SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission file number___________
CONTINENTAL CAPITAL & EQUITY CORPORATION
(Exact name of registrant as specified in its charter)
7311
(Primary Standard Industrial Classification Code Number)
Florida
(State of Incorporation)
59-3299963
(I.R.S. Employer Identification No.)
195 Wekiva Springs Road, #200, Longwood, Florida 32779
(Address of principal executive offices) (Zip Code)
(407) 682-2001
(Telephone number)
Jim Schnorf, 195 Wekiva Springs Road, #200, Longwood, FL 32779
(Name and Address of agent of service)
(407) 682-2001
(Telephone number)
Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933 check the following box /X/
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box /_/
Page 1 of 54 pages
Exhibit Index Begins on Page 56
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Calculation of Registration Fee
Title of each Amount to Proposed Proposed Amount of
class of be maximum maximum registration
securities to registered offering aggregate fee
be registered price offering
per price(1)
share
Common Shares 2,000,000 $7.00 $14,000,000 $7,000.00
TOTAL 2,000,000 $7.00 $14,000,000 $7,000.00
(1) Based on the proposed offering price of $7.00 per share.
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, as amended, or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to Section 8(a), may determine.
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CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K and Rule 404(a) the
following cross-reference sheet shows the location in the Prospectus of the
information required to be included in response to Items of Form SB-2.
PART I Item Location
Item 1 Forepart of Registration Statement Forepart of Registration Statement
and Outside Front Cover Page of and Outside Front Cover Page of
Prospectus Prospectus
Item 2 Inside Front and Outside Inside Front and Outside
Back Cover Pages of Back Cover Pages of
Prospectus Prospectus
Item 3 Summary Information, Risk Summary, Risk Factors
Factors and Ratio of
Earnings to Fixed Charges
Item 4 Use of Proceeds Use of Proceeds
Item 5 Determination of Offering Price Determination of Offering Price
Item 6 Dilution Dilution
Item 7 Selling Security Holders None
Item 8 Plan of Distribution Plan of Distribution
Item 9 Legal Proceedings Legal Matters
Item 10 Directors, Executive Directors, Executive
Officers, Promoters and Officers, Promoters and
Control Persons Control Persons
Item 11 Security Ownership of Security Ownership of
Certain Beneficial Certain Beneficial
Ownership and Management Ownership and Management
Item 12 Description of Securities Description of Securities
Item 13 Interest of Named Experts Not Applicable
and Counsel
Item 14 Disclosure of Commission Management - Indemnification of
Position on Indemnification Officers and Directors
For Securities Act Liabilities
Item 15 Organization within Last Business History
Five Years
Item 16 Description of Business Business History
Item 17 Management Discussion and Management Discussion and
Analysis of Operations Analysis of Operations
Item 18 Description of Property Business History
Item 19 Certain Relationships and Certain Relationships and
Related Party Transactions Related Party Transactions
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Item 20 Market for Common Equity None
and Related Stockholder
Matters
Item 21 Executive Compensation Executive Compensation
Item 22 Financial Statements Financial Statements
Item 23 Changes In and Disagreements Changes In and Disagreements
With Accountants With Accountants
PART II
Item 24 Indemnification of Officers Indemnification
and Directors
Item 25 Other Expenses of Issuance Other Expenses of Offering
and Distribution Registration and Distribution
Item 26 Recent Sales of Recent Sales of
Unregistered Securities Unregistered Securities
Item 27 Exhibits, Financial Exhibits, Financial
Statements and Schedules Statements and Schedules
Item 28 Undertakings Undertakings
Item 29 Financial Statements and Financial Statements and
Schedules Schedules
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CONTINENTAL CAPITAL & EQUITY CORPORATION
Two Million Shares of Common Stock
($.01 par value)
The offering price of $7.00 per Share is a price arbitrarily determined
by the Company. Continental Capital & Equity Corporation is engaged in the
Public Relations business for public companies.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK
This offering involves special risks concerning the Company, immediate
substantial dilution from the public offering price, substantial competition,
dependence upon management, continued control by present shareholders,
possible market volatility of the share price, lack of any commitment to
purchase shares, possible significant additional underwriting compensation
through the sale of Warrants and possible dilution if the Warrants are
exercised at their stated exercise price which may possibly be less than
market price at date of exercise. (See "RISK FACTORS", "Dilution" and
"Underwriting".)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Price to Underwriting Proceeds to
Public Commissions Company(3)
(1)
Per Share $7.00 $0.70 $6.30
Total $14,000,000 $1,400,000 $12,600,000
(Maximum)
The offering is being made by the Selected Dealers on a "best efforts"
2,000,000 share all or none basis. All proceeds from the sale of the shares
being offered will be promptly deposited in a non-interest bearing escrow
account (subscribers residing in states requiring the payment of interest
will be paid interest by the Company at passbook rates if the escrow does not
close) at the AmSouth Bank, Orlando, Florida, (the "Escrow Agent"). Unless
at least $14,000,000 is on deposit in the escrow account within 60 days from
the date of this Prospectus (which initial offering period may be extended for
an additional period or periods of not more than 90 days in the aggregate by
mutual consent of the Company and the Selected Dealers), the offering will be
withdrawn and all funds will be returned promptly to subscribers by the
Escrow Agent without deduction therefrom. A subscriber's payment tendered
to the Escrow Agent will not be returned to the subscriber
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until the offering period has expired or the offering has otherwise been
terminated. Funds will be transmitted to the Escrow Agent for deposit in the
escrow account no later than noon on the day following receipt by the
Underwriter or participating dealer. (See "Underwriting".)
(1) Does not include a nonaccountable expense allowance of 3% ($420,000) of
the aggregate proceeds realized from the sale of the shares offered hereby
payable to the selected Dealers. See "Distribution" for information
concerning the Company's agreement (a) to sell to the Selected Dealers
warrants to purchase up to 200,000 shares of common stock exercisable at
$8.40 per share; and (b) to indemnify the selected dealer against certain
civil liabilities, including liabilities under the Securities Act of 1933, as
amended.
(2) Before deduction of expenses payable by the Company in connection with
this offering, estimated at $500,000 for filing, printing, legal fees,
accounting fees, Selected Dealers' accountable expense allowances and Blue
Sky expenses. The Company will pay approximately $500,000 toward these expenses.
The Company is subject to the reporting requirements of Section
13(a) of the Exchange Act and in accordance therewith files reports and other
information with the Securities and Exchange Commission. This information
(including proxy and information statements filed pursuant to Sections 14(a)
and 14(c) of the Exchange Act) may be inspected and copied at the office of
Securities and Exchange Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. Copies of such materials can be obtained from the
Public Reference Section of the Securities and Exchange Commission, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549, at prescribed rates. The
Commission maintains a Web site that contains reports, proxy and information
statements and other information regarding registrants that file
electronically with the Commission and state the address of such site
(http://www.sec.gov). The Company undertakes to provide, without charge, to
any person to whom a Prospectus is delivered, upon oral or written request
of such person, a copy of an any and all information if any, that has been
incorporated by reference in the Prospectus. Such information can be obtained
from 195 Wekiva Springs Road, Suite #200, Longwood, FL 32779 (407) 682-2001.
THE SECURITIES DESCRIBED HEREIN ARE OFFERED BY CERTAIN SELECTED DEALERS
AS AGENTS FOR THE COMPANY SUBJECT TO PRIOR SALE, WITHDRAWAL, CANCELLATION, OR
MODIFICATION OF THE OFFERING, WITHOUT NOTICE, BY THE COMPANY OR THE
UNDERWRITER. OFFERS TO PURCHASE AND CONFIRMATIONS OF SALES ISSUED BY THE
SELECTED DEALERS ARE SUBJECT TO: (I) ACCEPTANCE BY THE COMPANY AND THE
SELECTED DEALER, (II) THE SALE OF THE MINIMUM NUMBER OF SHARES SPECIFIED
HEREIN, (III) THE RELEASE AND DELIVERY OF THE PROCEEDS OF THIS OFFERING TO
THE COMPANY, (IV) THE DELIVERY OF THE SECURITIES AND THEIR ACCEPTANCE BY THE
SELECTED DEALER, AND (V) THE RIGHT OF THE COMPANY AND THE SELECTED DEALERS TO
REJECT ANY AND ALL OFFERS TO PURCHASE AND TO CANCEL ANY SALE AT ANY TIME, PRIOR
TO THE PURCHASE PRICE BEING DELIVERED TO THE COMPANY IN EXCHANGE FOR DELIVERY
TO THE SELECTED DEALER OF THE CERTIFICATE ISSUED FOR THE PURCHASE PRICE, EVEN
AFTER A CONFIRMATION HAS BEEN ISSUED AND THE PURCHASE PRICE HAS BEEN PAID BY
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THE RECIPIENT OF THE CONFIRMATION, IF SUCH SALE OR ITS COMPLETION, IN THE
OPINION OF THE SELECTED DEALERS, VIOLATED OR VIOLATES FEDERAL OR STATE
SECURITIES LAWS OR A RULE OR POLICY OF THE NATIONAL ASSOCIATION OF SECURITIES
DEALERS, INC.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING MADE HEREBY, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELECTED DEALER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES,
OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
A SIGNIFICANT AMOUNT OF THE SECURITIES DESCRIBED HEREIN MAY BE SOLD TO
CUSTOMERS OF THE SELECTED DEALERS. SUCH CUSTOMERS SUBSEQUENTLY MAY ENGAGE IN
TRANSACTIONS FOR THE SALE OR PURCHASE OF SUCH SECURITIES THROUGH AND/OR WITH
THE SELECTED DEALER. ALTHOUGH THEY HAVE NO LEGAL OBLIGATIONS TO DO SO, THE
SELECTED DEALERS FROM TIME TO TIME MAY BECOME A MARKET MAKER AND OTHERWISE
EFFECT TRANSACTIONS IN SUCH SECURITIES. THE SELECTED DEALERS, IF THEY
PARTICIPATE IN THE MARKET, MAY BE A DOMINATING INFLUENCE IN THE MARKET FOR
THE SECURITIES DESCRIBED HEREIN. THE PRICES AND LIQUIDITY OF THE SECURITIES
MAY BE SIGNIFICANTLY AFFECTED BY THE DEGREE, IF ANY, OF THE SELECTED DEALERS'
PARTICIPATION IN SUCH MARKET.
OFFICERS, DIRECTORS AND AFFILIATES OF THE COMPANY MAY PURCHASE UP TO AN
AGGREGATE AMOUNT OF 10% OF THE SECURITIES OFFERED HEREBY AT THE PUBLIC
OFFERING PRICE. SUCH SECURITIES IF PURCHASED WILL BE PURCHASED FOR
INVESTMENT AND NOT WITH THE INTENT OF RESALE EXCEPT IN COMPLIANCE WITH
APPLICABLE LAW.
IN ADDITION THE SELECTED DEALERS, AT THE REQUEST OF THE COMPANY, MAY
SELL SHARES OFFERED HEREBY TO PERSONS DESIGNATED BY THE COMPANY, IF SUCH
SALES MAY LEGALLY BE MADE. SUCH PERSONS HAVE NOT YET BEEN SPECIFICALLY
IDENTIFIED BUT WOULD CONSIST OF FRIENDS AND BUSINESS ASSOCIATES OF
MANAGEMENT.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the information
and financial statements appearing elsewhere in this Prospectus.
The Company
Continental Capital & Equity Corporation ("CCEC" or "the Company"
hereafter), a Florida Corporation, incorporated in 1992, is a full service
financial public relations firm, headquartered in Longwood, Florida. In
February 1995 CCEC reincorporated to use "S" corporation tax status and
continued business. The Company was established primarily to provide pro-
active financial public relations strategies designed to enhance investment
community awareness of publicly traded companies.
Use of Proceeds
The Company intends to use the proceeds of this offering (net of
underwriting commissions and offering expenses), assuming the maximum shares
are sold at the price set by the Company of $7.00 per share, in the amounts
and priorities as follows:
Acquisitions $9,000,000
Expansion of working capital
and general corporate purposes $2,000,000
General and Administrative $ 600,000
Television Production/Marketing $ 500,000
Totals $12,100,000
(See "The Company" and "Use of Proceeds")
Risk Factors
The Company has at various times since its inception in 1992 encountered
substantial competition. Any potential purchaser of the shares should
carefully review all "Risk Factors" section and the "Financial Statements"
section herein.
The Offering
The Company proposes to offer 2,000,000 shares of its common stock at
the offering price of $7.00 per share as determined by the Company.
(See "Plan of Distribution" for information concerning the offering.)
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Net Proceeds to the Company(1)
Completed Offering $12,100,000
Common stock outstanding
prior to offering 4,000,000 shares
Common stock outstanding after
offering (2) 6,000,000 shares
Percentage of stock to be owned by Present Shareholder after offering
(2)(3)(4) - 67%
(1) Assumes the shares are sold at $7.00 per share, after payment of the
commission to the Selected Dealers of 10% of the proceeds and the deduction
of the offering costs of $500,000.
(2) Does not include up to 200,000 shares subject to employee incentive
stock option/share plans which may initially be offered to directors,
officers and employees of the Company. This plan has not been formally
approved and adopted by the Company.
(3) Based upon 6,000,000 shares to be issued and outstanding after the
sale of the total number of shares offered.
(4) These percentages assume that existing shareholders purchase no
shares offered hereby. As of June 10, 1998, the Company had one record
shareholder including nominees. An anticipated low trading volume of the
Company's shares would make share price susceptible to substantial price
swings should volume of any significant size and frequency occur in buying or
selling of the Company's shares.
Summary Financial Information
The following summary financial information should be read in
conjunction with the financial statements of the Company and related notes
included elsewhere in this Prospectus.
Financial information for the year ended December 31, 1997 is compared
to the year ended December 31, 1996.
December 31, 1997 December 31, 1996
Total Current Assets $2,254,086 $1,560,420
Other $31,992 $39,612
Total Assets $2,286,078 $1,600,032
Total Current Liabilities $129,000 $445,830
Total Shareholder's Equity $2,157,078 $1,154,202
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December 31, 1997 December 31, 1996
Total Revenues and Fees $5,608,722 $4,643,408
Total Cost of Revenues and Fees $1,225,580 $1,439,836
Income From Operations $4,383,142 $3,203,572
General and Administrative Expenses $3,205,119 $1,930,554
Total Other Income (Expenses) $559,414 $(16,085)
Net Income $1,737,437 $1,256,933
Basic and Diluted Earnings Per Common Shares $.43 $.31
Weighted Average Number of Common
Shares Outstanding 4,000,000 4,000,000
Net Income Prior to Pro Forma Adjustments $1,737,437 $1,256,933
Pro Forma Provision For Income Taxes $(506,500) $(487,000)
Pro Forma Net Income $1,230,937 $769,933
The following unaudited supplementary data presents net income per
share for the fiscal year ended December 31, 1997 and the three months ended
March 31, 1998 as adjusted to give effect to the proposed sale of common
stock as if it had occurred on January 1, 1997, for the 1997 year, or
January 1, 1998, for the three months ended March 31, 1998. The
calculations assume a sale price of $7.00 per share if the offering of shares
(2,000,000) is sold as of January 1, of the pro forma year, and no additional
income or loss has occurred.
Period
Dec. 31,1997 March 31, 1998
Net income before income
taxes as reported $.43 $.13
Adjustment to reflect
income tax expense $.13 $.06
Net income as adjusted $.30 $.07
Weighted average common
shares outstanding 4,000,000 4,000,000
Adjustment for the proposed
sale of 2 million shares 2,000,000 2,000,000
Number of common shares assumed
to be outstanding, as adjusted 6,000,000 6,000,000
Income per common share, as
adjusted for pro-forma income
tax expense $.30 $.07
Income per common
share, as adjusted to reflect
proposed sale of 2,000,000 shares $.20 $.04
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The following unaudited supplementary data presents comparative
summary financial information for the three months ended March 31, 1998
and 1997:
1st Quarter 1997 1st Quarter 1998
Total Revenues & Fees $1,059,789 $1,176,847
Total Cost of Revenues & Fees $177,622 $109,409
Income From Operations $882,167 $1,067,438
General and Administrative Expenses $633,358 $509,931
Total Other Income (Expenses) $74,974 $(24,394)
"S" Corp. Net Income $323,783 $533,113
Basic and Diluted Earnings Per
Common Share $.08 $.13
Weighted Average Number of
Common Shares Outstanding 4,000,000 4,000,000
(1) Gives effect to the sale of the offering of 2,000,000 shares offered
hereby at the offering price of $7.00 per share and the receipt
and application of the net proceeds of the offering by the Company
without giving effect to the exercise, if any, of the Selected Dealers'
Warrants for up to 200,000 shares. (See "Use of Proceeds").
COMPANY
Previous History
The original company was founded September 1, 1992, and commenced
acting as a financial publishing company for public companies. In 1995, the
company was reincorporated and the predecessor conveyed all of its assets,
name and business to a newly formed company solely owned by John Manion to
use "S" corporation tax status. The new company assumed the name
Continental Capital & Equity Corporation.
(b) BUSINESS OF ISSUER
General Information
Continental Capital & Equity Corporation ("CCEC"), a Florida Corporation,
originally incorporated 1992 in Florida, is a full service financial public
relations firm, headquartered in Longwood, Florida. The Company was
established primarily to provide pro-active financial public relations
strategies designed to enhance market exposure for public companies.
CCEC initially introduced a single proprietary product, a direct mail
piece entitled Inside Wall Street. Each issue of Inside Wall Street features
one public company and is designed to generate investor inquiries via a
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24-hour, toll- free number and a pre-paid business reply card. Upon
receipt, all investor responses are immediately captured in CCEC's data
bank, categorized, and each respective respondent is mailed a Corporate
Profile, which spotlights the fundamentals of the featured company. The
names of these potential shareholders are then forwarded to stockbrokers with
interest in the client company's industry and who have geographic
proximity to the respondent. These stockbrokers have been familiarized
with CCEC's client company. Through follow-up and proprietary tracking
methods, CCEC is capable of quantifying results and delivering tangible
evidence of lead conversions, retail market buying activity,
institutional involvement, and unsolicited order flow, the latter which
often occurs in discount brokerage houses.
Average response rates for successful national direct mail campaigns are
typically in the 1% to 1.5% range, yet Inside Wall Street has generated
regular average returns of approximately 4%. CCEC experienced response rates
of over 7% on two of its campaigns of 1997. This significant rate of
response is due to CCEC's ability to target and identify specific groups
of investors who have demonstrated a previous interest in the small and
micro-cap arenas.
In January of 1996, CCEC entered cyber space with the creation of its
web site, www.insidewallstreet.com. The web site provided CCEC with another
tool to increase the investor awareness of CCEC's publicly traded clients.
Achieving nearly 20,000 hits per month in the first year, the site
currently enjoys approximately 750,000 hits per month. The www.insidewallstreet
.com web site has also attracted the interest of major "advertisers"
including IBM, Charles Schwab Chase Manhattan, VISA, Investors Business
Daily and many others. CCEC anticipates the further integration of such
technology into client campaigns in the future, and the Company believes
this strategy will lead to enhanced revenue opportunities.
Recognizing that communication with a network of retail stockbrokers
is crucial to the success of every campaign, CCEC established its broker
relations department in January 1997. This internal organization initiates a
significant number of telephone calls per day to stockbrokers around the
world. The broker relations department also ships due diligence packages to
brokers, traders, analysts and institutional fund managers. The broker
relations department plays a key role in enhancing broad retail participation
and sizeable position taking in the common stock of various featured
clients. Activities of the broker relations department are constantly
monitored with results verified and captured in sophisticated tracking
systems. Results are then analyzed and conveyed to the client in
professional reports - both at interim periods and at the campaign's close.
In addition, CCEC continues to perform many other services for its
clients including writing and distributing press releases, coordinating
"road shows" and broker due diligence meetings, showcasing companies at
financial seminars, expos and trade shows, disseminating information via fax
broadcasting, effecting media coverage in trade and financial publications,
financial radio and television, and introducing its clients to interested
market makers and retail brokerage firms.
CCEC also has the ability to build corporate web sites for clients,
produce annual reports, introduce debt and equity financiers to clients
seeking funding sources, identify and evaluate prospective merger and
acquisition candidates for clients, and assist with the overall implementation
of client companies' business plans.
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Current Business Operations
1997 was the highest revenue and investment income producing year in its
history, with total realization of approximately $6.2 million, including
gains on sales of investments, resulting in pre-tax profits of approximately
$1.7 million. The clientele which CCEC is now attracting is evolving to reflect
more high cap companies trading on the AMEX and NASDAQ-NMS exchanges who are
seeking both retail and institutional participation. To service its clients,
CCEC is comprised of the following operating departments:
Corporate Sales
CCEC's current sales staff of nine individuals has responsibility
for identifying, negotiating, and coordinating all sales and marketing
efforts for the company.
CCEC's corporate sales staff evaluates fundamental and technical
issues associated with a prospective client, with the goal being to identify
obstacles to the client achieving specific market objectives. Upon the
completion of this step, the sales-person proposes and implements a
customized marketing plan designed to achieve the targeted objectives for
the client. CCEC's campaigns may take into consideration raising capital via
introductions to reputable investment banking contacts, evaluating
potential merger/acquisition candidates, increasing market awareness through
broader retail participation, and the achievement of greater awareness of
the client company in the investment community as a whole through
comprehensive Inside Wall Street direct mail and tele-marketing campaigns.
The CCEC corporate sales representative's goal is to become a strategic
partner of the client company.
Market Access Management Group
CCEC recently commenced the operations of the Market Access Program,
designed to provide higher cap companies with increased market exposure. CCEC's
Market Access Program involves primarily analysts, institutions, fund
managers, and industry oriented media. Contracts are long term (usually
24 months). CCEC believes that the Market Access Program represents a
logical integration of traditional financial public relations and
pro-active marketing strategies. By focusing on key relationships with
broker dealers, the financial media, institutions, and analysts, CCEC
believes its MAP representatives will be able to build additional
critical relationships with market allies on behalf of their client companies.
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Consulting Services
Another revenue source was created by CCEC's ability to consult in
recapitalizations for its clients. In most cases, CCEC representatives
refer their clients to funders who wish to have an active participation in
private placements, debt offerings, convertible debentures, or in
preferred stock purchases. CCEC is typically paid a consulting fee for
its services in structuring the recapitalization. CCEC often is then
employed as the financial public relations company for the client in
question. Equity funders have also become a considerable source of referral
business for CCEC, as they often insist that a financial public relations
campaign be in place prior, during and after an equity placement.
CCEC has also been strategically involved in a number of mergers and
acquisitions. These opportunities often occur because CCEC keeps active
files on clients which do not meet CCEC's criteria for representation.
These candidates may lack key management, working capital, product development,
or sufficient market penetration. However, when merged with or acquired by
another CCEC client or prospective client, the goals of all parties involved
can often be achieved.
Technology and Production
In addition to the revenues generated directly from the traditional
sales campaign, CCEC continues to develop other potential sources of
revenue. The CCEC Technology and Production Department (TPD) is responsible
for creating all the printed materials incorporated in CCEC's direct mail
campaigns, as well as creating and maintaining all CCEC web sites. With
experience on the world wide web and in color printing and graphics, the
TPD has also created revenue for CCEC by producing materials for CCEC's
clients. These materials include corporate literature, development of
company web sites, and complete production of direct mail packages for non-
investor use.
TPD has set its sights on capturing a percentage of the web site
development and maintenance work which is prevalent amongst CCEC's
current clientele, as well as other public companies. These services will
emulate those which TPD already performs for CCEC including the following:
www.insidewallstreet.com
- with nearly 750,000 hits each month, www.insidewallstreet.com is
proving to be a significant part of many Inside Wall Street direct
marketing campaigns. Features on this site are designed to provide a
wide range of resources for the potential investor. In addition to offering
the "Inside Wall Street" direct marketing piece online, the site gives
potential investors immediate access to fact sheets, stock quotes,
press releases, EDGAR filings, conference call transcripts, and e-mail
updates. The site also functions to generate a significant quantity of
investor leads for dissemination to the brokerage community.
www.insidewallstreet.com also features specialty areas of interest
including Hot Stock of the Week, direct or hyper links to other financial-
oriented sites, and reprinted commentary from industry analysts. Further,
the site supports sufficient traffic such that CCEC has been able to
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sell banner advertising to major companies like IBM, VISA, Chase Manhattan
and Charles Schwab. www.insidewallstreet.com has also entered into
revenue-sharing relationships with companies like Investors Business Daily.
www.brokerdata.com
- this site provides brokers with instant access to "fast fact
sheets", corporate profiles, and other relevant data on CCEC's client
companies. Designed with limited graphics which typically slow down
loading time, brokers can gather information rapidly and "hands free,"
thus providing a tool to help increase the effectiveness of their pre-
sentations and closing ratios. In 1998, CCEC expects to introduce new and
innovative tools on this site expressly for the stockbrokers, including
advanced industry education opportunities, Regional Investment Banking
association conference schedules, and other relevant industry information.
www.smallcapfinancial.com
- designed as a "proving ground" for new and innovative Internet
applications, smcp.com is a tool for delivering information to the
investment community. Specifically, this site provides the means to
test and qualify such applications as "real audio" conferences with
client company executives, as well as live stock quotes. Once these
functions are sufficiently tested and proven, they will be introduced on
the www.insidewallstreet.com site. In 1998, CCEC may also consider
utilizing this site to generate an alternate source of revenue by
permitting financial newsletter writers and other financial public
relations firms to purchase space on the site for shared revenue
opportunities.
www.prpower.com
- this site represents CCEC's "store front" on the web. It allows
potential clients to explore the services offered by CCEC, as well
as the ability to contact the company directly via e-mail, phone, fax,
or mail.
Technology personnel within TPD are capable of creating and maintaining
corporate web sites for client companies, producing CD-Rom versions of
annual reports or other corporate presentations, and creating
interactive sales tools for clients which incorporate slide show
presentations, live video and audio spots, and computer generated images.
Collectively, these capabilities represent additional revenue and profit
potential for CCEC in 1998 and beyond. CCEC intends to exploit these
opportunities through an aggressive sales and marketing program targeting
both CCEC's client and other organizations seeking electronic support
services.
Management Information Systems
CCEC mail campaigns, radio programs, television commercials and
Internet pages are designed to create investor responses. The names,
addresses and phone numbers of investors which are generated by these
media campaigns are managed in CCEC's proprietary database. The names are
categorized, profiled, and verified for accuracy, assuring that users of
these names will receive 98% guaranteed accuracy and deliverable
addressees. CCEC has invested in customized, proprietary software systems
which are capable of consolidating relevant geographic, demographic and
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psychographic criteria associated with each captured name, be it an individual
investor or retail stockbroker.
CCEC's Management Information Systems (MIS) department also plays a
key role in assisting the sales function as it is responsible for the
marketing and fulfillment of specialty list orders from major direct mail
users including the Republican National Party, Forbes, MBNA National Bank,
Investor Business Daily, The Wall Street Journal, USA Today and other
clients. The result of involving the MIS Department in sales of the
Company's lists is a savings of nearly $90,000 in annual costs and the
potential to generate additional revenues.
Operations Department
The Operations Department has the responsibility of supervising
all aspects of production, lead distribution, and back-end analysis of
each Inside Wall Street campaign, in addition to providing general sales
support. Serving as the central point of activity on each campaign,
this department remains in constant communication with each client company,
coordinating all copywriting, editing, creative and production issues,
writing and disseminating press releases, tracking and monitoring broker
performance and overall campaign results, cultivating and overseeing
relationships with commercial vendors and service providers, and serving as
the primary liaison between all internal divisions.
Broker Relations Department
CCEC's Broker Relations Department initiates a significant number of
calls per day and sends substantial quantities of due diligence packages
to brokers, traders, analysts and institutional fund managers in an effort to
stimulate interest on behalf of each client company. It is this department
which is responsible for attracting new market makers, initiating broad
retail participation, and coordinating sizable position-taking in each featured
client's stock. Additionally, the Broker Relations Department generates a
significant number of leads from the brokerage community. These leads are
given to the CCEC Corporate Sales Staff and, at times, result in a Financial
Public Relations Agreement being signed.
Financial Consulting Team
Led by CCEC's Chairman of the Board, the Financial Consulting
Team was created to advise the management of both publicly listed
and privately held corporations seeking assistance with sophisticated or
complex corporate objectives, i.e. shell acquisition, mergers/acquisitions,
specialized funding situations, restructuring considerations, investment
banking introductions and other related matters. Fees associated with
financial consulting services depend wholly on the objective(s) to be achieved
and may include compensation payable in monthly retainer fees, cash,
restricted shares, or a combination of all the above. This area has the
potential to become one of the fastest growing segments of CCEC's
business. The Financial Consulting Team consists of John Manion
(President), Jim Schnorf (Chief Operating Officer/Chief Financial Officer),
and Michael Manion (Director of Financial Consulting Services).
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Management and Operations
Business Plan
The primary goal of Continental Capital & Equity Corporation is to
become a widely respected financial public relations firm for public
companies. There are a number of steps that appear to be clearly defined as
the Company strives for the attainment of that goal. These include but are not
limited to the following:
* Creation or acquisition of a financial television program;
* Acquisition of competitive and profitable financial public
relations firms;
* Acquisition of profitable and synergistic businesses; and
* Continued recruitment and technical training of middle and
upper management.
Mission Statement
Continental Capital & Equity Corporation's mission is to maximize
market liquidity and sponsorship for our clients. CCEC is committed to
results with integrity, and to bridging the information gap between publicly
traded companies, investors and the brokerage industry.
Television Joint Venture
On April 16, 1998, Capital MediaPartners, Inc., a corporation
controlled by John Manion, President of CCEC, entered into a joint venture
agreement with Inside Wall Street, Inc., a Florida based corporation not
affiliated with the Registrant which has developed a concept for a thirty
minute, nationally broadcast television news show to be aired weekly. This
joint venture known as Madison & Wall Partners will provide CCEC with an
additional product for its clients that management believes will be
complimentary and synergistic to the Company's existing services. CCEC
believes that this additional service will attract new clients, some of which
will likely retain CCEC for financial public relations services. Pending the
outcome of the CCEC's public offering and the success of this joint venture,
CCEC may contemplate the acquisition of the partnership interest ofInside
Wall Street, Inc. and/or Capital Media Partners, Inc. in this venture.
The show will be hosted by Bob Berkowitz, an emmy winning television
anchor person. Each segment is planned to consist of three client companies,
providing each company with approximately six to seven minutes of air time
for the respective company's chief executive officer (or other executive
level personnel) to describe the company and its business to the investment
community.
The first client for the joint venture was signed June 16, 1998. It is
anticipated that the standard agreement will yield revenues of approximately
$90,000 per client ($270,000 per show).
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Certain CCEC resources will be utilized in the development of the joint
venture, including the services of CCEC's technology area. CCEC anticipates
the joint venture will assign revenues to CCEC in reasonable proportion to
the resources that CCEC commits to the venture. A website,
www.madisonwall.com, is being designed to integrate with the joint venture.
It is anticipated that each show will be digitized and accessible on the
Internet for a period of up to sixty days after the air date.
Consolidation of Highly Fragmented Financial Public Relations Industry CCEC
is considered a "non- traditional" financial public relations firm. There
are many other firms which also fall under this broad classification,
throughout the United States and abroad. Conversely, there are scores of other
financial public relations firms which prefer using a more "traditional"
approach to generating investor awareness for their clients. This traditional
approach provides for the dissemination of corporate press announcements
through wire services, the fulfillment of requests for investor kits, and the
arranging of tele-conferences and on-site broker due diligence meetings in
select cities. A few of these firms also specialize in the design and
production of quarterly reports and annual reports for their clients.
In many cases, a public company will hire a "traditional" firm in
conjunction with CCEC or immediately following one of CCEC's direct
marketing campaigns. The costs associated with traditional financial public
relations typically average between $50,000 and $100,000 each year plus
expenses, as compared to a typical fee of approximately $250,000 charged by
CCEC for a 6-8 month comprehensive Inside Wall Street direct marketing
campaign.
Believing that CCEC had the necessary infrastructure in place to
compete in the delivery of more "traditional" services, and thus capture
additional marketshare in the "traditional" financial public relations
segment, CCEC launched the Market Access Program in November, 1997.
CCEC management has begun pursuing acquisition candidates currently
operating within the traditional financial public relations arena. Potential
acquisitions must fulfill a number of strategic and synergistic criteria
including location, existing infrastructure, industry experience, quality of
current clientele, management, and revenue and earnings growth potential.
CCEC desires to establish a New York City satellite office, in part to
pursue primary acquisition targets geographically headquartered where most of
the world's trading activity takes place. Secondary markets where CCEC believes
that a branch office may prove advantageous include Chicago or Minneapolis
and Los Angeles or San Francisco. Preliminary discussions with certain
qualified candidates in these markets have been initiated.
CCEC's management believes there are a significant number of small
financial public relations firms which make impressive impacts on the
investment community via specific niche selection. CCEC believes that
significant synergy can be amassed by integrating the resources of CCEC and
select firms within the industry.
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Vertical Integration of Complimentary Services
Although CCEC's management places less emphasis on this segment of its
business plan, vertical integration of complimentary and synergistic services
makes fiscal sense to the long term growth of CCEC. CCEC is one of the
largest accounts of a regional printing company located in Orlando, Florida.
CCEC's Chairman is also knowledgeable in the printing industry. An
appropriate acquisition could provide CCEC with a pricing advantage over
competitors - especially in view of the fact that CCEC intends to enter
annual report printing and distribution, a market which is estimated at
$3 billion per year. The ability to print annual reports as well as Inside
Wall Street direct mail pieces and corporate profiles at lower costs while
creating increased revenues for the printing company could serve to enhance
CCEC's competitive advantages.
CCEC also believes that the acquisition of a reputable advertising
agency would help CCEC introduce new disciplines to its clients. Having a
full service ad agency on board could promote greater creativity to the
design elements of annual reports, direct mail pieces, and corporate
brochures. In addition, as ad agencies are large print buyers, such an
acquisition might further enhance the desired acquisition of a printing
company.
The Investor Relations Industry
The financial public relations industry is growing at a rate that is
proportionate to the growth in the number of publicly traded companies. In
1992, when CCEC commenced operations as a financial public relations company,
there were approximately 7,000 publicly traded companies in the United
States. By 1997, that number had more than doubled to approximately 15,000.
According to a 1996 survey conducted by the National Investor Relations
Institute (NIRI), the average publicly traded company has an annual investor
relations budget of $459,000. Larger blue chip companies spend on average
over $850,000 on their annual investor relations budgets. The NIRI also
estimates that the total investor relations industry exceeded $7.5 Billion
in 1996. This figure does not include expenditures such as stock market fees,
allocated department overhead, and the estimated $3 Billion per year that is
spent on annual reports.
Major Companies have entire financial public relations departments whose
primary responsibility is to stimulate broad interest and participation in
the corporation's securities. While these larger firms compete for mutual
fund dollars, pension plan investments, and large institutional money, lesser
firms are forced to vie for the attention of retail broker dealers and
small cap growth funds. This competition frequently requires the smaller firms
to participate in "road shows". CCEC believes there is a better way. By
maintaining relationships with a large number of brokers all over the world,
CCEC is often able to match publicly traded clients with the brokers who are
most likely to appreciate that respective client's attributes. CCEC
believes this noninvasive method provides a more attractive mechanism for client
companies.
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"Small Cap" Stock Market Trends
The investment community has historically favored blue chip stocks
over the small cap issues, even though, in many instances, these smaller
companies may offer investors greater potential for significant growth and
capital appreciation. One reason is the limited amount of media coverage
which is afforded these emerging growth companies. A lack of media exposure
makes it extremely difficult for small companies to communicate their messages
to individual investors. There are thousands of these smaller issuers
competing for the same investor dollar. Even more interesting is Wall
Street's definition of small cap. While it varies substantially, the general
consensus seems to be that "small cap" refers to companies with less than a
$500 million market cap. Those with less than a $100 million market cap are
considered "micro-cap".
There are a number of publicly traded companies that are successfully
competing for the small cap dollar. On the Nasdaq National Market System (NMS)
the 100 most actively traded stocks, representing approximately 4% of the
total number of NMS companies, accounted for nearly 37% of the total trading
volume in 1997. The situation is even more dramatic on the Nasdaq small cap
exchange where the top 100 issues, approximately 5% of the total, accounted
for well over 44% of the trading volume. The top issuers on NASDAQ-NMS had
average daily trading volumes of 1.7 million, and the top issuers on the
small cap had average daily trading volume of 200,000 shares. The balance of
Nasdaq companies had comparable average figures of 70,000 on NMS and 15,000
on Small Cap. Poor liquidity can limit the future prospects of companies
for fundings, acquisitions, internal growth and expansion.
CCEC believes it comprehends the problems associated with competing in
the small cap arena and has established comprehensive marketing programs
to bring lesser known companies to the fore- front of the investment
community. CCEC's approach is to educate and inform the investment
community as a whole about the attributes of client companies.
CCEC's Market Niche
The public companies which are generally the most attractive to CCEC are
those with annual revenues over $10 million, but generally less than $100
million. Another criteria CCEC utilizes in selecting clients is to find those
that appear to be undiscovered by the investment community. CCEC looks for
companies where the competition may be trading at considerably higher multiples
or situations where prospective clients are experiencing low trading volumes,
in particularthose circumstances where CCEC believes the client's
underwriters have failed to provide substantial after-market support.
CCEC believes that companies which fit these size requirements offer a
more appropriate opportunity for reward relative to risk. CCEC believes that
once a company generates annual sales of $10 million or more, it generally
has the infrastructure in place so it does not experience the level of
growing pains often experienced by smaller firms. In addition, larger firms
have the ability to grow more quickly due to greater borrowing capacities and
more robust capital structures.
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Principal products or services and their markets. The Company offers
financial public relations services, primarily to public companies in the U.S.
Distribution methods of the products or services. The Company
presently has one office and nine sales personnel to offer its services to the
public.
Status of any publicly announced new product or service. All services
announced are in usage by the Company for clients (see "Television" on page 14).
Competition, business conditions and the small business issuer's
competitive position in the industry and methods of competition. Registrant
is a mid-sized participant among the firms which engage in the same line of
business (public relations for public companies). A number of Registrant's
competitors may have greater financial and personnel resources and may possess
greater technical expertise than the Registrant. Registrant has encountered,
and will continue to encounter, substantial competition from Registrant's
competitors.
Customer, sales, Markets and Marketing
The company markets and sells its services primarily to growth stage,
publilcly traded companies which trade on United States based exchanges and
the over the counter market.
The following tables reflect an analysis of the Company's sales according
to different categories:
SALES TO FOREIGN CUSTOMERS
Foreign % of Total Sales
None 0 0
SALES TO CUSTOMERS IN EXCESS OF 10% OF SALES
Customer Amount % of Total Sales Number of Customers
None 0 0 0
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Competition
Registrant is a mid-sized participant amoung the firms which engage in the
same line of business (financial public relations) which Registrant has chosen
as its principal area of business concetration. Some of Registrant's
competitors are companies with greater financial and personnel resources than
the Registrant. The management experiance of Registrant's officers and
directors are extensive in the financial public relations industry and
Registrant has encountered, and will continue to encounter, substantial
competition in the public relations industry.
Employees
Number of total employees and number of full-time employees. Registrant
at March 31, 1998, employed approximately thirty (30) full-time persons
in its offices in the Orlando, Florida metro area.
Need for any govrnement approval of principal products or services. If
government approval is necessary and the small business issuer has not yet
received that approval, discuss the status of the approval within the
government approval process. No governnmental approval is necessary for the
company's products or services.
Effect of existing or probable governmental regulations on the business.
The Securities and Exchange Commission and the national stock exchanges
have existing rules and regulations and may enact new regulations relating
to the business of Registrant. To the extent such regulations are more
restrictive, the business of registrant may be adversely affected due to costs
or difficulties in compliance with such regulations.
Property and Equipment
The Registrant's executive offices, currently comprised of approximately
5,600 square feet, are located at 195 Wekiva Springs Road, Suite #200, Longwood,
FL 32779. These offices are leased from Greystone Venture, a commercial real
estate entity owned by the Company's Chairman, John Manion, and his wife Lisa
at a base rent of $7,000 per month plus an operating expense assessment, with
the total current monthly lease payments being approximately $10,000 per month.
The lease runs through February 2003.
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Dependence on one or a few major customers. Registrant is dependent
primarily on public companies for its clientele. The Registrant's customer
base is diverse, and Registrant is not dependent on any particular customer
for a material percentage of its revenues.
Patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts, including duration. The Company currently has
no patents, trademarks or licenses.
Need for any government approval of principal products or services. No
government approval of principal products or services is necessary.
Effect of existing or probable governmental regulations on the
business. Registrant intends to concentrate its immediate efforts in financial
public relations. The effect of governmental regulations on its business
should not cause Registrant to incur any delays in continuing operations,
however changes in regulations may require adjustments at expense to the
Company.
Research and development activities. Registrant does not intend to engage
in any research and development activities.
Number of total employees and number of fulltime employees.
Registrant employs approximately thirty (30) full time staff persons in its
offices in Longwood, Florida including officers. The Company has sales
personnel all of whom are considered fulltime employees.
Real Property
The Company owns no real property. It does lease office space from its
principal John Manion. (See "Certain Transactions").
Legal Proceedings
The Company, in the normal course of business, is engaged in lawsuits, as a
plaintiff or defendant, involving matters such as compensation disputes,
employment matters, contract disputes and other matters related to its
business. Management believes that none of the lawsuits presently pending
will have a material adverse impact upon the Company.
Submission of Matters to a Vote of Security Holders. No matters have been
submitted to security holders in the past year.
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RISK FACTORS
The securities being offered hereby involve a high degree of risk.
Prospective investors, prior to making an investment, should carefully read
this entire prospectus and consider, among other things, the following
risks and speculative factors inherent in and affecting the business of the
Company:
1. Company History
The Company was organized as a corporation in 1992, and has engaged in
active financial public relations business since inception. Long-term
operating results which might enablea prospective investor to evaluate the
future prospects of the Company are limited and not assured in any way.
All risks inherent in an operating corporate business in a competitive
environment are present in the Company's business.
2. Management
Experience of management is generally limited to management within
the public relations industry as detailed in the Management section.
(See "Management".) The Company's Chairman has been engaged in the
Company business since 1992.
Dependence on Key Employees
The Company's chairman, John Manion and certain of the Company
Management staff have extensive experience in the Company's business.
The Company's future success will depend on the contributions of Management.
The officers and employee/directors of the Company will devote full
time to its business affairs but may have other investment interests.
The Company has not obtained key man life insurance on any of its
officers or directors. Notwithstanding the combined experience and time
commitment of management, loss of the services of any of these individuals
could adversely affect development of the Company's business.
3. Dilution
The Company may issue additional shares to finance its future capital
and operations requirements and for acquisitions of other companies to
consolidate into its operations. Any such issuance will reduce the present
percent of ownership of previous investors (see "Risk Factor - Control") and
may result in additional dilution to investors purchasing shares from this
offering.
4. Nature of Public Relations Business
The Company's business is speculative, involves the commitment of
operating capital, and exposes the Company to potentially substantial
losses in the event the company is
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unsuccessful in continuing to contract with new clients. In addition, the
Company will be in direct competition with other organizations which may be
significantly better financed and staffed than the Company.
5. General Economic and Other Conditions
The Company's business may be adversely affected from time to time by
such matters as changes in general economic and industrial conditions as
they exist in the United States, changes in government policy, stock market
fluctuations, recessions and other factors of a general nature.
6. Absence of Dividends
The Company does not have a policy for paying dividends, and it is
currently anticipated that no cash dividends will be paid in the immediate
future. Any future decision to pay cash dividends will be made on the
basis of earnings, alternative needs for funds, and other conditions existing
at the time.
7. Control
More than fifty percent (50%) of the total number of authorized shares
of the Company will remain unissued if all the shares offered hereby are sold
and warrants are exercised. John Manion, President of CCEC, will also
retain controlling interest in the Company after the offering. The board of
directors has the power to issue such shares without shareholder approval. The
issuance of any such shares to persons other than the existing shareholders
would reduce the amount of control held by the shareholders following this
offering. There are presently no commitments, contracts, or intentions to
issue any additional shares to any other persons. The Company may issue stock
to acquire other companies complimentary to its business, and, if opportunities
become available which can best be obtained by issuing shares of the
Company's stock, the Company will consider the issuance of its shares for
such opportunities. In the event that any such shares are issued, the
proportionate ownership and voting power of every other shareholder will be
reduced.
8. Competition
The Company will be required to compete with multiple entities which are
larger, and which have greater resources than the Company. Operating losses
could result from the effect of such competition.
9. Lack of Diversification.
The Company's activities will be limited to its stated business of
financial public relations for public companies and services associated with
and enhancing its core business. To the extent this lack of diversification
into other businesses increases its susceptibility to market downturns, the
Company will be at greater risk than a more diversified company.
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10. Regulation
The Company competes in a regulatory environment, and is therefore
potentially subject to fines, penalties, and restrictions on certain of its
activities.
The Company presently accepts, in a number of circumstances, partial
payment in the form of shares of stock and/or options in its client
companies. If the SEC was to restrict or prohibit such activities, the
Company could potentially be adversely affected if the Company is unable to
implement an alternative to this type of compensation arrangement.
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RISK FACTORS RELATING TO OFFERING
1. Disproportionate Risk
Immediate Substantial Dilution of Purchasers' Investments.
The Officers, Directors and present shareholders of the Company have acquired
their stock in the Company at a cost less than that which the investors
purchasing pursuant to this prospectus will pay for their stock holdings.
Therefore, new investors will bear most of the risk of loss, while control of
the Company will remain in the hands of the present shareholders. Further,
assuming the shares offered hereby are sold, an investment in the common
stock of the Company by the purchaser will result in an immediate substantial
dilution (approximately $4.54 per share or approximately 65%) of the net
tangible book value of the common stock from the offering price which the
purchasers will have paid for their shares.
2. Nature of Offering
Arbitrary Offering Price: The offering price of Seven Dollars, ($7.00)
per Share has been arbitrarily determined and bears no relationship to book
value, par value or any other established criterion of value.
Market For Shares: There is no market for the Company's shares on the
NASDAQ Electronic (OTC) Bulletin Board or otherwise and no assurance can be
made that a market will ever develop after this offering is concluded. The
Company will seek listing on NASDAQ-NMS concurrent with the completion of the
offering.
Best Efforts Offering: The Shares are offered and shall be sold on a
"best efforts, all or none" basis by the issuer, 2,000,000 shares at $7.00
per share.
No one has made any commitment to purchase or take down any shares.
There is no assurance that all or any of the offered shares will be sold or
that any proceeds will be available to accomplish the Company's proposed
program as herein described. (See "Plan of Distribution".)
3. Speculative Nature of Investment. Due to the speculative nature of the
Company's business, it is possible that the investment in the shares offered
hereby will result in a total loss to the investor. Investors should be able
to financially bear the loss of their entire investment. Investment should,
therefore, be limited to that portion of discretionary funds not needed for
normal living purposes or for reserves for disability and retirement.
4. Significant competition. Potential investors should be made aware of
the difficulties which may be encountered by any company in the financial
public relations business, especially in view of the intense competition from
existing and more established businesses, who are also seeking to expand market
share. If the Company's plans prove to be unsuccessful, the stockholders
may lose all or a substantial part of their investment.
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5. No Assurance of Public Market for Securities. Prior to this offering
there has been no public market for the common stock of the Company and there
can be no assurance that a trading market will develop at the conclusion of
this offering, or even if such a trading market should develop that the
shares may be resold at their original offering price or near the offering
price. Any market for the common stock of the Company that may develop may be
substantially limited.
6. No Underwriter. The Shares are being offered by the Company and
selected dealers on a 2,000,000 Shares, "best efforts, all or none" basis.
The Company has not retained an underwriter to assist in offering the Shares.
The officers and directors of the Company have no experience in the offer and
sale of securities on behalf of an issuer and, the Shares may not all be sold
even with the assistance of selected broker-dealers. There is no assurance
the Company and selected broker-dealers are capable of selling all, or any,
of the Shares offered.
7. Burden to Public Investors. The financial risk of the Company's
proposed activities will be borne primarily by the public investors, who,
upon completion of this offering, will have contributed the significant
portion of the Company's capital.
8. Additional Financing May Be Required. Although the Company believes
that the funds raised in this offering will be sufficient for its needs, the
conduct of the Company's business may require availability of additional
funds. The Company may encounter difficulty in obtaining these funds.
Moreover, even if financing were to become available, it is possible that the
cost of such funds would be high and possibly prohibitive.
9. No Dividend Policy and None Anticipated. The Company does not have a
formal dividend policy nor does it contemplate or anticipate paying any
dividends upon its common stock in the immediate future.
10. No Commitment to Purchase Shares. No entity has any obligation to
purchase any of the Shares offered. Consequently, no assurance can be given
that any Shares will be sold. This "best efforts" offering is on a 2,000,000
Share "all or none" basis.
11. Shares Eligible For Future Sale. All outstanding Common Shares are
"restricted securities" and under certain circumstances may in the future be
sold in compliance with Rule 144 adopted under the Securities Act of 1933, as
amended. Future sales of those shares under Rule 144 could depress the
market price of the Common Shares in any market which may develop. Rule 144
provides, among other things, that persons holding restricted securities for a
period of one year may each sell in brokerage transactions every three months
an amount equal to 1% of the Company's outstanding Common Shares or the
average weekly reported volume of trading during the four calendar weeks
preceding the filing of a notice of proposed sale, whichever is greater.
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12. No Assurance of Successful Acquisitions
A significant portion of the proceeds from this offering are anticipated
to be utilized in consummating acquisitions and/or joint ventures. There can
be no assurance that the Company will be successful in identifying and
consummating such transactions in a manner and at values that are beneficial
to the Company.
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DILUTION AND COMPARATIVE DATA
The following table summarizes the comparative ownership and capital
contributions of existing shareholders and investors in this offering as of
March 31, 1998 (as adjusted for distributions to sole shareholder after
March 31, 1998) assuming maximum number of shares offered hereby are sold:
Percent
Percent Total of Total
Shares of Consideration Consideration Average
Owned Total Paid Paid Price
Shares Per
Share
Current
Shareholder 4,000,000 67% 2,645,980* 16% $.66
New Investors 2,000,000 33% 14,000,000 84% $7.00
Total 6,000,000 100% 16,645,980 100%
*Computed as estimated pre-offering shareholder's equity.
Without taking into account any changes in the net tangible book value
after March 31, 1998, other than to give effect to the issuance of common stock
offered hereby at a price per share of $7.00 (after deduction of underwriting
commissions and offering expenses), the following table illustrates the
approximate dilution to be incurred by public investors:
Net Tangible Book Value per share before offering(1) $.66
Net Tangible Book Value per share after offering(2) $2.46
Increase per share attributable to payments by new investors $1.80
Dilution per share to new investors(3) $4.54
Dilution per share as percentage of price to new investors(4) 65%
(1) Net Tangible Book value per share before offering is determined by
dividing the tangible net worth of the Company as of March 31, 1998 (assets
less total liabilities and intangible assets) by the number of outstanding
shares of common stock and is exclusive of up to 200,000 warrants to be issued
to the Selected Dealers.
(2) Net tangible book value per share after offering is determined by
dividing the tangible net worth of the Company as of March 31, 1998 plus the
estimated net proceeds from the issuance of common stock offered hereby
($12,100,000) by the number of outstanding shares of common stock plus the
number of shares issued in the offering (2,000,000 shares), exclusive of up
to 200,000 warrants to be issued to the Selected Dealers.
(3) Dilution is the difference between the offering price of $7.00 and the
net tangible book value per share immediately after the offering.
(4) Dilution per share as the percentage of price to new investors
calculated by dividing the net tangible book value per share after the
offering by the offering price per share of $7.00.
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In the event of the full exercise of all outstanding warrants and the
sale of the maximum number of shares, there would be 6,200,000 sharesissued
and outstanding. On that basis (a) the present shareholder would hold in the
aggregate 4,000,000 shares (representing approximately 65% of the outstanding
shares of common stock), (b) the public purchasers would in this offering
hold in the aggregate 2,000,000 shares representing approximately 32% of the
outstanding shares of common stock, and (c) the Selected Dealers would hold
in the aggregate 200,000 shares, representing approximately 3% of the
outstanding shares of common stock.
USE OF PROCEEDS
The net proceeds to the Company, after deducting commissions and expenses
of this offering as of the date of this Prospectus will be approximately
$12,100,000 if the shares offered hereby are sold.
The following schedule illustrates the manner in which the proceeds of
this offering are expected to be applied and allocated:
$14 Million Offering
$600,000 General & Administrative
$2,000,000 Working Capital and General Corporate Purposes (1)
$9,000,000 Acquisitions of Companies in Related Businesses
$500,000 Television Production and Marketing
$1,900,000 Commissions and Expenses of Offering
$14,000,000 Total
(1) Any net proceeds received from the exercise of the Underwriter's
warrants would be added to working capital.
Proceeds Usage
The Company intends to utilize approximately $2,000,000 of the net
proceeds for working capital and $600,000 for general and administrative
purposes.
Working capital will be used to fund geographic expansion, expansion
into new service arenas and to fund general growth of the Company. A total
of $9,000,000 will be used for acquisition of other complimentary companies,
as the opportunities may arise. Currently, various acquisition opportunities
have been identified, and confidentiality agreements have been signed with
multiple target companies. No letters of intent or definitive purchase
agreements have been executed.
The Company anticipates utilizing up to $500,000 of the proceeds to
assist in the development of a nationally syndicated television program (see
"Television Joint Venture" on page 13).
27
<PAGE>
The foregoing represents the Company's best estimate of its allocation
of the proceeds of this offering, based upon the current state of its
business operations, its current plans and current economic and industry
conditions. Management believes that the net proceeds of this offering,
together with funds anticipated to be generated from operations, will be
sufficient to satisfy the Company's cash requirements for at least twelve
(12) months following completion of this offering. In the event of revenue
shortfalls, there can be no assurance that loans will be available under any
future credit arrangements. Further, there can be no assurance that
additional funds will not be required for working capital purposes during
such period or that such funds, if required, will then be available on terms
satisfactory to the Company, if at all.
Pending utilization of all of the proceeds of this offering, the Company
may utilize a portion of the net proceeds to make temporary investments in
interest-bearing savings accounts, certificates of deposit, United States
government obligations, and high grade commercial paper.
Market for Registrant's Common Equity and Related Stockholder Matters
(a) The Company has no shares which have been traded publicly in the past.
(b) Holders
As of June 10, 1998, there was 1 shareholder of record of the
Registrant's Common Stock.
Registrant is authorized to issue Fifty Million (50,000,000) Common
Shares, par value of $.01. 4,000,000 shares of Common Stock are issued and
outstanding as of June 10, 1998.
The Registrant paid cash dividends on its Common Stock to John Manion
in 1997 in the amount of $734,561 (the Company was an "S" corp. for all of
1997, and thus Company profits are taxed at the shareholder level) and has no
present intention to declare or pay cash dividends on the Common Stock in the
immediate future. The Registrant intends to retain any earnings which it may
realize in the immediate future to finance its operations. Future dividends,
if any, will depend on earnings, financing requirements and other factors.
28
<PAGE>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as
of March 31, 1998 and (ii) such capitalization as adjusted as of such
date to give effect to the issuance and sale of the maximum shares of the common
stock offered hereby at $7.00 per share and the application of the net proceeds
therefrom.
March 31, 1998 As Adjusted
ASSETS $4,622,117 $16,722,117
Deferred Revenue 1,962,847 1,962,847
Due Related Party 4,000 4,000
Accounts Payable/Accrued 9,290 9,290
Payroll Taxes
TOTAL CURRENT LIABILITIES $1,976,137 $1,976,137
LONG TERM DEBT -- --
STOCKHOLDER'S EQUITY
Capital Stock - ($.01 par value,
50,000,000 shares authorized,
4,000,000 shares issued
and outstanding pre-offering and
6,000,000 issued and outstanding
post-offering) 40,000 60,000
Paid In Capital -- 12,080,000
Retained earnings (deficit) 2,605,980 2,605,980
TOTAL STOCKHOLDER'S EQUITY $2,645,980 $14,785,980
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $4,622,117 $16,722,117
29
<PAGE>
[CAPTION]
<TABLE>
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for
the Company which have been derived from the Company's financial
statements. The financial statements as of and for the year
ended December 31, 1997, have been audited by Moore Stephens
Lovelace, P.A., the Company's independent auditors. The financial
statements for the three months ended March 31, 1997 and 1998 are
unaudited, but, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary
for fair presentations of the results of operations for these periods,
and are not necessarily indicative of results for an entire year or of future
results. The selected financial data should be read in connection with the
financial statements and related notes included elsewhere herein.
<S> <C> <C> <C>
Year Ended 12/31/97
3/31/98 3/31/97
REVENUES AND FEES
Financial public
relation services and fees $771,681 $938,170 $4,682,223
Consulting service 102,131 15,619 736,999
Referral and finders fees 303,035 106,000 189,500
TOTAL REVENUES AND FEES $1,176,847 $1,059,789 $5,608,722
COST OF REVENUES AND FEES
Internet advertising 17,345 31,465 287,938
Pre-press and printing 23,444 59,709 272,424
Postage and related expense 36,188 44,319 251,163
List services 3,567 7,560 114,169
Commissions and fees 19,948 2,600 59,875
Consulting 500 7,500 35,000
Press releases 3,470 7,365 33,199
Other 4,947 17,104 171,812
TOTAL COST OF REVENUES AND FEES $109,409 $177,622 $1,225,580
INCOME FROM OPERATIONS $1,067,438 $882,167 $4,383,142
GENERAL AND ADMINISTRATIVE EXPENSES 509,931 633,358 3,205,119
OTHER INCOME (EXPENSES)
Interest Income 3,346 2,617 21,151
Gain (loss) on investments (33,497) 64,442 470,383
Interest expense -- -- (102)
Miscellaneous income 5,757 7,915 67,982
TOTAL OTHER INCOME (EXPENSES) ($24,394) $74,974 $559,414
PRE-TAX NET INCOME $533,113 $323,783 $1,737,437
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Balance Sheet Data As of March As of December As of December
31, 1998 31, 1996 31, 1997
Total Assets $4,622,117 $1,600,032 $2,286,078
Total Liabilities 1,976,137 445,830 129,000
Stockholder's Equity &
Retained Earnings 2,645,980 1,154,202 2,157,078
Cash Dividends/"S"
Corp. Distributions
Per Common Share $.01 $.01 $.18
30
<PAGE>
The following unaudited supplementary data present net profit per common
share for the fiscal year ended December 31, 1997, and the three months
ended March 31, 1998, as adjusted to give effect to the proposed sale of
common stock as if it had occurred on January 1 of the pro forma year. The
calculations assume a sale price of $7.00 per share if the offered shares
are sold at the beginning of the pro forma period.
December 31, March 31,
1997 1998
Pre-tax net income as reported $1,737,437 $533,113
Pro-forma provision for income taxes (506,500) (267,410)
Pro-forma net income as adjusted $1,230,937 $265,703
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
As reported 4,000,000 4,000,000
Adjustment for the proposed sale 2,000,000 2,000,000
Number of common shares assumed to be
outstanding, as adjusted 6,000,000 6,000,000
Pro-forma profit per common share, as
reported $.30 $.07
Adjustment (.10) (.03)
Pro-forma profit per common share, as
adjusted $.20 $.04
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
CURRENT OPERATIONS
The company has been managed as a private company for the benefit of its
sole shareholder since its inception. The company is involved in the
transition of management from a private company to the planning and
management of a public company for the prospective benefit of individual
shareholders. The capital being raised through the offering will be used
primarily for:
a) to provide operating capital; and
b) to provide capital to make additional acquisitions
c) to commence new programs
At year end 1997 the Company's assets increased to $2,286,078 compared
to $1,600,032 at the end of 1996. The increase was primarily a result of sales
increases to client companies.
Liabilities decreased significantly as a result of operations. At year end
1997, liabilities were $129,000, a decrease of 71% over 1996 year end
liabilities of $445,830.
31
</TABLE>
<PAGE>
Stockholder's equity at year end 1997 was $2,157,078, an increase of 86.8%
over the 1996 stockholder's equity of $1,154,202. The Company continued to
increase the stockholder's equity through operational profitability.
Three Months' Operating Results
The Company had $1,176,847 revenues in 1998 to March 31. It incurred
operating expenses in the amount of $109,409 and had operating income of
$1,067,438. For the same period in 1997, the Company had revenues of
$1,059,789. It incurred operating expenses of $177,622 for an operating
income of $882,167. General and administrative expenses were $633,358 in the
first quarter 1997 and $509,931 in the first quarter in 1998.
"S" Corp. net income for the three month period was $533,113 for an "S"
Corp. profit of $.13 per share, as compared to a net profit for the same
period in 1997 of $323,783 or $.08 per share.
PRIOR YEARS' OPERATING RESULTS
Comparison of Results of Operation for the Fiscal Years Ended December 31, 1997
and 1996.
The Company had operating revenues in 1997 of $5,608,722 and $4,643,408 in 1996.
The Company incurred $1,225,580 in cost of revenues in 1997 as compared to
$1,439,836 in 1996. The Company had operating income of $4,383,142 in 1997
and operating income of $3,203,572 in 1996.
Salaries and related expenses increased in 1997 to $2,569,865 from a total of
$1,447,378 in 1996. This trend will continue in 1998.
Office rent was $86,871 in 1997 and $60,142 in 1996. This will increase
again in 1998 due to relocation to a new facility to accommodate growth.
Legal and accounting expenses totaled $93,639 in 1997 as compared to $19,765
in 1996.
In 1997, the gain on investments totaled $470,383 compared to a ($69,637)
loss in 1996.
The Company earned interest income in 1997 of $21,151 as opposed to 1996
interest income of $14,496.
The Company had pre-tax net income for 1997 of $1,737,437 compared to pre-tax
net income in 1996 of $1,256,933. The Company anticipates that the trend of
net income on operations will continue in 1998 barring an economic downturn,
or any unexpected occurrences.
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<PAGE>
The per-share profit amounted to $.43 in 1997 as compared to a profit of
$.31 per share in 1996 (adjusted for forward split in June 1998).
Liquidity and Capital Resources
At year end 1997, the Company had a cash balance of $574,134 as compared to
$48,277 in 1996. Its total current assets were $2,254,086 at year end 1997
and $1,560,420 in 1996. The Company investment in Fixed Assets and related
equipment (net of accumulated depreciation) at 1997 year end totaled
$31,992 whereas in 1996 the Company had Fixed Assets (net) of $39,612.
At year end 1997 the total assets, less depreciation, were $2,286,078,
while at year end 1996 total assets stood at $1,600,032.
Its investment in Fixed Assets is illiquid. In order to fund future
operations and capital expenditures, if cash flow is insufficient, the
Company may have to borrow monies or make equity placements on terms
which may not be favorable to the Company.
The Company currently has an unsecured Business Line of credit with
AmSouth Bank in the amount of $1,000,000 with interest payable monthly
at 2.25% over Libor Rate. The Line of credit expires in April 1999.
The line is currently guaranteed personally by John Manion.
Customer, Sales, Markets and Marketing
The Company markets and sells its services primarily to growth
stage, publicly traded companies which trade on United States based
exchanges and the over the counter market.
The following tables reflect an analysis of the Company's sales
according to different categories:
SALES TO FOREIGN CUSTOMERS
Foreign % of Total Sales
None 0 0
SALES TO CUSTOMERS IN EXCESS OF 10% OF SALES
Customer Amount % of Total Sales Number of
Customers
None 0 0 0
33
<PAGE>
MANAGEMENT
The following table sets forth certain information concerning the
Directors and Executive Officers of the Registrant as of March 31, 1998.
Name Age Position Office Term
John R. Manion 49 Chief Executive Officer, Annual
President and Director
James Schnorf 44 Chief Financial Officer/ Annual
Chief Operating Officer
and Director
Juan Ferreira 38 Executive Vice President Annual
and Director
Dodi B. Zirkle 34 Corporate Secretary, Annual
V.P.-Market Access Program
Michael Manion 47 Director of Financial Annual
Consulting Services
Wendy Vogt 28 Director of Operations Annual
Jimmy Holton 33 Vice President Annual
Scott Gibson 40 Vice President Annual
James Vogt 30 Director of Technology Annual
and New Media
Michael F. Morrell 56 Director Annual
Michael Lee
Spraggins, Jr. 28 Director Annual
34
<PAGE>
Directors are elected at the annual meeting of shareholders to serve
for a period of one year or until their successors are elected and have
qualified. Vacancies on the Board of Directors are filled by the Board of
Directors. Officers serve at the discretion of the Board of Directors.
The Board Members who are not executive officers of the Company
will receive an annual retainer of $5,000 each and will be paid $1,000 for
each Board meeting attended, and $1,000 per year for each committee chaired,
plus out-of- pocket expenses. In addition, it is anticipated that such Board
members will be granted options.
BIOGRAPHICAL INFORMATION
The following biographical information is presented for the present
Officers and Directors of Registrant as of March 31, 1998.
John R. Manion
Chief Executive Officer, and President
Mr. Manion founded CCEC In September, 1992. Since that time, he
has increased CCEC's staff from one person to approximately 30 employees.
Under his management, CCEC's annual revenues have increased from $300,000
to approximately $6 million.
Prior to founding CCEC, Mr. Manion served as a senior level executive at
Personal Investing News and as Vice President of International Money and
Politics from February 1989 to March, 1992. He also owned and operated a
magazine publishing organization named Radey Publications, Inc. which produced
local and regional magazines for a variety of industries.
Mr. Manion founded and has ownership shares in Advantage List &
Marketing Corporation, a sister Company to CCEC, responsible for
maintaining and marketing internal financial databases and mailing lists;
Capital Media Group, Inc., a high tech company dedicated to exploring and
capitalizing on opportunities found on the worldwide web; Concap Partners,
Inc., the General Partner responsible for the administrative and investing
activities associated with the Niagara Venture Fund, L.P.; Meridian Capital
Group, Inc., a real estate acquisition firm which purchases single family
homes for rehab and resale; and Greystone Ventures which owns and manages a
35,000 square foot commercial office building in Longwood, Florida,
currently valued at over $3 million.
Mr. Manion will be devoting his full time and efforts to the Company.
He attended Canisius College and Bryant & Stratton Business Institute in
Buffalo, New York, Mr. Manion is currently an active member of The Executive
Committee (TEC), an international organization composed of regional
groups of Chief Executive Officers who convene once a month to evaluate
and advise one another on day to day operations of their respective
businesses.
35
<PAGE>
James Schnorf
Chief Financial Officer/Chief Operating Officer
Mr. Schnorf joined the executive management team of CCEC in February
1998 to oversee all financial and operational concerns of the Company.
Mr. Schnorf brings to CCEC experience in the design and coordination of
activities involving financing, taxes, risk management, strategic agreements,
mergers/acquisitions, and human resource matters.
Mr. Schnorf's experience, includes controllership responsibilities for
a division of Sequa Corp., a New York Stock Exchange entity specializing in the
aerospace industry. He also possesses approximately ten years' experience
in various managerial capacities at Caterpillar, Inc., a Fortune 100
manufacturer of earth moving equipment and diesel engines.
Most recently, from 1995 to 1997, Mr. Schnorf was the Chief Executive
Officer of Cardinal Capital, L.L.C., a limited liability company
responsible for managing a fund that provides mezzanine financing and which
takes controlling interest positions in emerging growth companies. From 1988
through 1995, Mr. Schnorf served as Chief Financial Officer and
Secretary-Treasurer of Stevens Industries, Inc., a large manufacturer/
distributor of laminated wood products.
Mr. Schnorf earned a BS degree in Accounting from Eastern Illinois
University and an MBA from the University of Illinois. Certified as a CPA and
CMA, Mr. Schnorf is an active member of the Mensa Society, the Institute
of Certified Management Accountants, the American Institute of Certified
Public Accountants, and the Financial Executives Institute. Mr. Schnorf
is a Past President of the Eastern Illinois University School of Business
Advisory Board and is a member of the University of Illinois Executive MBA
Alumni Association Board of Directors.
Juan Ferreira
Executive Vice President
Mr. Ferreira has over fifteen years of experience in the financial
services industry. After launching his career with First Commodity Corporation
of Boston as a commodity futures trader, Mr. Ferreira served as a retail
stock and commodities broker for Prudential Securities. Mr. Ferreira served
as an independent consultant from 1988 to 1990. In 1990, Mr. Ferreira
founded his own financial services firm, Equity Management, where he
supervised all retail and wholesale trading activity, SEC compliance issues,
and had responsibility for executive management matters.
Since joining CCEC in 1993, Mr. Ferreira's daily duties have evolved from
serving strictly in a sales capacity to also managing CCEC's corporate stock
portfolio. He was promoted to Executive Vice President in 1996. Further,
Mr. Ferreira is one of the founding principals of Concap Partners, Inc., the
General Partner created to oversee all administrative and investing
activities of Niagara Venture Fund, L.P. He also chairs the Company's
Technology Committee.
He is active in the Regional Investment Bankers Association (RIBA),
having attended the last nine consecutive RIBA conferences hosted throughout
36
<PAGE>
the United States.
Dodi B. Zirkle
Corporate Secretary, Vice President - Market Access Program
Prior to joining CCEC, Ms. Zirkle served as General Sales Manager of
Direct Response Marketing, Inc. (DRM) from November 1989 to June 1993 and later
DataBase Direct, Inc., (which was acquired by DRM), two of the largest direct
marketing and lettershop firms in the Southeast, where she was responsible
for managing the direct marketing needs of national clientele including
the National Republican Congressional Campaign Committee in Washington, D.C.,
TimeWarner Cable, Universal Studios - Florida and Premier Cruise Lines (The
Big Red Boatr).
She was also employed by Donnelley Directory as an account manager/
sales representative. Immediately following a three year tour of duty with
the U.S. Army, she was an Executive Assistant to the Vice Chairman of the
Board of three New York Stock Exchange Companies., Rollins, Inc., Rollins
Communications, Inc., and RPC Energy, Inc.
Since joining CCEC in 1993, Ms. Zirkle has served in a variety of
capacities involving the Company's operations. Initially, she was
responsible for overseeing all production and operational aspects of the
Company's Inside Wall Street campaigns, in addition to managing all database
marketing and list rental services. In 1995, she was promoted to Vice
President of Operations where she was responsible for creating many ofthe
logistical operating systems employed by the Company today. In 1997, Ms.
Zirkle was promoted to Vice President of Corporate Sales where she
assisted CCEC's Chairman and CEO with multiple managerial tasks, the
negotiation and direction of high-profile client campaigns, the development and
enhancement of CCEC's debt/equity financing source network, and the
implementation of internal expansion efforts. These activities included the
development of the Broker Relations Department, the enhancement ofthe
Company's Financial Consulting division, and the research and development of
CCEC's newly formed Market Access Program, which she currently manages.
Michael Manion
Director of Financial Consulting Services
Following a tenure with Merrill Lynch in the late 1970's as a
Registered Representative specializing in the solicitation of equity
securities, Mr. Manion pursued career opportunities in the gaming
industry based in Atlantic City, New Jersey. Over a 12 year period,
where he began as a croupier with Resorts International, Mr. Manion
progressed through a series of increasingly responsible gaming management
positions and ultimately served as a Director of the SLOT Performance
Maximization Project at Harrah's. In this capacity, he was primarily
responsible for the creation of a financial analysis data model to monitor
gaming performance including growth rates, wins per unit and hold percentage
variances.
Mr. Manion is a graduate of the State University of New York at
37
<PAGE>
Brockport where he earned a Bachelor of Science degree in Economics, and the
University of Pennsylvania's Wharton School of Business where he received
his post graduate degree in Business Administration. Since joining the firm
in 1996, Mr. Manion has advised CCEC clients concerning public shell
acquisitions, debt/equity financings, corporate restructuring issues, financial
auditing, adherence to SEC filing requirements, and merger/acquisition
matters. He was also instrumental in establishing a strategic relationship
between CCEC and Capston Network Company, a privately-held corporation
engaged in the business of acquiring and reselling publicly traded shells.
Mr. Manion is the younger brother of John Manion, CCEC's Chairman.
Wendy Vogt
Director of Operations
Ms. Vogt originally joined CCEC in 1995 serving in dual capacities
as both Production Manager, responsible for the design, layout and
printing of all Inside Wall Street direct mail pieces, an as Corporate
Controller, responsible for the organization's accounting functions. She
left CCEC to accept a position as a Manager of Finance for the Palo
Alto regional office of Ernst & Young, LLP, an international "Big 6"
accounting firm. In 1997, Ms. Vogt rejoined CCEC as Director of Operations
where she is directly responsible for supervising all support entities within
CCEC including Management Information Systems and Production
Scheduling/Monitoring.
Prior to joining CCEC, Ms. Vogt worked in several financial-
oriented positions for a leading subsidiary of F&M Bancorporation, a
Nasdaq listed financial institution.
Ms. Vogt is a graduate of the University of Wisconsin and holds BBA
and BA degrees in both Finance and Organizational Communications. She
has also earned Series 7 and Series 63 licenses within the securities
industry.
Jimmy Holton
Vice President
Prior to becoming a corporate services sales producer for CCEC in
1995, Mr. Holton served as President of the Holton Group, Inc., a financial
consulting firm which he founded to advise both private and public companies
on selective marketing strategies targeting Wall Street. For several years,
Mr. Holton was a regularly featured financial writer and Editor-at-Large for
Investor's Chronicle, a national financial newsletter featuring small cap
equities, and was also featured speaker on "The Financial Hour", a nationally
syndicated financial radio program aired in the Country's top metro markets.
"The Financial Hour" featured undiscovered and undervalued small cap companies.
Mr. Holton attended the University of Georgia from 1983-1985, where he
was accepted into the Terry College of Business. Mr. Holton transferred to
38
<PAGE>
Florida State University in 1986 where he received a degree in Business
Administration.
Scott A-B Gibson
Vice President
Scott A-B Gibson is CCEC's most tenured employee other than the Company
founder, John Manion. Originally employed as a corporate sales
representative, he has served in various administrative roles, including
the Director of Broker Relations, a department which Mr. Gibson created. He is
presently a sales vice president.
Prior to joining the firm in 1992, Mr. Gibson began his career in
the financial industry in October, 1988 with Profile Investment Corporation
as a securities representative specializing in Initial Public Offerings. In
1990, he accepted a position with Dean Witter Reynolds, Inc., where his
primary duties included equity and fixed income portfolio management.
Previously, Mr. Gibson also served as a marketing consultant for Personal
Investing News and Sound Money Investor national magazines.
A graduate of Brown Institute in 1980, Mr. Gibson began his
professional career in the television and radio broadcast industry as
an announcer/programmer with WFKZ-FM in Key Largo, Florida and later
entered the television industry as a marketing consultant with
WCPX-Channel 6, a CBS network affiliate in Orlando, Florida.
James Vogt
Director of Technology and New Media
After consulting CCEC on the enhancement and redesigning of its
corporate web sites in late 1996, Mr.Vogt joined the Company in mid-1997
and assumed overall managerial responsibility for the Creative/Technology
Department. In this capacity, Mr. Vogt is directly responsible for all
Internet related campaign functions, the creation of multimedia
presentations, the company-wide intranet, and the oversight of all Company
hardware and software matters.
Prior to joining CCEC, Mr. Vogt was an integral member of the design team
leading the creation and development of "Rockett's New School" and "Secret Paths
in the Forest". Both interactive, PC-based software gameswere created by
Convival Design and Purple Moon, both private companies based in San Francisco.
Mr. Vogt is a graduate of the University of Wisconsin and holds a
Bachelors degree in Music. In 1997, he also graduated as Class Salutatorian
from Full Sail Center for the Recording Arts, one of the Country's leading
advanced multi-media technical schools. While there, Mr. Vogt was awarded
multiple awards including the Advanced Achievement Award and Director Awards
for Digital Media Assembly, Computers in Digital Media and Creative Writing.
39
<PAGE>
Michael F. Morrell
Director
Mr. Morrell was appointed a director in June 1998. Mr. Morrell has
served as a director of Medical Industries of America, Inc. ("MIOA") and as
chairman of the board and chief executive officer of MIOA since August 1996.
From March 1994 through November 1995, Mr. Morrell served as president and as
a director of Westmark Group Holdings, Inc. ("Westmark"). From March 1990 to
March 1994, Mr. Morrell served as president of Nexus Leasing Corp. and
Nexus Realty which he founded in March 1990. From 1966 to 1984 Mr. Morrell
served in various capacities at Reliance Group Holdings (NYSE) and its wholly
owned subsidiary Leasco. Mr. Morrell served on the joint Board of Directors
and as a Vice President of Reliance and President of Leasco.
Michael Lee Spraggins, Jr.
Director
Mr. Spraggins was appointed as a Director in June 1998. He received a
Bachelor of Science from Auburn University in 1990, and attained a Certified
Public Accountant designation in Georgia in 1992. From 1990 to 1992 he was
employed as an auditor with Arthur Anderson & Co. in Atlanta. From 1992 to
date he has been President of Spraggins Flooring, Inc., a major specialty
flooring contractor based in Florida. Executive Compensation
Executive Compensation
The Company paid or accrued a total of $968,571 compensation to the
executive officers as a group for services rendered to the Company in all
capacities during the 1997 calendar year.
The Company anticipates having an employee incentive stock option/share
plan under which it anticipates initially providing up to 125,000 options for
executive officers and directors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
40
<PAGE>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
Name and Year Salary($) Bonus ($) Other Annual Restricted Securities
Principal Commissions Compensation Stock Underlying
Position ($)1099 Award(s) Options/
Consulting ($) SARs(#)
Fees
John Manion $186,500* None None None
Manion, CEO
and
President 1996 $331,470* None None None
1997 $644,785* None None None
James 1995 $0 None None None
Schnorf,
CFO/COO 1996 $0 None None None
1997 $0 None None None
Juan 1995 $81,126 None None None
Ferreira,
Executive
VP 1996 $123,653 None None None
1997 $167,531 None None None
Dodi B. 1995 $20,455 None None None
Zirkle,
Secretary,
VP of
Market
Access
Program 1996 $72,115 None None None
1997 $156,254 None None None
Michael 1995 $0 None None None
Manion,
Director of
Financial
Consulting
Services 1996 $57,151 None None None
1997 $124,105 None None None
Wendy Vogt, 1995 $17,885 None None None
Director of
Operations
1996 $39,042 None None None
1997 $17,086 None None None
Jimmy 1995 $52,068 None None None
Holton,
Vice
President
1996 $236,536 None None None
1997 $201,121 None None None
Scott 1995 $35,198 None None None
Gibson,
Vice
President
1996 $52,930 None None None
1997 $157,160 None None None
James Vogt, 1995 $0 None None None
Director of
Technology
and New
Media
1996 $0 None None None
1997 $17,086 None None None
41
<PAGE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR
value (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
*Treated as salary income under Sub "S" treatment of Corp. taxation to
John Manion.
Bonuses and Deferred Compensation
No deferred compensation was paid or earned by any officer or director
during 1997 and through March 31, 1998. Bonuses and commissions were paid as
shown in chart above and may be earned for 1998.
There are no payments of compensation or benefits to officers and
directors due upon termination without cause resulting from a change in control,
except for severance to Jim Schnorf.
Compensation Pursuant to Plans. None.
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
Name Annual Meeting Consulting Number Number
Retainer Fees ($) Fees/Other of of
Fees ($) Fees ($) Shares Securities
(#) Underlying
Options/SARs (#)
None 0 0 0 0 0
Stock Option/Share Plan
The Company plans to adopt an Employee Incentive Stock Option/Share
(the "Option Plan") for employees pursuant to which such employees may be
granted options/shares involving an aggregate of up to 175,000 shares of Common
Stock. The purpose of the Option Plan is to provide an incentive to employees
of the Company and its subsidiaries to acquire shares or increase their
proprietary interest in the Company, to increase their efforts on behalf of the
company and to promote the Company's business.
42
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) The Company leases office space from Greystone Ventures. Greystone
is co-owned by John Manion and his wife, Lisa. In the first quarter 1998 the
Company executed a five (5) year lease for the space at a rental rate the
company believes is in accordance with local market costs, approximately
$10,000 per month including variable common area fees.
(b) The Company purchases mailing lists or list services from a
company related through common ownership. These lists are utilized by the
Company in connection with direct mailings related to its client service
agreements. List service fees paid to this company during the years ended
December 31, 199 and 1996, approximated $70,000 and $137,000, respectively.
(c) An entity related to the Company through common ownership assigned
two client service contracts to the Company in 1997. These assignments
resulted in the transfer of consulting revenues and expenses of $285,000 and
$35,000 to the Company, respectively, which are included in operations. The
amount due to the Company from the related party for these assignments was
$250,000 at December 31, 1997.
LEGAL MATTERS
The Company from time to time is a party to certain legal proceedings. In
the opinion of management, the Company is not presently involved in any legal
proceedings that would reasonably be expected to result in a materially
adverse impact.
Based on an SEC investigation of the Company's first client from
occurrences in 1992-93, in February 1996, the Registrant and John Manion, its
President, entered into a Settlement with the Securities and Exchange
Commission over alleged violations of Sections 13(d) of the Exchange Act and
Section 17(b) of the Securities Act. In the Settlement, without admitting or
denying any guilt, Registrant and Manion agreed to a Consent Order under
which they agreed to refrain from violating Section 13(d) of the Exchange Act
and Section 17(b) of the Securities Act. (Admin Proc. 3-8963, Release No.
7267 and 36886).
43
<PAGE>
PRINCIPAL STOCKHOLDERS
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information, as of June 10, 1998, as to the
number of shares of the Registrant's Common Stock owned of record by (a)
beneficial owners of more than five percent of the Registrant's outstanding
Common Stock, and (b) the Officers and Directors of the Registrant,
individually, an the Officers and Directors of the Registrant as a group, and
(c) the percentage of ownership of the outstanding Common Stock represented
by such shares.
a)
% of Owner-
ship
Stock Names and Address of Beneficial After
Title of Class Beneficial Owner Ownership Offering
Common Stock John Manion 4,000,000 67%
b) The following table sets forth information, as of March 31, 1998,
with respect to the beneficial ownership of the Company's $.01 par value
common stock by the directors and officers of the Company, both individually
and as a group.
Name and Position Shares Current Ownership
Address of Owned % After
Beneficial Offering
Ownership
John Manion CEO and President 4,000,000 100% 67%
James Schnorf CFO/COO 0 0 0
Juan Ferreira Executive Vice 0 0 0
President
Dodi B. Zirkle Corporate 0 0 0
Secretary, VP of
Market Access
Program
Michael Manion Director of 0 0 0
Financial
Consulting Services
Wendy Vogt Director of 0 0 0
Operations
Jimmy Holton Vice President 0 0 0
Scott Gibson Vice President 0 0 0
James Vogt Director of 0 0 0
Technology and New
Media
Michael F. Director 0 0 0
Morrell
Michael Lee Director 0 0 0
Spraggins, Jr.
44
<PAGE>
Current
Beneficial Percent Ownership
Ownership After Offering
c) Present Officers
and Directors 100% 67%
as a Group
Loans to Officers and Directors
None.
DESCRIPTION OF SECURITIES
General
Common Shares. The Company's Amended Articles of Incorporation
authorizes 50,000,000 shares of common stock with $.01 par value. There are
4,000,000 common shares outstanding at the commencement of this offering. Each
record holder of common shares is entitled to one vote for each share held
as a matter of record on all matters properly submitted to the shareholders
of the Company for their vote. Cumulative voting is not authorized by the
Articles of Incorporation, as amended. A quorum at any shareholders meeting
consists of one-half of the common shares outstanding and entitled to vote.
Dividends
Holders of the Company's common stock are entitled to receive dividends
when and as declared by the Company's Board of Directors out of legally
available funds. Any such dividends may be paid in cash, property or shares
of the Company's common stock. The Company presently anticipates that all
earnings, if any, will be retained for development of the Company's business
and no dividends on its common stock will be declared in the foreseeable
future. Any future dividends will be subject to the discretion of the
Company's Board of Directors and would depend upon, among other things,
future earnings, the operating and financial condition of the Company, its
capital requirements, and general business conditions. Therefore, there can
be no assurance that any dividends on the Company's common stock will be paid
in the future.
Miscellaneous Rights and Provisions
Shares of the Company's common stock have no preemptive or conversion
rights, no redemption or sinking fund provisions, and are not liable to
further call or assessment. The outstanding shares of the Company's common
stock are, and any shares sold pursuant to this offering will be, fully paid
and nonassessable. Each share of the Company's common stock is entitled to
share ratably in any asset available for distribution to holders of its
equity securities upon liquidation of the Company.
45
<PAGE>
Selected Dealers
The Company may issue up to 200,000 warrants to purchase 200,000 common
shares to the Selected Dealers in connection with this offering. (See
"Underwriting").
Reports to Stockholders
The Company shall make available annual reports to its stockholders
containing audited financial statements reported upon by its independent
auditors. The Company intends to release unaudited quarterly or other
interim reports to its stockholders as it deems appropriate.
Transfer Agent and Registrar
United Stock Transfer, Inc., 13275 E. Fremont Place, Ste. #302, Englewood,
Colorado 80112-3901 is the transfer agent and registrar for the Company's
$.01 par value common stock.
Shares Eligible for Future Sale
Upon the successful completion of this offering, the Company will have
outstanding 6,000,000 shares of common stock. The 2,000,000 shares sold in
this offering will be registered under the Securities Act of 1933 and generally
will have an exemption under Federal law for resale of such shares, except
for any shares purchased by an "affiliate", as that term is defined in the
Securities Act of 1933 (the "Act"), of the Company, which will be subject to
the resale limitations of Rule 144.
In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned restricted
shares for at least one year, including "affiliates" (that is a person
controlling, controlled by or under common control with an issuer), is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the then outstanding shares of common stock
or the average weekly trading volume in the common stock during the four
calendar weeks preceding such sale, subject to the availability of certain
current public information about the Company and restrictions on the manner
of sale set forth in Rule 144. A person (or persons whose shares are
aggregated) who is not deemed an "affiliate" of the Company and who has
beneficially owned (and paid for in full) restricted shares for at least two
years is entitled to sell such shares under Rule 144 without regard to the
volume limitations and other restrictions described above.
Within one year after close of this offering, an aggregate of at least
240,000 shares (4% assuming the offering is sold) of the Company's common
stock will be eligible for sale in the public market in reliance upon
Rule 144.
46
<PAGE>
PLAN OF DISTRIBUTION
The Company will enter into Selected Dealer Agreements ("Agreement")
with NASD Broker Dealers. Pursuant to the terms of the Agreements, the
Selected Dealers, as the Company's agents, will to use best efforts to sell
at $7.00 per share up to 2,000,000 shares of the Company's $.01 par value
common stock offered by the Prospectus within a period of 90 days after the
date of the definitive Prospectus, unless extended for a maximum 90
additional days by mutual agreement of the Company and the Selected Dealers.
If the Selected Dealers are unable to sell at least 2,000,000 shares within
this period (including the extension period), then the offering will terminate
and all money will be returned to the subscribers, without interest
(subscribers residing in states which require the payment of interest will be
paid interest at prevailing rates if the escrow does not close) and without
deduction for commissions and other expenses relating to the offering.
Pursuant to Rule 15c2-4 promulgated by the Securities and Exchange Commission
under the Securities and Exchange Act of 1934, all subscriptions for the
sale of the shares will be transmitted, by noon of the next business day
following receipt by the Selected Dealer or a participating dealer, to an
escrow account to be maintained at AmSouth Bank, Orlando, Florida. In the
event 2,000,000 shares are not sold to the public within the 90-day period
(and any extension period, if applicable) funds deposited with the escrow
agent will be returned forthwith to subscribers without deduction therefrom
and without interest. Purchasers of the shares will not receive stock
certificates until after termination of the escrow agreement.
During the period of escrow, subscribers will have no right to demand return
of their subscriptions.
The Selected Dealer may refuse or reject any offer or subscription
to purchase the shares offered hereby, at any time and for any reason, at its
discretion.
Subject to the sale of the minimum number of shares prior to the
termination of this offering, the Company has agreed to pay the Selected
Dealer a sales commission of 10% of the offering price ($.70 per share).
The Company may also agree to pay the Selected Dealer a non-accountable expense
allowance up to 3% of the gross dollar amount of common stock it sells in the
offering. This will be paid upon the closing of the offering (the sale of
2,000,000 shares) and the release of funds by the Escrow Agent.
The Selected Dealers offering the shares are licensed securities dealers
who are members of the National Association of Securities Dealers, Inc. The
Selected Dealers do not intend to sell any shares offered hereby to any
account over which it has discretionary authority.
The Company and the Selected Dealers have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act of 1933. The Securities and Exchange Commission has taken the position that
such indemnity provisions are unenforceable and against public policy.
47
<PAGE>
The foregoing does not purport to be a complete statement of the terms
and conditions of the Selected Dealer Agreement, opies of which are on file at
the offices of the Selected Dealers, the Company and the Securities and Exchange
Commission.
Selected Dealers Warrants
Subject to the sale of at least 2,000,000 shares prior to the
termination of this offering, the Company may agree to sell to the Selected
Dealers, for $.001 per warrant, warrants (the "Dealers' Warrants") to
purchase one share of the Company's common stock for each ten shares sold in
the offering at $8.40 per share. The Selected Dealers' Warrants are
exercisable at 120% of the public offering price per share for a 18-month period
commencing 12 months from the effective date of this offering. The Selected
Dealers' Warrants may not be sold, transferred, assigned or hypothecated
except to officers of the Selected Dealers and participating dealers and/or
their officers or partners. The Selected Dealers' Warrants will contain
antidilution provisions providing for appropriate adjustments in the event of
any recapitalization, reclassification, stock dividends, stock split or similar
transaction. In the event of a consolidation or merger of the Company or a
transfer of substantially all of the Company's assets to another corporation,
the holders of the Selected Dealers' Warrants will be entitled to receive,
upon exercise of the Selected Dealers' Warrants, the securities or other
property which they would have been entitled to receive had they been
stockholders on the date of such action. The holders of the Selected Dealers'
Warrants will have no voting, dividend or other rights as stockholders of the
Company in respect of the shares underlying the Selected Dealers' Warrants
until the Selected Dealers' Warrants are exercised.
The Company has agreed that at any time upon the written request of the
holders of at least 50% of the total number of the Selected Dealers' Warrants
and common stock issued upon exercise of the Selected Dealers' Warrants made
during the four (4) year period commencing 12 months after the effective date
of the offer, it will file one registration statement at its expense under
the Securities Act of 1933, as amended, including Selected Dealers' Warrants and
shares of common stock.
For the period during which the Selected Dealers' Warrants are
exercisable, the holders thereof will have the opportunity to profit form a
rise in the market value of the Company's common stock, with a resulting
dilution in the interests of the other stockholders of the Company if the
exercise price is less than net tangible book value. The holders of the
Selected Dealers' Warrants can be expected to exercise them at a time when
the Company would, in all likelihood, be able to obtain any needed capital
from an offering of its unissued common stock on terms more favorable to the
Company than those provided for in the Selected Dealers' Warrants. Such
facts may adversely affect the terms on which the Company can obtain additional
financing. To the extent that the Underwriter realizes any gain form the
resale of the shares underlying the Selected Dealers' Warrants, such gain may be
deemed additional compensation.
48
<PAGE>
Determination of Offering Price
Prior to this offering, there has been no public market for the shares
of the Company's Common Stock or the Warrants. The initial public offering
price has been determined by the Company. There is no direct relation between
the offering price and the assets, book value, shareholders' equity or net
worth of the Company.
In determining the offering price and the number of shares to be
offered, the Company considered such factors as the financial condition of
the Company, the experience of current management, operating history, general
condition of the securities markets, and its longevity and present and future
business prospects and the common stock retained by Company Management.
Accordingly, the offering price set forth on the cover page of this
Prospectus should not be considered an indication of the actual value of the
Company's assets, financial performance, net worth or any other traditional
criteria of value.
LEGAL MATTERS
The law firm of Michael A. Littman, 10200 W. 44th Ave., #400, Wheat
Ridge, Colorado 80033 has acted as counsel for the Company in connection with
this Offering.
EXPERTS
The financial statements of the Company as of December 31, 1997 and as
of December 31, 1996 and for the years then ended have been included in the
Registration Statement in reliance upon the report of Moore Stephens
Lovelace, P.A., independent auditor, and upon the authority of said firm as
experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement on Form SB-2 under the
Securities Act of 1933 with the Securities and Exchange Commission,
Washington, DC, relating to the securities offered hereby. This Prospectus,
filed as part of the Registration Statement, does not contain certain
information set forth in, or annexed as exhibits to, the Registration
Statement. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement,
including the exhibits thereto, which may be inspected without charge at the
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington, DC
20549, or inspected and copied at, and obtained at prescribed rates from, the
Public Reference Section of the Securities and Exchange Commission at its
principal office at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. The commission maintains a Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission and state the adress of such site
(http://www.sec.gov). Statements contained in this Prospectus regarding the
contents of any contract or other document referred to are not necessarily
complete and in each instance reference is made to the copy of the contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by that reference.
49
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The only statute, charter provision, bylaw, contract or other
arrangement under which any Director or Officer of this Registrantis insured or
indemnified in any manner against any liability which he may incur in his
capacity as such, are contained in the Florida Corporation Act, which
provides that Directors and Officers of the Company may be indemnified in
accordance with the laws of the State of Florida, and in the Bylaws of the
Company which provide for indemnification of officers and directors.
50
<PAGE>
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Directors, Officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a Director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Director, officer or controlling
person in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Item 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Set forth below is a statement of expenses expected to be incurred by
the company in connection with the issuance and distribution of the
securities to be registered, other than underwriting discounts and commissions.
Legal Fees $25,000*
Accounting Fees $25,000*
Filing Fees $10,000*
Printing & Engraving
share certificates
and Prospectuses $20,000*
Non-Accountable Expenses $420,000*
Total $500,000
* Estimates Only
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Within the last three (3) years, no sales have been made of the
Registrant's no par value Voting Common Stock or any other security.
51
<PAGE>
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Exhibit No. Item.
1.1 Form of Dealer Agreement
1.2 Form of Dealers Purchase Option
3.1 Articles of Incorporation
3.2 Bylaws of Continental Capital & Equity Corporation
3.3 Amendment to Articles of Incorporation
5.1 Opinion of Michael A. Littman
10.4 Non-Qualified Stock and Option Award Plan*
24.1 Consent of Michael A. Littman, dated
June 26, 1998.
24.2 Consent of Moore Stephens Lovelace P.A.,
dated June 26, 1998
24.3 Form of Escrow Agreement
* to be filed later
FINANCIAL STATEMENT SCHEDULES
Unaudited Financial Statements
for Three Months Ended March 31, 1998
and 1997
Pages F-1 - F-5
Audited Financial Statements
for Years Ended December 31, 1997 and
1996
Pages F-6 - F-18
52
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers 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 facts or events
arising after the effective date of the
registration statement (or the most recent
posteffective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement.
(iii) To include any material information with respect
to the plan of distribution 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 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 posteffective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) To provide certificates in such denominations and registered in such
names as required by Selected Dealers to permit prompt delivery to each
purchaser.
(5) See Item 14 for Registrant's undertaking with respect to
indemnification.
53
<PAGE>
SIGNATURES
Pursuant to 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 for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Longwood, State of Florida, on
June 25, 1998.
CONTINENTAL CAPITAL & EQUITY CORPORATION
By: John R. Manion
Its: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/John R. Manion CEO, President, & Director June 25, 1998
/s/James Schnorf CFO/COO & Director June 25, 1998
/s/Juan Ferreira Executive VP & Director June 25, 1998
/s/Dodi B. Zirkle Corporate Secretary June 25, 1998
/s/Michael F. Morrell Director June 25, 1998
/s/Michael Lee Spraggins, Jr. Director June 25, 1998
54
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
___________________________
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________________
CONTINENTAL CAPITAL & EQUITY CORPORATION
(Exact name of Registrant as specified in charter)
_______________________________
EXHIBITS
<PAGE>
EXHIBIT INDEX
Exhibit No. Item.
1.1 Form of Dealer Agreement
1.2 Form of Dealers Purchase Option
3.1 Articles of Incorporation,
3.2 Bylaws of Continental Capital & Equity Corporation
3.3 Amendment to Articles of Incorporation
5.1 Michael A. Littman
10.4 Non-Qualified Stock and Option Award
Plan*
24.1 Consent of Michael A. Littman, dated
June 26, 1998.
24.2 Consent of Moore Stephens Lovelace P.A.,
dated June 26, 1998
24.3 Form of Escrow Agreement
*To be filed by Amendment
<PAGE>
EXHIBIT 1.1
<PAGE>
SELECTED
DEALER AGREEMENT
_________________________, 1998
Gentlemen:
Continental Capital & Equity Corporation., a Florida corporation (the
"Company") hereby confirms our agreement with you as follows:
1. Description of the Offering. The Company contemplates offering to the
public 2,000,000 shares of its $.01 par value Common Stock (the "Stock") at
an offering price of $7.00 per share.
2. Representations and Warranties of the Company. The Company represents
and warrants to you that:
(a) On or about _________________________, the Company filed with the
Securities and Exchange Commission (the "Commission") under the Securities
Act of 1933, as amended (the "Act"), a registration statement on Form SB-
2, (SEC File No. 33 _________D) including a preliminary Prospectus, a
copy of which is furnished to you herewith, relating to the offering,
and may file with the commission on or before the effective date of the
Registration Statement an amendment or amendments thereto. As used
herein the term "Registration Statement" shall, except where the context
otherwise requires, mean said Registration Statement (and all exhibits
thereto) as amended by all amendments filed prior to its effective date,
and the term "Prospectus" shall, except where the context otherwise
requires, mean the final prospectus filed with the Commission upon the
effectiveness of the Registration Statement; and
(b) When the Registration Statement becomes effective and at all times
subsequent thereto during the period of the offering thereunder, the
Registration Statement and the Prospectus will contain all material
statements which are required to be made therein in accordance with the Act
and the Rules and Regulations of the Commission thereunder (the "Rule and
Regulations"), and will in all material respects, conform to the
requirements of the Act and the rules and Regulations; and at such times
neither the Registration statement nor the Prospectus will include any
untrue statement of material fact or omit any material fact required to
be stated therein or necessary to make the statements herein not
misleading; and
(c) The balance sheet of the Company set forth in the Prospectus will
fairly present the financial condition of the company as of the date
indicated, in conformity with generally accepted accounting principles,
<PAGE>
and the independent public accountants whose certificate with respect
thereto is included therein are independent public accountants within
the meaning of the Act the Rules and Regulations.
3. Appointment of Agent.
(a) On the basis of the representations and warranties and subject to
the terms and conditions herein set forth, the Company hereby appoints
you its nonexclusive agent to offer to the public the opportunity to
purchase the Units in accordance with the Prospectus, and you agree to
use your best efforts to this end. Purchase of the shares shall be
evidenced by your normal order slips. It is understood that no
subscription shall be regarded as effective unless it is accompanied
by full payment to the company and until accepted by the Company, as
more fully set forth herein.
(b) You are hereby allocated up to __________________ of the shares
for sale within 90 days, unless extended for an additional 90 days
by the Company from the date the Registration Statement has become
effective. However, the Company reserves the right to reduce this
amount at any time by delivering written notice to you.
(c) You hereby agree to deliver to _______________________, (the
"Escrow Agent"), by 12:00 noon of the next business day following
receipt thereof, all proceeds from the sale of the Units in the
Public Offering at an initial public offering of $7.00 per share,
together with a written account for each sale, which account shall
set forth, among other things, the names and addresses of the
purchasers, the number of shares purchased by each, the amount paid
therefore, and whether the consideration received is in the form of
cash or evidenced by a check. All cashier's checks, checks or other
negotiable instruments shall be made payable to the Escrow Agent.
(d) The offering is conditional upon all of the shares being
sold (2,000,000 shares). All amounts received by the company
will be placed in Escrow with AmSouth Bank under an escrow
agreement until 2,000,000 shares are sold. If 2,000,000 shares
are not sold within 90 days of the date of the Registration Statement
becomes effective, unless extended for an additional 90 days by the
Company, the offering will be terminated, and all amounts in escrow
will be returned without interest. A copy of the escrow agreement
is provided to you herewith.
(e) (1) You will be entitled to receive from the Company, as a
commission for services as agent in the offering of the shares, 10%
of the principal amount of shares sold by you. All money received
from sale of the shares will be forwarded to the Company's escrow
<PAGE>
agent in accordance with the terms thereof; and commissions will be
paid directly by the Company.
(2) For each ten shares sold, you will be entitled to purchase for
$.001 a warrant to purchase one share of common stock of the
company at $8.40 per share for a period of eighteen months
commencing one year from the effective date of the registration
statement.
4. Particular Agreements of the Company.
(a) The Company will deliver to you one copy of the Registration
Statement as originally filed on Form SB-2 and of all amendments
thereto. The Company will also deliver to you, as soon as
practicable after the Registration Statement becomes effective and
from time to time thereafter, such number of copies of the
Prospectus as you may reasonably request.
(b) The Company will use its best efforts to cause the Registration
Statement to become and remain effective during the period of the
offering thereunder. The Company will immediately advise you by
telephone, confirming such advice in writing (i) when notice is
received from the Commission that the Registration Statement has
become or will become effective (ii) of any order suspending the
effectiveness of the Registration Statement or of any proceedings
or examination under the Act, as soon as the Company is advised
thereof, and (iii) of any order or communication of any public
authority addressed to the Company suspending or threatening to
suspend registration or qualification of the offering in those
states where such authority has jurisdiction.
(c) During the period of the offering under the Registration
Statement, if any event affecting the Company shall occur
which, in the opinion of your counsel and counsel for the
Company, should be set forth in a supplement to or an
amendment of the Prospectus, the Company will forthwith at its
own expense prepare and furnish to you a reasonable number of
copies of a supplement or amendment to the Prospectus so that
the Prospectus, as so supplemented or amended, will not
contain an untrue statement of a material fact or omit any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they
are made, not misleading.
(d) The Company will provide you or your duly authorized
representative access to and the right of inspection of all
books, records and physical facilities during the period of
this Agency Agreement.
(e) The Company will use its best efforts to qualify the
<PAGE>
offering at its expense under the securities or Blue Sky Laws
of the following states or jurisdictions: New York,Pennsylvania,
Colorado, Florida, and such other states as may be selected by
the Company, and to continue such qualification in effect so long
as required for the purpose of the distribution of the Units.
(f) Whether or not the transactions contemplated by this Agency
Agreement shall be consummated, the Company will pay or cause to
be paid all expenses in connection with the preparation, printing,
filing and reasonable distribution of the Registration Statement,
any preliminary Prospectus and the Prospectus, the bringing of this
Agency Agreement, qualifying the offering for the sale under the
Securities or Blue Sky Laws of those states listed in Section 4(e)
above (including counsel fees and disbursements) and all taxes and
other expenses in connection with the offering.
5. Condition of Your Obligation. Your obligation to distribute
copies of the Prospectus and to solicit the execution by prospective
Subscribers of forms of Subscription Agreements shall be subject to
the accuracy of the representations and warranties contained in
Section 2 hereof, to performance by the Company of its obligations
hereunder, and to the following conditions:
(a) The Registration Statement shall have become effective and no
stop order suspending the effectiveness thereof shall have been
issued and no proceedings therefore shall have been commenced by
the Commission.
(b) The Stock shall be qualified as provided in Section 4(e) and
each qualification shall be in effect and not subject to any stop
order or other proceeding on the effective state of the Registration
Statement. The Company will provide a "Blue Sky Memorandum" to you
listing the status of each such qualification as of the effective
date of the Registration Statement. The Company will provide an
amendment of the Blue Sky Memorandum to you at such times as are
necessary.
6. Indemnification.
(a) The Company agrees to indemnify and hold harmless you and
each person, if any, who controls you within the meaning of Section
15 of the Act and your respective successors (hereinafter in this
Section separately and collectively referred to as the "defendants")
against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) against, out of, or
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or in any
amendment or supplement thereto, or arising out of or based upon
any omission or alleged omission of a material fact required to be
<PAGE>
stated therein or necessary to make the statements therein not
misleading (except insofar as such losses, claims, damages or
liabilities which arise out of or are based upon any such untrue
statement or omission or allegation thereof which has been included
herein in reliance upon and in conformity with information furnished
to the Company by or on behalf of the defendants expressly for use in
connection therewith). If any action shall be brought against any
defendant in respect of which indemnity may be sought from the
Company pursuant to the provisions of the preceding paragraph, such
defendant shall promptly notify the Company in writing, and the
Company shall assume the defense thereof, including the employment
of counsel, (which shall be satisfactory to such defendant) and the
payment of all expenses. Any defendant shall have the right to employ
separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the
expense of such defendant unless (i) the employment thereof has been
specifically authorized by the Company in writing or (ii) the Company
has failed to assume such defense and to employ counsel.
7. Representations and Warranties of the Agent. You represent and
warrant to the Company that:
(a) You are registered as a broker-dealer with the Commission, are
a member in good standing with the National Association of Securities
Dealers, Inc., are registered as a broker-dealer in the states and
jurisdictions listed in Section 4(e) (or in such states and
jurisdictions as you intend to solicit and accept subscriptions for
the Units) and will supervise all activities of your Registered
Representatives in connection with the offer of the Units to the Public.
(b) There is not now pending or, to your knowledge, threatened
against you any action or proceeding of which you have been advised,
whether in any court or before the Commission or any state's securities
commission, concerning your activities as a broker or dealer.
(c) You have undertaken to comply with all requirements of Sections
8, 24, 25, 36, or Article III of the Rules of Fair Practice.
(d) You will not allow commissions to any non-member broker/dealer,
including foreign broker/dealers registered pursuant to the Securities
and Exchange Act of 1935.
8. Certain Agreements of the Agent. It is understood and agreed that
you are not authorized to make any representations other than those
contained in the Prospectus or to act as the agent of the Company or for
the Company in any other capacity except as expressly set forth herein.
<PAGE>
In acting as agent hereunder, you agree (a) only to make use of the
Prospectus or such other material as may be supplied for the purpose by
the Company; (b) to deliver a copy of the definitive Prospectus at least
48 hours prior to mailing a confirmation of such sale; and (c) to offer
to persons the opportunity to subscribe for the Units only in those states
listed in Section 4(e) above as confirmed by the Blue Sky Memorandum and
by such persons and in such manner as shall be permitted by the laws of
those states.
9. Terms. This Agency Agreement shall continue in effect until the
offering of Stock is fully subscribed or until 90 days (unless extended
for an additional 90 days by the Company) after the Registration Statement
becomes effective, unless sooner terminated pursuant to the provisions of
Section 3(b) or 5 hereof.
10. Notices. All notices or other communications hereunder shall be
in writing and shall be mailed, telegraphed or delivered and confirmed
to the party:
11. Miscellaneous. This Agency Agreement shall be governed by the
laws of Florida and shall inure to the benefit of and be binding upon
the successors of the Company and you. Nothing expressed or mentioned
in this Agency Agreement is intended or shall be construed to give any
person or corporation other than the parties hereto and their successors,
and the controlling persons and directors and officers referred to in
Section 6 hereof, any legal or equitable right, remedy or claim under or
in respect of this Agency Agreement or any provision hereof. The terms
"successors" shall not include any participant merely by his being a
party to an Agreement. This Agency Agreement may not be amended or
modified, except by written instrument signed by both parties hereto.
If the foregoing acceptably expresses our agreement with you, kindly
confirm by signing the acceptance on the enclosed counterpart hereof and
return the same to us, whereupon this letter and your acceptance shall
become and constitute a binding agreement between the Company and you
in accordance with its terms.
Very truly yours,
Continental Capital & Equity Corporation
By:________________________________
The foregoing Agency Agreement is hereby confirmed and accepted as
of the date first above written.
_____________________________________
(Broker/Dealer)
By:__________________________________
Authorized Officer
<PAGE>
EXHIBIT 1.2
<PAGE>
VOID AFTER:
DEALERS PURCHASE WARRANT FOR
SHARES OF COMMON STOCK
OF
CONTINENTAL CAPITAL & EQUITY CORPORATION
NO._______________________ WARRANT TO PURCHASE
____________ UNITS
(INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA)
THIS IS TO CERTIFY THAT (the "Warrant Holder") is entitled, upon
the due exercise hereof and subject to the terms and conditions hereof,
upon call by the company at any time after the effective date of the
Registration Statement referred to in paragraph 2 herein, and, subject
to the provisions of paragraph 5 below, before the close of business
on _________________, (which date is 30 month from after the effective
date of said Registration Statement), to purchase from Continental
Capital & Equity Corporation (the "Company") at a price of $8.40 per share
up to ____________ shares of Common Stock, $.01 par value, (herein called
"Common Shares" of the Company. Upon surrender hereof, with the
subscription form on the reverse side hereof duly filled out, at the
Office of the company or any transfer agent for the Company's Common
Shares, and upon simultaneous payment therefore in cash or by certified
or official bank check payable to the order of the Company in New York
Clearing House funds, at the price of $8.40 per share (hereinafter
referred to as the "Purchase Price") the shares may be purchased. The
number of shares which may be purchased, and the price, are subject to
adjustments provided herein.
1. The Company agrees that the Company will use its best
efforts to keep a current Registration Statement or to take such
other action as may be required, to permit a public trading of the
Stock of the Company. The Company will bear the out-ofpocket
expenses, disbursements and fees incurred by the Company in
connection with its Registration Statement filed or other action
taken pursuant to the paragraph, including all expenses,
disbursements and fees in connection with such filings.
2. The Warrant holder agrees, for himself and all subsequent
holders of these Warrants, to cooperate with the Company in the
preparation and filing of any Registration Statement or the taking
of any other action by the Company pursuant to paragraph 1 above.
3. Unless this Warrant is surrendered and payment made as
herein provided before the close of business on ___________________
(the "Expiration Date"), this Warrant will become wholly void and
all rights evidenced hereby will terminate.
<PAGE>
4. Subject to the provisions of paragraph 1 above, this
Warrant may be exchanged for a number of Warrants of the same tenor
as this Warrant for the purchase in the aggregate of the same
number of Common Shares of the company as are purchasable upon the
exercise of this Warrant, upon surrender hereof at the office of
the Company or any transfer agent of the Company's Common Shares
with written instructions as to the denominations of
the Warrants to be issued in exchange.
5. If this Warrant is exercised for less than all the shares
purchasable upon the exercise hereof, the holder shall be entitled
to receive a new Warrant or Warrants of the same tenor as this
Warrant for the purchase in the aggregate of the number of shares
of this Warrant which shall not have been exercised.
6. The number of Common Shares of the Company purchasable on
the Exercise of this Warrant and the Purchase Price per share shall
be increased or decreased proportionately, as the case may be,
without change in the aggregate purchase price, in case of the
payment by the Company in Common Shares of dividends on the
outstanding Common Share of the Company or in case of the
subdivision, reclassification, combination of the outstanding
Common Shares of the Company, or a similar issuance of Common
Shares of the Company for no consideration. In case the Company is
reorganized, or merged or consolidated with another corporation,
the holder of this Warrant shall be entitled thereafter, upon the
exercise hereof, to receive the number and kind of securities of
such reorganized, merged or consolidated corporation he would have
been entitled to receive in connection with such reorganization,
merger to consolidation if he had been a holder of the number of
Common Shares of the Company purchasable upon the exercise hereof
immediately prior to the time such reorganization, merger or
consolidation became effective. In no event shall the Company be
required to issue any fractional share or script in lieu thereof or
make any adjustment therefore in cash or otherwise in respect of
any fraction of a share issuable upon the exercise hereof.
7. The holder of this Warrant shall not be entitled to any
rights of a shareholder of the Company in respect of any shares
purchasable upon the exercise hereof, including voting, dividend or
dissolution rights, until such shares have been paid for in full
and issued to him. As soon as practicable after such exercise, the
Company shall deliver a certificate or certificates for the number
of full Common Shares issuable upon such exercise, all of which
shall be fully paid and non-assessable, to the person or persons
entitled to receive the same; provided, however, that such
certificate or certificates delivered to the holder of the
surrendered Warrant shall bear a legend reading substantially as
follows:
Transfer of the shares represented by this Certificate is
subject to certain restrictions set forth in certain
Warrants pursuant to which these shares were purchased
from the Company. Copies of these restrictions are on
<PAGE>
file at the principal office of the Company and at the
office of the Transfer Agent for the Common Stock of the
Company. No sale, offer to sell or transfer of such
shares or of this certificate, or of any shares or other
securities issued in exchange for or in respect of such
shares shall be made unless a registration statement
under the Securities Act of 1933, as amended, with
respect to such shares, is in effect or an exception from
the registration requirements of such Act is then in fact
applicable to such shares.
8. This warrant may not be exercised prior to 1 year from
effective date of the registration statement.
Dated:_______________ Continental Capital & Equity Corporation
By: _______________________
Its: _______________________
ATTEST:
By: __________________________
Secretary
<PAGE>
EXHIBIT 3.1
<PAGE>
ARTICLES OF INCORPORATION
OF
CONTINENTAL CAPITAL & EQUITY CORPORATION
I, the undersigned, being a natural person of legal age, do hereby
desire to form a Corporation under the Laws of the State of Florida,
and do hereby adopt the following Articles of Incorporation.
1. NAME. The name of the Corporation shall be CONTINENTAL CAPITAL
& EQUITY CORPORATION, a Florida Corporation.
2. PRINCIPAL OFFICE OR MAILING ADDRESS. The Principal Office of the
corporation shall be and its mailing address shall be 2301 Maitland
Center Parkway, Suite 100, Maitland, Florida 3275 1. The Principal
Office and mailing address may be changed from time to time by the
Board of Directors.
3. STOCK. The maximum number of shares of stock of this Corporation
which this Corporation is authorized to have outstanding at any one
time is 10,000 shares of common stock having a par value of $.01
per share. The consideration to be paid for each share of stock
shall be fixed by the Board of Directors of this Corporation.
4. INITIAL REGISTERED OFFICE AND AGENT. The street address of the
initial registered office of this Corporation is and the name of
the initial registered agent of this Corporation at that address is
John R. Manion
2301 Maitland Center Parkway
Suite 100
Maitland, Florida 32751
5. BOARD OF DIRECTORS. The business of the Corporation shall be
conducted and managed by a Board of Directors consisting of not
less than one member, as fixed from time to time by the Bylaws of
this Corporation and the Board of Directors shall be elected or
appointed as provided in the Bylaws of this Corporation.
6. INCORPORATOR. The name and address of the Incorporator(s) is
as follows:
NAME
John R. Manion
<PAGE>
ADDRESS
2301 Maitland Center Parkway
Suite 100
Maitland, Florida 32751
7. BY-LAWS. The power to adopt, alter, amend or repeal By-Laws
shall be vested in the Board of Directors.
8. INDEMNIFICATION. Every Director, Officer, employee or agent of
the Corporation shall be indemnified by the Corporation against all
expenses and liabilities, including attorney's fees reasonably
incurred or by reason of their being imposed upon him or her, in
connection with any proceeding to which he or she may be made a
party or in which he or she may become involved by reason of his or
her employment or by reason of his or her being or having been a
Director, Officer, employee or agent of the Corporation, or any
settlement thereof, whether or not he or she is a Director,
Officer, employee or agent at the time such expenses are incurred,
except in such cases wherein the Director, Officer, employee or
agent is adjudged liable for gross negligence or willful and wanton
misconduct in the performance of his or her duties as such Officer,
Director, employee or agent. The foregoing right of indemnification
shall be in addition to and not exclusive of all other rights to
which such Director, Officer, employee or agent may be entitled.
9. AMENDMENT. The Corporation reserves the right to amend, alter,
change, repeal and revise any of the provisions of this
Corporation's Articles of Incorporation in the manner now, or
hereafter prescribed by statute and all rights conferred on
shareholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned subscriber has executed these
Articles of Incorporation on the 30th day of January, 1995.
/s/John R. Manion
John R. Manion
<PAGE>
STATE OF FLORIDA
COUNTY OF ORANGE
I HEREBY CERTIFY that on this day, before me, an officer
duly authorized to administer oaths and take acknowledgements,
personally appeared John R. Manion, known to me to be the person
described in and who executed the foregoing Articles of
Incorporation and who acknowledged before me that he executed the
same, that I relied upon the following form of identification of
the above-named person: personally known and that an oath (was)
(was not) taken.
WITNESS my hand and official seal in the County and State last
aforesaid this 30th day of January, 1995.
/s/Annie Truncale
Notary Signature
Annie Truncale
Printed Notary Signature
My Commission Expires: October 10, 1998
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS OR DOMICILE
FOR THE SERVICE OF PROCESS WITHIN THIS STATE NAMING
UPON WHOM PROCESS MAY BE SERVED
In pursuance of Chapter 48.091, Florida Statutes, the following is
submitted in compliance with said Act:
First, that Continental Capital & Equity Corporation, desiring to
organize under the Laws of the State of Florida, with its principal
office, as indicated in the Articles of Incorporation in the City
of Maitland, County of Orange, State of Florida, has named John R.
Manion, 2301 Maitland Center Parkway, Suite 100, Maitland, Florida
32751, as its agent to accept process within this state.
Having been named to accept service of process for the above named
Corporation, at the place designated in this Certificate, I hereby
accept to act in this capacity and agree to comply with the
provisions of said Act relative to keeping open said office.
/s/John R. Manion
John R. Manion, Resident Agent
<PAGE>
STATE OF FLORIDA
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Articles
of Incorporation of CONTINENTAL CAPITAL & EQUITY CORPORATION, a
Florida corporation, filed on February 16, 1995, as shown by the
records of this office.
The document number of this corporation is P95000013248.
Given under my hand and the
Great Seal of the State of Florida,
at Tallahassee, the Capital, this the
Sixteenth day of February, 1995
/s/Sandra B. Mortham
Sandra B. Mortham Secretary of State
<PAGE>
EXHIBIT 3.2
<PAGE>
BY-LAWS
OF
CONTINENTAL CAPITAL & EQUITY CORPORATION
A FLORIDA CORPORATION
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE.
The principal office of 'this Corporation shall be at: 2301
Maitland Center Parkway, Suite 100, Maitland, Florida 32751.
Section 2. ADDITIONAL OFFICE.
The Corporation may also maintain an office or offices at such
other place or places within or without the State of Florida, as
the Board of Directors may from time to time designate.
Section 3. CHANGE OF OFFICE.
The principal office of the Corporation may from time to time be
changed and altered by Resolution by the Board of Directors.
ARTICLE II
MEETING OF SHAREHOLDERS
Section 1. ANNUAL MEETINGS.
The Annual meeting of the holders of common stock of this
Corporation shall be held on the first Monday in March of each year
provided the same does not fall on a holiday, and if it does, then
the following Tuesday, commencing with March 4,1996.
Section 2. SPECIAL MEETINGS.
Special meetings of the Shareholders be held when directed by the
President or the Board of Directors, or when requested in writing
by the Shareholders who hold at ten percent (10%) of the
outstanding stock having the right and entitled to vote at such
meeting, or as provided by law. A meeting requested by Shareholders
shall be called for a date not more than seventy (70) days after
the request is made; provided that notice therefor shall be given
not less than ten (10) nor more than sixty (60) days before the
meeting date. The call for the meeting shall be issued by the
Secretary or by the President, unless the President, Board of
Directors or Shareholders requesting the calling of the meeting
shall designate another person so to do. A Notice for a Shareholder
Special Meeting shall include the date, time, place and purpose(s)
of such meeting.
<PAGE>
Section 3. PLACE.
Meetings of Shareholders may be held at a place either within or
without the State of Florida. Unless otherwise directed by the
Board of Directors, meetings of the Shareholders shall be held at
the principal offices of the Corporation in the State of Florida.
The place at which a meeting is to be held shall be designated in
the Notice of the Meeting.
Section 4. NOTICE OF ANNUAL MEETING.
Notice in writing shall be given by the Secretary or by the
Assistant Secretary or by the Chief Executive Officer, if one has
been named, or by the President or any Vice President of all
meetings of Shareholders, to the holders of the stock having the
right and entitled to vote at such meeting, and said notice shall
be mailed to each Shareholder at such Shareholder's address as
shown upon the stock transfer books, or other records of the
Corporation. Such notice shall state the date, the time, and the
place and purpose of said meeting, and must be mailed not less than
ten (10) nor more than sixty (60) days l: -fore the date for such
meeting. If any Shareholder shall transfer any of his stock after
notice, it shall not be necessary to notify the transferee.
Section 5. WAIVER OF NOTICE AND VALIDATION.
By written consent of any Shareholder either before, at, or after
such meeting, the minimum time required for giving notice of such
meeting may be waived as to such Shareholder. Any Shareholder may
waive notice of any meeting either before, at, or after such
meeting.
Section 6. RECORD DATE.
For purposes of determining Shareholders of record who have the
right to and are entitled to notice of and to vote at the meeting
of Shareholders or any adjournment thereof or entitled to receive
payment of any distribution dividend or in order to make a
determination of Shareholders for any other purpose the Board of
Directors may close the stock transfer books of the Corporation for
a period not in excess of seventy (70) 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 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 seventy (70) days prior to the date
on which the particular action requiring such determination of
<PAGE>
Shareholders is to be taken. In no event may a record date fixed by
the Board of Directors be a date preceding the date upon which the
resolution fixing the record date is adopted. If the stock transfer
books are not closed and no record date is fixed for the determination
of Shareholders entitled to notice or to vote at a meeting of
Shareholders or Shareholders entitled to receive payment
of a distribution, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of
Directors declaring such distribution 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 apply to any adjournment thereof, unless the
Board of Directors fixes a new record date under this section for the
adjourned meeting; or, such meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
Section 7. VOTING.
Each Shareholder having the right and entitled to vote at a meeting
of Shareholders shall be entitled, at such meeting and upon each
proposal presented at such meeting, to one vote for each share of
stock having the right and entitled to vote at such meeting,
recorded in his name on the books of the Corporation, on the record
date fixed as provided in Section 6 of this Article, or if no such
record date was fixed, on the day of the meeting. Shares of its own
stock owned by another Corporation the majority of the voting stock
of which is owned or controlled by this Corporation and shares of
this Corporation's own stock held by this Corporation in a
fiduciary capacity shall not be voted, directly or indirectly, or
counted as outstanding for the purpose of any Shareholder's vote.
Section 8. OMISSION OF MEETING.
If the Annual Meeting of the Shareholders be not held as herein
provided on the date herein specified, the election of Directors
may be held at any special meeting thereafter called pursuant to
these Bylaws.
Section 9. ORGANIZATION.
Meetings of the Shareholders shall be presided over by the Chief
Executive Officer, or, if he is not present, then by the President,
or, if he is not present, by a Vice President, if a Vice President
has been elected, or, if neither the President or Vice President is
present, by a Chairman to be chosen by a majority of the Shareholders
entitled to vote who are present in person or by proxy at the meeting.
The Secretary of the Corporation, or in his absence an Assistant
Secretary, shall act as Secretary of every meeting, but if neither is
present, the meeting may choose any person to act as Secretary of the
meeting.
<PAGE>
At all meetings of Shareholders, the order of business may be
generally as follows:
1. Calling meeting to order.
2. Proof of the giving of Notice of Meeting or Waiver thereof,
and determination of quorum.
3. Reading of Minutes of previous meeting.
4. Reports of Officers.
5. Reports of Committees. 6. Unfinished business.
7. New business, election of Directors, if Annual meeting.
8. Adjournment.
Section 10. ADJOURNMENT.
Any Shareholders' meeting at which a quorum is present in person or
by proxy, may be adjourned from day to day or from time to time by
the vote of the holders of the majority of the stock having the
right and entitled to vote at such meeting. In case there be no
quorum present on the day fixed for any Shareholders' meeting, by
vote of the holders of a majority of the stock present in person or
by proxy having the right and entitled to vote thereat, such meeting
may be adjourned from time to time until a quorum be obtained, or may
be adjourned sine die. At any adjourned meeting at which a quorum
shall be present in person or by proxy, any business may be transacted
which might have been transacted at the original meeting. It shall not
be necessary to give any notice of the date, time or place of an
adjourned meeting or of the business to be transacted thereat if such
is announced at the meeting before an adjournment is taken; provided,
that if a new record date is or must be fixed then notice of the
adjourned meeting shall be given.
Section 11. QUORUM.
The presence of the holders of at least a majority of the outstanding
stock having the right and entitled to vote at any meeting, either in
person or by proxy, shall be necessary to constitute a quorum at any
Shareholders' meeting. If a quorum is present, the affirmative vote of
a majority of the shares represented at a meeting and entitled to vote
on the subject matter shall be the act of the shareholders. Shares of
its own stock owned by another Corporation the majority of the voting
stock of which is owned or controlled by this Corporation, and shares
of the Corporation's own stock held by this Corporation in a fiduciary
capacity shall not be counted as outstanding for the purpose of any
quorum.
<PAGE>
Section 12. PROXIES.
At any meeting of Shareholders or any adjournment thereof, any
Shareholder of record having the right and entitled to vote thereat
may be represented and vote by a proxy appointed by an instrument,
in writing, including a telegram, cablegram, photographic, photostatic
or equivalent reproduction of an instrument, signed by the Shareholder
or his attorney-in-fact. Before any such written proxy is voted, it
shall be filed with the Secretary. In the event that any such instrument
shall designate two or more persons to act as proxies, a majority of
such persons present at the meeting, or, if only one be present, that
one, shall have all of the powers conferred by the instrument upon all
the persons so designated unless the instrument shall otherwise provide;
but if the proxy holders present at a meeting are equally divided as to
the right and manner of voting in any particular case, then voting of
shares covered by such proxy shall be prorated. Any question as to the
validity, sufficiency or effectiveness of any such written instrument
purporting to appoint a proxy or proxies, shall be submitted to the
Shareholders present or represented at said meeting, and the vote of the
holders of a majority of the stock entitled to vote thereat shall be
conclusive upon all such questions. No such written instrument dated
more than eleven months before the date fixed for the meeting or meetings
at which it is offered, shall be accepted or effectual to permit the proxy
therein named to vote at such meeting or any adjournment thereof, unless
such instrument, on its face, shall name a longer period of time for
which it is to remain in force. If the appointment instrument expressly
provides, any proxy holder may appoint, in writing, a substitute to act
in his place.
ARTICLE III
DIRECTORS
Section 1. FUNCTION.
The business of this Corporation shall be managed and its corporate
powers exercised by the Board of Directors.
Section 2. NUMBER.
The Board of Directors shall consist of one member. The provisions
of this Section relating to the number of Directors constituting
the Board of Directors maybe amended, changed or altered.
Section 3. QUALIFICATION.
All of the members of the Board of Directors shall be natural
persons at least 18 years of age. It shall not be necessary that a
Director be a Shareholder of the Corporation.
<PAGE>
Section 4. ELECTION AND TERM.
The Directors shall be chosen at the Annual Meeting of the
Shareholders by a plurality of the votes cast at such election. The
term of office of such Directors shall be for one year, from the
date of the Annual Meeting of Shareholders at which elected until
the date of the next succeeding Annual Meeting of the Shareholders
and such Directors shall hold office until the election and
qualification of their successors. The Board of Directors may elect
by a vote of a majority of its members, and from its own number, a
Chairman of the Board, to preside at its meetings.
Section 5. VACANCIES.
Any vacancy in the Board of Directors, or committee of the Board of
Directors of the Corporation, caused by an increase in the number
of the Directors or number of Directors serving on a committee, or
by death, resignation, disqualification or other cause, may be
filled by the remaining Director or Directors in office, although
less than a quorum, by the affirmative vote of a majority thereof,
and the person so chosen to fill any such vacancy shall hold office
until the next Annual meeting of the Shareholders, and until his
successor shall have been elected and shall have been qualified.
Section 6. REMOVAL.
Any Director shall be subject to removal with or without cause at
any time by vote of a majority of the stock represented and having
the right and entitled to vote at any duly convened meeting of
Shareholders at which a quorum is present.
Section 7. ANNUAL AND REGULAR MEETINGS.
Immediately after the Annual meeting of the Shareholders, there
shall be held the Annual meeting of the Board of Directors to elect
Officers of the Corporation for the ensuing year, and to transact
other business brought before the meeting. Regular meetings of the
Board of Directors shall be those held at specified intervals
during the year. Regular meetings, if held, shall be held on such
stated date, time and place, as the Directors shall direct, or in
the absence of such Directors, on such stated date, time and place
as may be directed by the Chairman of the Board of Directors, the
Chief Executive Officer if one has been named, and if not, then by
the President. In case the day appointed for a regular meeting
falls upon a legal holiday, such meeting shall be held on the -next
succeeding business day, at the same time and place.
Section 8. SPECIAL MEETINGS.
Special meetings of the Board of Directors may be called at any
time by the Chief Executive Officer, if one has been named and if
<PAGE>
not, then by the President, Chairman of the Board of Directors or
by a majority of the Directors.
Section 9. PLACE OF MEETING.
Any meeting of the Board of Directors may be held either within or
without the State of Florida. Unless otherwise directed by the
Board of Directors, the Annual meeting of the Board of Directors
shall be held at the principal offices of the Corporation in the
State of Florida. Regular and Special Meetings of the Board of
Directors shall be held at said principal. offices of the
Corporation in the State of Florida, or at such other place as may
be appointed by the vote or written consent of a majority of the
Directors, or in the absence of such vote or written consent, at
such place as may be appointed by the Officers or Directors calling
such meeting.
Section 10. OMISSION OF MEETING.
If the Annual meeting of the Board of Directors be not held as
herein provided on the date herein specified, the election of
Officers may be held at any meeting held thereafter pursuant to
these Bylaws.
Section 11. ADJOURNMENTS.
Any meeting of the Board of Directors at which a quorum is present,
may be adjourned from day to day or from time to time, or place to
place by a vote of a majority of the Directors present and voting
at such meeting. In case there be no quorum present on the day
fixed for any meeting of the Board of Directors, by vote of a
majority of the Directors present and voting at such meeting, the
same may be adjourned from time to time and place to place until a
quorum be obtained, or may be adjourned sine die. At any adjourned
meeting at which a quorum shall be present, any business may be
transacted which might have been transacted at the original
meeting. It shall not be necessary to give notice of the date,
time and place of an adjourned meeting or of the business to be
transacted thereat other than by announcement at the meeting at
which the adjournment is taken. If no such announcement is made at
the meeting then notice shall be required.
Section 12. QUORUMS.
The presence of a majority of all the Directors shall be necessary
at any meeting of the Board of Directors to constitute a quorum to
transact business. The act of a majority of the Directors present
and voting at a meeting when a quorum is present shall be the act
of the Board of Directors.
Section 13. NOTICE OF MEETINGS.
Notice of the time, date and place of a Special Meeting of the
<PAGE>
Board of Directors, in writing, shall be given to each Director by
the Chairman of the Board of Directors, or, Secretary or by the
Assistant Secretary or by the Chief Executive Officer, President or
any Vice President of all the meetings of the Board of Directors.
Said Notice may be given by telegraphic message, or by leaving such
written notice in an envelope addressed to him or her at his or her
residence or place of business, or such notice may be given by
mailing the same to such Director at his or her address as shown on
the records of the Corporation, and such notice, if served on such
Director as herein provided other than by mail, must be served at
least two days before the time appointed for the meeting. Such
notice shall state the date, time, place and purpose(s) of the
meeting; provided, regular meetings of the Board of Directors may
be held without notice of the date, time, place or purpose of such
meetings.
Section 14. WAIVER OF NOTICE AND VALIDATION.
By written consent of any Director, either before at or after such
meeting, the minimum time required for giving notice of such
meeting, or any other matter required to be contained in any
written notice of a meeting, may be waived as to such Director. Any
Director may waive notice of any meeting either before, at or after
such meeting. Attendance of a director at a meeting shall
constitute a wavier of notice of such meeting and a waiver of any
and all objections to the place, time and date of such meeting or
the manner in which it was called or convened, except when a
Director states, at the beginning of the meeting or promptly upon
arrival at the meeting any objection to the transaction of business
because the meeting is not lawfully called or convened.
Section 15. EXECUTIVE COMMITTEE.
The Board of Directors shall have the power, by resolution adopted
by a majority of all the Directors of the Corporation, to designate
from among its members an executive committee, which committee may
have and may exercise all of the powers of the Board of Directors,
except such committee shall not have the powers to approve or
recommend to Shareholders actions or proposals required by law to
be approved by Shareholders; fill vacancies on the Board of
Directors or any committee thereof; adopt, amend or repeal the
Bylaws; authorize or approve the reacquisition of shares unless
pursuant to a general formula or method specified by the Board of
Directors; authorize or approve the issuance or sale or contract
for the sale of shares; or, determine the designation and relative
rights, preferences and limitations of a voting group except the
Board of Directors may authorize a committee (or a senior executive
officer of the Corporation) to do so within limits specifically
prescribed by the Board of Directors; unless powers of the
executive committee are expressly limited by resolution adopted by
the Board of Directors. The executive committee shall keep regular
minutes of all business transacted by it, and of all actions taken in
connection with the affairs of the Corporation, and said business
<PAGE>
and actions shall be subject to revision, election, and approval by
the Board of Directors of the Corporation; provided, that the Board
of Directors shall have no power to revise, alter or disapprove any
lawful action of the executive committee to the prejudice of third
parties.
Section 16. OTHER COMMITTEES.
The Board of Directors may also appoint from among its members such
other committees as the Board of Directors may determine, which
committees shall in each case consist of no less than two (2)
Directors who serve at the pleasure of the Board of Directors, and
which committees shall have such powers and duties as shall from
time to time be prescribed by the Board of Directors. A majority of
the members of any committee may fix its rules of procedure. All
action by any committee shall be reported to the Board of Directors
at a meeting succeeding such action and shall be subject to
revision, alteration, and approval by the Board of Directors;
provided that the Board of Directors shall have no power to revise,
alter or disapprove any lawful action of any committee to the
prejudice of third parties. The Board of Directors, by resolution,
may designate one or more directors as alternate members of any
such committee who may act in the place and stead of any absent
member or members at any meeting of such committee.
Section 17. ACTION TAKEN WITHOUT FORMAL MEETING.
Anything herein to the contrary not withstanding, the Board of
Directors or the executive committee, may take any action required
or permitted to be taken by them without a meeting if written
consent to said action, signed by all of the members of the Board
of Directors or executive committee, as the case may be, is filed
in the minutes of the proceedings of the Directors or committee
prior to the taking of such action.
Section 18. ADVISORY BOARD.
The Board of Directors of this Corporation may appoint individuals
who may, but need not be, Directors, officers, or employees of this
Corporation to serve as members of an Advisory Board of Directors
of one or more operating divisions or subsidiaries of this
Corporation and may fix fees or compensation for attendance at
meetings of any such Advisory Boards. The members of any such
Advisory Board may adopt and from time to time may amend rules and
regulations for the conduct of their meetings and shall keep
minutes of their meetings which minutes shall be submitted to the
Board of Directors of this Corporation. The term of office of any
member of the Advisory Board of Directors shall be at the pleasure
of the Board of Directors of this Corporation and shall expire the
day of the next succeeding Annual Meeting of the Shareholders of
this Corporation. The function of any such Advisory Board of
Directors shall be to advise the Board of Directors with respect to
<PAGE>
the affairs of the operating divisions and subsidiaries of this
Corporation to which it is appointed.
Section 19. TITLES.
The Board of Directors of this Corporation may from time to time
confer on the employees of this Corporation, including employees of
operating divisions and subsidiaries of this Corporation, or
discontinue, the title of Chief Executive Officer, President, Chief
Operating Officer, Vice President, Secretary, Chief Financial
Officer, Treasurer and any other titles deemed appropriate. The
designation of any such official titles for employees so assigned
shall not be permitted to conflict in any way with any executive or
administrative authority established from time to time by this
Corporation. Any employee so designated as an officer of an operating
division or subsidiary shall have authority, responsibilities, and
duties with respect to his operating division or subsidiary correspond-
ing to those normally vested in the comparable officer of this Corpora-
tion by these Bylaws, subject to such limitations as may be imposed by
the Board of Directors of this Corporation.
Section 20. COMPENSATION OF DIRECTORS.
The Board of Directors shall fix the compensation of the members of
the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. OFFICERS, ELECTION AND TERMS OF OFFICE.
The principal Officers of the Corporation shall be a President, a
Secretary and a Treasurer, and from time to time, the Board of
Directors may elect a Chief Executive Officer, Chief Operating
Officer, one or more Vice Presidents, Chief Financial Officer and
such Assistant Secretaries, Assistant Treasurers and such other
officer, agents and employees as it may deem proper. One person may
hold more than one office in the Corporation. All of said officers
shall be chosen annually by the Board of Directors at the Annual
Meeting thereof by a majority of the votes cast and shall hold
their respective offices from the date of the Annual Meeting
of the Board of Directors at which elected until the date of the
next succeeding Annual Meeting of the Board of Directors and such
officers shall hold their respective offices until their respective
successors are chosen and qualified in their stead. In its
discretion, the Board of Directors may delegate to the Chief
Executive Officer or President the power to appoint one or more
officers or assistant officers and may leave unfilled for any
period of time any office of the Corporation. The Board of
Directors shall have the power to create and to fill by
appointment, for such term as they may see fit, such additional
Assistant Secretaries, Assistant Treasurers and other officers as
<PAGE>
it may see fit, and to prescribe such duties for them to perform as
may be deemed necessary. The Board of Directors may also appoint or
authorize the appointment of such agents and factors and prescribe
or authorize the prescribing of such duties for them to perform as
to the Board may deem advisable.
Section 2. REMOVAL.
The Chief Executive Officer, President, any Vice President, the
Secretary and the Treasurer, and all other officers and agents of
the Corporation shall be subject to removal at any time, with or
without cause, by the affirmative vote of a majority of the
Directors present at any duly convened meeting of the Board of
Directors at which a quorum is present. All officers, agents and
employees, other than those elected or appointed by the Board of
Directors, shall hold office at the discretion of the committee or
the officer appointing them. Any officer or assistant officer, if
appointed by another officer, may be removed, at any time, with or
without cause, by the appointing officer.
Section 3. VACANCIES.
Any vacancy occurring in the office of the Chief Executive Officer,
President, any Vice President, the Secretary or the Treasurer of
the Corporation shall be filled by the Board of Directors for the
remainder of the year and until their successors are duly elected
and qualified.
Section 4. CHIEF EXECUTIVE OFFICER.
The Board of Directors may create the office known as Chief
Executive Officer. The Chief Executive Officer shall be the highest
ranking officer of the Corporation and shall have the powers of the
President as set out in these Bylaws, and such other powers and
duties as established from time to time by the Board of Directors
and/or as provided by Law. In the event that the Board of Directors
of this Corporation shall create the office of -Chief Executive
Officer, then the President shall be the Chief Operating Officer of
the Corporation and shall have the powers and perform such duties
as may be delegated to him by the Board of Directors or in the
absence of such action by the Board, then by the Chief Executive
Officer. In case of the death, absence or inability of the Chief
Executive Officer to act, except as may be expressly limited by
action of the Board of Directors, and unless and until the Board of
Directors has appointed a new Chief Executive Officer, the
President shall perform the duties and exercise the powers of the
Chief Executive Officer following such death of the Chief Executive
Officer or during the absence or inability of the Chief Executive
Officer to act.
Section 5. PRESIDENT.
Unless the Board of Director's create the office of Chief Executive
<PAGE>
Officer, the President shall be the Chief Executive Officer of the
Corporation subject to the directions of and limitations imposed by
the Board of Directors, and shall perform all the duties and have
all the power usually pertaining and attributed by law or otherwise
to the office of the President of the Corporation except as may be
expressly limited by the Board of Directors. The President shall
coordinate and supervise the activities of all other officers of
the Corporation. The President shall from time to time call special
meetings of the Board of Directors when he deems it necessary to do
so; or, whenever the requisite number of members of the Board of
Directors shall request him, in writing, so to do. He shall preside
at all meetings of the Shareholders. The President, unless some
other person is thereunto expressly authorized by resolution of the
Board of Directors, shall sign all certificates of stock, execute
all contracts, deeds, notes, mortgages, bonds and other instruments
and papers in the name of the Corporation and on its behalf,
subject, however, to the control when exercised of the Board of
Directors. He shall, at each Annual Meeting of the Shareholders,
present a report of the business and affairs of the Corporation, and
shall from time to time, whenever requested, report to the Board all
matters within his knowledge which the interest of the Corporation
may require be brought to the notice of the Directors. The
President shall have the power to employ and terminate the
employment of all such subordinate officers, agents, clerks and
other employees not herein provided to be elected by the Board, as
he may find necessary to transact the business of the Corporation,
and shall have the right to fix the compensation thereof.
Section 6. VICE PRESIDENTS.
The Vice Presidents shall have the powers and perform such duties
as may be delegated to them respectively, by the Board of Directors
or in the absence of such action by the Board, then by the
President. In case of the death, absence or inability of the
President to act, except as may be expressly limited by action of
the Board of Directors, and unless and until the Board of Directors
has appointed a President Pro Tempore, any Vice President may, and
any one of them expressly designated by the Board of Directors
shall perform the duties and exercise the powers of the President
following such death of the President or during the absence or
inability of the President to act; and, concurrently with the
President, shall at all times have the power to sign all
certificates of stock, execute all contracts, deeds, notes,
mortgages, bonds and other instruments and documents in the name of
the Corporation "on its behalf which the President is authorized to
do, but subject to the control and authority at all times of the
Board of Directors.
Section 7. PRESIDENT PRO TEMPORE.
In case of the death, absence or inability of the President to take
<PAGE>
action, the Board of Directors, in its discretion, may appoint a
President Pro Tempore who shall exercise the powers and duties of
the President until the return of the President or until the
President is again able to act, or until a successor to the
President has been duly elected.
Section 8. SECRETARY
The Secretary shall keep the Minutes of all meetings of the
Shareholders and the Board of Directors in a book or books to be
kept for such purposes and, also, when so requested, the Minutes of
all meetings of committees in a book or books to be kept for such
purposes. He shall attend to giving and serving of all notices, and
he shall have charge of all books and papers of the Corporation,
except those hereinafter directed to be in the charge of the
Treasurer, or except as otherwise expressly directed by the Board
of Directors. He shall keep the stock certificate book or books.
The Secretary shall be the custodian of the seal of the Corporation.
The Secretary shall sign with the President, or with a Vice President,
all certificates of stock as the Secretary of this Corporation and as
such Secretary, affix or cause to be affixed thereto the seal of the
Corporation. The Secretary may sign as Secretary of the Corporation,
with the President, or with a Vice President, in the name of the
Corporation and on its behalf, all contracts, deeds, mortgages, bonds,
notes and other papers, instruments and documents, except as otherwise
expressly provided by the Board of Directors, and as such Secretary
shall affix the seal of the Corporation thereto. Under the direction of
the Board of Directors or the President, the Secretary shall perform such
other duties as may be prescribed by the Board of Directors or the
President.
Section 9. ASSISTANT SECRETARY.
The Assistant Secretary shall have such powers and perform such
duties as may be delegated to him by the Board of Directors or the
President and, in case of the death, absence or inability of the
Secretary to act, whether temporary or not, he may exercise the
powers and duties of the Secretary. The Assistant Secretary may,
together with the President or with a Vice President, sign
certificates of stock, contracts and other instruments and documents
involving the carrying on of the business of the Corporation which the
Secretary is authorized to sign, which power shall be concurrent with
the power of the Secretary.
Section 10. TREASURER.
The Treasurer shall have the custody of all the funds and
securities of the Corporation, except as may be otherwise provided
by the Board of Directors, and he shall make such disposition of
the funds and other assets of the Corporation as he may be directed
by the Board of Directors. He shall keep or cause to be kept a
record of all money received and paid out, and all vouchers and
receipts given therefor, and all other financial transactions of
<PAGE>
this Corporation. He shall have general charge of all financial
books, vouchers and papers belonging to the Corporation or
pertaining to its business. He shall render an account of the
Corporation's funds at each Annual Meeting of the Board of
Directors and at such other meetings as may be requested, and he
shall make an Annual statement of the finances of this Corporation.
If at any time there is a person designated as Comptroller of the
Corporation, the Treasurer may delegate to such Comptroller such
duties and powers as to the Treasurer may deem proper. The
Treasurer shall perform such other duties as are usually incident
by law or otherwise to the office of the Treasurer, and as he may
be directed or required by the Board of Directors or the President.
Section 11. ASSISTANT TREASURER.
The Assistant Treasurer shall have such powers and shall perform
such duties as may be delegated to him by the Board of Directors or
the President or the Treasurer; and in case of the death, absence
or inability of the Treasurer to act, he may exercise the powers and
duties of the Treasurer.
Section 12. SUBORDINATE OFFICERS.
In all cases where the duties of subordinate officers and the
duties of agents or employees of the Corporation are not
specifically prescribed by the Bylaws or resolution of the Board of
Directors, such officers, agents and employees shall obey the
orders and instructions of the President. The President may, with
or without the consent of the Board of Directors, suspend or remove
any subordinate officer, agent or clerk or other servant of the
Corporation who has not been elected to such office by the Board of
Directors.
ARTICLE V
FUNDS OF THE CORPORATION
Section 1. DEPOSIT.
All monies of the Corporation or under its charge deposited in any
bank or other place of deposit shall be deposited to the credit of
the Corporation in its corporate name, unless otherwise expressly
directed by the Board of Directors.
Section 2. EVIDENCE OF INDEBTEDNESS.
All bonds, notes, mortgages and other evidence's of indebtedness of
the Corporation shall be signed by the President, or by a Vice
President or by the President Pro Tempore, in case such has been
appointed and all such instruments signed by other than the
President shall also be attested by the Secretary or the Assistant
Secretary, and no such instrument shall be valid or binding without
being so signed.
<PAGE>
Section 3. CHECKS.
All checks or warrants drawn upon funds of the Corporation shall be
in such form and signed and countersigned as the Board of Directors
may by resolution direct.
ARTICLE VI
SEAL
The seal of this Corporation shall be circular and shall have
inscribed thereon the name of the Corporation and such other words
and figures and in such design as may be prescribed by the Board of
Directors, and may be facsimile, engraved, printed or an impression,
or other type seal.
ARTICLE VII
STOCK
Section 1. AUTHORIZED ISSUANCE.
This Corporation may issue the shares of stock authorized by its
Articles of Incorporation and none other.
Section 2. CERTIFICATES OF STOCK.
Certificates of stock shall be numbered and registered in the order
in which they are issued. They shall be signed by the President or
Vice President, and by the Secretary or Assistant Secretary, and
the seal of the Corporation shall be affixed thereto. All stock
certificates shall be bound in a book, and shall be issued in
consecutive order therefrom, and on the margin of the stub of each
certificate shall be entered in the name of the person to whom such
certificate is issued, the number of shares issued, and the date
thereof.
Section 3. ISSUANCE OF STOCK.
The stock of the Corporation may be issued for consideration
consisting of any tangible or intangible property or benefit to the
Corporation, including cash, promissory notes, services performed,
promises to perform services evidenced by a written contract or
other securities of the Corporation.
Section 4. LIEN ON STOCK.
The Corporation shall have a first lien on all of the shares of its
capital stock at any time issued and outstanding and upon all
distributions declared on the same for any indebtedness of- the
respective Shareholders to the Corporation. Any stock certificate
issued by the Corporation shall have inscribed on the reverse side
<PAGE>
thereof the following notation, viz:
"This stock certificate is issued subject to a lien held by the
Corporation issuing the same for any indebtedness owed by the owner
of the stock evidenced hereby to the Corporation. "
Section 5. FORM OF STOCK CERTIFICATE.
It shall not be necessary to set forth in any stock certificate the
provisions of the Certificate of Incorporation showing the class or
classes of stock authorized to be issued and the distinguishing
characteristics thereof, nor the provisions of any Bylaws, nor of
any Agreement adopted by the Corporation, restricting the transfer
of shares of stock. Those provisions may either (a) be summarized
on the face or back of the certificate, or (b) be incorporated by
reference made on the face or back of the certificate, the
reference stating that a copy of the provisions, certified by an
officer of the Corporation, will be furnished by the Corporation or
its transfer agent, without costs, to and upon request of the
certificate holder, or party directly in interest.
Section 6. TRANSFER.
(a) Transfers of stock shall be made only on the books of the
Corporation by the holder, in person, or by an attorney-in-fact
under a power of attorney duly executed by such Shareholder and
filed with the Secretary with written direction for the transfer,
upon surrender of the original certificate for such shares and upon
the payment of all indebtedness by such Shareholder to the
Corporation, and the possession of a Certificate of Stock (as
between the holder and the Corporation) shall not be regarded as
evidence of ownership of the same in any person other than the
registered owner until the transfer thereof is duly made on the
books of the Corporation. No transfer of stock shall be valid
against this Corporation until it shall have been effected and
registered upon the Corporation's books in the manner herein
provided.
(b) On the transfer of any shares, each certificate shall be
receipted for and such receipt shall be attached to the margin or
stub of such certificate in the certificate book. When such
certificate is delivered by the Corporation by registered mail or
certified mail, the return receipt of such registered or certified
mail shall be sufficient as the receipt herein provided for. All
certificates exchanged or surrendered to the corporation shall be
cancelled by the Secretary or Assistant Secretary and affixed in
their original places in the certificate book, and no new
certificates shall be issued until the certificates for which it is
exchanged have been cancelled and returned to their original place
in said book, except as provided in Section 7, of this Article
pertaining to lost or destroyed certificates.
(c) If any holder of any stock of the Corporation shall have
<PAGE>
entered into an agreement with any other holder of any stock of the
Corporation or with the Corporation, or both, relating to a sale or
sales or transfer of any shares of stock of the Corporation, or
wherein or whereby any restriction or condition is imposed or
placed upon or in connection with the sale or transfer of any
shares of stock of the Corporation, and if a duly executed or
certified copy thereof shall have been filed with the Secretary of
the Corporation, none of the shares of stock covered by such
agreement or to which it relates, of any such contracting
Shareholder, shall be transferred upon the books of the Corporation
until there has been filed with the Secretary of the Corporation, a
certificate of compliance with such agreement, and any evidence, of
any kind or quality, of compliance with the terms of such agreement
which the Secretary deems satisfactory or sufficient shall be
conclusive upon all parties interested; provided, however, that
neither the Corporation nor any Director, officer, employee or
transfer agent thereof shall be liable for transferring or
effecting or permitting the transfer of any such shares of stock
contrary to or inconsistent with the terms of any such agreement,
in the absence of proof of willful disregard thereof or fraud, bad
faith or gross negligence on the part of the party to be charged;
provided, further that the Certificate of the Secretary, under the
seal of the Corporation, bearing the date of its issuance by the
Secretary, certifying that such an agreement is or is not on file
with the Secretary, shall be conclusive as to such fact so certified
for a period of five days from the date of such certificate, with
respect to the rights of any innocent purchaser or transferee for
value of any such shares without actual notice of the existence of
any such restrictive agreement.
Section 7. LOST CERTIFICATES.
Any Shareholder claiming a certificate of stock to be lost or
destroyed shall make affidavit or affirmation of the fact and the
fact that he is the owner and holder thereof, and give notice of
the loss or destruction of same in such manner as the Board of
Directors may require, and shall give the Corporation a bond of
indemnity in form, amount and with one or more sureties
satisfactory to the Board of Directors, which amount shall-be at
least double the par value of all the shares of stock represented
by such certificate, payable as may be required by the Board of
Directors to protect the Corporation and any person injured by the
issuance of the new certificate from any liability or expense which
it or they may be put to or incur by reason of the original
certificate remaining outstanding whereupon the President or Vice
President and the Secretary or Assistant Secretary may cause to be
issued a new certificate in the same tenor as the one alleged to
be lost or destroyed, but always subject to approval of the Board
of Directors.
Section 8. STOCK TRANSFER BOOK.
The Corporation shall keep at its office in the State of Florida,
<PAGE>
or in the office of its transfer agent or registrar wherever
located, a book (or books, if more than one kind, class or series
of stock is outstanding), to be known as the Stock Transfer Book,
containing the names of all Shareholders alphabetically arranged,
with the address of every Shareholder, showing the number of shares
of each kind, class and/or series of stock held of record by each
Shareholder. If the stock book is kept in the offices of the
transfer agent, the Corporation shall keep at its office in the
State of Florida copies of the stock lists prepared from the stock
transfer book and sent to it from time to time by the transfer
agent. The stock transfer book or books shall show the current
status, but if the transfer agent is located somewhere else, a
reasonable time, shall be allowed for transit of mail. The stock
transfer books or other records of the Corporation indicating an
alphabetical list of the names of all Shareholders entitled to
notice of such meeting, arranged by voting group with the address
of, and the number, class and series, if any, of the shares held by
each, shall be available for inspection by any Shareholder for a
period of ten (10) days prior to the meeting or such shorter time
as exists between the record date and the meeting and continuing
through the meeting at the Corporation's principal address, place
identified in the meeting notice; or, at the office of the
Corporation's transfer agent or registrar. Provided that the
shareholder demands in good faith and for a proper purpose; and,
describes with reasonable particularity his purpose and the records
he desires to inspect and, the records are directly connected to
his purpose, a Shareholder, his agent or attorney is entitled, on
written demand, to inspect the Shareholder list during
regular business hours and at his expense during the period it is
available for inspection. The original stock transfer books shall
be prima facie evidence as to who are the Shareholders entitled to
examine such list or transfer books or to vote at any meeting of
Shareholders.
ARTICLE VIII
FISCAL YEAR
Section 1. DESIGNATION.
The fiscal year of the Corporation shall, by resolution, be
determined by the Board of Directors.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 1. BY THE DIRECTORS.
These Bylaws may be replaced, altered, amended, added to or
modified by a majority vote of the Directors present and voting at
any Annual or Regular Meeting of the Board of Directors at which a
<PAGE>
quorum is present, without notice; or at any Special Meeting of the
Board of Directors at which a quorum is present if notice that a
proposal would be presented at the Special Meeting for repeal,
alternation, amendment, adding to, or modifying the Bylaws is
included in the notice of the meeting, unless waived in writing by
a majority of the Directors.
ARTICLE X
AMENDMENT TO ARTICLES OF INCORPORATION
The Articles of Incorporation may be amended by a majority vote of
the Shareholders of the Corporation present at a special or general
meeting of the Shareholders at which a quorum is present, called
for such expressed purpose, after proper notice of said meeting has
been given to all Shareholders in writing, or without said notice
in the event that majority of the Shareholders of the Corporation
shall waive said notice in writing. The Articles of Incorporation
may be amended by the Board of Directors without Shareholder action
to the extent provided by Law.
I HEREBY CERTIFY that the foregoing is a full, true and correct
copy of the Bylaws of CONTINENTAL CAPITAL & EQUITY CORPORATION.
/s/John R. Manion
John R. Manion, as President and Secretary
Dated: February 16, 1995
<PAGE>
EXHIBIT 3.3
<PAGE>
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Florida Corporation Code,
the undersigned corporation adopts the following Articles of
Amendments to its Articles of Incorporation:
FIRST: The name of the corporation is:
CONTINENTAL CAPITAL & EQUITY CORPORATION
SECOND: The following amendment to the Articles of
Incorporation was adopted on June 18, 1998, as prescribed by the
Florida Corporation Act, in the manner marked with an X below:
X Such amendment was adopted by a unanimous vote of
the shareholders. The number of shares voted for the
amendment was sufficient for approval.
The corporation shall be authorized to issue
50,000,000 common shares @ $.01 per share.
THIRD: The manner, if not set forth in such amendment, in
which any exchange, reclassification, or cancellation of issued
shares provided for in the amendment shall be effected, is as
follows:
None.
FOURTH: The manner in which such amendment effects a change
in the amount of stated capital, and the amount of stated capital
as changed by such amendment, are as follows:
None.
CONTINENTAL CAPITAL & EQUITY CORPORATION
By:/s/John R. Manion
President
and/s/Dodi B. Zirkle
Secretary/Treasurer
STATE OF FLORIDA )
) SS.
COUNTY OF SEMINOLE )
The foregoing Articles of Amendment to the Articles of
Incorporation was acknowledged before me by John R. Manion as
President and Dodi B. Zirkle as Secretary/Treasurer of CONTINENTAL
CAPITAL & EQUITY CORPORATION, a Florida corporation,
this 18th day of June, 1998.
My Commission expires: /s/Wendy A. Vogt
6/10/2000 Notary Public
Longwood, Fl
Seminole County
<PAGE>
EXHIBIT 5.1
<PAGE>
Michael A. Littman
Attorney at Law
10200 W. 44th Ave., #400
Wheat Ridge, CO 80033
(303) 422-8127 Fax: (303) 422-7796
June 26, 1998
Continental Capital & Equity Corporation
195 Wekiva Springs Road, Suite #200
Longwood, FL 32779
Re: SB-2 Registration Statement for common shares of Continental
Capital & Equity Corporation
Gentlemen:
At your request, I have examined the form of Registration
Statement No., ______________ which you are filing with the
Securities and Exchange Commission, on Form SB-2 (the "Registration
Statement"), in connection with the registration under the
Securities Act of 1933, as amended, of up to 2 million shares of
your Common Stock (the "Stock") issuable pursuant to the 1998
Registration Statement file No. ___________ when effective.
In rendering the following opinion, I have examined and relied
only upon the documents, and certificates of officers and director
of the Company as are specifically described below. In my examination,
I have assumed the genuineness of all signatures, the authenticity,
accuracy and completeness of the documents submitted to me as originals,
and the conformity with the original documents of all documents submitted
to me as copies. My examination was limited to the following documents
and not others:
1. Certificate of Incorporation of the Company, as amended
to date;
2. Bylaws of the Company, as amended to date;
3. Certified Resolutions adopted by the Board of Directors
of the Company authorizing the Plan and the issuance of the Stock.
4. The Registration Statement.
I have not undertaken, nor do I intend to undertake, any
independent investigation beyond such documents and records, or to
verify the adequacy of accuracy of such documents and records.
Based on the foregoing, it is my opinion that the Stock to be
<PAGE>
issued under the Registration Statement, subject to effectiveness
of the Registration Statement and compliance with applicable blue
sky laws, when issued, will by duly and validly authorized, fully
paid and non-assessable.
I express no opinion as to compliance with the securities or
"blue sky" laws of any state in which the Stock is proposed to be
offered and sold or as to the effect, if any, which noncompliance
with such laws might have on the validity of issuance of the Stock.
I consent to the filing of this opinion as an exhibit to any
filing made with the Securities and Exchange Commission or under
any state or other jurisdiction's securities act for the purpose of
registering, qualifying or establishing eligibility for an
exemption from registration or qualification of the Stock described
in the Registration Statement in connection with the offering
described therein. Other than as provided in the preceding
sentence, this opinion (i) is addressed solely to you, (ii) may not
be relied upon by any other party, (iii) covers only matters of
Florida and federal law and nothing in this opinion shall be deemed
to imply any opinion related to the laws of any other jurisdiction,
(iv) may not be quoted or reproduced or delivered by you to any
other person, and (v) may not be relied upon for any other purpose
whatsoever. Nothing herein shall be deemed to relate to or
constitute an opinion concerning any matters not specifically set
forth above.
By giving you this opinion and consent, I do not admit that I
am a expert with respect to any part of the Registration Statement
or Prospectus within the meaning of the term "expert" as used in
Section 11 of the Securities Act of 1933, as amended, or the Rules
and Regulations of the Securities and Exchange Commission
promulgated thereunder.
The information set forth herein is as of the date of this
letter. I disclaim any undertaking to advise you of changes which
may be brought to my attention after the effective date of the
Registration Statement.
Sincerely,
/s/ Michael A. Littman
Michael A. Littman
<PAGE>
EXHIBIT 10.4
<PAGE>
To be filed by Amendment
<PAGE>
EXHIBIT 24.1
<PAGE>
Michael A. Littman
Attorney at Law
10200 W. 44th Ave., #400
Wheat Ridge, CO 80033
(303) 422-8127 Fax: (303) 422-7796
CONSENT
I hereby consent to the use in the Form SB-2 of Continental
Capital & Equity Corporation under the Securities Act of 1933, of
my opinion letter dated June 26, 1998.
/s/ Michael A. Littman
Michael A. Littman
Attorney at Law
June 26, 1998
<PAGE>
EXHIBIT 24.2
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
CONTINENTAL CAPITAL & EQUITY CORPORATION
We consent to the reference of our firm under the caption
"Experts" and the use of our report dated March 4, 1998, except for
Notes 8 and 9, as to which the date is June 22, 1998, with respect
to the December 31, 1997 and December 31, 1996 financial statements
of Continental Capital & Equity Corporation included in the
Registration Statement (Form SB-2).
Moore Stephens Lovelace, P.A.
<PAGE>
EXHIBIT 24.3
<PAGE>
ESCROW AGREEMENT
AGREEMENT made this _____ day of _______________, 19__, by and
among Continental Capital & Equity Corporation, a Florida
corporation, with its principal offices at 195 Wekiva Springs Road,
#200, Longwood, Florida 32779 (the "Corporation"), and AmSouth Bank
of Orlando, Florida (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Escrow Agent has been advised that the Company is
organized under the laws of the State of Florida and
WHEREAS, the Escrow Agent has been advised that the Company is
authorized to issue 50,000,000 shares of Common Stock, having no
par value; and
WHEREAS, the Escrow Agent has been advised that the Company
has filed with the Securities and Exchange commission (the "SEC") a
registration statement on Form SB-2 (the "Registration Statement")
pursuant to the General Rules and Regulations under the Securities
Act of 1933, as amended (the "Act"), covering a proposed public
offering (the "Offering") of 2,000,000 shares of the Company's
securities at an offering price of $7.00 per share.
WHEREAS, the Escrow Agent has been advised that the Company
proposes to offer the shares and warrants (hereinafter
"securities"), through agents who are NASD Broker/Dealers, for sale
to the public on a "best efforts, 2,000,000 shares all or none:
basis; and
WHEREAS, in compliance with Rule 240.15c2-4 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as
amended, the Company and the Underwriter propose to establish an
escrow account with the Escrow Agent; and
WHEREAS, the Escrow Agent is willing to establish an escrow
account on the terms and subject to the conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained the parties hereby agree as follows:
1. Establishment of Escrow Account. Prior to the date on
which the Registration Statement is declared effective (the
"Effective Date") by the SEC, or as soon as practicable thereafter,
the parties hereto shall establish, and by execution of this
Agreement hereby agree to establish, a non-interest bearing escrow
account with a designated branch of the Escrow Agent, which escrow
account shall be entitled, AmSouth Bank, as Escrow Agent for
Subscribers to Continental Capital & Equity Corporation." (the
"Escrow Agent").
2. Deposits into the Escrow Account. The Agents promptly
<PAGE>
shall deposit all monies received from prospective purchasers of
the securities (the "Fund") in the Escrow Account. Such deposits,
properly made payable to the order of "AmSouth Bank", as Escrow
Agent shall be delivered to the Escrow Agent before 12:00 P.M. on
the next business day following receipt by the Agents of payments
by subscribers for the securities. Simultaneously with each such
deposit, the Agents shall inform the Escrow Agent, by confirmation
slip or other writing, of the name and address of each prospective
purchaser and of the number of securities subscribed for by such
purchaser. In this regard, the Escrow Agent shall have the right
to rely fully on the confirmation slips or other writings so
furnished by the Agents. Promptly after the SEC shall declare the
Registration Statement effective, the Corporation shall advise the
Escrow Agent in writing of the Effective Date.
3. Disbursements from the Escrow Account.
(a) In the event that the Escrow Agent does not receive
$14,000,000 (which represents the proceeds from the sale of
2,000,000 shares from the Agents for deposit in the Escrow
Account within 90 business days from the Effective Date (which
period may be extended for an additional 90 business days by
mutual consent of the Company and the Underwriter, upon the
furnishing of written notice thereof to the Escrow Agent
jointly signed by the Company and the Agents), the Escrow
Agent shall refund to each prospective purchaser the amount
actually received from such purchaser, without interest
thereon or deduction therefrom, and the Escrow Agent shall
notify the Agents and the Company of its distribution of the
Fund.
(b) In the event that the Escrow Agent receives the
$14,000,000 from the Agents for deposit in the Escrow Account
within 90 business days from the Effective Date (which period
may be extended for an additional 90 business days pursuant to
(a) above), the Escrow Agent shall notify the Corporation of
such fact in writing within a reasonable time. The Escrow
Agent shall hold such monies in escrow, until given
instructions in writing by the Company and the Agents as to
the disposition of the Fund and such other documents as may be
necessary in the opinion of the Escrow Agent.
(c) Upon the disbursement of the Fund pursuant to either (a)
or (b) above, the Escrow Agent will be under no further
responsibility with respect to this Agreement. In this
regard, it expressly is agreed and understood that in no event
shall the aggregate amount of payments made by the Escrow
Agent exceed the amount of the Fund.
4. Rights, Duties and Responsibilities of Escrow Agent. It
is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature. It is further agreed that:
(a) The Escrow Agent shall not be required to enforce any of
<PAGE>
the terms or conditions of the Agency Agreement or any other
agreement between the Agents and the Company, nor shall the
Escrow Agent be responsible for the performance by the Agents
or the Company of their respective obligations under this
Agreement;
(b) The Escrow Agent shall not be required to accept from the
Agents any confirmation slips or other writings issued to
prospective purchasers hereunder unless the same are
accompanied by cash, checks, drafts or other instruments for
the payment of money, nor shall the Escrow Agent be required
to keep records of any information on checks, drafts or other
instruments received or collected by the Escrow Agent from the
Agents except as to the amount of same; however, the Escrow
Agent shall notify the Agents within a reasonable time, by
wire or otherwise, of any discrepancy between the amount set
forth on any such confirmation slip or other writing and the
sum, or sums, delivered to the Escrow Agent by the Agents
therewith;
(c) The Escrow Agent shall be under no duty or responsibility
to enforce collection of any check, draft or other instrument
for the payment of money delivered to it hereunder, but the
Escrow Agent, within a reasonable time, shall return to the
Agent any check, draft or other instrument received from the
Agent which is dishonored, together with the confirmation slip
or other writing, if any, which accompanied such check, draft
or other instruments;
(d) The Escrow Agent shall have the right to act in reliance
upon any document, instrument or signature believed by it to
be genuine and to assume that any person purporting
to give any notice or instructions in accordance with this
Agreement or in connection with any transaction to which this
Agreement relates has been duly authorized to do so. The
Escrow Agent shall not be obligated to make any inquiry as to
the authority, capacity, existence or identity of any person
purporting to give any such notice or instructions;
(e) In the event that the Escrow Agent shall be uncertain as
to its duties or rights, hereunder or shall receive
instructions with respect to the Fund which, in its sole
opinion, are in conflict with either other instructions
received by it or any provision of this Agreement, it shall be
entitled to hold the Fund, or a portion thereof, in the Escrow
Account pending the resolution of such uncertainly to the
Escrow Agent's sole satisfaction, by final judgment of a court
or courts of competent jurisdiction or otherwise; or the
Escrow Agent, at its option, may deposit the Fund in the
registry of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined;
(f) The Escrow Agent shall not be liable for any action taken
or omitted hereunder except in the case of its willful
<PAGE>
misconduct or negligence, nor shall it be liable for the
default or misconduct of any employee, agent or attorney
appointed to it; and
(g) The Escrow Agent shall have no responsibility at any time
to ascertain whether or not any security interest exists in
the Fund or any part thereof or to file any financing
statement under the Uniform commercial code with respect to
the Fund or any part thereof.
5. Amendment; Resignation. This Agreement and/or the terms
of the Offering may be altered or amended only with the written
consent of the Corporation, the Agents and the Escrow Agent.
Should the Company and/or the Agents attempt to change the
Agreement and/or the terms of the Offering in a manner which, in
the Escrow Agent's sole opinion, is undesirable, the Escrow Agent
may resign as Escrow Agent upon 5 days written notice to the
Company and the Agents. In the case of the Escrow Agent's
resignation, its only duty shall be to hold and dispose of the Fund
in accordance with the original provisions of this Agreement until
a successor Escrow Agent shall be appointed and written notice of
the name and address of such successor Escrow Agent shall be given
to the Escrow Agent by the Company and the Agent, whereupon the
Escrow Agent's only duty shall be to pay over to the successor
Escrow Agent the Fund, less any portion thereof previously paid out
in accordance with this Agreement.
6. Warranties. The Company and the Agent warrant to and
agree with the Escrow Agent that, unless otherwise expressly set
forth in this Agreement:
(a) No party other than the parties hereto and the
prospective purchasers have, or shall have, any lien, claim or
security interest in the Fund or any part thereof;
(b) As of the date of this Agreement, the Registration
Statement has ben declared effective by the SEC; and
(c) No financing statement under the Uniform Commercial Code
is on file in any jurisdiction claiming a security interest in
or describing (whether specially or generally) the Fund or any
part thereof.
7. Fees and Expenses. The Escrow Agent shall be entitled
to a fee of $_________________ for services rendered by it as
Escrow Agent. The Escrow Agent also shall be reimbursed by the
Company and the Agent for any reasonable expenses incurred in
connection with this Agreement, including, but not limited to,
reasonable counsel fees.
8. Indemnification and Contribution.
(a) The company and the Agents (collectively referred to as
the "Indemnitors") jointly and severally agree to indemnify
<PAGE>
the Escrow Agent and its officers, agents, directors and
stockholders (jointly and severally the "Indemnitees")
against, and hold them harmless of and from, any and all loss,
liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Indemnitees may
suffer or incur by reason of any action, claim or proceeding
brought against the indemnitees, arising out or relating in
any way to this Agreement or any transaction to which this
Agreement relates, unless such action, claim or proceeding is
the result of the negligence of the Indemnitees. If any
person shall assert any claim (whether or not by the
institution of any action, suit or other proceeding) against
any of the Indemnitees arising out of this Agreement or any
transaction to which this Agreement relates, whether or not
such claim ultimately is established, the Indemnitors shall
pay all costs and expenses of the defense of such claim,
including, without limitation, reasonable counsel fees,
liability, cost, damage and expense against which the
Indemnitees are indemnified hereunder.
(b) If the indemnification provided for in this Section 8 is
applicable, but for any reason is held to be unavailable, the
Indemnitors shall contribute such amounts as are just and
equitable to pay (or to reimburse the Indemnitees for) the
aggregate of any and all losses, liability, costs, damages
and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any
amount paid in settlement of, any action, claim or proceeding
arising out of or relating in any way to any acts or omissions
of the Indemnitors.
(c) The Escrow Agent shall have a lien upon the Fund to the
extent of all losses, liabilities, damages, costs or expenses,
including reasonable counsel fees, for which it is to be
indemnified hereunder and for all fees due it hereunder. In
the event of any claim, action or proceeding against the
Indemnities relating to this Agreement or any transaction to
which this Agreement relates or if any fee due the Escrow
Agent hereunder shall remain unpaid, the Escrow Agent may
retain the Fund or any part thereof until the Escrow Agent's
lien upon the Fund shall have been determined and satisfied or
secured adequately, in the reasonable opinion of the Escrow
Agent.
(d) Any Indemnitee which proposes to assert the right to be
indemnified under this Section 8, promptly after receipt of
notice of commencement of any action, suit or proceeding
against such Indemnitee in respect of which a claim is to be
made against the Indemnitors under this Section 8, will notify
the Indemnitors of the Commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the
omission to so notify the Indemnitors of any such action, suit
or proceeding shall not relieve the Indemnitors from any
liability which they may have to any Indemnitee.
<PAGE>
In case such action, suit or proceeding shall be brought
against any Indemnitee, the Indemnitors shall be entitled to
participate in and, to the extent that they shall wish, to
assume the defense thereof, with counsel satisfactory to such
Indemnitee, and after notice from the Indemnitors to such
Indemnitee of their election to so assume the defense thereof,
the Indemnitors shall not be liable to such Indemnitee for any
legal or other expenses, other than reasonable costs of
investigation subsequently incurred by such Indemnitee, in
connection with the defense thereof. The Indemnitee shall have
the right to employ its counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such
Indemnitee unless (i) the employment of counsel by such Indemnitee
has been authorized by the Indemnitors, (ii) the Indemnitee shall
have concluded reasonably that there may be a conflict of interest
among the Indemnitors and the Indemnitee in the conduct of the
defense of such action (in which case the Indemnitors shall not have
the right to direct the defense of such action on behalf of the
Indemnitee) or (iii) the Indemnitors in fact shall not have employed
counsel to assume the defense of such action, in each of which cases
the fees and expenses of counsel shall be borne by the Indemnitors.
9. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State
of Florida and shall be binding upon the parties hereto and their
respective successors and assigns; provided, assignment rights
under this Agreement or with respect to the Fund shall be void as
against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow
Agent, and
(b) The Escrow Agent shall have consented in writing to
such assignment or transfer.
10. Notices. All notices required to be given in connection
with this Agreement shall be sent by registered or certified mail,
return receipt requested, and addressed to: the company at 195
Wekiva Springs Road, #200, Longwood, Florida 32779, and the Escrow
Agent Attention: Trust Department:
AmSouth Bank, Orlando, Florida.
11. Severability. If the application thereof to any person
or circumstance shall be determined to be invalid or unenforceable,
the remaining provisions of the Agreement or the application of
such provision to persons or circumstances other than those to
which it is held invalid or enforceable shall not be affected
thereby and shall be valid and enforceable to the fullest extent
permitted by law.
12. Execution in Several Counterparts. This Agreement may
be executed in several counterparts or by separate instruments, and
all of such counterparts and instruments shall constitute one
<PAGE>
agreement, binding on all of the parties hereto.
13. Pronouns. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, neuter, singular or
plural as the context may require.
14. Captions. All captions are for convenience only and
shall not limit or define the test hereof.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings
(written or oral) of the parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.
AMSOUTH BANK
By:____________________________
Continental Capital & Equity Corporation
By:____________________________
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
FINANCIAL STATEMENT SCHEDULE INDEX
For the Three Months Ended March 31, 1998 and 1997 (unaudited)
Page
Number
Balance Sheet F-2
Statement of Income F-3
Statement of Cash Flows F-4
Notes to Financial Statements F-5
F-1
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
BALANCE SHEET (UNAUDITED)
March 31, 1998
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,174,314
Accounts receivable 4,458
Employee advances 37,653
Due from related party 280,000
Investments 2,930,606
TOTAL CURRENT ASSETS $4,427,031
Furniture and equipment, net 170,086
Deposits 25,000
TOTAL ASSETS $4,622,117
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $8,945
Due to related party 4,000
Deferred revenue 1,962,847
Payroll taxes payable 345
TOTAL CURRENT LIABILITIES $1,976,137
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock, $.01 par value; 50,000,000
shares authorized; 4,000,000 shares issued
and outstanding (as adjusted for stock split) $40,000
Retained earnings 2,605,980
TOTAL SHAREHOLDER'S EQUITY $2,645,980
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $4,622,117
F-2
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENT OF INCOME (UNAUDITED)
For the Three Months Ended March 31, 1998 and 1997
<S> <C> <C>
1998 1997
REVENUES AND FEES
Financial public relations services & fees $771,681 $938,170
Consulting services 102,131 15,619
Referral & finder fees 303,035 106,000
TOTAL REVENUES AND FEES 1,176,847 1,059,789
COST OF REVENUES AND FEES
Internet advertising 17,345 31,465
Pre-press and printing 23,444 59,709
Postage and related expenses 36,188 44,319
List Services 3,567 7,560
Commissions and fees 19,948 2,600
Consultant advice 500 7,500
Press releases 3,470 7,365
Other 4,947 17,104
TOTAL COST OF REVENUES AND FEES 109,409 177,622
INCOME FROM OPERATIONS $1,067,438 $882,167
GENERAL AND ADMINISTRATIVE EXPENSES 509,931 633,358
OTHER INCOME ( EXPENSES)
Interest income (expense) 3,346 2,617
Gain (loss) on investments (33,497) 64,442
Miscellaneous income 5,757 7,915
TOTAL OTHER INCOME ( EXPENSES) (24,394) 74,974
NET INCOME $533,113 $323,783
BASIC AND DILUTED EARNINGS PER COMMON SHARE $0.13 $0.08
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,000,000 4,000,000
F-3
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENT OF CASH FLOWS (UNAUDITED)
For the Three Months Ended March 31, 1998 and 1997
<S> <C> <C>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $533,113 $323,783
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 9,106 7,122
Decrease in employee advances 7,724 13,000
Increase in due from related party (30,000) -
Increase in investments (1,550,489) (10,588)
Increase in accounts payable/payroll taxes 9,290 94,977
Increase in deposits (25,000) -
Increase in deferred revenue 1,837,847 150,114
NET CASH PROVIDED BY OPERATING
ACTIVITIES $791,591 $578,408
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture, equipment, and leasehold
improvements (147,200) (1,128)
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder distributions (44,211) (27,516)
INCREASE IN CASH AND CASH
EQUIVALENTS $600,180 $549,764
CASH AND CASH EQUIVALENTS AT BEGINNING OF
QUARTER 574,134 48,277
CASH AND CASH EQUIVALENTS AT END OF QUARTER $1,174,314 $598,041
F-4
</TABLE>
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Three Month Ended March 31, 1998 and 1997
Note 1 In the opinion of Continental Capital & Equity Corporation (the
Company), the accompanying financial statements contain all ad-
justments (consisting of normal recurring adjustments) necessary to
present fairly its financial position as of March 31, 1998, and
the results of its operations and cash flows for the three month
periods ended March 31, 1998 and 1997. The results are not
necessarily indicative of the results to be expected for the full
fiscal year. The financial statements should be read in conjunction
with the financial statement disclosures contained in the
Company's annual financial statements for the years ended
December 31, 1997 and 1996.
F-5
<PAGE>
CONTINENTAL CAPITAL &
EQUITY CORPORATION
FINANCIAL STATEMENTS
Years Ended December 31, 1997 and 1996
F-6
<PAGE>
C O N T E N T S
________
Page
Number
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-8
FINANCIAL STATEMENTS
Balance Sheets F-9
Statements of Income F-10
Statements of Changes in Shareholder's Equity F-11
Statements of Cash Flows F-12
Notes to Financial Statements F-13
F-7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Continental Capital & Equity Corporation
Longwood, Florida
We have audited the accompanying balance sheets of Continental Capital &
Equity Corporation and as of December 31, 1997 and 1996, and the related
statements of income, changes in shareholder's equity, and cash flows for
the years then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 Continental Capital & Equity
Corporation as of December 31, 1997 and 1996, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Moore Stephens Lovelace, P.A.
Orlando, Florida
March 4, 1998, except for
Notes 8 and 9, as to which
the date is June 22, 1998.
F-8
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
BALANCE SHEETS
December 31, 1997 and 1996
ASSETS
1997 1996
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 574,134 $ 48,277
Accounts receivable 4,458 133,891
Employee advances 45,377 33,802
Due from related party 250,000 -
Investments 1,380,117 1,344,450
TOTAL CURRENT ASSETS 2,254,086 1,560,420
Furniture and equipment, net 31,992 39,612
TOTAL ASSETS
$2,286,078 $1,600,032
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ 110,364
Due to related party 4,000 4,000
Deferred revenue 125,000 331,466
TOTAL CURRENT LIABILITIES 129,000 445,830
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common stock, $.01 par value; 50,000,000 shares
authorized; 4,000,000 shares issued
and outstanding 40,000 40,000
Retained earnings 2,117,078 1,114,202
TOTAL SHAREHOLDER'S EQUITY 2,157,078 1,154,202
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $2,286,078 $1,600,032
The accompanying notes are an integral part of the financial statements.
F-9
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENTS OF INCOME
Years Ended December 31, 1997 and 1996
1997 1996
<S> <C> <C>
REVENUES AND FEES
Financial public relations services and fees $4,682,223 $4,011,262
Consulting services 736,999 101,900
Referral and finders fees 189,500 530,246
TOTAL REVENUES AND FEES 5,608,722 4,643,408
COST OF REVENUES AND FEES
Internet advertising 287,938 13,145
Pre-press and printing 272,424 289,090
Postage and related expenses 251,163 366,636
List services 114,169 180,902
Commissions and fees 59,875 125,795
Consulting 35,000 282,800
Press releases 33,199 46,022
Other 171,812 135,446
TOTAL COST OF REVENUES AND FEES 1,225,580 1,439,836
INCOME FROM OPERATIONS 4,383,142 3,203,572
GENERAL AND ADMINISTRATIVE EXPENSES 3,205,119 1,930,554
OTHER INCOME (EXPENSES)
Interest 21,151 14,496
Gain (loss) on investments 470,383 (69,637)
Interest expense (102) (1,763)
Miscellaneous income 67,982 40,819
TOTAL OTHER INCOME (EXPENSES) 559,414 (16,085)
NET INCOME $1,737,437 $1,256,933
BASIC AND DILUTED EARNINGS
PER COMMON SHARE $ .43 $ .31
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 4,000,000 4,000,000
NET INCOME PRIOR TO PRO FORMA ADJUSTMENTS $1,737,437 $1,256,933
PRO FORMA PROVISION FOR INCOME TAXES (506,500) (487,000)
PRO FORMA NET INCOME $1,230,937 $ 769,933
The accompanying notes are an integral part of the financial statements.
F-10
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
Years Ended December 31, 1997 and 1996
Common Stock Retained
Shares Amount Earnings Total
<S> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995 4,000,000 $ 40,000 $ 403,203 $ 443,203
SHAREHOLDER DISTRIBUTIONS - - (545,934) (545,934)
NET INCOME - - 1,256,933 1,256,933
BALANCE AT DECEMBER 31, 1996 4,000,000 40,000 1,114,202 1,154,202
SHAREHOLDER DISTRIBUTIONS - - (734,561) (734,561)
NET INCOME - - 1,737,437 1,737,437
BALANCE AT DECEMBER 31, 1997 4,000,000 $ 40,000 $2,117,078 $2,157,078
The accompanying notes are an integral part of the financial statements.
F-11
</TABLE>
<PAGE>
[CAPTION]
<TABLE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997 and 1996
<S> <C> <C>
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,737,437 $1,256,933
Adjustments to reconcile net income to
net cash
provided by operating activities
Depreciation 28,139 28,486
Decrease (increase) in accounts receivable 129,433 (133,891)
Decrease (increase) in employee advances (11,575) 42,104
Increase in due from related party (250,000) -
Increase in investments (35,667) (959,811)
Increase (decrease) in accounts payable (110,364) 110,364
Increase (decrease) in deferred revenue (206,466) 331,466
Decrease in due to related party - (69,273)
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,280,937 606,378
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment (20,519) (47,734)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in bank overdraft - (21,887)
Shareholder distributions (734,561) (545,934)
NET CASH USED IN FINANCING ACTIVITIES (734,561) (567,821)
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 525,857 (9,177)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 48,277 57,454
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 574,134 $ 48,277
The accompanying notes are an integral part of the financial statements.
F-12
</TABLE>
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
Years Ended December 31, 1997 and 1996
NOTE 1 - DESCRIPTION OF BUSINESS
Continental Capital & Equity Corporation (the Company) was
incorporated as an S corporation in the State of Florida in
February 1995. The Company provides public relations and direct
marketing services primarily to publicly traded companies. These
services include publicizing and disseminating information about these
companies to potential investors, brokerage houses, analysts,
institutions and shareholders. In addition, the Company also offers
referral services and investor relations consulting services.
Prior to the Company's inception, its management offered similar
services through a C corporation (the C-Corp) that was originally
incorporated under the same name in September 1992. In February 1995,
all of the C-Corp operations were shifted to the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 these estimates.
Credit Risk
Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist principally of short-term
investments. The Company's short-term investments consist primarily of
equity securities, many of which are in thinly traded stocks.
Accordingly, the ultimate realization of such securities is not
assured. In the opinion of management, concentrations of credit risk
with respect to its short-term investments is somewhat mitigated due
to the Company's diverse holdings and due to the intended short-term
nature of the investments.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with a
maturity of three months or less at the time of acquisition to be cash
equivalents. The Company maintains its cash in bank deposit accounts
which, at times, may exceed federally insured limits. The Company
has not experienced any losses in such accounts. The Company believes
it is not exposed to any significant credit risk on cash and cash
equivalents.
F-13
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments
Investments consist primarily of equity securities that are received
in the normal course of business as partial consideration for services
performed. Investments are held principally for the purpose of selling
them in the near future (within twelve months) and, accordingly, are
classified as trading securities and reported at fair value, with
unrealized gains and losses included in earnings. Investments are
originally recorded at the estimated fair market value of the
securities received as of the date of receipt. Investments in
securities, which are traded on a national securities exchange (or
reported on the NASDAQ national market), are stated at the latest
reported sales price on the day of the valuation; other securities
traded in the over-the-counter market and listed securities for which
no sale was reported on that date are stated at the mean between the
last reported bid and asked prices, respectively. Securities that are
thinly traded or for which market quotations are not readily
available are valued at their fair value, as determined by management.
Unrealized holding gains/(losses) included in gains/(losses) on
investments in the accompanying statements of income for the years
ended December 31, 1997 and 1996, approximated $57,000 and $(48,000),
respectively.
Furniture and Equipment, net
Furniture and equipment is stated at cost. For financial reporting
purposes, depreciation is provided using the straight-line method
over the estimated useful lives of the respective assets, generally,
three to seven years. When items are sold, or otherwise disposed of,
the related costs and accumulated amortization or depreciation is
removed from the accounts and any resulting gains or losses are
recognized. Maintenance and repairs are charged to expense when incurred.
Deferred Revenue
Deferred revenue represents that portion of client service agreement
payments received for which the related services had not been
performed as of the end of the reporting period.
Revenue Recognition
The Company enters into client service agreements (CSA's) with
customers, whereby it provides various forms of financial public
relations services, primarily direct mail publication and
distribution, for a fee. CSA fees are recognized as of the date of the
direct mail shipment. CSA fees are often received in a combination of
cash and shares of the client's common stock. These fees are recorded
in an amount equal to the cash received/or to be received plus the fair
value of the common stock received or, if the fair value of the stock
received is not readily determinable, at the agreed upon fair value of
the services provided. During the years ended December 31, 1997 and
1996, approximately 52% and 46%, respectively, of the Company's
revenues were received in the form of equity securities. Revenues from
referral fees and consulting services are recognized when the related
services have been performed.
F-14
<PAGE>
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share
Earnings per share (EPS) is computed in accordance with Statement of
Financial Accounting Standards (SFAS No.128), "Earnings Per Share,"
which requires companies to present basic earnings per share and
diluted earnings per share. Under SFAS No. 128, basic EPS excludes
dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares
outstanding for the period (see Note 8). Diluted EPS reflects the
potential dilution that could occur if securities or other contracts
to issue common stock were exercised or converted into common stock, or
resulted in the issuance of common stock that then shared in the
earnings of the equity. The computation of diluted EPS does not
assume conversion, exercise, or contingent issuance of securities that
would have an anti-dilutive effect on earnings per share. The Company
did not have any common stock options or other contracts to issue
common stock outstanding during the years ended December 31, 1997 or
1996.
NOTE 3 - INCOME TAXES
The Company elected to be taxed under the provisions of subchapter S
of the Internal Revenue Code. The effect of this election is that
taxable income or loss of the Company passes through to its
shareholder to be included in his individual income tax return.
Accordingly, no provision for income taxes has been included in the
accompanying financial statements (see Notes 8 and 9).
NOTE 4 - FINANCIAL INSTRUMENTS
Fair Value of Financial Instruments
The carrying amounts of cash, cash equivalents, investments and
current liabilities approximate fair value because of the short-term
maturity of these items.
F-15
<PAGE>
NOTE 5 - GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended December 31,
1997 and 1996 consists of the following:
1997 1996
Salaries and related expenses $ 2,569,865 $ 1,447,378
Office expense 112,490 49,495
Travel 103,874 136,172
Legal and accounting 93,639 19,765
Rent 86,871 60,142
Telephone 71,733 51,575
Insurance 37,292 26,838
Depreciation 28,139 28,486
Equipment rental 17,943 8,377
Education, memberships, subscriptions 16,608 7,723
Taxes other than income 15,406 11,814
Repairs and maintenance 11,884 17,932
Advertising 8,555 44,379
Other 30,820 20,478
Total general and administrative
expenses $ 3,205,119 $ 1,930,554
NOTE 6 - RELATED-PARTY TRANSACTIONS
The Company purchases mailing lists or list services from a company
related through common ownership. These lists are utilized by the
Company in connection with direct mailings related to its Client
Service Agreements. List service fees paid to this company during the
years ended December 31, 1997 and 1996, approximated $70,000 and
$137,000, respectively.
An entity related to the Company through common ownership assigned two
client service agreements to the Company in 1997. These assignments
resulted in the transfer of consulting revenues and expenses of
$285,000 and $35,000 to the Company, respectively, which are included
in operations. The amount due to the Compan from the related party for
these assignments was $250,000 at December 31, 1997.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
The Company leases office space and equipment under various noncancelable
operating leases. Approximate minimum future rentals under these
noncancelable operating leases as of December 31, 1997, are as follows:
Year Amount
1998 $ 2,000
Rent expense under these leases in 1997 and 1996 approximated $87,000
and $60,000.
F-16
<PAGE>
NOTE 8 - SUBSEQUENT EVENTS
The Company intends to file a Registration Statement on Form SB-2
with the Securities and Exchange Commission in 1998. The Company
anticipates registering and offering for sale 2,000,000 shares of its
common stock at a proposed offering price of $7.00 per share. As part
of its offering, the Company may agree to sell to the selected
dealers, for $.001 per warrant, warrants to purchase one share of the
Company's common stock at a price of $8.40 per share (120% of proposed
offering price). The warrants shall be exercisable for the 18 month
period commencing 12 months from the effective date of the offering.
The selected dealers will have the option to purchase one warrant for
each ten shares of common stock sold in the offering. The Company
intends to use the proceeds of its initial public offering primarily
to facilitate its growth through acquisitions of similar
organizations. The warrants are subject to certain anti-dilutive
provisions, as defined in the warrant agreement.
Prior to the completion of its initial public offering, the Company
intends to create an incentive stock and stock option plan(s) for its
employees, officers and directors. The Company anticipates reserving
200,000 shares of its common stock for issuance under any such plan(s).
In April 1998, the Company obtained a $1,000,000 line of credit.
The line of credit is unsecured, bears interest at the LIBOR rate plus
2.25% and matures April 16, 1999. In June 1998, the Company's board of
directors authorized a 784.32-for-one stock split. Shareholder's
equity has been restated to give retroactive recognition to the stock
split for all periods presented by reclassifying from retained
earnings to common stock the par value of the additional shares arising
from the split. Also in June 1998, the Company amended its Articles of
Incorporation to increase the number of shares of common stock
authorized from 10,000 to 50,000,000. All references in the
accompanying financial statements to authorized shares, shares
outstanding and per share amounts have been restated.
Through June 15, 1998, the Company distributed approximately $890,000
to its shareholder primarily to cover the 1997 and estimated first six
months of 1998 income taxes generated by the Company's taxable income
being passed through to the shareholder (see Note 3). In addition,
the Company anticipates distributing to its shareholder the
undistributed profits of the S corporation prior to the termination of i
its S corporation election.
NOTE 9 - PRO FORMA INFORMATION
Pro Forma Income Taxes
In conjunction with the completion of its planned initial public
offering, the Company will terminate its S corporation election and
become subject to corporate income taxes from that date forward.
The statements of operations for the years ended December 31, 1997
and 1996 include a presentation of the pro forma effect on income taxes
as if the Company's income had been subjected to federal and state income
taxes as a C corporation.
F-17
<PAGE>
NOTE 9 - PRO FORMA INFORMATION (Continued)
Pro Forma Income Taxes (Continued)
Reconciliation of the federal statutory income tax rate of 34% to the
effective income tax rate reflected herein is as follows:
Years Ended
December 31,
1997 1996
Federal income tax at statutory rates 34.0% 34.0%
State income taxes 5.5 5.5
Non-deductible expenses and timing differences net (10.3) (.8)
Income tax expense 29.2% 38.7%
At December 31, 1997 and 1996, there were differences between the
bases for the Company's assets and liabilities as reported for income
tax return purposes and as reported for financial statement purposes.
The aggregate bases difference at these dates are not material to the
Company (principally, depreciation and unrealized gains and losses).
F-18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1997 MAR-31-1998
<CASH> 574,134 1,174,314
<SECURITIES> 1,380,117 2,930,606
<RECEIVABLES> 299,835 322,111
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2,254,086 4,427,031
<PP&E> 31,922 195,086
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,286,078 4,622,117
<CURRENT-LIABILITIES> 129,000 1,976,137
<BONDS> 0 0
0 0
0 0
<COMMON> 40,000 40,000
<OTHER-SE> 2,117,078 2,605,980
<TOTAL-LIABILITY-AND-EQUITY> 2,157,078 2,645,980
<SALES> 5,608,722 1,176,847
<TOTAL-REVENUES> 5,608,722 1,176,847
<CGS> 0 0
<TOTAL-COSTS> 1,225,580 109,409
<OTHER-EXPENSES> 3,205,119 509,931
<LOSS-PROVISION> 0 (24,394)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 1,737,437 533,113
<INCOME-TAX> (506,500) 0
<INCOME-CONTINUING> 1,230,937 533,113
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,230,937 293,213
<EPS-PRIMARY> .307 .13
<EPS-DILUTED> .307 .13
</TABLE>
