<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NORCAN VENTURES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 6770 13-400420
- --------------------------------------------------------------------------------
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Code Number)
or organization)
Suite 3132-595 Burrand Street, Vancouver, B.C. Canada V7X 1J1, (604) 609-6110
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices and place of business)
Copy to:
Joseph Sierchio, Esq.
Sierchio & Albert, P.C.
41 East 57th Street, 39th Floor
New York, New York 10022
(212) 446-9500
Approximate date of commencement of proposed sale to public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this form are to be offered
on a continuous or delayed basis pursuant to Rule 415 of the
Securities Act of 1933, check the following box [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Maximum Maximum Aggregate Amount of
Title of Each Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered Per Share Price (1) Fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value
per share 4,000,000 $.03 $120,000 $35.40
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457.
The Registrant hereby amends this Registration Statement on such date as
may be necessary to delay its Effective Date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE> 2
CROSS REFERENCE SHEET
Furnished Pursuant to Item 501(b) of Regulation S-K
under the Securities Act of 1933, as amended
Item Number and Caption
in Registration Statement Caption in Prospectus
- ------------------------- ---------------------
1. Forepart of the Registration Front of Registration Statement;
Statement and Outside Front Cover Cover Page
Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus Inside Front and Outside Back
Cover Pages
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page; Determination of
Offering Price
6. Dilution; Risk Factors Dilution; Risk Factors
7. Selling Security Holders Not Applicable
8. Plan of Distribution Cover Page; Distribution of
Securities
9. Legal Proceedings Legal Proceedings
10. Directors, Executive Officers, Directors, Executive Officers,
Promoters and Controlling Persons Promoters and Controlling
Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Opinions; Experts
14. Disclosure of Commission's Distribution of Securities
Position on Indemnification of
Securities Act Liabilities
15. Organization within Last Five Years The Company; Plan of Operation;
Risk Factors
16. Description of Business Plan of Operation
17. Management's Discussion and Plan of Operation
Analysis or Plan of Operation
18. Description of Property Proposed Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity Related Cover Page; Description of
Stockholder Matters Securities; and Risk Factors
21. Executive Compensation Directors, Executive Officers,
Promoters and Control Persons
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Not Applicable
Accountants on Accounting and
Financial Disclosure
<PAGE> 3
PROSPECTUS
NORCAN VENTURES, INC.
(A Delaware Corporation)
The offer and sale of up to 4,000,000 Shares of Common Stock
OFFERING PRICE - $.03 PER SHARE
Norcan Ventures, Inc. (the "Company") is a recently organized corporation,
formed for the purpose of acquiring or merging with an unspecified operating
business. This Prospectus relates to the offer and sale by the Company of a
maximum of 4,000,000 and a minimum of 1,000,000 Shares (the "Shares") of common
stock, $.001 par value ("Common Stock"). See "Description of Securities."
THIS BLANK CHECK OFFERING IS SUBJECT TO THE PROVISIONS OF RULE 419 OF
REGULATION C("RULE 419") AS PROMULGATED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"). ACCORDINGLY, THE OFFERING PROCEEDS AND THE SECURITIES PURCHASED BY
INVESTORS (RESPECTIVELY, THE "DEPOSITED FUNDS" AND "DEPOSITED SECURITIES"), LESS
10% OF THE DEPOSITED FUNDS, WHICH WILL BE DELIVERED TO THE COMPANY AS PERMITTED
BY RULE 419, WILL BE HELD IN ESCROW (THE "RULE 419 ESCROW") SUBJECT TO THE
SATISFACTION OF THE PROVISIONS OF THE RULE 419 ESCROW.
The Deposited Funds and the Deposited Securities may not be released until
an acquisition meeting certain specified criteria has been made and a sufficient
number of investors reconfirm their investment in accordance with the procedures
set forth in Rule 419. Pursuant to Rule 419, a new prospectus (the "Re-Offer
Prospectus"), which describes an acquisition candidate and its business and
includes audited financial statements, will be delivered to all investors prior
to consummation of an acquisition. Unless a sufficient number of investors
(representing at least 80% of the maximum Offering Proceeds) elect to remain
investors, all investors will be entitled to the return of a pro-rata portion of
the Deposited Funds (and any interest earned or dividends paid thereon) and none
of the Deposited Securities will be issued to investors. If a sufficient number
of investors elect to remain investors the acquisition described in the Re-Offer
Prospectus will be consummated; however, the Company must return the pro-rata
portion of the Deposited Funds (and any interest earned or dividends paid
thereon) to any investor who does not elect to remain an investor. In the event
an acquisition is not consummated within 18 months of the effective date of the
Registration Statement of which this prospectus is a part, the Deposited Funds
(and any interest earned or dividends paid thereon) will be returned on a
pro-rata basis to all investors. See "Investors' Rights and Substantive
Protection under Rule 419."
----------
THESE SECURITIES ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND
IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS"
----------
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>
<CAPTION>
- --------------------------------------------------------------------------------
Price to the Proceeds to the
Public (1) Company (2)(3)
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share $ .03 $ .03
Total - 1,000,000 Shares (Minimum) 30,000.00 30,000.00
4,000,000 Shares (Maximum) 120,000.00 120,000.00
- --------------------------------------------------------------------------------
</TABLE>
(See notes on following page)
----------
The date of this Prospectus is ___________________, 1998
<PAGE> 4
(Footnotes for cover page)
(1) The Shares are being offered (the "Offering" or "Blank Check Offering")
directly by the Company on a "best efforts, all or none basis" with
respect to the first 1,000,000 Shares and on a "best efforts basis" with
respect to the remaining 3,000,000 Shares. Proceeds of the offering will
be held in escrow pursuant to the terms of the Rule 419 Escrow (as defined
below). See "Distribution of Securities."
Unless at least 1,000,000 Shares are sold within 150 days of the date of
this Prospectus, which period may be extended for an additional 30 days
(collectively, the "Offering Period"), in the sole discretion of the
Company, the Offering will terminate and all funds theretofore received
from subscribers will be promptly returned (along with any interest earned
or dividends paid thereon). Therefore, in the event that the minimum
number of Shares is not sold, prospective investors' funds may be held in
escrow for as long as 180 days before they are returned by the Escrow
Agent.
The terms of the Escrow Agreement which have been included therein to
comply with Rule 419 (the "Rule 419 Escrow Provisions") will govern the
treatment of the Shares purchased by investors and the investors's funds
tendered in payment thereof. Pursuant to the Rule 419 Escrow Provisions,
the certificates evidencing the Shares will be promptly deposited into the
Rule 419 Escrow upon issuance. The proceeds of the Offering, after the
release to the Company of an amount equal to 10%, on an aggregate basis,
of the proceeds of the Offering (up to an aggregate of $12,000 if the
maximum number of Shares is sold), will remain deposited in the Rule 419
Escrow pending (i) consummation of an acquisition in accordance with Rule
419 or (ii) the expenditure of 18 months from the date of this Prospectus.
See "Investors' Rights and Substantive Protection Under Rule 419."
Consequently, since the Company will not be paying commissions with
respect to the offer and sale of Shares, after delivery to the Company of
10% of the proceeds, as permitted by Rule 419, the net amount to be
maintained in the Rule 419 Escrow is $27,000 if the minimum number of
Shares is sold and $108,000 if the maximum number of Shares is sold (plus
any interest earned or dividends paid thereon).
(2) All offer and sales of Shares will be effected through the Company's
officers and directors. The Company's officers and directors will not
receive any compensation for their services in connection therewith.
However, the Company reserves the right to pay finders' fees in an amount
up to 10% of the Offering proceeds in connection with all sales of Shares
effected in jurisdictions other than the United States. The Company's
officers and directors may, but are not obligated to, purchase Shares on
the same terms and conditions as all other investors. However, any Shares
purchased by the Company's officers and directors will not be included in
determining whether the minimum offering criteria has been satisfied.
Hence, the maximum number of Shares that the officers and directors of the
Company may purchase is 3,000,000 or 75% of the maximum offering. See
"Risk Factors."
(3) To date the Company has incurred organizational costs of approximately
$500 and expects to incur filing, printing, legal, accounting and
miscellaneous expenses relating to the Offering estimated at $30,000. Ten
(10%) percent of the proceeds of the Offering ($3,000 if the minimum
number of Shares is sold and $12,000 if the maximum number of Shares is
sold) will be delivered to the Company and will be used to pay a portion
of these expenses. The balance of the expenses will be paid from the
Company's working capital derived from private placements of equity
securities previously consummated; or, if necessary, from borrowed funds
to the extent available to the Company on terms it deems acceptable. The
Company anticipates incurring additional expenses of approximately $40,000
to effectuate a Business Combination (as hereinafter defined) and to
prepare a post-effective amendment to the registration statement.
2
<PAGE> 5
PROHIBITION AGAINST SELLING DEPOSITED SECURITIES
RULE 15g-8 PROMULGATED PURSUANT TO THE EXCHANGE ACT MAKES IT UNLAWFUL FOR ANY
PERSON TO SELL OR OFFER TO SELL THE DEPOSITED SECURITIES (OR ANY INTEREST IN OR
RELATED TO THE DEPOSITED SECURITIES). THUS, INVESTORS ARE PROHIBITED FROM MAKING
ANY ARRANGEMENTS TO SELL THE DEPOSITED SECURITIES UNTIL THEY ARE RELEASED FROM
THE ESCROW ACCOUNT (SEE "RISK FACTORS - "PROHIBITIONS PURSUANT TO RULE 15G-8
UNDER THE EXCHANGE ACT TO SELL OR OFFER TO SELL SHARES IN THE RULE 419 ACCOUNT.
Prior to this offering there has been no public market for the Shares. No
trading in the Shares can be effected during the term of the Rule 419 Escrow.
There can be no assurance that any trading market in the Shares will develop
hereafter or if it does develop, that it will be sustained. The Company has no
present plans, proposals, arrangements or understandings with any person with
regard to the development of a trading marking for the Shares of Common Stock
offered hereby.
The public offering price has been arbitrarily determined by the Company and
bears no relationship to the Company's assets, prospective earnings, book value
or any other recognized criteria of value. This offering will be conducted by
the Company without use of a professional underwriter or securities dealer. See
"Risk Factors" and "Distribution of Securities."
STATE SECURITIES REGULATION
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION IN SUCH
JURISDICTION.
THE COMPANY WILL REGISTER THE SHARES ONLY IN THE STATE OF NEW YORK AND WILL
OFFER SHARES IN THE STATE OF FLORIDA, THE PROVINCE OF BRITISH COLUMBIA, CANADA
AND CERTAIN OTHER NON US JURISDICTIONS PURSUANT TO AVAILABLE EXEMPTIONS FROM
REGISTRATION OF SECURITIES IN SUCH JURISDICTIONS. PURCHASERS OF THE SHARES IN
THIS OFFERING MUST BE RESIDENTS OF SUCH JURISDICTION. THE COMPANY WILL AMEND
THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES OR
JURISDICTIONS, IF ANY, IN WHICH THE SHARES WILL HAVE BEEN REGISTERED OR AN
EXEMPTION IS AVAILABLE. THE COMPANY IS NOT A "REPORTING ISSUER" IN ANY PROVINCE
OF CANADA.
----------
THE SHARES ARE OFFERED BY THE COMPANY SUBJECT TO PRIOR SALE, ACCEPTANCE OF AN
OFFER TO PURCHASE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE OFFER,
WITHOUT NOTICE. THE COMPANY RESERVES THE RIGHT TO REJECT ANY OFFER IN WHOLE OR
IN PART, FOR THE PURCHASE OF ANY OF THE SHARES OFFERED HEREBY.
3
<PAGE> 6
In order to subscribe for Shares, a Subscription Application in the form
attached to this Prospectus and a check made payable to the Firstrust Savings
Bank as Escrow Agent and forwarded along with the Subscription Agreement to the
Company at 3123-595 Burrand Street, Vancouver, B.C. Canada V7X 1J1.
AVAILABLE INFORMATION
The Company intends to furnish to its stockholders annual reports containing
financial statements audited and reported upon by its independent public
accounting firm and intends to make available quarterly reports for the first
three quarters of each year containing unaudited financial information.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 (the "Registration
Statement") under the Securities Act with respect to the Shares. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and this
offering, reference is made to the Registration Statement, including the
exhibits filed therewith, which may be examined at the Commission's principal
office, Room 1024, 450 Fifth Street, N.W., Washington, D. C. 20549, the
Northeast Regional Office of the Commission at 7 World Trade Center, Suite 1300,
New York, New York 10048 and the Midwest Regional Office of the Commission,
Northwest Atrium, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511 where copies may be obtained upon payment of the fees prescribed by
the Commission. Descriptions contained in this Prospectus as to the contents of
any contract or other documents filed as an exhibit to the Registration
Statement are not necessarily complete and each such description is qualified by
reference to such contract or document. The Company will provide without charge
to each person who receives a Prospectus, upon written request of such person, a
copy of any of the information that is incorporated by reference in the
Prospectus.
4
<PAGE> 7
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this Prospectus
and is qualified in its entirety by the more detailed information and financial
statements (including the notes thereto) appearing elsewhere in the Prospectus
and in the Registration Statement.
The Company
The Company was organized under the laws of the State of Delaware on April
8, 1998, under the name Norcan Ventures, Inc. for the purpose of acquiring or
merging with an unspecified operating business. The Company, since its
incorporation, has not been engaged in any business activities, other than those
described herein. The Company intends to effect a merger, exchange of capital
stock, asset acquisition or other similar business combination or acquisition (a
"Business Combination") with as yet an unidentified business entity (the
"Acquired Business"). Other than general corporate activities, including but not
limited to the negotiation and consummation of a Business Combination, the
Company will not engage in any substantive commercial business immediately
following this offering until such time as it has effected a Business
Combination. The Company has no plan, proposal, agreement, understanding or
arrangement to acquire or merge with any specific business or company and the
Company has not identified any specific business or company for investigation
and evaluation. It is likely that the Company will have the ability to effect
only a single Business Combination. None of the Company's officers and
directors, their affiliates or associates have had any preliminary contact or
discussions and there are no present plans, proposals, arrangements, or
understandings with any representative of the owners of any Acquired Business
regarding the possibility of a Business Combination.
The Company's officers and directors (collectively the "Management") do
not expect to become involved as management in the aforementioned businesses and
will hire presently unknown and unidentified individuals as management for the
aforementioned ventures. Management will have complete and absolute discretion
in selecting the business activities in which the Company will engage. No
assurance can be given that Management will be able to locate or acquire an
attractive business or property or that the Company will be able to operate or
acquire such on a profitable basis. The Company has not yet engaged in any
operations.
No assurance can be given that the net proceeds of the maximum offering of
this Blank Check Offering or any lesser net amount will be sufficient to
accomplish the Company's goals or that any Acquired Business will become
profitable. In the event that substantially less than the net proceeds from the
maximum offering are raised, the Company's plans may be materially and adversely
affected in that the Company may find it even more difficult, if not impossible,
to realize its goals. If such proceeds are insufficient, the Company may be
required to seek additional capital. No assurance can be given that the Company
will be able to obtain such additional capital, or even if available, that such
additional capital will be available on terms acceptable to the Company. In the
event that Management determines that the Company is unable to conduct any
business whatsoever, Management, subject to the requirements of Rule 419, which
provides that the Deposited Funds will be returned on a pro-rata basis if an
acquisition meeting certain prescribed criteria is not consummated within 18
months of the date of this Prospectus, will, in its sole discretion, seek
stockholder approval to liquidate the Company. In the event such a liquidation
were to occur at some point in time after the Company's compliance with the
provisions of Rule 419, all stockholders of the Company including those owning
shares purchased privately at less than the public offering price, will receive
the liquidated assets on a pro-rata basis (as opposed to being based
5
<PAGE> 8
on the amounts paid for such shares). While Management has not established any
guidelines for determining at what point in time it might elect to discontinue
its efforts to effectuate an acquisition, Management is subject to the 18 month
time frame set forth in Rule 419 in which to effect an acquisition.
The Company's address is 3123-595 Burrand Street, Vancouver B.C. Canada,
V7X 1J1.
The Offering
The Offering is being conducted as a blank check offering in accordance
with Rule 419. A maximum of 4,000,000 and a minimum of 1,000,000 Shares are
being offered for sale hereby at a price of $.03 per Share. The Shares are
offered on an all or none basis with respect to the first 1,000,000 Shares and
on a best efforts basis as to the balance of the 4,000,000 Shares. To subscribe
for Shares, a Subscription Application in the form attached to this prospectus
and a check made payable to Firstrust Savings Bank, as Escrow Agent should be
forwarded to the Company at Suite 1630, 605 Robson Street, Vancouver B.C.,
Canada V6B 5J3. All offers and sales of Shares will be effected through the
Company's officers and directors. The Company's officers and directors will not
receive any compensation for their services in connection therewith. However,
they will be reimbursed for reasonable expenses incurred by them on behalf of
the Company. Directors and officers of the Company may purchase Shares on the
same terms and conditions as all other investors; however, any such purchases
will not be included in calculating whether the minimum number of Shares have
been sold.
Presently there are 1,000,000 shares of Common Stock issued and
outstanding; after the completion of this offering there may be a maximum of
5,000,000 shares and a minimum of 2,000,000 shares of Common Stock issued and
outstanding.
At the completion of this offering, the present officers and directors of
the Company will own approximately 1.0% of the then outstanding shares if the
maximum number of Shares is sold and 2.5% of the then outstanding shares if the
minimum number of Shares is sold and assuming they do not acquire any Shares in
the Offering.
The Company may, in its sole discretion, terminate this offering at any
time prior to the sale of the minimum number of shares and thereafter conclude
the Offering prior to the sale of the maximum number of shares.
Rule 419
The Company is conducting the Offering as a blank check offering subject
to compliance with the Rule 419. Under Rule 419, investors have certain rights
and will receive certain substantive protection. Accordingly, the Deposited
Securities and the Deposited Funds will be deposited and held in Rule 419 Escrow
until an acquisition meeting specific criteria is completed. Before the
acquisition can be completed and before the Deposited Funds and Deposited
Securities can be released from escrow, the Company is required to amend the
registration statement of which this Prospectus is part, with a post-effective
amendment, and within the 5 days after the effective date thereof, the Company
is required to furnish investors with the prospectus produced thereby containing
the terms of a reconfirmation offer (the "Reconfirmation Offer") and information
regarding the proposed acquisition candidate and its business, including audited
financial statements.
6
<PAGE> 9
Pursuant to Rule 419, an investor must have no fewer than 20 and no more
than 45 business days from the effective date of the post-effective amendment to
decide to reconfirm his investment and remain an investor or alternately,
require the return of his investment (plus any interest earned or dividends paid
thereon), less any amounts delivered to the Company as permitted under Rule 419.
Any investor not making any decision within said 45 day period will
automatically have his investment funds returned within 5 business days. Rule
419 further provides that if the Company does not complete an acquisition
meeting the specified criteria within 18 months of the Effective Date, all of
the Deposited Funds (and any interest earned or dividends paid thereon) in the
Rule 419 Escrow must be returned to investors within 5 business days. If the
offering period is extended to its limit (180 days), the Company, will have only
12 months in which to consummate a merger or acquisition. See "Investors' Rights
and Substantive Protection Under Rule 419."
Determination of Offering Price
The offering price of $.03 per Share has been arbitrarily determined by
the Company. This price bears no relation to the Company's assets, book value,
or any other customary investment criteria, including the Company's prior
operating history. Among the factors considered by the Company in determining
the offering price were estimates of the Company's business potential, the
limited financial resources of the Company, the amount of dilution to public
investors and the general conditions of the securities market.
Risk Factors
The Company is presently in the development stage and consequently has not
generated any income nor incurred any expenses except those incurred in its
formation and in connection with this offering. The Company does not expect to
receive any revenues from operations until it consummates a Business
Combination.
Accordingly, an investment in the securities of the Company is highly
speculative. Notwithstanding the substantive rights afforded investors by Rule
419, a purchase of shares involves extremely high risks, and potential investors
should carefully review the entire Prospectus and, particularly, the sections
relating to "Risk Factors," "Dilution" and "Use of Proceeds."
Use of Proceeds
Under Rule 419, 10% of the offering proceeds may be, and in this instance
will be, delivered to the Company; said 10% of the offering proceeds, up to an
aggregate of $12,000 if the maximum number of Shares is sold, will be used to
defray the cost incurred in connection with the Offering. In addition,
commissions, underwriting expenses and dealer allowances, if any, are also
deductible from the offering proceeds.
The Company will receive the balance of the Deposited Funds in the event a
Business Combination is consummated pursuant to the provisions of Rule 419. The
Deposited Funds will remain in the Rule 419 Escrow Account maintained by the
Escrow Agent until the consummation of a Business Combination.
The Company intends to apply the Deposited Funds, when available, to the
payment of the costs and expenses incurred in attempting to effect a Business
Combination, including selecting and evaluating an Acquired Business,
structuring and consummating a Business Combination and the preparation and
filing
7
<PAGE> 10
of a post-effective amendment detailing the Reconfirmation Offer pursuant to
Rule 419. Rule 419 requires that the fair value of any Acquired Business be
equal to at least 80% of the maximum offering proceeds. See "Use of Proceeds."
Transfer Agent
StockTrans, Inc., 7 East Lancaster Avenue, Ardmore, Pennsylvania, will act
as the Company's transfer agent.
Escrow Agent
The Escrow Agent is Firstrust Savings Bank, 1931 Cottman Avenue,
Philadelphia, PA 19111.
RISK FACTORS
THE SHARES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE AN
EXTREMELY HIGH DEGREE OF RISK. EACH PROSPECTIVE INVESTOR SHOULD, PRIOR TO
PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF
THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS.
1. Rule 419 Generally. Rule 419 generally requires that the securities to
be issued and the funds received in a blank check offering be deposited and held
in an escrow account until an acquisition meeting specified criteria is
completed. Before the acquisition can be completed and before the funds and
securities can be released, the blank check company is required to update the
registration statement with a post-effective amendment; within 5 business days
after the effective date of any such post-effective amendment, the Company is
required to furnish investors with the prospectus produced thereby containing
information, including audited financial statements, regarding the proposed
acquisition candidate and its business. According to the rule, the investors
must have no fewer than 20 and no more than 45 days from the effective date of
the post-effective amendment to decide to remain an investor or require the
return of their investment funds. Any investor not making any decision within
said 45 day period is to automatically receive a return of his investment funds
within 5 business days. Unless investors representing 80% of the maximum
offering proceeds elect to remain investors, the consummation of an acquisition
of or merger with a target business would be prevented, all of the deposited
funds in the escrow must be returned to all investors and none of the securities
will be issued. Consequently, notwithstanding the fact that a majority of
investors may be in favor of a prospective Business Combination, such investors
may nevertheless have to accept the return of their investment in accordance
with Rule 419, if more than 20% of the Rule 419 Investors do not reconfirm their
investment. Although not considered likely, officers and directors could
acquire, on the same terms and conditions as other investors, up to 75% of the
Shares; if they were to do so, of the remaining unaffiliated shareholders, only
those holding 20% in value of the Shares offered would be required to vote in
favor of a proposed acquisition. Rule 419 further provides that if the blank
check company does not complete an acquisition meeting specified criteria within
18 months of the effectiveness of the initial registration statement of which
this Prospectus comprises a part thereof, all of the Deposited Funds in the Rule
419 Escrow, less amounts deducted therefrom pursuant to Rule 419, must be
returned to investors.
2. Prohibition Pursuant to Rule 15g-8 Under Exchange Act to Sell or Offer
to Sell Shares in Rule 419 Account. Rule 15g-8 of the Exchange Act provides that
it is unlawful for any person to sell
8
<PAGE> 11
or offer to sell the Shares (or any interest in or related to the Shares) held
in the Rule 419 account other than pursuant to a qualified domestic relations
order as contemplated by the Act, which term the Company believes includes an
order of a court of competent jurisdiction incorporating in an order of support
or judgment of divorce provisions for property distribution and/or support.
However, each investor is urged to consult with his own tax and legal counsel to
determine the applicability of such exemption to his particular circumstances.
As a result, contracts for sale to be satisfied by delivery of the Deposited
Securities (e.g. contracts for sale on a when, as, and if issued basis) are
prohibited. Rule 15g-8 also prohibits sales of other interests based on or in
the Shares, whether or not physical delivery is required.
3. No Assurance Net Proceeds from Maximum Offering or Lesser Amount to be
Sufficient to Realize Company's Goals. No assurance may be given that the net
proceeds from the Offering, if the maximum number of Shares is sold or if any
lesser amount is sold, will be sufficient to allow the Company to realize its
goals and engage in a business venture chosen by the Company's management.
Further, in the event that less than the net proceeds from the maximum offering
are raised, the Company's plans may be materially and adversely affected in that
the Company may find it even more difficult, if not impossible, to realize its
goals.
4. Recently Organized Company. The Company was only recently organized and
has no operating history. The Company, therefore, must be considered promotional
and in its early formative and development stage. Potential investors should be
aware of the difficulties normally encountered by a new enterprise, especially
in view of the relatively small size of this offering. There is nothing at this
time upon which to base an assumption that the Company's business plan will
prove successful, and there is no assurance that the Company will be able to
operate profitably. The Company has limited resources and has had no revenues to
date. Upon completion of the Offering, the present stockholders, assuming the
sale of the maximum number of Shares and that no Shares are acquired, will own,
in the aggregate, 20% of the then issued and outstanding shares of Common Stock.
See "Risk Factors - Control by Present Stockholders."
5. Minimal Time Spent by Management. Mr. Gordon Bruce Keep (sometimes
herein referred to as "Management") is the Company's sole officer and director
and is engaged full-time in other activities; and, therefore, prior to the
conclusion of the Offering, whether or not the maximum number of shares is sold,
will devote only a minimal amount of time (not to exceed, in the aggregate,
approximately 10 hours per week) to the Company's business. It is unlikely that
the lack of full-time management may have a materially adverse effect upon the
Company's business. At present, the Company has no employees. Even upon
completion of the Offering, the present intention of the Company is to limit its
employees to part-time secretarial and clerical help, except for management and
employees of any Acquired Business that it may acquire. See "Directors,
Executive Officers, Promoters and Control Persons."
6. Experience of Management. Although Management has general business
experience, potential investors should be aware that Management has limited
experience in effecting business combinations and may not have any significant
experience in acquiring or operating certain business interests that the Company
might choose to acquire. Management does not have, nor does it presently intend
to enter into, any contracts or agreements with any consultants or advisors with
respect to its proposed business activities. Consequently, Management has not
established the criteria that will be used to hire independent consultants
regarding their experience, the services to be provided, the term of service,
etc., and no assurance can be made that the Company will be able to obtain such
assistance on terms acceptable to the Company. See "Plan of Operation."
9
<PAGE> 12
7. No Present Identification of Industry. The Company has neither
conducted nor have others made available to it results of market research
concerning the feasibility of a Business Combination with an Acquired Business.
Therefore, Management has no assurance that market demand exists for an
acquisition or merger as contemplated by the Company. Management has not
identified any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be able to
consummate a Business Combination on terms favorable to the Company. (See "Plan
of Operation"). The Company has not yet identified a prospective Acquired
Business. There can be no assurance that an investment in the securities offered
hereby will not ultimately prove to be less favorable to investors in this
offering than a direct investment, if such opportunity were available, in an
Acquired Business. Purchasers of the Shares offered hereby, will have an
opportunity to evaluate an Acquired Business to the extent permitted by Rule
419.
To the extent the Company consummates a Business Combination with a
financially unstable company or an entity in its early stage of development or
growth (including entities without established records of sales or earnings),
the Company will become subject to numerous risks inherent in the business
operations of financially unstable and early stage or potential emerging growth
companies. In addition, to the extent that the company effects a Business
Combination with an entity in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable risk of that
industry. It is likely that the Company will have the ability to effect only a
single Business Combination. Accordingly, the prospects for the Company's
success will be entirely dependent upon the future performance of a single
business. Unlike certain entities which have the resources to consummate several
Business Combinations of entities operating in multiple industries or multiple
areas of a single industry, it is highly likely that the Company will not have
the resources to diversify its operations or benefits from the possible
spreading of risks or offsetting of losses. In addition, by consummating a
Business Combination with only a single entity, the prospects for the Company's
success may become dependent upon the development or market acceptance of a
single or limited number of products, processes or services. Consequently, there
can be no assurance that the Acquired Business will prove to be commercially
viable.
The Company's business may involve the acquisition of or merger with a
company which does not need substantial additional capital but which desires to
establish a public trading market for its shares. A company which seeks the
Company's participation in attempting to consolidate its operations through a
merger, reorganization, asset acquisition, or some other form of combination may
desire to do so to avoid what they may deem to be adverse consequences of
themselves undertaking a public offering. Factors considered may include time
delays, significant expense and loss of voting control.
8. Stockholder Approval for Business Combination May Result in a Loss.
After the sale of the minimum number of Shares, Rule 419 permits 10% of the
offering proceeds to be disbursed to the Company prior to the consummation of a
Business Combination, which amount will, in fact be dispensed to the Company. As
such, pursuant to Rule 419, 90% percent of the proceeds of this Offering, will
be held in the Rule 419 Escrow pending, among other things, the consummation of
a Business Combination which transaction must occur within 18 months of the
Effective Date hereof. Accordingly, the investors herein may lose 10% or more of
their investment if a significant number of investors do not confirm their
investment so as to preclude the consummation of a Business Combination
satisfying the criteria of Rule 419.
9. Intense Competition. There are numerous firms which are larger than the
Company, and which are also seeking to effect business acquisitions similar to
those contemplated by the Company. Such
10
<PAGE> 13
companies may be in a better position to finance such subsidiaries and to offer
incentives to management to run the subsidiaries and to supervise them. The
Company will thus encounter intense competition in the organizing or purchasing
of businesses which it hopes may prove to be profitable.
10. Potential Future 144 Sales. Of the 30,000,000 shares of the Company's
Common Stock authorized, there are presently issued and outstanding 1,000,000
none of which are being registered pursuant hereto; all are "restricted
securities" as that term is defined under the Act, and in the future may be sold
in compliance with Rule 144 of the Act, or pursuant to a Registration Statement
filed under the Act. Rule 144 provides, in essence, that a person holding
restricted securities for a period of 1 year may sell those securities in
unsolicited brokerage transactions or in transactions with a market maker, in an
amount equal to 1% of the Company's outstanding common stock every 3 months.
Additionally, Rule 144 requires that an issuer of securities make available
adequate current public information with respect to the issuer. Such information
is deemed available if the issuer satisfies the reporting requirements of
Sections 13 or 15(d) of the Exchange Act and of Rule 15c2-11 thereunder. Rule
144 also permits, under certain circumstances, the sale of shares by a person
who is not an affiliate of the Company and who has satisfied a 3 three year
holding period without any quantity limitation and whether or not there is
adequate current public information available. Investors should be aware that
sales under Rule 144, or pursuant to a Registration Statement filed under the
Act, may have a depressive effect on the market price of the Company's
securities in any market that may develop for such shares. None of the presently
outstanding shares will be available for sale under Rule 144 until at least
March, 1999.
11. Possible Issuance of Additional Shares. The Company's Certificate of
Incorporation, authorizes the issuance of 30,000,000 shares of Common Stock.
Upon the sale of the maximum number of Shares offered hereby, approximately 83%
of the Company's authorized shares will remain unissued. The Company's Board of
Directors has the power to issue any or all of such additional shares without
stockholder approval. Management presently anticipates that it may choose to
issue a substantial amount of such shares to acquire business interests or other
types of property in the future, or may, following a Business Combination issue
Shares for the purpose of raising additional capital. However, the Company
presently has no commitments, contracts or intentions to issue any additional
shares. Potential investors should be aware that any such stock issuances may
result in a reduction of the book value or market price, if any, of the then
outstanding shares. If the Company issues additional shares, such issuance will
reduce the proportionate ownership and voting power of the other stockholders.
Also, any new issuance of shares may result in a change of control of the
Company. See "Plan of Operation - Form and Structure of Acquisition."
12. Conflicts of Interest. Officers and directors of the Company
including, but not limited to Mr. Keep engage in other business activities
similar or dissimilar to those engaged in by the Company, including the
formation of other blind pool companies. To the extent that such officers and
directors engage in such other activities, they will have possible conflicts of
interest in diverting opportunities to other companies, entities or persons with
which they are or may be associated or have an interest in, rather than
diverting such opportunities to the Company. Such potential conflicts of
interest include, among other things, time, effort and corporate opportunity
involved in their participation in other business transactions. As no policy has
been established for the resolution of such a conflict, the Company may be
adversely affected should these individuals choose to place their other business
interests before those of the Company. No assurance can be given that such
potential conflicts of interest will not cause the Company to lose potential
opportunities. However, the failure by Management to resolve conflicts of
interest in favor of the Company may result in liability of Management to the
Company. Generally, under Delaware law, directors and officers have a fiduciary
responsibility to discharge their duties in
11
<PAGE> 14
good faith and with that degree of diligence, care and skill which an ordinarily
prudent person would exercise under similar circumstances in like positions.
Directors and officers may not acquire or divert to themselves property or
opportunities which they are under a duty to acquire for the corporation. This
duty does not apply to all acquisitions or opportunities; it does not affect
acquisitions or opportunities that the corporation has refused, that it would
not have been able to take advantage of or that are not appropriate or logically
related to the corporation's business.
While the Company and its Management intend that no shares of the
Company's Common Stock will be sold by any officers, directors or greater than
10% stockholders or persons who may be deemed promoters of the Company without
affording all stockholders of the Company a similar opportunity, Management may,
nevertheless, actively negotiate or otherwise consent to the purchase of all or
a portion of their shares of Common Stock as a condition to or in connection
with a proposed merger or acquisition transaction. It is noted that Management
may be deemed to have paid approximately $.02 per share of Common Stock owned by
Management. In connection with any such stock purchase transaction, it is
possible that a premium may be paid for Management's share of Common Stock and
that public investors in the Company may not receive any portion thereof in the
event such premium may be paid. Any transaction structured in such manner may
present Management with conflicts of interest and as a result of such conflicts,
may possibly compromise Management's fiduciary duties to the Company's
stockholders, as the potential would therefore exist for members of Management
to consider their own personal pecuniary benefit rather than the best interest
of the Company's other stockholders. Further, the Company's other stockholders
may not be afforded an opportunity to otherwise participate in any particular
stock buy-out transaction. Additionally, in any such transaction, it is
possible, although not presently intended, that the Company may borrow funds to
be used directly or indirectly to purchase Management's shares. Proceeds from
this Blank Check Offering will not be utilized directly or indirectly to
purchase Management's shares.
13. No Underwriter or Selected Broker/Dealers. The Company has not
retained an underwriter or any selected broker/dealers to assist in this
offering. The officers and directors of the Company have limited experience in
the offer and sale of securities on behalf of an issuer, and, consequently, they
may be unable to effect the sale of a sufficient number of Shares to meet the
minimum or maximum offerings. In the event that an underwriter or selected
broker/dealers are retained by the Company, the offering would be suspended
until such time as the Company's Registration Statement, including this
Prospectus, is amended to reflect such retention. The Registration Statement
would then require additional review by the Securities and Exchange Commission,
the NASD, and, if necessary, state regulatory authorities. The Company would be
expected to incur significant additional expenses in the form of selling
commissions, legal fees, and printing and accounting costs. The Company and
officers and directors who are offering the Shares on behalf of the Company, are
not registered as brokers or dealers under Section 15 of the Securities Exchange
Act of 1934, as amended and are relying on exemption from such registration
provided by Rule 3a4-1. The Company has reserved the right to pay finders fees
equal to 10% of the proceeds derived from the sale of Shares in jurisdictions
other than the United States.
14. Risks of Leverage; Debt of An Acquired Business. There are currently
no limitations relating to the Company's ability to borrow funds to increase the
amount of capital available to the Company to effect a business combination or
otherwise finance the operations of any acquired business. The amount and nature
of any borrowings by the Company will depend on numerous factors, including the
Company's capital requirements, the Company's perceived ability to meet debt
services on any such borrowings, and then-prevailing conditions in the financial
markets as well as general economic conditions. There can be no assurance that
debt financing, if required or otherwise sought, will be
12
<PAGE> 15
available on terms deemed to be commercially acceptable and in the best interest
of the Company. The inability of the Company to borrow funds required to effect
or facilitate a business combination, or to provide funds for an additional
infusion of capital into an acquired business, may have a material adverse
affect on the Company's financial condition and future prospects. Additionally,
to the extent that debt financing ultimately proves to be available, any
borrowings may subject the Company to various risks traditionally associated
with incurring of indebtedness, including (i) if the Company's operating
revenues after the Business Combination were to be insufficient to pay debt
service, there would be a risk of default and foreclosure on the Company's
assets; (ii) if a loan agreement contains covenants that require the maintenance
of certain financial ratios or reserves, and any such covenant is breached
without a waiver or renegotiation of the terms of that covenant, then the lender
could have the right to accelerate the payment of the indebtedness even if the
Company has made all principal and interest payments when due; (iii) if the
interest rate on a loan fluctuated or the loan was payable on demand, the
Company would bear the risk of variations in the interest rate or demand for
payment; and (iv) if the terms of a loan did not provide for amortization prior
to maturity of the full amount borrowed and the "balloon" payment could not be
refinanced at maturity on acceptable terms, the Company might be required to
seek additional financing and, to the extent that additional financing is not
available on acceptable terms, to liquidate its assets. Furthermore, an acquired
business may already have previously incurred debt financing and, therefore, the
risks inherent thereto, as discussed above. See "Use of Proceeds" and "Plan of
Operation - Form and Structure of Acquisitions."
15. Possible Need for Additional Financing of Acquired Business. In the
event of a consummation of a Business Combination, the Company cannot ascertain
with any degree of certainty the capital requirements for any particular
acquired business inasmuch as the Company has not yet identified any prospective
Acquired Business candidates. To the extent the Business Combination results in
the acquired business requiring additional financing, such additional financing
(which, among other forms, could be derived from the public or private offering
of securities or from the acquisition of debt through conventional bank
financing), may not be available, due to, among other things, the acquired
business not having sufficient (i) credit or operating history; (ii) income
stream; (iii) profit level; (iv) asset base eligible to be collateralized; or
(v) market for its securities. Although there are no agreements between the
Company and any of its officers and/or directors pursuant to which the Company
may borrow and such officers and/or directors are obligated to lend the Company
monies, there are no restrictions on the Company to borrow money, including, but
not limited to, loans from officers and directors. No stockholder approval is
required in connection with any such loans.
As no specific Business Combination or industry has been targeted, it is
not possible to predict the specific reasons why conventional private or public
financing or conventional bank financing might not become available. There can
be no assurance that, in the event of a consummation of a Business Combination,
sufficient financing to fund the operations or growth of the acquired business
will be available upon terms satisfactory to the Company, nor can there be any
assurance that financing would be available at all.
16. Investment Company Act Considerations. The regulatory scope of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), which
was enacted principally for the purpose of regulating vehicles for pooled
investments in securities, extends generally to companies engaged primarily in
the business of investing, reinvesting,owning,holding or trading in securities.
The Investment Company Act may, however, also be deemed to be applicable to a
company which does not intend to be characterized as an investment company but
which, nevertheless, engages in activities which may be deemed to be within the
definitional scope of certain provisions of the Investment Company Act.
13
<PAGE> 16
There can be no assurance that the Company will not be deemed to be an
investment company, especially during the period prior to a Business
Combination, although the Company intends to take all measures possible to avoid
such classification. In the event the Company is deemed to be an investment
company, the Company may become subject to certain restrictions relating to the
Company's activities, including restrictions on the nature of its investments
and the issuance of securities. In addition, the Investment Company Act imposes
certain requirements on companies deemed to be within its regulatory scope,
including registration as an investment company, adoption of a specific form of
corporate structure and compliance with certain burdensome reporting, record
keeping, voting, proxy, disclosure and other rules and regulations. In the event
of characterization of the Company as an investment company, the failure by the
Company to satisfy regulatory requirements, whether on a timely basis or at all,
would, under certain circumstances, have a material adverse affect on the
Company. The Company intends to take all measures possible to avoid such
characterization of the Company. See "Plan of Operation."
17. Tax Considerations. As a general rule, federal and state tax laws and
regulations have a significant impact upon the structuring of business
combinations. The Company will evaluate the possible tax consequences of any
prospective Business Combination and will endeavor to structure the Business
Combination so as to achieve the most favorable tax treatment to the Company,
the Acquired Business and their respective stockholders. There can be no
assurance, however, that the Internal Revenue Service (the "IRS") or appropriate
state tax authorities will ultimately assent to the Company's tax treatment of a
consummated Business Combination. To the extent the IRS or state tax authorities
ultimately prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to the Company, the Acquired
Business and their respective stockholders. The Company files its income taxes
on a calendar year basis.
18. Change of Control. In the event that the Company effects a Business
Combination by issuing additional common stock, the present stockholders of the
Company may no longer have control of the Company. Although the Company has no
present plans, understandings or arrangements with respect to any Business
Combination, the successful completion of such a transaction could result in a
change in control of the Company. This could result from the issuance of a large
percentage of the Company's authorized securities or the sale by the present
stockholders of all or a portion of their stock or a combination thereof. Any
change in control may also result in the resignation or removal of the Company's
present officers and directors. If there is a change in Management, no assurance
can be given as to the experience or qualifications of the persons who replace
present management respecting either the operation of the Company's activities
or the operation of the business, assets or property being acquired.
19. No Dividends. The Company has not paid any dividends on its Common
Stock to date and does not presently intend to pay cash dividends prior to the
consummation of a Business Combination. The payment of dividends after any such
Business Combination, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition
subsequent to consummation of a Business Combination. The payment of any
dividends subsequent to a Business Combination will be within the discretion of
the Company's then Board of Directors.
20. Arbitrary Determination of Offering Price. Prior to this offering,
there has been no public trading market for the Shares. The initial public
offering price of the Shares has been arbitrarily determined by the Company and
does not bear any relationship to such established valuation criteria such as
assets, book value or prospective earnings. Among the factors considered by the
Company were the lack of operating history of the Company, the proceeds to be
raised by the offering, the amount of capital
14
<PAGE> 17
to be contributed by the public in proportion to the amount of stock to be
retained by present stockholders, the relative requirements of the Company, and
the current market conditions in the over-the-counter market.
21. Dilution; Disparity of Consideration. Assuming the sale of the maximum
number of Shares (based on the Company's financial statements as of June 26,
1998), new investors will incur an immediate dilution of approximately $.01 per
share after the offering of the maximum number of Shares is consummated. The
existing stockholders of the Company acquired their shares of Common Stock at a
price of $.01 (or less) per share which is $.02 per share lower than the
offering price of the Shares. Accordingly, new investors will bear virtually all
of the risks inherent in an investment in the Company. See "Dilution." No resale
of the Shares can be effected until the same are released from the Rule 419
Escrow.
22. Penny Stock Rules.
Under Rule 15g-9, a broker or dealer may not sell a "penny stock" (as
defined in Rule 3a51-1) to or effect the purchase of a penny stock by any person
unless:
(1) such sale or purchase is exempt from Rule 15g-9; or
(2) prior to the transaction the broker or dealer has (a) approved the
person's account for transaction in penny stocks in accordance with Rule
15g-9 and (b) received from the person a written agreement to the
transaction setting forth the identity and quantity of the penny stock to
be purchased.
The Commission adopted regulations that generally define a penny stock to
be any equity security other than a security excluded from such definition by
Rule 3a51-1. Such exemptions include, but are not limited to (a) an equity
security issued by an issuer that has (i) net tangible assets of at least
$2,000,000, if such issuer has been in continuous operations for at least three
years; (ii) net tangible assets of at least $5,000,000, if such issuer has been
in continuous operation for less than three years; or (iii) average revenue of
at least $6,000,000 for the preceding three years; (b) except for purposes of
Section 7(b) of the Exchange Act and Rule 419, any security that has a price of
$5.00 or more; (c) and a security that is authorized or approved for
authorization upon notice of issuance for quotation on the National Association
of Securities Dealers Automated Quotation System.
It is likely that the Company's Common Stock will be subject to the
regulations on penny stocks; consequently, the market liquidity for the
Company's Common Stock may be adversely affected by such regulations limiting
the ability of broker/dealers to sell the Company's Common Stock and the ability
of purchasers in this offering to sell their securities in the secondary market
(following termination of the Rule 419 Escrow).
23. No Assurance of a Public Market. There is no current trading market
for the Shares and there can be no assurance that a trading market will develop,
or, if such a trading market does develop, that it will be sustained. The
Shares, to the extent that a market develops for the Shares at all, will likely
appear in what is customarily known as the "pink sheets" or on the NASD Bulletin
Board, which may limit the marketability and liquidity of the Shares. Pursuant
to Rule 419, all shares issued by a blank check company, must be placed in the
Rule 419 Escrow Account. These shares will not be released from the Rule 419
Escrow until (i) the consummation of a merger or acquisition as provided for in
Rule 419
15
<PAGE> 18
or (ii) the expiration of 18 months from the date of this Prospectus. There is
no present market for the Common Stock of the Company and there is no likelihood
of any active and liquid public trading market developing following the release
of securities from the Rule 419 Escrow. Thus, stockholders may find it difficult
to sell their shares.
To date, neither the Company nor anyone acting on its behalf has taken any
affirmative steps to request or encourage any broker/dealer to act as a market
maker for the company's Common Stock. Further, there have been no discussions or
understandings, preliminary or otherwise, between the Company or anyone acting
on its behalf and any market maker regarding the participation of any such
market maker in the future trading market, if any, for the company's Common
Stock. Present management of the Company has no intention of seeking a market
maker for the Company's Common Stock at any time prior to the reconfirmation
offer to be conducted prior to the consummation of a Business Combination. The
officers of the Company after the consummation of a Business Combination may
employ consultants or advisors to obtain such market makers. Management expects
that discussions in this area will ultimately be initiated by the management of
the Company in control of the entity after a Business Combination is reconfirmed
by the stockholders. There is no likelihood of any active and liquid trading
market for the Company's Common Stock developing. See "Market for the Company's
Common Stock" and "Investors' Rights and Substantive Protection Under Rule 419."
In order to prevent resale transactions in violation of states' securities
laws, public stockholders may only engage in resale transactions in the United
States, in New York and Florida and such other jurisdictions (there are none
now) in which an applicable secondary trading exemption is available or a blue
sky application has been filed and accepted. As a matter of notice to the
holders thereof, the Common Stock certificates shall contain information with
respect to resale of the Shares. Further, the Company will advise its market
makers in the Shares, if any, of such restriction on resale. Such restriction on
resales may limit the ability of investors to resell the Shares purchased in the
Offering.
SELECTED FINANCIAL INFORMATION
The Company is a start-up company and has no operating history. The
Company has had no revenues or earnings from operations to date.
<TABLE>
<CAPTION>
Summary Balance As at As Adjusted
Sheet Data: June 26, 1998 Minimum Maximum
(unaudited) -------- --------
-----------
<S> <C> <C> <C>
Assets $ 35,600 $ 65,600 $155,600
Liabilities 30,100 30,100 30,100
Shareholders Equity 5,500 35,500 125,500
</TABLE>
The Company has had no earnings from operations to date.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposited Funds and Deposited Securities
Pursuant to Rule 419, the Deposited Funds, after deduction for permitted
underwriting commissions, underwriting expenses, dealer allowances and certain
other amounts (equal to 10% of the proceeds) which will be delivered to the
Company, and the Deposited Securities are to be deposited into and held in the
16
<PAGE> 19
Rule 419 Escrow. The escrow is governed by an agreement which contains certain
terms and provisions specified by the Rule 419. Under Rule 419, the Deposited
Funds and Deposited Securities will be released to the Company and to the
investors, respectively, only after the Company has:
(1) Executed an agreement, for the consummation of a Business Combination,
meeting certain prescribed criteria.
(2) Filed a post-effective amendment to this Registration Statement which
includes the terms of a Reconfirmation Offer, and other prescribed information
regarding the Acquired Business including audited financial statements.
(3) Conducted the Reconfirmation Offer in accordance with the provisions
of Rule 419 and the requisite number of investors (sufficient in number to
permit an acquisition of a business or asset having a value of 80% of the
maximum offering proceeds) have elected to remain stockholders. Although not
considered likely, officers and directors could acquire on the same terms and
conditions as other investors up to 75% of the Shares being offered; if they
were to do so, of the remaining unaffiliated shareholders, only those holding
20% in value of the Shares offered would be required to vote in favor of a
proposed acquisition. After the foregoing conditions have been satisfied the
Company will submit a signed representation to the Escrow Agent that the
requirements of Rule 419 have been satisfied and that the Business Combination
has been (or is being) consummated. The Escrow Agent can then release the
Deposited Funds and Deposited Securities.
Accordingly, the Company has entered into the Rule 419 Escrow which
provides, among other things, that:
(1) The Deposited Funds are to be deposited into the Rule 419 Escrow
maintained by the Escrow Agent promptly upon receipt of such funds. The
Deposited Funds and interest or dividends thereon, if any, are to be held for
the sole benefit of the investors and can only be invested in bank deposits, in
money market mutual funds or federal government securities or securities for
which the principal or interest is guaranteed by the federal government.
(2) All Shares and any other securities issued during the escrow period,
with respect to such Shares including securities issued with respect to stock
splits, stock dividends or similar rights are to be deposited directly into the
Rule 419 Escrow promptly upon issuance. The identity of the investors are to be
included on the stock certificates or other documents evidencing the Deposited
Securities. The Deposited Securities held in the Rule 419 Escrow are to remain
as issued and deposited and are to be held for the sole benefit of the investors
who retain the voting rights, if any, with respect to the Deposited Securities
held in their names. The Deposited Securities held in the Rule 419 Escrow may
not be transferred, disposed of nor any interest created therein other than by
will or the laws of descent and distribution, or pursuant to a court order
issued in conjunction with or as part of a divorce judgment.
(3) Warrants, convertible securities or other derivative securities
relating to Deposited Securities held in the Rule 419 Escrow may be exercised or
converted in accordance with their terms; provided that, however, the securities
received upon exercise or conversion together with any cash or other
consideration paid in connection with the exercise or conversion are to be
promptly deposited into the Rule 419 Escrow.
Prescribed Acquisition Criteria
Rule 419 requires that before the Deposited Funds and the Deposited
Securities can be released, the Company must execute an agreement to acquire an
acquisition candidate(s) meeting specified criteria.
17
<PAGE> 20
The agreement(s) must provide for the acquisition(s) of a business(es) or assets
for which the fair value of the business or net assets represents at least 80%
of the maximum offering proceeds, but excluding underwriting commissions,
underwriting expenses, dealer allowances payable to non-affiliates and amounts
permitted to be delivered to the Company. The agreement(s) must include, as a
condition precedent to their consummation, a requirement that a sufficient
number of investors confirm their investment so as to permit consummation of a
Business Combination satisfying the criteria of Rule 419. Consequently, for
purposes of this Offering, the fair value of the business(es) or assets to be
acquired must be at least 80% of $30,000, if the minimum number of Shares is
sold and $120,000 if the maximum number of Shares is sold.
Post Effective Amendment
Once the agreement governing a Business Combination meeting the above
criteria has been executed, Rule 419 requires the Company to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information required by the applicable registration form,
concerning the Acquired Business, including financial statements of the Company
and the Acquired Business as required thereby, the results of this Offering, and
the use of the funds disbursed from the Rule 419 Escrow. The post-effective
amendment must also include the terms of the Reconfirmation Offer mandated by
Rule 419. The Reconfirmation Offer must include certain prescribed conditions
which must be satisfied before the Deposited Funds and Deposited Securities can
be released from the Rule 419 Escrow.
Reconfirmation Offer
The Reconfirmation Offer must commence within 5 business days after the
effective date of the post-effective amendment. Pursuant to Rule 419, the terms
of the reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the Rule 419 Escrow within 5
business days after the effective date of the post-effective amendment.
(2) Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to notify the
Company in writing that the investor elects to remain an investor.
(3) If the Company does not receive written notification from an investor
within 45 business days following the effective date, the pro-rata portion of
the Deposited Funds (and any related interest or dividends) held in the Rule 419
Escrow on such investor's behalf will be returned to the investor within 5
business days by first class mail or other equally prompt means.
(4) The Business Combination may be consummated only if a minimum number
of investors representing 80% of the maximum offering proceeds elect to
reconfirm their investment.
(5) If a Business Combination is not consummated within 18 months from the
date of this prospectus, the Deposited Funds and any related interest or
dividends held in the Rule 419 Escrow shall be returned to all investors on a
pro-rata basis within 5 business days by first class mail or other equally
prompt means and the Deposited Securities will be returned to the Company.
18
<PAGE> 21
Release of Deposited Securities and Deposited Funds
The Deposited Funds and Deposited Securities may be released to the
Company and the investors, respectively, after the Escrow Agent has received a
signed representation from the Company or other evidence acceptable by the
Escrow Agent that:
(a) the Company has executed an agreement for a Business Combination
for which the fair market value of the business represents at least 80% of the
maximum offering proceeds and has filed the required post-effective amendment;
(b) the post-effective amendment has been declared effective, the
mandated Reconfirmation Offer having the conditions prescribed by Rule 419 has
been completed and the Company has satisfied all of the prescribed conditions of
the Reconfirmation Offer; and
(c) the Business Combination described in paragraph (a) above has
been consummated.
If an investor elects not to reconfirm this investment, his subscription
amount (less any amount permitted to be and actually delivered to the Company)
plus any interest earned thereon will be returned to such investor; if a
Business Combination is not consummated within 18 months of the date of the
prospectus, his subscription amount (less any amount permitted to be and
actually delivered to the Company) together with interest earned thereon will be
returned to each investor in accordance with his subscription agreement.
THE COMPANY
The Company is a Delaware corporation incorporated on April 8, 1998. Upon
completion of this offering the Company intends to effect a Business Combination
with an Acquired Business which the Company believes has significant growth
potential. The Company will not engage in any substantive commercial business
immediately following this offering. The Company has no plan, proposal,
agreement, understanding or arrangement to acquire or merge with any specific
business or company and the Company has not identified any specific business or
company for investigation and evaluation. The Company intends to utilize either
cash (to be derived from the proceeds of this offering), equity, debt or a
combination thereof in effecting a Business Combination. It is likely that the
Company will have the ability to effect only a single Business Combination.
Since its organization, the Company's activities have been limited to the
sale of initial shares in connection with its organization, general corporate
matters, and its preparation of a registration statement and prospectus for its
initial public offering. See "Plan Of Operation." The Company does not intend to
engage in the business of investing, reinvesting or trading in securities as its
primary business or pursue any business which would render the Company an
"investment company" pursuant to the Investment Company Act. See "Risk Factors."
The Company is in the development stage and has no operating history. No
representation is made, nor is any intended, that the Company will be able to
carry on its activities profitably. The viability of the Company is dependent
upon sufficient funds being realized by the Company from this offering, of which
there is no assurance. Proceeds of this offering may be insufficient to enable
the Company to engage in potentially profitable operations, or to otherwise
engage in any business endeavors. The likelihood of the success of the Company
must be considered in light of the expenses, difficulties, and
19
<PAGE> 22
delays frequently encountered in connection with the formation of a new
business. Further, no assurance can be given that the Company will have the
ability to acquire assets, businesses, or properties with any value to the
Company.
No assurance can be given that the net proceeds of the maximum offering of
this Blank Check Offering or any lesser net amount will be sufficient to
accomplish the Company's goals or that any business acquired or developed by the
Company will become profitable. In the event that substantially less than the
net proceeds from the maximum offering are raised, the Company's plans may be
materially and adversely affected in that the Company may find it even more
difficult, if not impossible, to realize its goals. If such proceeds are
insufficient, the Company may be required to seek additional capital. No
assurance can be given that the Company will be able to obtain such additional
capital, or even if available, that such additional capital will be available on
terms acceptable to the Company. In the event that Management determines that
the Company is unable to conduct any business whatsoever, Management, subject to
the requirements of Rule 419 which provides that the Deposited Funds will be
returned on a pro-rata basis if an acquisition meeting certain prescribed
criteria is not consummated within 18 months of the date of this Prospectus,
will, in its sole discretion, seek stockholder approval to liquidate the
Company. In the event such a liquidation were to occur at some point in time
after the Company's compliance with the provisions of Rule 419, all stockholders
of the Company including those owning shares purchased privately at less than
the public offering price will receive the liquidated assets on a pro-rata basis
(as opposed to being based on the amounts paid for such shares). While
Management has not established any guidelines for determining at what point in
time it might elect to discontinue its efforts to seek a Business Combination,
Management is subject to the 18 month time frame set forth in Rule 419 in which
to effect an acquisition.
The Company's office is located at 3123-595 Burrand Street, Vancouver,
B.C. Canada V7X 1J1.
DILUTION
As of the date of this Prospectus, the following table sets forth the
percentage of equity to be purchased by public investors in the Offering
compared to the percentage of equity to be owned by the present stockholders,
and the comparative amounts paid for the shares by the public investors as
compared to the total consideration paid by the present stockholders of the
Company.
Assuming the Minimum Number of Shares Sold
<TABLE>
<CAPTION>
Approximate Approximate
Percentage Percentage
Shares of Total Total of Total
Purchased Shares Consideration Consideration
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Public Stockholders 1,000,000 50% $ 30,000 85%
Present Stockholders 1,000,000 50% 5,500 15%
--------- --- ------ ---
Total 2,000,000 100% $ 35,500 100%
========= ==== ====== ====
</TABLE>
Assuming the Maximum Number of Shares Sold
Approximate Approximate
20
<PAGE> 23
<TABLE>
<CAPTION>
Percentage Percentage
Shares of Total Total of Total
Purchased Shares Consideration Consideration
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Public Stockholders 4,000,000 80% $ 120,000 95%
Present Stockholders 1,000,000 20% 5,500 5%
--------- --- ----- --
Total 5,000,000 100% $ 125,500 100%
========= ==== ======= ====
</TABLE>
The difference between the public offering price per share and the pro
forma net tangible book value per share of Common Stock of the Company after
this offering constitutes the dilution to investors in this offering. Net
tangible book value per share is determined by dividing the net tangible book
value of the Company (total tangible assets less total liabilities) by the
number of outstanding shares of Common Stock. Dilution arises mainly from the
arbitrary decision by the Company as to the offering price per share. Dilution
of the value of the shares purchased by the public in this offering will also be
due, in part, to the lower book value of the shares presently outstanding, and
in part, to expenses incurred in connection with the public offering.
Net tangible book value is the net tangible assets of the Company (total
assets less total liabilities and intangible assets; see "Financial
Statements"). As of June 26, 1998 there were 1,000,000 shares of the Company's
common stock outstanding (see "CERTAIN TRANSACTIONS"). Therefore, the net
tangible book value of the Company's common stock as of June 26, 1998 was
approximately $.01 per share. The following table illustrates this dilution
based upon the book value as at June 26, 1998 and the receipt by the Company of
the estimated proceeds from the sale of the minimum number of Shares ($30,000)
and the maximum number of Shares ($120,000):
<TABLE>
<CAPTION>
Minimum Maximum
------- -------
<S> <C> <C>
Public Offering Price Per Share $ .03 $.03
Net Tangible Book Value Per Share,
Before Offering $ .01 $.01
Net Tangible Book Value Per Share
After Offering $ .02 $.026
Increase Per Share Attributable to
Payment by Public Investors $ .01 $.016
Dilution Per Share to Public Investors $0.01 $.014
==== ====
</TABLE>
USE OF PROCEEDS
The gross proceeds of this offering will be $30,000 if the minimum number
of Shares is sold and $120,000 if the maximum number of Shares is sold. Pursuant
to applicable rules, the Deposited Funds must be held in escrow pending
consummation of a Business Combination satisfying the criteria of Rule 419.
Pursuant to Rule 419, following the sale of the maximum number of Shares, 10% of
the Deposited Funds may be released to the Company as those funds are deposited
in the Escrow Account. The Company will use these funds to offset the costs and
expenses of the Offering. Upon the consummation of a Business Combination and
the reconfirmation of the investors' purchase of Shares, which reconfirmation
must precede such consummation, pursuant to Rule 419, the balance of the
Deposited
21
<PAGE> 24
Funds will be released to the Company and may be used to offset the expenses of
consummating a Business Combination including, without limitation, the
preparation and filing of a post effective amendment to the registration
statement of which this Prospectus is part.
The net proceeds received in this offering will be promptly deposited into
the Rule 419 Escrow Account pending consummation of a Business Combination and
satisfaction of the Rule 419 Escrow Provisions, including but not limited to the
investors reconfirmation. See "Investors' Rights and Substantive Protection
Under Rule 419."
The net proceeds when available to the Company are intended to be utilized
for the payment of expenses incurred by the Company in investigating and, if a
suitable opportunity is found, acquiring or investing in a business, the nature
and extent of which is presently unknown and for preparation and filing of the
post effective amendment. Investigation costs with respect to any specific
business opportunity will consist primarily of costs for attorneys and
accountants. There is no limit on the amount of such costs, and they may be
substantial. If a decision is made not to proceed with any given specific
business opportunity, such costs would not be recoverable.
Pursuant to an oral agreement, which may be terminated by either party on
30 days prior written notice, the Company will use the business office of its
President, rent free, until such time as it consummates a Business Combination
or the Rule 419 Escrow is otherwise terminated. However, it may be necessary to
incur some administrative costs for clerical assistance, office supplies and
related items, the amount of which is not expected to be significant. It is
expected that such costs would be covered by existing working capital.
The Company has not entered into any negotiations or discussions with any
person or entity regarding any possible establishment or acquisition of assets
or businesses, and has not at this time identified the area or areas of business
which may be suitable for acquisitions. No assurance can be given that the
Company will be able to identify and acquire a business or that if such a
business is acquired that it can be operated profitably. See "Risk Factors."
While the Company presently anticipates that it will be able to locate and
consummate a Business Combination, which adheres to the criteria discussed under
"Investors' Rights and Substantive Protection Under Rule 419," if the Company
determines that a Business Combination requires additional funds, it may seek
such additional financing through loans, issuance of additional securities or
through other financing arrangements. No such financial arrangements presently
exist, and no assurance can be given that such additional financing will be
available or, if available, whether such additional financing will be on terms
acceptable to the Company. Persons purchasing Shares in this offering will not,
unless required by law, participate in the determination of whether to obtain
additional financing or as to the terms of such financing. Because of the
Company's limited resources, it is likely that the Company will become involved
in only one Business Combination.
Except as described herein no portion of the proceeds of the offering will
be paid to officers, directors and/or their affiliates or associates. In
connection with the Offering, expenses of approximately $30,000 consisting of
(1) a legal fee of $20,000 to be paid to Sierchio & Albert, P.C., (2)
reimbursement of out-of-pocket expenses incurred and paid by officers and
directors on behalf of the Company in connection with the offering (not expected
to exceed $2,500), and (3) other costs associated with this offering estimated
at $7,500 will be incurred by the Company. It is anticipated that these expenses
will be paid from (i) the Company's working capital and (ii) the 10% of the
proceeds of the Offering to be
22
<PAGE> 25
distributed to the Company pursuant to Rule 419. If such working capital is
insufficient, the Company may seek to obtain additional financing through
offerings of equity and/or debt securities or borrowings. No assurance can be
given that such financing will be available or if available that it will be on
terms acceptable to the Company. There are no agreements between any existing
stockholder and the Company as to any such financing. See "Risk Factors."
In addition, the Company anticipates incurring additional expenses of
approximately $40,000 in connection with (1) the consummation of a Business
Combination and (2) the preparation and filing of the post effective amendment.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of the
date of this Prospectus and as adjusted to reflect the sale of the Shares
offered hereby. See "Description of Securities" and "Selected Financial
Information."
<TABLE>
<CAPTION>
As Adjusted
-----------
Authorized Outstanding Minimum Maximum
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 30,000,000 1,000,000 2,000,000 5,000,000
</TABLE>
23
<PAGE> 26
MARKET FOR THE COMPANY'S COMMON STOCK
Prior to the date hereof, there has been no trading market for the
Company's Common Stock. Pursuant to the requirements of Rule 15g-8 of the
Exchange Act, a trading market will not develop prior to or after the
effectiveness of this prospectus or while the Deposited Securities remain in the
Rule 419 Escrow. The Deposited Securities under this offering will remain in the
Rule 419 Escrow until, among other things, the Company's consummation of a
Business Combination pursuant to the requirements of Rule 419. There can be no
assurance that a trading market will develop upon the consummation of a Business
Combination and the subsequent release of the Deposited Securities from the Rule
419 Escrow.
PLAN OF OPERATION
Business Objectives
The Company's business plan is to seek to acquire or merge with potential
businesses that may, in the opinion of Management, warrant the Company's
involvement. Management's discretion is unrestricted, and the Company may
participate in any business whatsoever that may in the opinion of Management
meet the business objectives discussed herein.
The Company recognizes that as a result of its limited financial,
managerial or other resources, the number of suitable potential businesses that
may be available to it will be extremely limited. The Company's principal
business objective will be to seek long-term growth potential in the business in
which it participates rather than immediate, short-term earnings. In seeking to
attain its business objectives, the Company will not restrict its search to any
particular industry. Rather, the Company may investigate businesses of
essentially any kind or nature, including but not limited to finance, high
technology, manufacturing, service, research and development, communications,
insurance, brokerage, transportation, and others. Management may also seek to
become involved with other development stage companies or companies that could
be categorized as "financially troubled." At the present time, the Company has
not chosen the particular area of business in which it proposes to engage and
has not conducted any market studies with respect to any business, property or
industry.
Evaluation Criteria
The analysis of potential business endeavors will be undertaken by or
under the supervision of Management, no member of which is a professional
business analyst. Management is comprised of individuals of varying business
experiences, and Management will rely on its own business judgment in
formulating decisions as to the types of businesses that the Company may acquire
or in which the Company may participate. It is quite possible that Management
will not have any business experience or expertise in the type of business
engaged in by the company ultimately acquired. Management will seek to examine
those factors described herein when making a business decision; however, the
mention of such factors to be examined by Management with regard to its
determining the potential of a business endeavor should not be read as implying
any experience or expertise on behalf of Management as to the business chosen.
These factors are merely illustrative of the types of factors that Management
may consider in evaluating a potential acquisition.
24
<PAGE> 27
Management anticipates that the selection of an Acquired Business will be
complex and risky because of the competition for such business opportunities
among all segments of the financial community. The nature of the Company's
search for the acquisition of an Acquired Business requires maximum flexibility
inasmuch as the company will be required to consider various factors and
divergent circumstances which may preclude meaningful direct comparison among
the various business enterprises, products or services investigated. Investors
should recognize that the possible lack of diversification among the Company's
acquisition may not permit the Company to offset potential losses from one
venture against profits from another. This should be considered a negative
factor affecting any decision to purchase the Shares. Management of the Company
will have virtually unrestricted flexibility in identifying and selecting a
prospective Acquired Business. Management will consider, among other factors in
evaluating a prospective acquired business and determining the "fair market
value" thereof, the following:
* the Acquired Business' net worth;
* the Acquired Business' total assets;
* the Acquired Business' cash flow;
* costs associated with effecting the Business Combination;
* equity interest in and possible management participation in the
Acquired Business;
* earnings and financial condition of the Acquired Business;
* growth potential of the Acquired Business and the industry in which
it operates;
* experience and skill of management and availability of additional
personnel of the Acquired Business;
* capital requirements of the Acquired Business;
* competitive position of the Acquired Business;
* stage of development of the product, process or service of the
Acquired Business;
* degree of current or potential market acceptance of the product,
process or service of the Acquired Business;
* possible proprietary features and possible other protection of the
product, process or service of Acquired Business; and
* regulatory environment of the industry in which the Acquired
Business operates.
25
<PAGE> 28
The foregoing criteria is not intended to be exhaustive; any evaluation
relating to the merits of a particular Business Combination will be based, to
the extent relevant, on the above factors as well as other considerations deemed
relevant by Management in connection with effecting a Business Combination
consistent with the Company's business objectives. No particular consideration
may be given to any particular factor.
Although it is anticipated that locating and investigating specific
business proposals will take at least several months, the time such process will
take can by no means be assured. However, such process cannot exceed, in any
event, the 18 month time schedule set forth in Rule 419. See "Investors' Rights
and Substantive Protection Under Rule 419." The time and costs required to
select and evaluate an Acquired Business candidate (including conducting a due
diligence review) and to structure and consummate the Business Combination
(including negotiating relevant agreements and preparing requisite documents for
filing pursuant to applicable securities laws and state corporate laws) cannot
presently be ascertained with any degree of certainty.
The Company anticipates that it will make contact with business prospects
primarily through the efforts of its directors, officers and stockholders, who
will meet personally with existing management and key personnel, visit and
inspect material facilities, assets, products and services belonging to such
prospects, and undertake such further reasonable investigation as management
deems appropriate, to the extent of its limited financial resources. The Company
anticipates that certain Acquired Business candidates may be brought to its
attention from various unaffiliated sources, including securities
broker/dealers, investment bankers, venture capitalists, bankers, other members
of the financial community, and affiliated sources. While the Company does not
presently anticipate engaging the services of professional firms that specialize
in business acquisitions on any formal basis, the Company may engage such firms
in the future, in which event the Company may pay a finder's fee or other
compensation. See "Directors, Executive Officers, Promoters and Control Persons
- - Finders Fees and Other Compensation."
To date, the Company has not selected any particular industry or any
Acquired Business in which to concentrate its Business Combination efforts. See
"Risk Factors."
Tax Considerations.
As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure the Business Combination so as to
achieve the most favorable tax treatment to the Company, the Acquired Business
and their respective stockholders. The IRS or other appropriate state tax
authorities may attempt to recharacterize the tax treatment of a particular
Business Combination; and, as a result there may be adverse tax consequences to
the Company, the Acquired Business and their respective stockholders.
Form and Structure of Acquisition
Of the various methods and forms by which the Company may structure a
transaction acquiring another business, Management is likely to use, without
limitation, one of the following forms: (i) a leveraged buyout transaction in
which most of the purchase price is provided by borrowings (typically secured by
the assets of the acquired business and intended to be repaid out of the cash
flow of the
26
<PAGE> 29
business) from one or more lenders or from the sellers in the form of a deferred
purchase price; (ii) a merger or consolidation of the acquired corporation into
or with the Company; (iii) a merger or consolidation of the acquired corporation
into or with a subsidiary of the Company organized to facilitate the acquisition
(a "subsidiary merger"), or a merger or consolidation of such a subsidiary into
or with the acquired corporation (a "reverse subsidiary merger"); (iv) an
acquisition of all or a controlling amount of the stock of the acquired
corporation followed by a merger of the Acquired Business into the Company; (v)
an acquisition of the assets of a business by the Company or a subsidiary
organized for such purpose; (vi) a merger or consolidation of the Company with
or into the acquired Business or subsidiary thereof; or (vii) a combination of
any of the foregoing. The actual form and structure of a Business Combination
may be also dependent upon numerous other factors pertaining to the Acquired
Business and its stockholders as well as potential tax and accounting treatments
afforded the Business Combination.
The Company may utilize cash (derived from the proceeds of this offering),
equity, debt or a combination of these as consideration in effecting a Business
Combination. Although the Company has no commitments as of the date of this
prospectus to issue any shares of Common Stock other than as described in this
Prospectus, the Company will, in all likelihood, issue a substantial number of
additional shares in connection with a Business Combination. To the extent that
such additional shares are issued, dilution to the interest of the Company's
stockholders may occur. Additionally, if a substantial number of shares of
Common Stock are issued in connection with a Business Combination, a change in
control of the Company may occur.
If securities of the Company are issued as part of an acquisition, it
cannot be predicted whether such securities will be issued in reliance upon
exemptions from registration under applicable federal or state securities laws
or will be registered for public distribution. When registration of securities
is required, substantial cost may be incurred and time delays encountered. In
addition, the issuance of additional securities and their potential sale in any
trading market which may develop in the Company's Common Stock, of which there
is no assurance, may depress the price of the Company's Common Stock in such
market. Additionally, such issuance of additional securities by the Company
would result in a decrease in the percentage of the Company's issued and
outstanding shares of Common Stock by the purchasers of the Common Stock being
offered hereby.
The Company's operations may be limited by the Investment Company Act of
1940. While the Company will attempt to conduct its operations so as not to
require registration under the Investment Company Act of 1940, there can be no
assurance that the Company will not be deemed to be subject to the Investment
Company Act of 1940.
There are currently no limitations relating to the Company's ability to
borrow funds to increase the amount of capital available to the Company to
effect a Business Combination or otherwise finance the operations of the
Acquired Business. The amount and nature of any borrowings by the Company will
depend on numerous considerations, including the Company's capital requirements,
the Company's perceived ability to meet debt service on such borrowings and then
prevailing conditions in the financial markets, as well as general economic
conditions. There can be no assurance that debt financing, if required or
otherwise sought, would be available on terms deemed to be commercially
acceptable and in the best interest of the Company. The inability of the Company
to borrow funds for an additional infusion of capital into an Acquired Business
may have material adverse effects on the Company's financial condition and
future prospects. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks traditionally
associated with
27
<PAGE> 30
incurring indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest. Furthermore, an
Acquired Business may have already incurred debt financing and, therefore, all
the risks inherent thereto.
Because of the Company's small size, investors in the Company should
carefully consider the business constraints on its ability to raise additional
capital when needed. Until such time as any enterprise, product or service which
the Company acquires generates revenues sufficient to cover operating costs, it
is conceivable that the Company could find itself in a situation where it needs
additional funds in order to continue its operations. This need could arise at a
time when the Company is unable to borrow funds and/or market acceptance for the
sale of additional shares of the Company's Common Stock does not exist.
The Company's stockholders are relying upon the business judgment of
Management in connection with the proper expenditure of the funds raised in this
offering and in the future operations of the Company. It is not expected that
stockholders of the Company will be consulted with respect to the expenditure of
the proceeds of this offering or in connection with any acquisition engaged in
by the Company, unless required by law.
Daily Operations.
The Company expects to use attorneys and accountants as necessary, and
does not anticipate a need to engage any full-time employees so long as it is
seeking and evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision of whether or not
to acquire or participate in a specific business opportunity. The Company has
allocated a portion of the offering proceeds for general overhead. Although
there is no current plan to hire employees on a full-time or part-time basis,
some portion of working capital may be used to pay any part-time employees
hired.
Until an active business is commenced or acquired, the Company will have
no employees or day-to-day operations. The Company is unable to make any
estimate as to the future number of employees which may be necessary, if any, to
work for the Company. If an existing business is acquired, it is possible that
its existing staff would be hired by the Company. At the present time, it is the
intention of Management to meet or be in telephone contact at least once a week
and more frequently, if needed, to review business opportunities, evaluate
potential acquisitions and otherwise operate the affairs of the Company. Except
for reimbursement of reasonable expenses incurred on behalf of the Company,
Management will not be compensated for these services rendered on behalf of the
Company.
Legal Proceedings
The Company is not a party to any litigation, and has no knowledge of any
threatened litigation against the Company.
Office Facilities
The Company will maintain its business address at Suite 1360, 605 Robson
Street, Vancouver, B.C. Canada V6B 5J3. Pursuant to an oral agreement, which may
be terminated by either party on 30 days prior written notice, the Company will
use these offices on a rent free basis until such time as it consummates a
Business Combination or the Rule 419 Escrow is otherwise terminated. The
28
<PAGE> 31
Company is a development stage company and currently has no employees other than
certain of its officers and directors.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The following persons are the directors and executive officers of the
Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Gordon Bruce Keep 41 President and Director (since June 22, 1998)
</TABLE>
All directors and officers of the Company are elected annually to serve
for one year or until their successors are duly elected and qualified.
Management's business experience during the past five years is as follows:
Gordon Bruce Keep
Mr. Keep received a Bachelor of Science degree from Queens University in
1979 and a MBA from the University of British Columbia in 1983. Since October of
1997, Mr. Keep has been Senior Vice President of Lions Gate Entertainment Corp.
From March 1987 to October 1997 Mr. Keep was Vice President-Corporate Finance
Yorkton Securities, Inc.
There are no agreements, arrangements or understandings between Management
and anyone else pursuant to which other management is to be selected for a
particular office or position. It is estimated that Management of the Company
will devote only such time as they deem necessary to the activities of the
Company. The Company has not entered into any agreement or contract with any
outside consultant or advisor; nor, does it intend to enter into any such
agreements or contracts pending consummation of a Business Combination.
Finders Fees and Other Compensation
No officer or director presently receives a salary. Except as described
herein, it is not anticipated that any director or officer will receive any fee
or salary pending consummation of a Business Combination. However, directors
and/or officers will receive expense reimbursement for expenses reasonably
incurred on behalf of the Company.
In addition, Mr. Keep as a stockholder of the Company or his affiliates
may receive personal financial gain, other than from the proceeds of this Blank
Check Offering, by (i) payment of consulting fees; (ii) sales of affiliates'
stock; and (iii) payments of salaries. See "Conflicts of Interest" and "Risk
Factors." However, no finder fees will be paid to an officer, director or
principal stockholder of their affiliates by virtue of their initiation of, or
the identification of an Acquired Business with which, a Business Combination is
consummated.
29
<PAGE> 32
CONFLICTS OF INTEREST
The proposed business of the Company raises potential conflicts of
interest between the Company and its officers and directors. The Company has
been formed for the purpose of locating a suitable business opportunity in which
to participate. The officers and directors of the Company, who will not devote
full time to the Company, are engaged in various other business activities
including, but not limited to, the organization of companies or "blank check"
companies in the future. From time to time, in the course of such activities,
they may become aware of investment and business opportunities and may be faced
with the issue of whether to bring such opportunities to the attention of the
Company for its participation.
Officers and directors of Delaware corporations are required to bring
business opportunities to their corporation if the corporation could financially
undertake the opportunity and the opportunity is within the corporation's line
of business. Because the business of the Company is to locate a suitable
business venture, Management may be required to bring such business
opportunities to the Company. Potential conflicts may arise in the
determinations by Management as to whether these potential business
opportunities are within the financial means and proposed business plans of the
Company.
Accordingly, Management may have a conflict in the event that another
"blank check" or "blind pool" associated with Management is actively seeking the
acquisition of properties and businesses that are identical or similar to those
that the Company may seek. A conflict will not be present as between the Company
and another affiliated "blank check" or "blind pool" if, before the Company
begins seeking acquisitions, such other "blank check" or "blind pool": (i)
enters into any understanding, arrangement or contractual commitment to
participate in, or acquire, any business or property; or (ii) ceases its search
for additional properties or businesses identical or similar to those the
Company may seek. Conflicts also may not be present to the extent that potential
business opportunities are appropriate for the Company but not for other
affiliated "blank check" or "blind pools" (or vice versa), because of such
factors as the difference in working capital available to the Company. If,
however, at any time the Company and any other firms affiliated with Management
are simultaneously seeking business opportunities, Management may face the
conflict of whether to submit a potential business acquisition to the Company or
to such other firms. See "Risk Factors."
The Company has established no other guidelines or procedures for
resolving potential conflicts. Failure by Management to resolve conflicts of
interest in favor of the Company may result in liability of Management to the
Company. Management has and will continue to have an affirmative obligation to
disclose conflicts of interest to the Company's Board of Directors or
stockholders.
30
<PAGE> 33
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of June 26, 1998 and as
adjusted to reflect the sale of the Shares offered hereby, by (i) each person
who is known by the Company to own beneficially more than 5% of the Company's
outstanding common stock; (ii) each of the Company's officers and directors; and
(iii) all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
================================================================================
Shares of
Name and address of Common Stock
Beneficial Beneficially Approximate Approximate Percentage
Owner Owned Percentage to be Owned
-------------- ------------ Owned After Offering
----- ----------------------
- --------------------------------------------------------------------------------
Minimum Maximum
------- -------
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gordon Keep 50,000 5.0% 2.5% 1.0%
5476 Angus Dr.
Vancouver, B.C.
Canada V6M 3N4
- --------------------------------------------------------------------------------
1213788 Ontario Limited 225,000 22.5% 11.25% 4.50%
c/o Robert Cross
Suite 1000 Bentall Four
1055 Dunsmuir Street
P.O. Box 49333
Vancouver, B.C.
Canada V7X 1L4
- --------------------------------------------------------------------------------
Keith Peck 225,000 22.5% 11.25% 4.50%
Suite 1000 Bentall Four
1055 Dunsmuir Street
P.O. Box 49333
Vancouver, B.C.
Canada V7X 1L4
- --------------------------------------------------------------------------------
David Patterson 125,000 12.5% 6.25% 2.50%
Suite 1360
605 Robson Street
Vancouver, B.C.
Canada V6B 5J3
- --------------------------------------------------------------------------------
Michael Seifert 125,000 12.5% 6.25% 2.50%
700-625 Howe Street
Vancouver, B.C.
Canada V6C 2T6
- --------------------------------------------------------------------------------
Joseph Sierchio 125,000 12.5% 6.25% 2.50%
41 East 57th Street
Penthouse A,
New York, NY 10022
- --------------------------------------------------------------------------------
Stephen A. Albert 125,000 12.5% 6.25% 2.50%
41 East 57th Street
Penthouse A,
New York, NY 10022
- --------------------------------------------------------------------------------
Officers and Directors 50,000 5.0% 2.5% 1.0%
as a Group (1 person)
================================================================================
</TABLE>
31
<PAGE> 34
None of these shares will be available for resale pursuant to Rule 144 of
the Act until at least April, 1999.
The Company believes that each of the above referenced private offering
transactions was exempt from registration under the Act pursuant to Section 4(2)
thereof and the rules and regulations promulgated thereunder as a transaction by
an issuer not involving a public offering.
Except for the securities being registered pursuant hereto, such shares
are "restricted securities", as that term is defined in the rules and
regulations promulgated under the Act, subject to certain restrictions regarding
resale. See "Risk Factors." Certificates evidencing all of the above-referenced
securities, except for the securities being registered pursuant hereto, have
been stamped with a restrictive legend and will be subject to stop transfer
orders.
CERTAIN TRANSACTIONS
The Company was incorporated in the State of Delaware on April 8, 1998.
The Company subsequently issued 500,000 shares for $.01 per share or an
aggregate price of $5,000 and 500,000 shares at a price of $.001 per share or
$500 in the aggregate. See "Principal Stockholders."
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 30,000,000 shares of common stock,
$.001 par value per share, of which 1,000,000 shares were issued and outstanding
as of the date of this Prospectus. Each outstanding share of common stock
entitles the holder to one vote, either in person or by proxy, on all matters
that may be voted upon by the owners thereof at meetings of the stockholders.
The holders of common stock (i) have equal rights to dividends from funds
legally available therefor, when, as and if declared by the Board of Directors
of the Company; (ii) are entitled to share ratably in all of the assets of the
Company available for distribution to holders of common stock upon liquidation,
dissolution or winding up of the affairs of the Company; (iii) do not have
preemptive, subscription or conversion rights, and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote at
all meetings of stockholders.
All shares of common stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to the ownership thereof. The holders of shares of common stock of the
Company do not have cumulative voting rights, which means that the holders of
more than 50% of such outstanding shares, voting for the election of directors,
can elect all directors of the Company if they so choose and, in such event, the
holders of the remaining shares will not be able to elect any of the Company's
directors. At the completion of the Offering, the present officers and directors
of the Company will own approximately 2.5% of the then outstanding shares if the
maximum number of Shares is sold and 1.0% of the then outstanding shares if the
minimum number of shares is sold (assuming no Shares are acquired in the
Offering).
32
<PAGE> 35
Reports to Stockholders
The Company intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable after the end of
each fiscal year. The Company's fiscal year ends on December 31. In addition,
the Company intends to issue unaudited interim reports and financial statements
on a quarterly basis.
Dividends
The Company has not declared any dividends since inception, and has no
present intention of paying any cash dividends on its common stock in the
foreseeable future. The payment by the Company of dividends, if any, in the
future, rests within the discretion of its Board of Directors and will depend,
among other things, upon the Company's earnings, its capital requirements and
its financial condition, as well as other relevant factors.
DISTRIBUTION OF SECURITIES
The Company is offering a minimum of 1,000,000 and a maximum of 4,000,000
Shares at the purchase price of $.03 per Share on a "best efforts all or none
basis" as to the first 1,000,000 Shares and on a "best efforts" basis with
regard to the remaining 4,000,000 Shares. If the minimum number of shares is not
sold during the Offering Period, the proceeds received will be promptly returned
to investors with interest. The Company may allocate among or reject any offers
to purchase, in whole or in part. Moreover, the Company's directors and officers
may purchase Shares on the same terms and conditions as all other investors
provided, however, that any such Shares so purchased will not be included in
calculating the minimum number of Shares to be sold.
The Shares will be offered and sold by the Company's officers and
directors without compensation, (although the Company will reimburse certain
out-of-pocket expenses). These officers and directors have limited experience in
the sale of securities. None of the officers or directors of the Company nor the
Company is registered as a broker or dealer under Section 15 of the Securities
Exchange Act of 1934.
The Company is conducting the Offering as a blank check offering subject
to the provisions of Rule 419. However, until the earlier to occur of (i) the
sale of at least 1,000,000 Shares or (ii) the expiration of the Offering Period,
the Escrow Agent will maintain all proceeds in an escrow account pursuant to the
requirements of Rule 419. If at least 1,000,000 Shares (exclusive of Shares, if
any, acquired by the Company's officers and directors), are not sold during the
Offering Period, the proceeds therefrom will be returned to the investors with
interest. At such time as at least 1,000,000 Shares (exclusive of Shares, if
any, acquired by the Company's officers and directors) are sold during the
Offering Period, the proceeds from such sale, as well as the proceeds from the
sale of up to an additional 3,000,000 Shares (except as to 10% thereof which
will be released to the Company pursuant to Rule 419) will then continue to be
deposited and held pursuant to the provisions of Rule 419 Escrow. See
"Investor's Rights and Substantive Protection Under Rule 419 -Deposited Funds
and Deposited Securities."
The funds received by the Company with respect to the Shares that may be
sold, less the amount permitted by Rule 419 (an amount equal to up to 10% of the
proceeds) to be delivered to the Company, will be deposited and maintained in
the Rule 419 Escrow pursuant to the terms of an
33
<PAGE> 36
escrow agreement entered into between the Company and the Escrow Agent. Shares
will be issued to purchasers only if at least 1,000,000 Shares are sold by the
Company; after the sale of at least 1,000,000 Shares, all Shares sold pursuant
hereto will be held in escrow in accordance with the provisions of Rule 419.
Method of Subscribing
Prospective investors should make their checks payable to Firstrust Saving
Bank, as Escrow Agent and remit the checks and subscription agreement to the
Company at Suite 1360, 605 Robson Street, Vancouver, B.C. Canada V6B 5J3.
Subscriptions may not be withdrawn once made except in accordance with
applicable law. The Company reserves the right to reject any subscription in
whole or in part in its sole discretion for any reason whatsoever
notwithstanding tender of payment and to withdraw this Blank Check Offering at
any time prior to acceptance by the Company of the subscriptions received.
Funds will be held by the Escrow Agent, as described herein. There can be
no assurance that any or all of the Shares being offered hereby will be sold.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
LEGAL OPINIONS
Sierchio & Albert, P.C., 41 East 57th Street, 39th Floor, New York, New
York 10022, have acted as Counsel to the Company, in connection with the
offering and will render an opinion as to the legality of the securities being
offered hereby. Each of Messrs. Sierchio and Albert owns 125,000 shares of the
Company's common stock. See "Principal Stockholders."
EXPERTS
The Financial Statements included in this Prospectus and elsewhere in the
Registration Statement as of June 26, 1998 and for the period of inception April
8, 1998, to June 26, 1998 have been audited by Prinzi & Company, independent
public accountants as indicated in their report with respect thereto; the
reports are included in reliance upon the authority of said firm as an expert in
accounting and auditing in giving said report.
34
<PAGE> 37
Index to Financial Statements
Independent Auditor's Report dated July 3, 1998
Balance Sheet as of June 26, 1998
Statement of Operations for the period of
Inception (April 8, 1998) to June 26, 1998
Statement of Changes in Stockholders' Equity
for the period of Inception (April 8, 1998)
to June 26, 1998
Statement of Cash Flows for the period of
Inception (April 8, 1998) to June 26, 1998
Notes to Financial Statements
F(i)
<PAGE> 38
Norcan Ventures, Inc.
(A Development Stage Company)
Index To Financial Statements
Page
----
Report of Independent Public Accounts 2
Financial Statements:
Balance Sheet-July 10, 1998................................... 3
Statement of Operations for the period April 8, 1998
(date of Inception) Through July 10, 1998............... 4
Statement of Changes in Shareholders' Equity for the
period April 8, 1998 (date of Inception) Through
July 10, 1998........................................... 5
Statement of Cash Flows for the period April 8, 1998
(date of Inception) Through July 10, 1998............... 6
Notes to Financial Statements....................................... 7 to 9
1
<PAGE> 39
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Norcan Ventures, Inc.:
We have audited the accompanying balance sheet of Norcan Ventures, Inc. (a
Delaware corporation in the development stage) as of July 10, 1998, and the
related statements of operations, changes in shareholders' equity and cash flows
for the period from inception (April 8,1998) to July 10,1998. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free 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 audit provides 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 Norcan Ventures, Inc. as of
July 10,1998, and the results of its operations and its cash flows for the
period from inception (April 8,1998) to July 10,1998, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the accompanying financial
statements, the Company is a development stage enterprise with no significant
operating results to date. The factors discussed in Note 1 to the financial
statements raise a substantial doubt about the ability of the Company to
continue as a going concern. Management's plans in regards to those matters are
also described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Prinzi & Company
Staten Island, New York
July 15, 1998
2
<PAGE> 40
Norcan Ventures, Inc.
(A Development Stage Company)
Balance Sheet
July 10, 1998
<TABLE>
<S> <C>
Assets
Current Assets:
Cash ......................................................... $12,500
-------
Total Current Assets .................................... 12,500
-------
Deferred Registration Costs ....................................... 23,100
-------
Total Assets ............................................. $35,600
=======
Liabilities And Shareholders' Equity
Current Liabilities:
Accrued registration costs ................................... $13,100
Note from affiliate .......................................... 17,000
-------
Total Current Liabilities ................................ 30,100
-------
Shareholders' Equity:
Common stock, $.001 par value, 30,000,000 shares
authorized, 1,000,000 shares issued and outstanding ........ 1,000
Additional paid-in-capital ........................................ 4,500
-------
Total Shareholders' Equity ................................. 5,500
-------
Total Liabilities and Shareholders' Equity ................. $35,600
=======
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE> 41
Norcan Ventures, Inc.
(A Development Stage Company)
Statement of Operations
For the period April 8, 1998
(Date of Inception) Through July 10, 1998
<TABLE>
<S> <C>
Revenues ....................................................... $ --
----------
Expenses ....................................................... --
----------
Net Income ..................................................... $ --
==========
Net Income per Common Share .................................... $ --
==========
Weighted Average Number of Common Shares Outstanding ........... 1,000,000
==========
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE> 42
Norcan Ventures, Inc.
(A Development Stage Company)
Statement of Changes in Shareholders' Equity
For the period April 8, 1998
(Date of Inception) Through July 10, 1998
<TABLE>
<CAPTION>
Common Stock Additional Income Accumulated
--------------------- Paid in During the
Shares Par Value Capital Development Stage Total
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of stock to
original founders for
cash, at par value ......... 1,000,000 $ 1,000 $ 4,500 $ 5,500
Net Income For the
period April 8, 1998
(Date of Inception)
Through July 10, 1998 ...... -- -- -- --
--------------------------------------------------------------
Balance, July 10, 1998 ..... 1,000,000 $ 1,000 $ 4,500 $ 5,500
==============================================================
</TABLE>
See Accompanying Notes to Financial Statements
5
<PAGE> 43
Norcan Ventures, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the period April 8, 1998
(Date of Inception) Through July 10, 1998
<TABLE>
<S> <C>
Cash Flows From Operating Activities:
Net increase in Accrued Registration Costs .................. $ 13,100
Net increase in Deferred Registration Costs ................. (23,100)
--------
Net Cash Used in Operating Activities ..................... (10,000)
--------
Cash Flow From Financing Activities:
Proceeds from issuance of common stock ...................... 5,500
Proceeds from Note from Affiliate ........................... 17,000
--------
Net Cash Provided By Financing Activities ................. 22,500
--------
Net Increase in Cash: ......................................... 12,500
Cash, beginning of period ..................................... --
--------
Cash, end of period ........................................... $ 12,500
========
</TABLE>
See Accompanying Notes to Financial Statements
6
<PAGE> 44
Norcan Ventures, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND OPERATIONS
Norcan Ventures, Inc. ("the Company") was incorporated in the state of Delaware
on April 8, 1998, for the purpose of raising capital, which is to be used to
effect a business combination. The Company is currently in the development
stage. All activity of the Company to date relates to its formation and proposed
fund raising. Management has elected a December 31 year end for the Company.
The Company's ability to commence operations is contingent upon obtaining
financing through a public offering of the Company's common stock.
The Company is planning to register its securities with the Securities and
Exchange Commission and offer certain securities in a "blank check" offering
subject to Rule 419 of the Securities Act of 1933, as amended ("Rule 419"). The
offering allows for the Company to sell a minimum of 1,000,000 and a maximum of
4,000,000 shares of common stock, $.001 par value, at $.03 per share.
Accordingly, the offering proceeds and the securities purchased by investors,
less 10% of the deposited funds which will be delivered to the Company as
permitted by Rule 419, will be held in escrow subject to the satisfaction of the
provisions of Rule 419.
As a result of its limited resources, the Company will, in all likelihood, have
the ability to effect only a single business combination. Accordingly, the
prospects for the Company's success will be entirely dependent upon the future
performance of a single business.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash & Cash Equivalents
For the purpose of the statement of cash flows, cash equivalents include all
highly liquid investments with original maturities of three months or less.
Utilization of Estimates
The Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
7
<PAGE> 45
Norcan Ventures, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Net Income Per Common Share
Net income per common share is computed based on the weighted average number of
common shares outstanding and common stock equivalents, if not anti-dilutive.
Short-Term Classification
In accordance with the provisions of Rule 419, the Company must liquidate if no
qualified business combination can be arranged within 18 months of the effective
date of this registration, therefore, for financial reporting concerns, the
Company considers the business cycle and a short-term obligation to be 18 months
or less.
NOTE 3. CAPITAL STOCK
The Company's Certificate of Incorporation authorizes the issuance of 30,000,000
shares of Common Stock. The Company's Board of Directors has the power to issue
any or all of the authorized but unissued Common Stock without stockholder
approval. The Company will, in all likelihood, issue a substantial number of
additional shares in connection with a business combination. To the extent that
additional shares of common stock are issued, dilution to the interest of the
Company's stockholders participating in the proposed offering will occur.
NOTE 4. RELATED PARTY TRANSACTIONS
At July 10,1998, various members of the Company's legal counsel owned 250,000
shares of the Company's Common Stock.
The Company secured a short-term note in the amount of $17,000 from a
stockholder. See Note 7 "SHORT-TERM DEBT".
8
<PAGE> 46
Norcan Ventures, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
NOTE 5. CONFLICTS OF INTEREST
The proposed business of the Company raises potential conflicts of interests
between the Company and its officers and directors. The Company has been formed
for the purpose of locating a suitable business opportunity in which to
participate. The officers and directors of the Company (Collectively the
"Management"), who will not devote full time to the Company, are engaged in
various other business activities. From time to time, in the course of such
activities they may become aware of investment and business opportunities and
may be faced with the issue of whether to bring such opportunities to the
attention of the Company for its participation.
Accordingly, Management may have a conflict in the event that another "blank
check" or "blind pool" associated with Management is actively seeking the
acquisition of properties and business that are identical or similar to those
that the Company may seek
NOTE 6. INCOME TAXES
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No.109, "Accounting for Income Taxes". Under this method,
deferred income taxes are determined based on differences between the tax basis
of assets and liabilities and their financial reporting amounts at each year
end, and are measured based on enacted tax rates and laws that will be in effect
when the differences are expected to reverse. Valuation allowances are
established, when necessary, to reduce deferred tax assets to the amount
expected to be realized.
NOTE 7. SHORT-TERM DEBT
A short-term note payable has been secured from an affiliate (the "Note") in the
amount of $17,000. The Note bears no interest and is due the earlier of (i)
December 31, 1999 or (ii) a consummation of a business acquisition within the
parameters and guidelines of Rule 419.
9
<PAGE> 47
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF. IN THE EVENT ANY MATERIAL CHANGES OR TRANSACTIONS
NOT MENTIONED HEREIN ARISE, THE COMPANY HAS UNDERTAKEN THE RESPONSIBILITY TO
AMEND THIS PROSPECTUS AND THE REGISTRATION STATEMENT, OF WHICH THIS PROSPECTUS
IS A PART, THROUGH THE FILING OF POST-EFFECTIVE AMENDMENTS, INDICATING THE
EXISTENCE OF ANY SUCH MATERIAL CHANGES OR TRANSACTIONS WHICH ARE NOT REFLECTIVE
OR CONTAINED HEREIN.
TABLE OF CONTENTS
Page
----
Available Information 4
Prospectus Summary 4
Risk Factors 7
Selected Financial Information 16
Investors' Rights and Substantive
Protection Under Rule 419 16
The Company 19
Dilution 20
Use of Proceeds 21
Capitalization 23
Market For the Company's Common Stock 23
Plan of Operation 23
Directors, Executive Officers, Promoters
and Control Persons 29
Conflicts of Interest 30
Principal Stockholders 31
Certain Transactions 32
Description of Securities 32
Distribution of Securities 33
Legal Opinions 34
Experts 34
Financial Statements F(i)
NORCAN VENTURES, INC.
4,000,000 Shares
of Common Stock, $.001 par value per Share
Until 90 days after the registered securities are released from escrow pursuant
to Rule 419 of Regulation C, promulgated under the 1933 Securities Act, as
amended, all dealers effecting transactions in the securities whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligations of the dealers to deliver a prospectus
when acting as underwriters with respect to their unsold allotments or
subscriptions.
----------
PROSPECTUS
----------
Norcan Ventures, Inc.
Suite 3132-595 Burrand Street
Vancouver, B. C. Canada V7X 1J1
(604) 683-0564
<PAGE> 48
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Except as hereinafter set forth, there is no charter provision, bylaw,
contract, arrangement or statute under which any officer or director of the
Registrant is insured or indemnified in any manner against any liability which
he may incur in his capacity as such.
Indemnification of Directors and Officers
Section 145 of The Delaware General Corporation Law, as amended, provides
for the indemnification of the Company's officers, directors and corporate
employees and agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE.
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding, by judgment,order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such court shall deem
proper.
II-1
<PAGE> 49
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of the directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable a quorum of disinterested director so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of any
undertaking by or on behalf of such director to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses including attorneys'
fees incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
including (any constituent of a constituent) absorbed in a consolidation or
merger which, if separate existence had continued, would have had power and
authority to indemnify its directors, officers and employees or agents so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
II-2
<PAGE> 50
(i) For purposes of this section, reference to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to an employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involve services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
The Securities and Exchange Commission's Policy on Indemnification
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
Item 25. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offering are as follows:
<TABLE>
<CAPTION>
Item Amount
---- ------
<S> <C>
Securities and Exchange Commission
Registration Fee $ 35.40
Cost of Electronic Filings 2,000.00
Cost of Printing and Engraving 1,000.00
Escrow Fees 500.00
Legal Fees 20,000.00
Accountants' Services and Expenses 3,000.00
"Blue Sky" Fees and Expenses 500.00
Miscellaneous Expenses 3,064.60
TOTAL $30,100.00
</TABLE>
II-3
<PAGE> 51
Item 26. Recent Sales of Unregistered Securities
During the past three years, the Registrant has sold securities in the
manner set forth below without registration under the Securities Act of 1933, as
amended (the "Act").
In on or about April 1998 the Company raised $5,500 in said capital
through the sale of 1,000,000 shares of common stock as follows:
<TABLE>
<CAPTION>
====================================================================
Name and address of Shares of Common Stock
Beneficial Purchased
Owner ---------
--------------
--------------------------------------------------------------------
<S> <C>
Gordon Keep 50,000
5476 Angus Dr.
Vancouver, B.C.
Canada V6M 3N4
--------------------------------------------------------------------
1213788 Ontario Limited 225,000
c/o Robert Cross
Suite 1000 Bentall Four
1055 Dunsmuir Street
P.O. Box 49333
Vancouver, B.C.
Canada V7X 1L4
--------------------------------------------------------------------
Keith Pech 225,000
Suite 1000 Bentall Four
1055 Dunsmuir Street
P.O. Box 49333
Vancouver, B.C.
Canada V7X 1L4
--------------------------------------------------------------------
David Patterson 125,000
Suite 1360
605 Robson Street
Vancouver, B.C.
Canada V6B 5J3
--------------------------------------------------------------------
Michael Seifert 125,000
700-625 Howe Street
Vancouver, B.C.
Canada V6C 2T6
--------------------------------------------------------------------
Joseph Sierchio 125,000
41 East 57th Street
Penthouse A,
New York, NY 10022
--------------------------------------------------------------------
Stephen A. Albert 125,000
41 East 57th Street
Penthouse A,
New York, NY 10022
====================================================================
</TABLE>
Except for the securities being registered hereunder, such shares are
"restricted securities," as that term is defined in the rules and regulations
promulgated under the Securities Act of 1933, as amended, subject to certain
restrictions regarding resale. Certificates evidencing all of the
above-referenced securities have been stamped with a restrictive legend and will
be subject to stop transfer orders.
The Registrant believes that each of the above-referenced transaction was
exempt from registration under the Act, pursuant to Regulation S as promulgated
under the Act and Section 4(2) of the Act and the rules and regulations
promulgated thereunder as a transaction by an issuer not involving any public
offering.
II-4
<PAGE> 52
Item 27. Exhibits
3(i)(1) Certificate of Incorporation
3(i)(2) Amendment to Certificate of Incorporation
3(ii) By-Laws
4(i)(1) Form of Escrow Agreement
4(i)(2) Form of Subscription Agreement
5(i) Opinion of Sierchio & Albert, P.C.
23(i)(1) Consent of Sierchio & Albert, P.C. (included in Exhibit 5(i))
23(i)(2) Consent of Prinzi & Company
24 Power of Attorney*
- ----------
* Included on the Signature Page to the Registration Statement on Form SB-2
II-5
<PAGE> 53
Item. 28. Undertakings
(1) To file, during any period in which offers and sales of the securities
offered hereby are 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, as amended (the "Act"); and
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) that, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the Act, 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 that remain unsold at the termination of the
offering.
(4) That all such post-effective amendments will comply with the
applicable form, rules and regulations of the Securities and Exchange Commission
in effect at the time of the filing thereof.
(5) In the event any material changes or transactions not mentioned herein
arise, the Company has undertaken the responsibility to amend this prospectus
and the Registration Statement, of which this prospectus is a part, through the
filing of post-effective amendments, indicating the existence of any such
material changes of transactions which are not reflected or contained herein, if
such changes occurs within 90 days of the Effective Date.
(6) To file a post-effective amendment or a supplement to the Registration
Statement to reflect a probable acquisition as contemplated by Rule 419 and/or
to reflect the offering of shares in any state other than New York.
II-6
<PAGE> 54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned hereunto
duly authorized in the City of Vancouver on the 14th day of July, 1998.
NORCAN VENTURES, INC.
(Registrant)
By: s/Gordon Bruce Keep
-----------------------------------------
Gordon Bruce Keep, President and Director
<PAGE> 55
NORCAN VENTURES, INC.
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ON FORM SB-2
----------
INDEX TO EXHIBITS
Document Page
3(i)(1) Certificate of Incorporation
3(i)(2) Amendment to Certificate of Incorporation
3(ii) By-Laws
4(i)(1) Form of Escrow Agreement
4(i)(2) Form of Subscription Agreement
5(i) Opinion of Sierchio & Albert, P.C.
23(i)(1) Consent of Sierchio & Albert, P.C. (included in Exhibit 5(i))
23(i)(2) Consent of Prinzi & Company
24 Power of Attorney*
- ----------
* Included on the Signature Page of the Registration Statement
<PAGE> 1
EXHIBIT 3(i)(1)
CERTIFICATE OF INCORPORATION
OF
NORCAN VENTURES, INC.
1. The name of the corporation is:
NORCAN VENTURES, INC.
2. The address of its registered office in the State of Delaware is 1013
Centre Road, in the City of Wilmington 19805, County of New Castle. The name of
its registered agent at such address is the Corporation Service Company.
3. The nature of the business or purposes to be conducted or promoted is
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of common stock which the corporation shall
have authority to issue is thirty million (30,000,000) and the par value of each
such shares is One Tenth of One Cent ($.001) amounting in the aggregate to
Thirty Thousand Dollars ($30,000).
5. The board of directors is authorized to make, alter or repeal the
by-laws of the corporation. Election of directors need not be by written ballot.
6. The name and mailing address of the incorporator:
Joseph Sierchio, Esq.
41 East 57th Street, 39th Floor
New York, New York 10022
7. The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7) of
subsection (b) of ss. 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
8. The corporation shall, to the fullest extent permitted by the provision
of ss. 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall
<PAGE> 2
inure to the benefit of the heirs, executors and administrators of such a
person.
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of
Delaware, do make this certificate, hereby declaring and certifying that this is
my act and deed and the facts herein stated are true, and accordingly have
hereunto set my hand this 9th day of April, 1998.
/s/ Joseph Sierchio
----------------------------
Joseph Sierchio
2
<PAGE> 1
EXHIBIT 3(i)(2)
CERTIFICATE OF AMENDMENT OF THE CERTIFICATE OF INCORPORATION
OF
NORCAN VENTURES, INC.
FIRST: The present name of the corporation (herein referred to as the
"Corporation") is:
NORCAN VENTURES, INC.
SECOND: The Corporation's Certificate of Incorporation was filed with the Office
of the Secretary of State on April 8, 1998.
THIRD: The Certificate of Incorporation is amended as follows:
Section 5 of the Certificate of Incorporation which sets forth the
Board of Director's power to change the bylaws of the corporation and describes
the method of election of directors is deleted and amended to hereafter provide
as follows:
5. The number of directors of the Corporation shall be such as from
time to time shall be fixed by, or in the manner provided in the
bylaws. To the extent that the number of directors is less than the
number so fixed, the majority of the directors then in office shall
have the right, without shareholder vote, to appoint such number of
additional directors equal to the difference between the number of
directors in office and the maximum number of directors fixed in the
bylaws. Election of directors need not be by written ballot. The
Board of Directors is authorized, without the assent or vote of the
shareholders, to make, alter or repeal the bylaws of the
Corporation.
FOURTH: To date, the Corporation has not received any payment for any of its
stock.
FIFTH: As directors were not named in the Certificate of Incorporation and have
not yet been elected, this Certificate of Amendment has been duly adopted by the
sole incorporator of the Corporation in accordance with Section 241 of the
Delaware General Corporation Law.
SIXTH: The Corporation reserves the right to amend, alter, change or repeal any
provisions herein contained, in the manner now or hereafter prescribed by
statute, and all rights, powers, privileges, and discretionary authority granted
or conferred herein upon stockholders or directors are granted subject to
reservation.
The undersigned, being the sole incorporator of the Corporation, does
hereby make this Certificate of Amendment of the Certificate of Incorporation
hereby declaring, affirming, acknowledging, and certifying, under penalties of
perjury, that this is the act and deed of the
<PAGE> 2
undersigned and that the facts stated herein are true, and accordingly has
hereunto set his hand this 7th day of May, 1998.
/s/ Joseph Sierchio
-----------------------------------
Joseph Sierchio, Sole Incorporator
<PAGE> 1
EXHIBIT 3(ii)
BY-LAWS
OF
NORCAN VENTURES, INC.
1. MEETINGS OF STOCKHOLDERS.
1.1 Annual Meeting. The annual meeting of stockholders shall be held
on the second Tuesday of the month of June in each year, or as soon thereafter
as practicable, and shall be held at a place and time determined by the board of
directors (the "Board").
1.2 Special Meetings. Special meetings of the stockholders may be
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings; Waiver of Notice. Written notice of each
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except that (a) it
<PAGE> 2
shall not be necessary to give notice to any stockholder who submits a signed
waiver of notice before or after the meeting, and (b) no notice of an adjourned
meeting need be given, except when required under section 1.5 below or by law.
Each notice of a meeting shall be given, personally or by mail, or by facsimile
not fewer than 10 nor more than 60 days before the meeting and shall state the
time and place of the meeting, and, unless it is the annual meeting, shall state
at whose direction or request the meeting is called and the purposes for which
it is called. If mailed, notice shall be considered given when mailed to a
stockholder at his address on the corporation's records. The attendance of any
stockholder at a meeting, without protesting at the beginning of the meeting
that the meeting is not lawfully called or convened, shall constitute a waiver
of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person
or by proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if
- 2 -
<PAGE> 3
adjournment is for more than 30 days or if, after the adjournment, a new record
date is fixed for the meeting, notice of the adjourned meeting shall be given
pursuant to section 1.4.
1.6 Voting; Proxies. Each stockholder of record shall be entitled to
one vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by section 1.8. Directors shall be elected in the manner
provided in section 2.1. Voting need not be by ballot, unless requested by a
majority of the stockholders entitled to vote at the meeting or ordered by the
chairman of the meeting. Each stockholder entitled to vote at any meeting of
stockholders or to express consent to or dissent from corporate action in
writing without a meeting may authorize another person to act for him by proxy.
No proxy shall be valid after three years from its date, unless it provides
otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date
of any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list
- 3 -
<PAGE> 4
shall be kept either (a) at a place within the city where the meeting is to be
held, if that place shall have been specified in the notice of the meeting, or
(b) if not so specified, at the place where the meeting is to be held. The list
shall also be available for inspection by stockholders at the time and place of
the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voting. Prompt notice of the taking of any such
action shall be given to those stockholders who did not consent in writing.
2. BOARD OF DIRECTORS.
2.1 Number, Qualification, Election and Term of Directors. The
business of the corporation shall be managed by the entire Board, which
initially shall consist of one directors. The number of directors may be changed
by resolution of a majority of the Board or by the stockholders, but no decrease
may shorten the term of any incumbent director. To the extent that the number of
Directors is increased, the newly created positions may be filled in the manner
provided in Section 2.10 of these Bylaws. Directors shall be elected at each
annual meeting of
- 4 -
<PAGE> 5
stockholders by a plurality of the votes cast and shall hold office until the
next annual meeting of stockholders and until the election and qualification of
their respective successors, subject to the provisions of section 2.9. As used
in these by-laws, the term "entire Board" means the total number of directors
the corporation would have, if there were no vacancies on the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board
shall constitute a quorum for the transaction of business at any meeting, except
as provided in section 2.10. Action of the Board shall be authorized by the vote
of the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or
outside Delaware.
2.4 Annual and Regular Meetings. Annual meetings of the Board, for
the election of officers and consideration of other matters, shall be held
either (a) without notice immediately after the annual meeting of stockholders
and at the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such
- 5 -
<PAGE> 6
times and places as the Board determines. If the day fixed for a regular meeting
is a legal holiday, the meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
2.7 Board or Committee Action Without a Meeting. Any action required
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the
- 6 -
<PAGE> 7
adoption of a resolution authorizing the action. The resolution and the written
consents by the members of the Board or the committee shall be filed with the
minutes of the proceedings of the Board or the committee.
2.8 Participation in Board or Committee Meetings by Conference
Telephone. Any or all members of the Board or any committee of the Board may
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by
an increase in the number of directors, may be filled for the unexpired term by
a majority vote of the remaining directors, though less than a quorum.
2.11 Compensation. Directors shall receive such compensation as the
Board determines, together with reimbursement
- 7 -
<PAGE> 8
of their reasonable expenses in connection with the performance of their duties.
A director also may be paid for serving the corporation or its affiliates or
subsidiaries in other capacities.
3. COMMITTEES.
3.1 Executive Committee. The Board, by resolution adopted by a
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not
- 8 -
<PAGE> 9
disqualified, whether or not a quorum, may unanimously appoint another director
to act at the meeting in place of the absent or disqualified member. All action
of a committee shall be reported to the Board at its next meeting. Each
committee shall adopt rules of procedure and shall meet as provided by those
rules or by resolutions of the Board.
4. OFFICERS.
4.1 Number; Security. The executive officers of the corporation
shall be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive
- 9 -
<PAGE> 10
officer or committee the power to appoint and define the powers and duties of
any subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by the Board or
appointed by an executive officer or by a committee may be removed by the Board
either with or without cause, and in the case of an officer appointed by an
executive officer or by a committee, by the officer or committee that appointed
him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the
unexpired term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive
officer of the corporation. Subject to the control of the Board, he shall have
general supervision over the business of the corporation and shall have such
other powers and duties as presidents of corporations usually have or as the
Board assigns to him.
4.7 Vice President. Each vice president shall have such powers and
duties as the Board or the president assigns to him.
- 10 -
<PAGE> 11
4.8 The Treasurer. The treasurer shall be the chief financial
officer of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have such
powers and duties as the Board or the president assigns to him. In the absence
of the secretary from any meeting, the minutes shall be kept by the person
appointed for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or
it may authorize the president to fix the salary of any other officer.
5. SHARES.
5.1 Certificates. The corporation's shares shall be represented by
certificates in the form approved by the Board. Each certificate shall be signed
by the president or a vice president, and by the secretary or an assistant
secretary or the treasurer or an assistant treasurer, and shall be sealed with
the
- 11 -
<PAGE> 12
corporation's seal or a facsimile of the seal. Any or all of the signatures on
the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the
corporation's books, upon surrender of the certificate for the shares, properly
endorsed. The Board may require satisfactory surety before issuing a new
certificate to replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other action.
6. INDEMNIFICATION AND INSURANCE.
6.1 Right to Indemnification. Each person who was or is a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another
- 12 -
<PAGE> 13
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action or inaction in an official capacity or in any
other capacity while serving as director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent permitted
by the General Corporation Law of Delaware, as amended from time to time,
against all costs, charges, expenses, liabilities and losses (including
attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts
paid or to be paid in settlement) reasonably incurred or suffered by such person
in connection therewith, and that indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of his heirs, executors and administrators; provided, however, that,
except as provided in section 6.2, the corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part thereof)
initiated by that person, only if that proceeding (or part thereof) was
authorized by the Board. The right to indemnification conferred in these by-laws
shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance of
its final disposition; provided, however, that, if the General Corporation Law
of Delaware, as amended from time to time, requires, the payment of such
expenses incurred by a director or officer in his capacity as a director or
officer (and not in any other capacity in which service was or
- 13 -
<PAGE> 14
is rendered by that person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding shall be made only upon delivery to the corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced, if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under these by-laws or otherwise. The
corporation may, by action of its Board, provide indemnification to employees
and agents of the corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
6.2 Right of Claimant to Bring Suit. If a claim under section 6.1 is
not paid in full by the corporation within 30 days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant also shall be entitled to be paid
the expense of prosecuting that claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition, where the required
undertaking, if any, is required and has been tendered to the corporation) that
the claimant has failed to meet a standard of conduct that makes it permissible
under Delaware law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its
- 14 -
<PAGE> 15
Board, its independent legal counsel or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is permissible in the circumstances because he has met that
standard of conduct, nor an actual determination by the corporation (including
its Board, its independent counsel or its stockholders) that the claimant has
not met that standard of conduct, shall be a defense to the action or create a
presumption that the claimant has failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
- 15 -
<PAGE> 16
6.5 Expenses as a Witness. To the extent any director, officer,
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expenses actually and reasonably incurred by him or on his behalf in connection
therewith.
6.6 Indemnity Agreements. The corporation may enter into agreement
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
7. MISCELLANEOUS.
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
year. Until changed by the Board, the last day of the corporation's fiscal year
shall be December 31.
7.3 Voting of Shares in Other Corporations. Shares in other
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The Board
may, however, appoint some other person to vote the shares.
- 16 -
<PAGE> 17
7.4 Amendments. By-laws may be amended, repealed or adopted by the
stockholders and by the directors without stockholder consent.
- 17 -
<PAGE> 1
ESCROW AGREEMENT
AGREEMENT made this day of July, 1998 between Norcan Ventures, Inc., a Delaware
corporation, with offices at 1360-605 Robson Street, Vancouver, British
Columbus, Canada, V6B 5J3 (the "Issuer") and Firstrust Savings Bank, a state
chartered savings bank with offices at 1931 Cottman Avenue, Philadelphia, PA
19111 (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") covering a
proposed public offering of a maximum of 4,000,000 shares of its common stock,
$.001 par value per share, as described on the Information Sheet (as defined
herein); and
WHEREAS, the Issuer proposes to offer the shares for sale to the public on a
"best efforts, all or none basis" as to the first 1,000,000 shares and on a
"best efforts basis" with respect to the remaining 3,000,000 shares at the price
per share all as set forth on the Information Sheet; and
WHEREAS, the Issuer proposes to establish an escrow account with the Escrow
Agent in connection with such public offering and the Escrow Agent is willing to
establish such escrow account on the terms and subject to the conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. Information Sheet.
Each capitalized term not otherwise defined in this Agreement shall
have the meaning set forth for such term on the Information Sheet which is
attached to this Agreement and is incorporated by reference herein and made a
part hereof (the "Information Sheet").
2. Establishment of Escrow Account.
The parties hereto shall establish a money market escrow account at
the office of the Escrow Agent, and bearing the designation, set forth on the
Information Sheet (the "Escrow Account").
2.1 On or before the date of the initial deposit in the Escrow
Account pursuant to this Agreement, the Issuer shall notify the Escrow Agent in
writing of the effective date of the Registration Statement (the "Effective
Date") and the Escrow Agent shall not be required to accept any amount for
deposit in the Escrow Account prior to its receipt of such notification.
2.2 The Offering Period, which shall be deemed to commence on the
Effective Date, shall consist of the number of calendar days or business days
set forth on the Information Sheet. The Offering Period shall be extended by an
Extension Period only if the Escrow agent shall have received written notice
thereof at least five (5) business days prior to the expiration of the Offering
Period. The Extension Period, which shall be deemed to commence on the next
calendar day following the expiration of the
1
<PAGE> 2
Offering Period, shall consist of the number of the calendar days of business
days set forth on the Information Sheet. The last day of the Offering Period, or
the last day of the Extension Period (if provided), is referred to herein as the
"Termination Date". After the Termination Date, the Issuer shall not deposit,
and the Escrow Agent shall not accept, any additional amounts representing
payments by prospective purchasers.
3. Deposits in the Escrow Account.
3.1 Upon receipt, the Issuer shall promptly deposit all monies
received from investors with the Escrow Agent. All of these deposited proceeds
(the "Deposited Proceeds") shall be in the form of checks or money orders. All
checks or money orders deposited into the Escrow Account shall be made payable
to Escrow Agent. Any check or money order payable other than to the Escrow Agent
as required hereby shall be returned to the prospective purchasers, or if the
Escrow Agent has insufficient information to do so, then to the Issuer (together
with any Subscription Information, as defined below, or other documents
delivered therewith) within five (5) business days following receipt of such
check by the Escrow Agent, and such check shall be deemed not to have been
delivered to the Escrow Agent pursuant to the terms of this Agreement. The
Deposited Proceeds and interest or dividends thereon, if any, shall be held for
the sole benefit of the purchasers of the securities.
3.2 The Deposited Proceeds shall be invested in an obligation that
constitutes a "deposit" as that term is defined in Section (3)(1) of the Federal
Deposit Insurance Act;
3.3 Simultaneously with each deposit into the Escrow Account, the
Issuer shall inform the Escrow Agent of the name and address of the prospective
purchaser, the number of Securities subscribed for by such purchaser, and the
aggregate dollar amount of such subscription (collectively, the "Subscription
Information").
3.4 The Escrow Account shall not be required to accept for deposit
into the Escrow Account checks which are not accompanied by the appropriate
Subscription Information.
3.5 Interest or dividends earned on the Deposited Proceeds, if any,
shall be held in the Escrow Account until the Deposited Proceeds are released in
accordance with the provisions of Section 4 of the Escrow Agreement. If the
Deposited Proceeds are released to a purchaser of the shares, the purchaser
shall receive interest or dividends earned, if any, on such Deposited Proceeds
up to the date of release. If the Deposited Proceeds held in the Escrow Account
are released to the Company, any interest or dividends earned on such funds up
to the date of release may be released to the Company.
3.6 The Issuer shall deposit the certificate(s) representing the
shares sold (the "Deposited Securities") directly into the Escrow Account
promptly upon issuance, which certificates or other documents evidencing such
shares shall identify the purchaser of the shares.
3.7 The Deposited Securities shall be held for the sole benefit of
the purchasers. No transfer or other disposition of Deposited Securities held in
the Escrow Account or any interest related to such Deposited Securities shall be
permitted other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue Code of 1986, as amended, or Title I of the Employee Retirement Income
Security Act, or the rules thereunder.
2
<PAGE> 3
3.8 The Escrow Agent shall refund any portion of the Deposited
Proceeds prior to disbursement of the Deposited Proceeds in accordance with
Section 4 hereof upon instruction in writing signed by the Issuer.
4. Disbursement from the Escrow Account.
4.1 The Deposited Proceeds may be released to the Company and the
Deposited Securities delivered to the purchaser or other registered owner only
at the same time as or after the Escrow Agent has received a signed
representation letter from the Company, together with an opinion of counsel that
the requirements of Rule 419 as promulgated pursuant to the Securities Act of
1933 as amended (the "Act") as to the consummation of a business acquisition
have been satisfied.
4.2 If a consummated acquisition(s) meeting the requirements of Rule
419 has not occurred by a date 18 months after the Effective Date, the Deposited
Proceeds, less amounts, delivered to the Company pursuant to Section 4.5 hereof,
shall be returned by first class mail or equally prompt means to the purchaser
and the Deposited Securities shall be delivered to the Subscription Agent within
five business days following that date.
4.3 In the event that at the close of regular banking hours on the
Termination Date less than 1,000,000 shares have been sold, the Escrow Agent
shall promptly refund to each prospective purchaser the amount of payment
received from such purchaser held in Escrow with interest thereon and the Escrow
Agent shall notify the Issuer of its distribution of the Deposited Proceeds and
deliver any Deposited Securities to the Subscription Agent.
4.4 Upon distribution of the Deposited Proceeds and Deposited
Securities pursuant to the terms of this Section 4, the Escrow Agent shall be
relieved of all further obligations and released from all liability under this
Agreement.
4.5 Anything in this Escrow Agreement to the contrary
notwithstanding, after written notice is given by the Issuer to the Escrow Agent
that at least 1,000,000 shares have been sold, the Escrow Agent shall distribute
to the Issuer an amount equal to 10% of the Deposited Proceeds deposited (plus
interest thereon) through the date of such notice (the "Notice Date").
Thereafter within 5 days after the Termination Date, the Escrow Agent shall
deliver to the Issuer an amount equal to 10% of the aggregate Deposited Proceeds
(plus interest thereon) deposited by the Escrow agent after the Notice Date.
Upon receipt of the representation letter and opinion referred to in Section 4.1
above, the balance of the Deposited Proceeds (plus interest thereon) shall be
delivered to the Company.
5. Rights, Duties and Responsibilities of Escrow Agent.
It is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature, and that:
5.1 The Escrow Agent shall not be responsible for the performance by
Issuer of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the Issuer
any Subscription Information pertaining to prospective purchases unless such
Subscription Information is accompanied by checks or money orders representing
the payment of money, nor shall the Escrow Agent be required to
3
<PAGE> 4
keep records of any information with respect to payments deposited by the Issuer
except as to the amount of such payments; however, the Escrow Agent shall notify
the Issuer within a reasonable time of any discrepancy between the amount
delivered to the Escrow Agent therewith. Such amount need not be accepted for
deposit in the Escrow Account until such discrepancy has been resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy,
act in reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of an person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document. The Escrow Agent
must, however, determine for itself whether the conditions permitting the
release of the funds in the Escrow Account have been met.
5.5 In the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Escrow Account or the Deposited Proceeds which, in its sole determination, are
in conflict either with other instructions received by it or with any provision
of this Agreement, the Escrow Agent, at its sole option, may deposit the
Deposited Proceeds (and any other amounts that thereafter become part of the
Deposited Proceeds) with the registry of a court of competent jurisdiction in
the Eastern District of Pennsylvania, in a proceeding to which all parties in
interest are joined. Upon the deposit by the Escrow Agent of the Deposited
Proceeds with the registry of any court, the Escrow Agent shall be relieved of
all further obligations and released from all liability hereunder; and, the
Escrow Agent shall be reimbursed for its costs and expenses, including
reasonable attorneys' fees, incurred by it in connection therewith.
5.6 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct. The Escrow Agent
shall be entitled to consult with counsel of its own choosing and shall not be
liable for any action taken, suffered or omitted by it in accordance with the
advice of such counsel.
5.7 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Deposited Proceeds
or any part thereof or to file any financing statement under the Uniform
Commercial Code with respect to the Deposited Proceeds or any part thereof.
5.8 The Escrow Agent hereby appoints Stocktrans, Inc., as its
subscription agent (the "Subscription Agent") for the purposes of maintaining
complete and accurate records of all subscription documentation and monies
received; and for the further purpose of facilitating distributions from the
Escrow Account. The Subscription Agent's fee, if any, will be paid directly by
the Issuer.
6. Amendment; Resignation.
This Agreement may be altered or amended only with the written
consent of the Issuer and the Escrow Agent. The Escrow Agent may resign for any
reason upon thirty (30) business days written
4
<PAGE> 5
notice to the Issuer. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement or otherwise
dispose of the Deposited Proceeds for a period of not more than thirty (30)
business days following the effective date of such registration, at which time
(a) if a successor escrow agent shall have been appointed and written notice
thereof (including the name and address of such successor escrow agent) shall
have been given to the resigning Escrow Agent by the Issuer and such successor
escrow agent, the resigning Escrow Agent shall pay over to the successor escrow
agent the Deposited Proceeds, less any portion thereof previously paid out in
accordance with this Agreement, or (b) if the resigning Escrow Agent shall not
have received written notice signed by the Issue and a successor escrow agent,
then the resigning Escrow Agent shall promptly refund the amount in the
Deposited Proceeds to each prospective purchaser without interest thereon or
deduction therefrom, and the resigning Escrow Agent shall notify the Issuer in
writing of its liquidation and distribution of the Deposited Proceeds;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Deposited Proceeds to a successor Escrow
Agent or distribution of the Deposited Proceeds pursuant to this Section 6.
7. Representations and Warranties.
The Issuer hereby represents and warrants to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have any lien, claim or security interest in the
Deposited Proceeds or any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest in or describing (whether
specifically or generally) the Deposited Proceeds or any part thereof.
7.3 The Subscription Information submitted with each deposit shall,
at the time of submission and at the time of the disbursement of the Deposited
Proceeds, be deemed a representation and warranty that such deposit represents a
bona fide sale to the purchaser described therein of the amount of Securities
set forth in such Subscription Information and that the Securities and Exchange
Commission has declared effective the Registration Statement referred to in the
Information Sheet.
7.4 All of the information contained in the Information Sheet is, as
of the date hereof and will be, at the time of any disbursement of the Deposited
Proceeds, true and correct.
8. Indemnification and Contribution.
8.1 The Issuer (for purposes of this Section 8 hereof, referred to
as the "Indemnitor") agrees to indemnify the Escrow Agent and its officers,
directors, employees, agents and shareholders (jointly and severally the
"Indemnitees") against, and hold them harmless of and from, any and all loss,
liability, cost, damage and expense, including, without limitation, reasonable
counsel fees, which the Indemnitees may suffer or incur by reason of any action,
claim or proceeding brought against the Indemnitees arising out of or relating
in any way to this Agreement or any transaction to which this Agreement relates,
unless such action, claim or proceeding is the result of the willful misconduct
of the Indemnitees.
5
<PAGE> 6
8.2 If the indemnification provided for in this Section 8 is
applicable, but for any reasons held to be unavailable, the Indemnitors shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of any action, claim or proceeding arising out of or relating in any
way to any actions or omissions of the Indemnitors.
8.3 Any Indemnitee which proposes to assert the right to be
indemnified under this Section 8, promptly after receipt of notice of
commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Indemnitor under this Section
8, will notify the Indemnitor of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
the Indemnitor of any such action, suit or proceeding shall not relieve the
Indemnitor from any liability which they may have to any Indemnitee otherwise
than under this Section 8. In case any such action, suit or proceeding shall be
brought against any Indemnitee and it shall notify the Indemnitor of the
commencement thereof, the Indemnitor shall be entitled to participate in and, to
the extent that they shall wish, to assume the defense thereof, with counsel
satisfactory to such Indemnitee. The Indemnitee shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such Indemnitee unless (i) the employment of counsel by
such Indemnitee has been authorized by the Indemnitor, (ii) the Indemnitee shall
have concluded reasonably that there may be a conflict of interest among the
Indemnitor and the Indemnitee in the conduct of the defense of such action (in
which case the Indemnitor shall not have the right to direct the defense of such
action on behalf of the Indemnitee) or (iii) the Indemnitor in fact shall not
have employed counsel to assume the defense of such action, in each of which
cases the fees and expenses of counsel shall be borne by the Indemnitor.
8.4 The Indemnitor agrees to provide the Indemnitee with copies of
all registration statements pre- and post-effective amendments and/or
supplements to such registration statements including exhibits, whether filed
with the Commission prior to or subsequent to the disbursement of the Deposited
Proceeds.
8.5 The provisions of this Section 8 shall survive any termination
of this Agreement, whether by disbursement of the Deposited Proceeds and
Deposited Securities, resignation of the Escrow Agent or otherwise.
9. Governing Law and Assignment.
This Agreement shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania and shall be binding upon the
parties hereto and their respective successors and assigns; provided, however,
that any assignment or transfer by any party of its rights under this Agreement
or with respect to the Deposited Proceeds shall be void as against the Escrow
Agent unless:
9.1 written notice thereof shall be given to the Escrow Agent; and
9.2 the Escrow Agent shall have consented in writing to such
assignment or transfer.
10. Notices.
6
<PAGE> 7
All notices required to given in connection with this Agreement
shall be sent by registered or certified mail, return receipt requested, or by
hand delivery with receipt acknowledged, or by Express Mail service offered by
the United States Post Office or Federal Express, and addressed, if to the
Issuer at its address set forth on the Information Sheet, and if to the Escrow
Agent, to the address set forth on the Information Sheet, Attention of: Laurie
Wallace or to such other persons or such other address as any party hereto may
designate in writing to the other as provided herein.
11. Severability.
If any provision of this Agreement or the application thereof to any
person or circumstances shall be determined to be unpaid or unenforceable, the
remaining provisions of this Agreement or the application of such provision to
persons or circumstances other than those to which it is held invalid or
unenforceable shall not be affected thereby and shall be valid and enforceable
to the fullest extent permitted by law.
12. Pronouns.
All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular, or plural as the context may require.
13. Captions.
All captions are for convenience only and shall not limit or define
the term thereof.
14. Execution in Several Counterparts.
This Agreement may be executed in several counterparts or by
separate instruments and all of such counterparts and instruments shall
constitute one agreement, binding on all of the parties herein.
15. Entire Agreement.
This Agreement constitutes the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings (written or oral) of the parties in connection
herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
Norcan Ventures, Inc.
By:
------------------------------------------
Gordon Keep, President
Firstrust Savings Bank
By:
------------------------------------------
7
<PAGE> 8
ESCROW AGREEMENT INFORMATION SHEET
1. The Issuer:
Name: Norcan Ventures, Inc.
1360 - 605 Robson Street
Vancouver British Columbus,Canada V6B 5J3
2. Jurisdiction of Incorporation:
Delaware
3. The Securities:
A maximum of 4,000,000 shares and a minimum of 1,000,000 shares of common
stock, $.001 par value per share ("Common Stock") at $.03 per share.
4. Type of Offering:
Registration Statement filed on Form SB-2 filed under the Securities Act
of 1933, as amended (the "Act"). The offering shall terminate upon the earlier
to occur of (1) the sale of all of the Shares offered; (2) written notice given
by the Issuer terminating the Offering, which notice may be given at any time;
or (3) 150 days after the effective date of the Registration Statement unless
extended an additional 30 days by the Issuer (the "Termination Date"). The
offering will be considered a blank check offering in accordance with Rule 419
of the Act.
5. Escrow Agent:
Firstrust Savings Bank
1931 Cottman Avenue
Philadelphia, PA 19111
6. Fees: $500.00
8
<PAGE> 1
EXHIBIT 4(i)(2)
SUBSCRIPTION AGREEMENT
NORCAN VENTURES, INC.
Suite 1360, 605 Robson Street
Vancouver, B.C. Canada V6B 5J3
IN ORDER TO PURCHASE SHARES OF COMMON STOCK, $.001 PAR VALUE PER SHARE OF
NORCAN VENTURES, INC., (THE "COMPANY") AS DESCRIBED IN THE PROSPECTUS
DATED _______ 1998, ACCOMPANYING THIS SUBSCRIPTION AGREEMENT, EACH
SUBSCRIBER MUST COMPLETE, EXECUTE AND RETURN THIS SUBSCRIPTION AGREEMENT,
ALONG WITH THE PAYMENT, BY CHECK PAYABLE TO "FIRSTRUST SAVINGS BANK, AS
ESCROW AGENT," FOR THE SHARES PURCHASED, TO THE COMPANY AT SUITE 3132-595,
BURRAND STREET, VANCOUVER, B.C. CANADA V7X 1J1. CAPITALIZED TERMS USED
HEREIN AND NOT OTHERWISE DEFINED SHALL HAVE THE MEANING ASCRIBED THERETO
IN THE PROSPECTUS.
1. Subscription
The undersigned (the "Subscriber") hereby subscribes for and agrees to
purchase from the Norcan Ventures, Inc. (the "Company"), subject to the terms
and conditions set forth in the Prospectus dated _______, 1998 (the
"Prospectus"), a copy of which accompanied this Subscription Agreement, _____
shares of the Company's common stock $.001 par value per share, at a price per
Share of $.03 per share or $_____ in the aggregate (the "Subscription Price").
2. Payment
The Subscription Price must accompany this Subscription and shall be paid
by check payable to "Firstrust Savings Bank, as Escrow Agent."
1
<PAGE> 2
3. Subscription Information
If an Individual: If a Corporation
--------------------------------- ---------------------------------
Full Name Full Corporation Name
--------------------------------- ---------------------------------
Residential Address Head Office Address
--------------------------------- ---------------------------------
City Province/State Postal Code City Province/State Postal Code
--------------------------------- ---------------------------------
Telephone Telecopier Attention
--------------------------------- ---------------------------------
Social Security No. or Tax Telephone Telecopier
Identification No. (US Persons)
--------------------------------- ---------------------------------
Social Security No. or Revenue Telephone Telecopier
Canada Corporation No. (Canadian
Residents)
4. Representation and Acknowledgments of Canadian Subscribers
If the Subscriber is a resident of Canada, the Subscriber represents and
warrants to the Company that:
(a) the Subscriber is purchasing the Shares as principal for its own
account, and not for the benefit of any other person;
(b) the Subscriber has the legal capacity and competence to enter into
and execute this Subscription agreement and to take all actions
required pursuant hereto and, if the Subscriber is a corporation, it
is duly incorporated and validly subsisting under the laws of its
jurisdiction of incorporation and all necessary approvals by its
directors, shareholders and others have been given to authorize
execution of this Subscription Agreement on behalf of the
Subscriber;
(c) the Subscriber is purchasing Shares under the private issuer or
private company exemption from the prospectus requirements available
under the applicable Securities Act of jurisdiction of the
Subscriber's residency (the "Jurisdiction") and accordingly
acknowledges that the Shares may be subject to an indefinite hold
2
<PAGE> 3
period in the Jurisdiction;
(d) the Subscriber is aware that the Company, at the time of this
Subscription, is a private company or private issuer within the
meaning of the applicable Securities Act of the Subscriber's
Jurisdiction;
(e) the Subscriber is aware that the Company is not a reporting issuer
in any of the provinces of Canada and accordingly, the Shares may be
subject to resale restriction including an indefinite hold period in
such provinces and that if no further statutory exemption from the
prospectus and registration requirements of the applicable
legislation may be relied upon or if no discretionary order or
ruling is obtained, the Shares will remain subject to restrictions
on resale in such provinces for an indefinite period of time which
may never expire; and
(f) the Subscriber acknowledges that because this subscription is being
made pursuant to the exemption from the prospectus and registration
requirements under the applicable securities laws (the "Exemption"):
(i) the Subscriber is restricted from using certain of the civil
remedies available under the applicable securities laws;
(ii) the Subscriber may not receive information that might
otherwise be required to be provided to the Subscriber under
the applicable securities laws if the Exemptions were not
being used;
(iii) the Company is relieved from certain obligations that would
otherwise apply under the applicable securities laws if the
Exemptions were not being used; and
(iv) the Company is not obligated to become a "reporting issuer"
(as that term is defined under the applicable Securities Act)
in the Jurisdiction.
5. Representations of Non US and Non Canadian Subscribers
If the prospective Subscriber is a resident of a jurisdiction (the
"International Jurisdiction") other than the United States of America, one of
its possessions or territories or British Columbia, Canada such Subscriber will
be required to represent that:
(a) he is a resident of the International Jurisdiction;
(b) he is knowledgeable of, or has been independently advised as to, the
applicable securities laws of the International Jurisdiction, if
any, which would apply to this subscription;
3
<PAGE> 4
(c) he is purchasing the Shares pursuant to exemptions from the
prospectus and/or registration requirements under the applicable
securities laws of that International Jurisdiction; or, if such is
not applicable, the investor is permitted to purchase the Shares
under the applicable securities laws of the International
Jurisdiction without the need to rely on exemptions;
(d) the applicable securities laws do not require the Company to make
any filings or seek any approvals of any kind whatsoever from any
regulatory authority in the International Jurisdiction; and
(e) the investor will, if requested by the Company a certificate or
opinion of local counsel from the International Jurisdiction which
will confirm the matters referred to in subparagraphs (c) and (d)
above to the satisfaction of the Company, action reasonably.
6. Special State Law Considerations
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE AMENDED, OR THE FLORIDA
SECURITIES ACT, BY REASON OF SPECIFIC EXEMPTIONS THEREUNDER RELATING TO THE
LIMITED AVAILABILITY OF THE OFFERING. THE SHARES CANNOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS SUBSEQUENTLY REGISTERED
UNDER THE FLORIDA SECURITIES ACT, IF SUCH REGISTRATION IS REQUIRED.
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE FLORIDA SECURITIES ACT, IN
THE EVENT THAT SALES ARE MADE TO FIVE (5) OR MORE PERSONS IN THE STATE OF
FLORIDA PURSUANT TO THE EXEMPTION FOR LIMITED OFFERS OR SALES OF SECURITIES SET
FORTH IN SECTION 517.061(11)(a) OF THE FLORIDA SECURITIES AND INVESTOR
PROTECTION ACT, ANY SALE IN FLORIDA MADE PURSUANT TO SUCH SECTION IS VOIDABLE BY
THE PURCHASER IN SUCH SALE EITHER WITHIN THREE 93) DAYS AFTER THE FIRST TENDER
OF CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE
ISSUER, OR AN ESCROW AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF
THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. TO
ACCOMPLISH THIS, IT IS SUFFICIENT FOR A FLORIDA INVESTOR TO SEND A LETTER OR
TELEGRAM TO THE FUND WITHIN SUCH THREE (3) DAYS PERIOD STATING THAT IT IS
VOIDING AND RESCINDING THE PURCHASE. IF ANY INVESTOR SENDS SUCH A LETTER, IT IS
PRUDENT TO DO SO BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO INSURE THAT THE
LETTER IS RECEIVED AND TO EVIDENCE THE TIME OF MAILING.
4
<PAGE> 5
7. Miscellaneous
(a) All pronouns and any variations thereof used herein shall be deemed to
refer to the masculine, feminine, impersonal, singular or plural, as the
identity of the person or persons may require.
(b) This Subscription Agreement constitutes the legal, valid and binding
obligation of the undersigned enforceable in accordance with its terms this
Subscription Agreement shall be enforced, governed and construed in all respects
in accordance with the laws of the State of New York, as such laws are applied
by New York courts to agreements entered into and to be performed in New york
and between residents of New York, and shall be binding upon the Subscriber, the
Subscriber's heirs, estate, legal representatives, successors and assigns. If
any provision of this Subscription Agreement is invalid or unenforceable under
any applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be deemed
modified to conform with such statute or rule of law. Any provision hereof that
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision hereof.
(c) This Subscription Agreement constitutes the entire agreement between
the parties hereto with respect to the subject matter hereof and may be amended
only by a writing executed by both parties hereto.
(d) Except as set forth herein, neither this Subscription Agreement nor
any provision hereof shall be waived, modified, changed, discharged, terminated,
revoked or canceled except by an instrument in writing signed by the party
effecting the same against whom any change, discharge or termination is sought.
(e) The Offering may be withdrawn at any time prior to the issuance of
Shares to prospective Subscribers. Further, in connection with the offer and
sale of the Shares, the Company reserves the right, in its sole discretion, to
reject any subscription in whole or in part or to allot to any prospective
subscriber fewer than the Shares applied for by such subscriber. The Shares are
offered by the Company subject to prior sale, acceptance of an offer to
purchase, withdrawal, cancellation or modification of the offer, without notice.
(f) This Subscription Agreement does not constitutes an offer to sell or a
solicitation of any offer to buy any securities offered hereby by anyone in any
jurisdiction in which such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
5
<PAGE> 6
In Witness Whereof, the Subscriber has executed this Subscription
Agreement on this ____ day of ________, 199__.
------------------------------------
Name of Subscriber
(Please type or Print)
------------------------------------
[Signature of Subscriber or of duly
authorized signatory of a corporation,
partnership or other subscriber that
is not a natural person]
Name:
------------------------------
Title:
------------------------------
Please print or type name and title of
duly authorized signatory of a
corporate, partnership or other
subscriber that is not a natural
person.
Accepted this ___ day of _________, 199__
NORCAN VENTURES, INC.
By:
---------------------------------------
(Signature of duly authorized signatory)
6
<PAGE> 1
EXHIBIT 5(i)
[Form of Opinion of Sierchio & Albert, P.C.]
, 1998
Norcan Ventures, Inc.
Re: Registration Statement of Form SB-2
(SEC File No.____________)
of Norcan Ventures, Inc. (the "Registration Statement")
Dear Sirs:
We have acted as your counsel in connection with the proposed issue and
sale by Norcan Ventures, Inc., a Delaware corporation (the "Company") of up to a
maximum aggregate of 4,000,000 shares and a minimum of 1,000,000 shares of
Common Stock, $.001 par value (the "Company Shares") on the terms and conditions
set forth in the Registration Statement.
In that connection, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents and corporate
records, and have examined such laws or regulations, as we have deemed necessary
or appropriate for the purposes of the opinions hereinafter set forth.
Based on the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing under
the laws of the State of Delaware.
<PAGE> 2
2. The issue and sale of the Company Shares to be sold pursuant to the
terms of the Registration Statement as filed with the Securities and Exchange
Commission have been duly authorized and, upon the sale thereof in accordance
with the terms and conditions of the Registration Statement be validly issued,
fully paid and non-assessable.
We hereby consent to be named in the Prospectus forming Part I of the
aforesaid Registration Statement under the caption, "Legal Opinions" and the
filing of this opinion as an Exhibit to said Registration Statement.
Very truly yours,
Sierchio & Albert, P.C.
By:
-----------------------------
Joseph Sierchio
JS/rm
<PAGE> 1
EXHIBIT 23(i)(2)
[LETTERHEAD OF PRINZI AND COMPANY, CERTIFIED PUBLIC ACCOUNTANTS]
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Amendment No. 1 to Form SB-2 of our report dated July
15,1998 relating to the financial statements of Norcan Ventures, Inc. as of July
10,1998 and for the period from inception (April 8, 1998) to July 10,1998, which
appears in such Prospectus. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
/s/ Prinzi & Company
Staten Island, New York
July 15, 1998
