As filed with the Securities and
Exchange Commission on May 34, 2000
File No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
Registration Statement
Under the Securities Act of 1933
OAK BROOK CAPITAL III, INC.
(Exact Name of Registrant as Specified in its Charter)
1999 and 2000 Consultation Service Agreements
(Full name of the plan)
COLORADO 000-25013 05-0499527
-------------- --------------------- ---------------------
(State of (Commission File No.) (IRS Employer ID No.)
Incorporation)
1250 Turks Head Building
Providence, RI 02903
---------------------------------------
(Address of Principal Executive Offices)
NADEAU & SIMMONS, P.C.
1250 TURKS HEAD BUILDING
PROVIDENCE, RI 02903
---------------------------------------
(Name and Address of agent for service)
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following line:
[X]
CALCULATION OF REGISTRATION FEE
Proposed(1)(2) Proposed(2)(3)
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(4) Per Share Price Fee (3)
- -------------------------------------------------------------------------------
Common Stock 2,105,200 $.0038 $7,999.76 $2.76
(1) The securities registered hereunder are shares of the registrant's
common stock, no par value.
(2) Estimated for purpose of calculating the registration fee.
(3) The fee with respect to these shares has been calculated pursuant
to Rules 457(h) and 457(c) under the Securities Act of 1933, as
amended, and based upon the average of the bid and ask prices per share
of the Registrant's Common Stock on a date within five (5) days prior
to the date of filing of this Registration Statement, if any, as quoted
on Nasdaq. (Since no quote is now published, it was assumed at $.0038 for
purposes only of calculating the filing fee).
(4) Shares of the registrant's common stock issuable to consultants
under the registrant's 1999 and 2000 Consultation Service Agreements.
<PAGE> 1
--------------------------
FORWARD LOOKING STATEMENTS
--------------------------
THIS FORM S-8 AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY OAK
BROOK CAPITAL III, INC. (HEREINAFTER REFERRED TO AS "OAK BROOK" AND/OR
"COMPANY") OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF 1933
AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
FIFTEEN U.S.C.A. SECTIONS 77Z-2 AND 78U-5 (SUPP. 1996). THOSE STATEMENTS
INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT EXPECTATIONS OF
AEI AND MEMBERS OF ITS MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH
SUCH STATEMENTS ARE BASED.
PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING STATEMENTS
ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES,
AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY
SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY KNOWN TO
MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR COMPLIANCE
STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1 TO THIS
FORM S-8, AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE COMPANY
UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO
REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR
CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
- --------------------------------------------------------------------------------
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The information required by Part I is included in documents sent or given to
participants in the 1998 and 1999 Consultation Services Agreements pursuant to
Rule 428(b)(1).
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are following by reference into the registration
statement:
(a)-1. The Company's Form 10-KSB for FYE December 31, 1999, the Company's
Form 10-QSB filed for March 31, June 30 and September 30, respectively, and
all other reports filed pursuant to section 13(a) or 15(d) since the end
of the year covered by the annual report dated FYE December 31, 1998.
(a)-2. The Company's Form 10-QSB for March 31, 2000, and all other reports
filed pursuant to section 13(a) or 15(d) since the end of the year covered by
above annual report.
(a)-3. The Registration Statement on Form 10-SB filed on October 23, 1999, as
amended, pursuant to Section 12(g) of the Securities Exchange Act which became
effective on December 23, 1998 pursuant to Section 12(g)(1)(B) of the
Securities Exchange Act of 1934, File No. 000-24989.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, subsequent to the
date hereof and prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or which de-
registers all securities covered hereby then remaining unsold shall be deemed
to be incorporated by reference herein and to be a part hereof from the date
of filing of such documents, except as to any portion of any future Annual
or Quarterly Report to Stockholders which is deemed to be modified or
superseded for purposes of this Registration Statement to the extent that such
statement is replaced or modified by a statement contained in a subsequently
dated document incorporated by reference or contained in this Registration
Statement.
The description of the Company's common stock which is contained in the Third
Amendment to the Company's registration statement filed under Section 12 of
the Securities Exchange Act of 1934, including any amendments or reports filed
for the purpose of updating such description.
ITEM 4. DESCRIPTION OF SECURITIES
Common Stock:
Securities are registered under Section 12(g) of the Exchange Act.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL
The validity of the shares of Common Stock to be issued pursuant to this
registration statement will be passed upon by Nadeau & Simmons, P.C. (the
"firm"). Mark T. Thatcher, who serves in an "of counsel" capacity to
the firm, is a director, officer and beneficial owner in the Company,
such position having been held since inception.
<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Colorado Business Corporation Act (the "Act") provides that a corporation
may indemnify a director or officer of the corporation and to purchase and
maintain liability insurance for those persons as, and to the extent permitted
by the Act.
The Company's Bylaws limits directors' liability for monetary damages for
breaches of their duties of care owed the Company to the fullest extent
permitted by Colorado law.
Article 109 of the Colorado Business Corporation Act: (i) gives Colorado
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses (including
attorneys fees) judgments, fines and other amounts paid in settlement actually
and reasonably incurred in connection with threatened, pending or completed
actions, suits, or proceedings to which they are parties or are threatened to
be made parties by reason of being or having been such directors or officers,
subject to specified conditions and exclusions; (ii) gives an officer or
director who successfully defends an action the right to be so indemnified;
and (iii) permits a corporation to buy directors' and officers' liability
insurance.
As permitted by Colorado law, the Registrant's Articles of Incorporation
provide that the Registrant will indemnify its directors and officers against
expenses and liabilities they incur to defend, settle, or satisfy any civil or
criminal action brought against them on account of their being or having been
directors or officers unless, in any such action, they are adjudged to have
acted with gross negligence or willful misconduct. The Registrant's Articles
of Incorporation also exclude personal liability for its directors for monetary
damages based upon any violation of their fiduciary duties as directors,
except as to liability for any breach of the duty of loyalty, acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, acts which constitute improper distributions to shareholders
in violation of Section 7-106-401 of the Colorado Business Corporation Act,
or any transaction from which a director receives an improper personal benefit.
This exclusion of liability does not limit any right which a director may have
to be indemnified and does not affect any director's liability under federal
or applicable state securities laws.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is
therefore unenforceable.
<PAGE> 4
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Does not apply.
PART III
ITEM 8. EXHIBITS
EXHIBIT INDEX
Exhibit No. Exhibit
# 3(a) Articles of Incorporation
# 3(b) Bylaws
# 4(a) Agreements Defining Certain Rights of Shareholders
# 4(b) Specimen Stock Certificate
* 5.1 Opinion of Nadeau & Simmons, P.C. regarding the legality
of the securities being offered hereby.
7 Not applicable
9 Not applicable
# 10(a) Pre-incorporation Consultation and Subscription Agreement
* 10.1 Consultation Services Agreement
11 Not applicable
14 Not applicable
16 Not applicable
21 Not applicable
* 23.1 Consent of Counsel
(contained in Exhibit 5.1)
<PAGE> 5
Exhibit No. Exhibit
* 24.1 Consent of Dennis W. Bersch, CPA.
27 Financial Data Schedule
28 Not applicable
# 99.1 Safe Harbor Compliance Statement
____________________________
x filed herewith
# incorporated herein by reference from Registrant's Third
Amendment to Form 10SB12G, filed August 5, 1999.
ITEM 9. UNDERTAKINGS
The undersigned hereby undertakes:
(1)(a) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(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;
Provided, however, that paragraphs (1)(i) and (1)(a)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8 and the information required
to be included in a post-effective amendment by those paragraphs is contained
in periodic reports filed by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
in the Registration Statement.
<PAGE> 6
(b) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
benefit offering thereof.
(2) To remove from registration by means of a post effective amendment any of
the securities being registered which remain unsold at the termination of the
Plan.
(3) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act pursuant to section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement 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 benefit offering thereof.
(4) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver,
or cause to be delivered to each person to whom the prospectus is sent or
given, the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial information.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
<PAGE> 7
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 the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned thereunto duly
authorized, in the City of Providence, Rhode Island, on the 15th day of
May, 2000.
OAK BROOK CAPITAL III, INC.
By: /s/ Gerard Werner
________________________________
GERARD WERNER
Vice President and Secretary
Date: May 15, 2000
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
_________________ ___________ ________________
/s/ Mark T. Thatcher Chairman and May 15, 2000
& President
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
EXHIBITS
TO
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
OAK BROOK CAPITAL III, INC.
EXHIBIT INDEX
Exhibit No. Exhibit
# 3(a) Articles of Incorporation
# 3(b) Bylaws
# 4(a) Agreements Defining Certain Rights of Shareholders
# 4(b) Specimen Stock Certificate
* 5.1 Opinion of Nadeau & Simmons, P.C. regarding the
legality of the securities being offered hereby.
7 Not applicable
9 Not applicable
# 10(a) Pre-incorporation Consultation and Subscription Agreement
* 10.1 Consultation Services Agreements
<PAGE> 9
Exhibit No. Exhibit
11 Not applicable
14 Not applicable
16 Not applicable
21 Not applicable
* 23.1 Consent of Counsel
(contained in Exhibit 5.1)
* 24.1 Consent of Dennis W. Bersch, CPA.
27 Financial Data Schedule
28 Not applicable
# 99.1 Safe Harbor Compliance Statement
____________________________
x filed herewith
# incorporated herein by reference from Registrant's Third
Amendment to Form 10SB12G, filed August 5, 1999.
<PAGE> 10
EXHIBIT 5.1
NADEAU & SIMMONS, P.C.
May 15, 2000
Oak Brook Capital III, Inc.
1250 Turks Head Building
Providence, RI 02903
Re: S-8 for Oak Brook Capital III, Inc.
Gentlemen:
At your request, we have examined the form of Registration Statement
No. 000-24989 which you are filing with the Securities and Exchange
Commission, on Form S-8 (the "Registration Statement"), in connection with the
registration under the Securities Act of 1933, as amended, of 2,105,200 shares
of your Common Stock (the "Stock") issuable pursuant to a 1999 Consultation
Services Agreement Plan and a 2000 Consultation Services Agreement Plan
(collectively the "Plan").
In rendering the following opinion, we have examined and relied only
upon the documents, and certificates of officers and directors of the Company
as are specifically described below. In our examination, we have assumed the
genuineness of all signatures, the authenticity, accuracy and completeness of
the documents submitted to me as originals, and the conformity with the
original documents of all documents submitted to me as copies. Our
examination was limited to the following documents and not others:
1.Certificate of Incorporation of the Company, as amended to date;
2.Bylaws of the Company, as amended to date;
3.Certified Resolutions adopted by the Board of Directors of the Company
authorizing the Plan and the issuance of the Stock;
4.The Registration Statements; and
5.The Form of Plan.
We have not undertaken, nor do we intend to undertake, any independent
investigation beyond such documents and records, or to verify the adequacy
of accuracy of such documents and records.
<PAGE> 11
NADEAU & SIMMONS, P.C.
Oak Brook Capital III, Inc.
May 15, 2000
Page 2
Based on the foregoing, it is our opinion that the Stock issued under the
Plan, subject to effectiveness of the Registration Statement and compliance
with applicable blue sky laws, and execution of the Plan in the form referred
to herein, when issued under the Plan, has been duly and validly authorized,
fully paid and non-assessable.
We express no opinion as to compliance with the securities or "blue sky"
laws of any state in which the Stock is proposed to be offered and sold or as
to the effect, if any, which non-compliance with such laws might have on
the validity of issuance of the Stock.
We consent to the filing of this opinion as an exhibit to any filing made
with the Securities and Exchange Commission or under any state or other
jurisdiction's securities act for the purpose of registering, qualifying or
establishing eligibility for an exemption from registration or qualification
of the Stock described in the Registration Statement in connection with the
offering described therein. Other than as provided in the preceding sentence,
this opinion (i) is addressed solely to you, (ii) may not be relied upon by
any other party, (iii) covers only matters of Colorado and federal law and
nothing in this opinion shall be deemed to imply any opinion related to the
laws of any other jurisdiction, (iv) may not be quoted or reproduced or
delivered by you to any other person, and (v) may not be relied upon for any
other purpose whatsoever. Nothing herein shall be deemed to relate to or
constitute an opinion concerning any matters not specifically set forth above.
By giving you this opinion and consent, we do not admit that we are
experts with respect to any part of the Registration Statement or Prospectus
within the meaning of the term "expert" as used in Section 11 of the
Securities Act of 1933, as amended, or the Rules and Regulations of the
Securities and Exchange Commission promulgated thereunder.
The information set forth herein is as of the date of this letter. We
disclaim any undertaking to advise you of changes which may be brought to our
attention after the effective date of the Registration Statement.
Very truly yours,
NADEAU & SIMMONS, P.C.
By: /s/ James R. Simmons
JAMES R. SIMMONS,
Vice President
<PAGE> 12
EXHIBIT 10.1
1999 CONSULTATION SERVICES COMPENSATION PLAN
OAK BROOK CAPITAL III, INC.
1. PURPOSE OF THE PLAN.
This Consultation Services Compensation Plan is intended to further the
growth and advance the best interest of Oak Brook Capital III, Inc., a Colorado
corporation (the "Company"), by supporting and increasing the Company's
ability to attract, retain and compensate persons of experience and ability
and whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. This Plan provides for
stock compensation through the award of the Company's Common Stock, as a bonus
or in lieu of cash compensation for services rendered.
2. DEFINITIONS.
Whenever used in this Plan, except where the context might clearly
indicate otherwise, the following terms shall have the meanings set forth in
this section:
a. "Act" means the U.S. Securities Act of 1933, as amended.
b. "Affiliated Corporation" means any Parent or Subsidiary.
c. "Award" means any grant of Common Stock made under this Plan,
as a bonus, or in lieu of cash compensation for services
rendered.
d. "Board of Directors" means the Board of Directors of the
Company.
e. "Code" means the Internal Revenue Code of 1986, as amended.
<PAGE> 13
f. "Common Stock" or "Common Shares" means the common stock,
no par value per share, of the Company, or in the event
that the outstanding Common Shares are hereafter changed
into or exchanged for different shares of securities of the
Company, such other shares or securities.
g. "Date of Grant" means the day the Board of Directors
authorizes the grant of an Award or such later date as may be
specified by the Board of Directors as the date a
particular Award will become effective.
h. "Employee/Consultant" means any person or entity that renders
bona fide services to the Company, including, without
limitation, (i) a person employed by the Company in any
capacity; (ii) an officer or director of the Company; or
(iii) a person engaged by the Company as a consultant or
advisor.
i. "Participant" means an Employee or Consultant to whom an
Award of Plan Shares has been made.
j. "Plan Shares" means shares of Common Stock from time to time
subject to this Plan.
3. EFFECTIVE DATE OF THE PLAN.
The effective date of this Plan is May 15, 1999. No Plan Shares may
be issued after December 31, 2000.
4. ADMINISTRATION OF THE PLAN.
The Board of Directors will be responsible for the administration of
this Plan, and will negotiate compensation under this Plan. Subject to the
express provisions of this Plan, the Board of Directors shall have full
authority and sole and absolute discretion to interpret this Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all other
determinations which it believes to be necessary or advisable in administering
this Plan. The determination of those eligible to receive Plan Shares shall rest
in the sole discretion of the Board of Directors, subject to the provisions of
this Plan. The Board of Directors may correct any defect, supply any omission or
reconcile any inconsistency in this Plan in such manner and to such extent it
shall deem necessary to carry it into effect. Any decision made, or action
taken, by the Board of Directors arising out of or in connection with the
<PAGE> 14
interpretation and administration of the Plan shall be final and conclusive.
The Board of Directors may appoint a compensation committee from among the
members of the full Board of Directors to administer this Plan.
5. STOCK SUBJECT TO THE PLAN.
The maximum number of Plan Shares as to which Awards may be granted
under this Plan is 1,105,200 shares.
6. PERSONS ELIGIBLE TO RECEIVE AWARDS.
Awards may be granted only to Employees or Consultants
7. GRANTS OF AWARDS.
Except as otherwise provided herein, the Board of Directors shall have
complete discretion to determine when and to which Employees Awards are to be
granted, and the number of Plan Shares to be Awarded to each
Employee/Consultant. No grant will be made if, in the judgment of the Board
of Directors, such a grant would constitute a public distribution with the
meaning of the Act or the rules and regulations promulgated thereunder.
8. DELIVERY OF STOCK CERTIFICATES.
As promptly as practicable after authorizing the grant of an Award, the
Company shall deliver to the person who is the recipient of the award, a
certificate or certificates registered in that person's name, representing the
number of Plan Shares that were granted. Unless the Plan Shares have been
registered under the Act, each certificate evidencing Plan Shares shall bear a
legend to indicate that such shares represented by the certificate were issued
in a transaction which was not registered under the Act, and may only be sold
or transferred in a transaction that is registered under the Act or is exempt
from the registration requirements of the Act.
9. ASSIGNABILITY.
No Award of Plan Shares may be assigned. Plan Shares may be assigned
after such shares have been delivered, only in accordance with law and any
transfer restrictions imposed at the time of Award.
<PAGE> 15
10. EMPLOYMENT.
Nothing in this Plan or in the grant of an Award shall confer upon any
Employee/Consultant the right to continue in the employ of the Company nor shall
it interfere with or restrict in any way the lawful rights of the Company to
discharge any Employee/Consultant at any time for any reason whatsoever, with
or without cause.
11. LAWS AND REGULATIONS.
The obligation of the Company to sell and deliver Plan Shares on the
grant of an Award under this Plan shall be subject to the condition that the
Company be satisfied that the sale and delivery thereof will not violate the
Act or any other applicable laws, rules or regulations.
12. WITHHOLDING OF TAXES.
If subject to withholding tax, the Company may require that the Employee
concurrently pay to the Company the entire amount or a portion of any taxes
which the Company is required to withhold by reason of granting an Award, in
such amount as the Company in its discretion may determine. In lieu of part
or all of any such payment, the Employee may elect to have the Company withhold
from the Plan Shares issued hereunder a sufficient number of shares to satisfy
withholding obligations. If the Company becomes required to pay withholding
taxes to any federal, state or other taxing authority as a result of the
granting of an Award, and the Employee fails to provide the Company with the
funds with which to pay that withholding tax, the Company may withhold up to
50% of each payment of salary or bonus to the Employee (which will be in
addition to any required or permitted withholding), until the Company has
been reimbursed for the entire withholding tax it was required to pay in
respect of issuance of any Plan Shares.
If shares pursuant to the plan are issued to a consultant, not a regular
employee under the Internal Revenue Code, such shares shall not be delivered
until a W-2 is received and a Form 1099 shall be issued with delivery
of the shares.
<PAGE> 16
13. RESERVATION OF SHARES.
The stock subject to this Plan shall, at all times, consist of authorized
but unissued shares of Common Stock reacquired or held by the Company equal to
the maximum number of shares the Company may be required to issue on the grant
of Awards under this Plan, and such number of Common Shares hereby is reserved
for such purpose. The Board of Directors may decrease the number of shares
subject to this Plan, but not increase such number, except as a consequence
of a stock split or other reorganization or recapitalization affecting all
Common Shares.
14. AMENDMENT AND TERMINATION OF THE PLAN.
The Board of Directors may suspend or terminate this Plan at any time
or from time to time, but no such action shall adversely affect the rights of
a person granted an Award under this Plan prior to that date. Otherwise, this
Plan shall terminate on the earlier of the terminal date stated in Section 3 of
this Plan or the date when all Plan Shares have been issued. The Board of
Directors shall have absolute discretion to amend this Plan, subject to any
limitations expressly set forth herein.
15. DELIVERY OF PLAN.
A copy of this Plan shall be delivered to all participants, together with
a copy of the resolution or resolutions of the Board of Directors authorizing
the granting of the Award and establishing the terms, if any of participation,
prior to an Award of Plan Shares.
16. LIABILITY.
No member of the Board of Directors, any committee of directors, or
officers, employees or agents of the Company shall be personally liable for
any action, omission or determination made in good faith in connection with
this Plan.
17. MISCELLANEOUS PROVISIONS.
The place of administration of the Plan shall be in the State of Colorado,
and the validity, construction, interpretation and effect of this Plan and of
its rules, regulations and rights relating to it, shall be determined solely in
accordance with the laws of such state.
<PAGE> 17
Without amending this Plan, the Board of Directors may issue Plan Shares
to employees of the Company who are foreign nationals or employed outside
the United States, or both, on such terms and conditions different form those
specified in this Plan but consistent with the purpose of this Plan, as it deems
necessary and desirable to create equitable opportunities given differences in
tax laws in other countries.
All expenses of administering this Plan and issuing Plan Shares
shall be borne by the Company.
By signature below, the undersigned officers of the Company hereby
certify that the foregoing is a true and correct copy of the 1999 Consultation
Services Compensation Plan of the Company.
Dated: May 15, 2000
OAK BROOK CAPITAL III, INC.
/s/ Mark T. Thatcher
By:-----------------------------
MARK T. THATCHER, President
Attest:
/s/Gerard Werner
By:---------------------------
GERARD WERNER, Secretary
<PAGE> 18
2000 CONSULTATION SERVICES COMPENSATION PLAN
OAK BROOK CAPITAL III, INC.
1. PURPOSE OF THE PLAN.
This Consultation Services Compensation Plan is intended to further the
growth and advance the best interest of OAK BROOK CAPITAL III, Inc., a Colorado
corporation (the "Company"), by supporting and increasing the Company's
ability to attract, retain and compensate persons of experience and ability and
whose services are considered valuable, to encourage the sense of
proprietorship in such persons, and to stimulate the active interest of such
persons in the development and success of the Company. This Plan provides for
stock compensation through the award of the Company's Common Stock, as a bonus
or in lieu of cash compensation for services rendered.
2. DEFINITIONS.
Whenever used in this Plan, except where the context might clearly
indicate otherwise, the following terms shall have the meanings set forth in
this section:
a. "Act" means the U.S. Securities Act of 1933, as amended.
b. "Affiliated Corporation" means any Parent or Subsidiary.
c. "Award" means any grant of Common Stock made under this Plan,
as a bonus, or in lieu of cash compensation for
services rendered.
d. "Board of Directors" means the Board of Directors of the
Company.
e. "Code" means the Internal Revenue Code of 1986, as amended.
f. "Common Stock" or "Common Shares" means the common stock,
no par value per share, of the Company, or in the event
that the outstanding Common Shares are hereafter changed
into or exchanged for different shares of securities of
the Company, such other shares or securities.
<PAGE> 19
g. "Date of Grant" means the day the Board of Directors
authorizes the grant of an Award or such later date as may
be specified by the Board of Directors as the date a
particular Award will become effective.
h. "Employee/Consultant" means any person or entity that
renders bona fide services to the Company, including,
without limitation, (i) a person employed by the Company
in any capacity; (ii) an officer or director of the
Company; or (iii) a person engaged by the Company as a
consultant or advisor.
i. "Participant" means an Employee or Consultant to whom an
Award of Plan Shares has been made.
j. "Plan Shares" means shares of Common Stock from time to time
subject to this Plan.
3. EFFECTIVE DATE OF THE PLAN.
The effective date of this Plan is January 1, 2000. No Plan Shares may
be issued after December 31, 2000.
4. ADMINISTRATION OF THE PLAN.
The Board of Directors will be responsible for the administration of
this Plan, and will negotiate compensation under this Plan. Subject to the
express provisions of this Plan, the Board of Directors shall have full
authority and sole and absolute discretion to interpret this Plan, to prescribe,
amend and rescind rules and regulations relating to it, and to make all other
determinations which it believes to be necessary or advisable in administering
this Plan. The determination of those eligible to receive Plan Shares shall rest
in the sole discretion of the Board of Directors, subject to the provisions of
this Plan. The Board of Directors may correct any defect, supply any omission or
reconcile any inconsistency in this Plan in such manner and to such extent it
shall deem necessary to carry it into effect. Any decision made, or action
taken, by the Board of Directors arising out of or in connection with the
interpretation and administration of the Plan shall be final and conclusive.
The Board of Directors may appoint a compensation committee from among the
members of the full Board of Directors to administer this Plan.
<PAGE> 20
5. STOCK SUBJECT TO THE PLAN.
The maximum number of Plan Shares as to which Awards may be granted
under this Plan is 1,000,000 shares.
6. PERSONS ELIGIBLE TO RECEIVE AWARDS.
Awards may be granted only to Employees or Consultants
7. GRANTS OF AWARDS.
Except as otherwise provided herein, the Board of Directors shall
have complete discretion to determine when and to which Employees Awards
are to be granted, and the number of Plan Shares to be Awarded to each
Employee/Consultant. No grant will be made if, in the judgment of the Board
of Directors, such a grant would constitute a public distribution with the
meaning of the Act or the rules and regulations promulgated thereunder.
8. DELIVERY OF STOCK CERTIFICATES.
As promptly as practicable after authorizing the grant of an Award,
the Company shall deliver to the person who is the recipient of the award, a
certificate or certificates registered in that person's name, representing
the number of Plan Shares that were granted. Unless the Plan Shares have been
registered under the Act, each certificate evidencing Plan Shares shall bear a
legend to indicate that such shares represented by the certificate were issued
in a transaction which was not registered under the Act, and may only be sold
or transferred in a transaction that is registered under the Act or is exempt
from the registration requirements of the Act.
9. ASSIGNABILITY.
No Award of Plan Shares may be assigned. Plan Shares may be assigned
after such shares have been delivered, only in accordance with law and any
transfer restrictions imposed at the time of Award.
10. EMPLOYMENT.
Nothing in this Plan or in the grant of an Award shall confer upon
any Employee/Consultant the right to continue in the employ of the Company nor
shall it interfere with or restrict in any way the lawful rights of the
Company to discharge any Employee/Consultant at any time for any reason
whatsoever, with or without cause.
<PAGE> 21
11. LAWS AND REGULATIONS.
The obligation of the Company to sell and deliver Plan Shares on the
grant of an Award under this Plan shall be subject to the condition that the
Company be satisfied that the sale and delivery thereof will not violate the
Act or any other applicable laws, rules or regulations.
12. WITHHOLDING OF TAXES.
If subject to withholding tax, the Company may require that the Employee
concurrently pay to the Company the entire amount or a portion of any taxes
which the Company is required to withhold by reason of granting an Award, in
such amount as the Company in its discretion may determine. In lieu of part
or all of any such payment, the Employee may elect to have the Company withhold
from the Plan Shares issued hereunder a sufficient number of shares to satisfy
withholding obligations. If the Company becomes required to pay withholding
taxes to any federal, state or other taxing authority as a result of the
granting of an Award, and the Employee fails to provide the Company with the
funds with which to pay that withholding tax, the Company may withhold up to
50% of each payment of salary or bonus to the Employee (which will be in
addition to any required or permitted withholding), until the Company has
been reimbursed for the entire withholding tax it was required to pay in
respect of issuance of any Plan Shares.
If shares pursuant to the plan are issued to a consultant, not a regular
employee under the Internal Revenue Code, such shares shall not be delivered
until a W-2 is received and a Form 1099 shall be issued with delivery
of the shares.
13. RESERVATION OF SHARES.
The stock subject to this Plan shall, at all times, consist of authorized
but unissued shares of Common Stock reacquired or held by the Company equal
to the maximum number of shares the Company may be required to issue on the
grant of Awards under this Plan, and such number of Common Shares hereby is
reserved for such purpose. The Board of Directors may decrease the number of
shares subject to this Plan, but not increase such number, except as a
consequence of a stock split or other reorganization or recapitalization
affecting all Common Shares.
<PAGE> 22
14. AMENDMENT AND TERMINATION OF THE PLAN.
The Board of Directors may suspend or terminate this Plan at any time
or from time to time, but no such action shall adversely affect the rights of
a person granted an Award under this Plan prior to that date. Otherwise, this
Plan shall terminate on the earlier of the terminal date stated in Section 3 of
this Plan or the date when all Plan Shares have been issued. The Board of
Directors shall have absolute discretion to amend this Plan, subject to any
limitations expressly set forth herein.
15. DELIVERY OF PLAN.
A copy of this Plan shall be delivered to all participants, together with
a copy of the resolution or resolutions of the Board of Directors authorizing
the granting of the Award and establishing the terms, if any of participation,
prior to an Award of Plan Shares.
16. LIABILITY.
No member of the Board of Directors, any committee of directors, or
officers, employees or agents of the Company shall be personally liable for
any action, omission or determination made in good faith in connection with this
Plan.
17. MISCELLANEOUS PROVISIONS.
The place of administration of the Plan shall be in the State of Colorado,
and the validity, construction, interpretation and effect of this Plan and of
its rules, regulations and rights relating to it, shall be determined solely in
accordance with the laws of such state.
Without amending this Plan, the Board of Directors may issue Plan Shares
to employees of the Company who are foreign nationals or employed outside
the United States, or both, on such terms and conditions different form those
specified in this Plan but consistent with the purpose of this Plan, as it deems
necessary and desirable to create equitable opportunities given differences in
tax laws in other countries.
All expenses of administering this Plan and issuing Plan Shares shall
be borne by the Company.
<PAGE> 23
By signature below, the undersigned officers of the Company hereby
certify that the foregoing is a true and correct copy of the 2000 Consultation
Services Compensation Plan of the Company.
Dated: May 15, 2000
OAK BROOK CAPITAL III, INC.
/s/ Mark T. Thatcher
By:--------------------
MARK T. THATCHER,
CEO and President
DENNIS W. BERSCH
CERTIFIED PUBLIC ACCOUNTANTS
CONSENT FOR INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Oak Brook Capital III, Inc.
Dated: May 15, 2000
I hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of my report dated February 25, 1999 appearing on page
F-2 of Oak Brook Capital I, Inc. Registration Statement on Form 10SB12G for
the year ended December 31, 1998. I also consent to the reference to me under
the heading "Exhibits" in such Registration Statement.
/s/ Dennis W. Bersch
---------------------------------
Dennis W. Bersch
CONSENT OF COUNSEL
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our consent dated May 15, 2000 appearing in the Oak
Brook Capital III, Inc. Registration Statement on Form 10SB12G, Third
Amendment, filed that same day. We also consent to the reference to us under
the heading "Exhibits" in such Registration Statement.
NADEAU & SIMMONS, P.C.
/s/ James R. Simmons
By:_______________________
JAMES R. SIMMONS, ESQ.
Providence, RI
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,200
<PP&E> 0
<DEPRECIATION> (525)
<TOTAL-ASSETS> 3,675
<CURRENT-LIABILITIES> 7,725
<BONDS> 0
0
0
<COMMON> 4,200
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,675
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 7,725
<OTHER-EXPENSES> 525
<LOSS-PROVISION> (8,250)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,250)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. Oak Brook Capital III, Inc. ("Oak Brook"
or the "Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All forward-
looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of Oak Brook. The
Company undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, Oak Brook undertakes no obligation to
update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
FORWARD LOOKING STATEMENTS
THIS QUARTERLY REPORT AND OTHER STATEMENTS ISSUED OR MADE FROM TIME TO TIME BY
OAK BROOK CAPITAL III, INC. (HEREINAFTER REFERRED TO AS "OAK BROOK" AND/OR
"COMPANY") OR ITS REPRESENTATIVES CONTAIN STATEMENTS WHICH MAY CONSTITUTE
"FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE SECURITIES ACT OF
1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. FIFTEEN U.S.C.A. SECTIONS 77Z-2
AND 78U-5 (SUPP. 1996). THOSE STATEMENTS INCLUDE STATEMENTS REGARDING THE
INTENT, BELIEF OR CURRENT EXPECTATIONS OF OAK BROOK AND MEMBERS OF ITS
MANAGEMENT TEAM AS WELL AS THE ASSUMPTIONS ON WHICH SUCH STATEMENTS ARE
BASED. PROSPECTIVE INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE RISKS AND
UNCERTAINTIES, AND THAT ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS CURRENTLY
KNOWN TO MANAGEMENT THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE IN FORWARD-LOOKING STATEMENTS ARE SET FORTH IN THE SAFE HARBOR
COMPLIANCE STATEMENT FOR FORWARD-LOOKING STATEMENTS INCLUDED AS EXHIBIT 99.1
TO THIS FORM 10QSB, AND ARE HEREBY INCORPORATED HEREIN BY REFERENCE. THE
COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING
STATEMENTS TO REFLECT CHANGED ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED
EVENTS OR CHANGES TO FUTURE OPERATING RESULTS OVER TIME.
<PAGE> 1
RISK FACTORS
1. YEAR 2000.
It is possible that the Company's currently installed computer system,
software products or other business systems, or those of the Company's
customers, vendors or resellers, working either alone or in conjunction with
other software or systems, will not accept input of, store, manipulate and
output dates for the years 1999, 2000 or thereafter without error or
interruption (commonly known as the "Year 2000" problem). The Company has
conducted a review of its business systems, including its computer systems,
and is querying its customers, vendors and resellers as to their progress in
identifying and addressing problems that their computer systems may face in
correctly interrelating and processing date information as the year 2000
approaches and is reached.
The detail planning and inventory for the majority of the Company's legacy
systems that are being modified for Year 2000 compatibility has been
completed and such systems are in remediation.
The estimated cost of the Company's Year 2000 efforts is $1,000 to
$1,500 over 1998 and 1999, the majority of which represents redirection
of internal resources. However, there can be no assurance that the Company
will identify all such Year 2000 problems in its computer systems or those
of its customers, vendors or resellers in advance of their occurrence or
that the Company will be able to successfully remedy any problems that are
discovered. The expenses of the Company's efforts to identify and address
such problems, or the expenses or liabilities to which the Company may become
subject as a result of such problems, could have a material adverse effect on
the Company's business, financial condition and results of operations.
In addition, failure of the Company to identify and remedy Year 2000
problems could put the Company at a competitive disadvantage relative to
companies that have corrected such problems.
<PAGE>
2. Control by Principal Shareholders, Officers and Directors.
The Company's principal shareholders, officers and directors will
beneficially own approximately ninety percent (90%) of the
Company's Common Stock. As a result, such persons may have the
ability to control the Company and direct its affairs and
business. Such concentration of ownership may also have the
effect of delaying, deferring or preventing change in control of
the Company. See "Principal Stockholders."
3. Conflicts of Interest.
Certain conflicts of interest exist between the Company and its
officers and directors. They have other business interests to which
they devote their attention, and they may be expected to continue
to do so although management time should be devoted to the business
of the Company. As a result, conflicts of interest may arise that
can be resolved only through their exercise of such judgment as is
consistent with his fiduciary duties to the Company. See
"Management," and "Conflicts of Interest."
It is anticipated that Company's President and Vice President
may actively negotiate or otherwise consent to the purchase of a portion
of their common stock as a condition to, or in connection with, a proposed
merger or acquisition transaction. In this process, the Company's
President and/or Vice President may consider their own personal pecuniary
<PAGE>
benefit rather than the best interests of other Company shareholders, and
the other Company shareholders are not expected to be afforded the
opportunity to approve or consent to any particular stock buy-out
transaction. See "Conflicts of Interest."
4. Possible Need for Additional Financing.
The Company has very limited funds, and such funds may not be adequate
to take advantage of any available business opportunities. Even if the
Company's funds prove to be sufficient to acquire an interest in, or
complete a transaction with, a business opportunity, the Company may not
have enough capital to exploit the opportunity. The ultimate success of
the Company may depend upon its ability to raise additional capital. The
Company has not investigated the availability, source, or terms that
might govern the acquisition of additional capital and will not do so
until it determines a need for additional financing. If additional
capital is needed, there is no assurance that funds will be available
from any source or, if available, that they can be obtained on terms
acceptable to the Company. If not available, the Company's opera-
tions will be limited to those that can be financed with its modest
capital.
5. Regulation of Penny Stocks.
The Company's securities, when available for trading, will be subject to
a Securities and Exchange Commission rule that imposes special sales
practice requirements upon broker-dealers who sell such securities to
persons other than established customers or accredited investors. For
purposes of the rule, the phrase "accredited investors" means, in
general terms, institutions with assets in excess of $5,000,000, or
individuals having a net worth in excess of $1,000,000 or having an
annual income that exceeds $200,000 (or that, when combined with a
spouse's income, exceeds $300,000). For transactions covered by the rule,
the broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of broker-
dealers to sell the Company's securities and also may affect the ability
of purchasers in this offering to sell their securities in any market that
might develop therefor.
In addition, the Securities and Exchange Commission has
adopted a number of rules to regulate "penny stocks." Such rules
include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and
15g-7 under the Securities Exchange Act of 1934, as amended.
Because the securities of the Company may constitute "penny stocks"
<PAGE>
within the meaning of the rules, the rules would apply to the Company
and to its securities. The rules may further affect the ability
of owners of Shares to sell the securities of the Company in any
market that might develop for them.
Shareholders should be aware that, according to Securities and
Exchange Commission Release No. 34-29093, the market for penny
stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or issuer;
(ii) manipulation of prices through prearranged matching of purchases
and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differentials and markups by selling broker-
dealers; and (v) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a
desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses. The Company's
management is aware of the abuses that have occurred historically in
the penny stock market. Although the Company does not expect to
be in a position to dictate the behavior of the market or of broker-
dealers who participate in the market, management will strive within
the confines of practical limitations to prevent the described patterns
from being established with respect to the Company's securities.
6. No Operating History.
The Company was formed in May of 1998 for the purpose of registering
its common stock under the 1934 Act and acquiring a business opportunity.
The Company has no operating history, revenues from operations, or assets
other than cash from private sales of stock. The Company faces all of
the risks of a new business and the special risks inherent in the
investigation, acquisition, or involvement in a new business opportunity.
The Company must be regarded as a new or "start-up" venture with all of
the unforeseen costs, expenses, problems, and difficulties to which
such ventures are subject.
7. No Assurance of Success or Profitability.
There is no assurance that the Company will acquire a favorable business
opportunity. Even if the Company should become involved in a business
opportunity, there is no assurance that it will generate revenues or
profits, or that the market price of the Company's Common Stock will
be increased thereby.
<PAGE>
8. Reporting Requirements May Delay Or Preclude Acquisition.
Section 13 of the Securities Exchange Act of 1934 (the "Exchange Act"),
requires companies subject thereto to provide certain information about
significant acquisitions, including certified financial statements for the
company acquired, covering one or two years, depending on the relative
size of the acquisition. The time and additional costs that may be
incurred by some target entities to prepare such statements may
significantly delay or essentially preclude consummation of an
otherwise desirable acquisition by the Company. Acquisition prospects
that do not have or are unable to obtain the required audited statements
may not be appropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
9. Lack of Market Research or Marketing Organization.
The Company has neither conducted, nor have others made available to it,
results of market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company does not
have, and does not plan to establish, a marketing organization. Even in the
event demand is identified for a merger or acquisition contemplated by
the Company, there is no assurance the Company will be successful in
completing any such business combination.
10. Possible Business - Not Identified and Highly Risky.
The Company has not identified and has no commitments to enter into or
acquire a specific business opportunity and therefore can disclose the
risks and hazards of a business or opportunity that it may enter into
in only a general manner, and cannot disclose the risks and hazards of
any specific business or opportunity that it may enter into. An
investor can expect a potential business opportunity to be quite risky.
The Company's acquisition of or participation in a business
opportunity will likely be highly illiquid and could result in a total
loss to the Company and its stockholders if the business or
opportunity proves to be unsuccessful. See Item 1 "Description of
Business."
11. Type of Business Acquired.
The type of business to be acquired may be one that desires to avoid
effecting its own public offering and the accompanying expense, delays,
uncertainties, and federal and state requirements which purport to protect
investors. Because of the Company's limited capital, it is more likely than
not that any acquisition by the Company will involve other parties whose
primary interest is the acquisition of control of a publicly traded
company. Moreover, any business opportunity acquired may be
<PAGE>
currently unprofitable or present other negative factors.
12. Impracticability of Exhaustive Investigation.
The Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a business opportunity before the Company
commits its capital or other resources thereto. Management decisions,
therefore, will likely be made without detailed feasibility studies,
independent analysis, market surveys and the like which, if the Com-
pany had more funds available to it, would be desirable. The
Company will be particularly dependent in making decisions upon
information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's
participation. A significant portion of the Company's available funds
may be expended for investigative expenses and other expenses related
to preliminary aspects of completing an acquisition transaction,
whether or not any business opportunity investigated is eventually
acquired.
13. Lack of Diversification.
Because of the limited financial resources that the Company has, it is
unlikely that the Company will be able to diversify its acquisitions or
operations. The Company's probable inability to diversify its activities
into more than one area will subject the Company to economic fluctuations
within a particular business or industry and therefore increase the risks
associated with the Company's operations.
14. Possible Reliance upon Unaudited Financial Statements.
The Company generally will require audited financial statements from
companies that it proposes to acquire. No assurance can be given,
however, that audited financials will be available to the Company. In
cases where audited financials are unavailable, the Company will have
to rely upon unaudited information received from target companies'
management that has not been verified by outside auditors. The lack
of the type of independent verification which audited financial
statements would provide, increases the risk that the Company, in
evaluating an acquisition with such a target company, will not have
the benefit of full and accurate information about the financial
condition and operating history of the target company. This risk
increases the prospect that the acquisition of such a company might
prove to be an unfavorable one for the Company or the holders of the
Company's securities.
<PAGE>
Moreover, the Company will be subject to the reporting provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
thus will be required to furnish certain information about significant
acquisitions, including audited financial statements for any business
that it acquires. Consequently, acquisition prospects that do not have,
or are unable to provide reasonable assurances that they will be able to
obtain, the required audited statements would not be considered by the
Company to be appropriate for acquisition so long as the reporting
requirements of the Exchange Act are applicable. Should the Company,
during the time it remains subject to the reporting provisions of the
Exchange Act, complete an acquisition of an entity for which audited
financial statements prove to be unobtainable, the Company would be
exposed to enforcement actions by the Securities and Exchange Commission
(the "Commission") and to corresponding administrative sanctions,
including permanent injunctions against the Company and its
management. The legal and other costs of defending a Commission
enforcement action are likely to have material, adverse consequences
for the Company and its business. The imposition of administrative
sanctions would subject the Company to further adverse consequences.
In addition, the lack of audited financial statements would prevent the
securities of the Company from becoming eligible for listing on NASDAQ,
the automated quotation system sponsored by the National Association of
Securities Dealers, Inc., or on any existing stock exchange. Moreover,
the lack of such financial statements is likely to discourage broker-dealers
from becoming or continuing to serve as market makers in the securities
of the Company. Without audited financial statements, the Company would
almost certainly be unable to offer securities under a registration statement
pursuant to the Securities Act of 1933, and the ability of the Company to
raise capital would be significantly limited until such financial statements
were to become available.
15. Other Regulation.
An acquisition made by the Company may be of a business that is subject to
regulation or licensing by federal, state, or local authorities. Compliance
with such regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the Company.
<PAGE>
16. Dependence upon Management; Limited Participation of Management.
The Company currently has two individuals who are serving as its sole
officers and directors. The Company will be heavily dependent upon
their skills, talents, and abilities to implement its business plan,
and may, from time to time, find that the inability of the sole
officers and directors to devote their full time attention to the
business of the Company results in a delay in progress toward
implementing its business plan. Furthermore, since only two individuals
are serving as the sole officers and directors of the Company, it will be
entirely dependent upon their experience in seeking, investigating, and
acquiring a business and in making decisions regarding the Company's
operations. See "Management." Because investors will not be able to
evaluate the merits of possible business acquisitions by the Company,
they should critically assess the information concerning the Company's
sole officer and director.
17. Lack of Continuity in Management.
The Company does not have an employment agreement with its sole officers
and directors, and as a result, there is no assurance that they will
continue to manage the Company in the future. In connection with
acquisition of a business opportunity, it is likely the current officers
and directors of the Company may resign. A decision to resign will be
based upon the identity of the business opportunity and the nature of the
transaction, and is likely to occur without the vote or consent of the
stockholders of the Company.
18. Indemnification of Officers and Directors.
The Company's Articles of Incorporation provide for the indemnification
of its directors, officers, employees, and agents, under certain
circumstances, against attorney's fees and other expenses incurred by them
in any litigation to which they become a party arising from their association
with or activities on behalf of the Company. The Company will also
bear the expenses of such litigation for any of its directors, officers,
employees, or agents, upon such person's promise to repay the Company
therefor if it is ultimately determined that any such person shall not
have been entitled to indemnification. This indemnification policy could
result in substantial expenditures by the Company which it will be unable
to recoup.
<PAGE>
19. Director's Liability Limited.
The Company's Articles of Incorporation exclude personal liability of its
directors to the Company and its stockholders for monetary damages for
breach of fiduciary duty except in certain specified circumstances.
Accordingly, the Company will have a much more limited right of action
against its directors than otherwise would be the case. This provision
does not affect the liability of any director under federal or applicable
state securities laws.
20. Dependence upon Outside Advisors.
To supplement the business experience of its sole officer and director,
the Company may be required to employ accountants, technical experts,
appraisers, attorneys, or other consultants or advisors. The selection
of any such advisors will be made by the Company's President without any
input from stockholders. Furthermore, it is anticipated that such persons
may be engaged on an "as needed" basis without a continuing
fiduciary or other obligation to the Company. In the event the
President of the Company considers it necessary to hire outside
advisors, he may elect to hire persons who are affiliates, if they are
able to provide the required services.
21. Leveraged Transactions.
There is a possibility that any acquisition of a business opportunity by
the Company may be leveraged, i.e., the Company may finance the acquisition
of the business opportunity by borrowing against the assets of the business
opportunity to be acquired, or against the projected future revenues or
profits of the business opportunity. This could increase the
Company's exposure to larger losses. A business opportunity acquired
through a leveraged transaction is profitable only if it generates
enough revenues to cover the related debt and expenses. Failure to
make payments on the debt incurred to purchase the business
opportunity could result in the loss of a portion or all of the assets
acquired. There is no assurance that any business opportunity
acquired through a leveraged transaction will generate sufficient
revenues to cover the related debt and expenses.
22. Competition.
The search for potentially profitable business opportunities is intensely
competitive. The Company expects to be at a disadvantage when competing
with many firms that have substantially greater financial and management
resources and capabilities than the Company. These competitive conditions
will exist in any industry in which the Company may become interested.
<PAGE>
23. No Foreseeable Dividends.
The Company has not paid dividends on its Common Stock and does not
anticipate paying such dividends in the foreseeable future.
24. Loss of Control by Present Management and Stockholders.
The Company may consider an acquisition in which the Company
would issue as consideration for the business opportunity to be
acquired an amount of the Company's authorized but unissued
Common Stock that would, upon issuance, represent the great majority
of the voting power and equity of the Company. The result of such
an acquisition would be that the acquired company's stockholders and
management would control the Company, and the Company's
management could be replaced by persons unknown at this time.
Such a merger would result in a greatly reduced percentage of
ownership of the Company by its current shareholders. In addition, the
Company's President and/or Vice President could sell their control
block of stock at a premium price to the acquired company's
stockholders.
25. No Public Market Exists.
There is no public market for the Company's common stock, and no
assurance can be given that a market will develop or that a shareholder
ever will be able to liquidate his investment without considerable
delay, if at all. If a market should develop, the price may be highly
volatile. Factors such as those discussed in this "Risk Factors"
section may have a significant impact upon the market price of the
securities offered hereby. Owing to the low price of the securities,
many brokerage firms may not be willing to effect transactions in the
securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage
commissions, state transfer taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will
not permit the use of such securities as collateral for any loans.
26. Rule 144 Sales.
All of the outstanding shares of Common Stock held by present
stockholders are "restricted securities" within the meaning of
Rule 144 under the Securities Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144
or other applicable exemptions from registration under the Act and as
required under applicable state securities laws. Rule 144 provides in
essence that a person who has held restricted securities for a
prescribed period may, under certain conditions, sell every three
<PAGE>
months, in brokerage transactions, a number of shares that does not
exceed the greater of 1.0% of a company's outstanding common stock
or the average weekly trading volume during the four calendar weeks
prior to the sale. As a result of revisions to Rule 144 which
became effective on or about April 29, 1997, there will be no limit on
the amount of restricted securities that may be sold by a nonaffiliate
after the restricted securities have been held by the owner for a period
of two years. A sale under Rule 144 or under any other exemption
from the Act, if available, or pursuant to subsequent registrations of
shares of Common Stock of present stockholders, may have a
depressive effect upon the price of the Common Stock in any market
that may develop. Of the total 1,228,000 shares of common stock held
by present stockholders of the Company, 1,105,200 shares which were
issued pursuant to Rule 701, will become available for resale under Rule
144, on or about February 3, 1999, and the remaining 122,800 shares
will become available for resale starting in May, 1999.
27. Blue Sky Considerations.
Because the securities registered hereunder have not been registered for
resale under the blue sky laws of any state, the holders of such shares
and persons who desire to purchase them in any trading market that might
develop in the future, should be aware that there may be significant state
blue-sky law restrictions upon the ability of investors to sell the
securities and of purchasers to purchase the securities. Some jurisdictions
may not under any circumstances allow the trading or resale of blind-pool or
"blank-check" securities. Accordingly, investors should consider the
secondary market for the Company's securities to be a limited one.
