As filed with the Securities and Exchange Commission on June ___, 1998
S.E.C. Registration No. 33-______________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
BANNER HOLDING CORP.
(Name of small business issuer in its charter)
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<CAPTION>
<S> <C> <C>
Florida 6770 65-0826508
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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120 North U.S. Highway One
Tequesta, Florida 33469
(561) 747-0244
(Address and telephone number of principal executive offices and principal
place of business)
Mark H. Mirkin, Esq.
Mirkin & Woolf, P.A.
1700 Palm Beach Lakes Boulevard #580
West Palm Beach, Florida 33401
(561) 687-4460
(Name, address, and telephone number of agent for service)
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_| If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
TITLE OF EACH AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF
CLASS OF SEC REGISTERED MAXIMUM OF MAXIMUM AG REGISTRATION
URITIES TO BE FERING PRICE GREGATE FEE
REGISTERED PER SHARE(1) OFFERING
PRICE(1)
- - --------------------------------------------------------------------------------
Common Stock, 1,000,000 $.25 $250,000.00 $86.21
par value $.01 per
share
- - --------------------------------------------------------------------------------
TOTAL $86.21
MINIMUM FEE $100.00
================================================================================
(1)Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PRELIMINARY PROSPECTUS DATED ___________, 1998
SUBJECT TO COMPLETION
BANNER HOLDING CORP.
120 North U.S. Highway One
Tequesta, Florida 33469
(561) 747-0244
Minimum 200,000 Shares of Common Stock
Maximum 1,000,000 Shares of Common Stock
Offering Price
$.25 Per Share
PROSPECTUS
________________, 1998
Banner Holding Corp., a Florida corporation (the "Company"), hereby offers
1,000,000 shares of Common Stock, par value $.01 per share (the "Shares"). See
"Description of Securities." The Company is a "blank check" company (as
described below) and has not engaged in any business and has no specific plans
for any given business or industry. Prior to this offering there has been no
public market for the Shares. The initial public offering price of the Shares
has been arbitrarily determined by the Company and does not bear any
relationship to such established valuation criteria as assets, book value or
prospective earnings.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 13 AND "DILUTION."
--------------------
THE COMPANY HAS NOT APPLIED TO REGISTER THE SHARES IN ANY STATE. AN EXEMPTION
FROM REGISTRATION WILL BE RELIED UPON IN THE STATES WHERE SHARES ARE SOLD AND
THE SHARES MAY ONLY BE TRADED IN SUCH JURISDICTIONS AFTER COMPLIANCE WITH AP-
LICABLE SECURITIES LAWS. THERE CAN BE NO ASSURANCES THAT THE SHARES WILL BE
ELIGIBLE FOR SALE OR RESALE IN SUCH JURISDICTIONS. THE COMPANY MAY APPLY TO
REGISTER THE SHARES IN SEVERAL STATES FOR OFFER HEREUNDER OR FOR SECONDARY
TRADING, HOWEVER IT IS UNDER NO REQUIREMENT TO DO SO.
--------------------
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
There can be no assurance that a regular trading market will develop for the
Shares after this offering or that, if developed, any such market will be
sustained. The Company anticipates that trading of the Shares will be con-
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ducted through what is customarily known as the "pink sheets" and/ or on the
National Quotation Bureau's Over-The-Counter Electronic Bulletin Board (the
"Bulletin Board"). Any market for the Shares which may result will likely be
less well developed than if the Shares were traded on NASDAQ or on an exchange.
See "Risk Factors" and "The Offering."
The Company is conducting a "blank check" offering subject to Rule 419 of
Regulation C as promulgated by the U.S. Securities and Exchange Commission (the
"S.E.C.") under the Securities Act of 1933, as amended (the "Securities Act").
The net offering proceeds, after deduction for offering expenses (estimated at
$25,000) and sales commissions, and the securities to be issued to investors
must be deposited in an escrow account (the "Deposited Funds" and "Deposited
Securities," respectively). While held in the escrow account, the Deposited
Securities may not be traded or transferred. Except for an amount up to 10% of
the Deposited Funds otherwise releasable under Rule 419, the Deposited Funds and
the Deposited Securities may not be released until an acquisition meeting
certain specified criteria has been consummated and a sufficient number of
investors reconfirm their investment in accordance with the procedures set forth
in Rule 419. Pursuant to these procedures, a new prospectus, which describes an
acquisition candidate and its business and includes audited financial
statements, will be delivered to all investors. The Company must return the pro
rata portion of the Deposited Funds to any investor who does not elect to remain
an investor. Unless a sufficient number of investors elect to remain investors,
all investors will be entitled to the return of a pro rata portion of the
Deposited Funds (plus interest) and none of the Deposited Securities will be
issued to investors. In the event an acquisition is not consummated within 18
months of the effective date of this prospectus, the Deposited Funds will be
returned on a pro rata basis to all investors.
Officers and directors of the Company may purchase up to 50,000 of the Shares
sold in the offering under the same terms and conditions as the public
investors. Such purchases, if made, will be for investment purposes only and not
for redistribution. Such purchases may be made for the purpose of closing the
minimum offering.
THE SHARES MAY ONLY BE OFFERED OR TRADED IN VARIOUS STATES PURSUANT TO AN
EXEMPTION FROM REGISTRATION. PURCHASERS OF SHARES EITHER IN THIS OFFERING OR IN
ANY SUBSEQUENT TRADING MARKET WHICH MAY DEVELOP MUST BE RESIDENTS OF STATES IN
WHICH THE SHARES ARE EXEMPT FROM REGISTRATION. FOR THE OFFERING HEREUNDER, THE
COMPANY INTENDS TO RELY ON AN EXEMPTION FROM REGISTRATION IN THE STATE OF
FLORIDA. THE EXEMPTION IS SELF-EXECUTING, THAT IS TO SAY THAT THERE ARE NO
NOTICE OR FILING REQUIREMENTS AND COMPLIANCE WITH THE CONDITIONS OF THE
EXEMPTION RENDER THE EXEMPTION APPLICABLE. THE COMPANY WILL AMEND THIS
PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES, IF ANY, IN WHICH AN
EXEMPTION IS AVAILABLE.
The Company intends to provide its shareholders with complete disclosure
documentation, including audited financial statements, concerning an acquisition
or merger target and its business prior to any merger or acquisition.
UNTIL 90 DAYS AFTER THE DATE FUNDS AND SECURITIES ARE RELEASED FROM THE ESCROW
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OR TRUST ACCOUNT PURSUANT TO RULE 419, ALL DEALERS EFFECTING TRANSACTIONS IN THE
REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS.
Price to public(1) Underwriting Proceeds to
discounts and issuer(3)
commissions(2)
- - --------------------------------------------------------------------------------
Per Share $ .25 $ .025 $ .225
Total Minimum
(200,000) $ 50,000 $ 5000 $ 45,000
Total Maximum
(1,000,000) $250,000 $25,000 $225,000
================================================================================
(1) Subscribers purchasing shares should make their check payable to
"______________ BANK ESCROW AGENT." The address of ________________ Bank is
___________________________________. All proceeds from subscriptions to purchase
Shares will be transmitted by the Company and any participating dealer to the
escrow account by noon of the next business day after receipt. The Shares are
offered by the Company on a "best efforts" 200,000 Share minimum, 1,000,000
Share maximum, basis. In the event that the minimum of 200,000 Shares is not
sold by December 31, 1998, all proceeds raised will be returned promptly to
subscribers in full with interest thereon. Subscribers will not be entitled to a
return of funds from the escrow account during the offering period (including
any extension thereof).
(2) The Company intends to offer the Shares through its officers and directors
without the use of a professional underwriter, and by selected broker-dealers
who are members of the National Association of Securities Dealers, Inc. (the
"N.A.S.D."). On sales made by brokers a maximum commission of 10% will be
allowed. No commissions will be paid for sales effected by officers and
directors, however these figures assume payment of commissions on the sale of
all Shares.
(3) The proceeds to the Company have been computed before deduction of costs
that will be incurred in connection with this offering (excluding underwriting
discounts and commissions), including filing, printing, legal, accounting,
transfer agent and escrow agent fees estimated at $40,000.
- - ----------------------------
THE SHARES ARE BEING OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE WHEN, AS AND
IF DELIVERED TO AND ACCEPTED BY THE COMPANY, AND SUBJECT TO APPROVAL OF CERTAIN
LEGAL MATTERS BY COUNSEL AND CERTAIN OTHER CONDITIONS. THE COMPANY RESERVES THE
RIGHT TO WITHDRAW, CANCEL OR MODIFY THIS OFFERING AND TO REJECT ANY ORDER IN
WHOLE OR IN PART.
BANNER HOLDING CORP.
120 U.S. Highway One
Tequesta, Florida 33469
The date of this Prospectus is __________________, 1998
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ESCROW OF 90% OF THE PROCEEDS DERIVED HEREBY
UPON COMPLETION OF THIS OFFERING, 90% OF THE NET PROCEEDS THEREFROM WILL BE
PLACED IN AN ESCROW ACCOUNT WITH ________________ BANK AS ESCROW AGENT, SUBJECT
TO RELEASE UPON THE EARLIER OF (i) WRITTEN NOTIFICATION BY THE COMPANY OF ITS
NEED FOR ALL, OR SUBSTANTIALLY ALL, OF SUCH NET PROCEEDS FOR THE PURPOSE OF
FACILITATING A BUSINESS COMBINATION; OR (ii) 18 MONTHS AFTER THE EFFECTIVE DATE
OF THIS REGISTRATION STATEMENT. SEE "RISK FACTORS" AND "PROPOSED BUSINESS."
ESCROWED FUNDS NOT TO BE USED FOR SALARIES OR REIMBURSABLE EXPENSES
NO FUNDS (INCLUDING ANY INTEREST EARNED THEREON) WILL BE DISBURSED FROM THE
ESCROW ACCOUNT FOR THE PAYMENT OF SALARIES OR REIMBURSEMENT OF EXPENSES INCURRED
ON THE COMPANY'S BEHALF BY THE COMPANY'S OFFICERS AND DIRECTORS. OTHER THAN THE
FOREGOING, THERE IS NO LIMIT ON THE AMOUNT OF SUCH REIMBURSABLE EXPENSES, AND
THERE WILL BE NO REVIEW OF THE REASONABLENESS OF SUCH EXPENSES BY ANYONE OTHER
THAN THE COMPANY'S BOARD OF DIRECTORS, BOTH OF WHOM ARE OFFICERS. IN NO EVENT
WILL THE ESCROWED FUNDS (INCLUDING ANY INTEREST EARNED THEREON) BE USED FOR ANY
PURPOSE OTHER THAN IMPLEMENTATION OF A BUSINESS COMBINATION. SEE "RISK FACTORS,"
"USE OF PROCEEDS" AND "CERTAIN TRANSACTIONS."
NO PRIOR CONTACT WITH OTHER ENTITIES
REGARDING POSSIBLE BUSINESS COMBINATIONS
NONE OF THE COMPANY'S OFFICERS, DIRECTORS OR GREATER THAN 10% SHAREHOLDERS OR
PERSONS WHO DIRECTLY OR INDIRECTLY CONTROL, ARE CONTROLLED BY OR ARE UNDER
COMMON CONTROL WITH, THE COMPANY OR PERSONS WHO MAY BE DEEMED PROMOTERS OF THE
COMPANY HAS HAD ANY PRELIMINARY CONTACT OR DISCUSSIONS WITH ANY REPRESENTATIVE
OF ANY ENTITY REGARDING THE POSSIBILITY OF A BUSINESS COMBINATION BETWEEN THE
COMPANY AND SUCH OTHER ENTITY.
MATERIAL PERSONS
THE OFFICERS, DIRECTORS AND MAJOR SHAREHOLDERS OF THE COMPANY ARE THE ONLY
PERSONS WHO HAVE BEEN INSTRUMENTAL IN ARRANGING THE CAPITALIZATION OF THE
COMPANY TO DATE. NEITHER OF THE OFFICERS OR DIRECTORS OF THE COMPANY IS ACTING
AS NOMINEE FOR ANY PERSONS OR IS OTHERWISE UNDER THE CONTROL OF ANY PERSON OR
PERSONS. THERE ARE NO AGREEMENTS, AGREEMENTS IN PRINCIPLE, OR UNDERSTANDINGS
WITH REGARD TO COMPENSATION TO BE PAID BY THE COMPANY TO ANY OFFICER OR DIRECTOR
OF THE COMPANY.
IT IS ANTICIPATED THE COMPANY MAY MAKE SALES OF SHARES TO OFFICERS AND DIRECTORS
AND THAT SUCH PERSONS MAY PURCHASE UP TO 50,000 OF THE SHARES OFFERED HEREBY.
SUCH PURCHASES SHALL BE MADE FOR INVESTMENT PURPOSES ONLY AND IN A MANNER
CONSISTENT WITH A PUBLIC OFFERING OF THE COMPANY'S SHARES. SUCH PURCHASES MAY BE
USED TO REACH THE AMOUNT REQUIRED FOR CLOSING IN THE EVENT SUCH AMOUNT IS NOT
REACHED AS A RESULT OF PURCHASES BY THE GENERAL PUBLIC. THUS THE OFFICERS AND
DIRECTORS COULD PURCHASE UP TO 25% OF THE AMOUNT REQUIRED FOR CLOSING IF NO
SALES ARE MADE TO NEW SHAREHOLDERS, THE MAXIMUM OF WHICH COULD BE 50,000 SHARES.
SUCH PURCHASES WILL INCREASE THE EQUITY INTERESTS ALREADY
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OWNED BY THE OFFICERS AND DIRECTORS.
INVESTORS SHOULD CAREFULLY REVIEW THE FINANCIAL STATEMENTS WHICH ARE AN INTEGRAL
PART OF THIS PROSPECTUS.
DEALERS PARTICIPATING IN THIS OFFERING ARE REQUIRED TO DELIVER A COPY OF THE
FINAL PROSPECTUS TO ANY PERSON WHO IS EXPECTED TO RECEIVE A CONFIRMATION OF THE
SALE AT LEAST 48 HOURS PRIOR TO THE MAILING OF THE CONFIRMATION.
INVESTOR SUITABILITY STANDARDS
The purchase of Shares being offered hereby involves certain risks and is
suitable only for persons of adequate means with no need for liquidity in their
investment. Each potential investor should realize that the Shares may be
subject to certain restrictions on their transfer, and there may be no public
market for the Shares and no assurance that one will develop. See "Risk
Factors."
Because of the various risk factors and the lack of liquidity of the Shares,
each investor must represent and warrant that he is of sufficient financial
means to apprise himself of, and assume the risks inherent in, the purchase of
Shares, including the lack of liquidity of his investment, and must evaluate
whether such investment is suitable for him based upon his investment
objectives, financial situation and needs.
No Shares will be sold to a prospective investor unless he:
1. either:
(i) is an "accredited investor", in that such investor comes
within one of the categories enumerated in Rule 501 of Regulation D promul-
gated by the S.E.C. under the Securities Act, or
(ii) meets certain other income and net worth criteria imposed
by the Company; and,
2. either:
(i) has a preexisting personal or business relationship with the
Company or any of its officers, directors or controlling persons, or
(ii) by reason of his business or financial experience, or the
business or financial experience of his professional advisors who are
unaffiliated with and who are not compensated by the Company, or any affiliate
or selling agent of the Company, directly or indirectly, can be reasonably
assumed to have the capacity to protect his own interests in connection with an
investment in the Company; and
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3. meets any additional suitability requirements which may be
imposed by the state in which he resides.
A subscription, once made, is irrevocable. The Company will review the
subscriptions and representations of prospective investors and, based upon
information appearing therein, may make such further inquiry as it deems
appropriate with regard to the suitability of the investment for such investors.
The Company may reject any subscription, in whole or in part, for the purchase
of Shares.
Investors are strongly urged to consult with their legal, financial and tax
advisors before investing in the Shares.
JURISDICTIONAL NOTICES
IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATION
OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS
INVOLVED.
THE SHARES 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 SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE OR
JURISDICTION.
THE SHARES CANNOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON
OR ENTITY UNLESS THEY ARE REGISTERED OR AN EXEMPTION FROM REGISTRATION IN THE
PARTICULAR STATE IS AVAILABLE.
ANY SALE MADE IN FLORIDA IS VOIDABLE BY THE PURCHASER EITHER WITHIN THREE DAYS
AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH 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 SUCH PURCHASER, WHICHEVER
OCCURS LATER.
OTHER JURISDICTIONS MAY PLACE CERTAIN RESTRICTIONS ON THE OFFER AND SALE OF
SECURITIES TO RESIDENTS THEREOF, AND NO PURCHASE WILL BE CONFIRMED UNTIL SUCH
RESTRICTIONS ARE COMPLIED WITH BY THE RESIDENT AND THE COMPANY.
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PROSPECTUS SUMMARY
THE FOLLOWING IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, IN CLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS
PROSPECTUS IN ITS ENTIRETY.
THE COMPANY
Banner Holding Corp. (the "Company") was incorporated in the State of Florida on
January 26, 1998, to seek and make one or more Business Combinations (defined
below) to the extent its limited assets will allow. See "Risk Factors" and
"Proposed Business." The Company is in the development stage and has no
operating history. No representation is made or implied that the Company will be
able to carry on its activities profitably. The subsistence of the Company is
dependent initially upon sufficient proceeds being realized by the Com pany from
this blank check offering, of which there is no assurance. Proceeds of this
blank check offering may be in sufficient to enable the Company to conduct
potentially prof itable operations or otherwise to engage in any business en
deavors. The likelihood of the success of the Company must be considered in
light of the expenses, difficulties and delays frequently encountered in
connection with the formation of any new business. Further, no assurance can be
given that the Company will have the ability to acquire assets, businesses or
properties with any value to the Company. The Com pany's office is located at
120 North U.S. Highway One, Tequesta, Florida 33469 and its telephone number is
(561) 747-0244.
The Company intends to use the net proceeds of this blank check offering to
effect a merger, acquire the assets or the capital stock of existing businesses
or other similar business combination (a "Business Combination), of which no
assur ances are given. The Company shall seek to employ qualified, but as yet
unidentified, individuals to manage such business. No assurance can be given
that the net proceeds of the maximum number of shares offered in this blank
check offering or any lesser net amount will be sufficient to accomplish the
Company's goals or that any business acquired by the Company will become
profitable. In the event that substantially less than the net proceeds from the
maximum offering are raised, the Company's plans may be materially and adversely
affected in that the Company may find it even more difficult, if not impossible,
to realize its goals. Further, the Company has not identified any business to be
acquired. Investors will
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be providing their funds to management who will have complete discretion as to
their expenditure. See "Risk Factors", "Use of Proceeds" and "Proposed
Business."
If proceeds from this offering are insufficient, the Company may be required to
seek additional capital. No assurance can be given that the Company will be able
to obtain such additional capital, or even if available, that such additional
capital will be available on terms acceptable to the Company. In the event that
management determines that the Company is unable to conduct any business
whatsoever, management, sub ject to the requirements of Rule 419, which provides
that the Deposited Funds will be returned on a pro rata basis if an acquisition
meeting certain prescribed criteria is not con summated within 18 months of the
date of this prospectus, may, in its sole discretion, seek shareholder approval
to liquidate the Company. In the event such a liquidation were to occur at some
point in time after the Company's compliance with the provisions of Rule 419,
all shareholders of the Com pany, including those owning shares purchased
privately at less than the public offering price (see "Dilution"), will receive
the liquidated assets on a pro rata basis (as opposed to being based on the
amounts paid for such Shares). While management has not established any
guidelines for determining at what point in time it might elect to discontinue
its ef forts to engage in a Business Combination and seek shareholder approval
to liquidate the Company, management is subject to the 18 month time frame set
forth in Rule 419 in which to effect an acquisition.
THE OFFERING
Minimum Maximum
Securities offered: 200,000 1,000,000
Common Stock, par
value $0.01 per share
Common Stock to
be outstanding after
the offering 3,200,000 4,000,000
Officers and directors of the Company may purchase up to 50,000 Shares in the
offering under the same terms and conditions as the public investors. Such
purchases, if made, will be for investment purposes only and not for
redistribution. Such purchases may be made for the purpose of closing the
minimum offering.
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USE OF PROCEEDS
The Company intends to apply substantially all of the net proceeds of this
offering (other than the proceeds to be deposited into the escrow account) to
cover costs and expenses incurred in attempting to effect a Business
Combination, including selecting and evaluating targets and structuring and
consummating a Business Combination. The proceeds deposited into the escrow
account shall not be used by the Company for any Company payment of salaries or
expenses to Company officers or directors. They shall only be used, if at all,
for the implementation of a Business Combination. See "Use of Proceeds,"
"Proposed Business" and "Certain Transactions."
RISK FACTORS
The Shares offered hereby involve a high degree of risk and immediate
substantial dilution and should not be purchased by investors who cannot afford
the loss of their entire invest ment. Such risks include, among others: the
Company's recent formation and limited resources; the discretionary use of
proceeds; and intense competition in effecting a Business Combination. See "Risk
Factors," "Dilution" and "Use of Proceeds."
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
Rule 419 requires that the net offering proceeds, after deduction for
underwriting compensation and offering costs, and all securities to be issued be
deposited into an escrow or trust account (the "Deposited Funds" and "Deposited
Securities," respectively) governed by an agreement which contains certain terms
and provisions specified by the rule. Under Rule 419, the Deposited Funds and
Deposited Securities will be released to the Company and to investors,
respectively, only after the Company has met the following three conditions:
First, the Company must execute an agreement for an acquisition(s) meeting
certain prescribed criteria; second, the Company must successfully complete a
reconfirmation of fering which includes certain prescribed terms and conditions;
and third, the acquisition(s) meeting the prescribed criteria must be
consummated.
Accordingly, the Company has entered into an escrow agreement with Bank (the
"Escrow Agent") which provides that:
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(1) The net proceeds of this offering are to be deposited into an escrow
account maintained by the Escrow Agent. The Deposited Funds and interest
or dividends thereon, if any, are to be held for the sole benefit of the
investors and can only be invested in bank deposits, in money mutual funds
or federal government securities or securities for which the principal or
interest is guaranteed by the fed eral government;
(2) All securities issued in connection with this offering and any other
securities issued with respect to such securities, including securities
issued with respect to stock splits, stock dividends or similar rights,
are to be deposited directly into the escrow account promptly upon is
suance. The identities of the investors are to be reflected on the stock
certificates or other documents evidenc ing the securities. The securities
held in the escrow account are to remain as issued and deposited and are
to be held for the sole benefit of the investors who retain the voting
rights, if any, with respect to the securities held in their names. The
securities held in the escrow account may not be transferred or disposed
of, other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the In
ternal Revenue Code of 1986 or the Employee Retirement Income Security
Act; and
(3) Warrants, convertible securities or other derivative securities
relating to securities held in the escrow ac count may be exercised or
converted in accordance with their terms, provided, however, that the
securities received upon exercise or conversion together with any cash or
other consideration paid in connection with the exer cise or conversion
are to be promptly deposited into the escrow account.
PRESCRIBED ACQUISITION CRITERIA
Rule 419 requires that before the Deposited Funds and the Deposited Securities
can be released, the Company must first execute an agreement(s) to acquire an
acquisition candidate(s) meeting certain specified criteria. The agreement must
provide for the acquisition of a business(es) or assets valued at not less than
80% of the maximum offering proceeds, but excluding underwriting commissions,
underwriting expenses and dealer allowances payable to non-affiliates. Once the
acquisition agreements meeting the above criteria have been executed, the
Company must successfully complete the mandated reconfirmation offering and
consummate the acquisitions(s).
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POST-EFFECTIVE AMENDMENT
Once the agreement(s) governing the acquisition(s) of a business(es) meeting the
above criteria has (have) been executed, Rule 419 requires the Company to update
the registration statement of which this prospectus is a part with a
post-effective amendment. The post-effective amendment must con tain information
about: the proposed acquisition candidate(s) and its business(es), including
audited financial statements; the results of this offering; and the use of the
funds dis bursed from the escrow account. The post-effective amendment must also
include the terms of the reconfirmation offer man dated by Rule 419. The offer
must include certain prescribed conditions which must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow.
RECONFIRMATION OFFERING
The reconfirmation offer must commence within five business days after the
effective date of the post-effective amend ment. Pursuant to Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account within five
business days after the effective date of the post-effective amendment;
(2) Each investor will have no fewer than 20, and no more than 45, business
days from the effective date of the post-effective amendment to notify the
Company in writing that the investor elects to remain an investor;
(3) If the Company does not receive written notification from any investor
within 45 business days following the ef fective date, the pro rata portion of
the Deposited Funds (and any related interest or dividends) held in the escrow
account on such investor's behalf will be returned to the investor within five
business days by first class mail or other equally prompt means;
(4) The acquisition(s) will be consummated only if investors having
contributed 80% of the maximum offering proceeds elect to reconfirm their
investments; and
(5) If a consummated acquisition(s) has not occurred within 18
months from the date of this prospectus, the Deposited Funds held in the escrow
account shall be returned to
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all investors on a pro rata basis within five business days by first class mail
or other equally prompt means.
RELEASE OF DEPOSITED SECURITIES AND DEPOSITED FUNDS
The Deposited Funds and Deposited Securities may be released to the Company and
the investors, respectively, after:
(1) the Escrow Agent has received written certification from the Company
and any other evidence acceptable by the Escrow Agent that the Company has
executed an agreement for the acquisition(s) of a business(es) the value of
which rep resents at least 80% of the maximum offering proceeds and has filed
the required post-effective amendment, the post-effective amendment has been
declared effective, the mandated reconfirmation offer having the conditions
prescribed by Rule 419 has been completed, and the Company has satisfied all of
the prescribed conditions of the reconfirmation offer; and
(2) the acquisition(s) of the business(es) the value of which represents
at least 80% of the maximum offering proceeds is (are) consummated.
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RISK FACTORS
THE SHARES OFFERED HEREBY ARE SPECULATIVE, INVOLVE IMMEDIATE SUBSTANTIAL
DILUTION AND A HIGH DEGREE OR RISK, INCLUDING, BUT NOT NECESSARILY LIMITED TO,
THE SEVERAL FACTORS DESCRIBED BELOW. EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS INHERENT IN AND AFFECTING THE COMPANY AND
THIS OFFERING BEFORE MAKING AN INVESTMENT DECISION.
RULE 419 GENERALLY. Rule 419 generally requires that the securities to be issued
and the funds received in a blank check offering be deposited and held in an
escrow account until an acquisition meeting specified criteria is completed.
Before the acquisition can be completed and before the funds and securities can
be released, the issuer in a blank check offering is required to update its
registration statement with a post-effective amendment. After the effective date
of any such post-effective amendment, the Company is required to furnish
investors with the prospectus produced thereby containing information, including
audited financial statements, regarding the proposed acquisition candidate and
its business. Investors must be given no fewer than 20 and no more than 45
business days from the effective date of the post-effective amendment to decide
to remain investors or require the return of their investment funds. Any
investor not making a decision within said period is automatically to receive a
return of his investment funds.
CONFLICTS OF INTEREST - PURCHASE OF MANAGEMENT'S COMMON STOCK. While the Company
and its management intend that no Shares will be sold by any officers, directors
or greater-than-10% shareholders or persons who may be deemed promoters of the
Company without affording all shareholders of the Company a similar opportunity,
such parties may, nevertheless, sell all or a portion of their Shares as a
condition to or in connection with a proposed Business Combination. Such parties
paid $0.013 per Share. In connection with any such sale transaction, a premium
may be charged for such parties' Shares. The public investors in the Company
shall not receive any portion thereof in the event such premium may be paid. Any
transaction structured in such manner may present such insiders with conflicts
of interest and, as a result of such conflicts, may possibly compromise
management's fiduciary duties to the Company's shareholders, as the potential
would therefore exist for members of management to consider their own personal
pecuniary benefit rather than the best interests of the Company's other
shareholders. Proceeds from this blank check offering will not be utilized
directly or indirectly to purchase Shares from management.
Although investors may request the return of their investment funds in
connection with the reconfirmation offering required by Rule 419, the Company's
shareholders will not be afforded an
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opportunity specifically to approve or disapprove any particular transaction
involving the purchase of Shares from management. See Risk Factor entitled
"Actual and Potential Conflicts of Interest."
CONFLICTS OF INTEREST - PART-TIME MANAGEMENT. Neither of the Company's key
personnel is required to commit his or her full time to the affairs of the
Company and, accordingly, such personnel may have conflicts of interest in
allocating management time among various business activities. Messrs. O'Keefe
and Lavache intend to devote approximately 50% of their time to the affairs of
the Company. Such key personnel may in the future become affiliated with
entities, including other blank check companies, engaged in business activities
similar to those intended to be conducted by the Company. In the course of their
other business activities, including private investment activities, Messrs.
O'Keefe and Lavache may become aware of investment and business opportunities
which may be appropriate for presentation to the Company as well as the other
entities with which they are affiliated. Such persons may have conflicts of
interest in determining to which entity a particular business opportunity should
be presented. In general, officers and directors of Florida corporations are
required to present certain business opportunities to such corporations.
Accordingly, as a result of multiple business affiliations, Messrs. O'Keefe and
Lavache may have similar legal obligations relating to presenting certain
business opportunities to multiple entities. In addition, conflicts of interest
may arise in connection with evaluations of a particular business opportunity by
the Board of Directors with respect to the foregoing criteria. There can be no
assurance that any of the foregoing conflicts will be resolved in favor of the
Company. See "Proposed Business".
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST. The Company's officers and directors
may engage in other business activities similar and dissimilar to those engaged
in by the Company. To the extent that such officers and directors engage in such
other activities, they will have possible conflicts of interest in diverting
opportunities to other companies, entities or persons with which they are or may
be associated or have an interest, rather than direct such opportunities to the
Company. Such potential conflicts of interest include, among other things, the
time, effort and corporate opportunity involved in their participation in other
business activities. The Company may be adversely affected should these
individuals choose to place their other business interests before those of the
Company.
In addition, any officer, director or shareholder of the Company or their
affiliates may receive personal financial gain, other than from the proceeds of
this blank check offering, by means of a share-for-share exchange transaction or
other means,
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including: (i) payment of consulting fees: (ii) payment of finder's fees;
(iii) sales of affiliates' stock; (iv) payment of salaries; or (v) other methods
of payment by which affiliates may receive cash, stock or other assets.
The potential exists that finder's fees or other merger or acquisition-related
compensation may be paid to the Company's officers, directors, promoters or
their affiliates or associates from revenues or other funds of an acquisition or
merger candidate, or by the issuance of debt or equity of such entity; the
possibility, therefore, exists that such fees may become a factor in
negotiations and present conflicts of interest.
The net proceeds of this blank check offering may be used, in management's
discretion, to make loans (other than to officers and other affiliates); no
other restrictions exist as to whom loans may be made. Further, no criteria have
as yet been established for lending decisions, whether loans will be secured or
limitations as to amount.
The Company has not and does not presently intend to impose any limits or other
restrictions on the amount or circumstances under which any of such transactions
may occur, except that none of the Company's officers, directors or their
affiliates shall receive any personal financial gain from the proceeds of this
blank check offering except for reimbursement for out-of-pocket offering
expenses. See "Use of Proceeds". No assurance can be given that any of such
potential conflicts of interest will be resolved in favor of the Company or will
otherwise not cause the Company to lose potential opportunities.
PROHIBITION TO SELL OR OFFER TO SELL SHARES IN ESCROW ACCOUNT. According to Rule
15g-8 as promulgated by the S.E.C. under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), it shall be unlawful for any person to sell or
offer to sell Shares (or any interest in or related to the Shares) held in the
Rule 419 escrow account other than pursuant to a qualified domestic relations
order or by will or the laws of descent and distribution. As a result, contracts
for sale to be satisfied by delivery of the Deposited Securities (e.g.,
contracts for sale on a when, as, and if issued basis) are prohibited.
RECENTLY ORGANIZED COMPANY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES;
REPORT OF INDEPENDENT AUDITORS. The Company, which was incorporated on January
26, 1998 and is in the development stage, has not as yet attempted to seek a
Business Combination. Management has no prior experience with respect to a
transaction involving the proposed combination of entities, including a blank
check company. None of the Company's officers has had prior experience relating
to the identification, evaluation and acquisition of a merger or acquisition
target (a "Target"). See "Manage-
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ment." Thus the Company has no experience in consummating a Business Combination
and, accordingly, there is only a limited basis upon which to evaluate the
Company's prospects for achieving its intended business objectives. To date, the
Company's efforts have been limited primarily to organizational activities. The
Company has limited resources and has had no revenues to date. In addition, the
Company will not achieve any revenues (other than interest accruing on the
proceeds of this offering) until the consummation of a Business Combination, if
at all. Moreover, there can be no assurance that any Target, at the time of the
Company's consummation of a Business Combination, or at any time thereafter,
will derive any material revenues from its operations or operate on a profitable
basis. The Company's independent auditors' report on the Company's financial
statements includes an explanatory paragraph stating that the Company's ability
to commence operations is dependent on the sale of the Shares or other fund
raising, which raises substantial doubt about its ability to continue as a going
concern. See "Proposed Business" and the Financial Statements of the Company
included elsewhere in this Prospectus.
DISCRETIONARY USE OF PROCEEDS; "BLANK CHECK" OFFERING. As a result of
management's broad discretion with respect to the specific application of the
net proceeds of this offering, this offering can be characterized as a "blank
check" offering. Although substantially all of the net proceeds of this offering
are intended generally to be applied toward effecting a Business Combination,
such proceeds are not otherwise being designated for any more specific purposes.
Accordingly, prospective investors will invest in the Company without an
opportunity to evaluate the specific merits or risks of any one or more Business
Combinations. There can be no assurance that determinations ultimately made by
the Company relating to the specific allocation of the net proceeds of this
offering will permit the Company to achieve its business objectives. See
"Proposed Business."
ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO PROSPECTIVE BUSINESS COMBINATIONS;
INVESTMENT IN THE COMPANY VERSUS INVESTMENT IN A TARGET. Blank check offerings
are inherently characterized by an absence of substantive disclosure (other than
general descriptions relating to the intended application of the net proceeds of
the offering). The Company has not yet identified a Target. Accordingly,
investors in this offering will have virtually no substantive information
available for advance consideration of any specific Business Combination. The
absence of disclosure can be contrasted with the disclosure which would be made
if the Company had already identified a Target as a Business Combination
candidate or if the Target were to effect an offering of its securities directly
to the public. There can be no assurance that an investment in the securities
offered hereby will not ultimately prove to be less favorable to investors in
this offering than
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direct investment, if such opportunity were available, in a Target. See
"Proposed Business."
TARGET DESIRE TO ACHIEVE PUBLIC TRADING STATUS THROUGH BUSINESS COMBINATION.
While a prospective Target may deem a Business Combination with the Company
desirable for diverse reasons, a Business Combination may involve the
acquisition, reorganization, merger, or some other form of business combination
with an entity which does not need substantial additional capital but which
desires to establish a public trading market for its shares, while avoiding what
it may deem to be undesirable consequences of undertaking a public offering
itself, such as time delays, significant expense, loss of voting control and
compliance with various federal and securities laws enacted for the protection
of investors. See the Risk Factors below entitled "Unspecified Industry;
Unascertainable Risks" and "No Assurance of Public Market; Arbitrary
Determination of Offering Price."
NO PRESENT IDENTIFICATION OF INDUSTRY AND/OR ACQUISITION PROSPECTS;
UNAVAILABILITY OF CONVENTIONAL PRIVATE OR PUBLIC OFFERINGS OF SECURITIES OR
CONVENTIONAL BANK FINANCING. Management has not identified any specific business
or even any specific industry which it intends to enter through the purchase of
a business. Neither the Company nor any of its affiliates has any present plan,
proposals, arrangements or understandings with respect to any possible Business
Combination. None of the Company's officers, directors, promoters, their
affiliates or associates has had any preliminary contact or discussions with any
representative of any entity regarding the possibility of an acquisition or
merger transaction as contemplated hereby. While management will have sole
discretion to determine which businesses, if any, are intended to be acquired,
as well as the intended terms of any acquisition, investors in this blank check
offering will have the opportunity to evaluate the merits and risks of an
acquisition and be entitled to make an election as to whether they desire to
remain investors in the Company. An acquisition or merger will only be
consummated if investors having contributed 80% of the maximum offering proceeds
reconfirm their investment in the Company. Management has no present intention
of (a) considering a Business Combination with entities owned or controlled by
affiliates of the Company; (b) creating subsidiary entities with a view to
distributing their securities to the shareholders of the Company; or (c) selling
any securities owned or controlled by affiliates of the Company in connection
with any Business Combination transaction without affording all shareholders a
similar opportunity. The success or failure of an investment in the Shares will
depend entirely upon the ability of management to acquire successful businesses
and to continue to operate them and obtain additional capital to support the
working capital requirements of these businesses after their acquisition, of
which no assurances are given. See "Use of Proceeds" and "Proposed Business."
Investors
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should recognize that an investment herein may prove substantially less
favorable than a similar investment made directly in an entity which has a
current business or stated business prospects. Further, it may be expected that
any Target will present such a level of risk that conventional private or public
offerings of securities or conventional bank financing will not be available.
UNSPECIFIED INDUSTRY; UNASCERTAINABLE RISKS. To date, the Company has not
selected any particular industry in which to concentrate its Business
Combination efforts. Accordingly, there is no current basis for prospective
investors in this offering to evaluate the possible merits or risks of any
Target or the particular industry in which the Company may ultimately operate.
However, in connection with seeking shareholder approval of a Business
Combination, the Company intends to furnish its shareholders with proxy
solicitation materials prepared in accordance with the Exchange Act, which,
among other matters, will include a description of the operations of the Target
candidate and audited financial statements thereof. To the extent the Company
effects a Business Combination with a financially unstable company or an entity
in its early stage of development or growth (including entities without
established records of sales or earnings), the Company will become subject to
numerous risks inherent in the business operations of financially unstable and
early stage or potential emerging growth companies. In addition, to the extent
that the Company effects a Business Combination with an entity in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risk of that industry. An extremely high level of risk
frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
Target or industry, there can be no assurance that the Company will properly
ascertain or assess all such significant risk factors. See "Proposed Business."
PROBABLE LACK OF BUSINESS DIVERSIFICATION. While the Company may, under certain
circumstances, seek to effect Business Combinations with more than one Target,
it is likely that the Company will have the ability to effect only a single
Business Combination. Accordingly, the prospects for the Company's success will
be entirely dependent upon the future performance of a single business. Unlike
certain entities which have the resources to consummate several Business
Combinations of entities operating in multiple industries or multiple areas of a
single industry, it is highly likely that the Company will not have the
resources to diversify its operations or benefit from the possible spreading of
risks or offsetting of losses. In addition, by consummating a Business
Combination with only a single entity, the prospects for the Company's success
may become dependent upon the development or market acceptance of a single or
limited number of products, processes or services. Consequently, there can be no
assurance
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than the Target will prove to be commercially viable. See "Proposed Business."
DEPENDENCE UPON KEY PERSONNEL. The ability of the Company successfully to effect
a Business Combination will be largely dependent upon the efforts of John M.
O'Keefe and Vicki J. Lavache, the Company's President and Secretary/Treasurer,
respectively. It is anticipated that Messrs. O'Keefe and Lavache are the only
persons whose activities will be material to the operations of the Company
pending the Company's identification and consummation of a Business Combination.
The Company has not entered into employment agreements with any officer. It is
anticipated that each of Messrs. O'Keefe and Lavache will devote approximately
50% of his time to the affairs of the Company. The Company has not obtained "key
person" life insurance on the lives of either of the officers. The loss of the
services of such key personnel before suitable replacements are obtained could
have a material adverse effect on the Company's capacity successfully to achieve
its business objectives. Neither of the Company's key personnel is required to
commit his full time to the affairs of the Company and, accordingly, such
personnel may have conflicts of interest in allocating management time among
various business activities. In addition, the success of the Company may be
dependent upon its ability to retain additional personnel with specific
knowledge or skills necessary to assist the Company in evaluating a potential
Business Combination. There can be no assurance than the Company will be able to
retain such necessary additional personnel. See "Proposed Business" and
"Management."
LACK OF EXPERIENCE OF MANAGEMENT. Messrs. O'Keefe and Lavache have no prior
experience with respect to the successful completion of a Business
Combination. See "Management."
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. Although the Company has no present
plans, understandings or arrangements respecting any Business Combination, the
successful completion of such a transaction will, in all likelihood, result in a
change in control of the Company. This could result from the issuance of a large
percentage of the Company's authorized but unissued securities or the sale by
the present shareholders of all or a portion of their stock or a combination
thereof. Any change in control will, in all likelihood, also result in the
resignation or removal of the Company's present officers and directors. If there
is a change in management, no assurance can be given as to the experience or
qualifications of the persons who replace present management with respect to
either the operation of the Company's activities or the operation of the
business, assets or property acquired.
NATURE OF TRANSACTION; BENEFITS TO MANAGEMENT. In a merger or acquisition, the
Company's officers may be able to negotiate the
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sale of their Shares at a premium price. After the merger, the investors in this
offering may be left with management whose background and competence are
unknown, stock worth substantially less than the price paid, and a greatly
reduced percentage of ownership.
REIMBURSEMENT OF EXPENSES TO OFFICERS AND DIRECTORS. No funds will be disbursed
from the escrow account for the reimbursement of expenses incurred by the
Company's officers and directors on behalf of the Company. Notwithstanding the
foregoing, there is no limit on the amount of such reimbursable expenses, and
there will be no review of the reasonableness of such expenses by anyone other
than the Company's Board of Directors, both of the members of which are Company
officers. See "Use of Proceeds", "Proposed Business" and "Management".
LACK OF BUSINESS OPPORTUNITIES. Although the Company will attempt to locate
potential Targets, there is no assurance that any business or assets worthy of
even preliminary investigation will come to the Company's attention, or that any
significant amount of funds will be expended in the actual acquisition of
assets.
RISK OF MINIMUM OFFERING. The Company will only raise $50,000 in the event only
the minimum offering amount is sold. Under this condition, in view of the
limited funds available, the attractiveness of the Company to potential Targets
would be materially diminished. In the event that less than the net proceeds
from the maximum offering are raised, the Company's plans may be materially and
adversely effected in that the Company may find it even more difficult, if not
impossible, to realize its goals.
MANAGEMENT PARTICIPATION IN THIS OFFERING. The Company may sell Shares to
officers and directors of the Company. Such persons may purchase up to 50,000
Shares offered hereby, although they have made no commitment to do so. Such
purchases shall be made for investment purposes only and in a manner consistent
with a public offering of the Company's Shares. Such purchases may be used to
reach the amount required for closing in the event such amount is not reached as
a result of purchases by the general public. The officers and directors could
purchase up to 25% of the amount required for closing, the maximum of which
could be 50,000 Shares to meet the offering minimum. Such purchases will
increase the percentage of securities held by the officers and directors. To the
extent of any such Share purchases for investment purposes only, a portion of
the Shares from this offering will not enter the "public float." The public
float is the amount of free-trading Shares which are immediately resalable in
the trading market. Such reduction means that there are fewer Shares for public
investors to purchase and resell and may cause a lack of liquidity in the
trading of the Company's Shares.
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LOSS FROM ANALYSIS AND INVESTIGATION OF BUSINESS PROSPECTS. The Company will be
required, in all probability, to expend funds in the preliminary investigation
or examination of assets, businesses or properties, whether or not a Business
Combination occurs. To the extent management determines that a potential Target
has little or no value, the monies spent on such investigation will be a total
loss. In no event will the funds placed in the escrow account, including any
interest earned thereon, be used for expenses associated with the evaluation and
structuring of a contemplated Business Combination.
LIMITED ABILITY TO EVALUATE TARGET MANAGEMENT. While the Company's ability
successfully to effect a Business Combination will be dependent upon its key
personnel, the future role of such personnel in the Target cannot presently be
stated with any certainty. While it is possible that either of the Company's key
personnel will remain associated in some capacities with the Company following a
Business Combination, it is likely that such key personnel will not be
associated with the Company subsequent thereto except as shareholders. Moreover,
it is likely that such personnel will have little if any experience or knowledge
relating to the operations of the particular Target. Furthermore, although the
Company intends closely to scrutinize the management of a prospective Target in
connection with evaluating the desirability of effecting a Business Combination,
there can be no assurance that the Company's assessment of such management will
prove to be correct, especially in light of the inexperience of current key
personnel of the Company in evaluating businesses. In addition, there can be no
assurance that future management will have the necessary skills, qualifications
or abilities to manage a public company. The Company may also seek to recruit
additional managers to supplement the incumbent management of the Target. There
can be no assurance that the Company will have the ability to recruit such
additional managers, or that such additional managers will have the requisite
skills, knowledge or experience necessary to enhance the incumbent management.
See "Proposed Business".
COMPETITION. The Company expects to encounter intense competition from other
entities having a business objective similar to that of the Company. Many of
these entities are well established and have extensive experience in connection
with identifying and effecting Business Combinations directly or through
affiliates. Many of these competitors possess greater financial, technical,
personnel and other resources than the Company. There can be no assurance that
the Company will have the ability to compete successfully. The Company's
financial resources will be relatively limited when contrasted with those of
many of its competitors. This inherent competitive limitation may compel the
Company to select certain less attractive Targets. See "Proposed Business".
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UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET. In the event that the Company
succeeds in effecting a Business Combination, the Company will, in all
likelihood, become subject to intense competition from competitors of the
Target. In particular, certain industries which experience rapid growth
frequently attract an increasingly larger number of competitors, including
competitors with increasingly greater financial, marketing, technical and other
resources than the initial competitors in the industry. The degree of
competition characterizing the industry of any prospective Target cannot
presently be ascertained. There can be no assurance that, subsequent to a
Business Combination, the Company will have the resources to compete
effectively, especially to the extent that the Target is in a high growth
industry. See "Proposed Business".
POSSIBLE NEED FOR ADDITIONAL FINANCING. The Company has had no revenues to date
and is entirely dependent upon the proceeds of this offering to commence
operations relating to selection of a prospective Target. The Company will not
receive any revenues until the consummation of a Business Combination. Although
the Company believes that the proceeds of this offering will be sufficient to
effect a Business Combination, inasmuch as the Company has not yet identified
any prospective Target candidates, the Company cannot ascertain with any degree
of certainly the capital requirements for any particular transaction. In the
event that the net proceeds of this offering prove to be insufficient for
purposes of effecting a Business Combination (because of the size of the
Business Combination or the depletion of 10% of the portion of the net proceeds
available to the Company for the search for a Target), the Company will be
required to seek additional financing. In the event no Target is identified or
no Business Combination has been consummated, and all of the net proceeds other
than the Deposited Funds have been expended, the Company currently has no plans
or arrangements with respect to additional financing which may be required to
continue the operations of the Company. In such event, Messrs. O'Keefe and
Lavache may consider lending the Company funds for operations. Although there
are no plans or arrangements with respect to such loans, Messrs. O'Keefe and
Lavache do not currently anticipate such loans, if any, will be made on terms
other than for market interest rates. There can be no assurance that Messrs.
O'Keefe and Lavache will make such loans to the Company, or if made that such
will be made on terms favorable to the Company. The Deposited Funds, including
any interest earned thereon, however, will not be used for expenses associated
with the evaluation and structuring of a contemplated Business Combination.
There can be no assurance that such financing would be available on acceptable
terms, if at all. To the extent that such additional financing proves to be
unavailable when needed to consummate a particular Business Combination, the
Company would, in all likelihood, be compelled to restructure the transaction or
abandon that particular Business Combination and
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seek an alternative Target candidate. See "Proposed Business".
POSSIBLE NEED FOR ADDITIONAL FINANCING FOR TARGET. In the event of the
consummation of a Business Combination, the Company cannot ascertain with any
degree of certainty the capital requirements for any particular Target inasmuch
as the Company has not yet identified any prospective Target candidates. To the
extent the Business Combination results in the Target requiring additional
financing, such additional financing (which, among other forms, could be derived
from the public or private offering of securities or from conventional bank
financing), may not be available, as a result of, among other things, the Target
not having sufficient (i) credit or operating history; (ii) income stream; (iii)
profit level; (iv) asset base eligible to be collateralized; or (v) market for
its securities.
Because no specific Business Combination or industry has been targeted, it is
not possible to predict the specific reasons why conventional private or public
financing or conventional bank financing might not be available. There can be no
assurances that, in the event of consummation of a Business Combination,
sufficient financing to fund the operations or growth of the Target will be
available upon terms satisfactory to the Company, nor can there be any assurance
that financing would be available at all.
POSSIBLE USE OF DEBT FINANCING; DEBT OF A TARGET. There are currently no
limitations relating to the Company's ability to borrow funds to increase the
amount of capital available to the Company to effect a Business Combination or
otherwise finance the operations of a Target. The amount and nature of any
borrowing by the Company will depend on numerous considerations, including the
Company's capital requirements, the Company's perceived ability to meet debt
service on any such borrowing and then prevailing conditions in the financial
markets, as well as general economic conditions. There can be no assurance that
debt financing, if required or otherwise sought, would be available on terms
deemed to be commercially acceptable and in the best interests of the Company.
The inability of the Company to borrow funds required to effect or facilitate a
Business Combination, or to provide funds for an additional infusion of capital
into a Target, may have a material adverse effect on the Company's financial
condition and future prospects. Additionally, to the extent that debt funding
ultimately proves to be available, any borrowing may subject the Company to
various risks traditionally associated with incurring indebtedness, including
the risks of interest rate fluctuations and insufficiency of cash flow to pay
principal and interest. Furthermore, a Target may have already incurred debt
financing and, therefore, all the risks inherent thereto. See "Use of Proceeds"
and "Proposed Business."
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AUTHORIZATION OF ADDITIONAL SECURITIES. The Company's Articles of Incorporation
authorize the issuance of 25,000,000 shares of Common Stock and 5,000,000 shares
of preferred stock, par value $.01 per share. Upon completion of this offering,
assuming all of the Shares offered hereby are sold, there will be 21,000,000
authorized but unissued shares of Common Stock available for issuance. Although
the Company has no commitments as of the date of this prospectus to issue any
shares of Common Stock other than as described in this prospectus, the Company
will, in all likelihood, issue a substantial number of additional Shares in
connection with a Business Combination. To the extent that additional shares of
Common Stock are issued, dilution of the interests of the Company's then current
shareholders will occur. Additionally, if a substantial number of shares of
Common Stock are issued in connection with a Business Combination, a change in
control of the Company may occur which may impact, among other things, the
utilization of net operating losses, if any. Furthermore, the issuance of a
substantial number of shares of Common Stock may adversely affect prevailing
market prices, if any, for the Common Stock, and could impair the Company's
ability to raise additional capital through the sale of equity securities. See
"Proposed Business" and "Description of Securities."
ACQUISITION DILUTION AND CONTROL. The Company plans to acquire another company
or companies through the issuance of Shares. See "Proposed Business". Any such
acquisition effected by the Company will result in the issuance of additional
shares of Common Stock which will result in substantial dilution in the
percentage of the Company's Common Stock then held by the Company's
shareholders, including investors in this offering. Moreover, the Shares issued
in any such acquisition or merger transaction may be valued on an arbitrary or
non arms-length basis by management of the Company. In addition, a merger will,
in all likelihood, involve the appointment of additional members to the
Company's Board of Directors. Any such acquisition or merger may not legally
require shareholder approval, however, the Company plans to hold a shareholders'
meeting to vote on any acquisition or merger and provide a proxy statement to
shareholders at least 10 days prior thereto. Such transaction will likely be
structured so that the owners of a Target being acquired will be issued an
amount of the Company's Shares sufficient to provide them an 80% equity
ownership interest in the Company.
INVESTMENT COMPANY ACT CONSIDERATIONS. The regulatory scope of the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which was
enacted principally for the purpose of regulating vehicles for pooled
investments in securities, extends generally to companies engaged primarily in
the business of investing, reinvesting, owning, holding or trading in
securities. The Investment Company Act may, however, also be deemed to be
applicable to an entity which does not intend to be characterized
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as an investment company but which, nevertheless, engages in activities which
may be deemed to be within the definitional scope of certain provisions of the
Investment Company Act. The Company believes that its anticipated activities,
which will involve acquiring control of a Target, will not subject the Company
to regulation under the Investment Company Act. Nevertheless, there can be no
assurance that the Company will not be deemed to be an investment company,
especially during the period prior to a Business Combination. In the event the
Company is deemed to be an investment company, the Company may become subject to
certain restrictions relating to the Company's activities, including
restrictions on the nature of its investments and the issuance of securities. In
addition, the Investment Company Act imposes certain requirements on entities
deemed to be within its regulatory scope, including registration as an
investment company, adoption of a specific form of corporate structure and
compliance with certain reporting, recordkeeping, voting, proxy, disclosure and
other rules and regulations. In the event of characterization of the Company as
an investment company, the failure by the Company to satisfy regulatory
requirements, whether on a timely basis or at all, would, under certain
circumstances, have a material adverse effect on the Company. See "Proposed
Business."
TAX CONSIDERATIONS. As a general rule, federal and state tax laws and
regulations have a significant impact upon the structuring of Business
Combinations. The Company will evaluate the possible tax consequences of any
prospective Business Combination and will endeavor to structure its Business
Combination so as to achieve the most favorable tax treatment to the Company,
the Target and their respective shareholders. There can be no assurance,
however, that the Internal Revenue Service (the "IRS") or appropriate state tax
authorities will ultimately assent to the Company's tax treatment of a
consummated Business Combination. To the extent the IRS or state tax authorities
ultimately prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to the Company, the Target
and their respective shareholders. See "Proposed Business".
POSSIBLE PAYMENT OF FINDER'S FEES. In the event that a person or entity assists
the Company in connection with the introduction to a prospective Target with
which a Business Combination is ultimately consummated, such person or entity
may be entitled to receive a finder's fee in consideration for such
introduction. Such person may be required to be registered as, among other
things, an agent or broker-dealer under the laws of certain jurisdictions. The
Company is not presently obligated to pay any finder's fees. The officers and
directors of the Company will not be entitled to receive a finder's fee in the
event they originate a Business Combination. See "Proposed Business" and
"Management".
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CONTROL BY PRESENT SHAREHOLDERS. Upon consummation of the offering, if the
maximum number of Shares offered is sold, the present shareholders (who are also
the present officers and directors) of the Company, will collective own 75% of
the then issued and outstanding Shares. (These figures could be higher if such
persons acquire Shares in this offering.) In the election of directors,
shareholders are not entitled to accumulate their votes for nominees.
Accordingly, the current shareholders will be able to elect all of the Company's
directors of the Company. See "Principal Shareholders," "Certain Transactions"
and "Description of Securities."
NO DIVIDENDS. The Company has not paid any dividends on its Common Stock to date
and does not presently intend to pay cash dividends prior to the consummation of
a Business Combination. The payment of dividends after any such Business
Combination, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition
subsequent to consummation of a Business Combination. The payment of any
dividends subsequent to a Business Combination will be within the discretion of
the Company's then Board of Directors. It is the present intention of the Board
of Directors to retain all earnings, if any, for use in the Company's business
operations and, accordingly, the Board does not anticipate paying any cash
dividends in the foreseeable future. See "Description of Securities".
NO COMMITMENT TO PURCHASE SHARES. No commitment exists by anyone to purchase any
of the Shares offered. Consequently, no assurance can be given that any Shares
will be sold. Although no commitment has been made, officers and directors may
purchase up to 50,000 Shares in the offering. This offering is being made on a
"best efforts" 200,000 Share minimum, 1,000,000 Share maximum basis. In the
event that the minimum of 200,000 Shares is not sold by December 31, 1998, all
proceeds raised will be returned promptly to subscribers in full with interest.
Subscribers will not be entitled to a return of funds from the escrow account
during the offering period (including any extension thereof). See "The
Offering".
NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF OFFERING PRICE. Prior
to this offering, there has been no public trading market for the Shares. The
initial public offering price of the Shares has been arbitrarily selected by the
Company and does not bear any relationship to such established valuation
criteria as assets, book value or prospective earnings. There can be no
assurance that a regular trading market will develop for the Shares after this
offering or that, if developed, that any such market will be sustained. The
Shares will likely appear in what is customarily known as the "pink sheets" or
on the Bul-
26
<PAGE>
letin Board, thus limiting their marketability. So long as the Company has net
tangible assets of $2,000,000 or less, transactions in the Shares shall be
subject to Rule 15c2-6 promulgated under the Exchange Act. Under such rule,
broker-dealers who recommend such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with spouse) must make a special
written suitability determination and receive a written agreement to a
transaction prior to sale. Transactions are exempt from this rule if the market
price of the Shares is at least $5.00. If the Shares become subject to Rule
15c2-6, broker-dealers may find it difficult to effectuate customer transactions
and/or trading activity in the Shares, thus, the market price, if any, may be
depressed, and an investor may find it more difficult to dispose of the Shares.
As of the date hereof, the Company has had no discussions and there are no
understandings with any firm regarding the participation of such firm as a
market maker in the Shares. See "The Offering."
NO PRESENT PLANS FOR THE DEVELOPMENT OF A TRADING MARKET. There are currently no
plans, proposals, arrangements or understandings with any person with regard to
the development of a trading market in the Shares.
IMMEDIATE SUBSTANTIAL DILUTION; DISPARITY OF CONSIDERATION. Assuming all Shares
offered are sold, investors in this offering will incur an immediate and
substantial dilution of approximately $.204 per Share between the pro forma net
tangible book value per Share after the offering of $.056 and the public
offering price of $.25 per share. The existing shareholders of the Company
acquired their Shares at a nominal price and, accordingly, new investors will
bear virtually all of the risks inherent in an investment in the Company. See
"Dilution."
SHARES ELIGIBLE FOR FUTURE SALE. All 3,000,000 Shares of the Company's Common
Stock outstanding are "restricted securities" and under certain circumstances
may in the future be sold in compliance with Rule 144 promulgated under the
Securities Act. Future sales of those shares under Rule 144 could depress the
market price of the Shares in any market which may develop. None of the current
outstanding Shares will be eligible for sale pursuant to Rule 144 until January
26, 1999.
In general, under Rule 144 as currently in effect, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the Company (or
persons whose shares are aggregated) who has owned restricted shares
beneficially for at least one year is entitled to sell, within any three-month
period, a number of shares that does not exceed the greater of 1% of the
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total number of outstanding shares of the same class or, if the shares are
quoted on NASDAQ, the average weekly trading volume during the four calendar
weeks preceding the sale. A person who has not been an affiliate of the Company
for at least three months immediately preceding the sale and who has
beneficially owned shares for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above. No
prediction can be made as to the effect, if any, that sales of restricted shares
or the availability of such shares for sale will have on the market prices
prevailing from time to time. Nevertheless, the possibility that substantial
amounts of restricted shares may be sold in the public market may adversely
affect prevailing market prices for the Shares and could impair the Company's
ability to raise capital through the sale of equity securities. See "Principal
Shareholders" and "Description of Securities."
REGULATIONS CONCERNING "BLANK CHECK" ISSUERS. The ability to register or qualify
for sale the Shares for both initial sale and secondary trading is limited
because a number of states have enacted regulations pursuant to their securities
or "blue sky" laws restricting or, in some instances, prohibiting, the sale of
securities of "blank check" issuers, such as the Company, within that state. In
addition, many states, while not specifically prohibiting or restricting "blank
check" companies, may not register the Shares for sale in their states. Because
of such regulations and other restrictions, the Company's selling efforts, and
any secondary market which may develop, may only be conducted in those
jurisdictions where an applicable exemption is available or a blue sky
application has been filed and accepted or where the Shares have been
registered.
The Company has not applied to register the Shares in any state. The Company
will seek to obtain an exemption from registration to offer the Shares in
various states and may apply to register the Shares in some states. Purchasers
of the Shares in this offering must be residents of such jurisdictions which
either provide an applicable exemption or in which the Shares are registered. In
order to prevent resale transactions in violation of states' securities laws,
public shareholders may only engage in resale transactions in the Shares in such
jurisdictions in which an applicable exemption is availlable or a registration
application has been filed and accepted. As a matter of notice to the holders
thereof, the Common Stock certificates shall contain information with respect to
resale of the Shares. Further, the Company will advise market makers in the
Shares, if any, of such restriction on resale. Such restriction on resales may
limit the ability of investors to resell the Shares purchased in this offering.
Several states may permit secondary market sales of the Shares
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(i) once or after certain financial and other information with respect to the
Company is published in a recognized securities manual such as Standard & Poor's
Corporation Records, (ii) after a certain period has elapsed from the date
hereof, or (iii) pursuant to exemptions applicable to certain investors.
However, because the Company is a "blank check" company, it may not be able to
be listed in a recognized securities manual until after the consummation of the
first Business Combination.
USE OF PROCEEDS
Because management has no specific business contemplated for the Company, it is
unable to indicate precisely categories for the use of proceeds from this blank
check offering. However, the following table sets forth management's estimate as
to how the proceeds will likely be allocated:
Minimum Maximum
Gross Gross
Proceeds Proceeds
DESCRIPTION RAISED RAISED(L)
Working capital available for
operations and other business
endeavors(2) $ 5,000 $185,000
Offering expenses(3) $40,000 $ 40,000
Underwriting commissions $ 5,000 $ 25,000
======= ========
TOTAL $50,000 $250,000
- - ----------------------------
(1)The Company intends to utilize the proceeds from this blank check offering in
the priority set forth in this column whether or not such gross proceeds or a
lesser amount are raised. No assurances are given that the Company will sell any
Shares.
(2)The working capital (i.e., monies to be used in connection with a potential
acquisition, including but not limited to due diligence, travel and related
out-of-pocket expenses, and consulting fees, if any) that will be available
should be considered to be uncommitted because the Company is not presently
planning to invest in any specific business or property, and the Company has no
understanding, arrangement or contractual commitment to participate in, or
acquire, any business or property. Such funds, however, may be used in
connection with the Company's acquisition of a business or property, including
the costs of such acquisition. Substantial funds could be expended in connection
with preparing for an acquisition that is not consummated. Working capital also
will be used to pay other costs of the Company's operations, including legal
fees and costs incurred in filing periodic reports under the federal securities
laws. A portion of the gross proceeds raised hereby may be paid to officers,
directors and promoters, and their affiliates or associates, for any of their
out-of-pocket expenses relating to this offering. The Company has not
established any limit on the amount of the gross proceeds that may be paid to
officers, directors and promoters and their affiliates or associates for
expenses of the offering. However, no portion of the proceeds raised hereby will
be paid to those persons, directly or indirectly, as consultants' fees,
advisors' fees, officers' salaries, directors' fees, finders' fees for
acquisitions, purchase of Shares or other payments, in accordance with an
informal understanding among management. Management is not aware of any
circumstances under which such policy may be changed. Working capital also may
be used to obtain the services of independent
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<PAGE>
outside consultants to evaluate prospective acquisitions for the Company. If the
Company uses outside consultants, it will compensate such consultants at
competitive rates. The Company is not presently under any agreement or
understanding to use the services of any outside consultant for such purposes.
Indeed, the Company may choose to enter into acquisitions or other business
endeavors without seeking such consulting services.
(3)Includes legal, accounting, printing and transfer agent fees, and other
miscellaneous expenses.
- - -----------------------------
The Company has received commitments for a total of $39,000 in capital
contributions from its founders. See "Certain Transactions." This amount is
being used as seed money to finance the expenses of this blank check offering.
The Company estimates that it will have available as working capital for
acquisitions and other business endeavors an aggregate of approximately
$224,000, assuming all of the Shares offered hereby are sold and underwriting
commissions are paid, although no assurances are given.
The Company presently anticipates that it will be able to locate and acquire
suitable business interests or properties utilizing the net proceeds of this
blank check offering, assuming all or substantially all of the net proceeds from
the maximum offering are raised. In the event that substantially less than the
net proceeds from the maximum offering are raised, the Company's plans may be
materially and adversely effected in that the Company may find it even more
difficult, if not impossible, to realize its goals. In any event, if the Company
eventually determines that a business opportunity requires additional funds,
regardless of the level of net proceeds raised, the Company may seek such
additional financing through loans, additional equity issuances or through other
financing arrangements. No such financing arrangements presently exist, and no
assurances can be given that such additional financing will be available, or, if
available, on terms acceptable to the Company. Investors buying Shares in this
blank check offering will not, unless otherwise required by law, participate in
the determination of whether to obtain additional financing or as to the terms
of any such financing. See "Proposed Business".
The net proceeds of this blank check offering may be used, in management's
discretion, to make loans (other than to officers and other affiliates); no
restrictions exist, other than as set forth above, as to whom loans may be made.
Further, no criteria have as yet been established for determining whether or not
to make loans, whether any such loans will be secured or limitations as to
amount.
The Company has not and does not presently intend to impose any limits or other
restrictions on the amount or circumstances under which any of such transactions
may occur, except that none of the Company's officers, directors or their
affiliates shall receive any personal financial gain from the proceeds of this
blank check
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<PAGE>
offering except for reimbursement of out-of-pocket offering expenses. No
assurance can be given that any of such potential conflicts of interest will be
resolved in favor of the Company or will otherwise not cause the Company to lose
potential opportunities.
None of the proceeds raised hereby will be used to make any loans to the
Company's promoters, management or their affiliates or associates of any of the
Company's shareholders. Further, the Company may not borrow funds and use the
proceeds therefrom to make payments to the Company's promoters, management or
their affiliates or associates.
It is contemplated that the Deposited Funds will be invested in one of the
following, pending the consummation of any acquisition effected in accordance
with Rule 419:
(a) an obligation that constitutes a "deposit," as that term is
defined in Section 3(1) of the Federal Deposit Insurance Act [12 U.S.C. 1813(1)
(1991)];
(b) securities of an open-end investment company registered under the
Investment Company Act that holds itself out as a money market fund meeting the
conditions of paragraph (c)(2), (c)(3) and (c)(4) of Rule 2a-7 (17 CFR 270.2a-7)
under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations
guaranteed as to principal or interest by, the United States.
The Company believes that the proceeds from this blank check offering will be
sufficient to satisfy the Company's cash needs through consummation of a
Business Combination. The Company may be deemed an "investment company" should
the net proceeds of this blank check offering remain uninvested for more than
one year. Being deemed an investment company without registration under the
Investment Company Act can result in civil liability and criminal penalties to
controlling persons in certain instances, as well as civil liabilities and
unenforceability of contracts with regard to the Company. In the event the
Company has not completed an acquisition of a business within one year of the
closing of this blank check offering, the Company will take such actions as it
deems necessary to avoid being classified as an "investment company." Such
measures may include a decision, if deemed necessary, to seek shareholder
approval to liquidate the Company. If there is such a liquidation, all investors
in this blank check offering will receive the liquidated assets comprised of the
Deposited Funds on a pro-rata basis.
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DILUTION
The difference between the public offering price per Share and the pro forma net
tangible book value per Share after this offering constitutes the dilution to
investors in this offering. Net tangible book value per Share is determined by
dividing the net tangible book value of the Company (total tangible assets less
total liabilities) by the number of outstanding Shares.
At April 30, 1998, the net tangible book value of the Company was $39,000 or
$.013 per Share. After giving effect to the sale of 1,000,000 Shares offered
hereby and the application of the estimated net proceeds therefrom, the pro
forma net tangible book value of the Company at April 30, 1998 would have been
$224,000 or $.056 per Share, representing an immediate increase in net tangible
book value of $185,000 or $.046 per Share to existing shareholders and an
immediate dilution of $.204 per Share to investors in this offering. There are
currently no plans, proposals, arrangements or understandings with respect to
the sale of additional securities to any persons for the period commencing with
the closing of this offering and the Company's identification of a Business
Combination. See "The Offering."
The following table illustrates the foregoing information with respect to
dilution to new investors on a per-Share basis after the offering assumes all
Shares offered are sold:
Public offering price per Share $ .25
Net tangible book value per
Share, before this offering $ .013
Increase per Share attributable
to investments by new investors $ .046
Net tangible book value per Share,
after this offering $ .056
Dilution to new investors per Share $ .204
The following table sets forth, as of the date of this prospectus, with respect
to existing shareholders and new investors, a comparison of the number of Shares
acquired, their percentage ownership of such Shares, the total consideration
paid, the percentage of total consideration paid and the average price per
Share:
Percentage Consideration Percentage of Price Per
AMOUNT OF SHARES PAID CONSIDERATION SHARE
Existing
Shareholders 3,000,000 75.0 $ 39,000.00 13.5% $.013
New Investors 1,000,000 25.0% 250,000.00 86.5% $.25
--------- ------ ---------- ------
Total 4,000,000 100.0% $289,000.00 100.0%
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LEGAL PROCEEDINGS
The Company is not a party to, nor is it aware of, any threatened litigation of
any nature.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of April 30,
1998, and as adjusted to give effect to the sale of the minimum and maximum
number of Shares being offered hereby and the application of the estimated net
proceeds therefrom:
Minimum - 200,000 Shares
OUTSTANDING As
ADJUSTED
Shareholders' equity
Preferred Stock, $.01 par value,
5,000,000 shares authorized, none
issued; Common Stock, $.01 par
value, 25,000,000 shares
authorized, 3,000,000 shares issued,
3,200,000 as adjusted $ 30,000 $32,000
Capital in excess of par value(1) $ 9,000 $12,000
Deficit accumulated during
development stage $ - $ -
Shareholders' receivable(3) $(24,675) $44,000
--------- -------
Total shareholders' equity $ 14,325 $44,000
Maximum - 1,000,000 Shares
OUTSTANDING As
ADJUSTED
Shareholders' equity
Preferred Stock, $.01 par value,
5,000,000 shares authorized,
none issued; Common Stock, $.01
par value, 25,000,000 shares
authorized, 3,000,000 shares
issued, 4,000,000 as adjusted $ 30,000 $ 40,000
Capital in excess of par value(2) $ 9,000 $184,000
Deficit accumulated during
development stage $ - $ -
Shareholders' receivable(3) $(24,675) $224,000
--------- --------
Total Shareholders' equity $ 14,325 $224,000
- - ------------------------------------
(1) Net of underwriting discounts and commissions of $5,000 and expenses of
the offering estimated at $40,000.
(2) Net of underwriting discounts and commissions of $25,000 and expenses of
the offering estimated at $40,000.
(3) Assumes shareholders' receivable is paid prior to consummation of
offering.
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<PAGE>
MANAGEMENT
DIRECTORS AND OFFICERS
NAME AGE TITLE
- - ---- --- -----
John M. O'Keefe 55 President, Director
Vicki J. Lavache 51 Secretary/Treasurer, Director
Mr. O'Keefe serves as chief executive officer of Merit First, Inc., an
investment banking firm in Tequesta, Florida which he formed in June 1996, that
specializes in advising development stage enterprises concerning finance. Prior
to that, he served as chief financial officer of Eutro Group Holding Inc., a
publicly-traded company located in Jupiter, Florida in the medical diagnostic
business, since 1993. Earlier in his career, Mr. O'Keefe sold life and health
insurance and worked as a bank loan officer. He spent four years in the U.S.
Navy after graduating from Fordham University in New York in 1964.
Ms. Lavache serves as secretary/treasurer of Merit First. Previously, she served
as Mr. O'Keefe's assistant at Eutro Group Holding. From 1986 through 1995 she
owned and operated Executive Line Business Services Inc. in Jupiter, Florida, a
provider of secretarial, bookkeeping and other business services.
The directors of the Company hold office until the next annual meeting of the
shareholders and until their successors have been elected and qualified.
The directors receive no compensation for serving as such, other than
reimbursement of reasonable expenses incurred in attending meetings. Officers
are appointed by the Board of Directors and serve at the discretion of the
Board. Messrs. O'Keefe and Lavache, the current executive officers of the
Company, intend to devote approximately 50% of their time to the affairs of the
Company.
There are no agreements or understandings for any officer or director to resign
at the request of another person and neither of the officers or directors is
acting on behalf of or will act at the direction of any other person.
EXECUTIVE COMPENSATION
No compensation has been paid to any officers or directors since inception. The
Company does not expect to pay any direct or indirect compensation to its
officers and directors except for reimbursement for reasonable out-of-pocket
expenses. There are no understandings or arrangements otherwise relating to
compen-
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<PAGE>
sation. Management anticipates that shares of the Company's authorized but
unissued Common Stock may be utilized in connection with a business acquisition
or combination and not as compensation to the Company's management, promoters,
or their affiliates or associates. See "Use of Proceeds", "Management -
Conflicts of Interest" and "Certain Transactions".
CONFLICTS OF INTEREST
The proposed business of the Company raises potential conflicts of interest
between the Company and its officers and directors. The Company has been formed
for the purpose of locating suitable business opportunities in which to
participate. Each member of management will be devoting not more than half of
his or her time to the Company and is engaged in various other business
activities. From time to time, in the course of such activities they may become
aware of investment and business opportunities and may be faced with the issue
of whether to involve the Company in such transactions.
Management of the Company is required by the Company's By-Laws to bring business
opportunities to the Company insofar as they relate to business opportunities in
which the Company has expressed an interest. Because the business of the Company
is to locate a suitable business venture, management is required to bring such
business opportunities to the Company. Potential conflicts may arise if a member
of management does not disclose such potential business opportunities.
It is possible that management may organize other "blank check" companies in the
future and offer their securities to the public. Management may have conflicts
in the event that another "blank check" company associated with management is
actively seeking the acquisition of properties and businesses that are identical
or similar to those that the Company may seek, should the Company complete this
offering. A conflict will not be present between the Company and another
affiliated "blank check" company if, before the Company begins seeking
acquisitions, such other "blank check" company (i) enters into an understanding,
arrangement or contractual commitment to participate in, or acquire, any
business or property, and (ii) ceases its search for additional properties or
businesses identical or similar to those the Company may seek. Conflicts also
may not be present to the extent that potential business opportunities are
appropriate for the Company but not for other affiliated "blank check" companies
(or vice versa), because of such factors as the difference in working capital
available. If, however, at any time the Company and any other entities
affiliated with management are simultaneously seeking business opportunities,
management may face the conflict of whether to submit a potential business
acquisition to the Company or to such other entities. In the event that an
oppor-
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<PAGE>
tunity is appropriate to both the Company and another affiliated "blank check"
entity, management intends first to offer such opportunity to that entity that
first closed on the sale of its securities.
The Company will not invest the proceeds of this blank check offering in any
entity affiliated with management without the approval of shareholders holding a
majority of the Company's Shares not owned by the Company's officers and
directors. Further, and in any event, the Company must comply with the
reconfirmation offering requirements of Rule 419. The Company has established no
other guidelines or procedures for resolving potential conflicts. Failure by
management to resolve conflicts of interest in favor of the Company may result
in the liability of management to the Company. Management has and will continue
to have an affirmative obligation to disclose conflicts of interest to the
Company' Board of Directors or shareholders.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of the date hereof and as adjusted
to reflect the sale of the Shares offered hereby, based on information obtained
from the persons named below, with respect to the beneficial ownership of shares
of Common Stock by (i) each person known by the Company to be the owner of more
than 5% of the outstanding shares of Common Stock, (ii) each director, and (iii)
officers and directors as a group:
Amount and Approximate
PERCENTAGE OF OUTSTANDING SHARES
Beneficial Before After
SHAREHOLDER OWNERSHIP OFFERING OFFERING(2)
John M. O'Keefe(1) 1,650,000 55% 41.25%
8671 SE Somerset Island Way
Jupiter, Florida 33458
Vicki J. Lavache(1) 1,350,000 45% 33.75%
1510 Seabrook Road
Jupiter, Florida 33469
Officers and directors 3,000,000 100% 75.00%
as a group (2 persons)
(1) An officer and director
(2) Assumes all Shares offered are sold.
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Unless otherwise noted, the persons named in the table have sole voting and
investment power with respect to all Shares beneficially owned by them. Neither
person named in the table is acting as nominee for any persons or is otherwise
under the control of any person or group of persons.
Messrs. O'Keefe and Lavache may be deemed to be "promoters" and
"parents" of the Company, as such terms are defined under the
federal securities laws.
DESCRIPTION OF SECURITIES
GENERAL
The Company is authorized to issue 25,000,000 shares of Common Stock, par value
$.01 per share. Prior to this offering, 3,000,000 shares of Common Stock were
outstanding, held of record by two persons. The Company is authorized to issue
5,000,000 shares of Preferred Stock, par value $.01 per share, none of which is
outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters to be voted on by shareholders. There is no cumulative
voting with respect to the election of directors, with the result that the
holders of more than 50% of the Shares voted for the election of directors can
elect all of the directors. The holders of Common Stock are entitled to receive
dividends when, as and if declared by the Board of Directors out of funds
legally available therefor. In the event of liquidation, dissolution or winding
up of the Company, the holders of Common Stock are entitled to share ratably in
all assets remaining available for distribution to them after payment of
liabilities and after provision has been made for each class of stock, if any,
having preference over the Common Stock. Holders of shares of Common Stock, as
such, have no conversion, preemptive or other subscription rights, and, except
as noted herein, there are no redemption provisions applicable to the Common
Stock. All of the outstanding shares of Common Stock are, and the Shares when
issued and paid for as set forth in this prospectus, will be, fully paid and
nonassessable.
PREFERRED STOCK
The Board of Directors of the Company is authorized (without any further action
by the shareholders) to issue Preferred Stock in one or more series and to fix
the voting rights, liquidation preferences, dividend rates, conversion rights,
redemption rights and terms, including sinking fund provisions, and certain
other rights and preferences. Satisfaction of any dividend preferences
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<PAGE>
of outstanding Preferred Stock would reduce the amount of funds available for
the payment of dividends, if any, on the Common Stock. Also, holders of the
Preferred Stock would normally be entitled to receive a preference payment in
the event of any liquidation, dissolution or winding up of the Company before
any payment is made to holders of Common Stock. In addition, under certain
circumstances, the issuance of Preferred Stock may render more difficult or tend
to discourage a merger, tender offer or proxy contest, the assumption of control
by a holder of a large block of the Company's securities, or the removal of
incumbent management. The Board of Directors of the Company, without shareholder
approval, may issue Preferred Stock with dividend, liquidation, redemption,
voting and conversion rights which could adversely affect the holders of Common
Stock.
DIVIDENDS
The Company has not paid any dividends on its Common Stock to date and does not
presently intend to pay cash dividends prior to the consummation of a Business
Combination. The payment of cash dividends in the future, if any, will be
contingent upon the Company's revenues and earnings, if any, capital
requirements and general financial condition subsequent to consummation of a
Business Combination. The payment of any dividends subsequent to a Business
Combination will be within the discretion of the Company's then Board of
Directors. It is the present intention of the Board of Directors to retain all
earnings, if any, for use in the Company's business operations and, accordingly,
the Board does not anticipate paying any cash dividends in the foreseeable
future.
TRANSFER AGENT
After completion of this offering, the transfer agent for the Company's Common
Stock will be Florida Atlantic Stock Transfer, Inc., 5701 North Pine Island Rd.
#310A, Tamarac, Florida 33321. Currently the Company is acting as its own
transfer agent.
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the sale of the maximum amount of Shares offered in this
offering, the Company will have 4,000,000 Shares outstanding. Of these, the
1,000,000 Shares sold in this offering will be freely tradeable without
restriction or further registration under the Securities Act, except for any
Shares purchased by an "affiliate" of the Company (in general, a person who has
a control relationship with the Company) which will be subject to the
limitations of Rule 144 promulgated by the S.E.C. under the Securities Act. All
of the remaining 3,000,000 shares are "restricted securities," as that term is
defined under Rule
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144, in that such Shares were issued in private transactions not involving a
public offering.
In general, under Rule 144 as currently in effect, subject to the satisfaction
of certain other conditions, a person, including an affiliate of the Company (or
persons whose Shares are aggregated), who has owned restricted shares
beneficially for at least one year, is entitled to sell, within any three-month
period, a number of Shares that does not exceed the greater of 1% of the total
number of outstanding Shares of the same class, or the average weekly trading
volume during the four calendar weeks preceding the sale. A person who has not
been an affiliate of the Company for at least the three months immediately
preceding the sale and who has beneficially owned Shares for at least two years
is entitled to sell such Shares under Rule 144 without regard to any of the
limitations described above.
Prior to this offering, there has been no market for the Shares, and no
prediction can be made as to the effect, if any, that market sales of restricted
shares or the availability of such restricted shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of Common Stock may be sold in the public market may
adversely affect the price for the sale of the Company's Shares in any trading
market which may develop.
INDEMNIFICATION
The Company's Articles of Incorporation and Florida law contain provisions
relating to the indemnification of officers and directors. Generally, they
provide that the Company may indemnify any person who was or is a party to any
threatened, pending, or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except for an action by or in right
of the Company, by reason of the fact that he is or was a director, officer,
employee or agent of the Company. It must be shown that he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the best
interests of the Company. Generally, no indemnification may be made where the
person has been determined to be negligent or guilty of misconduct in the
performance of his duty to the Company.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons sons controlling the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
informed that in the opinion of the S.E.C. such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer or controlling per-
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son of the Company in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
PROPOSED BUSINESS
INTRODUCTION
The Company was formed in January 1998 to effect a merger, exchange of capital
stock, asset acquisition or other similar business combination (a "Business
Combination") with an operating business (a "Target") which the Company believes
has significant growth potential. The Company will not engage in any substantive
commercial business immediately following this offering and for an indefinite
period of time following this offering. The Company has no plan, proposal,
agreement, understanding or arrangement to acquire or merge with any specific
business or entity and the Company has not identified any specific business or
entity for investigation and evaluation. The Company intends to utilize cash (to
be derived from the proceeds of this offering), equity, debt or a combination
thereof in effecting a Business Combination. It is likely that the Company will
have the ability to effect only a single Business Combination. The Company may
effect a Business Combination with a Target which may be financially unstable or
in its early stage of development or growth.
"BLANK CHECK" OFFERING
As a result of management's broad discretion with respect to the specific
application of the net proceeds of this offering, this offering can be
characterized as a "blank check" offering. Although substantially all of the net
proceeds of this offering are intended to be generally applied toward effecting
a Business Combination, such proceeds are not otherwise being designated for any
more specific purposes. Accordingly, prospective investors will invest in the
Company without an opportunity to evaluate the specific merits or risks of any
one or more Business Combinations. A Business Combination may involve the
acquisition of, or merger with, an entity which does not need substantial
additional capital but which desires to establish public trading status, while
avoiding what it may deem to be adverse consequences of undertaking a public
offering itself, such as time delays, significant expense, loss of voting
control and compliance with various federal and state securities laws.
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None of the Company's officers, directors, promoters, their affiliates or
associates has had any preliminary contact or discussions with any
representative or the owner of any business or entity regarding the possibility
of an acquisition or merger transaction contemplated hereby. While management
will have sole discretion to determine which businesses, if any, are intended to
be acquired, as well as the intended terms of any acquisition, investors in this
blank check offering will have the opportunity to evaluate the merits and risks
of an acquisition and be entitled to make an election as to whether they desire
to remain investors in the Company. An acquisition will only be consummated if
investors representing 80% of the maximum offering proceeds reconfirm their
investment. Management has no present intention of (a) considering a Business
Combination with entities owned or controlled by affiliates or associates of the
Company (a "related party transaction"), (b) creating subsidiary entities with a
view to distributing their securities to the shareholders of the Company, or (c)
selling any securities owned or controlled by affiliates or associates of the
Company in connection with any Business Combination transaction without
affording all shareholders a similar opportunity. In the event management
contemplates a related party transaction it will obtain an independent appraisal
of the value of the business or assets to be acquired and no transaction will be
structured unless it is at a price which is lesser or equal to the value
determined by the independent appraisal. Such a related party transaction is not
an arms-length tranaction because management would be on both sides of the
transaction and may have financial interests which are adverse to the
shareholders of the Company. Such a situation creates a potential for
management's fiduciary duties to the shareholders of the Company to be
compromised and the interests of the shareholders to be affected adversely. See
"Risk Factors". If management's fiduciary duties are compromised, any remedy
available to shareholders under state corporate law will most likely be
prohibitively expensive and time consuming.
To date, the Company has not selected any particular industry or any Target in
which to concentrate its Business Combination efforts. Accordingly, there is no
current basis for prospective investors in this offering to evaluate the
possible merits or risks of a Target or the particular industry in which the
Company may ultimately operate. However, in connection with seeking shareholder
approval of a Business Combination, the Company, as a result of its intention to
register its Common Stock under the Exchange Act and thereby become subject to
the proxy solicitation rules contained therein, intends to furnish its
shareholders with proxy solicitation materials prepared in accordance with the
Exchange Act which, among other matters, will include a description of the
operations of the Target candidate and audited historical financial statements
thereof. To the extent the Company effects a Business Combination with a
financially unstable entity
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or an entity in its early stage of development or growth (including entities
without established records of sales or earnings), the Company will become
subject to numerous risks inherent in the business and operations of financially
unstable and early stage or potential emerging growth entities. In addition, to
the extent that the Company effects a Business Combination with an entity in an
industry characterized by a high level of risk, the Company will become subject
to the currently unascertainable risks of that industry. An extremely high level
of risk frequently characterizes certain industries which experience rapid
growth. Although management will endeavor to evaluate the risks inherent in a
particular industry or Target, there can be no assurance that the Company will
properly ascertain or assess all significant risk factors.
The Company may, under certain circumstances, seek to effect Business
Combinations with more than one Target although it is likely that the Company
will have the ability to effect only a single Business Combination. Accordingly,
the prospects for the Company's success will be entirely dependent upon the
future performance of a single business. Unlike certain entities which have the
resources to consummate several Business Combinations of entities operating in
multiple industries or multiple areas of a single industry, it is highly likely
that the Company will not have the resources to diversify its operations or
benefit from the possible spreading of risks or offsetting of losses. The
Company's probable lack of diversification may subject the Company to numerous
economic, competitive and regulatory developments, any or all of which may have
a substantial adverse impact upon the particular industry in which the Company
may operate subsequent to a Business Combination. In addition, by consummating a
Business Combination with only a single entity, the prospects for the Company's
success may become dependent upon the development or market acceptance of a
single or limited number of products, processes or services. Accordingly,
notwithstanding the possibility of capital investment in and management
assistance to the Target by the Company, there can be no assurance that the
Target will prove to be commercially viable. Prior to the consummation of a
Business Combination, the Company has no intention to purchase or acquire a
minority interest in any entity.
The investors in this offering will, in all likelihood, neither receive nor
otherwise have the opportunity to evaluate any financial or other information
which will be made available to the Company in connection with selecting a
potential Business Combination until after the Company has entered into an
agreement to effectuate a Business Combination. Such agreement to effectuate a
Business Combination, however, will be subject to shareholder approval as
discussed elsewhere herein. As a result, investors in this offering will be
almost entirely dependent on the judg-
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ment of management in connection with the selection and ultimate consummation of
a Business Combination. In connection with seeking shareholder approval of a
Business Combination, the Company intends to furnish its shareholders with proxy
solicitation materials prepared in accordance with the Exchange Act which, among
other matters, will include a description of the operations of the Target
candidate and audited historical financial statements thereof.
While the Company's ability successfully to effect a Business Combination will
be dependent upon Messrs. O'Keefe and Lavache, the future role of such personnel
in the Target cannot presently be stated with any certainty. While it is
possible that certain of the Company's key personnel will remain associated in
some capacities with the Company following a Business Combination, it is likely
that such key personnel will no longer be involved in the Company subsequent
thereto. Moreover, such personnel will have little if any experience or
knowledge relating to the operations of a particular Target. Furthermore,
although the Company intends closely to scrutinize the management of a
prospective Target in connection with evaluating the desirability of effecting a
Business Combination, there can be no assurance that the Company's assessment of
such management will prove to be correct, especially in light of the
inexperience of current key personnel of the Company in evaluating businesses.
Furthermore, there can be no assurance that such future management will have the
necessary skills, qualifications or abilities to manage a public company. The
Company may also seek to recruit additional managers to supplement the incumbent
management of the Target. There can be no assurance that the Company will have
the ability to recruit additional managers, or that such additional managers
will have the requisite skill, knowledge or experience necessary or desirable to
enhance the incumbent management.
Management anticipates that the selection of a Target will be complex and risky
because of competition for such business opportunities among all segments of the
financial community. The nature of the Company's search for a Target requires
maximum flexibility inasmuch as the Company will be required to consider various
factors and divergent circumstances which may preclude meaningful direct
comparison among the various business enterprises, products or services
investigated. Investors should recognize that the possible lack of
diversification among the Company's acquisitions may not permit the Company to
offset potential losses from one venture against profits from another. This
should be considered a negative factor affecting any decision to purchase the
Shares. Management of the Company will have virtually unrestricted flexibility
in identifying and selecting a prospective Target. In addition, in evaluating a
prospective Target, management will consider, among other factors, the
following:
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- costs associated with effecting the Business Combination;
- equity interest in and possible management participation in the Target;
- growth potential of the Target and the industry in which it operates;
- experience and skill of management and availablity of additional
personnel of the Target;
- capital requirements of the Target;
- competitive position of the Target;
- stage of development of the product, process or service of the Target;
- degree of current or potential market acceptance of the product,
process or service of the Target;
- possible proprietary features and possible other protection of the
product, process or service of the Target; and
- regulatory environment of the industry in which the Target operates.
The foregoing criteria are not intended to be exhaustive; any evaluation
relating to the merits of a particular Business Combination will be based, to
the extent relevant, on the above factors as well as other considerations deemed
relevant by management in connection with effecting a Business Combination
consistent with the Company's business objective. In connection with its
evaluation of a prospective Target, management anticipates that it will conduct
an extensive due diligence review which will encompass, among other things,
meetings with incumbent management and inspection of facilities, as well as
review of financial or other information which will be made available to the
Company.
The Company will consider the quality of the management of any Target candidate,
its operating results, the soundness of the service or product to be developed
or being developed, the effect of market and economic conditions and
governmental policies on the business and its products, the nature of its
competition, and the total projected required capital.
The time and costs required to select and evaluate a Target candidate (including
conducting a due diligence review) and to structure and consummate the Business
Combination (including negotiating relevant agreements and preparing requisite
documents for filing pursuant to applicable securities laws and state
corporation laws) cannot presently be ascertained with any degree of certainty.
Messrs. O'Keefe and Lavache, the current executive officers of the Company,
intend to devote approximately 50% of their respective time to the affairs of
the Company and, accordingly, consummation of a Business Combination may require
a greater period of time than if the Company's executive officers
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devoted their full time to the Company's affairs. Any costs incurred in
connection with the identification and evaluation of a prospective Target with
which a Business Combination is not ultimately consummated will result in a loss
to the Company and reduce the amount of capital available to complete a Business
Combination.
The Company anticipates that it will make contact with Target prospects
primarily through the efforts of its officers, who will meet personally with
Target candidate management and key personnel, visit and inspect facilities,
assets, products and services belonging to such prospects, and undertake such
further reasonable investigation as management deems appropriate, to the extent
of its limited financial resources. The Company anticipates that certain Target
candidates may be brought to its attention from various unaffiliated sources,
including securities broker-dealers, investment bankers, venture capitalists,
bankers, other members of the financial community, and affiliated sources. While
the Company does not presently anticipate engaging the services of professional
firms that specialize in business acquisitions on any formal basis, the Company
may engage such firms in the future, in which event the Company may pay a
finder's fee or other compensation. See "Management" and "Certain Transactions."
As part of the Company's investigation of prospective enterprises, products and
services, management intends to request that current owners of a prospective
Target provide, among other things, written materials regarding the current
owner's business, product or service, available market studies as well as the
assumptions upon which they are made, appropriate title documentation with
respect to the assets, products and services of the potential Target, detailed
written descriptions of any transactions between the potential Target and any of
its affiliates, copies of pleadings of material litigation, if any, copies of
material contracts and any and all other information deemed relevant.
Additionally, the Company may verify such information, if possible, by
interviewing competitors, certified public accountants and other persons in a
position to have independent knowledge regarding the product or service as well
as the financial condition of the potential Target.
As a general rule, federal and state tax laws and regulations have a significant
impact upon the structuring of business combinations. The Company will evaluate
the possible tax consequences of any prospective Business Combination and will
endeavor to structure the Business Combination so as to achieve the most
favorable tax treatment to the Company, the Target and their respective
shareholders. There can be no assurance that the IRS or appropriate state tax
authorities will ultimately assent to the Company's tax treatment of a
particular consummated Business Combination. To the extent the IRS or state tax
authorities
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ultimately prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to the Company, the Target
and their respective shareholders. Tax considerations as well as other relevant
factors will be evaluated in determining the precise structure of a particular
Business Combination, which could be effected through various forms of a merger,
consolidation or stock or asset acquisition.
The Company may utilize cash (derived from the proceeds of this offering),
equity, debt or a combination of these as consideration in effecting a Business
Combination. Although the Company has no commitments as of the date of this
prospectus to issue any Shares other than as described in this prospectus, the
Company will, in all likelihood, issue a substantial number of additional Shares
in connection with a Business Combination. To the extent that such additional
Shares are issued, dilution to the interests of the Company's shareholders will
occur. Additionally, if a substantial number of Shares is issued in connection
with a Business Combination, a change in control of the Company may occur.
If securities of the Company are issued as part of an acquisition, it cannot be
predicted whether such securities will be issued in reliance upon exemptions
from registration under applicable federal or state securities laws or will be
registered for public distribution. When registration of securities is required,
substantial cost may be incurred and time delays encountered. In addition, the
issuance of additional securities and their potential sale in any trading market
which may develop in the Company's securities, of which there is no assurance,
may depress the price of the Company's securities in any market which may
develop in the Company's securities. Additionally, such issuance of additional
securities of the Company would result in a decrease in the percentage ownership
of the Company of purchasers of the Shares being offered hereby.
The Company's operations may be limited by the Investment Company Act. Unless
the Company registers with the S.E.C. as an investment company, it will not,
among other things, be permitted to own investment securities, exclusive of
government securities and cash items, which have a value exceeding 40% of the
value of the Company's total assets on an unconsolidated basis. It is not
anticipated that the Company will have a policy restricting the type of
investments it may make. While the Company will attempt to conduct its
operations so as not to require registration under the Investment Company Act,
there can be no assurances that the Company will not be deemed to be subject to
the Investment Company Act.
There are currently no limitations relating to the Company's ability to borrow
funds to increase the amount of capital avail-
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able to the Company to effect a Business Combination or otherwise finance the
operations of the selected Target. The amount and nature of any borrowings by
the Company will depend on numerous considerations, including the Company's
capital requirements, the Company's perceived ability to meet debt service on
such borrowings and then prevailing conditions in the financial markets, as well
as general economic conditions. There can be no assurance that debt financing,
if required or otherwise sought, would be available on terms deemed to be
commercially acceptable and in the best interests of the Company. The inability
of the Company to borrow funds for an additional infusion of capital into a
Target may have material adverse effects on the Company's financial condition
and future prospects. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks traditionally
associated with incurring indebtedness, including the risks of interest rate
fluctuations and insufficiency of cash flow to pay principal and interest.
Furthermore, a Target may have already incurred debt financing and, therefore,
all the risks inherent thereto.
Because of the Company's small size, investors in the Company should carefully
consider the business constraints on its ability to raise additional capital
when needed. Until such time as any enterprise, product or service which the
Company acquires generates revenues sufficient to cover operating costs, it is
conceivable that the Company could find itself in a situation where it needs
additional funds in order to continue its operations. This need could arise at a
time when the Company is unable to borrow funds and/or when market acceptance
for the sale of additional shares of the Company's Common Stock does not exist.
In connection with the consummation of a Business Combination, the Company may
become obligated to pay fees to certain persons. No officers, directors or
current shareholders shall be paid any consulting fees or salaries for services
rendered by such persons in connection with a Business Combination. The Company
shall reimburse officers and directors for any accountable reasonable expenses
incurred in connection with activities on behalf of the Company. The Deposited
Funds (including any interest earned thereon) will not be used for salaries. No
funds (including any interest earned thereon) will be disbursed from the
Deposited Funds for reimbursement of expenses. Other than the foregoing, there
is no limit on the amount of such reimbursable expenses and there will be no
review of the reasonableness of such expenses by anyone other than the Board of
Directors, both of the members of which are officers. Subsequent to the
consummation of a Business Combination, to the extent current officers,
directors and/or shareholders of the Company provide services to the Company,
such persons may receive from the Company consulting fees and/or salaries. The
Company has no present intention to pay to anyone any consulting fees or
salaries. The Company is not aware
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of any plans, proposals, understandings or arrangements with respect to the sale
of any shares of Common Stock of the Company by any current shareholders.
Further, there are no plans, proposals, understandings or arrangements with
respect to the transfer by the Company to any of the current shareholders of any
funds, securities or other assets of the Company.
The Company expects to encounter intense competition from other entities having
a business objective similar to that of the Company. Many of these entities are
well established and have extensive experience in connection with identifying
and effecting Business Combinations directly or through affiliates. Many of
these competitors possess greater financial, technical, personnel and other
resources than the Company and there can be no assurance that the Company will
have the ability to compete successfully. Inasmuch as the Company may not have
the ability to compete effectively with its competitors in selecting a
prospective Target, the Company may be compelled to evaluate certain less
attractive prospects. There can be no assurance that such prospects will permit
the Company to meet its stated business objective.
In the event that the Company succeeds in effecting a Business Combination, the
Company will, in all likelihood, become subject to intense competition from
competitors of the Target. In particular, certain industries which experience
rapid growth frequently attract an increasingly larger number of competitors,
including competitors with increasingly greater financial, marketing, technical
and other resources than the initial competitors in the industry. The degree of
competition characterizing the industry of any prospective Target cannot
presently be ascertained. There can be no assurance that, subsequent to a
Business Combination, the Company will have the resources to compete
effectively, especially to the extent that the Target is in a high growth
industry.
This blank check offering is subject to Rule 419 under the Securities Act. As
such, any agreement to acquire a Target must provide that the fair market value
of the business or assets to be acquired represents at least 80% of the offering
proceeds, less underwriting commissions, if any, and expenses and dealer
allowances payable to non-affiliates. Once an acquisition agreement meeting the
above criteria has been executed, the Company must successfully complete a
reconfirmation offering. See "The Offering".
The Company has agreed that contemporaneous with the sale of the Shares it will
file an application with the S.E.C. to register its Common Stock under the
provisions of Section 12(g) of the Exchange Act, and that it will use it best
efforts to continue to maintain such registration for a minimum of two years
from the
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date of this prospectus. Such registration will require the Company to comply
with periodic reporting, proxy solicitations and certain other requirements of
the Exchange Act.
If the Company seeks shareholder approval of a Business Combination at such time
as the Company's securities are registered pursuant to Section 12 of the
Exchange Act, the Company's proxy solicitation materials required to be
transmitted to shareholders may be subject to prior review by the S.E.C.
Under the federal securities laws, public companies must furnish certain
information about significant acquisitions, which information may require
audited financial statements of an acquired entity with respect to one or more
fiscal years, depending upon the relative size of the acquisition. Consequently,
if a prospective Target did not have available and was unable reasonably to
obtain the requisite audited financial statements, the Company could, in the
event of consummation of a Business Combination with such entity, be precluded
from (i) any public financing of its own securities for a period of as long as
three years, as such financial statements would be required to undertake
registration of such securities for sale to the public; and (ii) registration of
its securities under the Exchange Act. Consequently, it is unlikely that the
Company would seek to consummate a Business Combination with such a Target. See
"Risk Factors."
The Company is currently not seeking listing of the Shares on NASDAQ. So long as
the Company has net tangible assets of $5,000,000 or less, transactions in the
Shares shall be subject to Rule 15g promulgated under the Exchange Act. Under
such rule, broker-dealers who recommend such securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with spouse)
must make a special written suitability determination for the purchaser and
receive the purchaser's written agreement to a transaction prior to sale.
Transactions are exempt from this rule if the market price of the Shares is at
least $5.00 per share. Rule 3a51-1 generally defines a penny stock to be any
equity security that has a market price of less than $5.00 per share, subject to
certain exemptions. Such exemptions include an equity security issued by an
issuer that has (i) net tangible assets of at least $2,000,000, if such issuer
has been in continuous operation for at least three years, (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous operation
for less than three years, or (iii) average revenue of at least $6,000,000 for
the preceding three years. Unless an exemption is available, Rule 15g requires
the delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated therewith.
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Because the Shares are subject to Rule 15g, broker-dealers may find it difficult
to effectuate customer transactions and/or trading activity in the Shares. Thus,
the market price, if any, may be depressed, and an investor may find it more
difficult to dispose of the Shares. Also, the market liquidity for the Company's
Shares could be adversely affected by limiting the ability of broker/dealers to
sell the Shares and the ability of investors in this offering to sell their
Shares in the secondary market.
Pursuant to an oral agreement with the President, the Company maintains
executive offices rent-free in approximately 1200 square feet of office space
located at 120 North U.S. Highway One, Tequesta, Florida 33469. The Company
considers this space to be adequate for its needs and has no preliminary
agreements or understandings with respect to office space in the future.
As of the date of this prospectus, the Company's employees consist of its two
executive officers, each of whom will devote approximately 50% of his working
time to the affairs of the Company.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION
The Company, a development stage entity, has neither engaged in any operations
nor generated any revenues to date. Its entire activity since its inception has
been to prepare for its proposed fund raising through an offering of equity
securities as contemplated herein.
The Company's expenses to date, all of which are attributable to its formation
and proposed fund raising are approximately $20,000.
Substantially all of the Company's working capital needs subsequent to this
offering will be attributable to the identification of a suitable Target, and
thereafter to effectuate a Business Combination with such Target. Such working
capital needs are expected to be satisfied from the net proceeds of this
offering. Although no assurances can be made, the Company believes it can
satisfy its cash requirements until a Business Combination is consummated with
10% of the net proceeds derived hereby. Because of the possible indefinite
period of time to consummate a Business Combination and the nature and cost of
the Company's expenses related to the Company's search and analysis of a Target,
there can be no assurances that the Company's cash requirements until a Business
Combination is consummated will be satisfied with 10% of the net proceeds of
this offering. Prior to the conclusion of this offering the Company currently
anticipates its expenses to be limited to accounting fees, legal fees,
telephone,
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mailing, filing fees, escrow agent fees and transfer agent fees.
See "Risk Factors."
CERTAIN TRANSACTIONS
On January 26, 1998, the Company issued 1,650,000 shares of its Common Stock to
John M. O'Keefe, the Company's President and a Director, and 1,350,000 shares to
Vicki J. Lavache, the Company's Secretary/Treasurer and a Director,
respectively, for cash and cash commitments aggregating $39,000.
Since inception, the Company, pursuant to a an oral agreement with the
President, has maintained at no cost to the Company its executive offices in
approximately 1200 square feet of office space located at 120 North U.S. Highway
One, Tequesta, Florida 33469.
On March 1, 1998, the Company issued a warrant to Mirkin & Woolf, P.A., counsel
to the Company, to purchase 150,000 Shares at $0.75 per share, exercisable
through February 29, 2000.
The Company shall not make any loans to any officers or directors following this
offering. Further, the Company shall not borrow funds for the purpose of making
payments to the Company's officers, directors, promoters, management or their
affiliates or associates.
THE OFFERING
The offering is being conducted directly by the Company without the use of a
professional underwriter.
The Company proposes to offer the Shares through its officers and directors and
selected broker-dealers who are members of the NASD and who agree to sell the
Shares in conformity with the NASD Rules of Fair Practice. Such selected
broker-dealers may receive as maximum compensation for sales hereunder a 10%
selling commission and a 3% non-accountable expense allowance. No selected
dealers have yet been identified by the Company. The Company will amend the
registration statement of which this prospectus is a part following its
effectiveness to identify a selected broker-dealer at such time as such
broker-dealer sells 5% or more of the Shares offered in this offering. A
broker-dealer that sells such amount of securities in this type of an offering
would be deemed an underwriter as defined in Section 2(11) of the Securities
Act. Prior to the involvement of any broker-dealer in the offering, the Company
must obtain a "no objection" position from the NASD regarding the contemplated
underwriting compensation and arrangements.
Prior to this offering, there has been no public market for the
51
<PAGE>
Shares. Consequently, the initial public offering price for the Shares has been
arbitrarily selected by the Company. No assurance can be given that a public
market for the Shares will develop after the close of the offering, or if a
public market in fact develops, that such public market will be sustained, or
that the Shares can be resold at any time at the offering or any other price.
See "Risk Factors -- No Assurance of Public Market; Arbitrary Determination of
Offering Price."
AVAILABILITY OF EXEMPTION
For purposes of compliance with certain state securities laws exemptions from
registration, this offering will be conducted using the guidelines of Regulation
D promulgated under the Securities Act, and various state securities
registration exemption requirements which provide that offers and sales of
securities that satisfy the terms and conditions thereof are deemed to be
transactions not involving an offering requiring registration of the securities.
The following is a summary of pertinent restrictions imposed by such regulations
upon the offer and sale of securities which render such offers and sales exempt
from registration:
- - - The securities may not be offered or sold by means of general advertising
or general solicitation except in state jurisdictions where they are
registered.
- - - The securities must be acquired for investment purposes only and for the
purchaser's own account. Restrictions on the transfer or resale of the
securities may be imposed under state securities laws.
PROSPECTIVE INVESTOR DOCUMENTATION
Prospective investors will be required to complete the following documentation
when they subscribe for Shares:
1) Investor Qualification Questionnaire
2) Purchaser Representative Questionnaire (if applicable)
3) Subscription Agreement
OFFERING CONDUCTED IN ACCORDANCE WITH RULE 419
The Company's offering is being conducted in accordance with S.E.C. Rule 419
which was adopted to strengthen the regulation of securities offerings by "blank
check" companies, which Congress found to have been common vehicles for fraud
and manipulation in the penny stock market. Accordingly, investors in the
offering will receive the substantive protection provided by Rule 419. Rule 419
requires that the securities to be issued and the funds
52
<PAGE>
received in a blank check offering be deposited and held in an escrow account
until an acquisition meeting specified criteria is completed. Before the
acquisition can be completed and before the Deposited Funds and Deposited
Securities can be released, the "blank check" company is required to update the
registration statement with a post-effective amendment; after the effective date
thereof, the Company is required to furnish investors with the prospectus
produced thereby containing information, including audited financial statements,
regarding the proposed acquisition candidate and its business. According to the
rule, the investors must have no fewer than 20 and no more than 45 days from the
effective date of the post-effective amendment to decide to remain investors or
require the return of their investment funds. Any investor not making a decision
within said 45 day period is automatically to receive a return of his investment
funds. Unless a sufficient number of investors elect to remain investors, all of
the Deposited Funds in the escrow account must be returned to all investors and
none of the Deposited Securities will be issued. Rule 419 further provides that
if the "blank check" company does not complete an acquisition meeting specified
criteria within 18 months of the date of this prospectus, all of the Deposited
Funds in the escrow account must be returned to investors.
LEGAL MATTERS
Mirkin & Woolf, P.A., West Palm Beach, Florida, has rendered an opinion (which
is filed as an exhibit to the registration statement of which this prospectus is
a part) to the effect that the Shares, when issued and paid for as described
herein, will constitute legally issued securities of the Company, fully paid and
non-assessable. Mirkin & Woolf, P.A. holds a warrant to purchase 150,000 Shares.
See "Certain Transactions".
EXPERTS
The financial statements included in this prospectus have been audited by
Sweeney, Gates & Co., independent public accountants, as indicated in its report
with respect thereto, and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing in giving said report. Reference
is made to the opinion in said report that the Company's ability to commence
operations is dependent, among other factors, upon the success of this offering
or other fund raising.
AVAILABLE INFORMATION
The Company has filed with the S.E.C. a registration statement on Form SB-2 (the
"Registration Statement") under the Securities Act with respect to the Shares.
This prospectus does not contain all of the information set forth in the
Registration Statement, cer-
53
<PAGE>
tain parts of which are omitted in accordance with the rules and regulations of
the S.E.C. For further information with respect to the Company and this
offering, reference is made to the Registration Statement, including the
exhibits filed therewith, which may be examined at the S.E.C.'s principal
office, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, the New York
Regional Office of the S.E.C. at 7 World Trade Center, New York, New York 10007
and the Chicago Regional Office of the S.E.C., Northwest Atrium, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, where copies may be
obtained upon payment of the fees prescribed by the S.E.C.
Descriptions contained in this prospectus as to the contents of any contract or
other document filed as an exhibit to the Registration Statement are not
necessarily complete and each such description is qualified by reference to such
contract or document. References in this prospectus to various documents,
statutes, regulations and agreements do not purport to be complete and are
qualified in their entirety by reference to such documents, statutes,
regulations and agreements. The Company will provide without charge to each
person who receives a prospectus, upon written request of such person, a copy of
any of the information that is incorporated by reference in the prospectus.
The S.E.C. maintains a world wide web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically with the S.E.C. The S.E.C.'s address on the Web is
http://www.sec.gov.
54
<PAGE>
FINANCIAL STATEMENTS
INDEX
Independent Auditors' Report F-2
Balance Sheet - April 30, 1998 F-3
Statement of Operations - January 26, 1998 to April 30, 1998 F-4
Statement of Changes in Shareholders' Equity - January 26,
1998 to April 30, 1998 F-5
Statement of Cash Flows - January 26, 1998 to April 30, 1998 F-6
Notes to Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Banner Holding Corp. (A Development Stage Company)
We have audited the accompanying balance sheet of Banner Holding Corp. (a
development stage company) as of April 30, 1998, and the related statements of
operations, stockholders' equity and cash flows for the period from January 26,
1998 (date of inception) to April 30, 1998. The financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements based upon our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of Banner Holding Corp. (a
development stage company) as of April 30, 1998, and the results of its
operations and its cash flows for the period from January 26, 1998 (date of
inception) to April 30, 1998 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has minimal
capital resources presently available to meet obligations, which normally can be
expected to be incurred by similar companies, and with which to carry out its
planned activities. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to this
matter are discussed in Note 2. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
Sweeney, Gates & Co.
Fort Lauderdale, Florida
May 5, 1998
F-2
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
APRIL 30, 1998
ASSETS
Current assets:
Cash ......................................................... $ 1,000
--------
Total current assets ................................... 1,000
Other assets:
Deferred offering costs ........................................ 13,325
$ 14,325
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................. $ 4,853
--------
Total current liabilities ................................. 4,853
Stockholders' equity:
Preferred stock, par value $.01;5,000,000
shares authorized;
No shares issued or outstanding .............................. --
Common stock, par value $.01;25,000,000
shares authorized
3,000,000 shares issued and outstanding ...................... 30,000
Capital in excess of par value ............................... 9,000
Deficit accumulated during the development
stage ........................................................ --
--------
39,000
Less stockholders' receivable ............................ (29,528)
--------
Total stockholders' equity ............................... 9,472
--------
$ 14,325
========
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
JANUARY 26, 1998 (DATE OF INCEPTION) TO APRIL 30, 1998
Sales $ -
Expenses: -
Net income $ -
=======
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
JANUARY 26, 1998 (DATE OF INCEPTION) TO APRIL 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Deficit
Accumulated
Capital In during the
Common Excess of Development Stockholder
SHARES STOCK PAR VALUE STAGE RECEIVABLE TOTAL
Issuance of
founders' stock ......... 3,000,000 $30,000 $9,000 $ $(29,528) $9,472
Net income (loss) ....... -- -- -- -- -- --
--------- ------- ------ ------------ -------- ------
Balance
April 30, 1998 .......... 3,000,000 $30,000 $9,000 $ -- $(29,528) $9,472
--------- ------- ====== ============ ======== ======
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
JANUARY 26, 1998 (DATE OF INCEPTION) TO APRIL 30, 1998
Net cash used for operating activities:
Net income $ -
-------
Adjustment to reconcile net income to net
cash provided by operating activities:
Changes in assets and liabilities:
Increase in accounts payable 4,853
Total adjustments 4,853
Net cash provided by operating activities 4,853
-------
Cash flows from financing activities:
Proceeds from issuance of stock
9,472
Deferred offering costs (13,325)
Net cash provided by financing activities 3,853
-------
Cash, ending $ 1,000
=======
Additional information:
Amount of interest paid during the year $ -
=======
Amount of income taxes paid during the year $ -
=======
The accompanying notes are an integral part of these financial statements
F-6
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Banner Holding Corp., (the "Company"), was incorporated in the
State of Florida on January 26, 1998. It has been formed to consummate a Blank
Check Offering (See Note 5).
The Company is in the development stage and its efforts through April 30, 1998,
have been principally devoted to organizational activities and raising initial
capital. The Company intends to seek, investigate and if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons who or firms which desire to employ the Company's funds in their
business or seek the perceived advantages of a public held corporation.
DEFERRED OFFERING COSTS - Amounts paid or accrued for costs related to the
anticipated public offering will be recorded as a reduction of the proceeds when
the offering is completed. If the offering is not completed, the costs will be
expensed. To date these costs have been legal and auditing services.
INCOME TAXES - The Company accounts for income taxes on an asset and liability
approach to financial accounting. Deferred income tax assets and liabilities are
computed annually for the difference between the financial statement and tax
basis of assets and liabilities that will result in taxable or deductible
amounts in the future, based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities. The Company has made no provision for
taxes because there has not been any profit or losses since its inception.
ESTIMATES - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
EARNING PER SHARE - The Company has adopted Financial Accounting Standards No.
128, "Earnings per Share" ("FAS 128"), effective
F-7
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 1, 1997. FAS 128 requires presentation of earnings or loss per share on
basic and diluted earnings per share. The Company does not have any potentially
dilutive shares outstan-ing. Earnings or loss per share is computed by dividing
net income by the weighted average number of shares outstanding during the
period. Since no earnings or losses have occurred to date, no earnings or loss
per share is presented.
2. GOING CONCERN CONTINGENCY
The Company has minimal capital available to meet future obligations and to
carry out its planned operations. These factors raise substantial doubt about
the Company's ability to continue as a going concern.
In order to begin any significant operations, the Company will have to pursue
other sources of capital, such as raising equity as discussed in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
3. RELATED PARTY TRANSACTIONS
The Company shares facilities and certain other resources free of charge with a
Company owned by the President and principal shareholders.
4. STOCKHOLDER RECEIVABLE
The Company has issued 3,000,000 shares of stock to its founding stockholders.
The Company has received a commitment for a total of $39,000 in capital
contributions for these shares. These funds will be used to finance the expenses
of this offering (see Note 5). As of April 30, 1998, the founders have paid
offering expenses of $8,472 and contributed $1,000 in cash and owe the remaining
$29,528, which has been offset against stockholders' equity. The receivable is
unsecured and does not bear interest.
5. PROPOSED PUBLIC OFFERING OF COMMON STOCK
The Company is preparing to commence an offering which calls for a minimum of
200,000 or a maximum of 1,000,000 common shares to
F-8
<PAGE>
BANNER HOLDING CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
be sold at $.25 per share on a "best efforts" basis. All proc-eds from
subscriptions for shares are required to be paid to an escrow account maintained
by an escrow agent. The securities to be issued to investors must also be
deposited into this escrow account.
If the minimum number of shares are not sold, the full amount will be refunded
with interest. If the public offering has raised in excess of the minimum
amount, the funds and securities may not be released until an acceptable
acquisition has been made and a sufficient number of investors reconfirm their
investment. A new prospectus, which describes the acquisition candidate and it
business and includes
audited financial statements must be delivered to all investors. The Company
must return the pro rata portion of the deposited funds to any investor who does
not elect to remain an investor. Unless a sufficient number of investors elect
to remain investors, all investors will be entitled to the refunds and none of
the escrowed securties will be issued to investors. In the event an acquisition
is not consummated within 18 months of the effective date, the escrowed funds
will be returned on a pro rata basis to all investors.
F-9
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 607.0850(1) of the Florida Business Corporation Act, as amended (the
"Florida Act"), provides that, in general, a Florida corporation may indemnify
any person who was or is a party to any proceeding (other than an action by, or
in the right of, the corporation), by reason of the fact that he is or was a
director, offi cer, 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 liability incurred in connection with such proceeding, including any
appeal thereof, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal action or proceeding, he had no reasonable cause to
believe his conduct was unlawful.
In the case of proceedings by or in the right of the corporation, Section
607.0850(2) of the Florida Act provides that, in general, a corporation may
indemnify any person who was or is a party to any such proceeding by reason of
the fact that he is or was a director, officer, employee or agent of the
corporation against expenses and amounts paid in settlement actually and
reasonably incurred in con nection with the defense or settlement of such
proceeding, including any appeal thereof, provided that such per-son acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation, except that no in demnification shall be
made in respect of any claims as to which such person is adjudged liable unless
a court of competent juris diction determines upon application that such person
is fairly and reasonably entitled to indemnity.
Section 607.0850 further provides that to the extent a director, officer,
employee or agent of a corporation is successful on the merits or in the defense
of any proceeding referred to in subsec tions (1) or (2) of Section 607.0850 or
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses actually and reasonably incurred by him in connection
therewith; that the corporation may advance such expenses; that indemnification
provided for by Section 607.0850 shall not be deemed exclusive of any other
rights to which the indemnified party may be entitled; and that the corporation
may purchase and maintain insurance on behalf of such person against any
liability asserted against him or 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 liabilities under such Section 607.0850.
II-1
<PAGE>
Section 607.0850 of the Florida Act further provides that, in gener al,
indemnification or advancement of expenses shall not be made to or on behalf of
any director, officer, employee or agent if a judg ment or other final
adjudication establishes that such person's ac tions, or omissions to act, were
material to the cause of action so adjudicated and constitute: (i) a violation
of the criminal law, unless such person had reasonable cause to believe his
conduct was lawful or had no reasonable cause to believe his conduct was unlaw
ful; (ii) a transaction from which such person derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which the
director has voted for or assented to a distribution made in violation of the
Florida Act or the corporation's articles of incorporation; or (iv) willful
misconduct or a conscious disregard for the best interests of the corporation in
a proceeding by or in the right of the corporation to procure a judgment in
favor or in a proceeding by or in the right of a shareholder.
The Company's Articles of Incorporation and Bylaws provide that the Company
shall indemnify its directors and officers to the fullest extent permitted by
Florida law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
S.E.C. Registration Fee $ 100
Blue Sky Fees and Expenses 1,900
Legal Fees and Expenses 25,000
Printing Expenses 7,500
Accounting Fees and Expenses 3,000
Transfer Agent Fees and Expenses 1,000
Miscellaneous 1,500
Total $40,000
=========
The foregoing expenses, except for the S.E.C. registration fee, are
estimated.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following sets forth information relating to all prev-ious sales
of Common Stock by the Company, which sales were not registered under the
Securities Act.
- - - -
Date of
Sale Purchaser Shares Consideration
1/26/98 John M. O'Keefe 1,650,000 $21,450
1/26/98 Vicki J. Lavache 1,350,000 $17,550
--------- -------
Total 3,000,000 $39,000
II-2
<PAGE>
With respect to the issuance of the aforementioned Shares, the Company relied on
the exemptions from registration provided by Section 4(2) of the Securities Act.
No advertising or general solicitation was employed in offering the Shares. The
Shares were offered for investment only and not for the purpose of resale or
distribution. All of the Shares issued to the aforementioned persons bear
restrictive legends preventing their transfer except in accordance with the
Securities Act and the regulations promulgated thereunder. In addition, stop
transfer instructions pertaining to these Shares will be lodged with the
Company's transfer agent.
ITEM 27. EXHIBITS.
The following exhibits are filed with this Registration Statement:
Exhibit Exhibit Name Page Number
Number
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Common Stock specimen
4.2 Escrow Agreement*
5 Opinion regarding legality*
23.1 Consent of counsel(1)*
23.2 Consent of accountants
27 Financial Data Schedule
- - -----------------------------
(1)The consent of counsel is contained in the opinion regarding legality.
- - -----------------------------
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
- - ----------------------
*to be filed by amendment
II-3
<PAGE>
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the Offering.
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
S.E.C. such supplementary and periodic information, documents, and reports as
may be prescribed by any rule or regulation of the S.E.C. heretofore or
hereafter duly adopted pursuant to authority conferred to that section.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers, and controlling persons of the Company
pursuant to its Articles of Incorporation or provisions of Florida law, or
otherwise, the Company has been advised that in the opinion of the S.E.C. such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Company will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
For purposes of determining any liability under the Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall be
deemed to be part of this registration statement as of the time the Commission
declared it effective.
II-4
<PAGE>
For the purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering of those securities.
II-5
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of Tequesta,
State of Florida, on June 12, 1998.
BANNER HOLDING CORP.
By: /s/ JOHN M. O'KEEFE
John M. O'Keefe, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ JOHN M. O'KEEFE President (principal June 12, 1998
John M. O'Keefe executive officer) and
Director
/s/ VICKI J. LAVACHE Treasurer (principal June 12, 1998
Vicki J. Lavache financial officer),
Secretary and Director
II-6
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
BANNER HOLDING CORP.
The undersigned subscriber to these Articles of Incorporation, a
natural person competent to contract, hereby forms a corporation under the laws
of the State of Florida.
ARTICLE I. NAME
The name of the Corporation shall be Banner Holding Corp. The principal
place of business shall be 120 N. U.S. Highway One, Tequesta, Florida 33469.
ARTICLE II. NATURE OF BUSINESS
The Corporation may engage in or transact all lawful activities or
businesses permitted under the laws of the United States, the State of Florida,
or any other state, country, terri tory or nation.
ARTICLE III. CAPITAL STOCK
The total number of shares of capital stock which the Corporation shall
have authority to issue is thirty million (30,000,000), of which twenty five
million (25,000,000) shares shall be Common Stock with a par value of $0.01 per
share, and five million (5,000,000) shares shall be Preferred Stock with a par
value of $0.01 per share, all of which shares, when issued, shall be fully paid
and non-assessable.
None of the shares of Common Stock shall be entitled to any preference
over any other shares of such stock. The Common Stock shall be subject to all of
the powers, rights and preferences of each series of the Preferred Stock as such
may, from time to time, be established by resolution of the Board of Directors.
Subject to the provisions of this Article III with respect to the Preferred
Stock, dividends payable in cash, stock or otherwise, as may be determined by
the Board of Directors, may be declared and paid on the Common Stock from time
to time out of funds law fully available therefor. Upon any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
after such preferential rights, if any, upon liquidation as are possessed by
holders of shares of any series of Preferred Stock shall have been satisfied,
the remaining net assets of the Corporation shall be distributed PRO RATA to the
holders of shares of the Common Stock and the holders of shares of any series of
the Preferred Stock that do not possess preferential rights upon such
liquidation, dissolution or winding up.
<PAGE>
The Board of Directors of the Corporation is authorized to issue shares
of Preferred Stock from time to time in one or more series for such
consideration as it may determine; to fix or alter the voting powers,
designations, preferences and rights, including, but not limited to, dividend
rights, dividend rate conversion rights and terms of redemption (including
sinking fund provisions), redemption price or prices and liquidation
preferences, or any of them, as to unissued series of shares of Preferred Stock;
and to fix the number of shares constituting any such series and designation
thereof, or any series subsequent to the issue of shares of that series, but not
below the number of shares of such series then outstanding. In case the number
of shares of such series shall be so decreased, the shares constituting such
decrease shall resume the status which they had prior to the adoption of the
resolution originally fixing the number of shares of such series.
ARTICLE IV. REGISTERED AGENT
The street address of the initial registered office of the Corporation
shall be c/o Mirkin & Woolf, P.A., 1700 Palm Beach Lakes Blvd. #580, West Palm
Beach, Florida 33401 and the name of the initial registered agent of the
Corporation at that address is Mark H. Mirkin, Esq.
ARTICLE V. TERM OF EXISTENCE
The Corporation shall exist perpetually.
ARTICLE VI. DIRECTORS
The Corporation shall have one (1) director initially. The name and
address of the initial member of the Board of Directors are John M. O'Keefe, 120
N. U.S. Highway One, Tequesta, Florida 33469.
ARTICLE VII. INCORPORATOR
The name and address of the incorporator to these Articles of
Incorporation are John M. O'Keefe, 120 N. U.S. Highway One, Tequesta, Florida
33469.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
on this 30th day of November, 1997.
/s/JOHN M. O'KEEFE
John M. O'Keefe
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<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS
OR DOMICILE FOR THE SERVICE OF PROCESS
WITHIN THIS STATE, NAMING AGENT UPON WHOM
PROCESS MAY BE SERVED
The following is submitted in accordance with the requirements of
Chapter 48.091, Florida Statutes:
BANNER HOLDING CORP., desiring to organize under the laws of the State
of Florida with its registered office address, as indicated in the Articles of
Incorporation, as c/o Mirkin & Woolf, P.A., 1700 Palm Beach Lakes Blvd. #580,
West Palm Beach, Florida 33401, has named MARK H. MIRKIN, ESQ. as its agent to
accept service of process within this State.
ACKNOWLEDGEMENT
Having been named to accept service of process for the above-stated
Corporation at the place designated in this Certificate, I hereby accept to act
in this capacity and agree to comply with the provisions of Chapter 48.091,
F.S., relative to keeping open said office.
/s/MARK H. MIRKIN, ESQ.
Mark H. Mirkin, Esq.
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BYLAWS
Of
BANNER HOLDING CORP
Adopted
January 26, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I. OFFICES
1.01 Principal and Business Offices . . . . . . . . . . . 1
1.02 Registered Office . . . . . . . . . . . . . . . . . . 1
ARTICLE II. SHAREHOLDERS
2.01 Annual Meeting . . . . . . . . . . . . . . . . . . . 1
2.02 Special Meeting . . . . . . . . . . . . . . . . . . . 1
2.03 Place of Meeting . . . . . . . . . . . . . . . . . . 1
2.04 Notice of Meeting . . . . . . . . . . . . . . . . . . 2
2.05 Closing of Transfer Books or Fixing
of Record Date . . . . . . . . . . . . . . . . . . . 2
2.06 Voting Records . . . . . . . . . . . . . . . . . . . 2
2.07 Quorum . . . . . . . . . . . . . . . . . . . . . . . 3
2.08 Conduct of Meeting . . . . . . . . . . . . . . . . . 3
2.09 Proxies . . . . . . . . . . . . . . . . . . . . . . . 3
2.10 Voting of Shares . . . . . . . . . . . . . . . . . . 4
2.11 Voting of Shares by Certain Holders . . . . . . . . . 4
(a)Other Corporations . . . . . . . . . . . . . . . . 4
(b)Legal Representatives and Fiduciaries. . . . . . . 4
(c)Receiver . . . . . . . . . . . . . . . . . . . . . 4
(d)Pledgees . . . . . . . . . . . . . . . . . . . . . 4
(e)Subsidiaries . . . . . . . . . . . . . . . . . . . 4
ARTICLE III. BOARD OF DIRECTORS
3.01 General Powers and Numbers . . . . . . . . . . . . . 5
3.02 Tenure and Qualifications . . . . . . . . . . . . . . 5
3.03 Regular Meetings . . . . . . . . . . . . . . . . . . 5
3.04 Special Meetings . . . . . . . . . . . . . . . . . . 5
3.05 Notice of Meetings . . . . . . . . . . . . . . . . . 5
3.06 Quorum . . . . . . . . . . . . . . . . . . . . . . . 6
3.07 Manner of Acting . . . . . . . . . . . . . . . . . . 6
3.08 Conduct of Meetings . . . . . . . . . . . . . . . . . 6
3.09 Vacancies . . . . . . . . . . . . . . . . . . . . . . 6
3.10 Compensation . . . . . . . . . . . . . . . . . . . . 6
3.11 Presumption of Assent . . . . . . . . . . . . . . . . 7
3.12 Committees . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV. OFFICERS
4.01 Number . . . . . . . . . . . . . . . . . . . . . . . 7
4.02 Election and Term of Office . . . . . . . . . . . . . 8
4.03 Removal . . . . . . . . . . . . . . . . . . . . . . . 8
4.04 Vacancies . . . . . . . . . . . . . . . . . . . . . . 8
4.05 President . . . . . . . . . . . . . . . . . . . . . . 8
4.06 Vice Presidents . . . . . . . . . . . . . . . . . . . 9
4.07 Secretary . . . . . . . . . . . . . . . . . . . . . . 9
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TABLE OF CONTENTS (Cont.)
ARTICLES IV. OFFICERS
4.08 Treasurer . . . . . . . . . . . . . . . . . . . . . . 9
4.09 Assistant Secretaries and Assistant Treasurers . . .10
4.10 Other Assistants and Acting Officers . . . . . . . .10
4.11 Salaries . . . . . . . . . . . . . . . . . . . . . .10
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01 Contracts . . . . . . . . . . . . . . . . . . . . . .10
5.02 Loans . . . . . . . . . . . . . . . . . . . . . . . .11
5.03 Checks, Drafts, etc. . . . . . . . . . . . . . . . .11
5.04 Deposits . . . . . . . . . . . . . . . . . . . . . .11
5.05 Voting of Securities Owned by this Corporation . . .11
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.01 Certificate for Shares . . . . . . . . . . . . . . .12
6.02 Facsimile Signatures and Seal . . . . . . . . . . . .12
6.03 Transfer of Shares . . . . . . . . . . . . . . . . .12
6.04 Restrictions on Transfer . . . . . . . . . . . . . .12
6.05 Lost, Destroyed or Stolen Certificates . . . . . . .12
6.06 Consideration for Shares . . . . . . . . . . . . . .13
6.07 Stock Regulations . . . . . . . . . . . . . . . . . .13
ARTICLE VII. WAIVER OF NOTICE
ARTICLE VIII. CONSENT WITHOUT A MEETING
ARTICLE IX. INDEMNIFICATION
ARTICLE X. SEAL
ARTICLE XI. FISCAL YEAR
ARTICLE XII. AMENDMENTS
12.01 By Shareholders . . . . . . . . . . . . . . . . . . .14
12.02 By Directors . . . . . . . . . . . . . . . . . . . .14
12.03 Implied Amendments . . . . . . . . . . . . . . . . .14
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ARTICLE I. OFFICES
1.01. PRINCIPAL AND BUSINESS OFFICES. The corporation may have
such principal and other business offices, either within or outside the State of
Florida, as the Board of Directors may designate or as the business of the
corporation may require from time to time.
1.02. REGISTERED OFFICE. The registered office of the
corporation required by the Florida Business Corporation Act to be maintained in
the State of Florida may be, but need not be, identical with the principal
office in the State of Florida. The address of the registered office may be
changed from time to time by the Board of Directors or, if within the county, by
the registered agent. The business office of the registered agent of the
corporation shall be identical to such registered office.
ARTICLE II. SHAREHOLDERS
2.01. ANNUAL MEETING. The annual meeting of the shareholders
shall be held on the last Wednesday of April in each year at 9:00 o'clock a.m.,
or at such other time and date as may be fixed by or under the authority of the
Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may come before the meeting. If the day
fixed for the annual meeting shall be a legal holiday in the State of Florida,
such meeting shall be held on the next succeeding business day. If the election
of directors shall not be held on the day designated herein, or fixed as herein
provided, for any annual meeting of the shareholders, or at any adjournment
thereof, the Board of Directors shall cause the election to be held at a special
meeting of the shareholders as soon thereafter as convenient.
2.02. SPECIAL MEETING. Special meetings of the shareholders, for
any purpose or purposes, unless otherwise prescribed by statute, may be called
by the President or the Board of Directors or by the person designated in the
written request of the holders of not less than one(C)tenth of all shares of the
corporation entitled to vote at the meeting.
2.03. PLACE OF MEETING. The Board of Directors may designate any
place either within or outside the State of Florida as the place of meeting for
any annual meeting or for any special meeting called by the Board of Directors.
A waiver of notice signed by all shareholders entitled to vote at a meeting may
designate any place, whether within or outside the State of Florida, as the
place for the holding of such meeting. If no designation is made, or if a
special meeting be otherwise called, the place of meeting shall be the principal
business office of the corporation in the State of Florida or such other
suitable place in the county of such principal office as may be designated by
the person calling such meeting, but any meeting may be adjourned to reconvene
at any place designated by vote of a majority of the shares represented thereat.
<PAGE>
2.04. NOTICE OF MEETING. Written notice stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
(10) days (unless a longer period is required by law) nor more than thirty (30)
days before the date of the meeting, either personally or by mail, by or at the
direction of the President, the Secretary, or the person(s) calling the meeting,
to each shareholder of record entitled to vote at such meeting. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail,
addressed to the shareholder at his or her address as it appears on the stock
record books of the corporation, with postage thereon prepaid.
2.05. CLOSING OF TRANSFER BOOK OR FIXING OF RECORD DATE. For the
purpose of determining shareholders entitled to notice of or to vote at any
meeting of shareholders, or any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a determination of
shareholders for any other proper purpose, the Board of Directors may provide
that the stock transfer books shall be closed for a stated period but not to
exceed, in any case, thirty (30) days. If the stock transfer books shall be
closed for the purpose of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be closed for at least ten
(10) days immediately preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not
more than thirty (30) days and, in case of a meeting of shareholders, not less
than ten (10) days prior to the date on which the particular action requiring
such determination of shareholders is to be taken. If the stock transfer books
are not closed and no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a meeting of shareholders, or shareholders
entitled to receive payment of a dividend, the close of business on the date on
which notice of the meeting is mailed or on the date on which the resolution of
the Board of Directors declaring such dividend is adopted, as the case may be,
shall be the record date for such determination of shareholders. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this section, such determination shall be applied
to any adjournment thereof except where the determination has been made through
the closing of the stock transfer books and the stated period of closing has
expired.
2.06. VOTING RECORDS. In the event the corporation issues its
stock to more than six (6) shareholders Section 607.0901 of the Florida Business
Corporation Act dealing with affiliated transactions and control-share
acquisitions shall apply.
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<PAGE>
2.07. QUORUM. Except as otherwise provided in the articles of
incorporation, a majority of the shares entitled to vote, represented in person
or by proxy, shall constitute a quorum at a meeting of shareholders but in no
event shall a quorum consist of less than one(C)third of the shares entitled to
vote at the meeting. When a specified item of business is required to be voted
on by a class or series of stock, a majority of the shares of such class or
series shall constitute a quorum for the transaction of such item of business by
that class or series. 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 shareholders unless the vote of a greater
number or voting by classes is required by the Florida Business Corporation Act
or the articles of incorporation. If less than a quorum is represented at a
meeting, a majority of the shares so represented may adjourn the meeting from
time to time without further notice. 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 noticed. The shareholders present
at a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum.
2.08. CONDUCT OF MEETINGS. The President, or in the President's
absence, a Vice President in the order provided under Section 4.06, and in their
absence, any person chosen by the shareholders present shall call the meeting of
the shareholders to order and shall act as chairman of the meeting, and the
Secretary shall act as secretary of all meetings of the shareholders, but, in
the absence of the Secretary, the presiding officer may appoint any other person
to act as secretary of the meeting.
2.09. PROXIES. At all meetings of shareholders, a shareholder
entitled to vote may vote in person or by proxy appointed in writing by the
shareholder or by his duly authorized attorney(C)in(C)fact. Such proxy shall be
filed with the Secretary before or at the time of the meeting. Unless otherwise
provided in the proxy or Section 607.101 of the Florida Business Corporation
Act, a proxy may be revoked at any time before it is voted, either by written
notice filed with the Secretary or the acting secretary of the meeting or by
oral notice given by the sharehoder to the presiding officer during the meeting.
The presence of a shareholder who has filed a proxy shall not of itself
constitute a revocation. No proxy shall be valid after eleven (11) months from
the date of its execution, unless otherwise provided in the proxy. The Board of
Directors shall have the power and authority to make rules as to the validity
and sufficiency of proxies.
2.10. VOTING OF SHARES. Each outstanding share shall be entitled
to one vote on each matter submitted to a vote at a
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<PAGE>
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are enlarged, limited or denied by the articles
of incorporation.
2.11. VOTING OF SHARES BY CERTAIN HOLDERS.
(a) OTHER CORPORATIONS. Shares standing in the name of another
corporation, domestic or foreign, may be voted either in person or by proxy by
the president of such corporation or any other officer appointed by such
president. A proxy executed by any principal officer of such other corporation
or assistant thereto shall be conclusive evidence of the signer's authority to
act, in the absence of express notice to this corporation, given in writing to
the Secretary of this corporation, of the designation of some other person by
the Board of Directors or the bylaws of such other corporation.
(b) LEGAL REPRESENTATIVES AND FIDUCIARIES. Shares held by an
administrator, executor, guardian, conservator or assignee for creditors may be
voted by such person, either in person or by proxy. Shares standing in the name
of a trustee may be voted by him or her, either in person or by proxy, but no
trustee shall be entitled to vote shares held by him or her without a transfer
of such shares into his or her name. Shares standing in the name of a fiduciary
may be voted by him or her, either in person or by proxy. A proxy executed by a
fiduciary shall be conclusive evidence of the signer's authority to act in the
absence of express notice given in writing to the Secretary that such manner of
voting is prohibited or otherwise directed by the document creating the
fiduciary relationship.
(c) RECEIVER. Shares standing in the name of a receiver may be
voted by such receiver, and shares held by or under the control of a receiver
may be voted by such receiver without the transfer thereof into his or her name
if authority to do so is contained in an appropriate court order pursuant to
which such receiver was appointed.
(d) PLEDGEES. A shareholder whose shares are pledged shall be
entitled to vote such shares in person or by proxy, until the shares have been
transferred into the name of the pledgee, and thereafter the pledgee or his or
her nominee shall be entitled to vote the shares so transferred.
(e) SUBSIDIARIES. Neither shares of the corporation's stock
owned by another corporation, the majority of the voting stock of which is owned
or controlled by it, nor shares of its own stock held by another corporation in
a fiduciary capacity shall be voted, directly or indirectly, at any meeting; and
such shares shall not be counted in determining the total number of outstanding
shares at any given time.
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<PAGE>
ARTICLE III. BOARD OF DIRECTORS
3.01. GENERAL POWERS AND NUMBER. The business and affairs of the
corporation shall be managed by its Board of Directors. The number of directors
of the corporation initially shall be a minimum of one (1) but may be increased
to not more than nine (9) without amendment. The number of directors may be
increased or decreased from time to time by amendment to this Section adopted by
the shareholders or the Board of Directors but no decrease shall have the effect
of shortening the term of an incumbent director.
3.02. TENURE AND QUALIFICATIONS. Each director shall hold office
until the next annual meeting of shareholders and until the director's successor
shall have been elected, or until his or her prior death, resignation or
removal. Any director or the entire Board of Directors may be removed from
office, with or without cause, by affirmative vote of a majority of the
outstanding shares entitled to vote for the election of such director, or the
Board of Directors. A director may resign at any time by filing a written
resignation with the Secretary of the corporation. Directors need not be
residents of the State of Florida or shareholders of the corporation.
3.03. REGULAR MEETINGS. A regular meeting of the Board of
Directors shall be held, without other notice than this bylaw, immediately after
the annual meeting of shareholders, and each adjourned session thereof. The
place of such regular meeting shall be the same as the place of the meeting of
shareholders which precedes it, or such other suitable place as may be announced
at such meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place, either within or outside the State of Florida,
for the holding of additional regular meetings without other notice than such
resolution.
3.04. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by or at the request of the President or any two
directors. The persons calling any special meeting of the Board of Directors may
fix any place, either within or outside the State of Florida, as the place for
holding any special meeting of the Board of Directors called by them, and if no
other place is fixed the place of meeting shall be the principal business office
of the corporation in the State of Florida. Special meetings may be held by
means of a telephone conference circuit and connecting to such circuit shall
constitute presence at such meeting.
3.05. NOTICE OF MEETINGS. Notice of each meeting of the Board of
Directors (unless otherwise provided in or pursuant to Section 3.03) shall be
given by written notice delivered personally or mailed or given by telephone or
telegram to each director at his or her business or home address or at such
other ad-
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<PAGE>
dress as such director shall have designated in writing filed with the
Secretary, in each case not less than 48 hours prior thereto. If mailed, such
notice shall be deemed to be delivered when deposited in the United States mail
so addressed, with postage thereon prepaid. If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company; if by telephone, at the time the call is completed. The
attendance of a director at a meeting shall constitute a waiver of notice of
such meeting, except where a director attends a meeting and objects thereat to
the transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.06. QUORUM. A majority of the number of directors as provided
in Section 3.01 shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, but a majority of the directors present
(though less than such quorum) may adjourn the meeting from time to time without
further notice.
3.07. MANNER OF ACTING. The act of the majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, unless the act of a greater number is required by the Florida
Business Corporation Act, the corporation's articles of incorporation or these
bylaws.
3.08. CONDUCT OF MEETINGS. The President, and in the President's
absence, a Vice President in the order provided under Section 4.06, and in their
absence, any director chosen by the directors present, shall call meetings of
the Board of Directors to order and shall chair the meeting. The Secretary of
the corporation shall act as secretary of all meetings of the Board of
Directors, but in the absence of the Secretary, the presiding officer may
appoint any assistant secretary or any director or other person present to act
as secretary of the meeting.
3.09. VACANCIES. Any vacancy occurring in the Board of
Directors, including a vacancy created by an increase in the number of
directors, may be filled until the next succeeding annual election by the
affirmative vote of a majority of the directors then in office, though less than
a quorum of the Board of Directors, provided that in case of a vacancy created
by removal of a director(s), the shareholders shall have the right to fill such
vacancy at the same meeting or any adjournment thereof.
3.10. COMPENSATION. The Board of Directors, by affirmative vote
of a majority of the directors then in office, and irrespective of any personal
interest of any of its members, may establish reasonable compensation of all
directors for services to the corporation as directors, officers or otherwise,
and the
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<PAGE>
manner and time of payment thereof, or may delegate such authority to an
appropriate committee. The Board of Directors also shall have authority to
provide for or to delegate authority to an appropriate committee to provide for
reasonable pensions, disability or death benefits, and other benefits or
payments, to directors, officers and employees and to their estates, families,
dependents or beneficiaries on account of prior services rendered by such
directors, officers and employees to the corporation.
3.11. PRESUMPTION OF ASSENT. A director who is present at a
meeting of the Board of Directors or a committee thereof of which he is a member
at which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment thereof
or shall forward such dissent by registered mail to the Secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to a director who voted in favor of such action.
3.12. COMMITTEES. The Board of Directors, by resolution adopted
by the affirmative vote of a majority of the number of directors as provided in
Section 3.01, may designate one or more committees, each committee to consist of
three or more directors elected by the Board of Directors, which to the extent
provided in said resolution as initially adopted, and as thereafter supplemented
or amended by further resolution adopted by a like vote, shall have and may
exercise, when the Board of Directors is not in session, the powers of the Board
of Directors in the management of the business and affairs of the corporation,
except action in respect to dividends to shareholders, election of the principal
officers or the filling of vacancies on the Board of Directors or committees
created pursuant to this Section. The Board of Directors may elect one or more
of its members as alternate members of any such committee who may take the place
of any absent member or members at any meeting of such committee, upon request
by the President or upon request by the chairman of such meeting. Each such
committee shall fix its own rules governing the conduct of its activities and
shall make such reports to the Board of Directors of its activities as the Board
of Directors may request.
ARTICLE IV. OFFICERS
4.01. NUMBER. The principal officers shall be a President, one
or more Vice Presidents (the number and designations to be determined by the
Board of Directors), a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors; the Board of Directors may elect a chairman who if so
elected shall be a principal officer. Any two or more offices may be held by the
same person. The Board of Directors may designate
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<PAGE>
one of the Vice Presidents as the Executive Vice President. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the Board of Directors or the President.
4.02. ELECTION AND TERM OF OFFICE. The officers to be elected by
the Board of Directors shall be elected annually by the Board of Directors at
the first meeting of the Board of Directors held after each annual meeting of
the shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as conveniently may be. Each
officer shall hold office until his successor shall have been duly elected or
until his prior death, resignation or removal.
4.03. REMOVAL. Any officer or agent may be removed by the Board
of Directors whenever in its judgment the best interests of the corporation will
be served thereby, but such removal shall be without prejudice to the contract
rights, if any, of the person so removed. Election or appointment shall not of
itself create contract rights.
4.04. VACANCIES. A vacancy in any principal office because of
death, resignation, removal, disqualification or otherwise, shall be filled by
the Board of Directors for the unexpired portion of the term.
4.05. PRESIDENT. The President shall be the principal executive
officer and, subject to the control of the Board of Directors, shall in general
supervise and control all of the business and affairs of the corporation. He or
she shall preside at all meetings of the shareholders and of the Board of
Directors. The President shall have authority, subject to such rules as may be
prescribed by the Board of Directors, to appoint such agents and employees of
the corporation as he or she shall deem necessary, to prescribe their powers,
duties and compensation, and to delegate authority to them. Such agents and
employees shall hold office at the discretion of the President. The President
shall have authority to sign, execute and acknowledge, on behalf of the
corporation, all deeds, mortgages, bonds, stock certificates, contracts, leases,
reports and all other documents or instruments necessary or proper to be
executed in the course of the corporation's regular business, or which shall be
authorized by resolution of the Board of Directors; and, except as otherwise
provided by law or the Board of Directors, the President may authorize any Vice
President or other officer or agent of the corporation to sign, execute and
acknowledge such documents or instruments in his or her place and stead. In
general he shall perform all duties incident to the office of President and such
other duties as may be prescribed by the Board of Directors from time to time.
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<PAGE>
4.06. VICE PRESIDENTS. In the absence of the President, or in
the event of the President's death, inability or refusal to act, or in the event
for any reason it shall be impracticable for the President to act personally,
the Vice President (or in the event there be more than one Vice President, the
Vice Presidents in the order designated by the Board of Directors, or in the
absence of any designation, then in the order of their election) shall perform
the duties of the President, and when so acting, shall have all the powers of
and be subject to all the restrictions upon the President. Any Vice President
may sign, with the Secretary or Assistant Secretary, certificates for shares of
the corporation, and shall perform such other duties and have such authority as
from time to time may be delegated or assigned to him or her by the President or
the Board of Directors. The execution of any instrument of the corporation by
any Vice President shall be conclusive evidence, as to third parties, of the
Vice President's authority to act in the stead of the President.
4.07. SECRETARY. The Secretary shall: (a) keep the minutes of
the meetings of the shareholders and of the Board of Directors in one or more
books provided for that purpose; (b) see that all notices are duly given in
accordance with the provisions of these bylaws or as required by law; (c) be
custodian of the corporate records and of the seal of the corporation, if any,
and see that the seal of the corporation, if any, is affixed to all documents
which are authorized to be executed on behalf of the corporation under its seal;
(d) keep or arrange for the keeping of a register of the post office address of
each shareholder which shall be furnished to the Secretary by such shareholder;
(e) sign with the President, or a Vice President, certificates for shares of the
corporation, the issuance of which shall have been authorized by resolution of
the Board of Directors; (f) have general charge of the stock transfer books of
the corporation; and (g) in general perform all duties incident to the office of
Secretary and have such other duties and exercise such authority as from time to
time may be delegated or assigned to him or her by the President or by the Board
of Directors.
4.08. TREASURER. The Treasurer shall: (a) have charge and
custody of and be responsible for all funds and securities of the corporation;
(b) receive and give receipts for moneys due and payable to the corporation from
any source whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries as shall be
selected in accordance with the provisions of Section 5.04; and (c) in general
perform all of the duties incident to the office of Treasurer and have such
other duties and exercise such other authority as from time to time may be
delegated or assigned to him or her by the President or by the Board of
Directors.
-9-
<PAGE>
4.09. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. There
shall be such number of Assistant Secretaries and Assistant Treasurers as the
Board of Directors or President from time to time authorizes. The Assistant
Secretaries may sign with the President or a Vice President certificates for
shares of the corporation the issuance of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Secretaries and Assistant
Treasurers, in general, shall perform such duties and have such authority as
from time to time shall be delegated or assigned to them by the Secretary or the
Treasurer, respectively, or by the President or the Board of Directors.
4.10. OTHER ASSISTANTS AND ACTING OFFICERS. The Board of
Directors and the President shall have the power to appoint any person to act as
assistant to any officer, or as agent for the corporation in the officer's
stead, or to perform the duties of such officer whenever for any reason it is
impracticable for such officer to act personally, and such assistant or acting
officer or other agent so appointed by the Board of Directors or President shall
have the power to perform all the duties of the office to which that person is
so appointed to be assistant, or as to which he or she is so appointed to act,
except as such power may be otherwise defined or restricted by the Board of
Directors or President.
4.11. SALARIES. Salaries may be paid to the principal officers
of the corporation at the discretion of the Board of Directors, and if so paid,
shall be fixed from time to time by the Board of Directors or by a duly
authorized committee thereof, and no officer shall be prevented from receiving
such salary by reason of the fact that such officer is also a director of the
corporation.
ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS
5.01. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute or
deliver any instrument in the name of and on behalf of the corporation, and such
authorization may be general or confined to specific instances. No contract or
other transaction between the corporation and one or more of its directors or
any other corporation, firm, association or entity in which one or more of its
directors are directors or officers or are financially interested, shall be
either void or voidable because of such relationship or interest or because such
director or directors are present at the meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction or because the votes of the interested director(s) are counted for
such purpose, if (1) the fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
-10-
<PAGE>
purpose without counting the votes or consents of such interested directors; or
(2) the fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve or ratify such
contract or transaction by vote or written consent; or (3) the contract or
transaction is fair and reasonable to the corporation. Common or interested
directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors or a committee thereof which authorizes, approves or
ratifies such contract or transaction.
5.02. LOANS. No indebtedness for borrowed money shall be
contracted on behalf of the corporation and no evidences of such indebtedness
shall be issued in its name unless authorized by or under the authority of a
resolution of the Board of Directors. Such authorization may be general or
confined to specific instances.
5.03. CHECKS, DRAFTS, ETC. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the corporation shall be signed by such officer(s), employee(s) or
agents of the corporation and in such manner as shall from time to time be
determined by or under the authority of a resolution of the Board of Directors.
5.04. Deposits. All funds of the corporation not otherwise
employed shall be deposited from time to time to the credit of the corporation
in such banks, trust companies or other depositaries as may be selected by or
under the authority of a resolution of the Board of Directors.
5.05. VOTING OF SECURITIES OWNED BY THIS CORPORATION.
Subject always to the specific directions of the Board of Directors, (a) any
shares or other securities issued by any other corporation and owned or
controlled by this corporation may be voted at any meeting of security holders
of such other corporation by the President of this corporation if he or she is
present, or in the President's absence, by any Vice President of this
corporation who may be present, and (b) whenever, in the judgment of the
President, or in the President's absence, of any Vice President, it is desirable
for this corporation to execute a proxy or written consent with respect to any
shares or other securities issued by any other corporation and owned by this
corporation, such proxy or consent shall be executed in the name of this
corporation by the President or one of the Vice Presidents of this corporation,
without necessity of any authorization by the Board of Directors, affixation of
corporate seal or countersignature or attestation by another officer. Any person
or persons designated in the manner above stated as the proxy or proxies of this
corporation shall have full right, power and authority to vote the shares or
other securities issued by such other corporation and owned by this corporation
the same as such shares or other securities might be voted by this corporation.
-11-
<PAGE>
ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFERSA
6.01. CERTIFICATE FOR SHARES. Certificates representing shares
of the corporation shall be in such form, consistent with law, as shall be
determined by the Board of Directors. Such certificates shall be signed by the
President. All certificates for shares shall be consecutively numbered or
otherwise identified. The name and address of the person to whom the shares
represented thereby are issued, with the number of shares and the date of issue,
shall be entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and cancelled, except as provided
in Section 6.05.
6.02. FACSIMILE SIGNATURES AND SEAL. The seal of the
corporation, if the corporation has elected to have a seal, on any certificates
for shares may be a facsimile. The signature of the President upon a certificate
may be a facsimile if the certificate is manually signed on behalf of a transfer
agent or a registrar, other than the corporation itself or an employee of the
corporation.
6.03. TRANSFER OF SHARES. Prior to due presentment of a
certificate for shares for registration of transfer, the corporation may treat
the registered owner of such shares as the person exclusively entitled to vote,
to receive notifications and otherwise to have and exercise all the rights and
powers of an owner. Where a certificate for shares is presented to the
corporation with a request to register for transfer, the corporation shall not
be liable to the owner, or any other person suffering loss as a result of such
registration of transfer if (a) there were on or with the certificate the
necessary endorsements, and (b) the corporation had no duty to inquire into
adverse claims or has discharged any such duty. The corporation may require
reasonable assurance that said endorsements are genuine and effective and in
compliance with such other regulations as may be prescribed by or under the
authority of the Board of Directors.
6.04. RESTRICTIONS ON TRANSFER. The face or reverse side of each
certificate representing shares shall bear a conspicuous notation of any
restriction imposed by the corporation upon the transfer of such shares.
6.05. LOST, DESTROYED OR STOLEN CERTIFICATES. Where the owner
claims that his or her certificate for shares has been lost, destroyed or
wrongfully taken, a new certificate shall be issued in place thereof if the
owner (a) so requests before the corporation has notice that such shares have
been acquired by a bona fide purchaser, and (b) if required by the corporation,
files with the corporation a sufficient indemnity bond, and (c)
-12-
<PAGE>
satisfies such other reasonable requirements as may be prescribed by or under
the authority of the Board of Directors.
6.06. CONSIDERATION FOR SHARES. The shares of the corporation
may be issued for such consideration as shall be fixed from time to time by the
Board of Directors, provided that any shares having a par value shall not be
issued for a consideration less than the par value thereof. The consideration to
be paid for shares may be paid in whole or in part, in money, in other property,
tangible or intangible, or in labor or services actually performed for the
corporation. When payment of the consideration for which shares are to be issued
shall have been received by the corporation, such shares shall be deemed to be
fully paid and nonassessable by the corporation. No certificate shall be issued
for any share until such share is fully paid.
6.07. STOCK REGULATIONS. The Board of Directors shall have the
power and authority to make all such rules and regulations not inconsistent with
the statutes of the State of Florida as it may deem expedient concerning the
issue, transfer and registration of certificates representing shares of the
corporation.
ARTICLE VII. WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions
of the Florida Business Corporation Act or under corresponding provisions of the
corporation's articles of incorporation or bylaws, a waiver thereof in writing,
signed at any time, whether before or after the time of the meeting, by the
person or persons entitled to such notice, shall be deemed equivalent to the
giving of such notice. Such waiver by a shareholder in respect of any matter of
which notice is required under any provision of the Florida Business Corporation
Act shall contain the same information as would have been required to be
included in such notice under any applicable provisions of said Law, except that
the time and place of meeting need not be stated.
ARTICLE VIII. CONSENT WITHOUT A MEETING
Any action required by the articles of incorporation or these
bylaws or any provisions of the Florida Business Corporation Act to be taken at
a meeting or any other action which may be taken at a meeting may be taken
without a meeting if a consent in writing setting forth the action so taken
shall be signed by the requisite number of shareholders or directors under law
or all of the members of a committee thereof entitled to vote with respect to
the subject matter thereof and such consent shall have the same force and effect
as a vote.
ARTICLE IX. INDEMNIFICATION
The corporation shall indemnify all directors and officers to
the fullest extent now or hereafter permitted by the
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<PAGE>
Florida Statues. This bylaw shall not limit the rights of such persons or other
persons to indemnification as provided or permitted as a matter of law, under
the Florida Statutes or otherwise.
ARTICLE X. SEAL
The Board of Directors may provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the corporation
and the state of incorporation and the words "Corporate Seal."
ARTICLE XI. FISCAL YEAR
Except as the Board of Directors may otherwise determine, the
fiscal year of the corporation shall be the year ending on the last day of
December of each year.
ARTICLE XII. AMENDMENTS
By Shareholders. These bylaws may be altered, amended or
repealed and new bylaws may be adopted by the shareholders by affirmative vote
of not less than a majority of the shares present or represented at an annual or
special meeting of the shareholders at which a quorum is in attendance.
12.02. BY DIRECTORS. These bylaws may also be altered, amended
or repealed and new bylaws may be adopted by the Board of Directors by
affirmative vote of a majority of the number of directors present at any meeting
at which a quorum is in attendance; but no bylaw adopted by the shareholders
shall be amended or repealed by the Board of Directors if the bylaw so adopted
so provides.
12.03. IMPLIED AMENDMENTS. Any action taken or authorized by the
shareholders or by the Board of Directors which would be inconsistent with the
bylaws then in effect but is taken or authorized by affirmative vote of not less
than the number of shares or the number of directors required to amend the
bylaws so that the bylaws would be consistent with such action, shall be given
the same effect as though the bylaws had been temporarily amended or suspended
so far, but only so far, as is necessary to permit the specific action so taken
or authorized.
-14-
EXHIBIT 4.1
NUMBER SHARES
BANNER HOLDING CORP.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
THIS CERTIFIES THAT ____________________________ IS THE REGISTERED HOLDER OF
___________________________ SHARES
TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN PERSON
OR BY ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED.
IN WITNESS WHEREOF, THE SAID CORPORATION HAS CAUSED THIS CERTIFICATE TO BE
SIGNED BY ITS DULY AUTHORIZED OFFICERS AND ITS CORPORATE SEAL TO BE HEREUNTO
AFFIXED
THIS ______________ DAY OF ___________________ A.D. 19__
__________________________ ____________________
SECRETARY PRESIDENT
EXHIBIT 23.2
[SWEENEY, GATES & CO. LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in this Registration Statement on Form SB-2 of our
report dated May 5, 1998, related to the financial statements of Banner Holding
Corp. and to the reference to our firm under the caption "Experts" in the
prospectus.
/s/ SWEENEY, GATES & CO.
Sweeney, Gates & Co.
Fort Lauderdale, Florida
June 8, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM BANNER HOLDING CORP. AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> APR-30-1998
<CASH> 1,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,325
<CURRENT-LIABILITIES> 4,853
<BONDS> 0
0
0
<COMMON> 30,000
<OTHER-SE> 29,528
<TOTAL-LIABILITY-AND-EQUITY> 14,325
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
