SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission file number 333-58137
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 75 pages
Exhibit Index Begins on Page 76
<PAGE>
<TABLE>
<CAPTION>
Calculation of Registration Fee
<S> <C> <C> <C> <C>
============================ ==================== ================ ====================== ==========================
Title of each class of Amount to be Proposed Proposed maximum Amount of registration
securities to be registered registered maximum aggregate offering fee
offering price price(1)
per share
============================ ==================== ================ ====================== ==========================
Common Shares 2,000,000 $7.00 $14,000,000 $7,000.00
- ---------------------------- -------------------- ---------------- ---------------------- --------------------------
Selected Dealer's Warrants 200,000 0 0 0
- ---------------------------- -------------------- ---------------- ---------------------- --------------------------
Common Shares Underlying 200,000 $8.40 $1,680,000 $840.00
Warrants
============================ ==================== ================ ====================== ==========================
TOTAL $15,680,000 $7,840.00*
============================ ==================== ================ ====================== ==========================
</TABLE>
(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.
* $7,000.00 previously paid as initial filing fee, $840.00 paid concurrently
with this amendment.
2
<PAGE>
<TABLE>
<CAPTION>
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/A.
<S> <C> <C>
================ ================================================ =================================================
PART I Item Location
================ ================================================ ================================================
Item 1 Forepart of Registration Statement and Outside Forepart of Registration Statement and Outside
Front Cover Page of Prospectus Front Cover Page of Prospectus
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 2 Inside Front and Outside Back Cover Pages of Inside Front and Outside Back Cover Pages of
Prospectus Prospectus
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 3 Summary Information, Risk Factors and Ratio of Summary, Risk Factors
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 Officers, Promoters and Directors, Executive Officers, Promoters and
Control Persons Control Persons
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 11 Security Ownership of Certain Beneficial Security Ownership of Certain Beneficial
Ownership and Management Ownership and Management
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 12 Description of Securities Description of Securities
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 13 Interest of Named Experts and Counsel Not Applicable
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 14 Disclosure of Commission Position on Management - Indemnification of Officers and
Indemnification For Securities Act Liabilities Directors
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 15 Organization within Last Five Years Business History
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 16 Description of Business Business History
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 17 Management Discussion and Analysis of Operations Management Discussion and Analysis of Operations
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 18 Description of Property Business History
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 19 Certain Relationships and Related Party Certain Relationships and Related Party
Transactions Transactions
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 20 Market for Common Equity and Related None
Stockholder Matters
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 21 Executive Compensation Executive Compensation
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 22 Financial Statements Financial Statements
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 23 Changes In and Disagreements With Accountants Changes In and Disagreements With Accountants
3
<PAGE>
================ ================================================= =================================================
PART II
================ ================================================= =================================================
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 24 Indemnification of Officers and Directors Indemnification
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 25 Other Expenses of Issuance and Distribution Other Expenses of Offering Registration and
Distribution
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 26 Recent Sales of Unregistered Securities Recent Sales of Unregistered Securities
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 27 Exhibits, Financial Statements and Schedules Exhibits, Financial Statements and Schedules
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 28 Undertakings Undertakings
- ---------------- ------------------------------------------------- -------------------------------------------------
Item 29 Financial Statements and Schedules Financial Statements and Schedules
================ ================================================= =================================================
</TABLE>
4
<PAGE>
PRELIMINARY PROSPECTUS DATED SEPTEMBER 10, 1998
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.
<TABLE>
<S> <C> <C> <C>
============================== ============================ =========================== ============================
Price to Public Underwriting Commissions Proceeds to Company(3)
(1)(2)
============================== ============================ =========================== ============================
Per Share $7.00 $0.70 $6.30
============================== ============================ =========================== ============================
Total (Maximum) $14,000,000 $1,400,000 $12,600,000
============================== ============================ =========================== ============================
</TABLE>
(1) 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 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".)
5
<PAGE>
(2) Does not include a nonaccountable expense allowance of 3% 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 dealers against certain civil liabilities, including liabilities under
the Securities Act of 1933, as amended.
(3) 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 will be subject to the reporting requirements of Section
13(a) of the Exchange Act after effectiveness of this offering and in accordance
therewith will be required to file reports and other information with the
Securities and Exchange Commission. This information 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 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 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.
6
<PAGE>
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. NO SINGLE
OFFICER, DIRECTOR, OR AFFILIATE WILL PURCHASE MORE THAN 1% OF THE OFFERING.
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.
7
<PAGE>
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 $ 8,000,000
Expansion of working capital
and general corporate purposes $ 2,000,000
Undistributed Subchapter S earnings
dividend distribution to shareholder $ 1,000,000
General and administrative $ 600,000
Marketing expenditures $ 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.)
8
<PAGE>
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 30, 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.
<TABLE>
<CAPTION>
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.
<S> <C> <C>
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 $2,129,000 $445,830
Total Shareholder's Equity $157,078 $154,202
========================== =========================
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
December 31, 1997 December 31, 1996
------------------------- --------------------------
Total Revenues and Fees $6,079,105 $4,573,771
Total Cost of Revenues and Fees $1,225,580 $1,439,836
General and Administrative Expenses $3,205,119 $1,930,554
------------------------- --------------------------
Income From Operations $1,648,406 $1,203,381
Total Other Income (Expenses) $89,031 $53,552
------------------------- --------------------------
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
========================= ==========================
</TABLE>
<TABLE>
<CAPTION>
The following unaudited supplementary data presents net income per
share for the fiscal year ended December 31, 1997 and the six months ended June
30, 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 six months ended June 30, 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
<S> <C> <C>
DEC. 31, 1997 JUNE 30, 1998
--------------- -------------
Net income before income
taxes as reported $.43 $.27
Adjustment to reflect
income tax expense $.12 $.08
Net income as adjusted $.31 $.19
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 $.31 $.19
Income per common
share, as adjusted to reflect
proposed sale of 2,000,000 shares $.20 $.13
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
The following unaudited supplementary data presents comparative summary
financial information for the six months ended June 30, 1998 and 1997:
<S> <C> <C>
First Six Months 1997 First Six Months 1998
------------------------------- -----------------------------
Total Revenues & Fees $2,659,732 $2,875,219
Total Cost of Revenues & Fees $503,470 $321,565
General and Administrative Expenses $1,356,322 $1,490,741
------------------------------- -----------------------------
Income From Operations $799,940 $1,062,913
Total Other Income (Expenses) $31,490 $27,521
"S" Corp. Net Income $831,430 $1,090,434
=============================== =============================
Basic and Diluted Earnings Per Common Share
$.21 $.27
=============================== =============================
Weighted Average Number of Common Shares Outstanding
4,000,000 4,000,000
=============================== =============================
</TABLE>
(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.
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 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.
11
<PAGE>
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 has achieved
participation levels as high as 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.
12
<PAGE>
CURRENT BUSINESS OPERATIONS
1997 was the highest revenue and investment income producing year in
its history, with total revenue of approximately $6.1 million, 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 ten 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.
13
<PAGE>
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 participation levels as high as 750,000 hits a 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 on-line, 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
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.
14
<PAGE>
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 presentations 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 and demographic criteria associated with each captured name, be it an
individual investor or retail stockbroker.
15
<PAGE>
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).
16
<PAGE>
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 SHOW SALES
Capital Media Partners, Inc., a corporation controlled by John Manion,
President of CCEC, developed with Inside Wall Street, Inc., a Florida based
corporation not affiliated with the Registrant, a concept for a thirty minute,
nationally broadcast television news show to be aired weekly, the entity being
known as Madison & Wall Partners. In August, 1998 Inside Wall Street, Inc. sold
its interest in Madison & Wall Partners to Advantage List & Marketing
Corporation, an entity controlled by John Manion, President of CCEC. CCEC will
sell this additional product to its clients because management believes it will
be complementary and synergistic to the Company's existing services. CCEC
further believes that this additional service will attract new clients, some of
which may also retain CCEC for financial public relations services.
The television show, as planned, 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.
17
<PAGE>
The first client for the television program was signed June 16, 1998,
and the second client was signed in early August, 1998. It is anticipated that a
third client will be contracted within a timeframe to debut the first show in
Fall, 1998. It is further anticipated that the standard agreement will yield
revenues of approximately $60,000 per client ($180,000 per show).
Certain CCEC resources will be utilized in the development of the
program, including the services of CCEC's technology area. CCEC will charge to
Madison & Wall in reasonable proportion to the resources that CCEC utilizes for
the program. In addition, it is anticipated that a number of clients will
contract with CCEC for services in addition to participating in the television
show.
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 six to
eight 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.
18
<PAGE>
VERTICAL INTEGRATION OF COMPLEMENTARY SERVICES
Although CCEC's management places less emphasis on this segment of its
business plan, vertical integration of complementary 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. 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 non-invasive
method provides a more attractive mechanism for client companies.
19
<PAGE>
"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 forefront 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 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 particular
those 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. Management further
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.
20
<PAGE>
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
21
<PAGE>
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 FULL-TIME EMPLOYEES. Registrant
employs approximately forty (40) full time staff persons in its offices in
Longwood, Florida including officers. The Company has sales personnel all of
whom are considered full-time 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE>
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 enable a 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 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.
23
<PAGE>
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.
24
<PAGE>
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
25
<PAGE>
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 $4.93 per share or approximately 70%) 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.
26
<PAGE>
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.
27
<PAGE>
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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
28
<PAGE>
<TABLE>
<CAPTION>
DILUTION AND COMPARATIVE DATA
The following table summarizes the comparative ownership and capital
contributions of existing shareholders and investors in this offering as of June
30, 1998 (as adjusted for anticipated distributions to sole shareholder after
June 30, 1998) assuming maximum number of shares offered hereby are sold:
<S> <C> <C> <C> <C> <C>
Percent of Total Percent of Total Average Price
Shares Owned Total Shares Consideration Consideration Per Share
Paid Paid
-------------- --------------- ------------------ ------------------- ----------------
Current Shareholder 4,000,000 67% $311,257* 2% $.08
New Investors 2,000,000 33% 14,000,000 98% $7.00
-------------- --------------- ------------------ ------------------- ----------------
Total 6,000,000 100% $14,311,257 100%
</TABLE>
*Computed as estimated pre-offering shareholder's equity.
Without taking into account any changes in the net tangible book value
after June 30, 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) $.08
Net Tangible Book Value per share after offering(2) $2.07
Increase per share attributable to payments by new investors $1.99
Dilution per share to new investors(3) $4.93
Dilution per share as percentage of price to new investors(4) 70%
(1) Net Tangible Book value per share before offering is determined by dividing
the tangible net worth of the Company as of June 30, 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 June 30, 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 is calculated
by dividing the dilution per share to new investors by the offering price per
share of $7.00.
29
<PAGE>
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 shares issued 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)
$1,000,000 Undistributed Subchapter S earnings dividend
distribution to Shareholder
$8,000,000 Acquisitions of Companies in Related Businesses
$500,000 Marketing Expenditures
$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
$8,000,000 will be used for acquisition of other complimentary companies, as the
opportunities may arise. CCEC has reviewed, on a preliminary basis, various
acquisition opportunities. Confidentiality agreements have been signed with
certain entities, but there have been no substantive discussions regarding
purchase prices, timeframes, or purchase structures with any company. No letters
of intent or definitive purchase agreements have been executed.
30
<PAGE>
The Company anticipates utilizing up to $500,000 of the proceeds to
assist in the expansion of marketing efforts, including the addition of
marketing and sales personnel.
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 30, 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 30, 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 after the termination of the Subchapter S election. 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.
31
<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION
The following table sets forth (i) the capitalization of the Company as
of June 30, 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.
<S> <C> <C>
June 30, 1998 As Adjusted
------------------------------ -----------------------------
ASSETS $3,385,308 $15,485,308
Deferred Revenue 1,071,781 1,071,781
Due Related Party 4,000 4,000
Accounts Payable/Accrued Payroll Taxes (1,730) (1,730)
Distribution Payable 2,000,000 2,000,000
------------------------------ -----------------------------
TOTAL CURRENT LIABILITIES $3,074,051 $3,074,051
LONG TERM DEBT -- --
STOCKHOLDER'S EQUITY
Capital Stock - ($.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 271,257 12,351,257
Retained earnings (deficit) -- --
------------------------------ -----------------------------
TOTAL STOCKHOLDER'S EQUITY $311,257 $12,411,257
------------------------------ -----------------------------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,358,308 $15,485,308
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
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 six months ended June 30, 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>
For Six Months Ending
6/30/98 6/30/97 Year Ended 12/31/97
- -------------------------------------------------------- -------------- --------------- --------------------------
REVENUES AND FEES
Financial public relations services and fees $2,214,172 $2,341,021 $4,682,223
Consulting services 311,381 30,619 736,999
Referral and finders fees 473,035 162,500 189,500
Gain (loss) on investments (123,369) 125,592 470,383
- -------------------------------------------------------- -------------- --------------- --------------------------
TOTAL REVENUES AND FEES $2,875,219 $2,659,732 $6,079,105
COST OF REVENUES AND FEES
Internet advertising 28,345 131,474 287,938
Pre-press and printing 76,343 106,385 272,424
Postage and related expenses 91,237 127,411 251,163
List services 11,317 33,752 114,169
Commissions and fees 87,998 18,975 59,875
Consulting 1,325 12,500 35,000
Press releases 7,805 20,074 33,199
Other 17,195 52,899 171,812
- -------------------------------------------------------- -------------- --------------- --------------------------
TOTAL COST OF REVENUES AND FEES $321,565 $503,470 $1,225,580
- -------------------------------------------------------- -------------- --------------- --------------------------
GENERAL AND ADMINISTRATIVE
EXPENSES 1,490,741 1,356,322 3,205,119
- -------------------------------------------------------- -------------- --------------- --------------------------
INCOME FROM OPERATIONS $1,062,913 $799,940 $1,648,406
OTHER INCOME (EXPENSES)
Interest Income 11,230 4,919 21,151
Interest expense -- -- (102)
Miscellaneous income 16,291 26,571 67,982
- -------------------------------------------------------- -------------- --------------- --------------------------
TOTAL OTHER INCOME (EXPENSES) $27,521 $31,490 $89,031
- -------------------------------------------------------- -------------- --------------- --------------------------
PRE-TAX NET INCOME $1,090,434 $831,430 $1,737,437
======================================================== ============== =============== ==========================
BALANCE SHEET DATA As of June 30, 1998 As of December 31, 1996 As of December 31, 1997
- -------------------------------------- -------------------- --------------------------- ----------------------------
Total Assets $3,385,308 $1,600,032 $2,286,078
Total Liabilities 3,074,051 1,445,830 2,129,000
Stockholder's Equity & Retained
Earnings 311,257 154,202 157,078
Cash Dividends/"S" Corp.
Distributions Per Common Share
(prior to undistributed
earnings dividend to shareholder in
the amount of $2,000,000) $.23 $.18 $.14
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
The following unaudited supplementary data present net profit per
common share for the fiscal year ended December 31, 1997, and the six months
ended June 30, 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.
<S> <C> <C>
December 31, 1997 June 30,
1998
------------------ -------------------
Pre-tax net income as reported $1,737,437 $1,090,434
Pro-forma provision for income taxes (506,500) (324,628)
------------------ -------------------
Pro-forma net income as adjusted $1,230,937 $765,806
================== ===================
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 $.31 $.19
Adjustment for the proposed sale (.11) (.06)
------------------ -------------------
Pro-forma profit per common share, as adjusted $.20 $.13
================== ===================
</TABLE>
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 resulting in a higher Cash balance, and a $250,000
increase in amounts Due from related party.
34
<PAGE>
Liabilities increased significantly as a result of an increase in the
accrued Distribution payable from $1,000,000 to $2,000,000 in anticipation of
the termination of Subchapter S status.
At year end 1997, liabilities were $2,129,000, an increase of 47% over
1996 year end liabilities of $1,445,830.
Stockholder's equity at year end 1997 was $157,078, compared to 1996
stockholder's equity of $154,202. The increase in accrued Distribution payable
substantially offset the 1997 earnings achieved by the Company.
YEAR 2000 COMPUTER ISSUE
The SEC has issued Staff Legal Bulletin No. 5 and commission release
No. 33-7558 stating that public operating companies should consider whether
there will be any anticipated costs, problems and uncertainties associated with
the Year 2000 issue, which affects many existing computer programs that use only
two digits to identify a year in the date field. The Company's business
operations electronically interact with third parties very minimally, and the
issues raised by Staff Legal Bulletin No. 5 are not applicable in any material
way to the Company's business or operations. Additionally, the Company intends
that any computer systems that the Company may purchase or lease that are
incident to the Company's business will have already addressed the Year 2000
issue. The Company's internet service provider is compliant beyond the year
3000.
THREE MONTH'S OPERATING RESULTS
The Company had operating revenue of $1,731,869 in the quarter ended
June 30, 1998 compared to operating revenue of $1,535,501 for the comparable
period in 1997. The increase in revenue was primarily attributable to an
increase in consulting service activity and referral fee income, offset by a
loss on investments of ($89,872) as compared to a gain on investments of $61,150
in the second quarter, 1997.
The Company's cost of revenues declined to $212,156 as compared to
$325,848 in the period ended June 30, 1997. The reduction in cost of revenues as
a percentage of sales improved due primarily to a significant reduction in
internet advertising on behalf of client companies.
General and administrative expenses were $980,810 for the quarter, as
compared to $722,964 for the second quarter, 1997, an increase of 36%. The
increase was primarily the result of the adding of more personnel in the sales
and sales support areas, and increased rental costs incurred with the Company's
expansion into additional office space.
Net income before tax increased from $507,647 to $557,321 due to the
increase in revenues and reductions in cost of revenues, partially offset by the
increase in general and administrative expenses.
35
<PAGE>
The Company's cash position increased from $574,134 at December 31,
1997 to $636,539 at June 30, 1998. The Company had pre-tax income of $1,090,434
for the six month period, and made cash distributions to the Shareholder in the
amount of $932,034 primarily for the purpose of paying 1997 and first quarter
1998 estimated tax payments payable from Subchapter S income taxed at the
Shareholder level. The Due from related party balance declined from $250,000 to
$80,000, reflecting payments made to the Company by the related entity.
Investments increased by almost $1,000,000 during the first six months of 1998,
reflecting certain large client agreements for which the Company received
significant payments in the form of client company securities. Deferred revenue
increased by an amount similar to the increase in investments, reflecting the
fact that the securities received by the Company for the referenced client
agreements had not yet been recognized as earned revenues as of June 30, 1998.
SIX MONTHS' OPERATING RESULTS
The Company had operating revenue of $2,875,219 for the six months
ended June 30, 1998 compared to operating revenue of $2,659,732 for the
comparable period in 1997. The increase in revenue was primarily attributable to
an increase in consulting service activity and referral fee income, offset by a
loss on investments of ($123,369) as compared to a gain on investments of
$125,592 in the second quarter, 1997.
The Company's cost of revenues declined to $321,565 as compared to
$503,478 in the period ended June 30, 1997. The reduction in cost of revenues as
a percentage of sales improved due primarily to a significant reduction in
Internet advertising on behalf of client companies, and lower printing and
postage costs due to a higher percentage of revenues being generated from
activities not requiring printing and mailing.
General and administrative expenses were $1,490,741 for the six month
period as compared to $1,356,322 for the same period in 1997. The increase was
primarily the result of adding more personnel in the sales and sales support
areas, and increased rental costs associated with the Company's expansion into
additional office space.
Net income before tax increased from $831,430 to $1,090,434 due to the
increase in revenues and reductions in cost of revenues, partially offset by the
increase in general and administrative expenses.
PRIOR YEARS' OPERATING RESULTS
The Company had operating revenues of $6,079,105 in 1997 compared to
$4,573,771 in 1996, an increase of 33%. The increase was primarily the result of
servicing an increased client base during 1997 in the areas of financial public
relations services and consulting services. In addition, the Company recognized
a gain on investments of approximately $470,000 in 1997 as compared to a loss of
approximately ($70,000) in 1996.
36
<PAGE>
Total cost of revenues declined to $1,225,580, or 20% of revenues, as
compared to $1,439,836, or 31% of revenues in 1996. The reduction was primarily
a result of lower costs for internet advertising, which typically results in a
lower profit margin to the Company, and lower costs for postage and list
services as the Company expanded its efforts in the areas of consulting services
and monthly retainer services, areas that do not require the utilization of
postage and purchased lists.
General and administrative expenses increased from $1,930,554 in 1996
to $3,205,119 in 1997 due primarily to the addition of sales and sales support
personnel, and the creation of additional infrastructure, including greater data
processing capabilities, to support the anticipated continuing growth of the
Company. In addition, costs for professional services increased significantly,
including an increase in legal and accounting expenses from $19,765 in 1996 to
$93,639 in 1997.
The Company recorded pre-tax income of $1,737,437 in 1997 compared to
$1,256,933 in 1996, an increase of 38%. The increase was a result of higher
revenues and lower cost of sales, partially offset by an increase in general and
administrative expenses. The per-share profit amounted to $.43 in 1997 compared
to $.31 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 were $1,600,032.
The Company's 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 undertake equity placements on terms which
may not be favorable to the Company.
The Company currently has an unsecured 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 unsecured, and is
currently guaranteed personally by John Manion. The Company had no outstanding
borrowings as of June 30, 1998
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
37
<PAGE>
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
COMPETITION
Registrant is a mid-sized participant among the firms which engage in
the same line of business (financial public relations) which Registrant has
chosen as its principal area of business concentration. Some of Registrant's
competitors are companies with greater financial and personnel resources than
the Registrant. The management experience 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 June 30, 1998, employed approximately forty (40) full-time persons in its
offices in the Orlando, Florida metro area.
NEED FOR ANY GOVERNMENT 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 governmental 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.
38
<PAGE>
PROPERTY AND EQUIPMENT
The Registrant's executive offices, currently comprised of
approximately 7,000 square feet, are located at 195 Wekiva Springs Road, Suite
#200, Longwood, FL 32779. These offices are leased from Greystone Ventures, a
commercial real estate entity owned by the Company's Chairman, John Manion, and
his wife Lisa at a base rent of approximately $9,000 per month plus an operating
expense assessment, with the total current monthly lease payments being
approximately $12,000 per month. The lease runs through February 2003.
<TABLE>
<CAPTION>
MANAGEMENT
The following table sets forth certain information concerning the
Directors and Executive Officers of the Registrant as of June 30, 1998.
<S> <C> <C> <C>
NAME AGE POSITION OFFICE TERM
John R. Manion 50 Chief Executive Officer, Annual
President and Director
James Schnorf 44 Chief Financial Officer/ Annual
Chief Operating Officer
and Director
Juan Ferreira 39 Executive Vice President Annual
and Director
Dodi B. Zirkle 35 Corporate Secretary, Annual
V.P.-Market Access Program
Michael Manion 48 Director of Financial Annual
Consulting Services
Wendy Vogt 29 Director of Operations Annual
Jimmy Holton 34 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
</TABLE>
39
<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 June 30, 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 40 employees. Under his
management, CCEC's annual revenues have increased from $300,000 to in excess of
$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 Infinity Capital 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.
Educated at 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.
Mr. Manion will be devoting his full time and efforts to the Company.
40
<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, 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 The Infinity Capital 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 the
United States.
41
<PAGE>
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
Boat(R)).
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 of the 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 of the 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
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.
42
<PAGE>
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, and 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 distinguishing himself as the leading corporate sales producer
for CCEC every year since 1995 when he joined the firm, 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 earned a variety of football awards while attending the
University of Georgia from 1983-1985, where he was accepted into the Terry
College of Business. Mr. Holton transferred to Florida State University in 1986
where he received a degree in Business Administration.
43
<PAGE>
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 games were 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.
44
<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
The Company paid or accrued a total of $968,571 compensation to the
executive officers as a group for services rendered to the Company in all
capacities during the 1997 calendar year.
The Company anticipates having an employee incentive stock option/share
plan under which it anticipates initially providing up to 125,000 options for
executive officers and directors.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
45
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
====================== ========= ============= ================= ====================== ================ ==============
NAME AND PRINCIPAL YEAR SALARY ($) BONUS ($) OTHER ANNUAL RESTRICTED SECURITIES
POSITION COMMISSIONS COMPENSATION ($)1099 STOCK AWARD(S) UNDERLYING
CONSULTING FEES ($) OPTIONS/
SARS (#)
====================== ========= ============= ================= ====================== ================ ==============
John Manion, CEO and 1995 $186,500* None None None
President --------- ------------- ----------------- ---------------------- ---------------- --------------
1996 $331,470* None None None
--------- ------------- ----------------- ---------------------- ---------------- --------------
1997 $644,785* None None None
- ---------------------- --------- ------------- ----------------- ---------------------- ---------------- --------------
James Schnorf, 1995 $0 None None None
CFO/COO --------- ------------- ----------------- ---------------------- ---------------- --------------
1996 $0 None None None
--------- ------------- ----------------- ---------------------- ---------------- --------------
1997 $0 None None None
- ---------------------- --------- ------------- ----------------- ---------------------- ---------------- --------------
Juan Ferreira, 1995 $81,126 None None None
Executive VP --------- ------------- ----------------- ---------------------- ---------------- --------------
1996 $123,653 None None None
--------- ------------- ----------------- ---------------------- ---------------- --------------
1997 $167,531 None None None
- ---------------------- --------- ------------- ----------------- ---------------------- ---------------- --------------
Dodi B. Zirkle, 1995 $20,455 None None None
Secretary, VP of --------- ------------- ----------------- ---------------------- ---------------- --------------
Market Access Program 1996 $72,115 None None None
--------- ------------- ----------------- ---------------------- ---------------- --------------
1997 $156,254 None None None
- --------------------- --------- ------------- ----------------- ---------------------- ---------------- --------------
Michael Manion, 1995 $0 None None None
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 Holton, Vice 1995 $52,068 None None None
President --------- ------------- ----------------- ---------------------- ---------------- --------------
1996 $236,536 None None None
--------- ------------- ----------------- ---------------------- ---------------- --------------
1997 $201,121 None None None
- ---------------------- --------- ------------- ----------------- ---------------------- ---------------- --------------
Scott Gibson, 1995 $35,198 None None None
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 $17,086 None None None
====================== ========= ============= ================= ====================== ================ ==============
</TABLE>
46
<PAGE>
Option/SAR Grants Table (None)
Aggregated Option/SAR Exercises in Last Fiscal Year an FY-End Option/SAR value
(None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
*Treated as salary income under Sub "S" treatment of Corp. taxation to John
Manion.
BONUSES AND DEFERRED COMPENSATION
No deferred compensation was paid or earned by any officer or director
during 1997 and through June 30, 1998. Bonuses and commissions were paid as
shown in chart above and may be earned for 1998.
There are no payments of compensation or benefits to officers and
directors due upon termination without cause resulting from a change in control,
except for severance to Jim Schnorf.
COMPENSATION PURSUANT TO PLANS. None.
<TABLE>
<CAPTION>
DIRECTOR COMPENSATION FOR LAST FISCAL YEAR
(Except for compensation of Officers who are also Directors which Compensation
is listed in Summary Compensation Table of Executives)
Cash Compensation Security Grants
<S> <C> <C> <C> <C> <C>
=============== ===================== ===================== ===================== ================= ==================
Name Annual Retainer Meeting Fees ($) Consulting Number of Number of
Fees ($) Fees/Other Fees ($) Shares (#) Securities
Underlying
Options/
SARs (#)
=============== ===================== ===================== ===================== ================= ==================
None 0 0 0 0 0
=============== ===================== ===================== ===================== ================= ==================
</TABLE>
STOCK OPTION/SHARE PLAN
The Company plans to adopt an Employee Incentive Stock Option/Share
Plan (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.
47
<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 $12,000
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, 1997 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, First
National Entertainment Corp., from occurrences in 1992-93, the Securities and
Exchange Commission brought an administrative proceeding against the Company and
John Manion in February, 1996 alleging violations of Section 17(b) of the
Securities Act, and Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2
thereunder. The first allegation was that the Company and Mr. Manion violated
Section 17(b) in failing to disclose compensation agreements with First National
Entertainment Corp. in the publications by the Company about First National
Entertainment Corp. The second allegation was that the Company and Mr. Manion
violated Section 13(d) by failing to file, and by filing inaccurate 13(d)
filings. 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).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
48
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL STOCKHOLDERS
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of June 30, 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)
<S> <C> <C> <C>
======================= =============================================== ================================== =================
Current After
Stock Names and Address of Beneficial Offering
Title of Class Beneficial Owner Ownership
======================= =============================================== ================================== =================
Common Stock John Manion 4,000,000 67%
======================= =============================================== ================================== =================
</TABLE>
<TABLE>
<CAPTION>
b) The following table sets forth information, as of June 30, 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.
<S> <C> <C> <C> <C>
======================= ===================================== ==================== ==================== ====================
Name and Address of Position Shares Owned Current Beneficial * % Ownership
Beneficial Ownership After
Ownership Offering
======================= ===================================== ==================== ==================== ====================
John Manion CEO and President 4,000,000 100% 67%
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
James Schnorf CFO/COO 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Juan Ferreira Executive Vice President 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Dodi B. Zirkle Corporate Secretary, VP of Market 0 0 0
Access Program
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Michael Manion Director of Financial Consulting 0 0 0
Services
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Wendy Vogt Director of Operations 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Jimmy Holton Vice President 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Scott Gibson Vice President 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
James Vogt Director of Technology and New Media 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Michael F. Morrell Director 0 0 0
- ----------------------- ------------------------------------- -------------------- -------------------- --------------------
Michael Lee Director 0 0 0
Spraggins, Jr.
======================= ===================================== ==================== ==================== ====================
</TABLE>
*Prior to any sales by selling shareholder.
49
<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.
50
<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.
51
<PAGE>
PLAN OF DISTRIBUTION
SUMMARY OF SELECTED DEALER
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.
52
<PAGE>
The Company will not use its officers, directors or employees as sales
agents for the Offering. No distribution over the Internet or through web pages
is contemplated or planned.
The foregoing does not purport to be a complete statement of the terms
and conditions of the Selected Dealer Agreement, copies 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 anti-dilution 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.
53
<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, Wheat Ridge, Colorado 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. 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.
54
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
FINANCIAL STATEMENT SCHEDULE INDEX
For the Three Months and Six Months Ended June 30, 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>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
BALANCE SHEET (UNAUDITED)
June 30, 1998
ASSETS
<S> <C>
CURRENT ASSETS
Cash and cash equivalents $636,539
Accounts receivable 4,458
Loans receivable 41,000
Employee advances 53,797
Due from related party 80,000
Investments 2,339,586
-----------------
TOTAL CURRENT ASSETS 3,155,380
Furniture and equipment, net 176,278
Deposits 26,650
Other assets 27,000
-----------------
TOTAL ASSETS $3,385,308
=================
LIABILITIES AND SHAREHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts payable ($1,730)
Due to related party 4,000
Deferred revenue 1,071,781
Payroll taxes payable --
Distribution payable 2,000,000
-----------------
TOTAL CURRENT LIABILITIES 3,074,051
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER EQUITY
Common stock, $.01 par value; 50,000,000 40,000
shares authorized; 4,000,000 shares
issued and outstanding (as adjusted for stock split)
Additional paid-in capital 271,257
Retained earnings --
-----------------
TOTAL SHAREHOLDER'S EQUITY 311,257
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $3,385,308
=================
</TABLE>
F-2
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENT OF INCOME (Unaudited)
For the Three Months and Six Months Ended June 30, 1998 and 1997
<S> <C> <C> <C> <C>
REVENUES & FEES 1998 1997 1998 1997
--------------- -------------- --------------- ---------------
Financial public relations services & fees $1,442,491 $1,402,851 $2,214,172 $2,341,021
Consulting services 209,250 15,000 311,381 30,619
Referral & finder fees 170,000 56,500 473,035 162,500
Gain (loss) on investments (89,872) 61,150 (123,369) 125,592
--------------- -------------- --------------- ---------------
TOTAL REVENUES & FEES 1,731,869 1,535,501 2,875,219 2,659,732
COST OF REVENUES & FEES
Internet advertising 11,000 100,009 28,345 131,474
Pre-press and printing 52,899 46,676 76,343 106,385
Postage and related expenses 55,049 83,092 91,237 127,411
List Services 7,750 26,192 11,317 33,752
Commissions and fees 68,050 16,375 89,998 18,975
Consultant advice 825 5,000 1,325 12,500
Press releases 4,335 12,709 7,805 20,074
Other 12,248 35,795 17,195 52,899
--------------- -------------- --------------- ---------------
TOTAL COST OF REVENUES & FEES 212,156 325,848 321,565 503,470
GENERAL AND ADMINISTRATIVE EXPENSES 980,810 722,964 1,490,741 1,356,322
--------------- -------------- --------------- ---------------
INCOME FROM OPERATIONS 538,903 486,689 1,062,913 799,940
OTHER INCOME (EXPENSES)
Interest income (expense) 7,884 2,302 11,230 4,919
Miscellaneous income 10,534 18,656 16,291 26,571
--------------- -------------- --------------- ---------------
TOTAL OTHER INCOME (EXPENSES) 18,418 20,958 27,521 31,490
--------------- -------------- --------------- ---------------
NET INCOME $557,321 $507,647 $1,090,434 $831,430
=============== ============== =============== ===============
BASIC & DILUTED EARNINGS PER COMMON SHARE $0.14 $0.13 $0.27 $0.21
=============== ============== =============== ===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 4,000,000 4,000,000 4,000,000 4,000,000
OUTSTANDING
=============== ============== =============== ===============
NET INCOME PRIOR TO PRO FORMA ADJUSTMENTS $557,321 $507,647 $1,090,434 $831,430
PRO FORMA PROVISION FOR INCOME TAXES (227,482) (191,832) (324,628) (314,476)
--------------- -------------- --------------- ---------------
PRO FORMA NET INCOME $329,839 $315,815 $765,806 $516,954
=============== ============== =============== ===============
PRO FORMA BASIC AND DILUTED EARNINGS PER COMMON $0.08 $0.08 $0.19 $0.13
SHARE
=============== ============== =============== ===============
</TABLE>
F-3
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 1998 and 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997
---------------- -----------------
Net Income $1,090,434 $831,430
Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation 18,667 15,178
Decrease(increase) in accounts receivable - -
Increase in employee advances (8,420) (38,697)
Decrease in due from related party 170,000 -
Decrease (increase) in investments (959,469) 66,245
Increase (decrease) in accounts payable/payroll taxes (1,730) 175,499
Increase in deposits (26,650) -
Increase (decrease) in deferred revenue 874,560 817,417
---------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,157,402 1,867,072
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of furniture, equipment, and leasehold improvements (162,963) (2,177)
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder distributions (932,034) (123,138)
---------------- -----------------
INCREASE IN CASH AND CASH EQUIVALENTS 62,405 1,741,757
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 574,134 48,277
---------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF SECOND QUARTER $636,539 $1,790,034
</TABLE>
F-4
<PAGE>
CONTINENTAL CAPITAL & EQUITY CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Six Months Ended June 30, 1998 and 1997
Note 1 - In the opinion of Continental Capital & Equity Corporation (the
Company), the accompanying financial statements contain all adjustments
(consisting of normal recurring adjustments) necessary to present fairly its
financial position as of June 30, 1998, and the results of its operations and
cash flows for the three month and six month periods ended June 30, 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.
Certified Public Accountants
Orlando, Florida
March 4, 1998, except for
Notes 8 and 9, as to which the date is June 22, 1998.
F-8
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
ASSETS
<S> <C> <C>
1997 1996
---------------- -----------------
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
Distribution payable 2,000,000 -
---------------- -----------------
TOTAL CURRENT LIABILITIES 2,129,000 445,830
DISTRIBUTION PAYABLE - 1,000,000
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
Additional paid-in capital 117,078 114,202
Retained earnings - -
---------------- -----------------
TOTAL SHAREHOLDER'S EQUITY 157,078 154,202
---------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 2,286,078 $ 1,600,032
================ =================
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997 AND 1996
<S> <C> <C>
1997 1996
---------------- -----------------
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
Gain (loss) on investments 470,383 (69,637)
---------------- -----------------
TOTAL REVENUES AND FEES 6,079,105 4,573,771
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
GENERAL AND ADMINISTRATIVE EXPENSES 3,205,119 1,930,554
---------------- -----------------
INCOME FROM OPERATIONS 1,648,406 1,203,381
OTHER INCOME (EXPENSES)
Interest 21,151 14,496
Interest expense (102) (1,763)
Miscellaneous income 67,982 40,819
---------------- -----------------
TOTAL OTHER INCOME 89,031 53,552
---------------- -----------------
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
================ =================
PRO FORMA BASIC AND DILUTED EARNINGS
PER COMMON SHARE $ .31 $ .19
================ =================
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-10
<PAGE>
<TABLE>
<CAPTION>
CONTINENTAL CAPITAL & EQUITY CORPORATION
STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
YEARS ENDED DECEMBER 31, 1997 AND 1996
<S> <C> <C> <C> <C> <C>
Common Stock Additional
------------------------------ Paid-In Retained
Shares Amount Capital Earnings Total
-------------- ------------- --------------- ------------------ -----------------
BALANCE AT DECEMBER 31, 1995 4,000,000 $ 40,000 $ - $ 403,203 $ 443,203
SHAREHOLDER DISTRIBUTIONS - - - (1,660,136) (1,660,136)
CAPITAL CONTRIBUTION - - 114,202 - 114,202
NET INCOME - - - 1,256,933 1,256,933
-------------- ------------- --------------- ------------------ -----------------
BALANCE AT DECEMBER 31, 1996 4,000,000 40,000 114,202 - 154,202
SHAREHOLDER DISTRIBUTIONS - - - (1,737,437) (1,737,437)
CAPITAL CONTRIBUTION - - 2,876 - 2,876
NET INCOME - - - 1,737,437 1,737,437
-------------- ------------- --------------- ------------------ -----------------
BALANCE AT DECEMBER 31, 1997 4,000,000 $ 40,000 $ 117,078 $ - $ 157,078
============== ============= =============== ================== =================
The accompanying notes are an integral part of the financial statements.
</TABLE>
F-11
<PAGE>
<TABLE>
<CAPTION>
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.
</TABLE>
F-12
<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. The ultimate realization of such
securities cannot be assured due to uncontrollable factors,
including market conditions, company performance, trading volume,
etc. In the opinion of management, concentrations of credit risk
with respect to its short-term investments are 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
are stated at the last reported bid price.
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, deprecia-tion 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. The Company does not have any significant
obligations due under the CSA subsequent to its direct mail
shipment and, accordingly, 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. 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>
<TABLE>
<CAPTION>
NOTE 5 - GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the years ended December 31, 1997 and 1996 consists of the
following:
<S> <C> <C>
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
================= ================
</TABLE>
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 Company
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
accom-panying financial statements to authorized shares, shares
outstanding and per share amounts have been restated.
Through June 15, 1998, the Company distributed approximately
$930,000 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).
NOTE 9 - PRO FORMA INFORMATION
PRO FORMA INCOME TAXES
In connection 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>
<TABLE>
<CAPTION>
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:
<S> <C> <C>
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 .1 2.5
Unrealized (gain)/loss (7.8) 3.8
Other timing differences (2.6) (2.3)
Non-taxable refund - (4.8)
------------- -------------
Income tax expense 29.2% 38.7%
============= =============
</TABLE>
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).
PRO FORMA DISTRIBUTION
The Company anticipates distributing to its shareholder the
undistributed profits of the S corporation prior to or within
twelve months of the termination of its S corporation election.
The anticipated amount of this tax-free distribution is
$2,000,000, representing the substantial majority of the
undistributed S Corporation profits at June 30, 1998. As a result,
the accompanying financial statements have been adjusted to
reflect the anticipated distribution as if it had been declared in
1996 and in 1997 based upon available undistributed profits in
excess of the anticipated distribution have been presented as a
distribution to and a capital contribution from the shareholder.
<TABLE>
<CAPTION>
The shareholder distributions presented in the accompanying
financial statements consist of the following components:
<S> <C> <C>
YEARS ENDED
DECEMBER 31,
------------------------------------
1997 1996
---------------- ----------------
Actual distributions $ 734,561 $ 545,934
Pro forma distributions 1,002,876 1,114,202
---------------- ----------------
Total Distributions $ 1,737,437 $ 1,660,136
================ ================
Pro forma capital contribution $ 2,876 $ 114,202
================ ================
</TABLE>
The pro forma distributions and capital contribution are non-cash
financing activities for purposes of presentation in the statement
of cash flows.
F-18
<PAGE>
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 $15,000*
Printing & Engraving
share certificates and Prospectuses $50,000*
Non-Accountable Expenses $280,000*
* 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.
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 Form of Opinion of Michael A. Littman
10.4* Non-Qualified Stock and Option Award Plan
24.1 Consent of Michael A. Littman, dated
September 10, 1998.
24.2 Consent of Moore Stephens Lovelace P.A., dated
September 10,1998
24.3** Form of Escrow Agreement
* to be filed later
** Previously Filed
73
<PAGE>
FINANCIAL STATEMENT SCHEDULES
Unaudited Financial Statements
for Three Months Ended June 30, 1998
and 1997 Pages F-1 - F-5
Audited Financial Statements
for Years Ended December 31, 1997 and 1996 Pages F-6- F-18
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
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.
(ii) 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 post-effective 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.
74
<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/A 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 September 10,
1998.
CONTINENTAL CAPITAL & EQUITY CORPORATION
By:/s/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 President September 10, 1998
- --------------------------- --------------- -------------
/s/James Schnorf CFO/COO & Director September 10, 1998
- --------------------------- --------------- -------------
/s/Juan Ferreira Executive VP &
Director September 10, 1998
- --------------------------- --------------- -------------
/s/Dodi B. Zirkle Corporate Secretary September 10, 1998
- --------------------------- --------------- -------------
/s/Michael F. Morrell Director September 10, 1998
- -------------------------- --------------- -------------
/s/Michael Lee Spraggins, Jr. Director September 10, 1998
- -------------------------- --------------- -------------
75
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
---------------------------
FORM SB-2/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------
CONTINENTAL CAPITAL & EQUITY CORPORATION
(Exact name of Registrant as specified in charter)
-------------------------------
EXHIBITS
76
<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 Form of Opinion of Michael A. Littman
10.4* Non-Qualified Stock and Option Award Plan
24.1 Consent of Michael A. Littman, dated
September 10, 1998.
24.2 Consent of Moore Stephens Lovelace P.A., dated
September 10, 1998
24.3** Form of Escrow Agreement
*To be filed by Amendment
** Previously Filed
77
<PAGE>
EXHIBIT 5.1
78
<PAGE>
Michael A. Littman
Attorney at Law
10200 W. 44th Ave., #400
Wheat Ridge, CO 80033
(303) 422-8127 Fax: (303) 422-7796
September 10, 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., 333-58137 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. 333-58137 when effective.
In rendering the following opinion, I have examined and relied only
upon the documents, and certificates of officers and directors 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.
79
<PAGE>
Based on the foregoing, it is my opinion that the Stock to be issued
under the Registration Statement, when issued, will be 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 non-compliance 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
80
<PAGE>
EXHIBIT 10.4
81
<PAGE>
To be filed by Amendment
82
<PAGE>
EXHIBIT 24.1
83
<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/A of Continental Capital &
Equity Corporation under the Securities Act of 1933, of my opinion letter dated
September 10, 1998.
/S/ MICHAEL A. LITTMAN
Michael A. Littman
Attorney at Law
September 10, 1998
84
<PAGE>
EXHIBIT 24.2
85
<PAGE>
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
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, in the Registration Statement (Form SB-2) and related
Prospectus, Amendment No. 1, of Continental Capital & Equity Corporation for the
registration of 2,000,000 shares of its common stock.
Moore Stephens Lovelace, P.A.
Orlando, Florida
September 10, 1998
86
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-END> JUN-30-1998 DEC-31-1997
<CASH> 636,539 574,134
<SECURITIES> 2,339,586 1,380,117
<RECEIVABLES> 45,458 254,458
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 3,155,380 2,254,086
<PP&E> 176,278 31,992
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 3,385,308 2,286,078
<CURRENT-LIABILITIES> 3,074,051 2,129,000
<BONDS> 0 0
0 0
0 0
<COMMON> 40,000 40,000
<OTHER-SE> 271,257 117,078
<TOTAL-LIABILITY-AND-EQUITY> 3,385,308 2,286,078
<SALES> 0 0
<TOTAL-REVENUES> 1,731,869 6,079,105
<CGS> 0 0
<TOTAL-COSTS> 212,156 1,225,580
<OTHER-EXPENSES> 980,810 3,205,119
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 538,903 1,737,437
<INCOME-TAX> (227,482) (506,500)
<INCOME-CONTINUING> 329,839 1,230,937
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 329,839 1,230,937
<EPS-PRIMARY> 0.14 0.43
<EPS-DILUTED> 0.08 0.31
</TABLE>
