SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the fiscal year ended April 30, 2000.
Commission File Number 333-61629
THE ARIELLE CORP.
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(Name of Small Business Issuer in Its Charter)
Delaware 11-3456837
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(State of Incorporation) (IRS Identification Number)
26 Aerie Court, North Hills, New York 11030
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(Address of principal executive offices) (Zip Code)
(516) 621-8286
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(Issuer's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes No X
----- ----
<PAGE>
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
State issuer's revenues for its most recent fiscal year. 0
The aggregate market value of the voting stock held by non-affiliates
of the registrant is $10.
As of April 30, 2000 there were 400,000 shares of the issuer's common
stock, $.0001 par value per share, issued and outstanding.
<PAGE>
THE ARIELLE CORP.
10-KSB
April 30, 2000
PART I
Item 1. DESCRIPTION OF BUSINESS
THE ARIELLE CORP. was organized under the laws of the State of Delaware
on October 6, 2000. Arielle was formed as a vehicle to pursue a Business
Combination. Since inception, the primary activity of Arielle has been directed
to organizational efforts, obtaining initial financing, and efforts intended to
identify possible Business Combinations.
Arielle's initial public offering comprised 100,000 shares of common
stock at a purchase price of $.35 per share.
Arielle was organized for the purposes of creating a corporate vehicle
to seek, investigate and, if such investigation warrants, engaging in business
combinations presented to it by persons or firms who or which desire to employ
Arielle's funds in their business or to seek the perceived advantages of
publicly-held corporation. Arielle's principal business objective is to seek
long-term growth potential in a business combination venture rather than to seek
immediate, short-term earnings. Arielle has not restricted its search to any
specific business, industry or geographical location.
Arielle has 18 months from its date of effectiveness (October 5, 2000)
to consummate a business combination, including the filing of a post-effective
amendment and shareholder reconfirmation offering. If a consummated business
combination has not occurred by the date 18 months after the effective date of
the initial registration statement, the funds held in escrow shall be returned
by first class mail to the purchasers within five (5) business days following
that date.
-2-
<PAGE>
Arielle does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and analyzing
merger candidates are being paid with money in Arielle's treasury. Persons who
purchased shares in Arielle's initial public offering and other shareholders
have not had much opportunity to participate in any of these decisions.
Arielle's proposed business is sometimes referred to as a "blank check" company
because investors entrust their investment monies to Arielle's management before
they have a chance to analyze any ultimate use to which their money may be put.
Substantially all of Arielle's initial public offering are intended to be
utilized generally to effect a business combination. Rule 419 states that
prospective investors who invest in Arielle will have an opportunity to evaluate
the specific merits or risks of only the business combination management decides
to enter into.
Although Arielle is subject to regulation under the Securities Act of
1933 and the Securities Exchange Act of 1934, management believes Arielle is not
subject to regulation under the Investment Company Act of 1940. The regulatory
scope of the Investment Company Act of 1940, as amended, was enacted principally
for the purpose of regulatory vehicles for pooled investments in securities,
extends generally to companies primarily in the business of investing,
reinvesting, owning, holding or trading 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 definition of the scope of
certain provisions of the Investment Company Act. Arielle believes that its
principle activities will not subject it to regulation under the Investment
Company Act. Nevertheless, there can be no assurances that Arielle will not be
deemed to be an Investment Company. In the event Arielle is deemed to be an
Investment Company, Arielle may be subject to certain restrictions relating to
Arielle's activities, including restrictions on the nature of its investments
and the issuance of securities. Arielle has obtained no formal determination
from the Securities and Exchange Commission as to the status of Arielle under
the Investment Company Act of 1940.
-3-
<PAGE>
Arielle presently has no employees.
On February 4, 2000, Arielle entered into an acquisition agreement with
Method Products Corp., a Florida corporation. Pursuant to this agreement, 100%
of MPC shall be merged into Arielle on the effective date of the merger with
Arielle as the surviving entity. Thus, all MPC shareholders shall become
shareholders of Arielle as a result of the merger.
MPC is a multi-service business communications systems company
specializing in the custom design, installation and service of total
communications network systems for businesses, with a focus on businesses
located in South Florida. MPC is involved with computer telephone integration,
fiber optic cabling and video conferencing, among other network systems.
Since 1990, MPC has operated as a full service communications systems
provider offering businesses a single source for services and equipment required
for communications systems. MPC's goal is to provide "one stop shopping" for its
clients telecommunications needs. MPC is an authorized dealers for Fujitsu,
Niksuko America, Panasonic and Sony corporation among others.
The executive offices of MPC are located at 1301 West Copans Road,
Suite F-1, Pompano Beach, Florida 33064.
Arielle believes it has structured the merger in such a manner as to
minimize federal and state tax consequences to Arielle and any target company.
Item 2. PROPERTIES
Arielle is presently using the offices of Mr. David Kass, President of
Arielle as its office. Mr. Kass does not charge Arielle for this service. Such
arrangement is expected to continue until a business combination is effected,
including effectiveness of a post-effective amendment and shareholder
reconfirmation.
Arielle currently owns no equipment, and does not intend to own any
prior to engaging in a business combination.
Item 3. LEGAL PROCEEDINGS
Arielle is not presently a party to any litigation, nor, to the
knowledge of management, is any litigation threatened against Arielle which may
materially affect Arielle.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no shareholders meetings in the fourth quarter of this
fiscal year.
-4-
<PAGE>
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
There is no established public trading market for Arielle's common
shares. As of April 30, 2000, there were 500,000 shares of common stock
outstanding. The par value per share is $.0001. Arielle has not paid any
dividends on its common stock in the past, nor does it foresee paying dividends
in the near future. Pursuant to its initial public offering, Arielle offered
100,000 shares of common stock at $.35 per share.
Item 6. PLAN OF OPERATION
Arielle does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and analyzing
business combinations are being paid with money in Arielle's treasury, and not
with proceeds received from Arielle's initial public offering.
Arielle may seek a business combination in the form of firms which have
recently commenced operations, are developing companies in need of additional
funds for expansion into new products or markets, are seeking to develop a new
product or service, or are established businesses which may be experiencing
financial or operating difficulties and are in need of additional capital. A
business combination 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, while avoiding what it may
deem to be adverse consequences of undertaking a public offering itself, such as
time delays, significant expense, loss of voting control and compliance with
various Federal and State securities laws.
Arielle will not acquire a target business unless the fair value of the
target business represents 80% of the maximum offering proceeds. To determine
the fair market value of a target business, Arielle's management will examine
the certified financial statements (including balance sheets and statements of
cash flow and stockholders' equity) of any candidate and will participate in a
personal inspection of any potential target business.
-5-
<PAGE>
Based upon management's experience with and knowledge of blank check
companies, the probable desire on the part of the owners of target businesses to
assume voting control over Arielle (to avoid tax consequences or to have
complete authority to manage the business) will almost assure that Arielle will
combine with just one target business. Management also anticipates that upon
consummation of a business combination, there will be a change in control in
Arielle which will most likely result in the resignation or removal of Arielle's
present officers and directors.
On February 4, 2000, Arielle entered into a merger agreement with
Method Products Corp., a Florida corporation. Pursuant to this agreement, MPC
shall be merged into Arielle, with Arielle as the surviving entity. Thus, all
MPC shareholders shall become shareholders of Arielle as a result of the merger.
MPC is a multi-service business communications systems company
specializing in the custom design, installation and service of total
communications network systems for businesses, with a focus on businesses
located in South Florida. MPC is involved with computer telephone integration,
fiber optic cabling and video conferencing, among other network systems.
Since 1990, MPC has operated as a full service communications systems
provider offering businesses a single source for services and equipment required
for communications systems. MPC's goal is to provide "one stop shopping" for its
clients telecommunications needs. MPC is an authorized dealers for Fujitsu,
Niksuko America, Panasonic and Sony corporation among others.
Pursuant to the merger agreement, MPC will be merged into Arielle.
Consummation of the merger is conditioned upon, among other things,
reconfirmation by holders of least 80% of the shares owned by the Rule 419
investors. Upon consummation of the merger, Arielle shall issue 5,335,000 shares
of the merged entity (representing 89.6%) to former MPC shareholders in
proportion to their holdings of MPC. Current Arielle shareholders shall retain
their 500,000 shares in Arielle, which amount represents 8.4% of the merged
entity. Additionally, Schonfeld & Weinstein, L.L.P. shall be issued 156,000
shares representing 2% of the merged entity. The shareholders of MPC have agreed
to place 595,500 of their shares in escrow to be released when MPC achieves
sales of a minimum of $5,000,000 in the first fiscal year following the merger.
In the event such sales are not achieved, the 595,5000 escrowed shares shall be
returned to the company's treasury. MPC will merge into Arielle with Arielle as
the surviving entity. The merger is intended to be consummated in such a manner
as to be tax-free to all parties involved under Internal Revenue Code Section
368(a)(1)(A).
Arielle filed a post effective amendment to its registration statement on Form
SB-2 on June 12, 2000. This amendment contained information regarding MPC
including audited financial statements of MPC and its subsidiaries.
-6-
<PAGE>
Investors should note that any merger or acquisition effected by
Arielle, including the merger with MPC can be expected to have a significant
dilutive effect on the percentage of shares held by Arielle's then-shareholders,
including purchasers in this offering. On the consummation of a business
combination, the target business will have significantly more assets than
Arielle; therefore, management plans to offer a controlling interest in Arielle
to the target business.
Arielle and MPC have attempted to structure the acquisition in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1954, as amended (the "Code"). In order to obtain
tax-free treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the surviving
entity. In such event, the shareholders of Arielle would retain less than 20% of
the issued and outstanding shares of the surviving entity, which would be likely
to result in significant dilution in the equity of such shareholders. Pursuant
to the merger agreement with MPC, Arielle shareholders and their assignees shall
retain 6% of the surviving entity. In addition, a majority of all of Arielle's
directors and officers may, as part of the terms of the acquisition transaction,
resign as directors and officers.
Management anticipates that it may be able to effect only one potential
business combination, due primarily to Arielle's limited financing. As a result,
Arielle will not be able to offset potential losses from one venture against
gains from another.
The analysis of business combinations has been undertaken by the
officers and directors of Arielle, none of whom is a professional business
analyst. In analyzing prospective business combinations, management considered
such matters as the available technical, financial, and managerial resources;
working capital and other financial requirements; prospects for the future;
nature of present and expected competition; the quality and experience of
management services which may be available and the depth of that management; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance or products; name identification; and other
relevant factors.
Management has not actively negotiated or otherwise consented to the
purchase of any portion of their common stock as a condition to or in connection
with the proposed merger with MPC.
-7-
<PAGE>
The securities to be issued in the merger with MPC shall be issued in
reliance on exemptions from registration under applicable federal and state
securities laws.
The terms of the merger were based upon the respective needs and
desires of Arielle and MPC and the relative negotiating strength of Arielle and
such other management.
Arielle has adopted a policy that it will not pay a finder's fee to any
member of management for locating a merger or acquisition candidate. No member
of management intends to or may seek and negotiate for the payment of finder's
fees.
Arielle does not intend to raise any additional capital prior to
consummation of a business combination within the next twelve months.
-8-
<PAGE>
THE ARIELLE CORP.
( A development stage company)
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT AUDITORS F-2
FINANCIAL STATEMENTS
Balance Sheets F-3
Statements of Operations F-4
Statement of Changes
in Stockholder's Equity F-5
Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 Through F-9
F-1
<PAGE>
THE ARIELLE CORP.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
PAGE
REPORT OF INDEPENDENT AUDITORS F-2
------------------------------
FINANCIAL STATEMENTS
Balance Sheets F-3
Statements of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 through F-9
-----------------------------
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
The Arielle Corp.
We have audited the accompanying balance sheets of The Arielle Corp. (the
"Company"), a development stage company, as of April 30, 2000 and 1999, and the
related statements of operations, changes in stockholders' equity, and cash
flows for the years ended April 30, 2000 and 1999, and for the period October 6,
1997 (date of incorporation) through April 30, 2000. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of The Arielle Corp. as of April
30, 2000 and 1999, and the related statements of operations, changes in
stockholders' equity, and cash flows for the years ended April 30, 2000 and
1999, and for the period October 6, 1997 (date of incorporation) through April
30, 2000, in conformity with generally accepted accounting principles.
/s/ Ahearn, Jasco + Company, P.A.
---------------------------------
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
May 25, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
THE ARIELLE CORP.
(A development stage company)
BALANCE SHEETS
APRIL 30, 2000 and 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2000 1999
------- -------
ASSETS
------
<S> <C> <C>
CURRENT ASSET - Cash and cash equivalents $ 3,433 $ 1,442
RESTRICTED CASH 32,398 --
DEFERRED OFFERING COSTS -- 15,535
-------- --------
TOTAL $ 35,831 $ 16,977
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
ACCRUED EXPENSES $ 5,645 $ 3,444
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.0001 par value; 20,000,000 shares
authorized; shares issued and outstanding
500,000 in 2000 and 400,000 in 1999 50 40
Additional paid-in capital 39,415 19,960
Deficit accumulated during the development stage (9,279) (6,467)
-------- --------
STOCKHOLDERS' EQUITY, NET 30,186 13,533
-------- --------
TOTAL $ 35,831 $ 16,977
======== ========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
THE ARIELLE CORP.
(A development stage company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999,
AND FROM INCEPTION TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
From
Inception
Year ended Year ended Through
04/30/00 04/30/99 04/30/00
---------- ---------- ---------
<S> <C> <C> <C>
REVENUE, interest income $ 376 $ -- $ 376
GENERAL AND ADMINISTRATIVE EXPENSES 3,188 4,325 9,655
--------- --------- -------
LOSS BEFORE INCOME TAX PROVISION (2,812) (4,325) (9,279)
PROVISION FOR INCOME TAXES -- -- --
--------- --------- -------
NET LOSS $ (2,812) $ (4,325) $(9,279)
========= ========= =======
PER SHARE AMOUNTS - basic and diluted:
Net loss per weighted average common share $ (0.0062) $ (0.0108)
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 457,104 400,000
========= =========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
THE ARIELLE CORP.
(A development stage company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999,
AND FROM INCEPTION TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
From
Inception
Year ended Year ended Through
04/30/00 04/30/99 04/30/00
---------- ---------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (2,812) $(4,325) $ (9,279)
Items not affecting cash flow from operations:
Accrued expenses 1,679 3,344 5,123
Other -- 316 358
-------- ------- --------
NET CASH USED IN OPERATING ACTIVITIES (1,133) (665) (3,798)
-------- ------- --------
CASH FLOWS FROM INVESTING ACTIVITY:
Deferred offering costs incurred -- (535) (15,535)
Other 522 -- 164
-------- ------- --------
CASH USED IN INVESTING ACTIVITIES 522 (535) (15,371)
-------- ------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sales of common stock 35,000 -- 55,000
Increase in restricted cash (32,398) -- (32,398)
-------- ------- --------
CASH USED IN FINANCING ACTIVITIES 2,602 -- 22,602
-------- ------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,991 (1,200) 3,433
CASH AND CASH EQUIVALENTS, beginning of period 1,442 2,642 --
-------- ------- --------
CASH AND CASH EQUIVALENTS, end of period $ 3,433 $ 1,442 $ 3,433
======== ======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ -- $ --
======== ======= ========
Cash paid for income taxes $ -- $ -- $ --
======== ======= ========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
<TABLE>
<CAPTION>
THE ARIELLE CORP.
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999,
AND FROM INCEPTION TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Common Additional Deficit Total
Stock Paid-in Accumulated
Capital during the
Development
Stage
--------------------------------------
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY, October 6, 1997 $-- $ -- $ -- $ --
Sale of 400,000 shares of common stock 40 19,960 -- 20,000
Net loss for the year ended
April 30, 1998 -- -- (2,142) (2,142)
--- ------- ------- --------
STOCKHOLDERS' EQUITY, April 30, 1998 40 19,960 (2,142) 17,858
Net loss for the year ended
April 30, 1999 -- -- (4,325) (4,325)
--- ------- ------- --------
STOCKHOLDERS' EQUITY, April 30, 1999 40 19,960 (6,467) 13,533
Sale of 100,000 shares of common stock,
net of expenses of the offering 10 19,455 -- 19,465
Net loss for the year ended
April 30, 2000 -- -- (2,812) (2,812)
--- ------- ------- --------
STOCKHOLDERS' EQUITY, April 30, 2000 $50 $39,415 $(9,279) $ 30,186
=== ======= ======= ========
See notes to financial statements.
F-5
<PAGE>
THE ARIELLE CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999
AND FROM INCEPTION (OCTOBER 6, 1997) TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The Arielle Corp. (the "Company"), a development stage company,
was organized in Delaware on October 6, 1997 as a "blank check" company
which plans to look for a suitable business to merge with or acquire.
Operations since incorporation have consisted primarily of obtaining the
first capital contribution by the insiders, coordination of activities
regarding the filing of an SEC registration statement, completing the
offering, and identifying a merger candidate.
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.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEFERRED OFFERING COSTS
Deferred offering costs, which were being incurred in
anticipation of the Company filing a Rule 419 registration statement, were
deferred until the sale of common shares. On October 5, 1999, when the
offering closed, these costs were charged to additional paid in capital.
ORGANIZATION COSTS
Organization costs were originally capitalized, and were being
amortized over a period of 60 months. In accordance with the American
Institute of Certified Public Accountants' SOP 98-5, the balance of the
organization costs were expensed in October 1998. The cumulative effect of
a change in accounting method disclosure is not presented as the amounts
involved are immaterial.
INCOME TAXES
The Company accounts for income taxes in accordance with the
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes," which requires the recognition of deferred tax liabilities
and assets at currently enacted tax rates for the expected future tax
consequences of events that have been included in the financial statements
or tax returns. A valuation allowance is recognized to reduce the net
deferred tax asset to an amount that is more likely than not to be
realized. The tax provision shown on the accompanying statement of
operations is zero since the deferred tax asset generated from the net
operating loss is offset in its entirety by a valuation allowance. State
minimum taxes are expensed as incurred.
CASH AND CASH EQUIVALENTS, AND RESTRICTED CASH
Cash and cash equivalents, if any, include all highly liquid debt
instruments with an original maturity of three months or less at the date
of purchase. Restricted cash represents the proceeds of the Rule 419
common stock offering, which are limited as to their use pursuant to this
Rule.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Cash and current liabilities are recorded in the financial
statements at cost, which approximates fair market value because of the
short-term maturity of those instruments.
F-6
<PAGE>
THE ARIELLE CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999
AND FROM INCEPTION (OCTOBER 6, 1997) TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTE 3 - STOCKHOLDER'S EQUITY
The Company, organized under the laws of the State of Delaware,
has authorized 20,000,000 shares of common stock at $0.0001 par value.
Through April 30, 1999, the Company raised $20,000 through a private
placement subscription agreement, and during fiscal 2000, raised an
additional $35,000 in connection with a Rule 419 offering (see Note 4
below).
NOTE 4 - RULE 419 REQUIREMENTS
Rule 419 requires that offering proceeds after deduction for
underwriting commissions, underwriting expenses and deal allowances issued
be deposited into an escrow or trust account (the "Deposited Funds" and
"Deposited Securities", respectively) governed by an agreement which
contains certain terms and provisions specified by the Rule. Under Rule
419, the Deposited Funds and Deposited Securities will be released to the
Company and to the investors, respectively, only after the Company has met
the following three basic conditions. First, the Company must execute an
agreement for an acquisition meeting certain prescribed criteria. Second,
the Company must file a post-effective amendment to the registration
statement which includes the terms of a reconfirmation offer that must
contain conditions prescribed by the rules. The post-effective amendment
must also contain information regarding the acquisition candidate and its
business, including audited financial statements. The agreement must
include, as a condition precedent to their consummation, a requirement
that the number of investors representing 80% of the maximum proceeds must
elect to reconfirm their investments. Third, the Company must conduct the
reconfirmation offer and satisfy all of the prescribed conditions,
including the condition that investors representing 80% of the Deposited
Funds must elect to remain investors. 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 escrow. After the Company submits a signed representation
to the escrow agent that the requirements of Rule 419 have been met and
after the acquisition is consummated, the escrow agent can release the
Deposited Funds and Deposited Securities. Investors who do not reconfirm
their investments will receive the return of a pro-rata portion thereof;
and in the event investors representing less than 80% of the Deposited
Funds reconfirm their investments, the Deposited Funds will be returned to
the investors on a pro-rata basis.
The Company raised $35,000 through the sale of 100,000 shares of
common stock pursuant to Rule 419, and the Company closed this sale and
deposited the funds into an escrow account on October 5, 1999. Also
pursuant to Rule 419, 10% of these funds may be transferred to the Company
for expenses; accordingly, the Company transferred $3,500 to its operating
cash account in April 2000. As of May 25, 2000, a merger candidate has
been identified, and the Company is in the process of filing the
post-effective amendment, performing the reconfirmation offer, and
proceeding to close the merger with the acquisition candidate.
F-7
<PAGE>
THE ARIELLE CORP.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED APRIL 30, 2000 AND 1999
AND FROM INCEPTION (OCTOBER 6, 1997) TO APRIL 30, 2000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTE 5 - LOSS PER COMMON SHARE
The Company follows the provisions of SFAS No. 128, "Earnings per
Share," which requires entities to present both basic and diluted earnings
(loss) per share ("EPS") on the face of the statement of operations. Basic
EPS is calculated as income (loss) available to common stockholders
divided by the weighted average number of common shares outstanding during
the period. Diluted EPS is calculated using the "if converted" method for
convertible securities and the treasury stock method for options and
warrants. Net loss per common share, as shown on the statement of
operations, is the same for both basic and diluted as the Company has no
convertible or dilutive securities outstanding.
The Company, when it becomes applicable to its equity structure,
will use the treasury stock method for computing earnings per share. Under
the treasury stock method, the dilutive effect of outstanding stock
options and other convertible securities for determining primary earnings
per share is computed using the average market price during the fiscal
period, whereas the dilutive effect of outstanding stock options and
convertible securities for determining fully diluted earnings per share is
computed using the market price as of the end of the fiscal period, if
greater than the average market price.
The weighted average common shares for the year ended April 30,
2000 differ from the issued and outstanding shares solely because of the
effects of weighting, and result from the Company's sale of 100,000 shares
of common stock in October 1999.
NOTE 6 - RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH SHAREHOLDERS
During 1998, the company advanced $15,000 to the law firm of
Schonfeld & Weinstein, LLP, who is also a shareholder of the company, for
legal fees to complete its SEC registration. These fees were recorded as
deferred offering costs (see Note 2), and were charged against the
offering proceeds.
OFFICE FACILITIES
Office space is provided by an officer of the Company at no
charge.
F-8
<PAGE>
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The officers and directors of Arielle, and further information
concerning them are as follows:
Name Age Position with Arielle
---- --- ---------------------
David Kass(1) 63 President, Director
26 Aerie Court
North Hills, New York 11030
David S. Jacobs(1) 54 Vice, President,
26 Court Street Director, Secretary
Brooklyn, New York 11242
John E. Vidaver 51 Director
49 Poplar Avenue
Oradell, New Jersey 07469
(1) May be deemed "Promoters" of Arielle, as that term is defined under the
Securities Act of 1933.
BIOGRAPHY
DAVID KASS, President and a director of the Company, was Vice president and
owner of Mobile Phone Radio Systems from 1974 to 1982. Since 1982, Mr. Kass
has been active in several organizations such as Fellow Radio Club of North
America, MENSA and Explorers Club. Mr. Kass is a graduate of the State
University of New York at Buffalo. Mr. Kass has been President and a
director of the Company since October 1997.
DAVID S. JACOBS, Vice President, Secretary and a director of the Company, has
been a partner in the law firm of Jacobs & Cohen, in Brooklyn, New York,
since 1994. Prior to that, he was a partner in the law firm of Jacobs, Katz
& Lurie, Brooklyn, New York. Mr. Jacobs is a graduate of Brooklyn College and
Brooklyn Law School. He has been secretary and a director of the Company
since October 1997.
JOHN E. VIDAVER, Director, has been a free-lance radio announcer and
voice-over artist for commercials and films since 1990. He has worked for
such radio stations as WQXR Radio, New York, NY, and WQCD Radio, New York,
NY. Mr. Vidaver is a graduate of Rutgers College (Rutgers University) of New
Jersey. Mr. Vidaver has been a director of the Company since July 7,
1998.
Item 10. EXECUTIVE COMPENSATION
No officer or director of Arielle has received any cash remuneration
since Arielle's inception, and none received or accrued any remuneration from
Arielle at the completion of the initial public offering. No remuneration of any
nature has been paid for or on account of services rendered by a director in such capacity.
None of the officers and directors intends to devote more than twenty hours per
month to Arielle's affairs.
-9-
<PAGE>
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of Arielle's Common Stock as of April 30, 1999 by (i) each
person who is known by Arielle to own beneficially more than 5% of Arielle's
outstanding Common Stock; (ii) each of Arielle's officers and directors; and
(iii) all directors and officers of Arielle as a group. It also show the amount
and nature of beneficial ownership of Arielle after the proposed negotiation
with MPC.
Amount and Nature of Amount and Nature of
Beneficial Ownership Beneficial Ownership
Prior to the Merger(1) After the Proposed
Merger with MPC (2)
Number Percent Number Percent
<S> <C> <C> <C> <C>
David Kass (1) (2) 95,000 19.0% 95,000 1.2%
26 Aerie Court
North Hills, NY 11030
David S. Jacobs (1)(2) 95,000 19.0% 95,000 1.2%
26 Court Street
Brooklyn, NY 11242
John E. Vidaver (2) 0 0% 0 0%
49 Poplar Avenue
Oradell, NJ 07469
B. Alice Campos 100,000 20.0% 100,000 1.3%
3325 Dempster Street
Skokie, IL 60076
Schonfeld & Weinstein,
L.L.P. (3) 95,000 19.0% 95,000 1.2%
63 Wall Street
Suite 1801 New York, NY 10005
Total Officers
and Directors
(3 Persons) 190,000 38.0% 190,000 2.4%
<FN>
(1) May be deemed "Promoters" of Arielle, as that term is defined under the
Securities Act of 1933.
(2) Mr. Kass is the President and a director of Arielle. Mr. Jacobs is
Vice
President, Secretary and a director of Arielle. Mr. Vidaver is a director of
Arielle.
(3) Excludes 156,000 shares to be issued to Schonfeld & Weinstein, L.L.P
upon the closing of the merger.
(4) Based on 7,791,521 shares to be outstanding after the merger.
</FN>
</TABLE>
-10-
<PAGE>
MPC
The following table sets forth certain information regarding the beneficial
ownership of the MPC's Common Stock as of the date of this Prospectus by (i)
each person known to MPC to beneficially own 5% or more of MPC's Common Stock,
(ii) each director of MPC and (iii) all directors and executive officers of MPC
as a group. All information with respect to beneficial ownership has been
furnished to MPC by the respective director, executive officer or 5%
shareholder, as the case may be.
Amount and Nature of Amount and Nature of
Beneficial Ownership Beneficial Ownership
Prior to the Merger After the Proposed
Merger with Arielle
Name/Address
Beneficial
Owner
---------------------- --------------------
PERCENT NUMBER PERCENT
------- ------ -------
NAME/ADDRESS
BENEFICIAL
OWNER
NUMBER OF SHARES
NAME AND ADDRESS OF
BENEFICIAL OWNER SHARES HELD
---------------- -----------
<PAGE>
Mark I. Weitsman 2,350,000 33.0% 2,350,000 30%
1301 W. Copans Road
Suite F-1
Pompano Beach, FL 33064
Michael R. Beaubien 2,350,000 33.0% 2,350,000 30%
1301 W. Copans Road
Suite F-1
Pompano Beach, FL 33064
Mark V. Antonucci(1) 500,000 7.0% 500,000 6.4%
1301 W. Copans Road
Suite F-1
Pompano Beach, FL 33064
Georges Karam
8 Sloan Street
London SW1
London, UK 301,500 4.2% 301,500 3.9%
Dr. Anthony Ivankovich 735,000 10.3% 735,000 9.4%
526 Woodland Drive
Glenview, IL 60025
All Officers and Directors
as a Group (4 persons) 5,501,500 77.1% 5,501,500 70.6%
(1) Excludes an option for Mr. Antonucci to purchase shares representing
10% of the company. This option, which allows Mr. Antonucci to purchase shares
for par value, expires on the last day of Mr. Antonucci's initial employment
agreement, but no sooner than June 30, 2001, and no later than April 15, 2003.
(2) Based on 7,791,521 shares to be outstanding after the merger.
-11-
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no relationships or transactions required to be disclosed
under this Item.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(A) The following exhibits filed with Arielle's post-Effective Amendment No. 3
on Form SB-2 are incorporated by reference:
2.0 Merger Agreement
24.0 Accountants' Consent to Use Opinion.
-12-
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE ARIELLE CORP.
By /s/ David Kass
----------------
DAVID KASS, President
Date August 30, 2000
In accordance with the Securities Exchange Act of 1934 this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By /s/ David Kass
----------------
DAVID KASS, President, Director
Date August 30, 2000
* * *
By /s/ David S. Jacobs
------------------
DAVID S. JACOBS, Secretary, Director
Date August 30, 2000
* * *
By
JOHN E. VIDAVER, DIRECTOR
Date
* * *
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security holders.
-13-
<PAGE>
