title and
interest previously enjoyed by Ciro Inc., Ciro of Bond Street, Inc., and Ciro
Creations, Inc., the debtors in the Cases (collectively, the "Debtors"), in and
to the business and assets of the Debtors; and
WHEREAS, Trustee and Buyer are parties to a certain Asset Purchase
Agreement of even date herewith (the "Purchase Agreement") which provides for,
among other things, the sale and o transfer to Buyer from Trustee of all of the
Trustee's right, title and interest in and to said assets (the "Subject
Assets"), all as more fully described in the Purchase Agreement, for
consideration in the amount and on terms and conditions provided in the Purchase
Agreement; and
WHEREAS, the parties desire to carry out the intent and purpose of the
Purchase Agreement by Trustee's execution and delivery to Buyer of, among other
things, this Assignment and Assumption Agreement evidencing the transfer to and
vesting in Buyer of all of the Trustee's right, title and interest in and to the
franchise and license agreements (the "Franchise/License Agreements") listed on
Exhibit A attached hereto.
NOW, THEREFORE, in consideration of payment of the Purchase Price (as
defined in the Purchase Agreement) and of other good and valuable consideration
to Trustee, simultaneously with or before the execution and delivery hereof, the
receipt and sufficiency of which are hereby acknowledged, Trustee hereby assigns
and transfers to Buyer all of the Trustee's right, title and interest in and to
the Franchise/License Agreements, TO HAVE AND TO HOLD the same unto Buyer, its
successors and assigns, forever.
<PAGE>
This assignment is made without any representation or warranty, express or
implied, with respect to the Franchise/License Agreements or the Trustee's
right, title or interest in any of them.
Upon the execution and delivery hereof, Buyer assumes all obligations in
respect of the Franchise/License Agreements.
Executed: February 2, 1995
MERCHANTS T&F, INC.
By: /s/ Laszlo Schwartz
---------------------
Name:
Title: V.P.
See next page for signature of Trustee.
<PAGE>
/s/ Alan Cohen
-------------------------
Alan Cohen, Chapter 11 Trustee
of Ciro Inc., et al.
[NOTARY STAMP]
SUBLEASE AGREEMENT
The parties agree as follows:
Date of this
Sublease: August ______ 1997
Parties to this Overtenant: Merchants T & F, Inc.
Sublease: Address for notices: 445 Fifth Avenue, New York, N.Y.
10016
You, the Undertenant: Ciro International, Inc.
Address for notices: 445 Fifth Avenue, New York, N.Y.
10016
If there are more than one Overtenant or Undertenant,
the words "Overtenant" and "Undertenant" used in this
Sublease includes them.
Information from Landlord: Murray Wilson
Over-Lease: Address for notices: 445 Fifth Avenue, New York, N.Y.
10016
Overtenant: Merchants T & F, Inc.
Address for notices: 445 Fifth Avenue, New York, N.Y.
10016
Date of Over-Lease: January 1, 1992
Term: 10 Years from: January 1, 1992 to: December 31, 2001
Term: 1. Monthly Beginning: August 1, 1997
ending: 19
Premises rented: 2. 445 Fifth Avenue, New York, N.Y. 10016
Use of premises: 3. The premises may be used for commercial uses, within
the parameters of the Undertenant's business plan
only.
Rent: 4. The rent is $ 2,000 per month. You, the Undertenant,
will pay this rent to the Overtenant in monthly
payments of $ 2,000. Payments shall be paid in
advance on the first day of each month during the
Term. This Lease may be terminated upon the receipt
of Ninety days notice by the Overtenant.
Security: 5. The security for the Undertenant's performance is $
XXXXXXXXXXX. Overtenant states that Overtenant has
received it. Overtenant shall hold the security in
accordance with Paragraph _____ of the Over-Lease.
Agreement to lease 6. Overtenant sublets the premises to you, the
and pay rent: Undertenant, for the Term. Overtenant states that it
has the authority to do so. You, the Undertenant,
agree to pay the Rent and other charges as required
in the Sublease. You, the Undertenant, agree to do
everything required of you in the Sublease.
Notices: 7. All notices in the Sublease shall be sent by
certified mail, "return receipt requested".
Subject to: 8. The Sublease is subject to the Over-Lease. It is also
subject to any agreement to which the Over-Lease is
subject. You, the Undertenant, state that you have
read and initialed the Over-Lease and will not
violate it in any way.
Overtenant's duties: 9. The Over-Lease describes the Landlord's duties. The
Overtenant is not obligated to perform the Landlord's
duties. If the Landlord fails to perform, you, the
Undertenant, must send the Overtenant a notice. Upon
receipt of the notice, the Overtenant shall then
promptly notify the Landlord and demand that the
Over-Lease agreements be carried out. The Overtenant
shall continue the demands until the Landlord
performs.
Consent: 10. If the Landlord's consent to the Sublease is
required, this consent must be received within _____
days from the date of this Sublease. If the
Landlord's consent is not received within this time,
the Sublease will be void. In such event all parties
are automatically released and all payments shall be
refunded to you, the Undertenant.
Adopting the 11. The provisions of the Over-Lease are part of this
Over-Lease and Sublease. All the provisions of the Over-Lease
exceptions: applying to the Overtenant are binding on you, the
Undertenant, except these:
a) These numbered paragraphs of the Over-Lease
shall not apply:
<PAGE>
No authority: 12. You, the Undertenant, have no authority to contact or
make any agreement with the Landlord about the
premises or the Over-Lease. You the Undertenant, may
not pay rent or other charges to the Landlord, but
only to the Overtenant.
Successors: 13. Unless otherwise stated, the Sublease is binding on
all parties who lawfully succeed to the rights or
take the place of the Overtenant or you, the
Undertenant. Examples are an assign, heir, or a legal
representative such as an executor of your will or
administrator of your estate.
Changes: 14. This sublease can be changed only by an agreement in
writing signed by the parties to the Sublease.
Signatures: OVERTENANT
/s/ [illegible]
----------------------------
----------------------------
Witness: You, the UNDERTENANT
----------------------------
/s/ Laszlo Schwartz /s/ [illegible]
-------------------------- ----------------------------
GUARANTY OF PAYMENT WHICH IS PART OF THE SUBLEASE
Date of Guaranty: 19
Guarantor
and address:
Reason for 1. I know that the Overtenant would not rent the
Guaranty: premises to the Undertenant unless I guarantee Under-
tenant's performance. I have also requested the
Overtenant to enter into the Sublease with the
Undertenant. I have a substantial interest in making
sure that the Overtenant rents the premises to the
Undertenant.
Guaranty: 2. The following is my Guaranty: I guaranty the full
performance of the Sublease by the Undertenant. This
Guaranty is absolute and without any condition. It
includes, but is not limited to, the payment of rent
and other money charges.
In addition, I agree to these other terms:
Changes in 3. This Guaranty will not be affected by any change in
Sublease have the Sublease, whatsoever. This includes, but is not
no effect: limited to, any extention of time or renewals. The
Guaranty will be binding even if I am not a party to
these changes.
Waiver of notice: 4. I do not have to be informed about any failure of
performance by Undertenant. I waive notice of non-
payment or nonperformance.
Performance: 5. If the Undertenant fails to perform under the
Sublease, the Overtenant may require me to perform
without first demanding that the Undertenant perform.
Waiver of jury trial: 6. I give up my right to trial by jury in any claim
related to the Sublease or this Guaranty.
Changes: 7. This Guaranty of payment and performance can be
changed only by written agreement signed by all
parties to the Sublease and Guaranty.
Signatures:
GUARANTOR:
WITNESS:
----------------------------
/s/ Laszlo Schwartz /s/ [illegible]
-------------------------- ----------------------------
- --------------------------------------------------------------------------------
EPA and HUD Lead Paint Regulations, Effective September 6, 1996(1)
Landlords must disclose known lead-based paint and lead-based paint hazards of
pre-1978 housing to tenants(2) Use the following BLUMBERG LAW PRODUCTS (800 LAW
MART) to comply:
3140 Lead Paint Information Booklet 3141 Lead Paint Lease Disclosure Form
(1) December 6, 1996 for owners of 1 to 4 residential dwellings.
(2) Leases for less than 100 days, 0-bedroom units, elderly and
handicapped housing (unless children live there) and housing found to
be lead-free by a certified inspector are excluded.
- --------------------------------------------------------------------------------
TERMINATION OF EXCLUSIVE LICENSE AGREEMENT
THIS TERMINATION OF EXCLUSIVE LICENSE AGREEMENT entered into as of this
19th day of March, 1997 by and among Ciro Jewelry, Inc. and Merchants T&F Inc.
(henceforth collectively referred to as "Licensor") and Hyman License, Inc.
("Licensee").
WITNESSETH
WHEREAS, the Licensor entered into a License Agreement dated May 19, 1995
as amended by letter agreements dated July 7, 1995 and August 17, 1995
(henceforth collectively called "License Agreement") with Licensee for the
exclusive right and license to operate Ciro retail stores within the Territory
(as defined in the License Agreement); and
WHEREAS, Licensor and Licensee desire to terminate the License Agreement
effective as of the date hereof:
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto do hereby agree that the License Agreement shall be and the same is
hereby cancelled, terminated and of no further force and effect, as of the date
hereof, and each party is hereby relieved1 released and discharged of and from
any and all past, present and future liabilities and obligations which any party
had to another party under the License Agreement or otherwise.
Notwithstanding the foregoing, it shall be expressly understood that;
1) Licensee shall be responsible for any Royalty" (as defined within The
Agreement) due under the terms of The Agreement and not paid as of the
date hereof.
2) Licensee shall be permitted to continue operating those stores it
presently operates under the name Ciro as Ciro stores and accordingly
shall be responsible for any Royalty due Licensor for any such store
after the date hereof as if The License Agreement remained In full
force and effect;
<PAGE>
3) Licensee shall have the right but not the obligation, in its sole
discretion, to open up to four (4) additional Ciro stores after the
date hereof. Should Licensee open any or all such stores said stores
shall be subject to the same terms and conditions as if they had been
opened with the License Agreement in full force and effect.
The parties hereto have duly executed this Agreement as of the day and year
first above written.
Ciro Jewelry, Inc.
Witness
/s/ [ILLEGIBLE]
- ---------------------------- By: /s/ [ILLEGIBLE]
--------------------------
President
/s/ [ILLEGIBLE] Merchants T&F Inc.
- ----------------------------
By: /s/ [ILLEGIBLE]
--------------------------
/s/ [ILLEGIBLE]
- ---------------------------- Hyman License, Inc.
By: /s/ [ILLEGIBLE]
--------------------------
LIMITED OFFERING MEMORANDUM
Do not copy or circulate
CIRO INTERNATIONAL, INC.
$990,000 Offering
1,500,000 Shares of Common Stock
$0.66 per Share
Ciro International, Inc., a Nevada corporation, (the "Company") is offering
up to 1,500,000 shares of its common stock, par value $0.001 per share (the
"Shares") at a price of $0.66 per Share, to persons who meet the suitability
standards set forth herein. The Company will not escrow any funds from this
offering, but will make such funds immediately available to the Company. The
minimum purchase amount per investor is $990, unless waived by the Company.
Prior to this offering, there has been a limited public market for the Company's
common stock, and there can be no assurance that an active market will be
established in the future. This offering involves immediate and substantial
dilution to investors. See "Dilution." The public offering price of $0.66 per
share has been arbitrarily determined by the Company and bears no necessary
relationship to assets, shareholders equity or any other recognized criteria of
value. This offering will expire not later than March 31, 1998 (the "Expiration
Date"), unless extended by management for an additional ninety (90) days. See
"Risk Factors," "Investor Suitability," and "Plan of Distribution."
The Company is engaged in the business of licensing the use of the CIRO
name and proposes to acquire existing, and/or to open, retail fashion jewelry
stores using the CIRO name. See "Business." Net cash proceeds from the offering
will be used by the Company to open new stores, to purchase inventory therefor,
to acquire existing retail stores, and for the working capital needs of the
Company. See "Use of Proceeds." The common stock of the Company is quoted on the
OTC Electronic Bulletin Board under the symbol "CIRR."
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK AND SHOULD NOT BE PURCHASED BY
PERSONS WHO CANNOT AFFORD TO RISK LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY OTHER SECURITIES REGULATORY AUTHORITY. NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER AUTHORITY HAS PASSED UPON
OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS
MEMORANDUM AND IT 1S NOT INTENDED THAT ANY OF THEM WILL DO SO. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. INVESTORS MUST RELY ON
THEIR OWN EXAMINATION OF THE COMPANY, AND THE RISKS, MERITS AND TERMS OF THIS
OFFERING IN MAKING AN INVESTMENT DEC1SION.
================================================================================
Offering
Price Commissions(1) Proceeds to Company(2)
- --------------------------------------------------------------------------------
Per Share $0.66(1) -0- $0.66
Total $990.000(3) -0- $990.000
================================================================================
(Footnotes on following page)
The Date of this Memorandum is January 14, 1998
<PAGE>
Footnotes from preceding page:
(1) The purchase price per Share is payable at the time an investor executes
the Subscription Agreement. Payment will be in cash at the rate of one
share for each $0.66 received. The offering will be managed by the Company
and the Shares will be offered and sold by officers of the Company, without
any discounts or other commissions. See "Plan of Distribution."
(2) The proceeds to the Company are shown before deduction for legal,
accounting, printing, and other expenses estimated at $20,000.
(3) The offering will continue until the earlier of the receipt of $990,000 or
the Expiration Date, unless extended in the sole discretion of the Company.
Any extension may be accompanied by a supplement to this Memorandum if the
same is deemed necessary by the Company.
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION
UNDER SECTION 3(b) OF THE SECURITIES ACT OF 1933 AND RULE 504 PROMULGATED
THEREUNDER.
THIS MEMORANDUM SHOULD BE READ IN ITS ENTIRETY BY ANY PROSPECTIVE INVESTOR
PRIOR TO INVESTING. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR
THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED IN THIS MEMORANDUM IN CONNECTION WITH
THIS OFFERING. THE DELIVERY OF THIS MEMORANDUM AT ANY TIME DOES NOT IMPLY THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE
DATE HEREOF. THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER WITHIN ANY STATE OR TO
ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL. THIS MEMORANDUM IS FOR THE
EXCLUSIVE USE OF THE PERSON TO WHOM IT IS DISTRIBUTED BY THE COMPANY AND MAY NOT
BE REPRODUCED OR USED IN ANY OTHER MANNER WITHOUT THE EXPRESS WRITTEN CONSENT OF
THE COMPANY. BY ACCEPTING DELIVERY OF THIS MEMORANDUM, EACH PERSON AGREES TO
RETURN THE MEMORANDUM IF HE/SHE DOES NOT PURCHASE THE SECURITIES OFFERED HEREBY.
THE COMPANY HAS AGREED TO GIVE ALL PROSPECTIVE INVESTORS OR THEIR
REPRESENTATIVE(S), OR BOTH, AT A REASONABLE TIME PRIOR TO THE PURCHASE OF ANY OF
THE SECURITIES OFFERED HEREBY, THE OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE
ANSWERS FROM, THE COMPANY OR PERSON(S) ACTING ON ITS BEHALF CONCERNING THE TERMS
AND CONDITIONS OF THIS OFFERING, AND TO OBTAIN ANY ADDITIONAL INFORMATION WHICH
THE COMPANY POSSESSES OR CAN ACQUIRE WITHOUT UNREASONABLE EFFORT OR EXPENSE THAT
IS NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN.
PURCHASERS MUST RELY ON THEIR OWN EVALUATION OF THE COMPANY AND THE TERMS
OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED IN MAKING AN INVESTMENT
DECISION WITH RESPECT TO THE SHARES. THE INVESTMENT DESCRIBED
-ii-
<PAGE>
HEREIN IS NOT LIQUID AND INVOLVES CERTAIN RISKS. THIS INVESTMENT IS SUITABLE
ONLY FOR INVESTORS OF SUBSTANTIAL MEANS WHO CAN AFFORD TO RISK A TOTAL LOSS OF
THEIR INVESTMENT.
IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE ISSUER AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THESE SECURITIES HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR
STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE COMPANY, IN ITS ABSOLUTE DISCRETION, MAY REJECT, ALL OR IN PART, THE
SUBSCRIPTION AGREEMENT TENDERED BY ANY PERSON.
FOR FLORIDA RESIDENTS ONLY:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES AND
INVESTOR PROTECTION ACT AND ARE BEING SOLD IN RELIANCE UPON THE EXEMPTION
CONTAINED IN SECTION 517.061(11) OF SUCH ACT. SUCH SECTION PROVIDES THAT ANY
SALE MADE PURSUANT THERETO SHALL BE VOIDABLE BY THE PURCHASER EITHER WITHIN
THREE DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY THE PURCHASER TO
THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS
AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO THE PURCHASER,
WHICHEVER OCCURS LATER. SUBSCRIBERS ARE HEREBY NOTIFIED OF SUCH RIGHT.
NOTICE TO ALL INVESTORS:
THE COMPANY, AS OF THE DATE OF THIS OFFERING, HAD NOT YET DETERMINED IN
WHICH JURISDICTIONS OR STATES IT WILL MAKE THIS OFFERING. SOME STATES REQUIRE A
SPECIFIC LEGEND OR NOTIFICATION BE GIVEN TO INVESTORS. OTHER STATES REQUIRE A
GENERAL NOTICE THAT SUCH STATE HAS NOT PASSED ON OR ENDORSED THE OFFERING AND
THAT THE SECURITIES ARE BEING SOLD PURSUANT TO AN EXEMPTION FROM REGISTRATION IN
THAT STATE. THE COMPANY HEREBY PROVIDES THE FOLLOWING NOTICE AND MAY PROVIDE
ADDITIONAL NOTICES TO RESIDENTS OF CERTAIN STATES:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH ANY STATE OR OTHER
JURISDICTION AND ARE BEING SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION.
NO SECURITIES AGENCY HAS REVIEWED OR PASSED UPON THE MERITS OF THE OFFERING OR
THE ADEQUACY OF THE DISCLOSURE CONTAINED HEREIN. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
-iii-
<PAGE>
TABLE OF CONTENTS
Page
INVESTOR SUITABILITY ....................................................... 1
SUMMARY OF THE OFFERING .................................................... 2
RISK FACTORS ............................................................... 3
DILUTION ................................................................... 6
USE OF PROCEEDS ............................................................ 6
MANAGEMENT'S DISCUSSION AND ANALYSIS ....................................... 7
BUSINESS ................................................................... 8
MANAGEMENT ................................................................. 12
PRINCIPAL SHAREHOLDERS ..................................................... 13
CERTAIN TRANSACTIONS ....................................................... 14
CONFLICTS OF INTEREST ...................................................... 14
DESCRIPTION OF SECURITIES .................................................. 15
MARKET INFORMATION ......................................................... 16
PLAN OF DISTRIBUTION ....................................................... 16
LITIGATION ................................................................. 17
FINANCIAL STATEMENTS ....................................................... 17
FURTHER INFORMATION ........................................................ 18
-iv-
<PAGE>
INVESTOR SUITABILITY
There is currently a limited trading market for the Company's common stock
which is quoted on the OTC Electronic Bulletin Board ("CIRR"). No assurance can
be given as to any future established public market for the Shares. Therefore,
although the Shares are being offered pursuant to Rule 504 of Regulation D
promulgated under the Securities Act of 1933 (the "Act"), which provides that
the Shares will not be "restricted securities" (i.e. securities which may not be
publicly resold unless registered under the Act or in compliance with Rule 144
promulgated thereunder), an investment in the Shares is nonetheless highly
speculative and illiquid. An investor may not be able to liquidate his
investment readily or at all and may have to bear the risk of investment for an
indefinite period of time. Therefore, the purchase of the Shares is suitable
only for persons who (a) do not anticipate the need to sell the Shares in the
foreseeable future; and (b) have sufficient net worth to risk loss of the entire
investment. Investors purchasing Shares in this offering who reside in certain
States may be required by the laws of such States to agree in writing to not
publicly resell the shares for an indeterminate time period.
The Company has established the following suitability standards for
prospective investors: Each prospective investor must represent in writing to
the Company (1) that he or she is an "accredited investor" within the meaning of
Regulation D, as hereinafter defined, or (2) is a sophisticated investor who (a)
has adequate means of providing for current needs and personal contingencies and
has no need to sell the securities in the foreseeable future (that is, at the
time of the investment, the prospective investor can afford to hold the
investment for an indefinite period of time); and, (b) either alone or with a
purchaser representative, has sufficient knowledge and experience in business
and financial matters to be able to evaluate the risks and merits of an
investment in the Securities. Such representations will be made by each investor
in the subscription agreement delivered to each prospective investor with this
Memorandum. Each investor must complete and execute the subscription agreement
in accordance with its instructions and submit it to the Company. A prospective
investor may be required to substantiate the accuracy of such representations.
It should be noted that these suitability standards are the minimum requirements
for prospective purchasers of the Shares, as adopted by the Company, and that
the satisfaction of those standards does not necessarily mean that the Shares
are a suitable investment for a prospective purchaser. Subject to the
limitations imposed by federal and state securities laws the Company may modify
the above standards.
The term "accredited investor" is defined in Rule 501(a) of Regulation D
promulgated under the Act. Accredited investors include the following: (i)
Certain financial institutions; (ii) a private business development company
under Section 202(a)(22) of the Investment Advisers Act of 1940; (iii)
organizations described in Section 501 (c)(3) of the Internal Revenue Code and
certain other corporations, trusts or partnerships not formed for the specific
purpose of acquiring the securities offered, with total assets in excess of
$5,000,000; (iv) any director or executive officer of the Company; (v) any
natural person whose individual net worth, or joint net worth with that person's
spouse, at the time of his purchase exceeds $1,000,000; (vi) any natural person
who has an individual income in excess of $200,000 in each of the last two most
recent years, or joint income with that person's spouse in excess of $300,000 in
each of those years, and has a reasonable expectation of reaching the same
income level in the current year; (vii) any trust with total assets in excess of
$5,000,000 not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person; and (viii) any
entity in which all of the equity owners are accredited investors.
-1-
<PAGE>
SUMMARY OF THE OFFERING
The following summary of certain aspects of this Memorandum is qualified in
its entirety by the more detailed information appearing elsewhere herein, and
the description of any document is qualified in its entirety by the terms of
such document.
The Company and its Proposed Business
The Company, through its wholly owned subsidiary, Ciro Jewelry, Inc.
(hereinafter the "Subsidiary"), holds five licenses in various countries through
which the licensees operate a total of 30 retail fashion jewelry stores using
the CIRO name. In addition, the Company intends to acquire and/or to open and
operate retail fashion jewelry stores using the CIRO name. See "Business."
The Company's principal place of business is located at 445 Fifth Avenue,
11th Floor, New York, NY 10016, and its telephone number is (212) 481-1322.
The Offering
Securities Offered: The Company is offering on a best efforts basis,
1,500,000 shares of common stock which will represent
approximately 19% of the Company's outstanding shares.
See "Plan of Distribution."
Terms of the Offering: Offering proceeds will not be deposited in an escrow
account, but will be delivered to the Company
immediately upon acceptance of the subscription. See
"Plan of Distribution."
Use of Proceeds: Net cash proceeds from the offering will be used by the
Company to open new stores, to purchase inventory
therefor, to acquire existing retail stores, and for
the working capital needs of the Company. See "Use of
Proceeds."
Plan of Distribution: The cash purchase price per Share is payable at the
time an investor executes the Subscription Agreement.
The offering will be managed by the Company and the
Shares will be offered and sold by officers of the
Company, without any discounts or other commissions.
The minimum purchase amount per investor is $990,
unless waived by the Company. See "Plan of
Distribution."
Who May Invest: The Shares are being offered pursuant to this
Memorandum solely to persons who meet the suitability
standards set forth herein. See "Investor Suitability."
Risk Factors: A purchase of Shares in this offering is highly
speculative and involves a high degree of risk for
investors. There currently exists a limited public
market for the Shares and there is no assurance that an
established market will develop following this
offering. The proposed business of the Company is new
and largely untested. An investor risks losing his
entire investment. See "Risk Factors."
-2-
<PAGE>
Transfer Agent Interwest Transfer Co., 1981 East 4800 South,
Salt Lake City, Utah 84117; telephone (801) 272-9294.
Additional Information: Additional information regarding the Company and this
offering may be obtained by contacting the Company at
the address set forth herein.
RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prospective investors should carefully consider, among others, the following
risk factors present in this offering:
1. Limited Operating History. The Company has had a limited operating
history. Although the Subsidiary has been profitable since its inception, there
is no assurance that it will remain profitable or that the Company will be
profitable, especially with the proposed acquisition and/or opening and
operation of retail fashion jewelry stores. As a new enterprise, the operation
of such retail stores is likely to be subject to risks management has not
anticipated. See "Business," "Management's Discussion and Analysis," and
"Financial Statements."
2. Reliance on Officers, Directors and Key Employees. The ability of the
Company to successfully conduct its business affairs will be subject to the
capabilities and business acumen of current officers, directors and key
employees. The Company has no employment agreements with management. The loss of
any one of these individuals could have a material adverse impact on the
continued operation of such company. See "Management."
3. Felony Conviction of Key Officer. In June 1989 Mr. Murray A. Wilson, the
president, a director, and the controlling shareholder of the Company, was found
guilty in federal court in a non-securities related matter of conspiracy to
commit mail and wire fraud in Las Vegas, Nevada. In 1991 Mr. Wilson pleaded
guilty in New York to a Class E Felony in a non-securities related matter. See
"Management."
4. Limited Liability of Officers and Directors. The articles of
incorporation of the Company limit a director's personal liability to the
Company or its shareholders for monetary damages for any actions taken or any
failure to take action to the fullest extent permitted by Nevada law, or any
other applicable law as now in effect or as it may hereafter be amended.
Furthermore, the Company is obligated under the articles of incorporation and
bylaws to indemnify its directors, officers' employees, agents, or fiduciaries
to the fullest extent permitted or required by Nevada law. Each of these
provisions could reduce the legal remedies available to the Company and the
shareholders against such individuals. See "Conflicts of Interest."
5. Competition. The market for the Company's products and services is
intensely competitive, with many providers who have greater technical expertise,
financial resources and marketing capabilities than the Company. There is no
assurance that the Company will be able to overcome competitive disadvantages it
will face as a small, start up company with limited capital. See "Business."
6. Fashion Jewelry Industry and Competition. The fashion jewelry industry
is highly competitive and is affected by changes in international, national,
regional, and local economic conditions and market trends. The Company, and its
licensees, do and will compete with a variety of other retail jewelry businesses
in the industry. The competitors, generally, have been in existence longer and
have a much more
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established market presence and substantially greater financial, marketing and
other resources than the Company. See "Business."
7. Proprietary Rights. The present income of the Company is dependent upon
the various license arrangements with others to use the CIRO name. The Company
has attempted to register with the various federal and foreign agencies to
protect the exclusive use of the name. There is no assurance that the rights to
such name are adequately protected. The loss of the use of the name CIRO would
be a material negative factor in the current and proposed business of the
Company. See "Business."
8. No Established Public Market for the Company's Stock. Although the
Common Stock of the Company is quoted on the OTC Electronic Bulletin Board
("CIRR"), limited trading has occurred since such listing in February 1997, and
therefore, at present, management believes that no established market exists for
the Common Stock. There is no assurance that an established trading market for
such securities will develop, or if such market is developed, that it will be
sustained. See "Market Information."
9. Dividend Policy. The Company has never paid a cash dividend on its
Common Stock and does not anticipate paying cash dividends in the foreseeable
future. See "Description of Securities--Dividend Policy."
10. Market Overhang. At December 23, 1997, Mid-Way had approximately
4,635,000 shares, or approximately 71%, of its Common Stock which had not been
registered with the Securities and Exchange Commission or any state securities
agency and which were restricted pursuant to Rule 144 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended.
Rule 144 provides, in essence, that a person holding restricted securities for
one year from the date the securities were bought from the issuer, or an
affiliate of the issuer, and fully paid, may sell limited quantities of the
securities to the public without registration, provided there shall be available
adequate current public information with respect to the issuer. Such information
shall be deemed to be available only if the issuer is current in filing its
reports with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, or if not required to file such reports, has
made certain information publicly available. Sales of securities of an
affiliate, or a non-affiliate who has owned the stock for more than one year but
less than two years, are limited to one percent of the total outstanding shares
of the issuer during the three months preceding the sale. Further, the
securities must be sold in brokers' transactions within the meaning of Rule 144.
Pursuant to Rule 144, such securities held by non-affiliates for more than two
years may be sold without reference to the current public information or broker
transaction requirements, or the one percent selling limitation. Management
believes that some of the current outstanding restricted shares may be available
for resale pursuant to Rule 144. The sale of some or all of such currently
restricted shares of Common Stock could have a material negative impact upon the
market price of the Common Stock of the Company if an established market for
such securities should develop in the future. See "Market Information."
11. Strict Compliance with Exemption Requirements. It is the intention of
the Company to issue the Shares in accordance with an exemption from
registration contained in Section 3(b) of the Securities Act of 1933, as
amended, and Rule 504 of Regulation D promulgated by the Securities and Exchange
Commission, and to comply with state filing requirements. The failure to comply
strictly with the requirements of Regulation D, and the similar state
provisions, could make such exemptions unavailable and would create liability
for the Company, its officers and directors, and others for failure to register
the securities. See "Plan of Distribution."
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12. Applicability of Low Priced Stock Risk Disclosure Requirements. The
Common Stock of the Company is considered a low priced security under rules
promulgated under the Securities Exchange Act of 1934, as amended. Under these
rules, broker-dealers participating in transactions in low priced securities
must first deliver a risk disclosure document which describes the risks
associated with such stocks, the broker-dealer's duties, the customer's rights
and remedies, and certain market and other information, and make a suitability
determination approving the customer for low priced stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer
and obtain specific written consent of the customer, and provide monthly account
statements to the customer. With all these restrictions, the likely effect of
designation as a low priced stock will be to decrease the willingness of
broker-dealers to make a market for the stock, to decrease the liquidity of the
stock and increase the transaction cost of sales and purchases of such stocks
compared to other securities.
13. Volatility of Stock Prices. In the event that an established public
market does develop for the Common Stock, market prices will be influenced by
many factors, and will be subject to significant fluctuation in response to
variations in operating results of the Company and other factors such as
investor perceptions of the Company, supply and demand, interest rates, general
economic conditions and those specific to the industry, developments with regard
to the Company's activities, future financial condition and management.
14. Best Efforts Offering; No Firm Commitment. The Shares are offered by
the Company on a "best efforts" basis; there is no underwriter and no firm
commitment from anyone to purchase all or any of the Shares offered. No
assurance can be given that all of the Shares will be sold. See "Plan of
Distribution."
15. Uncertain Sufficiency of Funds. The Company believes that the net
proceeds to the Company from the sale of the Shares offered hereby (assuming
that all Shares offered hereby are sold) will provide the Company with
sufficient capital to fund its operations for the next 12 months. Many factors
may, however, affect the Company's cash needs, including the Company's possible
failure to generate revenues from the sale of its products. In any event, the
Company may not have sufficient capital to continue to fund its business and it
may be unable to find suitable financing on terms acceptable to the Company.
This event would significantly increase the risk to those persons who invest in
this offering. See "Business" and "Use of Proceeds."
16. Dilution. Upon completion of this offering, assuming sale of all Shares
offered hereby, investors in this offering will incur substantial immediate
dilution in the net book value per share of their common stock compared to the
purchase price thereof See "Dilution."
17. Arbitrary Determination of Offering Price. The public cash offering
price of the Shares of common stock offered hereby was arbitrarily determined by
management of the Company. The cash price bears no relationship to the Company's
assets, book value, net worth or other economic or recognized criteria of value.
In no event should the public offering price be regarded as an indicator of any
future market price of the Company's securities. See "Financial Statements."
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DILUTION
The difference between the Offering price per share ($0.66) of the
Company's common stock offered hereby and the pro forma book value per Share
after this Offering constitutes the dilution to investors in this offering. Book
value per share is determined by dividing the pro forma book value of the
Company (total tangible assets less total liabilities) by the number of pro
forma outstanding shares of Common Stock.
Based on the unaudited financial statements of the Subsidiary and the
Company at September 30, 1997 (giving effect to the forward split effective
December 1, 1997, the cancellation of stock effective December 2, 1997, and the
issuance of stock in connection with the reorganization effective December 2,
1997), and after giving effect to the sale of 1,500,000 Shares offered hereby,
the pro forma book value of the Company is shown at $49,710, or $0.0076 per
share. The pro forma book value per share following the offering would be
$0.127, or an increase of $0.1194 per share to the current shareholders. If
fewer than the maximum number of Shares is sold, the dilution per share to the
investors would be increased. The following table illustrates the dilution to
investors in this Offering on a per share basis, assuming the sale of all of the
Shares.
Offering price per share $0.66
Pro forma book value per share after offering $0.127
Dilution per share to investors in the Offering:
Amount $0.533
Percent 80.76%
USE OF PROCEEDS
The proceeds to the Company from the sale of the Shares offered hereby at
an offering price of $0.66 per Share shall be $990,000 if the offering is
completed. There will be no selling commissions. Estimated offering expenses of
up to $20,000 are anticipated in this Offering. The Company anticipates using
the proceeds as soon as they become available, but any portion not required for
immediate expenditure may be deposited in interest-bearing accounts or invested
in short-term government notes, treasury bills, or similar obligations of
financial institutions.
The following table sets forth an estimate of the use of the proceeds of
the offering. The actual expenditure of such funds may vary and will be spent at
the discretion of management of the Company to fund its working capital needs in
its proposed business operations. If less than all of the Shares are sold,
management may decide to open only one retail store which would reduce
proportionately the amount required for inventory and working capital. Also, if
the Company is able to negotiate the purchase of an existing store quickly, the
net proceeds of the offering may be allocated to such purchase prior to the
opening of new stores.
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Approximate
Item Estimated Amount Percentage
- ---- ---------------- ----------
Gross Proceeds $990,000
Costs of Offering 20,000 2.02%
--------
Net Proceeds $970,000
========
Opening New Stores(1) $300,000 30.3%
Inventory Purchase(2) 200,000 20.2%
Working Capital(3) 220,000 22.22%
Purchase of Existing Stores(4) 250,000 25.26%
-------- -----
Total $970,000 100%
======== =====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the financial statements of the Company and the Subsidiary, and the notes
associated with them, contained elsewhere in this Memorandum. (See "Financial
Statements.") This discussion should not be construed to imply that the results
discussed herein will necessarily continue into the future, or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future. Such discussion represents only the best present
assessment of management of the Company.
Results of Operations
Comparison of Years Ended December 31, 1996, and December 31, 1995;
September 30, 1997
Revenues from royalty income for the year 1996 increased to $262,975 from
royalty income of $253,520 in 1995. However, merchandise sales decreased to
$3,076 compared with sales of $29,950 in 1995, offset by the cost of merchandise
in 1995 at $50,623 and no such cost in 1996. Income from operations increased
from ($9,941) in 1995 to $388 in 1996, due largely to the decrease in the cost
of merchandise. Other income (expenses) decreased from $18,942 in 1995 compared
to $3,458 in 1996, based upon the
- ----------
(1)Management estimates that such amount would allow the Company to open
approximately two new retail stores, including the acquisition of the necessary
furniture, fixtures, and equipment for such stores, lease payments, and security
deposits.
(2)Management anticipates that the inventory would be purchased for the new
stores proposed to be opened by the Company.
(3)Management proposes to use these funds for the operations of any of the
stores to be purchased or opened by the Company.
(4)Management estimates that such amount would permit the Company to
purchase the existing leases of between four and five retail stores. In addition
to the cash amount of the purchase price, management anticipates that it would
issue a promissory note for the balance of the purchase price of each store,
which amount could be substantially more than the cash portion of the total
purchase price.
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eliminations of commission income, a reduction in interest income and other
income, and a one-time gain on the sale of stock in 1995. In 1996, the company
had no interest expense or interest income as compared to interest income (net
of interest expense) of $1,263 in 1995. Income before taxes for 1996 was $3,846,
compared to $9,001 for 1995. Net income for 1996 was ($1,461) compared to $4,939
for 1995.
Revenues from royalty income for the first nine months of 1997 were
$139,678, while selling, general and administrative expenses were $259,545.
Losses from operations for such period were ($119,867), $100,000 of which is due
primarily to a non-reoccurring sale of stock. Losses before taxes were likewise
($119,867) since the combined companies had no other income or expenses during
this period. Net loss for the first nine months of 1997 was ($122,602).
Liquidity
During the first nine months of 1997, and during 1996 and 1995, the
Subsidiary has had positive working capital. Working capital at the end of 1995
was $12,607 as compared to $22,201 at the end of 1996. At June 30, 1997, working
capital was $17,099.
Capital Resources and Requirements
The Company currently has no material commitments for capital expenditures.
However, it intends to operate several retail fashion jewelry stores during
1998. The purchase or opening of such stores and their operation will require
capital commitments by the Company which it intends to finance through funds
generated internally and through the sale of Shares in this offering.
BUS1NESS
History and Development of the Company
The Company was originally incorporated in the State of Florida on June 14,
1990, under the name "Mid-Way Medical and Diagnostic Center, Inc." (the Florida
corporation is hereinafter designated as "Mid-Way.") On September 16, 1996,
Mid-Way amended its articles of incorporation to increase the authorized number
of common shares from 100 to 50,000,000 and to reduce the par value to $.001.
Also on September 16, 1996, Mid-Way forward split its outstanding shares of
Common Stock 10,000-for-one, increasing the number of outstanding shares from
100 to 1,000,000. On July 16, 1997, Mid-Way filed articles of amendment to
restate the articles. Mid-Way was initially engaged in the business of
attempting to establish and operate medical and diagnostic centers. During 1991
Mid-Way abandoned its efforts to engage in such business. On September 3, 1997,
Mid-Way entered into a Stock Purchase Agreement with Mr. David Cohen in which
Mid-Way agreed to issue 10,000,000 shares of its Common Stock to Mr. Cohen for
$100,000. The purchase price was paid and the shares issued on or about
September 3, 1997, and Mr. Cohen was also appointed the sole officer and
director on such date. The funds paid to Mid-Way were used by Mid-Way to pay
legal expenses and finders' fees in connection with such transaction.
Effective December 9, 1997, Mid-Way changed its domicile to the State of
Nevada by merging with and into Mid-Way Medical and Diagnostic Center, Inc., a
Nevada corporation incorporated on November 12, 1997, by Mid-Way solely for the
purposes of changing the domicile of Mid-Way to the State of Nevada. In
connection with the change of domicile, the name of Mid-Way was changed to "Ciro
International, Inc."
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Effective the chose of business on December 1, 1997, the Company forward
split its 11,000,000 outstanding shares of Common Stock at the rate of 2.5
shares for each one share outstanding.
In November 1997, Mid-Way entered into a reorganization agreement with Ciro
Jewelry, Inc., a Delaware corporation, (hereinafter "Ciro (Del)") in which Ciro
(Del) agreed to merge with and into a newly created wholly owned Nevada
corporation organized by Mid-Way for the purpose of acquiring Ciro (Del). This
corporation was unincorporated on November 12, 1997, under the name "Mid-Way
Acquisitions Corp." (hereinafter the "Subsidiary"). Ciro (Del) was incorporated
on June 28, 1994, under the laws of the State of Delaware as "Ciro Jewelery,
Inc." but changed its name to "Ciro Jewelry, Inc." on September 23, 1997. The
closing of the reorganization occurred on December 2, 1997, and the Company
issued 2,500,000 post-forward split shares to Murray A. Wilson, the sole
shareholder of Ciro (Del) in return for all of the outstanding stock of Ciro
(Del). By virtue of the merger, all of the assets, liabilities, and business of
Ciro (Del) became the assets, liabilities, and business of the Subsidiary, the
wholly owned subsidiary of the Company. In connection with the merger, the
Subsidiary changed its name to "Ciro Jewelry, Inc." Also, Mr. Cohen resigned as
the sole officer and director of the Company and the Subsidiary and appointed
Mr. Wilson as the sole director of each entity. Also in connection with the
reorganization, Mr. Cohen canceled 9,400,000 of the 10,000,000 pre-forward split
shares held by him. He also sold 260,000 of his pre-forward split shares to Mr.
Wilson for $26,000 and 140,000 of his pre-forward split shares to Mr. Laszlo
Schwartz, a current officer of the Company for $14,000.
The Company's principal place of business is located at 445 Fifth Avenue,
11th Floor, New York, NY 10016, and its telephone number is (212) 481-1322.
General
The Subsidiary currently has five licensees in the United States, Korea,
Israel, Mexico, and Russia which operate approximately 32 retail fashion jewelry
stores using the CIRO name. In addition, it holds a number of trademarks and
trade names relating to the CIRO name throughout the world. These license
agreements and trademarks and trade names were acquired by Ciro (Del) from
Merchants T&F, Inc. ("M T&F"), a corporation controlled by Mr. Wilson, an
officer, director, and a controlling shareholder of the Company. In 1994 Ciro,
Inc., Ciro of Bond Street, Inc., and Ciro Creations, Inc. (hereinafter
collectively referred to as "Former Ciro") filed for protection under Chapter 11
of the U.S. Bankruptcy Code. On February 5, 1995, for $1,475,000, M T&F
purchased certain assets from Alan Cohen, as Trustee in the bankruptcy of Former
Ciro. These assets included real property leases for various store locations
previously operated by Former Ciro together with the security deposits
thereunder, the personal property in the stores, merchandise inventory, computer
equipment and software used in connection with the operation of Former Ciro, and
the agreements between Former Ciro and all of its franchisees. M T&F, using the
services of Ciro (Del), subsequently sold off substantially all of the assets
purchased from the bankruptcy court, but retained the name and licensing
agreements. M T&F transferred these license agreements and trademarks and trade
names to Ciro (Del) in 1995 as a capital contribution for 1,500 shares of Ciro
(Del). Ciro (Del) spent approximately one year bringing the license agreements
and the various trade marks current. Neither M T&F or Ciro (Del), nor the
officers, directors, or affiliates of such entities, had any affiliation with
Former Ciro.
The Subsidiary currently collects royalty payments from the licensees and
the Company proposes to establish and operate retail fashion jewelry stores in
the United States. The Subsidiary has a license agreement with J&S Fashions of
Boca Raton, Florida, to both manufacture and distribute CIRO named products in
the Company's retail stores, when opened, and independently.
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<PAGE>
Products and Services
Before filing for protection under federal bankruptcy laws, Former Ciro was
a significant retailer of high quality imitation jewelry and cultured and
imitation pearls under the name CIRO, Ken Lane, Kenneth Jay Lane, and Daniel
Swarovski trade names. The items sold under these names included all types of
jewelry set with imitation, man-produced diamonds, imitation pearls, cultured
pearls and a wide range of necklaces, rings, brooches, earrings, bracelets, and
watches. At December 31, 1993, Former Ciro owned a total of 146 retail stores,
of which 47 were in the United States, 75 were in the United Kingdom, 13 were in
Germany, 5 in Austria, and 6 in France. At such time Former Ciro employed a
total of 623 people at these locations. In addition, it had 14 licensing
arrangements. Ciro (Del), and now the Subsidiary, has serviced the remaining
licensees and collected royalty payments therefrom since 1995.
The Subsidiary presently has licensing arrangements with entities
throughout the world, which entities are entitled to use the CIRO trade name in
connection with their retail stores, subject to certain quality control
requirements enforced by the Subsidiary. The licensees are entitled to open as
many stores as they wish within the territory for which their licenses are
granted. Each of the license agreements is for an initial term of five years,
renewable at the option of the Subsidiary. The following table sets forth (1)
the location for which a licensee has rights to open stores; (2) whether the
licensee's development rights are exclusive or non-exclusive to the licensee;
(3) the total number of stores opened as of January 1, 1998; and (4) the year in
which the present license agreement shall expire:
Exclusive/ Total Stores License
Location Non-Exclusive Open at 1/1/98 Expiration Date
- -------- ------------- -------------- ---------------
Mexico Exclusive 3 December 2002
Korea Exclusive 3 December 1999
Russia Exclusive 5 December 2002
Israel Exclusive 12 December 2002
USA Non-exclusive 5 December 2002
USA Non-exclusive 2 December 1998
Proposed Activities
The Company proposes to use the proceeds from this Offering either to
purchase existing leases of retail stores using the CIRO name and/or to
establish and operate retail fashion jewelry stores in the United States using
the CIRO name. The Company intends to sell six principal lines of products:
rings, necklaces, bracelets, brooches, watches, and earrings. It is anticipated
that such products will range in price from approximately $35 to $15,000, with
most products falling within the range of $35 to $250. The Company intends to
sell its products to retail customers for cash or against third party credit
cards; the Company does not intend to extend credit. Depending upon available
funding, the Company proposes to locate retail stores most likely in the States
of New York and Nevada, where management believes interest in such fashion
jewelry would be the greatest. Management will seek locations in high-end
shopping malls or large hotels. Management is currently negotiating for the
purchase of existing leases, but no definitive agreements have been reached as
of the date of this Memorandum, and there is no assurance that the Company will
be able to acquire such leases. Management anticipates that the purchase price
of the existing leases would be a combination of cash from this Offering and the
issuance of promissory notes.
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Markets and Distribution
Initially, management intends to advertise the retail stores through local
advertising and airline magazines. The Company also intends to advertise
licensing arrangements through national and international jewelry and fashion
magazines.
Competition
The jewelry business is highly competitive, with the competition
principally from other independent jewelry stores, department stores, and others
operating in leased concession department stores. Many of the potential
competitors are considerably larger than the Company and have considerably
greater financial and other resources than the Company. With respect to any
given item of jewelry which the Company proposes to sell in its retail stores,
the price of the company's product will fall between the price of precious
jewelry and inexpensive costume jewelry. As a result, the Company's products
will compete to some extent with both categories. However, management believes
that the cost differential between its product and precious jewelry on the one
hand and the inferior quality of how cost costume jewelry on the other has
created a distinct market niche for the Company. Also, management believes that
name recognition will be a positive factor in its competition with other fashion
jewelry retail operators.
Seasonality of Business
The proposed business of the Company and the current business of the
licensees is highly seasonal. Approximately 30% of the revenues are ordinarily
earned in the final quarter of the year, primarily during the Christmas season.
Trade Marks
M T&F originally purchased several trade names and trademarks in the
bankruptcy of Former Ciro In 1995 M T&F assigned all of its right, title, and
interest in the trade names and trademarks to Ciro (Del), subject to existing
license agreements. Set forth below is a list of the trademarks and trade names
assigned to Ciro (Del) and currently owned by the Subsidiary:
Country Mark Application Number Registration Number
- ------- ---- ------------------ -------------------
Bolivia CIRO 1361
Chile CIRO 421866
Hungary CIRO 137946
Israel CIRO 80209
CIRO 80210
CIRO in Hebrew 80058
CIRO in Hebrew 80059
Japan CIRO 63006/1993
Macao CIRO 11006-M
CIRO 11515-M
Mexico CIRO 416046
CIRO 421337
Monaco CIRO 9314680
Panama CIRO (stylized) 54820
CIROLITE 54821
Philippines CIRO 85612-PN
Portugal CIRO 276161
CIRO 280206
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Russia CIRO 95703549
South Korea CIRO 262281
CIRO 262282
CIRO 265017
CIRO 265158
U.S.A. CIRO 327696
CIRO 826855
CIRO 1794011
CIRO 1668523
CIRO (stylized) 601862
CIRO and crown 74/350726
CIROLITE 949790
Crown device 74/350876
Employees
As of December 1, 1997, the Company had 3 employees. During the calendar
year 1998, the Company anticipates hiring an additional six employees for the
proposed retail stores to be opened.
Facilities
The Subsidiary rents on a month-to-month basis approximately 1,000 square
feet of office space from M T&F in New York City, New York. Monthly rental
payments for the space are $2,000.
MANAGEMENT
Executive Officers and Directors
The following table sets forth the directors, executive officers and other
significant employees of the Company, their ages, and all offices and positions
with the Company. Directors are elected for a term of one year and until his
successor is elected and qualified. Annual meetings are scheduled to be held at
such time each year as designated by the Board of Directors. Officers are
elected by the Board of Directors, which shall consider that subject at its
first meeting after every annual meeting of stockholders. Each officer holds his
office until his successor is elected and qualified or until his earlier
resignation or removal.
Name Age Position Director Since
---- --- -------- --------------
Murray A. Wilson 59 President, CEO & Director 1997
Laszlo Schwartz 54 Vice-President & Secretary --
These individuals serve as management of the Company and hold the same
positions with the Subsidiary. A brief description of their positions, duties
and their background and business experience follows:
MURRAY A. WILSON, has been the president and chief operating officer of
Merchants T&F, Inc. since 1990. Also, since 1994 he has been the president of
Grossingers Trademark. In June 1989 Mr. Wilson was found guilty in federal
court in a non-securities related matter of conspiracy to commit mail and wire
fraud in Las Vegas, Nevada. In 1991 Mr. Wilson pleaded guilty in New York to a
Class E Felony in a nonsecurities related matter.
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LASZLO SCHWARTZ, has been the vice-president of Merchants T&F, Inc. since
1992. From 1995 to the present he has been the president of Camnpagnola Holdings
and 128 Ecco Holdings Corp.
Executive Compensation
No compensation has been awarded to, earned by, or paid to the named
executive officers of the Company since inception for services rendered in any
capacity to the Company or its subsidiaries. However, as the sole shareholder of
Merchants T&F, Inc., Mr. Wilson has received substantial revenues from the
Subsidiary. See "Certain Transactions."
Certain officers are foregoing payment of their salaries for the time being
to ease cash flow requirements during the start up of operations. Management of
Company shall be entitled to be reimbursed for any out-of-pocket expenses
incurred on behalf of the Company. The Company has no employment agreements with
or key man life insurance with respect to the members of management.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information furnished by the
following persons, or their representatives, regarding the ownership of the
Common Shares of the Company as of January 14, 1997, by (i) each person known to
the Company to be the beneficial owner of more than 5% of the outstanding shares
of Common Stock, (ii) each of the Company's executive officers and directors,
and (iii) all of the Company's executive officers and directors as a group.
Name and Percent of Class
Address of Amount and Nature of --------------------
Beneficial Owner Beneficial Ownership(1) Before After(2)
- ---------------- ----------------------- ------ --------
Murray A. Wilson 3,150,000 48% 39%
445 Fifth Avenue
New York, NY 10016
Laszlo Schwartz 350,000 5% 4%
445 Fifth Avenue
New York, NY 10016
Executive Officers and Directors
as a Group (2 Persons) 3,500,000 54% 44%
- ----------
(1)Unless otherwise indicated, the named person is deemed to be the sole
beneficial owner of the shares.
(2)Assumes the sale of all of the Shares, of which there is no assurance.
If all of the Shares are sold, and assuming no further issuances of shares of
Common Stock by the Company, the Company would have 8,000,000 shares outstanding
following the offering.
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CERTAIN TRANSACTIONS
Murray A. Wilson is the sole shareholder of Merchants T&F, Inc. (M T&F),
the former parent of Ciro (Del). During 1995 M T&F assigned to Ciro (Del) the
various rights to the trade name CIRO which M T&F purchased in the bankruptcy.
The value assigned to the rights to the trade name was $370,000 which was the
capital contribution of M T&F for the 1,500 shares of Ciro (Del) issued to M
T&F. See "Business."
Effective February 3, 1995, Ciro (Del) entered into a consignment agreement
with M T&F in which Ciro (Del) agreed to sell for M T&F the hard assets acquired
by M T&F in the bankruptcy proceeding involving Former Ciro. Ciro (Del) was paid
a commission of 90% of the selling price of such assets. The agreement
terminated on February 22, 1997. This agreement was not entered into in an arms'
length transaction and although management believes the terms were fair, no
independent determination of fairness was obtained. See "Business."
During the years ended December 31, 1996 and 1995, Ciro (Del) paid to M T&F
management fees of $169,875 and $112,579, respectively. This arrangement was not
entered into in an arms' length transaction and although management believes the
terms were fair, no independent determination of fairness was obtained.
Effective August 1, 1997, M T&F entered into a one year consulting
agreement with Ciro (Del). As compensation under such agreement, Ciro (Del)
agreed to pay M T&F the greater of $5,000 per month or 20% of the gross royalty
income. In return, M T&F will provide management and organization services on a
part-time basis. This agreement was not entered into in an arms' length
transaction and although management believes the terms are fair, no independent
determination of fairness has been obtained. This agreement has been assumed by
the Subsidiary. See "Business."
Ciro (Del) entered into a sublease agreement with M T&F for the office
space presently utilized by the Company and the Subsidiary. Management believes
that the remit for such sublease is within comparable rates in the area. The
sublease has been assumed by the Subsidiary.
CONFLICTS OF INTEREST
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
dealings the parties will attempt to deal on terms competitive in the market and
on the same terms that either party would deal with a third person. Presently
none of the officers and directors have any transactions which they contemplate
entering into with the Company, aside from the matters described herein.
Management will attempt to resolve any conflicts of interest that may arise
in favor of the Company. Failure to do so could result in fiduciary liability to
management.
The General Corporation Law of Nevada limits liability of officers and
directors for breach of fiduciary duty to certain specified circumstances, and
also empowers the Company to indemnify officers, directors, employees and others
from liability in certain circumstances such as where the person successfully
defended himself on the merits or acted in good faith in a manner reasonably
believed to be in the best interests of the Corporation.
The Company's articles of incorporation with certain exceptions eliminate
any personal liability of an officer or director to the Company or its
shareholders for monetary damages for the breach of a director's fiduciary duty
and therefore a director cannot be held liable for damages to the Company or its
shareholders
-14-
<PAGE>
for gross negligence or hack of due care in carrying out his fiduciary duties as
a director except in certain specified instances. The Company's bylaws also
provide for indemnification to the fullest extent permitted under law which
includes all liability, damages and costs or expenses arising from or in
connection with service for, employment by, or other affiliation with the
Company to the maximum extent and under all circumstances permitted by law.
Insofar as indemnification, for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified in
their entirety by reference to the detailed provisions of the Company's Articles
of Incorporation and Bylaws, copies of which will be furnished to an investor
upon written request therefor. See "Further Information."
Common Stock.
The Company is authorized to issue 50,000,000 shares of Common Stock, par
value $.001 per share. As of December 23, 1997, the Company had outstanding
6,500,000 shares of Common Stock. All Common Shares are equal to each other with
respect to voting, and dividend rights, and, are equal to each other with
respect to liquidation rights. Special meetings of the shareholders may be
called by the president, the board of directors, or upon the request of holders
of at least ten percent of the outstanding voting shares. Holders of shares of
Common Stock are entitled to one vote at any meeting of the shareholders for
each share of Common Stock they own as of the record date fixed by the Board of
Directors. At any meeting of shareholders, one-third of the outstanding shares
of Common Stock entitled to vote, represented in person or by proxy, constitutes
a quorum. A vote of the majority of the shares of Common Stock represented at a
meeting will govern, even if this is substantially less than a majority of the
shares of Common Stock outstanding. Holders of shares are entitled to receive
such dividends as may be declared by the Board of Directors out of funds legally
available therefor, and upon liquidation are entitled to participate pro rata in
a distribution of assets available for such a distribution to shareholders.
There are no conversion, preeruptive or other subscription rights or privileges
with respect to any share. Reference is made to the Articles of Incorporation
and Bylaws of the Company as well as to the applicable statutes of the State of
Nevada for a more complete description of the rights and liabilities of holders
of shares. The shares of the Company do not have cumulative voting rights, which
means that the holders of more than fifty percent of the shares of Common Stock
voting for election of directors may elect all the directors if they choose to
do so. In such event, the holders of the remaining shares aggregating less than
fifty percent will not be able to elect directors.
Transfer Agent.
The Company has appointed Interwest Transfer Company, Inc. as the transfer
agent for the company. The address for such transfer agent is 1981 East 4800
South, Suite 100, Salt Lake City, Utah 84117; telephone (801) 272-9294.
Annual Reports
The Company intends to furnish annual reports to shareholders which will
contain financial statements examined by independent certified public
accountants and such other interim reports as the
-15-
<PAGE>
Company may determine.
Dividend Policy
The Company has not paid any dividends on its Common Stock to date and does
not anticipate paying dividends on Common stock in the foreseeable future. The
Company intends for the foreseeable future to follow a policy of retaining all
of its earnings, if any, to finance the development and expansion of its
business.
MARKET INFORMATION
Bid Prices
The Common Stock of the Company has been quoted on the OTC Electronic
Bulletin Board since approximately February 4, 1997, although trading did not
begin until approximately December 3, 1997. There is currently no established
public trading market for the Common Stock. From December 3, 1997, through
January 2, 1998, approximately 117,200 shares of the Company have been traded.
During the fourth quarter ended December 31, 1997, the high bid was $1.125 and
the how bid was $0.25. These quotations reflect inter-dealer prices, without
retail market-up, mark-down, or commission and may not necessarily represent
actual transactions.
Outstanding Shares and Shareholder Information
As of December 23, 1997, the Company had outstanding 6,500,000 shares of
its Common Stock, 4,635,000 of which are restricted pursuant to Rule 144
promulgated by the Securities and Exchange Commission. Management believes that
some of such shares have been held for more than one year and therefore may be
available for resale pursuant to Rule 144. None of the currently restricted
outstanding shares of Common Stock of the Company is being, nor have any such
shares been proposed to be, publicly offered by the Company.
As of December 23, 1997, there were approximately 30 holders of record of
the Common Stock of the Company as reported by the transfer agent.
No cash dividends have been declared or paid as yet on the Common Stock of
the Company. See "Dividend Policy."
PLAN OF DISTRIBUTION
General
The Company is offering the securities on a best-efforts basis. The
offering will be managed by the Company and the Shares will be offered and sold
by officers of the Company, without any discounts or other commissions, on a
best efforts, no minimum basis.
The purchase price per Share is payable at the time an investor executes
the Subscription Agreement. The minimum purchase amount per investor is $990
unless waived by the Company.
Offering proceeds will be immediately available to the Company and will not
be held in escrow. The offering will continue until the earlier of the receipt
of $990,000 or March 31, 1998, unless extended in the
-16-
<PAGE>
sole discretion of the Company for an additional ninety (90) days. Any extension
may be accompanied by a supplement to this Memorandum if the same is deemed
necessary by the Company.
The Shares will be offered only to persons who meet the suitability
standards set forth herein.
Method of Subscribing
Each potential investor must complete a Subscription Agreement and submit
it with payment in full for the subscribed shares to the Company. All checks and
wire transfers must be payable to "Ciro International, Inc." Except to the
extent otherwise required under applicable state law, no potential investor
shall have the right to withdraw or cancel his subscription for a period of five
days following receipt by the Company. If for any reason the Company has not
accepted the subscription within such five day period by written notification to
the subscriber, such person may withdraw or terminate his subscription by
written notification to the Company.
Right to Reject
The Company reserves the right to reject any subscription in its sole
discretion for any reason whatsoever prior to the time funds for such
subscription are deposited by the Company and to withdraw this offer at any
time.
LITIGATION
Neither the Company or the Subsidiary nor any of their respective
properties, is a party to any material pending legal proceedings or government
actions, including any material bankruptcy, receivership, or similar
proceedings. Management of Company does not believe that there are any material
proceedings to which any director, officer, or affiliate of the Company, any
beneficial owner of more than five percent of the Common Stock of Company, or
any associate of any such director, officer, affiliate of the Company, or
security holder is a party adverse to the Company or the Subsidiary or has a
material interest adverse to the Company or the Subsidiary.
FINANCIAL STATEMENTS
The following financial statements of Ciro (Del) and Mid-Way are attached
hereto and incorporated herein. The transaction between Ciro (Del) and Mid-Way
is viewed for accounting purposes as a recapitalization of the equity section of
the financial statements and not as a business combination. Therefore, no pro
forma combined financial statements are included herein.
Ciro (Del)
Report of Auditors
Balance Sheets at June 30, 1997 (unaudited) and December 31, 1996 and 1995
Statements of Income for the Six Months Ended June 30, 1997 (unaudited) and
the Years Ended December 31, 1996 and 1995
Statements of Retained Earnings for the Nine Months ended June 30, 1997
(unaudited) and the Years Ended December 31, 1996 and 1995
Statements of Cash Flows for the Nine Months Ended June 30, 1997
(unaudited) and the Years Ended December 31, 1996 and 1995
Notes to Financial Statements
-17-
<PAGE>
Mid-Way
Report of Auditors
Balance Sheets at September 30, 1997 (unaudited) and at March 31, 1997, and
December 31, 1996 and 1995
Statements of Operations for the Nine Months Ended September 30, 1997
(unaudited), and for the Three Months Ended March 31, 1997, and the Years
Ended December 31, 1996, 1995, and 1994, and the Period from Inception to
March 31, 1997
Statement of Changes in Stockholders' Equity for the Period from Inception
to March 31, 1997, and through September 30, 1997 (unaudited)
Statements of Cash Flows for the Nine Months Ended September 30, 1997
(unaudited) and for the Three Months Ended March 31, 1997, and the Years
Ended December 31, 1996, 1995, and 1994, and the Period from Inception to
June 30, 1997
Notes to Financial Statements
FURTHER INFORMATION
All references to each document referred to in this Memorandum are
qualified in their entirety by reference to the complete contents of such
document. Copies of these document may be obtained upon request from management
at the address of the Company, 445 Fifth Avenue, Suite 11th Floor, New York, NY
10016; telephone (212) 481-1322. Each prospective investor and his advisor may,
during normal business hours prior to sale of Shares through and including the
Expiration Date, (1) have access to the same kind of information with respect to
the Company and its proposed activities as specified in Regulation D as
promulgated under the Securities Act of 1933, or (2) ask questions of management
with respect to terms and conditions of the offering and request additional
information necessary to verify accuracy of the information provided. Management
will seek to provide answers and such information to the extent possessed by
management or obtainable by them without unreasonable effort or expense.
Proposed investors are encouraged to meet with management of the Company
and to ask questions and review further information.
The following is a list of exhibits to this Memorandum which are not
attached hereto but which will be provided to any prospective investor, upon
written request, at any time prior to the purchase of the Shares by such person:
1. Articles of Incorporation of the Company, and Articles of Merger
2. Current Bylaws of the Company
3. Form of common stock certificate of the Company
4. Memorandum/Information Statement dated November 12, 1997
5. Agreement and Plan of Reorganization dated November 12, 1997
6. Trademark and Trade Name Registrations of the Subsidiary
7. Agreement dated February 3, 1995, between Merchants T&F and Ciro (Del)
transferring the trademarks, trade names, and license agreements to
Ciro (Del)
8. Consulting Agreement dated August 1, 1997, by and between Ciro (Del)
and Merchants T&F
-18-
<PAGE>
CIRO JEWELRY, INC.
FINANCIAL STATEMENTS AND ACCOUNTANTS'
COMPILATION REPORT
FOR THE NINE MONTHS ENDED SEPTEMBER 30. 1997
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
CIRO JEWELRY. INC.
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
- CONTENTS -
Page(s)
-------
Accountants' Compilation Report 1.
Financial Statements:
Balance Sheet 2.
Statement of Operations 3.
Statement of Retained Earnings (Deficit) 4.
Statement of Cash Flows 5.
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
Lazar, Levine & Company LLP
Certified Public Accountants
Melvin F. Lazar, CPA 350 Fifth Avenue - Suite 6820
Neal J. Weisbrod, CPA New York, NY 10118-0170
Henry & Guberman, CPA (212) 736-1900
Amiram (Kiki) Bielory CPA Fax: (212) 629-3219
Ted M. Felix, CPA
Barry J. Schreiber, CPA
Michael Dinkes, CPA 4 Becker Farm Road
Roseland, NJ 07068
ACCOUNTANTS' COMPILATION REPORT (201) 533-1040
------------------------------- Fax: (201) 535-1603
To the Shareholders
Ciro Jewelry, Inc.
New York, New York
We have compiled the accompanying balance sheet of Ciro Jewelry, Inc. as of
September 30, 1997 and the related statements of operations and retained
earnings and cash flows for the nine months then ended, in accordance with
Statements on Standards for Accounting and Review Services issued by the
American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
/s/ Lazar, Levine & Company LLP
-------------------------------
LAZAR, LEVINE & COMPANY LLP
New York, New York
December 4, 1997
<PAGE>
CIRO JEWELRY. INC.
BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(See Accountants' Compilation Report)
- ASSETS -
CURRENT ASSETS:
Cash $ 1,416
Accounts receivable 23.257
---------
TOTAL CURRENT ASSETS 24,673
OTHER ASSETS:
Loans receivable - shareholders' $ 32,611
Trademarks, net of accumulated amortization 302,166 334,777
--------- ---------
$ 359,450
=========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ 7,574
---------
TOTAL CURRENT LIABILITIES 7,574
SHAREHOLDERS' EQUITY:
Common stock $ 1,000
Additional paid-in capital 370,000
Accumulated deficit (19,124) 351,876
--------- ---------
$359450
=========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 2.
<PAGE>
CIRO JEWELRY. INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(See Accountants' Compilation Report)
REVENUES - ROYALTY INCOME $ 139,678
Selling, general and administrative expenses 159,545
---------
OPERATING LOSS (19,867)
Income taxes 2,735
---------
NET LOSS $ (22,602)
=========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 3.
<PAGE>
CIRO JEWELRY, INC.
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(See Accountants' Compilation Report)
RETAINED EARNINGS, AT BEGINNING OF YEAR $ 3,478
Add: net loss (22,602)
---------
ACCUMULATED DEFICIT, AT END OF PERIOD $ (19,124)
=========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 4.
<PAGE>
CIRO JEWELRY, INC.
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(See Accountants' Compilation Report)
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(22,602)
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 18,500
Changes in assets and liabilities:
Decrease in accounts receivable 7,123
Decrease in accounts payable (897)
--------
Net cash provided by operating activities 2,124
--------
CASH FLOWS FROM IN VESTING ACTIVITIES:
Loans to shareholders' (1,000)
--------
Net cash used by investing activities (1,000)
--------
NET INCREASE IN CASH 1,124
Cash, at beginning of year 292
--------
CASH, AT END OF PERIOD $ 1,416
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
income taxes $ 10,136
Lazar, Levine & Company LLP
Certified Public Accountants
Page 5.
<PAGE>
CIRO JEWELRY, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
CIRO JEWELRY. INC.
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- CONTENTS -
Page(s)
-------
Independent Auditors' Report
Financial Statements:
Balance Sheets 2.
Statements of Income 3.
Statements of Retained Earnings 4.
Statements of Cash Flows 5.
Notes to Financial Statements 6. - 8.
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
Lazar, Levine & Company LLP
Certified Public Accountants
Melvin F. Lazar, CPA 350 Fifth Avenue - Suite 6820
Neal J. Weisbrod, CPA New York, NY 10118-0170
Henry & Guberman, CPA (212) 736-1900
Amiram (Kiki) Bielory CPA Fax: (212) 629-3219
Ted M. Felix, CPA
Barry J. Schreiber, CPA
Michael Dinkes, CPA 4 Becker Farm Road
Roseland, NJ 07068
INDEPENDENT AUDITORS' REPORT (201) 533-1040
---------------------------- Fax: (201) 535-1603
To the Shareholders
Ciro Jewelry, Inc.
New York, New York
We have audited the balance sheets of Ciro Jewelry, Inc. as of December 31, 1996
and 1995 and the related statements of income, retained earnings and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements, referred to above,
present fairly, the financial position of Ciro Jewelry, Inc. as of December 31,
1996 and 1995 and the results of the operations and the cash flows for the years
then ended, in conformity with generally accepted accounting principles.
/s/ LAZAR, LEVINE & COMPANY LLP
------------------------------
LAZAR, LEVINE & COMPANY LLP
New York. New York
July 15, 1997
except as to note 6 which is
dated September 5, 1997
<PAGE>
CIRO JEWELRY, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
- ASSETS -
<TABLE>
<CAPTION> 1996 1995
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 292 $ 870
Accounts receivable (Note 2e) 30,380 15,799
-------- --------
TOTAL CURRENT ASSETS 30,672 16,669
-------- --------
OTHER ASSETS:
Loans receivable - shareholder's (Note 4) 31,611 17,999
-------- --------
Trademarks, net of accumulated amortization (Note 2c) 320,666 345,333
-------- --------
352,277 345,333
-------- --------
$382,949 $380,001
======== ========
- LIABILITIES AND SHAREHOLDER'S EQUITY -
CURRENT LIABILITIES:
Accounts payable $8,471 $ 4,062
-------- --------
TOTAL CURRENT LIABILITIES $8,471 $ 4,062
-------- --------
SHAREHOLDERS' EQUITY:
Common stock - no par value, 1,500 shares authorized,
1,500 shares issued and outstanding 1,000 1,000
Additional paid-in capital 370,000 370,000
Retained earnings 3,478 4,939
-------- --------
TOTAL SHAREHOLDERS' EQUITY 374,478 375,939
-------- --------
$382,949 $380,001
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 2.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
REVENUES:
Royalty income $ 259,899 $ 223,570
Merchandise sales 3,076 29,950
--------- ---------
TOTAL REVENUES 262,975 253,520
--------- ---------
OPERATING COSTS:
Cost of merchandise -- 50,623
Selling, general and administrative expenses (Note 4) 262,587 212,838
--------- ---------
262,587 263,461
--------- ---------
INCOME (LOSS) FROM OPERATIONS 388 (9,941)
--------- ---------
OTHER INCOME (EXPENSE):
Commission income -- 4,388
Interest income -- 6,963
Other income 3,458 7,458
Interest expense -- (5,700)
Gain on sale of stock -- 5,833
--------- ---------
3,458 18,942
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 3,846 9,001
Provision for income taxes (Note 2b) 5,307 4,062
--------- --------
NET INCOME (LOSS) $ (1,461) $ 4,939
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 3.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
RETAINED EARNINGS, AT BEGINNING OF YEAR $4,939 $ --
Add: Net income (loss) (1,461) 4,939
------ ------
RETAINED EARNINGS, AT END OF YEAR $3,478 $ 4,939
====== =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 4.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF CASH FLOWS.
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,461) $ 4,939
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,667 24,667
Changes in assets and liabilities:
(Increase) in accounts receivable (14,581) (15,799)
Increase in accounts payable 4,409 4,062
--------- ---------
Net cash provided by operating activities 13,034 17,869
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to shareholder's (13,612) (17,999)
--------- ---------
Net cash used by investing activities (13,612) (17,999)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 1,000
--------- ---------
Net cash provided by financing activities -- 1,000
--------- ---------
NET (DECREASE) INCREASE IN CASH (578) 870
Cash, at beginning of year 870 --
--------- ---------
CASH, AT END OF YEAR $ 292 $ 870
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 830 $ --
Interest -- 5,700
NON-CASH TRANSACTIONS:
Contribution of trademarks from parent company $ 370,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 5.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF BUSINESS:
The Company owns a trademark for the "Ciro" jewelry name in the following
countries: Bolivia, Chile, Hungary, Israel, Japan, Macao, Mexico, Monaco,
Panama, Philippines, Portugal, South Korea, Russia and the United States. The
Company licenses its trademark and receives royalties from the licensees. The
Company is a wholly-owned subsidiary of Merchants T & F, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with generally accepted
accounting principles. Outlined below are those policies considered particularly
significant.
(a) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that effect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management
does not expect such variances, if any, to have a material effect on
the financial statements.
(b) Income Taxes:
The Company has adopted Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" (SFAS No. 109). SFAS No. 109
requires use of the asset and liability approach of providing for
income taxes. The implementation of this standard had no material
effect on the financial statements of the Company. The Company files a
consolidated federal income tax return with its parent. Federal income
taxes have been computed based upon the Company's proportionate share
of the consolidated total. State and local taxes have been computed on
a stand-alone basis since the Company does not file consolidated state
and local returns. The provision for income taxes includes certain
local taxes based upon measures other than income.
(c) Trademark:
Trademarks are being amortized over a 15 year period.
Lazar Levine & Company LLP
Certified Public Accountants
Page 6.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(d) Cash Equivalents:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
(e) Accounts Receivable:
Based upon past collection history, management believes that no
allowance for doubtful accounts is required as of December 31, 1996.
NOTE 3 - ACQUISITION AND SALE:
During February 1995, the Company's parent transferred to the Company
as a capital contribution the trademarks and related licenses to the
"Ciro" name that it had acquired. The transfer was accounted for at
the parent's allocated cost of $370,000 when it purchased these assets
from the trustee in Bankruptcy.
NOTE 4 - RELATED PARTY TRANSACTIONS:
Loans receivable - shareholder's are non-interest bearing and have no
formal repayment terms.
A management fee of $169,875 and $112,579 was paid in 1996 and 1995,
respectively to the Company's parent.
The Company leases its office facilities from its parent company.
During the years ended December 31, 1996 and 1995, rent of $24,000 for
each year was charged to operations. The lease is effective to
December 31, 2001.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 7.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 5 - SUBSEQUENT EVENT:
As of August 1, 1997, a consulting agreement was entered into between
the Company and its parent company. The agreement is for one year
whereby the Company will pay the greater of $5,000 per month or 20% of
the gross royalty income it earns to its parent, who will provide
management consulting services.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 8.
<PAGE>
Mid-way Medical and Diagnostic Center, Inc.
(a Development Stage Company)
Financial Statements
September 30, 1997
<PAGE>
[LOGO OF ORTON & COMPANY]
Certified Public Accountants
A PROFESSIONAL CORPORATION
50 West Broadway, Suite 1130, Salt Lake City, Utah 84101
(801) 537-7044, Fax (801) 363-0615
ACCOUNTANT'S REPORT
To the Board of Directors and Stockholders
of Mid-way Medical and Diagnostic Center, Inc.
We have compiled the accompanying balance sheets of Mid-way Medical and
Diagnostic Center, Inc.. (a Florida corporation) (a development stage company)
as of September 30, 1997, and the related statements of operations, stockholders
equity, and cash flows for the period then ended, in accordance with Statements
on Standards for Accounting and Review Services issued by the American Institute
of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
The accompanying financial statements from June 14, 1990 (inception) to December
31, 1996 were compiled by other accountants from financial statements that did
not omit substantially all of the disclosures required by generally accepted
accounting principles and that they previously audited as indicated in their
report dated April 2, 1997.
/s/ Orton & Company
Orton & Company
Salt Lake City, Utah
December 9, 1997
<PAGE>
Mid-way Medical and Diagnostic, Inc.
(A Development Stage Company)
Balance Sheet
ASSETS
September 30,
1997
-------------
Total Assets $ -
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity:
Common stock, $0.00 1 par value;
authorized 50,000,000 shares;
11,000,000 issued and outstanding 11,000
Additional Paid in Capital 92,000
Deficit accumulated during development stage (103,000)
-------
Total Stockholders' Equity -
-------
Total Liabilities and Stockholders' Equity $ -
=======
See Accountants' Report
3
<PAGE>
Mid-way Medical and Diagnostic, Inc.
(A Development Stage Company)
Statements of Operations
January 1 June 14, 1990
to (inception) to
September 30, September 30,
1997 1997
----------- ------------
Income:
Sales $ -- $ --
----------- ------------
Total Income -- --
Expenses:
General and Administrative 100,000 103,000
----------- ------------
Total Expenses 100,000 103,000
----------- ------------
Net Profit (Loss) $ (100,000) $ (103,000)
=========== ============
Net Profit or (Loss) Per Share (.047) (.092)
=========== ============
Average Number of Shares of
Common Stock Outstanding 2,111,111 1,114,942
=========== ============
See Accountants' Report
4
<PAGE>
Mid-way Medical and Diagnostic, Inc.
(A Development Stage Company)
Statements of Stockholders' Equity
Deficit
accumulated
Additional during
Common Stock paid in development
Shares Amount Capital stage
-------- ------ ------- ---------
Balance, December 31, 1993 1,000,000 $ 1,000 $ 2,000 $ (3,000)
Net loss year ended
December 31, 1994 -- -- -- --
--------- ------- ------- --------
Balance, December 31, 1994 1,000,000 $ 1,000 $ 2,000 $ (3,000)
Net loss year ended
December 31, 1995 -- -- -- --
--------- ------- ------- --------
Balance, December 31, 1995 1,000,000 $ 1,000 $ 2,000 $ (3,000)
Net loss year ended
December 31, 1996 -- -- -- --
--------- ------- ------- --------
Balance, December 31, 1996 1,000,000 $ 1,000 $ 2,000 $ (3,000)
Issuance of 10,000,000 shares
of common stock at $.01
per share 10,000,000 10,000 90,000 --
Net loss January 1, 1997 to
September 30, 1997 -- -- -- (100,000)
----------- ------- ------- --------
Balance, September 31, 1997 11,000,000 $11,000 $92,000 $(103,000)
========== ======= ======= =========
See Accountants' Report
5
<PAGE>
Mid-way Medical and Diagnostic, Inc.
(A Development Stage Company)
Statements of Cash Flows
January 1 June 14, 1990
to (inception) to
September 30, September 30,
1997 1997
------------ --------------
Cash Flows from Operating Activities
Net profit (loss) $ (100,000) $ (103,000)
Cash Flows from Financing Activities
Issuance of common stock 100,000 103,000
------------ --------------
Net increase in Cash -- --
Cash, beginning of period $ -- $ --
------------ ---------------
Cash, end of period $ -- --
============ ===============
Supplementary Cash Flows Information:
Cash Paid for:
Taxes $ -- $ --
Interest $ -- $ --
See Accountants' Report
6
<PAGE>
MID-WAY MEDICAL, AND DIAGNOSTIC CENTER, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL, STATEMENTS
March 31, 1997
December 31, 1996
December 31, 1995
<PAGE>
TABLE OF CONTENTS
-----------------
PAGE
----
INDEPENDENT AUDITORS' REPORT............................................. 1
BALANCE SHEET............................................................ 2
STATEMENT OF OPERATIONS.................................................. 3
STATEMENT OF STOCKHOLDERS' EQUITY........................................ 4
STATEMENT OF CASH FLOWS.................................................. 5
NOTES TO FINANCIAL STATEMENTS............................................ 6-7
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
----------------------------
Board Of Directors April 2, 1997
Mid-Way Medical and Diagnostic Center, Inc.
Miami, Florida
I have audited the Balance Sheets of Mid-Way Medical and Diagnostic Center,
Inc., (A Development Stage Company), as of March 31, 1997, December 31, 1996,
and December 31, 1995, and the related Statements of Operations, Stockholders'
Equity and Cash Flows for the period January 1, 1997, thru March 31, 1997, and
the two years ended December 31, 1996 and December 31, 1995. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mid-Way Medical and
Diagnostic Center, Inc., at March 31, 1997, December 31, 1996 and December 31,
1995, and the results of its operations and cash flows for the period January 1,
1997 thru March 31, 1997 and the two years ended December 31, 1996, and December
31, 1995, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered losses from operations and has no
established source of revenue. This raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant
<PAGE>
Mid-Way Medical and Diagnostic, Inc.
(A Development Stage Company)
BALANCE SHEET
-------------
ASSETS
------
March December December
31, 1997 31, 1996 31, 1995
-------- -------- --------
CURRENT ASSETS:
Cash $ 0 $ 0 $ 0
------ ------ -------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
------ ------ -------
OTHER ASSETS:
Other Assets $ 0 $ 0 $ 0
------ ------ -------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------ ------ -------
TOTAL ASSETS $ 0 $ 0 $ 0
====== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES: $ 0 $ 0 $ 0
Accounts Payable ------ ------ -------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
------ ------ -------
STOCKHOLDERS' EQUITY:
Common stock, $1.00 par value,
authorized 100 shares: issued
and outstanding at
December 31, 1995- 100 shares $ 100
Common stock, $0.001 par value;
authorized 50,000,000 shares
issued and outstanding at
December 31, 1996- 1,000,000 shs $ 1,000
March 31, 1997- 1,000,000 shs $ 1,000
Additional paid-in capital 2,000 2,000 2,900
Deficit accumulated during
development stage -3,000 -3.000 -3.000
------ ------- -------
TOTAL STOCKHOLDER'S EQUITY 1.& $ 0 $ 0 $ 0
------ ------ -------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
$ 0 $ 0 $ 0
====== ====== =======
See accompanying notes to financial statements.
-2-
<PAGE>
Mid-Way Medical arid Diagnostic Center. Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
-----------------------
Jan. 1 Jan. 1 Jan. 1 Jun. 14, 1990
to to to (inception)
Mar. 31 Dec. 31 Dec. 31 to Mar. 31
1997 1996 1995 1997
-------- -------- -------- -------------
INCOME:
Sales $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------------
TOTAL INCOME $ 0 $ 0 $ 0 $ 0
-------- -------- -------- -------------
EXPENSES:
General and
administrative $ 0 $ 0 $ 0 $ 3,000
-------- -------- -------- -------------
TOTAL EXPENSES $ 0 $ 0 $ 0 $ 3,000
-------- -------- -------- -------------
NET PROFIT LOSS(-) $ 0 $ 0 $ 0 $ -3,000
======== ======== ======== =============
NET PROFIT OR
LOSS(-) PER SHARE $ .0000 $ .0000 $ .0000 $ -.0376
======== ======== ======== =============
AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING 1000,000 1000,000 1000,000 79,802
======== ======== ======== =============
See accompanying notes to financial statements.
-3-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A Development Stage Company)
March 31, 1997
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
Deficit
accumulated
Common Stock Additional during
----------------- paid-in development
Shares Amount capital stage
------ ------ ---------- -----------
Balance,
December 31, 1993 100 $ 100 $ 2,900 $ -3,000
Net loss year ended 0
December 31, 1994 ------ ------ ---------- -----------
Balance,
December 31, 1994 100 $ 100 $ 2,900 $ -3,000
Net loss year ended 0
December 31, 1995 ------ ------ ---------- -----------
Balance,
December 31, 1995 100 $ 100 $ 2,900 $ -3,000
On Sept. 16, 1996
changed par value
from $1.00 to $0.001 - 100 + 100
On Sept. 16, 1996
forward stock split
10,000:1 999,900 +1,000 -1,000
Net loss year ended
December 31, 1996 ------ ------ ---------- -----------
Balance,
December 31, 1996 1,000,000 $1,000 $ 2,000 $ -3,000
Net loss Jan. 1,
1997 to Mar. 31,
1997 --------- ------ ---------- -----------
Balance,
March 31, 1997 1,000,000 $1,000 $ 2,000 $ -3,000
========= ====== ========== ===========
See accompanying notes to financial statements.
-4-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
-----------------------
Jan. 1 Jan. 1 Jan. 1 Jun. 14, 1990
to to to (inception)
Mar. 31 Dec. 31 Dec. 31 to Mar. 31
1997 1996 1995 1997
-------- -------- -------- -------------
Cash Flows from
op4raeing Activities
Net Profit/Loss(-)$ $ 0 $ 0 $ 0 $ -3,000
Cash Flows from
Financing Activities
Issuance of common +3,000
stock -------- -------- -------- -------------
Net increase in
cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of 0 0 0 0
period -------- -------- -------- -------------
Cash, end of period $ 0 $ 0 $ 0 $ 0
======== ======== ======== =============
See accompanying notes to financial statements.
-5-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A DEVELOPMENT STAGE COMPANY)
March 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - History and Organization of the Company
The Company was organized June 14, 1990, under the law of the State of Florida
as Mid-Way Medical and Diagnostic Center, Inc. The Company currently has no
operations and, in accordance with SFAS #7, is considered a development company.
On June 29, 1990 the company issued 100 shares of its common stock for $3,000.
On September 16, 1996, the Company voted to restate its Articles of
Incorporation, which changed the $1.00 par value common shares to a par value of
$0.00l each. Also the company increased its capitalization from 100 common
shares to 50,000,000 common shares.
Also on September 16, 1996 the Company forward split its common stock 10,000:1,
thus increasing the number of outstanding common stock shares from 100 to
1,000,000.
NOTE 2 Accounting Policies and Procedures
The Company has not determined its accounting policies and procedures, except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings or loss per share is calculated using the weighted averaged
number of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment or
dividends. No dividends have been paid since inception.
NOTE 3 - Going Concern
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
-6-
SUPPLEMENT NO. 1
TO THE LIMITED OFFERING MEMORANDUM
DATED JANUARY 14, 1998
OF
CIRO INTERNATIONAL, INC.
Ciro International, Inc., a Nevada corporation (the "Company"), hereby
amends the Limited Offering Memorandum dated January 14, 1998 (the "Memorandum")
as follows:
1. All shares to be issued pursuant to the limited offering are being
offered and sold upon the condition that such shares shall not be sold or
transferred for a period of six (6) months through October 1, 1998. Each
certificate representing such shares shall bear a restrictive legend reflecting
such restriction and stop transfer instructions will be placed on the transfer
records of the Company with the transfer agent. These restrictions are in
addition to the restrictions on transfer set forth in the Memorandum and in the
Subscription Agreement. See "Plan of Distribution" and the Subscription
Agreement.
2. On February 27, 1998, Laszlo Schwartz resigned as vice-president and
secretary of the Company and of Ciro Jewelry, Inc. On February 27, 1998, Mr.
Schwartz also sold the 350,000 shares of the Company owned by him to Murray A.
Wilson, an officer, director and principal shareholder of the Company, for
$20,000 paid by Mr. Wilson. See "Management" and "Principal Shareholders."
3. On February 27, 1998, the Board of Directors appointed Mr. Wilson as
Secretary and Max Bloch as Vice-President of the Company. Mr. Wilson was also
appointed Secretary of Ciro Jewelry, Inc. A brief description of Mr. Bloch's
background and business experience follows:
MAX BLOCH, has been a partner in Berlowitz Bloch & Partner, Zurich,
Switzerland, a portfolio management firm, since 1996. From 1994 to
1996 he was the Deputy Manager and a director of Giro-Credit Bank,
Zurich, Switzerland, and from 1993 to 1994 he was the Deputy Manager
and a director of Uto Bank AG, Zurich, Switzerland. Age 46.
4. As a result of the sale of stock by Mr. Schwartz, he is no longer a 5%
shareholder of the Company. Set forth below is a revised table of the principal
shareholders:
<PAGE>
Name and Percent of Class
Address of Amount and Nature of ----------------
Beneficial Owner Beneficial Ownership(1) Before After(2)
- ---------------- ----------------------- ------ --------
Murray A. Wilson 3,500,000 54% 44%
445 Fifth Avenue
New York, NY 10016
Max Bloch -0-
Executive Officers and Directors 3,500,000 54% 44%
as a Group (2 Persons)
See "Principal Shareholders."
5. The Company has terminated the license agreement with J&S Fashions of
Boca Raton, Florida, and is presently seeking a replacement company to
manufacture the jewelry which the Company proposes to market in its retail
stores. See "Business--General."
Date: February 27, 1998
The undersigned subscriber hereby acknowledges receipt of the foregoing
Supplement.
------------------------------
Signature
------------------------------
Please Print Name
- ----------
(1) Unless otherwise indicated, the named person is deemed to be the sole
beneficial owner of the shares.
(2) Assumes the sale of all of the Shares, of which there is no assurance.
If all of the Shares are sold, and assuming no fUrther issuances of shares of
Common Stock by the Company, the Company would have 8,000,000 shares outstanding
following the offering.
-2-
SUPPLEMENT NO. 2
TO THE LIMITED OFFERING MEMORANDUM
DATED JANUARY 14, 1998
OF
CIRO INTERNATIONAL, INC.
Ciro International, Inc., a Nevada corporation (the "Company"), hereby
amends the Limited Offering Memorandum dated January 14, 1998, as amended by
Supplement No. 1, to extend the closing date of the offering to June 29, 1998.
Date: March 31, 1998
The undersigned subscriber hereby acknowledges receipt of the foregoing
Supplement.
_____________________________
Signature
_____________________________
Please Print Name
SUPPLEMENT NO. 3
TO THE LIMITED OFFERING MEMORANDUM
DATED JANUARY 14, 1998
OF
CIRO INTERNATIONAL, INC.
Ciro International, Inc., a Nevada corporation (the "Company"), hereby
amends the Limited Offering Memorandum dated January 14, 1998, as amended by
Supplements No. 1 and No. 2 (the "Memorandum"), to extend the closing date of
the offering to August 31, 1998. Management represents that there have been no
other material changes to the Memorandum.
Date: June 29, 1998
The undersigned subscriber hereby acknowledges receipt of Supplement No. 1.
_____________________________
Signature
_____________________________
Please Print Name
<TABLE>
<CAPTION>
<S> <C> <C>
------------------------------
OMB APPROVAL
UNITED STATES OMB Number: 3235-00
SECURITIES AND EXCHANGE COMMISSION Expires: August 31, 199_
Washington, D.C. 20549 Estimated average burden
FORM D hours per response... 16.00
NOTICE OF SALE OF SECURITIES -----------------------------
PURSUANT TO REGULATION D, SEC USE ONLY
SECTION 4(6)AND/OR Prefix Serial
UNIFORM LIMITED OFFERING EXEMPTION DATE RECEIVED
------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Offering (|_| check if this is an amendment and name has changed, and
indicate change.)
1998 Limited Offering
- ------------------------------------------------------------------------------------------------------------------------------------
Filing Under (Check box(es) that apply): |x| Rule 504 |_| Rule 506 |_| Section 4(6) |_| ULOE
Type of Filing |x| New Filing |_| Amendment
- ------------------------------------------------------------------------------------------------------------------------------------
A. BASIC IDENTIFICATION DATA
- ------------------------------------------------------------------------------------------------------------------------------------
1. Enter the information requested about the issuer
- ------------------------------------------------------------------------------------------------------------------------------------
Name of Issuer (|_| check if this is an amendment and name has changed, and indicate change)
Ciro International, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Address of Executive Offices (Number and Street, City, State, Zip Code) Telephone Number (Including Area Code)
445 5th Ave, 11th Fl., New York, NY 10016 212-481-1322
- ------------------------------------------------------------------------------------------------------------------------------------
Address of Principal Business Operations (Number and Street, City, State, Zip Code) Telephone Number (Including Area Code)
(if different from Executive Offices)
- ------------------------------------------------------------------------------------------------------------------------------------
Brief Description of Business
Retail fashion jewelry
- ------------------------------------------------------------------------------------------------------------------------------------
Type of Business Organization
|x| corporation |_| limited partnership, already formed |_| other (please specify):
|_| business trust |_| limited partnership, to be formed
- ------------------------------------------------------------------------------------------------------------------------------------
Month Year
Actual or Estimated Date of Incorporation or Organization 1 1 9 7 |x| Actual |_| Estimated
Jurisdiction of Incorporation or Organization: (Enter two-letter U.S. Postal Service abbreviation for State:
CN for Canada: FN for other foreign jurisdiction) N V
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
GENERAL INSTRUCTIONS
Federal:
Who Must File: All issuers making an offering of secruties in reliance on an
exemption under Regulation D or Section 4(6), 17 CFR 230.501 et seq. or 15 U.S.C
77d(6).
When to File: A notice must be filed no later than 15 days after the first sale
of securities in the offering. A notice is deemed filed with the U.S. Securities
and Exchange Commission (SEC) on the earlier of the date it is received by the
SEC at the address given below or, if received at that address after the date on
which it is due, on the date it was mailed by the United States registered or
certified mail to that address.
Where to File: U.S. Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549.
Copies Required: Five (5) copies of this notice must be filed with the SEC, one
of which must be manually signed. Any copies not manually signed must be
photocopies of the manually signed copy or bear typed or printed signatures.
Information Required: A new filing must contain all information requested.
Amendments need only report the name of the issuer and offering, any changes
thereto, the information requested in Part C, and any material changes from the
information previously supplied in Parts A and B. Part E and the Appendix need
not be filed with the SEC.
Filing Fee: There is no federal filing fee.
State:
This notice shall be used to indicate reliance on the Uniform Limited Offering
Exemption (ULOE) for sales of securities in those states that have adopted ULOE
and that have adopted this form. Issuers relying on ULOE must file a separate
notice with the Securities Administrator in each state where sales are to be, or
have been made. If a state requires the payment of a fee as a precondition to
the claim for the exemption, a fee in the proper amount shall accompany this
form. This notice shall be filed in the appropriate states in accordance with
state law. The Appendix to the notice constitues a part of this notice and must
be completed.
- ---------------------------------- ATTENTION------------------------------------
Failure to file notice in the appropriate states will not result in a loss of
the federal exemption. Conversely, failure to file the appropriate federal
notice will not result in a loss of an available state exemption unless such
exemption is predicated on the filing of a federal notice.
- --------------------------------------------------------------------------------
Potential persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a currently
valid OMB control number.
SEC 1972 (2-97) 1 of 8
<PAGE>
A. BASIC IDENTIFICATION DATA
- --------------------------------------------------------------------------------
2. Enter the infomation requested for the following:
o Each promoter of the issuer, if the issuer has been organized within the
past five years;
o Each beneficial owner having the power to vote or dispose, or direct the
vote or disposition of, 10% or more of class of equity securities of the
issuer;
o Each executive officer and director of corporate issuers and of
corporate general and managing partners of partnership issuers; and
o Each general and managing partner of partnership issuers.
<TABLE>
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |x| Beneficial Owner |x| Executive Officer |x| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
Wilson, Murray A.
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
445 Fifth Ave., 11th Floor, New York, NY 10016
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |x| Executive Officer |_| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
Bloch, Max
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
Buchstrasse 2, 5304 Endingen, Switzerland
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |_| Executive Officer |_| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |_| Executive Officer |x| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |_| Executive Officer |_| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
Slattery, Joseph
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
1892 Willoughby Avenue, Ridgewood, NY 11385
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |_| Executive Officer |_| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
Check Box(es) that Apply: |_| Promoter |_| Beneficial Owener |_| Executive Officer |_| Director |_| General and/or
Managing Partner
- ------------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- ------------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Street, City, State, Zip Code)
- ------------------------------------------------------------------------------------------------------------------------------------
(Use blank sheet, or copy and use addtional copies of this sheet, as necessary.)
</TABLE>
2 of 8
<PAGE>
<TABLE>
<CAPTION>
B. INFORMATION ABOUT OFFERING
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Yes No
1. Has the issuer sold, or does the issuer intend to sell, to non-accredited investors in this offering? ....... |x| |_|
Answer also in Appendix, Column 2, if filing under ULOE.
2. What is the minimum investment that will be accepted from any individual? ................................... $990
-------
Yes No
3. Does the offering permit joint ownership of a single unit? .................................................. |x| |_|
4. Enter the information requested for each person who has been or will be paid or given, directly of indirectly
any commission or similar remuneration for solicitation of purchasers in connection with sales of securities
in the offering. If a person to be listed is an associated person or agent of a broker or dealer registered
with the SEC and/or with a state or states, list the name of the broker or dealer. If more than five (5)
persons to be listed are associated persons of such a broker or dealer, you may set forth the information for
that broker or dealer only.
- -----------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- -----------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Stree, City, State, Zip Code)
- -----------------------------------------------------------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- -----------------------------------------------------------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) ............................................................... |_| All States
[AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID]
[IL] [IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO]
[MT] [NE] [NV] [NH] [NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA]
[RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA] [WV] [WI] [WY] [PR]
- -----------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- -----------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Stree, City, State, Zip Code)
- -----------------------------------------------------------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- -----------------------------------------------------------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) ............................................................... |_| All States
[AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID]
[IL] [IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO]
[MT] [NE] [NV] [NH] [NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA]
[RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA] [WV] [WI] [WY] [PR]
- -----------------------------------------------------------------------------------------------------------------------------------
Full Name (Last name first, if individual)
- -----------------------------------------------------------------------------------------------------------------------------------
Business or Residence Address (Number and Stree, City, State, Zip Code)
- -----------------------------------------------------------------------------------------------------------------------------------
Name of Associated Broker or Dealer
- -----------------------------------------------------------------------------------------------------------------------------------
States in Which Person Listed Has Solicited or Intends to Solicit Purchasers
(Check "All States" or check individual States) ............................................................... |_| All States
[AL] [AK] [AZ] [AR] [CA] [CO] [CT] [DE] [DC] [FL] [GA] [HI] [ID]
[IL] [IN] [IA] [KS] [KY] [LA] [ME] [MD] [MA] [MI] [MN] [MS] [MO]
[MT] [NE] [NV] [NH] [NJ] [NM] [NY] [NC] [ND] [OH] [OK] [OR] [PA]
[RI] [SC] [SD] [TN] [TX] [UT] [VT] [VA] [WA] [WV] [WI] [WY] [PR]
- -----------------------------------------------------------------------------------------------------------------------------------
(Use blank sheet, or copy and use addtional copies of this sheet, as necessary.)
</TABLE>
3 of 8
<PAGE>
<TABLE>
<CAPTION>
C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
1. Enter the aggregate offering price of securities included in this offering and the total
amount already sold. Enter "0" if answer is "none" or "zero." If the transaction is an
exchnage offering, check this box |_| and indicate in the columns below the amounts of the
securities offered for exchange and already exchanged.
Type of Security Aggregate Amount Already
Offering Price Sold
Debt ....................................................................................... $ -0- $ -0-
------------- --------------
Equity ..................................................................................... $ 990,000 $ 244,200
|x| Common |_| Preferred
Convertible (including warrants) ........................................................... $ -0- $ -0-
------------- --------------
Partnership Interests ...................................................................... $ -0- $ -0-
------------- --------------
Other (Specify ______________________) ..................................................... $ -0- $ -0-
------------- --------------
Total ................................................................................. $ 990,000 $ 244,200
------------- --------------
Answer also in Appendix, Column 3, if filing under ULOE.
2. Enter the number of accredited and non-accredited investors who have purchases securities in
this offering and the aggregate dollar amounts of their purchases. For offerings under Rule
504, indicate the number of persons who have purchased securities and the aggregate dollar
amount of their purchases on the total lines. Enter "0" if answer is "none" or "zero."
Aggregate
Number Dollar Amount
Investors of Purchases
Accredited Investors ....................................................................... 10 $ 244,200
Non-accredited Investors ................................................................... -0- $ -0-
------------- --------------
Total (for filings under Rule 504 only) ............................................... 10 $ 244,200
Answer also in Appensix, Column 4, if filinf under ULOE.
3. If this filing is for an offering under Rule 504 or 505, enter the information requested for
all securities sold by the issuer, to date, in offerings of the types indicated, in the
twelve (12) months prior to the first sale of securities in this offering. Classify
securities by type listed in Part C - Question 1.
Type of Dollar Amount
Type of offering Security Sold
Rule 505 ................................................................................... $ -0-
------------- --------------
Regulation A ............................................................................... $ -0-
------------- --------------
Rule 504 ................................................................................... $ -0-
------------- --------------
Total ................................................................................. $ -0-
------------- --------------
4. a. Furnish a statement of all expenses in connection with the issuance and distribution of
the securities in this offering. Exclude amounts realting solely to organization expenses of
the issuer. The information may be given as subject to future contingencies. If the amount of
an expenditure is not known, furnish an estimate and check the box to the left of the
estimate.
Transfer Agent's Fees ................................................................................. |x| $ 200
-------------
Printing and Engraving Costs .......................................................................... |x| $ 300
-------------
Legal Fees ............................................................................................ |x| $ 15,000
-------------
Accouting Fees ........................................................................................ |x| $ 4,500
-------------
Engineering Fees ...................................................................................... |_| $
-------------
Sales Commission (specify finders' fees separately) ................................................... |_| $
-------------
Other Expenses (identify) ___________________________________ ......................................... |_| $
-------------
Total ............................................................................................ |x| $ 55,000
-------------
</TABLE>
4 of 8
<PAGE>
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
C. OFFERING PRICE, NUMBER OF INVESTORS, EXPENSES AND USE OF PROCEEDS
- ------------------------------------------------------------------------------------------------------------------------------------
b. Enter the difference between the aggregate offering price given in response to Part C -
Question 1 and total expenses furnished in response to PArt C - Question 4.a. This difference
is the "adjusted gross proceeds to the issuer."......................................................... $970,000
-------------
5. Indicate below the amount of the adjusted gross proceeds to the issuer used or propsed to be
used for each of the purposes shown. If the amount for any purpose is not known, furnish an
estimate and check the bow to the left of the estimate. The total of the payments listed must
equal the adjusted gross proceeds to the issuer set forth in response to Part C - Question
4.b above.
Payments to
Officers,
Directors, & Payments To
Affiliates Others
Salaries and fees |_| $ |_| $
----------- ---------
Purchase of real estate |_| $ |_| $
----------- ---------
Purchase, rental or leasing and installation of machinery and equipment |_| $ |_| $
----------- ---------
Construction or leasing of plant buildings and facilities |_| $ |X| $ 300,000
----------- ---------
Acquisition of other businesses (including the value of securities
offering that may be used in exchange for the assets or securities of another
issuer pursuant to a merger) |_| $ |_| $ 250,000
----------- ---------
Repayment of indebtedness (Chase Loan) |_| $ |_| $
----------- ---------
Working capital |_| $ |x| $ 220,000
----------- ---------
Other (specify): Purchase of inventory |_| $ |x| $ 200,000
----------- ---------
|_| $ |_|
----------- ---------
Column Totals |_| $ -0- |x| $ 970,000
----------- ---------
Total Payments Listed (column totals added) |x| $970,000
--------
</TABLE>
- --------------------------------------------------------------------------------
D. FEDERAL SIGNATURE
- --------------------------------------------------------------------------------
The issuer has duly caused this notice to be signed by the undersigned duly
authorized person. If this notice is filed under Rule 505, the following
signature constitues an undertaking by the issuer to furnish the U.S. Securities
and Exchange Commission, upon written request of its staff, the information
furnished by the issuer to any non-accredited investor pursuant to paragraph
(b)(2) of Rule 502.
- --------------------------------------------------------------------------------
Issuer (Print or Type) Signature Date
Circo International, Inc. /s/ Murray A. Wilson 4/2/98
- --------------------------------------------------------------------------------
Name of Signer (Print or Type) Title of Signer (Print or Type)
Murray A. Wilson President
- --------------------------------------------------------------------------------
- ----------------------------------ATTENTION-------------------------------------
Intentional misstatements or omission of fact consitute federal criminal
violations. (See 18 U.S. C. 1001.)
- --------------------------------------------------------------------------------
5 of 8
Confirmation of Rescission of (i) Asset
Purchase Agreement (the "Agreement")
dated as of May 1,1998 among
Hamilton jewelry, Inc., Oldco Bijoux, Inc. and KJL Vegas, Inc.
(collectively "Sellers") arid Ciro International, Inc. ("Buyer")
and of (ii) the purchase transaction (the "Transaction")
consummated thereunder.
The undersigned, being all of the parties to the Agreement and the
Transaction, hereby confirm that they have rescinded the Agreement and the
Transaction ab initio to the effect that the Agreement and the Transaction never
took place. In confirmation of the foregoing, the parties agree:
1. Any and all documents executed by any of the parties with respect to the
Agreement or the Transaction are canceled, ab initio, and are null and void, and
each party agrees to return to the other any documents executed and delivered by
such other party with respect to the Agreement or the TransactIon.
2. Any and all activities with respect to the jewelry business (the
"Jewelry Business") and assets covered by the Agreement and the Transaction
including but not limited to purchases, sales, receipts, disbursements, assets,
liabilities, etc. whIch may have been done in the name of the Buyer shall be
assumed by the Sellers and, for all purposes, be deemed purchases, sales,
receipts, disbursements, assets, liabilities, etc. of the Sellers, and Sellers
agree and are authorized to take such reasonable steps as are necessary in the
name of the Buyer or otherwise to confirm and accomplish the foregoing. In
furtherance thereof, Sellers hereby agree to indemnify and save Buyer harmless
from and against all claims of whatever nature or description relating to the
assets and business of the Sellers from and after May 1, 1998 and shall
reimburse the Buyer for all cost and expense including reasonable attorney fees
to defend any such claim, provided Buyer first gives Sellers written notice of,
and opportunity to defend, any such claim.
3. Each of the parties hereto shall take such reasonable steps as may be
requested by any of the other parties to confirm and accomplish the rescission,
ab initio, of the Agreement and the Transaction.
4. In furtherance of the Agreement and the Transaction, the Buyer has
heretofore advanced to the Sellers and/or for the purposes of the Jewelry
Business the approximate sum of $300,000.00, which sum shall be repaid by
Sellers to Buyer as per separate agreement to be negotiated by the parties.
5. Except as is set forth in this Confirmation of Rescission, the separate
agreement for the repayment of the $300,000.00, royalty arrangements concerning
use
<PAGE>
of the Ciro trademark and lease purchase agreement with respect to the lease for
the Ciro shop at Caesar's Palace Hotel, the Sellers and the Buyer each hereby
release and discharge the other and their respective officers, directors,
agents, servants and employees from all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims, and demands whatsoever, in law,
admiralty or equity, which against any such other, such party, its successors
and assigns ever had, now have or hereafter can, shall or may have, for, upon,
or by reason of any matter, cause or thing whatsoever from the beginning of the
world to the date hereof.
6. This Confirmation of Rescission may not be changed orally but only by a
writing signed by the party to the charged with any such change.
Dated: December 23, 1998
HAMILTON JEWELRY, INC.
By /s/ [ILLEGIBLE]
---------------------
OLDCO BIJOUX, INC.
By /s/ [ILLEGIBLE]
---------------------
KJL VEGAS, INC
By /s/ [ILLEGIBLE]
---------------------
CIRO INTERNATIONAL, INC.
By /s/ [ILLEGIBLE]
-------------------
PRIVATE PLACEMENT MEMORANDUM/INFORMATION STATEMENT
DATED NOVEMBER 12, 1997
------------
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A Florida Corporation)
------------
2,500,000 Shares of Common Stock, Par Value $.001
------------
This Private Placement Memorandum is also an Information Statement
(hereinafter the "Memorandum/Information Statement") with respect to shares of
Common Stock, par value $.00l per share, of Mid-Way Medical and Diagnostic
Center, Inc., a Florida corporation ("Mid-Way"), to be issued to the sole
shareholder of Ciro Jewelry, Inc., a Delaware, ("Ciro") in connection with a
proposed merger transaction in which Ciro would merge with and into a newly
formed Nevada corporation, Mid-Way Acquisitions Corp. ("Mid-Way Acquisitions"),
and the shareholder of Ciro would receive shares of Common Stock of Mid-Way
pursuant to the Agreement and Plan of Reorganization dated November 12, 1997,
(the "Merger Agreement") described herein and attached as Appendix "A." Mid-Way
Acquisitions is a wholly owned subsidiary of Mid-Way. This Memorandum covers
2,500,000 shares of Common Stock of Mid-Way, which shares represent the maximum
number of shares issuable upon consummation of the merger called for by the
Merger Agreement (the "Merger"). See "Plan of Distribution" and "Agreement and
Plan of Reorganization."
There are currently 11,000,000 shares of Mid-Way's $.001 par value Common
Stock outstanding. Mr. David Cohen, the sole officer and director, and the
principal shareholder of Mid-Way, has agreed to cancel 9,400,000 of the
10,000,000 shares currently held by him simultaneous with the closing of the
Merger. He has also agreed to sell 260,000 of his shares to Mr. Murray Wilson,
an officer, director, and the sole shareholder of Ciro, and 140,000 of his
shares to another officer of Ciro prior to closing. In addition, Mid-Way has
agreed to forward split its outstanding shares of Common Stock at the rate of
2.5 shares for each one share outstanding, such that there would be
approximately 4,000,000 shares of Mid-Way's Common Stock outstanding, taking
into account the foregoing cancellation of shares by Mr. Cohen. After issuance
of 2,500,000 shares to the sole shareholder of the Ciro in the Merger, there
would be 6,500,000 shares outstanding. After Closing, the current shareholders
of Mid-Way (excluding the 1,000,000 post reverse split shares sold to the
affiliates of Ciro by Mr. Cohen) would then own 2,500,000 shares or
approximately 38.46% of the outstanding shares and the affiliates of Ciro
(including the 1,000,000 post reverse split shares purchased from Mr. Cohen)
would own 3,500,000 shares or approximately 53.85% of said outstanding shares.
See "Agreement and Plan of Reorganization" and "Principal Shareholders."
Also as part of the Merger Mid-Way has agreed to change its name to "Ciro
International, Inc." or some derivation thereof, to nominate a director
designated by Ciro to become the sole director of Midway, and Mid-Way
Acquisitions, and to change its domicile to the State of Nevada. See "Agreement
and Plan of Reorganization" and "Change of Domicile."
THIS OFFERING IS HIGHLY SPECULATIVE AND INVOLVES SPECIAL RISKS. (SEE "RISK
FACTORS.")
<PAGE>
This Memorandum/Information Statement is first being sent to shareholders
of Mid-Way on or about November 17, 1997.
The address of Mid-Way and Mid-Way Acquisitions is 1600 Market Street, 33rd
Floor, Philadelphia, PA 19103, attn: David Cohen; telephone (215) 587-2620. The
address of Ciro is 445 Fifth Avenue, 11th Floor, New York, NY 10016; telephone
(212) 481-1322.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. "SEE PLAN OF DISTRIBUTION."
No person has been authorized to give any information or make any
representation concerning Mid-Way, Ciro, the capital stock of either company, or
the Merger Agreement, other than as contained in this Memorandum/Information
Statement. This Memorandum/Information Statement does not constitute an offer to
sell any securities other than the securities to which it relates or an offer to
sell the securities covered by this Memorandum/Information Statement in any
jurisdiction where, or to any person to whom, it is unlawful to make such an
offer.
THE SECURITIES BEING OFFERED PURSUANT TO THIS MEMORANDUM HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND ARE
BEING OFFERED AND SOLD IN RELIANCE UPON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE ACT. SUCH SECURITIES MAY NOT BE REOFFERED OR RESOLD UNLESS
THE SECURITIES ARE REGISTERED UNDER THE ACT, OR AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE ACT IS AVAILABLE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, OR ANY STATE SECURITIES DIVISION, NOR HAS THE
COMMISSION, OR ANY STATE SECURITIES DIVISION, PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS MEMORANDUM/INFORMATION STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Mid-Way is not a reporting company. However, it intends to deliver an
annual report to shareholders, which will include audited financial statements.
The shareholder of Ciro is invited to question and receive Answers from
Mid-Way concerning the terms and conditions of this offering and the business of
Mid-Way. Upon request, Mid-Way will provide additional information and
documents, if available or obtainable without unreasonable effort or expense.
(See "Additional Information.") The shareholder of Ciro is urged to request any
additional information he may consider necessary in making an informed decision
in connection with the merger. All requests should be directed to the president
of Mid-Way at 1600 Market Street, 33rd Floor, Philadelphia, PA 19103; telephone
(215) 587-2620.
THE SHAREHOLDER OF CIRO IS NOT TO CONSTRUE THE CONTENTS OF THIS
MEMORANDUM/INFORMATION STATEMENT AS LEGAL ADVICE. SUCH SHAREHOLDER SHOULD
CONSULT HIS OWN COUNSEL AS TO LEGAL AND RELATED MATTERS CONCERNING THIS
ISSUANCE.
-ii-
<PAGE>
STATE LEGENDS
In October 1996 Congress passed the Capital Markets Efficiency Act of 1996.
Part of this Act preempted state law in regard to the offer and sale of
securities, which are exempt pursuant to Section 4(2) of the Securities Act of
1933, as amended. However, states may still impose notice filing requirements
that are substantially similar to those required by rule or regulation under
Section 4(2) and may continue to collect filing or registration fees. As a
consequence of such preemption of state law by Congress, no state legends are
provided in this Memorandum/Information Statement.
-iii-
<PAGE>
TABLE OF CONTENTS
Page
----
Introduction ............................................................. 1
Memorandum/Proxy Statement Summary ....................................... 1
Risk Factors ............................................................. 4
Plan of Distribution ..................................................... 7
Principal Shareholders ................................................... 8
Agreement and Plan of Reorganization ..................................... 9
Mid-Way Medical and Diagnostic, Inc ..................................... 15
General ............................................................ 15
Management's Discussion and Analysis ............................... 15
Management ......................................................... 16
Market Information ................................................. 17
Legal Proceedings .................................................. 17
Dividend Policy .................................................... 18
Additional Information ............................................. 18
Ciro Jewelry, Inc ....................................................... 18
Business ........................................................... 18
Selected Financial Data ............................................ 21
Management's Discussion and Analysis ............................... 22
Management ......................................................... 22
Legal Proceedings .................................................. 23
Additional Information ............................................. 24
Change of Domicile of Mid-Way to the State of Nevada .................... 24
Independent Certified Public Accountants ................................ 27
Additional Information .................................................. 28
Financial Statements .................................................... 28
Exhibits
Appendix "A" Agreement and Plan of Reorganization
Appendix "B" Plan and Agreement of Merger (Change of Domicile)
Appendix "C" Form of Surviving Company Nevada Articles of Incorporation
Appendix "D" Dissenters' Rights (Florida)
-iv-
<PAGE>
INTRODUCTION
This Memorandum/Information Statement is being furnished to shareholders of
Mid-Way in compliance with Section 607.0704 of the Florida Business Corporation
Act which requires that notice of any action by the shareholders without a
meeting must be given to those shareholders entitled to vote who have not
consented in writing. On November 12, 1997, the sole shareholder of Ciro and the
principal shareholder of Mid-Way owning a majority of the outstanding shares of
common stock of such corporation approved the Merger Agreement. The parties to
the Merger Agreement propose to execute and file the respective Articles of
Merger in the States of Florida and Delaware on the closing date of the Merger
Agreement which is presently scheduled for December 2, 1997, and which must take
place on or before December 15, 1997. Immediately following the closing of the
Merger, Ciro will be merged into Mid-Way Acquisitions, which will continue the
business of Ciro under the name "Ciro Jewelry, Inc.." The separate corporate
existence of Ciro will cease and Mid-Way Acquisitions will continue to be a
wholly owned subsidiary of Mid-Way. Mid-Way will change its name to "Ciro
International, Inc." and will change its domicile to the State of Nevada. On
November 12, 1997, the sole shareholder of Ciro and the principal shareholder of
Mid-Way owning a majority of the outstanding shares of common stock of such
corporation approved the change of domicile.
MEMORANDUM/INFORMATION STATEMENT SUMMARY
The following summary information is qualified in its entirety by the
detailed information and financial statements appearing elsewhere herein:
MERGER TRANSACTION
The Companies
Mid-Way is the parent of its wholly owned subsidiary, Mid-Way Acquisitions,
a company incorporated for the sole purpose of completing the Merger with Ciro.
Mid-Way Acquisitions has had no activities since inception, except in connection
with the proposed Merger. Mid-Way is currently an inactive shell company with no
active business operations, with the exception of seeking viable businesses or
enterprises to acquire. See "Mid-Way Communications, Inc."
Ciro holds five licenses in various countries through which the licensees
operate a total of 32 retail fashion jewelry stores using the CIRO name. In
addition, Ciro intends to open and operate retail fashion jewelry stores using
the CIRO name. See "Ciro Jewelry, Inc."
Merger Agreement
The Merger Agreement provides for Ciro and Mid-Way Acquisitions to merge
(the Merger). Mid-Way Acquisitions will be the surviving corporation and will
succeed to all of the assets, liabilities, rights, and obligations of Ciro. The
Merger Agreement also provides that Mid-Way Acquisitions will change its name to
"Ciro Jewelry, Inc." Also, Mid-Way has agreed in the Merger Agreement to change
the domicile of Mid-Way to the State of Nevada and to change its name to "Ciro
International, Inc.". See "Change of Domicile."
-1-
<PAGE>
Also, in connection with the Merger, David Cohen, the sole officer and
director, and a controlling shareholder of Mid-Way has agreed to cancel
9,400,000 shares of the 10,000,000 shares owned by him. He has also agreed to
sell 400,000 shares owned by him to the sole shareholder and another affiliate
of Ciro. Finally, Mid-Way has agreed prior to closing to forward split its
outstanding shares of Common Stock at the rate of 2.5 shares for each share
outstanding.
Upon the effectiveness of the Merger, all of the 1,500 outstanding shares
of Common Stock of Ciro will be converted into 2,500,000 shares of Common Stock
of Mid-Way. Upon the effectiveness of the Merger former shareholders and
affiliates of Ciro will hold approximately 53.85% of the outstanding shares of
Mid-Way, including the shares of Mid-Way to be purchased by such affiliates from
the principal shareholder of Mid-Way.
The Merger will not result in any changes in the provisions of the Articles
of Incorporation of Mid-Way Acquisitions, except, as set forth herein, and there
will be no changes in the bylaws of Mid-Way Acquisitions. The following is a
summary of the changes to the Articles of Incorporation of Mid-Way Acquisitions:
1. The name of Mid-Way Acquisitions will be changed to "Ciro
Jewelry, Inc." and
2. The Board of Directors will be changed to persons designated by
Ciro.
See "Agreement and Plan of Reorganization."
Required Vote
The affirmative vote of a majority of the outstanding shares of Ciro and
Mid-Way Acquisitions is required to approve the Merger. The sole shareholder of
Ciro owning all of the outstanding shares of the company has consented in
writing to the Merger. Mid-Way Acquisitions is a wholly owned subsidiary of
Mid-Way, which has consented to the Merger, and a shareholder of Mid-Way owning
approximately 90.9% of the outstanding shares has consented in writing to the
Merger. Murray A. Wilson, the sole shareholder of Ciro, owns all of the
outstanding shares of the company. "See "Agreement and Plan of Reorganization"
and "Principal Shareholders."
Risk Factors
Issuance of the shares of Mid-Way in the Merger involves a number of risks
inherent in the business operations of the two entities and the transaction
itself. See "Risk Factors."
Common Stock Outstanding
As of November 12, 1997, Mid-Way had outstanding 11,000,000 shares of its
common stock. Immediately following the closing of the Merger, assuming the
cancellation of 9,400,000 shares by Mr. Cohen and the 2.5 for one forward split,
but no further issuances of shares prior to such closing date, Mid-Way will have
outstanding approximately 4,000,000 shares of Common Stock.
-2-
<PAGE>
Management and Operations after the Merger
Upon closing of the Merger Agreement, the current management of Mid-Way
Acquisitions and Mid-Way, consisting of David Cohen as the sole officer and
director, will resign. Murray A. Wilson, the sole director of Ciro, will be
appointed as the sole director of both surviving entities. The business of
Midway Acquisitions will become the business of Ciro without any effect of the
Merger. See "Agreement and Plan of Reorganization."
Summary Historical and Pro Forma Financial Data
The following table sets forth unaudited condensed pro forma financial data
of Mid-Way for the period ended June 30, 1997, and the years ended December 31,
1995 and 1996, which presents the acquisition of Ciro by Mid-Way as if the
acquisition had been consummated June 30, 1997. The pro forma condensed
financial data does not purport to represent what Mid-Way's results of
operations would actually have been had the acquisition in fact occurred on June
30, 1997, and is not necessarily indicative of future operating results or
financial position. The information contained in this table should be read in
conjunction with the annual and interim financial statements included elsewhere
herein and in conjunction with Management's Discussion and Analysis for each
entity.
Six Months Year Ended Year Ended
June 30, December 31, December 31,
1997 1996 1995
---- ---- ----
Operating Data:
Revenues $ 105,868 $ 262,975 $ 253,520
Operating Costs 121,814 262,587 263,461
Income from Operations (15,946) 388 (9,941)
Other Income (Expenses)
Commissions 4,388
Interest 6,963
Other 3,458 7,458
Interest Expense (5,700)
Gain on Sale of Stock 5,833
Total Expenses -0- 3,458 18,942
Income Before Taxes (15,946) 3,846 9,001
Provision for Taxes 2,255 5,307 4,062
Net Income (Loss) ($ 18,201) ($ 1,461) 4,931
Balance Sheet Data:
Current Assets $ 22,427 $ 30,672 $ 16,669
Other Assets 340,944 352,277 363,332
Total Assets 363,371 382,949 380,001
Current Liabilities 7,094 8,471 4,062
Total Liabilities 7,094 8,471 4,062
Total Stockholder's Equity 356,277 374,478 375,939
-3-
<PAGE>
Federal Income Tax Consequences
The tax advisor to Ciro has advised that, for U.S. federal income tax
purposes, the transaction contemplated by the Merger Agreement will constitute a
tax-free reorganization.
Recent Prices of Mid-Way Common Stock
The Common Stock of Mid-Way has been quoted on the NASDAQ Electronic
Bulletin Board since approximately February 4, 1997. Trading on the NASDAQ
Electronic Bulletin Board is under the trading symbol "MWMD." As of the date of
execution of the Merger Agreement, the date of mailing of this
Memorandum/information Statement, and on November 14, 1997, the last trading day
prior to the announcement of the Merger, there was no bid or ask quotation for
the Common Stock of Mid-Way on the Bulletin Board. Because of the limited volume
of trading of the Common Stock of Mid-Way as reported on the Bulletin Board,
management does not believe that an established market for such stock currently
exists. See "Risk Factors" and "Mid-Way Medical and Diagnostic Center,
Inc.--Market Information."
Federal or State Regulatory Requirements
Except with regard to the statutory provisions concerning the merger of the
two entities, neither federal nor state requirements must be complied with, nor
must approval be obtained in connection with the proposed merger. However, the
issuance of stock to the shareholder of Ciro is proposed to be accomplished
through certain federal and state exemptions from registration. Compliance with
such exemptions will be required in the Merger transaction. See "Plan of
Distribution."
CHANGE OF DOMICILE
Midway is also proposing to change the domicile of the company from the
State of Florida to the State of Nevada. See "Change of Domicile of Midway."
RISK FACTORS
In evaluating the Merger and other transactions herein, Ciro and Midway
shareholders should consider the following factors and should carefully review
the information contained elsewhere in this Memorandum/Information Statement:
1. Limited Operating History. Ciro has had a limited operating history.
Although it has been profitable since its inception, there is no assurance that
it will remain profitable, especially with the proposed opening and operation of
retail fashion jewelry stores. As a new enterprise, the operation of such retail
stores is likely to be subject to risks management has not anticipated. Ciro has
limited resources and may require outside capital through equity funding to
allow it to conduct the retail store operations. Therefore, unless Ciro is able
to continue to raise funds through such equity financing, the ability of Ciro to
finance its proposed operations may not be possible. Also, Mid-Way has had
limited operations since inception and has no assets or liabilities. The future
operations and profitability of Mid-Way is dependent upon the completion of the
Merger or a similar transaction. See "Mid-Way Medical and Diagnostic Center,
Inc.-
-4-
<PAGE>
Management's Discussion and Analysis," "Ciro Jewelry, Inc. -- Management's
Discussion and Analysis," and "Financial Statements."
2. Reliance on Officers, Directors and Key Employees. The ability of Ciro
to successfully conduct its business affairs will be subject to the capabilities
and business acumen of current officers, directors and key employees. Ciro has
no employment agreements with management. The loss of any one of these
individuals could have a material adverse impact on the continued operation of
such company. See "Ciro Jewelry, Inc.--Management."
3. Felony Conviction of Key Officer. In June 1989 Mr. Murray A. Wilson, the
president, a director, and the sole shareholder of Ciro, was found guilty in
federal court of conspiracy to commit mail and wire fraud in Las Vegas, Nevada.
In 1991 Mr. Wilson pleaded guilty in New York to a Class F Felony. See "Ciro
Jewelry, Inc.--Management."
4. Limited Liability of Officers and Directors. The articles of
incorporation of Mid-Way and Mid-Way Acquisitions limit a director's personal
liability to the company or its shareholders for monetary damages for any
actions taken or any failure to take action to the fullest extent permitted by
Florida and Nevada law, respectively, or any other applicable law as now in
effect or as it may hereafter be amended. Furthermore, as proposed herein,
Mid-Way Acquisitions is or will be obligated under the respective articles of
incorporation and bylaws to indemnify its directors, officers' employees,
agents, or fiduciaries to the fullest extent permitted or required by Nevada
law. Each of these provisions could reduce the legal remedies available to the
companies and the shareholders against such individuals. See "Agreement and Plan
of Reorganization."
5. Competition. The market for Ciro's products and services is intensely
competitive, with many providers who have greater technical expertise, financial
resources and marketing capabilities than Ciro. There is no assurance the
company will be able to overcome competitive disadvantages it will face as a
small, start up company with limited capital. See "Ciro Jewelry,
Inc.--Business."
6. Fashion Jewelry Industry and Competition. The fashion jewelry industry
is highly competitive and is affected by changes in international, national,
regional, and local economic conditions and market trends. Ciro, and its
licensees do and will compete with a variety of other retail jewelry businesses
in the industry. The competitors, generally, have been in existence longer and
have a much more established market presence and substantially greater
financial, marketing and other resources than Ciro. See "Ciro Jewelry,
Inc.--Business."
7. Proprietary Rights. The present income of Ciro is dependent upon the
various license arrangements with others to use the CIRO name. Ciro has
attempted to register with the various federal and foreign agencies to protect
the exclusive use of the name. There is no assurance that the rights to such
name are adequately protected. The loss of the use of the name CIRO would be a
material negative factor in the current and proposed business of Ciro. See "Ciro
Jewelry, Inc.--Business."
8. No Established Public Market for Mid-Way's Stock. Although the Common
Stock of Mid-Way is quoted on the OTC Electronic Bulletin Board, limited trading
has occurred since such listing in February 1997, and therefore, at present,
management believes that no established market exists for the Common Stock of
Mid-Way. There is no assurance that an established trading market for such
securities
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will develop, or if such market is developed that it will be sustained. See
"Mid-Way Medical and Diagnostic Center, Inc.--Market Information."
9. Dividend Policy. Neither Mid-Way nor Ciro has ever paid a cash dividend
on its Common Stock and does not anticipate paying cash dividends in the
foreseeable future. See "Mid-Way Medical and Diagnostic Center, Inc.--Dividend
Policy."
10. Market Overhang. At September 30, 1997, Mid-Way had approximately
10,952,000 shares, or approximately 99.56%, of its Common Stock which had not
been registered with the Securities and Exchange Commission or any state
securities agency and which were restricted pursuant to Rule 144 promulgated by
the Securities and Exchange Commission under the Securities Act of 1933, as
amended. Rule 144 provides, in essence, that a person holding restricted
securities for one year from the date the securities were bought from the
issuer, or an affiliate of the issuer, and fully paid, may sell limited
quantities of the securities to the public without registration, provided there
shall be available adequate current public information with respect to the
issuer. Such information shall be deemed to be available only if the issuer is
current in filing its reports with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, or if not required
to file such reports, has made certain information publicly available. Sales of
securities of an affiliate, or a non-affiliate who has owned the stock for more
than one year but less than two years, are limited to one percent of the total
outstanding shares of the issuer during the three months preceding the sale.
Further, the securities must be sold in brokers' transactions within the meaning
of Rule 144. Pursuant to Rule 144, such securities held by non-affiliates for
more than two years may be sold without reference to the current public
information or broker transaction requirements, or the one percent selling
limitation. Management believes that approximately 952,000 of the current
outstanding restricted shares are available for resale pursuant to Rule 144. The
sale of some or all of such currently restricted shares of Common Stock could
have a material negative impact upon the market price of the Common Stock of
Mid-Way if an established market for such securities should develop in the
future. See "Mid-Way Medical and Diagnostic Center, Inc.--Market Information."
11. Restrictions Upon Shares. The Shares to be issued pursuant to the
Merger will be restricted securities as that term is defined in Rule 144
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, as amended. As a result, the certificates representing such Shares will
bear restrictive legends and will be subject to certain requirements on resale,
including a minimum holding period, limitations upon the amount and manner of
sales, and certain notification requirements with the Securities and Exchange
Commission. See "Plan of Distribution."
12. Strict Compliance with Exemption Requirements. It is the intention of
Mid-Way to issue the Shares in accordance with an exemption from registration
contained in Section 4(2) of the Securities Act of 1933, as amended, Rule 506 of
Regulation D promulgated by the Securities and Exchange Commission, and to
comply with state filing requirements. The failure to comply strictly with the
requirements of Regulation D, and the similar state provisions, could make such
exemptions unavailable and would create liability for Mid-Way, Ciro, their
officers and directors, and others for failure to register the securities. See
"Plan of Distribution."
13. Applicability of Low Priced Stock Risk Disclosure Requirements. The
Common Stock of Mid-Way is considered a low priced security under rules
promulgated under the Securities Exchange Act of 1934, as amended. Under these
rules, broker-dealers participating in transactions in low priced securities
must first deliver a risk disclosure document which describes the risks
associated with such stocks, the broker-dealer's duties, the customers rights
and remedies, and certain market and other information, and
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make a suitability determination approving the customer for low priced stock
transactions based on the customers financial situation, investment experience
and objectives. Broker-dealers must also disclose these restrictions in writing
to the customer and obtain specific written consent of the customer, and provide
monthly account statements to the customer. With all these restrictions, the
likely effect of designation as a low priced stock will be to decrease the
willingness of broker-dealers to make a market for the stock, to decrease the
liquidity of the stock and increase the transaction cost of sales and purchases
of such stocks compared to other securities.
14. Volatility of Stock Prices. In the event that an established public
market does develop for the Common Stock of Mid-Way, market prices will be
influenced by many factors, and will be subject to significant fluctuation in
response to variations in operating results of Mid-Way and other factors such as
investor perceptions of the company, supply and demand, interest rates, general
economic conditions and those specific to the industry, developments with regard
to Mid-Way's activities, future financial condition and management.
PLAN OF DISTRIBUTION
The issuance of the shares of Mid-Way pursuant to the Merger Agreement is
being made in accordance with the terms and conditions of Rule 506 of Regulation
D promulgated by the Securities and Exchange Commission. Said rule provides an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"). Ciro has represented to Mid-Way that the sole
shareholder of Ciro has sufficient knowledge and experience in financial and
business matters to be able to evaluate the risks and merits of the issuance of
shares as set forth in the Merger Agreement. Such shareholder of Ciro will be
required to furnish to Mid-Way a representation form stating that such person is
either an accredited investor or that he has the requisite knowledge and
experience.
The shares of Mid-Way to be issued in the Merger will be restricted
securities as defined in Rule 144 promulgated by the Securities and Exchange
Commission. There are substantial restrictions on the transferability of such
shares. Since such shares will not be registered under the Securities Act, or
any applicable state securities laws, the shares may not be sold unless they are
registered under the Securities Act and state securities laws, or unless such
sale is exempt from such registration under the Securities Act and any other
applicable state securities laws or regulations.
Rule 144 provides, in essence, that a person holding restricted securities
for one year from the date the securities were bought from the issuer, or an
affiliate of the issuer, and fully paid, may sell limited quantities of the
securities to the public without registration, provided there shall be available
adequate current public information with respect to the issuer. Such information
shall be deemed to be available only if the issuer is current in filing its
reports with the Securities and Exchange Commission pursuant to the Securities
Exchange Act of 1934, as amended, or if not required to file such reports, has
made certain information publicly available. Sales of securities of an
affiliate, or a non-affiliate who has owned the stock for more than one year but
less than two years, are limited to one percent of the total outstanding shares
of the issuer during the three months preceding the sale. Further, the
securities must be sold in brokers' transactions within the meaning of Rule 144.
Pursuant to Rule 144, such securities held by non-affiliates for more than two
years may be sold without reference to the current public information or broker
transaction requirements, or the one percent selling limitation.
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Mid-Way is under no obligation to aid in obtaining any exemption from the
registration requirements. The seller will be responsible for compliance with
all conditions on transfer imposed by any securities administrator of any state
and for any expenses incurred by Mid-Way for legal or accounting services in
connection with reviewing such a proposed transfer and/or issuing opinions in
connection therewith.
The following restrictions and limitations will be applicable to any
resales, pledges, hypothecations or other transfers of the shares of Common
Stock of Mid-Way:
a. The shares cannot be sold, pledged, hypothecated or otherwise
transferred unless the shares are registered under the Securities Act and
applicable state securities laws or are exempt therefrom.
b. A legend in substantially the following form will be placed on any
certificate or other documents evidencing the Shares:
The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), or any state securities
laws, and no sale or transfer thereof may be effected without an effective
registration statement or an opinion of counsel for the holder,
satisfactory to the company, that such registration is not required under
the Act and any applicable state securities laws.
c. Stop transfer instructions will be placed with respect to the shares so
as to restrict resale, pledge, hypothecation or other transfer thereof without
compliance with the foregoing requirements.
d. The legend and stop transfer instructions described in subparagraphs (b)
and (c) above will be placed with respect to any new certificate(s) issued upon
presentment of certificate(s) for transfer.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information furnished by the
following persons, or their representatives, regarding the ownership of the
Common Shares of Mid-Way as of November 12, 1997, and adjusted to reflect the
Merger, by (i) each person known to Mid-Way to be the beneficial owner of more
than 5% of the outstanding shares of Common Stock, (ii) each of Mid-Way's
executive officers and directors, (iii) individuals to be appointed directors as
a result of the Merger, and (iv) all of Midway's executive officers and
directors as a group.
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Name and Amount and Nature of
Address of Beneficial Ownership Percent of Class
Beneficial Owner -------------------- ----------------
As of Post As of Post
9/30/97 Merger(1) 9/30/97 Merger
------- --------- ------- ------
Mid-Way Executive Officers and Directors and Holders of More than 5%
David Cohen 10,000,000 500,000(2) 90.9% 7.69%
1600 Market Street
33rd Floor
Philadelphia, PA 19103
Executive Officers and Directors
as a Group (1 Person) 10,000,000 500,000(3) 90.9% 7.69%
Ciro Executive Officers and Directors. and Appointees, and Holders of More than
5%
Murray A. Wilson -- 3,150,000(4) -- 48.46%
445 Fifth Avenue
New York, NY 10016
Laszlo Schwartz -- 350,000(5) -- 5.38%
445 Fifth Avenue
New York, NY 10016
Executive Officers and Directors
as a Group (2 Persons) -- 350,000 -- 53.85%
AGREEMENT AND PLAN OF REORGANIZATION
This section of the Memorandum/Information Statement describes certain
aspects of the Merger but does not purport to be complete and is qualified in
its entirety by reference to the Merger Agreement which is set forth as Appendix
"A" attached hereto and incorporated herein.
- ----------
(1) Assuming the closing of the Merger, no other issuances of stock by
either entity, and the 2.5-for-one forward split of the outstanding shares of
Common Stock of Mid-Way, Mid-Way would have 6,500,000 shares outstanding upon
completion of the Merger.
(2) Assumes the cancellation of 9,400,000 pre-forward split shares and the
sale of 400,000 pre-forward split shares to the affiliates of Ciro.
(3) Assumes the cancellation of 9,400,000 pre-forward split shares and the
sale of 400,000 pre-forward split shares to the affiliates of Ciro.
(4) Assumes the purchase of 260,000 pre-forward split shares from Mr.
Cohen. Mr. Wilson is the sole shareholder of Ciro and as a result will receive
all of the 2,5000,000 shares to be issued in the Merger.
(5) Assumes the purchase of 140,000 pre-forward split shares from Mr.
Cohen.
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ALL SHAREHOLDERS ARE URGED TO READ THE MERGER AGREEMENT (AND ITS EXHIBITS) IN
ITS ENTIRETY.
On November 12, 1997, the sole shareholder of Ciro owning all of the
outstanding shares of Common Stock of the company on such date, approved the
Merger Agreement by written consent. As of November 12, 1997, Ciro had
outstanding 1,500 shares of Common Stock, representing a like number of votes,
all of which shares gave written consent approving the Merger Agreement.
In addition, on November 12, 1997, Mr. David Cohen, a shareholder of
Mid-Way owning approximately 90.9% of all of the outstanding shares of Common
Stock of the company, approved the Merger Agreement by written consent. As of
November 12, 1997, Mid-Way had outstanding 11,000,000 shares of Common Stock,
representing a like number of votes, of which 10,000,000 shares gave written
consents approving the Merger Agreement.
General Description
The Merger Agreement provides that on the effective date of the Merger (the
"Effective Date"), Ciro will be merged with and into Mid-Way Acquisitions.
Mid-Way Acquisitions will be the surviving corporation. Ciro, which will not
survive the Merger, will be merged into Mid-Way Acquisitions and all of Ciro's
assets, liabilities and property will become the assets, liabilities, and
property of Mid-Way Acquisitions. The Articles of Incorporation of Mid-Way
Acquisitions will be unchanged, except, as set forth in the Articles of Merger
described below and there will be no change to its bylaws.
Effect of the Merger
Consummation of the Merger and conversion of the Ciro Common Stock into
shares of Mid-Way Common Stock will result in the current shareholder and other
affiliate of Ciro owning approximately 53.85% (assuming cancellation of
9,400,000 pre-forward split shares by Mr. Cohen and the sale of 400,000
pre-forward split shares by Mr. Cohen to the affiliates of Ciro) of the
outstanding Common Stock of Mid-Way on the Effective Date, assuming no further
shares of Mid-Way are issued prior to the Effective Date.
The Merger will not result in any changes to Mid-Way Acquisitions Articles
of Incorporation, except as set forth in the Articles of Merger discussed below,
or to the bylaws of Mid-Way Acquisitions concerning the rights of holders of
Mid-Way Acquisitions Common Stock.
Conversion Ratio
On the Effective Date, the 1,500 shares of outstanding Common Stock of Ciro
will be converted into 2,500,000 shares of Common Stock of Mid-Way.
Conditions to the Merger
If, at any time prior to the effective date of the Merger, events or
circumstances occur which in the opinion of a majority of the board of directors
of either constituent corporation renders it inadvisable to consummate the
Merger, the Merger Agreement will not become effective even though previously
adopted by the shareholders of the corporations.
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Articles of Merger
On the Effective Date Articles of Merger will be filed in the States of
Delaware and Nevada. The Articles of Incorporation of Mid-Way Acquisitions will
be amended to the extent set forth in Articles of Merger. Set forth below are
the amendments to the Articles of Incorporation set forth in the Articles of
Merger:
I. Amend Article I of the Articles of Incorporation to read as follows: The
name of the corporation is Ciro Jewelry, Inc.
Basis and Reasons for the Merger
As part of its business strategy Ciro recognized the tremendous growth
opportunity in the area of fashion jewelry, especially using the CIRO name. To
expedite timeliness to market and expansion of its retail business, Ciro needed
additional capital. In order to increase its capital, management determined that
the public market would provide the best access to capital infusion. Mid-Way has
been inactive since approximately 1991 and has been seeking business
opportunities which would allow its shareholders to realize potential return on
their stock holdings. The Boards of Directors of Mid-Way and Ciro believe that
the Merger meets the companies' objectives and is in the best interests of the
shareholders.
Interests of Certain Persons in the Merger
Mr. Cohen, the sole officer and director, and a controlling shareholder of
Mid-Way has agreed to sell to Mr. Wilson, the sole director and shareholder of
Ciro, 260,000 of his shares of Mid-Way for $26,000 and 140,000 shares to Laszlo
Schwartz, an officer of Ciro, for $14,000. In addition Mr. Cohen has agreed as
part of the Merger to cancel 940,000 of the 10,000,000 shares owned by him.
Management and Operations after the Merger
The board of directors and officers of Mid-Way Acquisitions will be changed
at the closing of the Merger Agreement to provide for Murray A. Wilson as the
sole director. After the Effective Date of the Merger, the principal business of
Mid-Way Acquisitions will be the current business of Ciro.
Differences in Rights of Ciro Shareholders as a Result of the Merger
If the Merger is approved and becomes effective, the sole shareholder of
Ciro will receive shares of Common Stock of Mid-Way in place of his shares of
Common Stock of Ciro. Ciro is a Delaware corporation and Mid-Way is a Florida
corporation. However, it is also proposed that contemporaneous with the
effectiveness of the Merger, Mid-Way will change its domicile to the State of
Nevada. Differences between the corporation laws of the States of Delaware and
Nevada, as well as differences in the charter and bylaws of the two companies
will result in differences in the rights of the Ciro shareholder. The material
differences between the corporate laws of the States of Delaware and Nevada as
set forth in the General Corporation Law of the State of Delaware ("Del Law")
and the Nevada Revised Statutes ("NRS") are as follows:
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Shareholders' Meetings
Call. Pursuant to Section 211 of Del Law, special meetings of the
shareholders may be called by the board of directors or the person or persons
authorized by the certificate of incorporation or the bylaws. Nevada corporate
law has no such provision. However, the bylaws of Midway provide that special
meetings of the shareholders may be called by the president or the board of
directors, or when requested in writing by the holders of not less than 10% of
all the shares entitled to vote at the meeting.
Proxies. Section 78.355 of the NRS provides that no proxy shall be valid
after the expiration of six months, or, if coupled with an interest, for more
than seven years from the date of its execution. Section 212 of Del Law provides
that no proxy shall be valid after three years, unless the proxy is designated
as irrevocable and is coupled with an interest, in which event the proxy may be
valid until the interest with which it is coupled is extinguished.
Action Without a Meeting. Generally, under Section 78.320 of the NRS, any
action by a majority of the voting power of the corporation is sufficient to
take such action without a meeting. Under Section 228 of Del Law, any action
which may be taken at any annual or special meeting of shareholders may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing shall be signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted.
Court-Ordered Meetings. Section 211 of Del Law provides that any
shareholder or director may demand an annual meeting of the shareholders be
called if no such meeting has been held within thirteen months after the
organization of the corporation or after the last annual meeting. Section 78.345
of the NRS provides that a majority of the voting power may demand that an
annual meeting be called if the corporation shall fail to hold an annual meeting
within six months after the time designated therefore.
Number of Directors
Section 141 of Del Law and Section 78.115 of the NRS permit a corporation
to have only one director.
Election and Removal of Directors
In both Delaware and Nevada, election of directors by the shareholders is
substantially similar. Cumulative voting is generally allowed in both states. In
both Delaware and Nevada the articles of incorporation or an amendment thereto
must specifically provide for cumulative voting. Also, shareholders of Nevada
corporations registered under the Securities Act of 1933 must give notice to the
corporation in advance that a shareholder wishes to cumulate votes (NRS Section
78.3 60). The articles of incorporation of Ciro and Mid-Way do not provide for
cumulative voting. Removal of directors in both states is also similar. In
Delaware shareholders may remove one or more directors with or without cause
unless the articles of incorporation provide that directors may only be removed
for cause (Section 14 1(k) of Del Law). In Nevada, however, shareholders
representing two-thirds or more of the voting stock are generally required to
remove a director from office (NRS Section 78.335).
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Amendments to the Articles of Incorporation
In general, unless the articles of incorporation provide otherwise, most
amendments must be approved by the shareholders of corporations in both Delaware
and Nevada. Delaware law provides for certain limited cases where the
incorporators or directors may amend the articles before receipt of payment for
stock (Del Law Section 241). Otherwise though, most amendments must be approved
by a majority vote of the outstanding shares (Del Law Section 242). In Nevada,
directors have fewer capabilities to amend the articles. Likewise, Nevada
corporate articles may be amended by a simple majority of the shareholders (NRS
Section 78.390).
Shareholders' Rights to Inspect Financial Records
Delaware corporate law provides that every shareholder of record has a
right, in person or by attorney or other agent, upon written demand under oath
stating the purpose therefore, to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records during reasonable business hours (Del Law Section 220). In Nevada,
shareholders of at least fifteen percent of the issued and outstanding shares
may inspect the financial records of the company upon providing five days'
written notice to the corporation (NRS Section 78.25 7).
Preemptive Rights
Under Nevada corporate law, except to the extent limited or denied by the
articles of incorporation, shareholders have certain preemptive rights to
purchase a corporation's unissued shares (NRS Section 78.265). In Delaware,
shareholders do not have preemptive rights unless the articles of incorporation
specifically state that such rights (Del Law Section 102(b)(3)). The articles of
incorporation of both Ciro and Mid-Way do not provide for shareholder preemptive
rights.
Dissenters' Rights
Both Delaware and Nevada provide certain dissenters' rights to protect
minority shareholders. In general, these dissenters' rights give shareholders
the right to receive fair compensation from the corporation for their shares in
the event that the corporation does certain acts with which the shareholders do
not agree. In Delaware shareholders generally have appraisal rights when the
corporation is involved in a merger or consolidation with another corporation
(Del Law Section 262). In Nevada shareholders generally have dissenters' rights
to receive payment for the fair value of their shares when the corporation
merges into or consolidates with another corporation (NRS Section 78.505).
Shareholders' Approval of Mergers and Acquisitions
Delaware law provides that mergers be approved by a majority of the
outstanding stock of the corporation entitled to vote thereon (Del Law Section
251, et seq.). Nevada law requires majority shareholder approval for an
acquisition of a controlling interest in the Nevada corporation before the
shares issued in such transaction may be voted by the acquiring party (NRS
Sections 78.3 78 et seq.).
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Accounting Treatment
Because the shareholders of Ciro will control Mid-Way Acquisitions
following the Merger, the Merger will be treated as a "Reverse Acquisition" for
accounting purposes using historical book values similar to a "pooling of
interests" method of accounting.
Federal Income Tax Consequences
The tax advisor to Ciro has advised that, for U.S. federal income tax
purposes, the transactions contemplated by the Merger Agreement will constitute
tax-free reorganizations.
Description of Securities of Mid-Way
Common Stock. Mid-Way is authorized to issue 50,000,000 shares of Common
Stock, par value $.00l per share. As of November 12, 1997, Mid-Way had
outstanding 11,000,000 shares of Common Stock. All Common Shares are equal to
each other with respect to voting, and dividend rights, and, are equal to each
other with respect to liquidation rights. Special meetings of the shareholders
may be called by the president, the board of directors, or upon the request of
holders of at least ten percent of the outstanding voting shares. Holders of
shares of Common Stock are entitled to one vote at any meeting of the
shareholders for each share of Common Stock they own as of the record date fixed
by the Board of Directors. At any meeting of shareholders, 50.0 1% of the
outstanding shares of Common Stock entitled to vote, represented in person or by
proxy, constitutes a quorum. A vote of the majority of the shares of Common
Stock represented at a meeting will govern, even if this is substantially less
than a majority of the shares of Common Stock outstanding. Holders of shares are
entitled to receive such dividends as may be declared by the Board of Directors
out of funds legally available therefor, and upon liquidation are entitled to
participate pro rata in a distribution of assets available for such a
distribution to shareholders. There are no conversion, preemptive or other
subscription rights or privileges with respect to any share. Reference is made
to the Articles of Incorporation and Bylaws of Mid-Way as well as to the
applicable statutes of the State of Florida for a more complete description of
the rights and liabilities of holders of shares. The shares of Mid-Way do not
have cumulative voting rights, which means that the holders of more than fifty
percent of the shares of Common Stock voting for election of directors may elect
all the directors if they choose to do so. In such event, the holders of the
remaining shares aggregating less than fifty percent will not be able to elect
directors.
Transfer Agent Mid-Way has appointed Interwest Transfer Company, Inc. as
the transfer agent for the company. The address for such transfer agent is 1981
East 4800 South, Suite 100, Salt Lake City, Utah 84117; telephone (801)
272-9294.
Rights of Dissenting Shareholders
The sole shareholder of Ciro has voted in favor of the Merger and therefore
has waived any appraisal rights under the laws of the State of Delaware. Under
Florida law the shareholders of Mid-Way do not have any right to dissent from
the Merger.
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MID-WAY MEDICAL AND DIAGNOSTIC CENTER
GENERAL
Mid-Way was incorporated in the State of Florida on June 14, 1990. On
September 16, 1996, the company amended its articles of incorporation to
increase the authorized number of common shares from 100 to 50,000,000 and to
reduce the par value to $.00 I. Also on September 16, 1996, Mid-Way forward
split its outstanding shares of Common Stock 10,000-for-one, increasing the
number of outstanding shares from 100 to 1,000,000. On July 16, 1997, the
company filed articles of amendment to restate the articles.
Mid-Way has been in the development stage since its inception in 1990. The
company was initially engaged in the business of attempting to establish and
operate medical and diagnostic centers. During 1991 the company abandoned its
efforts to engage in this business and has been inactive since approximately
1991.
Mid-Way presently has no business ventures in which it is engaged. It owns
no properties and has no employees. Since 1991 the company has been seeking
business opportunities through which its shareholders could realize some gain on
their capital investments in the company.
On September 3, 1997, Mid-Way entered into a Stock Purchase Agreement with
Mr. David Cohen in which Mid-Way agreed to issue 10,000,000 shares of its Common
Stock to Mr. Cohen for $100,000. The purchase price was paid and the shares
issued on or about September 3, 1997, and Mr. Cohen was also appointed the sole
officer and director on such date. The funds paid to Mid-Way were used by
Mid-Way to pay legal expenses and finders' fees in connection with such
transaction.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with Mid-Way's
Financial Statements and respective notes thereto, included elsewhere herein.
Since discontinuing operations in 1991, Mid-Way has had no operations. The
company was organized for the purpose of engaging in the operation of medical
and diagnostic centers; however, it does not have any significant cash or other
material assets, nor does it have an established source of revenues sufficient
to cover operating costs and to allow it to continue as a going concern. Mid-Way
followed a course of action to attempt to take advantage of any reasonable
business proposal presented which management believed would provide the company
and its stockholders with a viable business opportunity. For this reason Mid-Way
has entered into the Merger transaction set forth in this document.
The investigation of the business opportunity with Ciro and the
negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and
attention and will require Mid-Way to incur costs for payment of accountants,
attorneys, and others. If a decision is made not to participate in or complete
the Merger transaction, the costs incurred in a related investigation will not
be recoverable.
Currently, management is not able to determine the time or resources that
will be necessary to complete the Merger transaction. There is no assurance that
the completion of the Merger transaction will be profitable.
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Liquidity and Capital Resources
As of December31, 1996, Mid-Way had no assets or liabilities, and at June
30, 1997, the company still had no assets or liabilities. Mid-Way had no
revenues or expenses for the year ended December 31, 1996, and the six months
ended June 30, 1997, respectively The company has never generated revenue and it
is unlikely that any revenue will be generated until the company completes the
Merger, if then. The investigations associate with the Merger transaction may
cost the company not only out-of pocket expenses for management, but also
expenses associated with legal and accounting costs. Some expenses have been
advanced by officers of Mid-Way, but there is no arrangement or assurance that
such officers will continue to advance such costs on behalf of the company.
There can also be no guarantees that Mid-Way will receive any benefits from the
efforts of management to locate such business opportunities.
Mid-Way has had no employees since discontinuing its operations and does
not intend to employ anyone in the future, except in connection with the
consummation of the Merger transaction. The president of Mid-Way is providing
the company with a location for its offices on a "rent free" basis. Mid-Way is
not paying salaries or other forms of compensation to any officers or directors
of the company for their time and effort. Unless otherwise agreed to by Mid-Way,
the company does intend to reimburse its officers and director for out-of pocket
expenses.
Results of Operations
The Company has not had any operations during the fiscal year ended
December 31, 1996, or the six months ended June 30, 1997, and has not had any
significant operations since inception. Since 1991 the Company's only operations
have involved in seeking new business ventures or opportunities.
MANAGEMENT
Executive Officers and Directors
The following persons are the current executive officers and directors of
Mid-Way:
Name Age Position Director Since
David Cohen 73 Director & President 1997
DAVID COHEN has practiced law since 1952.
Executive Compensation
No executive compensation was awarded to, earned by, or paid to the named
executive officers of Mid-Way for the fiscal years December 31, 1996 or 1995,
for any services rendered in any capacity to Mid-Way.
Indemnification of Directors. Officers. and Others
The articles of incorporation of Mid-Way expressly authorize the company to
indemnify its officers and directors against claims or liabilities arising out
of such persons' conduct if they acted in good faith and
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in a manner they reasonably believed to be in or not opposed to the best
interest of the Company. In general, these provisions provide for
indemnification in instances when such persons acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the company. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling person of Mid-Way, pursuant to the foregoing provisions, or
otherwise, Mid-Way has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable.
Certain Relationships and Related Transactions
Management is not aware of any relationships or related transactions which
currently exist.
MARKET INFORMATION
Bid Prices
The Common Stock of Mid-Way has been quoted on the OTC Electronic Bulletin
Board since approximately February 4, 1997. There is currently no established
public trading market for the Common Stock. Since the initial quotation on the
Bulletin Board, approximately 19,500 shares of Mid-Way have been traded. There
is no current bid or ask price quoted on the Bulletin Board.
Outstanding Shares and Shareholder Information
As of November 12, 1997, Mid-Way had outstanding 11,000,000 shares of its
Common Stock, 10,952,000 of which are restricted pursuant to Rule 144
promulgated by the Securities and Exchange Commission. Management estimates that
952,000 of such shares have been held for more than one year and therefore may
be available for resale pursuant to Rule 144. None of the currently restricted
outstanding shares of Common Stock of Mid-Way is being, nor have any such shares
been proposed to be, publicly offered by Mid-Way.
As of November 12, 1997, there were approximately 27 holders of record of
the Common Stock of Mid-Way as reported by the transfer agent.
No cash dividends have been declared or paid as yet on the Common Stock of
Mid-Way. See "Dividend Policy."
LEGAL PROCEEDINGS
Neither Mid-Way, any of its properties, nor its subsidiary, is a party to
any material pending legal proceedings or government actions, including any
material bankruptcy, receivership, or similar proceedings. Management of Mid-Way
does not believe that there are any material proceedings to which any director,
officer, or affiliate of the company, any owner of record of beneficially or
more than five percent of the Common Stock of Mid-Way, or any associate of any
such director, officer, affiliate of the company, or security holder is a party
adverse to Mid-Way or has a material interest adverse to Mid-Way.
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DIVIDEND POLICY
The present policy of Mid-Way is to retain earnings to provide funds for
use in its business. Mid-Way has not declared or paid cash dividends on its
Common Shares and does not anticipate that it will do so in the future.
ADDITIONAL INFORMATION
Should any shareholder of Mid-Way desire any additional information
regarding Mid-Way or wish to review any of the underlying documents referred to
herein, they may do so by requesting such material from David Cohen, President,
who can be reached by telephone at (215) 587-2620, or by mail at 1600 Market
Street, 33rd Floor, Philadelphia, PA 19103. All such requests will be
accommodated during normal business hours.
CIRO JEWELRY, INC.
Introduction
Ciro was incorporated on June 28, 1994, under the laws of the State of
Delaware as Ciro Jewelery, Inc. The company changed its name to Ciro Jewelry,
Inc. on September 23, 1997. Ciro's principal place of business is located at 445
Fifth Avenue, 11th Floor, New York, NY 10016, and its telephone number is (212)
481-1322.
On August 1, 1997, Merchants T&F, Inc. sold all of the outstanding stock of
Ciro to Murray A. Wilson, an officer and the sole director of Ciro.
BUSINESS
General
Ciro currently has five licensees in the United States, Korea, Israel,
Mexico, and Russia which operate approximately 32 retail fashion jewelry stores
using the CIRO name. In addition, it holds a number of trademarks and trade
names relating to the CIRO name throughout the world. These license agreements
and trademarks and trade names were acquired by Ciro from Merchants T&F, Inc.
("M T&F"), a corporation controlled by Mr. Wilson, an officer, director, and the
sole shareholder of Ciro. In 1994 Ciro, Inc., Ciro of Bond Street, Inc., and
Ciro Creations, Inc. (hereinafter collectively referred to as "Former Ciro")
filed for protection under Chapter 11 of the U.S. Bankruptcy Code. On February
5, 1995, for $1,475,000, M T&F purchased certain assets from Alan Cohen, as
Trustee in the bankruptcy of Former Ciro These assets included real property
leases for various store locations previously operated by Former Ciro together
with the security deposits thereunder, the personal property in the stores,
merchandise inventory, computer equipment and software used in connection with
the operation of Former Ciro, and the agreements between Former Ciro and all of
its franchisees. M T&F, using the services of Ciro, subsequently sold off
substantially all of the assets purchased from the bankruptcy court, but
retained the name and licensing agreements. M T&F transferred these license
agreements and trademarks and trade names to Ciro in 1995 as a capital
contribution for 1,500 shares of Ciro. Ciro spent approximately one year
bringing the license agreements and the various trade marks current. Neither M
T&F nor Ciro had any affiliation with Former Ciro.
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Ciro currently collects royalty payments from the licensees and proposes to
establish and operate retail fashion jewelry stores in the United States. Ciro
has signed a license agreement with J&S Fashions of Boca Raton, Florida, to both
manufacture and distribute CIRO named products in Ciro's retail stores, when
opened, and independently.
Products and Services of Ciro
Before filing for protection under federal bankruptcy laws, Former Ciro was
a significant retailer of high quality imitation jewelry and cultured and
imitation pearls under the name CIRO, Ken Lane, Kenneth Jay Lane, and Daniel
Swarovski trade names. The items sold under these names included all types of
jewelry set with imitation, man-produced diamonds, imitation pearls, cultured
pearls and a wide range of necklaces, rings, brooches, earrings, bracelets, and
watches. At December 31, 1993, Former Ciro owned a total of 146 retail stores,
of which 47 were in the United States, 75 were in the United Kingdom, 13 were in
Germany, 5 in Austria, and 6 in France. At such time Former Ciro employed a
total of 623 people at these locations. In addition, it had 14 licensing
arrangements. Ciro has serviced the remaining licensees and collected royalty
payments therefrom since 1995.
Ciro presently has licensing arrangements with entities throughout the
world, which entities are entitled to use the CIRO trade name in connection with
their retail stores, subject to certain quality control requirements enforced by
Ciro. The licensees are entitled to open as many stores as they wish within the
territory for which their licenses are granted. Each of the license agreements
is for an initial term of five years, renewable at the option of Ciro. The
following table sets forth (1) the location for which a licensee has rights to
open stores; (2) whether the licensee's development rights are exclusive or
non-exclusive to the licensee; (3) the total number of stores opened as of
October 1, 1997; and (4) the year in which the present license agreement shall
expire:
Exclusive/ Total Stores License
Location Non-Exclusive Open at 10/1/97 Expiration Date
- -------- ------------- --------------- ---------------
Mexico Exclusive 3 December 1997
Korea Exclusive 3 December 1999
Russia Exclusive 5 December 2002
Israel Exclusive 12 December 2002
USA Non-exclusive 9 December 1997
Proposed Activities
Ciro proposes either to use its current cash flow or to seek outside
funding to establish and operate retail fashion jewelry stores in the United
States using the CIRO name. Ciro intends to sell six principal lines of
products: rings, necklaces, bracelets, brooches, watches, and earrings. It is
anticipated that such products will range in price from approximately $35 to
$15,000, with most products falling within the range of $35 to $250. Ciro
intends to sell its products to retail customers for cash or against third party
credit cards; the company does not intend to extend credit. Depending upon
available funding, Ciro proposes to locate three retail stores during 1998, most
likely in the States of New York and Nevada, where management believes interest
in such fashion jewelry would be the greatest. Management will seek locations in
high-end shopping malls or large hotels.
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Markets and Distribution
Initially, management intends to advertise the retail stores through local
advertising and airline magazines. The company also intends to advertise
licensing arrangements through national and international jewelry and fashion
magazines.
Competition
The jewelry business is highly competitive, with the competition
principally from other independent jewelry stores, department stores, and others
operating in leased concession department stores. Many of the potential
competitors are considerably larger than Ciro and have considerable greater
financial and other resources than Ciro. With respect to any given item of
jewelry which Ciro proposes to sell in its retail stores, the price of the
company's product will fall between the price of precious jewelry and
inexpensive costume jewelry. As a result, Ciro's products will compete to some
extent with both categories. However, management believes that the cost
differential between its product and precious jewelry on the one hand and the
inferior quality of low cost costume jewelry on the other has created a distinct
market niche for Ciro. Also, management believes that name recognition will be a
positive factor in its competition with other fashion jewelry retail operators.
Seasonality of Business
The proposed business of Ciro and the current business of the licensees is
highly seasonal. Approximately 30% of the revenues are ordinarily earned in the
final quarter of the year, primarily during the Christmas season.
Trade Marks
M T&F originally purchased several trade names and trademarks in the
bankruptcy of Former Ciro In 1995 M T&F assigned all of its right, title, and
interest in the trade names and trademarks to Ciro, subject to existing license
agreements. Set forth below is a list of the trademarks and trade names assigned
to Ciro and currently owned by Ciro:
Country Mark Application Number Registration Number
Bolivia CIRO 1361
Chile CIRO 421866
Hungary CIRO 137946
Israel CIRO 80209
CIRO 80210
CIRO in Hebrew 80058
CIRO in Hebrew 80059
Japan CIRO 63006/ 1993
Macao CIRO 11006-M
CIRO 11515-M
Mexico CIRO 416046
CIRO 421337
Monaco CIRO 9314680
Panama CIRO (stylized) 54820
CIROLITE 54821
Philippines CIRO 85612-PN
Portugal CIRO 276161
CIRO 280206
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Russia CIRO 95703549
South Korea CIRO 262281
CIRO 262282
CIRO 265017
CIRO 265158
U.S.A. CIRO 327696
CIRO 826855
CLRO 1794011
CIRO 1668523
CIRO (stylized) 601862
CIRO and crown 74/350726
CIROLITE 949790
Crown device 74/350876
Employees
As of October 1, 1997, Ciro had 3 employees. During the calendar year 1998,
Ciro anticipates hiring an additional six employees for the proposed three
retail stores.
Facilities
Ciro rents on a month-to-month basis approximately 1,000 square feet of
office space from M T&F in New York City, New York. Monthly rental payments for
the space are $2,000.
SELECTED FINANCIAL DATA
The following selected financial data should be read in conjunction with
the financial statements of Ciro incorporated herein by reference.
For the Period Ended For the Years Ended December 31,
June 30, 1997 1996 1995
------------- ---- ----
Operating Data:
Total Revenues $ 105,868 $ 262,975 $ 253,520
Operating Costs 121,814 262,587 212,838
Income (loss) before
income taxes (15,946) 3,846 9,001
Net Income (Loss) (18,201) (1,461) 4,939
Balance Sheet Data:
Current assets $ 22,427 $ 30,672 $ 16,669
Other assets 340,944 352,277 363,332
Working Capital 15,333 22,201 12,607
Total assets 363,371 382,949 380,001
Current liabilities 7,094 8,471 4,062
Stockholders' equity 356,277 374,478 375,939
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MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
Comparison of Years Ended December31, 1996, and December31, 1995; June 30,
1997
Revenues from royalty income for the year 1996 increased to $262,975 from
royalty income of $253,520 in 1995. However, merchandise sales decreased to
$3,076 compared with sales of $29,950 in 1995, offset by the cost of merchandise
in 1995 at $50,623 and no such cost in 1996. Income from operations increased
from ($9,941) in 1995 to $388 in 1996, due largely to the decrease in the cost
of merchandise. Other income (expenses) decreased from $18,942 in 1995 compared
to $3,846 in 1996, based upon the eliminations of commission income, a reduction
in interest income and other income, and a one-time gain on the sale of stock in
1995. In 1996, the company had no interest expense or interest income as
compared to interest income (net of interest expense) of $1,263 in 1995. Income
before taxes for 1996 was $3,846, compared to $9,001 for 1995. Net income for
1996 was ($1,461) compared to $4,939 for 1995.
Revenues from royalty income for the first six months of 1997 were
$105,868, while selling, general and administrative expenses were $121,814.
Income from operations for such period was ($15,946), which if such trend
continues throughout the remainder of the year would be a substantial decrease
in operating income from the prior two years, due primarily to a decrease in
revenues. Income before taxes was $2,255, which if the trend continues
throughout the remainder of the year will be greater than in the prior two
years. Net loss for the first six months of 1997 was ($18,201).
Liquidity
During the first six months of 1997, and during 1996 and 1995, Ciro has had
positive working capital. Working capital at the end of 1995 was $12,607 as
compared to $22,201 at the end of 1996. At June 30, 1997, working capital was
$15,333.
Capital Resources and Requirements
Ciro currently has no material commitments for capital expenditures.
However, the company intends to open several retail fashion jewelry during 1998.
The opening of such stores and their operation will require capital commitments
by the company which Ciro intends to finance through funds generated internally
or through the sale of shares of common stock.
MANAGEMENT
Executive Officers and Directors
The following persons are the current executive officers and directors of
Ciro:
Name Age Position Director Since
- ---- --- -------- --------------
Murray A. Wilson 59 President, CEO & Director 1994
Laszlo Schwartz 54 Vice-President & Secretary --
If the merger between Mid-Way Acquisitions and Ciro is completed, Murray A.
Wilson and Laszlo Schwartz will become the sole officers, and Mr. Wilson will be
the sole director, of Mid-Way and Mid-Way Acquisitions.
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MURRAY A. WILSON, has been the president and chief operating officer of
Merchants T&F, Inc. since 1990. Also, since 1994 he has been the president of
Grossingers Trademark. In June 1989 Mr. Wilson was found guilty in federal court
of conspiracy to commit mail and wire fraud in Las Vegas, Nevada. In 1991 Mr.
Wilson pleaded guilty in New York to a Class E Felony.
LASZLO SCHWARTZ. has been the vice-president of Merchants T&F, Inc. since
1992. From 1995 to the present he has been the president of Campagnola Holdings
and 128 Ecco Holdings Corp.
Executive Compensation
No compensation has been awarded to, earned by, or paid to the named
executive officers of Ciro since inception for services rendered in any capacity
to Ciro or its subsidiaries. However, as the sole shareholder of Merchants T&F,
Inc., Mr. Wilson has received substantial revenues from Ciro. See "Certain
Relationships and Related Transactions."
Ciro has no employment contracts with any officer or employee of the
company.
Certain Relationships and Related Transactions
Murray A. Wilson is the sole shareholder of Merchants T&F, Inc. (M T&F),
the former parent of Ciro. During 1995 M T&F assigned to Ciro the various rights
to the trade name CIRO which M T&F purchased in the bankruptcy. The value
assigned to the rights to the trade name was $370,000 which was the capital
contribution of M T&F for the 1,500 shares of Ciro issued to M T&F.
Effective February 3, 1995, Ciro entered into a consignment agreement with
M T&F in which Ciro agreed to sell for M T&F the hard assets acquired by M T&F
in the bankruptcy proceeding involving Former Ciro. Ciro was paid a commission
of 90% of the selling price of such assets. The agreement terminated on February
22, 1997. This agreement was not entered into in an arms' length transaction and
although management believes the terms were fair, no independent determination
of fairness was obtained.
During the years ended December 31, 1996 and 1995, Ciro paid to M T&F
management fees of $169,875 and $112,579, respectively. This arrangement was not
entered into in an arms' length transaction and although management believes the
terms were fair, no independent determination of fairness was obtained.
Effective August 1, 1997 M T&F entered into a one year consulting agreement
with Ciro. As compensation under such agreement, Ciro has agreed to pay M T&F
the greater of $5,000 per month or 20% of the gross royalty income. In return, M
T&F will provide management and organization services on a part-time basis. This
agreement was not entered into in an arms' length transaction and although
management believes the terms are fair, no independent determination of fairness
has been obtained.
Ciro has entered into a sublease agreement with M T&F for the office space
presently utilized by Ciro. Management believes that the rent for such sublease
is within comparable rates in the area.
LEGAL PROCEEDINGS
Neither Ciro nor any of its properties, is a party to any material pending
legal proceedings or government actions, including any material bankruptcy,
receivership, or similar proceedings. Management of Ciro does not believe that
there are any material proceedings to which any director, officer, or affiliate
of the company, any owner of record of beneficially or more than five percent of
the Common Stock of Ciro,
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or any associate of any such director, officer, affiliate of the company, or
security holder is a party adverse to Ciro or has a material interest adverse to
Ciro.
ADDITIONAL INFORMATION
Should any shareholder of Mid-Way desire any additional information
regarding Ciro's products or wish to review any of the underlying documents
referred to herein, they may do so by requesting such material from Murray A.
Wilson, who can be reached at Ciro by telephone at (212) 481-1322, or by mail at
445 Fifth Avenue, 11th Floor, New York, NY 10016. All such requests will be
accommodated during normal business hours.
CHANGE OF DOMICILE OF MID-WAY
TO THE STATE OF NEVADA
General
The majority shareholders of Mid-Way and the sole shareholder of Ciro have
approved a proposal to change the state of incorporation of Mid-Way from the
State of Florida to the State of Nevada. This change in the state of
incorporation will be effected pursuant to the Plan and Agreement of Merger (the
"Domicile Change Merger Agreement"). A copy of the Domicile Change Merger
Document is attached hereto as Appendix "B" and the following discussion is
qualified in its entirety by reference to the Domicile Change Merger Agreement.
Under the Domicile Change Merger Agreement, Mid-Way will merge into a Nevada
corporation which will be organized for this purpose (hereinafter the "Nevada
Corporation" or the "Surviving Corporation"). Except as set forth herein, the
merger will not involve any change in current business, management, location,
policies or properties of Mid-Way, and the Surviving Corporation will be
essentially the same enterprise as Mid-Way except for the change in the state of
incorporation and the other matters set forth in this Memorandum/Information
Statement in connection with the Merger.
With the change of domicile, the Articles of Incorporation of the Surviving
Corporation will become the Articles of Incorporation of Mid-Way. The Articles
of Incorporation of the Nevada Company are attached hereto in Appendix" C."
Reasons for the Change of Domicile
It is the opinion of the Board of Directors in general that the corporation
law of the State of Nevada allows greater latitude for the functions of Mid-Way.
Certain Federal Income Tax Consequences
Management of Mid-Way believes that under present federal income tax laws
no gain or loss will be recognized to Mid-Way, the Nevada Corporation, the
holders of common stock or to the shareholders who do not exercise their
statutory rights as dissenting shareholders, as explained herein. However, those
shareholders who do exercise their statutory rights will recognize a gain or
loss for federal income tax purposes. The effect of state tax laws upon
shareholders may vary from state to state. Accordingly, such persons are urged
to consult with their personal financial advisers or legal counsel.
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DESCRIPTION OF THE CHANGE OF DOMICILE TRANSACTION
General
The Domicile Change Merger Agreement provides that at the time the merger
becomes effective, Mid-Way will be merged with and into the Nevada Corporation,
which will be the surviving corporation, and the separate existence of Mid-Way
as a Florida corporation will cease. Thereupon the Surviving Corporation will
possess all the rights, property and assets of Mid-Way and will assume and be
subject to all of its debts, liabilities and obligations. On the effective date,
the former shareholders of Mid-Way, including the shareholder of Ciro, will
become shareholders of the Surviving Corporation and the presently issued and
outstanding stock of the Surviving Corporation, all of which is owned by
Mid-Way, will be canceled.
The corporation into which Mid-Way is proposed to merge will be
incorporated under the laws of Nevada and the Articles of Incorporation and
Bylaws of the surviving corporation will be the Articles of Incorporation of the
Surviving Corporation after the effective date. The Articles of Incorporation of
the Nevada Corporation are attached to this Information Statement as Appendix
"C."
Effect on Securities of Mid-Way
The Domicile Change Merger Agreement provides that each issued and
outstanding share of common stock of Mid-Way will, upon and after the effective
date of merger, automatically be converted into and become one of the issued and
outstanding shares of common stock of the Nevada Corporation. It will not be
necessary for the shareholders of Mid-Way to submit the certificates
representing shares of the common stock of Mid-Way for cancellation. As a result
of the change of domicile each certificate then will represent shares of the
Nevada Corporation and should be preserved for that purpose until a new
certificate is issued. Each share of stock of the Surviving Corporation
following the effective date of merger will be owned subject to the same rights,
conditions, and qualifications as the shares now owned.
Rights of Dissenting Stockholders
Under Sections 607.1301 et seq. of the Florida Business Corporation Act,
any stockholder who, within 20 days of the mailing of this Memorandum/Proxy
Statement to him, files with Mid-Way a notice of his election to demand payment
for shares, shall receive the estimated fair cash value of his shares as set
forth in such sections. Such notice must include his name and address, the
number, classes, and series of shares as to which he dissents, and a demand for
payment of the fair value of his shares. Any stockholder who fails to file such
election to dissent within such 20 day period shall be deemed to have assented
to the merger or to have waived such dissenters rights. The appraisal rights
described herein are more fully set forth in Appendix "D" hereto, which appendix
includes copies of Sections 607.1301,607.1302, and 607.1320 of the Florida
Business Corporation Act.
MATERIAL DIFFERENCES BETWEEN
THE STATE LAWS OF FLORIDA AND NEVADA
General
The following is a summary of material differences in state corporate law
between the states of Florida and Nevada, with special emphasis on how those
differences affect shareholder rights. "NRS" refers to the Nevada Revised
Statutes, for references to Nevada law, while "FBCA" refers to the Florida
Business Corporation Act, for references to Florida law.
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Shareholders' Meetings
Call. Pursuant to Section 607.0702 of the FBCA, special meetings of the
shareholders may be called by the board of directors or the person or persons
authorized by the articles of incorporation or bylaws, or by the holders of
shares representing at least 10% of all votes entitled to be cast on a
particular issue proposed to be considered at the special meeting, unless a
greater percentage not to exceed 50% is required by the articles of
incorporation. No such comparable provisions exists within the NRS. However, the
bylaws of the Surviving Corporation are proposed to provide that special
meetings of the shareholders may be called by shareholders owning at least 10%
of the outstanding shares.
Proxies. Section 78.355 of the NRS provides that no proxy shall be valid
after the expiration of six months, or, if coupled with an interest, for more
than seven years from the date of its execution. Section 607.0722 of the FBCA
provides that no proxy shall be valid after eleven months, unless a longer
period is expressly provided.
Action Without a Meeting. Generally, under Section 78.320 of the NRS, any
action by a majority of the voting power of the corporation is sufficient to
take such action without a meeting. Under Section 607.0704 of the FBCA, action
may be taken by shareholders without a meeting if such action is taken by
shareholders having not less than the minimum number of votes with respect to
each voting group that would be necessary to authorize or take such action at a
meeting.
Court-Ordered Meetings. Section 607.0703 of the FBCA provides that any
shareholder may demand an annual meeting of the shareholders be called if no
such meeting has been held within thirteen months after the last annual meeting.
Section 78.345 of the NRS provides that a majority of the voting power may
demand that an annual meeting be called if the corporation shall fail to hold an
annual meeting within six months after the time designated therefor.
Number of Directors
Both Section 607.0803 of the FBCA and Section 78.115 of the NRS permit a
corporation to have only one director.
Election and Removal of Directors
In both Florida and Nevada, election of directors by the shareholders is
substantially similar. Cumulative voting is generally allowed in both states. In
both Florida and Nevada the articles of incorporation or an amendment thereto
must specifically provide for cumulative voting. Shareholders of Nevada
corporations registered under the Securities Act of 1933 must give notice to the
corporation in advance that a shareholder wishes to cumulate votes (NRS Section
78.360). Removal of directors in both states is also similar. In Florida
shareholders may remove one or more directors with or without cause unless the
articles of incorporation provide that directors may only be removed for cause
(FBCA Section 607.0808). In Nevada, however, shareholders representing
two-thirds or more of the voting stock are generally required to remove a
director from office (NRS Section 78.33 5).
Amendments to the Articles of Incorporation
In general, unless the articles of incorporation provide otherwise, most
amendments must be approved by the shareholders of corporations in both Florida
and Nevada. Florida provides for certain limited cases where the directors may
amend the articles, but these deal mostly with unissued shares, deleting certain
historical information, and changing the name of the company to add a corporate
designation (FBCA Section 607.1002). Otherwise though, most amendments must be
approved by a majority vote of the
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outstanding shares (FBCA Section 607.1003). In Nevada, directors have fewer
capabilities to amend the articles. Likewise, Nevada corporate articles may be
amended by a simple majority of the shareholders (NRS Section 78.390).
Shareholders' Rights to Inspect Financial Records
Florida corporate law provides that every shareholder has a right to
inspect the corporation's articles of incorporation, bylaws, minutes, its most
recent annual report, and other records during reasonable business hours upon
written notice delivered five days prior to the requested inspection (FBCA
Section 607.1602). In Nevada, shareholders of at least fifteen percent of the
issued and outstanding shares may inspect the financial records of the company
upon providing five days' written notice to the corporation (NRS Section
78.257).
Preemptive Rights
Under Nevada corporate law, except to the extent limited or denied by the
articles of incorporation, shareholders have certain preemptive rights to
purchase a corporation's unissued shares (NRS Section 78.265). In Florida,
shareholders do not have preemptive rights unless the articles of incorporation
specifically state that such rights (FBCA Section 607.0630).
Dissenters' Rights
Both Florida and Nevada provide certain dissenters' rights to protect
minority shareholders. In general, these dissenters' rights give shareholders
the right to receive fair compensation from the corporation for their shares in
the event that the corporation does certain acts with which the shareholders do
not agree. In Florida shareholders generally have dissenters' rights when the
corporation is involved in a merger or share exchange with another corporation,
or when the corporation, or a corporation controlled by such corporation, sells
or disposes of all or substantially all of its property (FBCA Section 607.1302).
In Nevada shareholders generally have dissenters' rights to receive payment for
the fair value of their shares when the corporation merges into or consolidates
with another corporation (NRS Section 78.505).
Shareholders' Approval of Mergers and Acquisitions
Nevada law requires majority shareholder approval for an acquisition of a
controlling interest in the Nevada corporation before the shares issued in such
transaction may be voted by the acquiring party (NRS Sections 78.3 78 et seq.).
Florida has a similar provision (FBCA Section 607.0902).
INDEPENDENT ACCOUNTANTS
The financial statements of Ciro Jewelry, Inc. for the years ended
December31, 1996 and 1995, have been audited by Lazar, Levine & Company, P.C.,
Certified Public Accountants, New York, New York, as set forth in their report
incorporated by reference herein.
The financial statements of Mid-Way Medical and Diagnostic Center, Inc. for
the period ended March 31, 1997, and the years ended December31, 1996 and 1995,
have been audited by Barry L. Friedman, P.C., Certified Public Accountant, Las
Vegas, Nevada, as set forth in their report incorporated by reference herein.
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ADDITIONAL INFORMATION
The following is a list of exhibits to this Memorandum/Information
Statement which are not attached hereto but which will be provided to any
shareholder of Ciro ro Mid-Way, upon written request, at any time prior to the
closing of the Merger Agreement:
1. Articles of Incorporation of Mid-Way Medical and Diagnostic
Center, Inc.
2. Current Bylaws of Mid-Way Medical and Diagnostic Center, Inc.
3. Form of stock certificate of Mid-Way Medical and Diagnostic
Center, Inc.
4. Articles of Incorporation of Ciro Jewelry, Inc.
5. Current Bylaws of Ciro Jewelry, Inc.
6. Trademark and Trade Name Registrations of Ciro Jewelry, Inc.
7. Agreement dated February 3, 1995, between Merchants T&F and Ciro
Jewelry, Inc. transferring the trademarks, trade names, and
license agreements to Ciro
8. Ciro Jewelry, Inc. office lease
9. Consulting Agreement dated August 1, 1997, by and between Ciro
Jewelry, Inc. and Merchants T&F
10. Legal opinion re issuance of shares
11. Tax opinion
FINANCIAL STATEMENTS
The following financial statements of Ciro, Mid-Way, and the companies
combined on a pro forma basis, are attached hereto and incorporated herein.
Ciro
Report of Auditors
Balance Sheets at June 30, 1997 (unaudited) and December 31, 1996 and 1995
Statements of Income for the Six Months Ended June 30, 1997 (unaudited) and the
Years Ended December 31, 1996 and 1995
Statements of Retained Earnings for the Six Months ended June 30, 1997
(unaudited) and the Years Ended December 31, 1996 and 1995
Statements of Cash Flows for the Six Months Ended June 30, 1997 (unaudited) and
the Years Ended December 31, 1996 and 1995
Notes to Financial Statements
Mid-Way
Report of Auditors
Balance Sheets at March 31, 1997, and December 31, 1996 and 1995
Statements of Operations for the Three Months Ended March 31, 1997, and the
Years Ended December 31, 1996, 1995, and 1994, and the Period from Inception to
June 30, 1997
Statement of Changes in Stockholders' Equity for the Period from Inception to
June 30, 1997
Statements of Cash Flows for the Three Months Ended March 31, 1997, and the
Years Ended December31, 1996, 1995, and 1994, and the Period from Inception to
June 30, 1997
Notes to Financial Statements
-28-
<PAGE>
Pro Forma Consolidated Statements of Operations for the Period Ended June 30,
1997
Pro Forma Consolidated Statements of Operations for the Year Ended December
31, 1996
Pro Forma Consolidated Statements of Operations for the Year Ended
December31, 1995
Pro Forma Consolidated Balance Sheets for the Period Ended June
30, 1997
Pro Forma Consolidated Balance Sheets for the Year Ended December 31,
1996
Pro Forma Consolidated Balance Sheets for the Year Ended December 31, 1995
EXHIBITS
Attached hereto and incorporated herein are the following exhibits:
Appendix "A" Agreement and Plan of Reorganization
Appendix "B" Plan and Agreement of Merger (Change of Domicile)
Appendix "C" Surviving Company Articles of Incorporation
Appendix "D" Dissenters' Rights (Florida)
-29-
<PAGE>
CIRO JEWELRY, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 and 1995
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
CIRO JEWELRY, INC.
FOR THE YEARS ENDED DECEMBER 31.1996 AND 1995
- CONTENTS -
Pages(s)
--------
Independent Auditors' Report 1.
Financial Statements:
Balance Sheets 2.
Statements of Income 3.
Statements of Retained Earnings 4.
Statements of Cash Flows 5.
Notes to Financial Statements 6. - 8.
Lazar, Levine & Company LLP
Certified public Accountants
<PAGE>
Lazar, Levine & Company LLP
Certified Public Accountants
Melvin F. Lazar CPA 350 Fifth Avenue - Suite 6820
Neal J. Weisbrod, CPA New York, NY 10178-0170
Henry B. Guberman, CPA (212) 736.1900
Amiram (Kiki) Bielory, CPA Fax: (212) 629-3219
Ted M. Felix, CPA
Barry J. Schreiber, CPA
Michael Dinkes, CPA
INDEPENDENT AUDITORS' REPORT
To The Shareholders 4 Becker Farm Road
Ciro Jewelry, Inc. Roseland, NJ 07069
New York, New York (201) 533-1040
Fax: (201) 535-1603
We have audited the balance sheets of Ciro Jewelry, Inc. as of December 31, 1996
and 1995 and the related statements of income, retained earnings and cash flows
for the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the accompanying financial statements, referred to above,
present fairly, the financial position of Ciro Jewelry, Inc. as of December
31,1996 and 1995 and the results of the operations and the cash flows for the
years then ended, in conformity with generally accepted accounting principles.
/s/ Lazar, Levine & Company LLP
-------------------------------
Lazar, Levine & Company LLP
New York, New York
July 15, 1997
except as to note 6 which is
dated September 5, 1997
<PAGE>
CIRO JEWELRY, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
- ASSETS -
<S> <C> <C>
1996 1995
-------- --------
CURRENT ASSETS:
Cash $ 292 $ 870
Accounts receivable (Note 2e) 30,380 15,799
-------- --------
TOTAL CURRENT ASSETS 30,672 16,669
-------- --------
OTHER ASSETS: 31,611 17,999
Loans receivable - shareholder's (Note 4) 320,666 345,333
-------- --------
Trademarks, net of accumulated amortization (Note 2c) 352,277 363,332
-------- --------
$382,949 $380,001
======== ========
LIABILITIES AND Shareholder's EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,471 $ 4,062
-------- --------
TOTAL CURRENT LIABILITIES $ 8,471 $ 4,062
-------- --------
SHAREHOLDERS' EQUITY:
Common stock - no par value, 1,500 shares authorized,
1,500 shares issued and outstanding 1,000 1,000
Additional paid-in capital 370,000 370,000
Retained earnings 3,478 4,939
-------- --------
TOTAL SHAREHOLDERS' EQUITY 374,478 375,939
-------- --------
$382,949 $380,001
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 2.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
REVENUES:
Royalty income $ 259,899 $ 223,570
Merchandise sales 3,076 29,950
--------- ---------
TOTAL REVENUES 262,975 253,520
--------- ---------
OPERATING COSTS:
Cost of merchandise -- 50,623
Selling, general and administrative expenses (Note 4) 262,587 212,838
--------- ---------
262,587 263,461
--------- ---------
INCOME (LOSS) FROM OPERATIONS 388 (9,941)
--------- ---------
OTHER INCOME (EXPENSE):
Commission income -- 4,388
Interest income -- 6,963
Other income 3,458 7,458
Interest expense -- (5,700)
Gain on sale of stock -- 5,833
--------- ---------
3,458 18,942
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 3,846 9,001
Provision for income taxes (Note 2b) 5,307 4,062
--------- ---------
NET INCOME (LOSS) $ (1,461) $ 4,939
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 3.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
RETAINED EARNINGS, AT BEGINNING OF YEAR $ 4,939 $ --
Add: Net income (loss) (1,461) 4,939
------- -------
RETAINED EARNINGS, AT END OF YEAR $ 3,478 $ 4,939
======= =======
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 4.
<PAGE>
CIRO JEWELRY, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,461) $ 4,939
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 24,667 24,667
Changes in assets and liabilities:
(Increase) in accounts receivable (14,581) (15,799)
Increase in accounts payable 4,409 4,062
--------- ---------
Net cash provided by operating activities 13,034 17,869
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to shareholder's (13,612) (17,999)
--------- ---------
Net cash used by investing activities (13,612) (17,999)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock -- 1,000
--------- ---------
Net cash provided by financing activities -- 1,000
--------- ---------
NET (DECREASE) INCREASE IN CASH (578) 870
Cash, at beginning of year 870 --
--------- ---------
CASH, AT END OF YEAR $ 292 $ 870
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 830 $ --
Interest -- 5,700
NON-CASH TRANSACTIONS:
Contribution of trademarks from parent company $ 370,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 5.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF BUSINESS:
The Company owns a trademark for the "Ciro" jewelry name in the
following countries: Bolivia, Chile, Hungary, Israel, Japan, Macao,
Mexico, Monaco, Panama, Philippines, Portugal, South Korea, Russia and
the United States. The Company licenses its trademark and receives
royalties from the licensees. The Company is a wholly-owned subsidiary
of Merchants T & F, Inc.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The Company's accounting policies are in accordance with generally
accepted accounting principles. Outlined below are those policies
considered particularly significant.
(a) Use of Estimates:
In preparing financial statements in accordance with generally
accepted accounting principles, management makes certain estimates and
assumptions, where applicable, that effect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements, as well as the
reported amounts of revenues and expenses during the reporting period.
While actual results could differ from these estimates, management
does not expect such variances, if any, to have a material effect on
the financial statements.
(b) Income Taxes:
The Company has adopted Statement of Financial Accounting Standards
No. 109 "Accounting for Income Taxes" (SFAS No. 109). SFAS No. 109
requires use of the asset and liability approach of providing for
income taxes. The implementation of this standard had no material
effect on the financial statements of the Company. The Company files a
consolidated federal income tax return with its parent. Federal income
taxes have been computed based upon the Company's proportionate share
of the consolidated total. State and local taxes have been computed on
a stand-alone basis since the Company does not file consolidated state
and local returns. The provision for income taxes includes certain
local taxes based upon measures other than income.
(c) Trademarks:
P
Trademarks are being amortized over a 15 year period.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 6.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued):
(4) Cash Equivalents:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
(e) Accounts Receivable:
Based upon past collection history, management believes that no
allowance for doubtful accounts is required as of December 31, 1996.
NOTE 3 - ACQUISITION AND SALE:
During February 1995, the Company's parent transferred to the Company
as a capital contribution the trademarks and related licenses to the
"Ciro" name that it had acquired. The transfer was accounted for at
the parent's allocated cost of $370,000 when it purchased these assets
from the trustee in Bankruptcy.
NOTE 4 - RELATED PARTY TRANSACTIONS:
Loans receivable - shareholder's are non-interest bearing and have no
formal repayment terms.
A management fee of $169,875 and $112,579 was paid in 1996 and 1995,
respectively to the Company's parent.
The Company leases its office facilities from its parent company.
During the years ended December 31, 1996 and 1995, rent of $24,000 for
each year was charged to operations. The lease is effective to
December 31, 2001.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 7.
<PAGE>
CIRO JEWELRY, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 5 - SUBSEQUENT EVENT:
As of August 1, 1997, a consulting agreement was entered into between
the Company and its parent company. The agreement is for one year
whereby the Company will pay the greater of $5,000 per month or 20% of
the gross royalty income it earns to its parent, who will provide
management consulting services.
Lazar, Levine & Company LLP
Certified Public Accountants
Page 8.
<PAGE>
CIRO JEWELRY, INC.
FINANCIAL STATEMENTS AND ACCOUNTANTS'
COMPILATION REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
CIRO JEWELRY, INC.
FOR THE SIX MONTHS ENDED JUNE 30, 1997
- CONTENTS -
Page(s)
-------
Accountants' Compilation Report 1.
Financial Statements:
Balance Sheet 2.
Statement of Income 3.
Statement of Retained Earnings 4.
Statement of Cash Flows 5.
Lazar, Levine & Company LLP
Certified Public Accountants
<PAGE>
Lazar, Levine & Company LLP
Certified Public Accountants
Melvin F. Lazar, CPA 350 Fifth Avenue - Suite 6820
Neal J. Weisbrod, CPA New York, NY 10118-0170
Herny B. Guberman, CPA (212) 736-1900
Amiram (Kiki) Bielory, CPA Fax (212) 629-3219
Ted M. Felix, CPA
Barry J. Schreiber, CPA
Michael Dinkes, CPA
4 Becker Farm Road
Roseland, NJ 07068
(201) 533-1040
Fax (201) 535-1603
ACCOUNTANTS' COMPILATION REPORT
To The Shareholders
Ciro Jewelry, Inc.
New York, New York
We have compiled the accompanying balance sheet of Ciro Jewelry, Inc. as of June
30, 1997 and the related statements of income and retained earnings and cash
flows for the six months ended, in accordance with Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying financial statements and, accordingly, do not express
an opinion on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
cash flows. Accordingly, these financial statements are not designed for those
who are not informed about such matters.
/s/ Lazar, Levine & Company LLP
-------------------------------
LAZAR, LEVINE & COMPANY LLP
New York, New York
July 15, 1997
<PAGE>
CIRO JEWELRY, INC.
BALANCE SHEET
AS OF JUNE 30, 1997
(See Accountants' Compilation Report)
-ASSETS-
CURRENT ASSETS:
Cash $ 2,572
Accounts receivable 19,855
---------
TOTAL CURRENT ASSETS 22,427
OTHER ASSETS:
Loans receivable - shareholder's $ 32,611
Trademarks, net of accumulated amortization 308,333 340,944
---------- --------
$ 363,371
=========
- LIABILITIES AND SHAREHOLDERS' EQUITY -
CURRENT LIABILITIES:
Accounts payable $ 7,094
---------
TOTAL CURRENT LIABILITIES 7,094
SHAREHOLDERS' EQUITY:
Common stock $ 1,000
Additional paid-in capital 370,000
Retained (deficit) (14,723) 356,277
--------- --------
$ 363,371
=========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 2.
<PAGE>
CIRO JEWELRY, INC.
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(See Accountants' Compilation Report)
REVENUES - ROYALTY INCOME $ 1O5,868
Selling, general and administrative expenses 121,814
---------
OPERATING LOSS (15,946)
Income taxes 2,255
---------
NET LOSS $ (18,201)
==========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 3.
<PAGE>
CIRO JEWELRY, INC.
STATEMENT OF RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(See Accountants' Compilation Report)
RETAINED EARNINGS, AT BEGINNING OF YEAR $ 3,478
Add: net loss (18,201)
---------
RETAINED DEFICIT, AT END OF PERIOD $ (14,723)
=========
Lazar, Levine & Company LLP
Certified Public Accountants
Page 4.
<PAGE>
CIRO JEWELRY, INC.
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(See Accountants' Compilation Report)
<TABLE>
<S> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(18,201)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 12,333
Changes in assets and liabilities:
Decrease in accounts receivab1e 10,525
Decrease in accounts payable (1,377)
--------
Net cash provided by operating activities 3,280
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to shareholder's (1,000)
--------
Net cash used by investing activities (1,000)
--------
NET INCREASE IN CASH 2,280
Cash, at beginning of year 292
--------
CASH, AT END OF PERIOD $ 2,572
========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Income taxes $ 10,136
</TABLE>
Lazar, Levine & Company LLP
Certified Public Accountants
Page 5.
<PAGE>
MID-WAY MEDICAL AND DIAGNOSTIC CENTER, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
March 31, 1997
December 31, 1996
December 31, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
----
INDEPENDENT AUDITORS' REPORT ............................................... 1
BALANCE SHEET .............................................................. 2
STATEMENT OF OPERATIONS .................................................... 3
STATEMENT OF STOCKHOLDERS' EQUITY .......................................... 4
STATEMENT OF CASH FLOWS .................................................... 5
NOTES TO FINANCIAL STATEMENTS .............................................6-7
<PAGE>
BARRY L. FRIEDMAN, P.C.
Certified Public Accountant
1582 TULITA DRIVE OFFICE (702) 361-8414
LAS VEGAS, NEVADA 89123 FAX NO. (702) 896-0278
INDEPENDENT AUDITORS' REPORT
Board Of Directors April 2, 1997
Mid-Way Medical and Diagnostic Center, Inc.
Miami, Florida
I have audited the Balance Sheets of Mid-Way Medical and Diagnostic Center,
Inc., (A Development Stage Company), as of March 31, 1997, December 31, 1996,
and December 31, 1995, and the related Statements of Operations, Stockholders'
Equity and Cash Flows for the period January 1, 1997, thru March 31, 1997, and
the two years ended December 31, 1996 and December 31, 1995. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonab1e assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as eva1uating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Mid-Way Medical and
Diagnostic Center, Inc., at March 31, 1997, December 31, 1996 and December 31,
1995, and the results of its operations and cash flows for the period January 1,
1997 thru March 31, 1997 and the two years ended December 31, 1996, and December
31, 1995, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered losses from operations and has no
established source of revenue. This raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Barry L. Friedman
- ---------------------------
Barry L. Friedman
Certified Public Accountant
<PAGE>
Mid-Way Medical and Diagnostic, Inc.
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
March December December
31, 1997 31, 1996 31, 1995
-------- -------- ---------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash $ 0 $ 0 $ 0
------- -------- --------
TOTAL CURRENT ASSETS $ 0 $ 0 $ 0
------- -------- --------
OTHER ASSETS:
Other Assets $ 0 $ 0 $ 0
------- -------- --------
TOTAL OTHER ASSETS $ 0 $ 0 $ 0
------- -------- --------
TOTAL ASSETS $ 0 $ 0 $ 0
======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable $ 0 $ 0 $ 0
------- -------- --------
TOTAL CURRENT LIABILITIES $ 0 $ 0 $ 0
------- -------- --------
STOCKOLDERS' EQUITY:
Common stock, $1.00 par value,
authorized 100 shares: issued
and outstanding at
December 31, 1995- 100 shares $ 100
Common stock, $0.001 par value;
authorized 50,000,000 shares
issued and outstanding at
December 31, 1996- 1,000,000 shs $ 1,000
March 31, 1997- 1,000,000 shs $ 1,000
Additional paid-in capital 2,000 2,000 2,900
Deficit accumulated during
deve1opment stage -3,000 -3.000 -3,000
------- -------- --------
TOTAL STOCKHOLDER'S EQUITY $ 0 $ 0 $ 0
------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 0 $ 0 $ 0
======= ======== ========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Jan. 1 Jan. 1 Jan. 1 Jun. 14, 1990
to to to (inception)
Mar. 31 Dec. 31 Dec. 31 to Mar. 31
1997 1996 1995 1997
------- ------- ------- -------------
<S> <C> <C> <C> <C>
INCOME:
Sales $ 0 $ 0 $ 0 $ 0
------- ------- ------- --------
TOTAL INCOME $ 0 $ 0 $ 0 $ 0
------- ------- ------- --------
EXPENSES:
General and
administrative $ 0 $ 0 $ 0 $ 3,000
------- ------- ------- --------
TOTAL EXPENSES $ 0 $ 0 $ 0 $ 3,000
------- ------- ------- --------
NET PROFIT LOSS(-) $ 0 $ 0 $ 0 $ -3,000
======= ======= ======= ========
NET PROFIT OR
LOSS(-) PER SHARE $ .0000 $ .0000 $ .0000 $ -.0376
======= ======= ======= ========
AVERAGE NUMBER OF
SHARES OF COMMON
STOCK OUTSTANDING 1000,000 1000,000 1000,000 $ 79,802
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A Development Stage Company)
March 31, 1997
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
<TABLE>
<CAPTION>
Deficit
accumulated
Additional during
Common Stock paid-in development
Shares Amount capital stage
---------- --------- ----------- ------------
<S> <C> <C> <C> <C>
Balance,
December 31, 1993 100 $ 100 $ 2,900 $ -3,000
Net loss year ended
December 31, 1994 0
---------- --------- ----------- ------------
Balance,
December 31, 1994 100 $ 100 $ 2,900 $ -3,000
Net loss year ended
December 31, 1995 0
---------- --------- ----------- ------------
Balance,
December 31, 1995 100 $ 100 $ 2,900 $ -3,000
On Sept. 16, 1996
changed par value
from $1.00 to $0.001 - 100 + 100
On Sept. 16, 1996
forward stock split
10,000:1 999,900 +1,000 -1,000
Net loss year ended
December 31, 1996 0
---------- --------- ----------- ------------
Balance,
December 31, 1996 1,000,000 $ 1,000 $ 2,000 $ -3,000
Net loss Jan. 1,
1997 to Mar. 31,
1997 0
---------- --------- ----------- ------------
Balance,
March 31, 1997 1,000,000 $ 1,000 $ 2,000 $ -3,000
========== ========= =========== ===========
</TABLE>
See accompanying notes to financial statements:.
-4-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Jan. 1 Jan. 1 Jan. 1 Jun. 14, 1990
to to to (inception)
Mar. 31 Dec. 31 Dec. 31 to Mar. 31
1997 1996 1995 1997
----------- ---------- --------- --------------
<S> <C> <C> <C> <C>
Cash Flows from
Operating Activities
Net Profit/Loss(-) $ 0 $ 0 $ 0 $ -3,000
Cash Flows from
Financing Activities
Issuance of common
stock +3,000
--------- ---------- ---------- -------------
Net increase in
cash $ 0 $ 0 $ 0 $ 0
Cash, beginning of
period 0 0 0 0
--------- ---------- ---------- -------------
Cash, end of period $ 0 $ 0 $ 0 $ 0
========= ========== ========== ============
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
Mid-Way Medical and Diagnostic Center, Inc.
( A DEVELOPMENT STAGE COMPANY)
March 31, 1997, December 31, 1996 and December 31, 1995
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - History and Organization of the Company
The Company was organized June 14, 1990, under the laws of the State of Florida
as Mid-Way Medical and Diagnostic Center, Inc. The Company currently has no
operations and, in accordance with SFAS #7, is considered a development company.
On June 28, 1990 the Company issued 100 shares of it common stock for $3,000.
On September 16, 1996, the Company voted to restate its Articles of
Incorporation, which changed the $1.00 par value common shares to a par value of
$0.001 each. Also the Company increased its capitalization from 100 common
shares to 50,000,000 common shares.
Also on September 16, 1996 the Company forward split its common stock 10,000:1,
thus increasing the number of outstanding common stock shares from 100 to
1,000,000.
NOTE 2 Accounting Policies and Procedures
The Company has not determined its accounting policies and procedures, except as
follows:
1. The Company uses the accrual method of accounting.
2. Earnings or loss per share is calculated using the weighted averaged
number of shares of common stock outstanding.
3. The Company has not yet adopted any policy regarding payment of
dividends. No dividends have been paid since inception.
NOTE 3 - Going Concern
The Company's financial statements are prepared using the genera11y accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of 1iabilities in the normal course of
business. However, the Company has no current source of revenue. Without
realization of additional capital, it would be unlikely for the Company to
continue as a going concern. It is management's plan to seek additional capital
through a merger with an existing operating company.
-6-
<PAGE>
CIRO INTERNATIONAL, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
MIDWAY
CIRO MEDICAL
JEWELRY AND DIAGNOSTIC ADJUSTMENTS TOTAL
<S> <C> <C> <C> <C>
REVENUES
ROYALTY INCOME $105,868 0 $105,868
MERCHANDISE SALES 0
TOTAL 105,868 0 105,868
OPERATING COSTS:
COST OF MERCHANDISE 0 0
SELLING, GENERAL AND ADMINISTRATIVE 121,814 0 121,814
TOTAL 121,814 0 121,814
INCOME FROM OPERATIONS (15,946) 0 (15,946)
OTHER INCOME (EXPENSE)
COMMISSION 0 0
INTEREST 0 0
OTHER 0 0
INTEREST EXPENSE 0 0
GAIN ON SALE OF STOCK 0 0
TOTAL 0 0 0
INCOME BEFORE TAXES (15,946) 0 (15,946)
TAXES 2,255 0 2,255
NET INCOME ($18,201) $0 ($18,201)
</TABLE>
<PAGE>
CIRO INTERNATIONAL, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MIDWAY
CIRO MEDICAL ADJUSTMENTS TOTAL
JEWELRY AND DIAGNOSTIC
<S> <C> <C> <C> <C>
REVENUES
ROYALTY INCOME $259,899 0 $259,899
MERCHANDISE SALES 3,076 0 $3,076
TOTAL 262,975 0 262,975
OPERATiNG COSTS:
COST OF MERCHANDISE 0 0 0
SELLING, GENERAL AND ADMINISTRATIVE 262,587 0 262,587
TOTAL 262,587 0 262,587
INCOME FROM OPERATIONS 388 0 388
OTHER INCOME (EXPENSE)
COMMISSION 0 0 0
INTEREST 0 0 0
OTHER 3,458 0 3,458
INTEREST EXPENSE 0 0 0
GAIN ON SALE OF STOCK 0 0 0
TOTAL 3,458 0 3,458
INCOME BEFORE TAXES 3,846 0 3,848
TAXES 5,307 0 5,307
NET INCOME ($1,461) $0 ($1,461)
</TABLE>
<PAGE>
CIRO INTERNATIONAL, INC.
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
MIDWAY
CIRO MEDICAL ADJUSTMENTS TOTAL
JEWELRY AND DIAGNOSTIC
<S> <C> <C> <C> <C>
REVENUES
ROYALTY INCOME $ 223,570 0 $ 223,570
MERCHANDISE SALES 29,950 0 $29,950
TOTAL 253,520 0 253,520
OPERATING COSTS:
COST OF MERCHANDISE 50,623 0 50,623
SELLING, GENERAL AND ADMINISTRATIVE 212,838 0 212,838
TOTAL 263,461 0 263,481
INCOME FROM OPERATIONS (9,941) 0 (9,941)
OTHER INCOME (EXPENSE)
COMMISSION 4,388 0 4,388
INTEREST 6,963 0 6,963
OTHER 7,458 0 7,458
INTEREST EXPENSE (5,700) 0 (5,700)
GAIN ON SALE OF STOCK 5,833 0 5,833
TOTAL 18,942 0 18,942
INCOME BEFORE TAXES 9,001 0 9,001
TAXES 4,062 0 4,082
NET INCOME $ 4,939 $0 $4,931
</TABLE>
<PAGE>
CIRO INTERNATIONAL INC.
PROFORMA CONSOLIDATED BALANCE SHEETS
JUNE 30. 1997
<TABLE>
<CAPTION>
MIDWAY
CIRCO MEDICAL ADJUSTMENTS TOTAL
JEWELRY AND DIAGNOSTIC
<S> <C> <C> <C> <C>
ASSETS
Cash and short term deposits $2,572 $0 $ 2,572
Accounts receivable 19,855 0 19,855
0
TOTAL 22,427 0 22,427
OTHER ASSETS
Loan receivable-shareholders 32,611 0 32,611
Trademark 308,333 0 308,333
TOTAL $363,371 $0 $363,371
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals $7,094 $0 $7,094
0
TOTAL 7,094 0 7,094
STOCKHOLDERS' EQUITY
Common stock 1,000 1,000 -1000 1,000
Additional paid in capital 370,000 2,000 1000 373,000
Retained earnings (14,723) (3,000) (17,723)
TOTAL $363,371 $0 $363,371
$363,371
</TABLE>
<PAGE>
CIRO INTERNATIONAL
PROFORMA CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MIDWAY
CIRCO MEDICAL ADJUSTMENTS TOTAL
JEWELRY AND DIAGNOSTIC
<S> <C> <C> <C> <C>
ASSETS
Cash and short term deposits $292 $0 $292
Accounts receivable 30,380 0 30,380
TOTAL 30,672 0 30,672
OTHER ASSETS
Loan receivable-shareholders 31,611 0 31,611
Trademark 320,666 0 320,666
TOTAL $382,949 $0 $382,949
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals $8,471 $0 $8,471
TOTAL 8,471 0 8,471
STOCKHOLDERS' EQUITY
Common stock 1,000 1,000 -1000 1,000
Additional paid in capital 370,000 2,000 1000 373,000
Retained earnings 3,478 (3,000) 478
TOTAL $382,949 $0 $382,949
</TABLE>
<PAGE>
CIRO INTERNATIONAL, INC.
PROFORMA CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
MIDWAY
CIRCO MEDICAL ADJUSTMENTS TOTAL
ASSETS JEWELRY AND DIAGNOSTIC
<S> <C> <C> <C> <C>
Cash and short term deposits $870 $0 $870
Accounts receivable 15,799 0 15,799
TOTAL 16,669 0 16,669
OTHER ASSETS
Loan receivable-shareholders 17,999 0 17,999
Trademark 345,333 0 345,333
TOTAL $380,001 $0 $380,001
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accruals $4,062 $0 $4,062
TOTAL 4,062 0 4,062
STOCKHOLDERS' EQUITY
Common stock 1,000 100 -1000 100
Additional paid in capital 370,000 2,900 1000 373,900
Retained earnings 4,939 (3,000) 1,939
0
TOTAL $380,001 $0 $380,001
</TABLE>
