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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
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AMENDMENT NO. 1 TO FORM 10-SB
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GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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N.E.C. PROPERTIES, INC.
(Name of Small Business Issuer in its charter)
Nevada 88-0339817
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada 89103
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (702) 248-1027
Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section 12(g) of the Act:
$.001 Common Stock
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(Title of Class)
Page One of 34 Pages
Exhibit Index is Located at Page 25.
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TABLE OF CONTENTS
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Page
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PART I
Item 1. Description of Business......................................... 3
Item 2. Plan of Operation................................................ 8
Item 3. Description of Property......................................... 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management.............................. 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons........................................... 16
Item 6. Executive Compensation.......................................... 18
Item 7. Certain Relationships and
Related Transactions.......................................... 19
Item 8. Description of Securities....................................... 19
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters....................................................... 20
Item 2. Legal Proceedings............................................... 22
Item 3. Changes in and Disagreements with Accountants................... 22
Item 4. Recent Sales of Unregistered Securities......................... 22
Item 5. Indemnification of Directors and Officers....................... 23
PART F/S
Financial Statements [previously filed]......................... __
PART III
Item 1. Index to Exhibits............................................... 25
Signatures...................................................... 26
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2.
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PART I
Item 1. Description of Business
The N.E.C. Properties, Inc. (the "Company") was incorporated on June 16,
1995 under the laws of the State of Nevada to engage in any lawful corporate
activity, including, but not limited to, selected mergers and acquisitions. The
Company has been in the developmental stage since inception and has no
operations to date. Other than issuing shares to its original shareholders, the
Company never commenced any operational activities. As such, the Company can be
defined as a "shell" company, whose sole purpose at this time is to locate and
consummate a merger or acquisition with a private entity. The Board of Directors
of the Company has elected to commence implementation of the Company's principal
business purpose described below under "Item 2 - Plan of Operation." The
proposed business activities described herein may classify the Company as a
"blank check" company.
The Company is filing this registration statement on a voluntary
basis because the primary attraction of the Company as a merger partner or
acquisition vehicle will be its status as a public company. Any business
combination or transaction will likely result in a significant issuance of
shares and substantial dilution to present stockholders of the Company.
In addition, the Company is filing this registration statement to
enhance investor protection and to provide information if a trading market
commences. On December 11, 1997, the National Association of Securities Dealers,
Inc. (NASD) announced that its Board of Governors had approved a series of
proposed changes for the Over The Counter ("OTC") Bulletin Board and the OTC
market. The principal changes, which was approved by the Securities and Exchange
Commission on January 5, 1999 allows only those companies that report their
current financial information to the Securities and Exchange Commission,
banking, or insurance regulators to be quoted on the OTC Bulletin Board. The
rule provides for a phase-in period for those securities already quoted on the
OTC Bulletin Board.
Risk Factors
The Company's business is subject to numerous risk factors, including
the following:
1. Lack of History. The Company has had no operating history nor any
revenues or earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until the consummation of a
business combination. This may result in the Company incurring a net operating
loss which will increase continuously until the Company can consummate a
business combination with a profitable
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business opportunity. There is no assurance that the Company can identify such a
business opportunity and consummate such a business combination.
2. The Company's Proposed Operations is Speculative. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance that
the Company will be successful in locating candidates meeting such criteria. In
the event the Company completes a business combination, of which there can be
no assurance, the success of the Company's operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of established
and well-financed entities, including venture capital firms, are active in
mergers and acquisitions of companies which may be desirable target candidates
for the Company. Nearly all such entities have significantly greater financial
resources, technical expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a business
combination. Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
4. The Company has No Agreement for a Business Combination or Other
Transaction - No Standards for Business Combination. The Company has no
arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. There
can be no assurance the Company will be successful in identifying and evaluating
suitable business opportunities or in concluding a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation by the Company. There is no assurance the
Company will be able to negotiate a business combination on terms favorable to
the Company. The Company has not established a specific length of operating
history or a specified level of earnings, assets, net worth or other criteria
which it will require a target business opportunity to have achieved, and
without which the Company would not consider a business combination in any form
with such business opportunity. Accordingly, the Company may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
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5. Continued Management Control, Limited Time Availability. While
seeking a business combination, management anticipates devoting up to ten hours
per month to the business of the Company. None of the Company's officers has
entered into a written employment agreement with the Company and none is
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on any of its officers or directors. Notwithstanding the
combined limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of the
Company's business and its likelihood of continuing operations. See "Item 5 -
Directors, Executive Officers, Promoters and Control Persons."
6. There May be Conflicts of Interest. Officers and directors of the
Company may in the future participate in business ventures which could be deemed
to compete directly with the Company. Additional conflicts of interest and
non-arms length transactions may also arise in the future in the event the
Company's officers or directors are involved in the management of any firm with
which the Company transacts business. Management has adopted a policy that the
Company will not seek a merger with, or acquisition of, any entity in which
management serve as officers, directors or partners, or in which they or their
family members own or hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions. Sections
13 and 5(d) of the Securities Exchange Act of 1934 (the "1934 Act"), require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company acquired,
covering one, two, or three 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.
8. 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.
9. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a business
combination with a business opportunity. Consequently, the Company's activities
may be limited to those engaged in by business opportunities which the Company
merges with or acquires. The Company's inability to diversify its
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activities into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore increase the
risks associated with the Company's operations.
10. Regulation. Although the Company will be subject to regulation under
the 1934 Act, management believes the Company will not be subject to regulation
under the Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In the event the
Company engages in business combinations which result in the Company holding
passive investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of 1940. In such event,
the Company would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. The Company has
obtained no formal determination from the Securities and Exchange Commission as
to the status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences.
11. Probable Change in Control and Management. A business combination
involving the issuance of the Company's Common Shares will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest in
the Company. Any such business combination may require management of the Company
to sell or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the Company. The
resulting change in control of the Company could result in removal of one or
more present officers and directors of the Company and a corresponding reduction
in or elimination of their participation in the future affairs of the Company.
12. Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would result in the
Company issuing securities to shareholders of any such private company. The
issuance of previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control or
management of the Company.
13. Disadvantages of Blank Check Offering. The Company may enter into a
business combination with an entity that desires to establish a public trading
market for its shares. A business opportunity may attempt to avoid what it deems
to be adverse consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may include, but are
not limited to, time delays of the registration process, significant expenses to
be incurred in such an offering, loss of voting control to public shareholders
and the inability or unwillingness to comply with various federal and state laws
enacted for the protection of investors.
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14. Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the Company may
undertake. Currently, such transactions may be structured so as to result in
tax-free treatment to both companies, pursuant to various federal and state tax
provisions. The Company intends to structure any business combination so as to
minimize the federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business combination
will meet the statutory requirements of a tax-free reorganization or that the
parties will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both parties to the
transaction.
15. Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
16. Dilution. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares held
by the Company's then shareholders.
17. No Trading Market. There is no trading market for the Company's
common stock at present, and there has been no trading market to date. There is
no assurance that a trading market will ever develop or, if such market does
develop, that it will continue. The Company intends to request a broker-dealer
to make application to the NASD Regulation, Inc. to have the Company's
securities traded on the OTC Bulletin Board or published in print and electronic
media, or either, in the National Quotation Bureau LLC "Pink Sheet."
18. Required Year 2000 Compliance. A business combination will, in all
likelihood, result in the Company disclosing additional Year 2000 matters. Many
existing computer programs use only two digits to identify a year in the date
field. These programs were designed and developed without considering the impact
of the upcoming change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the Year 2000. The
Year 2000 issue affects virtually all companies and organizations.
19. Disclosure by Public Companies Regarding the Year 2000 Issue. The
business combination will require specific Year 2000 disclosures. Management of
the Company believes that any potential business opportunity may require a
disclosure that many companies must undertake major projects to address the Year
2000 issue. The disclosure of the potential costs and uncertainties will depend
on a number of factors, including its software and
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hardware and the nature of its industry. Companies also must coordinate with
other entities with which they electronically interact, both domestically and
globally, including suppliers, customers, creditors, borrowers, and financial
service organizations. If the Company does not successfully address its Year
2000 issues, the Company may face material adverse consequences. The Company
will be required to review, on an ongoing basis, whether it needs to disclose
anticipated costs, problems and uncertainties associates with Year 2000
consequences, particularly in their filings with the Securities and Exchange
Commission. The Company may have to disclose this information in the Securities
and Exchange Commission filings because (i) the form or report may require the
disclosure, or (ii) in addition to the information that the Company is
specifically required to disclose, the disclosure rules require disclosure of
any additional material information necessary to make the required disclosure
not misleading.
If the Company determines that it should make a Year 2000 disclosure,
applicable rules or regulations must be followed. If the Company has not made an
assessment of its Year 2000 issues or has not determined whether it has material
Year 2000 issues, a disclosure of this known uncertainty is required. In
addition, the Securities and Exchange Commission staff believes that the
determination as to whether the Company's Year 2000 issues should be disclosed
should be based on whether the Year 2000 issues are material to the Company's
business, operations, or financial condition, without regard to related
countervailing circumstances (such as Year 2000 remediation programs or
contingency plans). If the Year 2000 issues are determined to be material,
without regard to countervailing circumstances, the nature and potential impact
of the Year 2000 issues as well as the countervailing circumstances will be
required. As part of this disclosure, the following topics will be addressed:
o the Company's general plans to address the Year 2000 issues
relating to its business, its operations (including operating
systems) and, if material, its relationships with customers,
suppliers, and other constituents; and its timetable for
carrying out those plans; and
o the total dollar amount that the Company estimates will be spent
to remediate its year 2000 issues, if such amount is expected to
be material to the Company's business, operations or financial
condition, and any material impact these expenditures are
expected to have on the Company's results of operations,
liquidity and capital resources.
Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues in exchange for its
securities. The Company has no particular acquisitions in mind and has not
entered into any negotiations
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regarding such an acquisition. None of the Company's officers, directors,
promoters or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility of an
acquisition or merger between the Company and such other company as of the date
of this registration statement.
The Company has no full time or part-time employees. None of the
officers and directors anticipates devoting more than ten (10%) percent of his
or her time to Company activities. The Company's President and Secretary have
agreed to allocate a portion of said time to the activities of the Company,
without compensation. These officers anticipate that the business plan of the
Company can be implemented by their devoting minimal time per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officers. See "Item 5
- - Directors, Executive Officers, Promoters and Control Persons - Resumes."
General Business Plan
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the advantages of an Issuer who has
complied with the 1934 Act. The Company will not restrict its search to any
specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of the Company's virtually unlimited discretion to search for and
enter into potential business opportunities. Management anticipates that it may
be able to participate in only one potential business venture because the
Company has nominal assets and limited financial resources. See Item F/S,
"Financial Statements." This lack of diversification should be considered a
substantial risk to shareholders of the Company because it will not permit the
Company to offset potential losses from one venture against gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some industries
and shortages of available capital, management believes that there are numerous
firms seeking the benefits of an Issuer who has complied with the 1934 Act. Such
benefits may include facilitating or improving the terms on which additional
equity financing may be sought, providing liquidity for
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incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes), for all shareholders
and other factors. Potentially, available business opportunities may occur in
many different industries and at various stages of development, all of which
will make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in an Issuer who has complied with the 1934 Act without incurring the
cost and time required to conduct an initial public offering. The owners of the
business opportunities will, however, incur significant legal and accounting
costs in connection with acquisition of a business opportunity, including the
costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and related
reports and documents. The 1934 Act, specifically requires that any merger or
acquisition candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within the
numerous filings relevant to complying with the 1934 Act. Nevertheless, the
officers and directors of the Company have not conducted market research and are
not aware of statistical data which would support the benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The Company has made no determination as to whether or not it will file
periodic reports in the event its obligation to file such reports is suspended
under the 1934 Act. Jeffery D. Andre, an officer and director of the Company,
has agreed to provide the necessary funds, without interest, for the Company to
comply with the 1934 Act reporting requirements, provided that he is an officer
and director of the Company when the obligation is incurred.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be brought
to its attention through present associations of the Company's officers and
directors, or by the Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available technical,
financial and managerial resources; working capital and other financial
requirements; history of operations, if any; 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 further research, development, or exploration; specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company; the potential for growth or expansion; the potential for profit;
the public recognition of acceptance of products, services,
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or trades; name identification; and other relevant factors. Officers and
directors of the Company expect to meet personally with management and key
personnel of the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be obtained
within a reasonable period of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts in
accomplishing the business purposes of the Company. It is not anticipated that
any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee by such party will
need to be paid by the prospective merger acquisition candidate, as the Company
has no cash assets with which to pay such obligation. There have been no
contracts or agreements with any outside consultants and none are anticipated in
the future.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business in
which the Company may become engaged, in that such business may need to seek
additional capital, may desire to have its shares publicly traded, or may seek
other advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has no
capital with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest free loans
to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a proposed
transaction. The Company has no plans, proposals, arrangements or understandings
with respect to the sale or issuance of additional securities prior to the
location of an acquisition or merger candidate.
The Company has no plans, proposals, arrangements, or understanding with
respect to the sale or issuance of additional securities prior to the location
of an acquisition or merger candidate.
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Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may also
acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of the
Company will no longer be in control of the Company. In addition, the Company's
directors may, as part of the terms of the acquisition transaction, resign and
be replaced by new directors without a vote of the Company's shareholders or may
sell their stock in the Company. Any terms of sale of the shares presently held
by officers and/or directors of the Company will be also afforded to all other
shareholders of the Company on similar terms and conditions. Any and all such
sales will only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all or
a part of such securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which there can be
no assurance, it will be undertaken by the surviving entity after the Company
has successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
the Company's securities may have a depressive effect on the value of the
Company's securities in the future, if such a market develops, of which there is
no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (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 the Company, would retain less than
20% of the issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise. The manner in which the
Company participates in an opportunity will
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depend on the nature of the opportunity, the respective needs and desires of the
Company and other parties, the management of the opportunity and the relative
negotiation strength of the Company and such other management.
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The Company
is subject to all of the reporting requirements included in the 1934 Act.
Included in these requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger or
acquisition, as well as the Company's audited financial statements included in
its annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements of the 1934
Act, or if the audited financial statements provided do not conform to the
representations made by the candidate to be acquired in the closing documents,
the closing documents will provide that the proposed transaction will be
voidable, at the discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision providing for
the acquisition entity to reimburse the Company for all costs associated with
the proposed transaction.
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Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
Investment Company Act of 1940
Although the Company will be subject to regulation under the Securities
Act of 1933, as amended, and the 1934 Act, management believes the Company will
not be subject to regulation under the Investment Company Act of 1940 insofar as
the Company will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business combinations which
result in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the Investment
Company Act of 1940. In such event, the Company would be required to register as
an investment company and could be expected to incur significant registration
and compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences. The Company's Board
of Directors unanimously approved a resolution stating that it is the Company's
desire to be exempt from the Investment Company Act of 1940 under Regulation
3a-2 thereto.
Lock-Up Agreement
Each of the officers and directors of the Company have executed and
delivered a "lock-up" letter agreement affirming that they shall not sell their
respective shares of the Company's common stock until such time as the Company
has entered into a merger or acquisition agreement, or the Company is no longer
classified as a "blank check" company, whichever first occurs.
Item 3. Description of Property
The Company has no properties and at this time has no agreements to
acquire any properties.
The Company presently occupies office space supplied by Paul W. Andre
and Savoy Financial Group, Inc., at 6767 W. Tropicana Avenue, Suite 207, Las
Vegas, Nevada 89013. Paul W. Andre is the father of Jeffery D. Andre. This space
is provided to the Company on a rent free basis, and it is anticipated that this
arrangement will remain until such time as the Company successfully consummates
14.
<PAGE> 15
a merger or acquisition. Management believes that this arrangement will meet the
Company's needs for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership
for each class of equity securities of the Company beneficially owned by all
directors and officers of the Company.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Vivian M. Krueger 370,000 19.9%
1501 W. Mesquite Street
Chandler, Arizona 85224
Common Jeffery D. Andre 750,000 40.3%
11073 North 111th Way
Scottsdale, Arizona 85259
Common Paige D. Price 185,000 10.0%
1601 W. Mesquite Street
Chandler, Arizona 85224
Common All Officers and 1,305,000 70.2%
Directors as a Group
(three [3] individuals)
</TABLE>
The total of the Company's outstanding Common Shares are held by 35
persons.
(b) Security Ownership of Management.
The following table sets forth the beneficial ownership for each class
of equity securities of the Company beneficially owned by all directors and
officers of the Company.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Vivian M. Krueger 370,000 19.9%
1501 W. Mesquite Street
Chandler, Arizona 85224
</TABLE>
15.
<PAGE> 16
<TABLE>
<S> <C> <C> <C>
Common Jeffery D. Andre 750,000 40.3%
11073 North 111th Way
Scottsdale, Arizona 85259
Common Paige D. Price 185,000 10.0%
1601 W. Mesquite Street
Chandler, Arizona 85224
Common All Officers and 1,305,000 70.2%
Directors as a Group
(three [3] individuals)
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Vivian M. Krueger 31 President/Director
Jeffery D. Andre 35 Secretary/Treasurer/
Director
Paige D. Price 29 Director
</TABLE>
The above listed officers and directors will serve until the next
annual meeting of the shareholders or until their death, resignation,
retirement, removal, or disqualification, or until their successors have been
duly elected and qualified. Vacancies in the existing Board of Directors are
filled by majority vote of the remaining Directors. Officers of the Company
serve at the will of the Board of Directors. There are no agreements or
understandings for any officer or director to resign at the request of another
person and no officer or director is acting on behalf of or will act at the
direction of any other person. There is no family relationship between any
executive officer and director of the Company.
Resumes
Vivian M. Krueger
Vivian M. Krueger has been a major shareholder since 1995 and has been
President and a Director of the Company since 1998. From 1993 through
1994, she was the Treasurer of the Outdoor Sportsmen of Arizona
Political Action Committee. From 1995 to the present, she has been the
accountant for Hewson Properties, Inc., a major commercial real estate
development and management firm in Phoenix, Arizona.
16.
<PAGE> 17
Jeffery D. Andre
Jeffery D. Andre has been a major shareholder since 1995 and has been
Secretary and Treasurer of the Company since 1998. From 1989 through
1994, he served as the Senior Accounting Specialist for Caliber Bank, a
federally chartered bank which merged into Bank of America. From 1994 to
the present, he has been an Accountant and Systems Administrator for
Hewson Properties, Inc.
Paige D. Price
Paige D. Price has been a major shareholder since 1995 and has been a
Director of the Company since 1998. From 1992 through 1997, Ms. Price
was a certified teacher for the Youth & Family Services Pre-School in
Rapid City, South Dakota. From 1977 to the present, Ms. Price is
attending graduate school at Arizona State University.
Previous Blank Check Companies - Current
Blank Check Companies
The officers and directors of the Company have not been officers and
directors in any other blank check offerings. The officers and directors,
however, do anticipate becoming involved with additional blank check companies
who may file under the Securities Act of 1933, as amended, or the 1934 Act, or
either. In addition, the officers and directors of the Company may become
involved in additional blank check companies which may request a broker-dealer
to request clearance from the NASD Regulation, Inc. for trading clearance in the
applicable quotation medium.
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of the
Company. Insofar as the officers and directors are engaged in other business
activities, management anticipates it will devote only a minor amount of time
to the Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may be
engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the performance
of their duties or otherwise. The Company does not currently have a right of
first refusal pertaining to opportunities that come to management's attention
insofar as such opportunities may relate to the Company's proposed business
operations.
17.
<PAGE> 18
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
If the Company or the companies in which the officers and directors are
affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy with respect
to such transactions.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any compensation
for their respective services rendered unto the Company, nor have they received
such compensation in the past. They all have agreed to act without compensation
until authorized by the Board of Directors, which is not expected to occur until
the Company has generated revenues from operations after consummation of a
merger or acquisition. As of the date of this registration statement, the
Company has no funds available to pay directors. Further, none of the directors
are accruing any compensation pursuant to any agreement with the Company.
It is possible that, after the Company successfully consummates a merger
or acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the
Company and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in
18.
<PAGE> 19
the form of a finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part of the terms
of the proposed transaction, or will be in the form of cash consideration.
However, if such compensation is in the form of cash, such payment will be
tendered by the acquisition or merger candidate, because the Company has
insufficient cash available. The amount of such finder's fee cannot be
determined as of the date of this registration statement, but is expected to be
comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
Item 7. Certain Relationships and Related Transactions.
There have been no related party transactions, or any other transactions
or relationships required to be disclosed pursuant to Item 404 of Regulation
S-B.
Jeffery D. Andre, for the year ended December 31, 1997, had lent to the
Company $250.00, and for the year ended December 31, 1998, had lent to the
Company an additional $110.00, for a total as at December 31, 1998 of $360.00 to
pay for costs incurred by the Company. In addition, from December 31, 1998 to
the date hereof, Jeffery D. Andre has advanced $3,275.00 to the Company to pay
for the current legal and accounting costs applicable to cause to be filed this
Form 10SB12G and all amendments applicable to this filing, and has agreed to
provide the necessary funds, without interest, for the Company to comply with
the 1934 Act provided that he is an officer and director of the Company when the
obligation is incurred. All advances are interest-free.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 25,000,000 shares,
par value $.001 per share. There are 1,860,000 Common Shares issued and
outstanding as of the date of this filing.
All shares of Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the
19.
<PAGE> 20
holders of the remaining shares of Common Stock will not be able to elect any
directors. In the event of liquidation of the Company, each shareholder is
entitled to receive a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and after
distribution in full of preferential amounts, if any. All shares of the
Company's Common Stock issued and outstanding are fully-paid and nonassessable.
Holders of the Common Stock are entitled to share pro rata in dividends and
distributions with respect to the Common Stock, as may be declared by the Board
of Directors out of funds legally available therefor.
PART II
Item 1. Market Price for Common Equity and Related Stockholder Matters.
There is no trading market for the Company's Common Stock at present and
there has been no trading market to date. There is no assurance that a trading
market will ever develop or, if such a market does develop, that it will
continue. The Company intends to request a broker-dealer to make application to
the NASD Regulation, Inc. to have the Company's securities traded on the OTC
Bulletin Board Systems or published, in print and electronic media, or either,
in the National Quotation Bureau LLC "Pink Sheets."
(a) Market Price. The Company's Common Stock is not quoted at the
present time.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary
20.
<PAGE> 21
trading, and about commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the rights
and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must
have net tangible assets of $4 million or market capitalization of $50 million
or a net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5 million.
The minimum bid price must be $4.00 and there must be 3 market makers. In
addition, there must be 300 shareholders holding 100 shares or more, and the
company must have an operating history of at least one year or a market
capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have
net tangible assets of $2 million or market capitalization of $35 million or a
net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities to
be traded without the aforesaid limitations. However, there can be no assurances
that, upon a successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange, or be able to
maintain the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the relevant
maintenance criteria after such qualification in the future may result in the
discontinuance of the inclusion of the Company's securities on a national
exchange. In such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result, a shareholder
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's securities.
The Company intends to request a broker-dealer to make application to
the NASD Regulation, Inc. to have the Company's securities traded on the OTC
Bulletin Board Systems or published, in print and electronic media, or either,
in the National Quotation Bureau LLC "Pink Sheets," or either.
(b) Holders.
There are thirty-five (35) holders of the Company's Common Stock. In
1995, the Company issued 1,860,000, as adjusted for the stock split, of its
Common Shares for cash. All of the
21.
<PAGE> 22
issued and outstanding shares of the Company's Common Stock were issued in
accordance with the exemption from registration afforded by Section 4(2) of the
Securities Act of 1933, as amended.
As of the date of this registration statement, 555,000 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations included
in said Rule. In general, under Rule 144, a person (or persons whose shares are
aggregated), who has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of shares which
does not exceed the greater of one percent of the then outstanding Common Stock
or the average weekly trading volume during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding three months,
an affiliate of the Company.
(c) Dividends.
The Company has not paid any dividends to date, and has no plans to do
so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the Company.
Item 3. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
The Company has not changed accountants since its formation and there
are no disagreements with the findings of said accountants.
Item 4. Recent Sales of Unregistered Securities.
The Company has not issued any of its securities during the three year
period preceding the date of this registration statement. All of the shares of
Common Stock of the Company previously issued have been issued for investment
purposes in a "private transaction" and are "restricted" shares as defined in
Rule 144 under the Securities Act of 1933, as amended. These shares may not be
offered for public sale except under Rule 144, or otherwise, pursuant to said
Act.
As of the date of this report, all of the issued and outstanding shares
of the Company's Common Stock are eligible for sale under Rule 144 promulgated
under the Securities Act of 1933, as amended, subject to certain limitations
included in said Rule. Except for the officers and directors of the Company, no
share-
22.
<PAGE> 23
holder has executed and delivered to the Company a "lock-up" letter affirming
that he or she shall not sell their respective shares of the Company's Common
Stock until such time as the Company has successfully consummated a merger or
acquisition and the Company is no longer classified as a "blank check" company.
In summary, Rule 144 applies to affiliates (that is, control persons)
and nonaffiliates when they resell restricted securities (those purchased from
the issuer or an affiliate of the issuer in nonpublic transactions).
Nonaffiliates reselling restricted securities, as well as affiliates selling
restricted or nonrestricted securities, are not considered to be engaged in a
distribution and, therefore, are not deemed to be underwriters as defined in
Section 2(11), if six conditions are met:
(1) Current public information must be available about the issuer
unless sales are limited to those made by non-affiliates after two
years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by an
affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold
by non-affiliates between the first and second years, there are
identical limitations; after two years, there are no volume
limitations for resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates
after two years, all sales must be made in brokers' transactions
as defined in Section 4(4) of the Securities Act of 1933, as
amended, or a transaction directly with a "market maker" as that
term is defined in Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by non-affiliates
after two years, a notice of proposed sale must be filed for all
sales in excess of 500 shares or with an aggregate sales price in
excess of $10,000.
(6) There must be a bona fide intention to sell within a reasonable
time after the filing of the notice referred to in (5) above.
Item 5. Indemnification of Directors and Officers.
Except for acts or omissions which involve intentional misconduct, fraud
or known violation of law or for the payment of dividends in violation of Nevada
Revised Statutes, there shall be no personal liability of a director or officer
to the Company, or its stockholders for damages for breach of fiduciary duty as
a director or officer. The Company may indemnify any person for
23.
<PAGE> 24
expenses incurred, including attorneys fees, in connection with their good faith
acts if they reasonably believe such acts are in and not opposed to the best
interests of the Company and for acts for which the person had no reason to
believe his or her conduct was unlawful. The Company may indemnify the officers
and directors for expenses incurred in defending a civil or criminal action,
suit or proceeding as they are incurred in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount of such expenses if it is
ultimately determined by a court of competent jurisdiction in which the action
or suit is brought determined that such person is fairly and reasonably entitled
to indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to officers, directors or persons controlling the Company
pursuant to the foregoing, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and is therefore
unenforceable.
PART F/S
Financial Statements.
The following financial statements have been previously filed as an
exhibit to the Company's Form 10-SB:
1) Table of Contents
2) Independent Auditors' Report
3) Assets
4) Liabilities and Stockholders' Equity
5) Statement of Operations
6) Statement of Shareholders' Equity
7) Statement of Cash Flows
8) Notes to Financial Statements
24.
<PAGE> 25
PART III
Item 1. Exhibit Index
<TABLE>
<CAPTION>
Sequential
No. Page No.
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation* __
3.2 Bylaws* __
(12) Lock-Up Agreements
12.1 Vivian M. Kreuger 28
12.2 Jeffery D. Andre 30
12.3 Paige D. Price 32
(23) Consents - Experts
23.1 Consent of Barry L. Friedman* __
(27) Financial Data Schedule
27.1 Financial Data Schedule 34
</TABLE>
- ---------------------
* Previously filed as an exhibit to the Company's Form 10-SB.
25.
<PAGE> 26
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 23, 1999 N.E.C. PROPERTIES, INC.
By: /s/ VIVIAN M. KRUEGER
--------------------------------
Vivian M. Krueger
President
26.
<PAGE> 1
EXHIBIT 12.1
April 22, 1999
N.E.C. Properties, Inc.
6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada 89103
Re: N.E.C. Properties, Inc.
Gentlemen:
The undersigned is the record owner of 370,000 shares of the common stock of
N.E.C. Properties, Inc., par value $.001 per share (the "Shares), such Shares
are eligible for sale under Rule 144 promulgated under the Securities Act of
1933, as amended, subject to certain limitations included in said Rule.
On January 14, 1999, the Company filed its Form 10SB12G with the Securities and
Exchange Commission. Thereafter, during the pendency of said filing, the
undersigned, together with the other majority shareholders, and each of them,
agreed as follows:
1. The undersigned will not sell, contract to sell, or make any
other disposition of, or grant any purchase option for the
sale of, any of the shares of the common stock owned by the
undersigned, directly or indirectly, until such time as the
Company has entered into a merger or acquisition or the
Company is no longer classified as a "blank check" company, as
that term is defined in the Form 10SB12G on file with the
Securities and Exchange Commission, whichever first occurs.
2. The undersigned acknowledges that Pacific Stock Transfer
Company, 5855 S. Pecos Road, Suite D, Las Vegas, Nevada 89l20,
the transfer agent for the Company, has been advised of the
restrictions described herein and that any attempts by the
undersigned to violate said restriction may result in legal
action(s) by the Company. The undersigned further agrees,
upon the request of the Company, that in addition to any other
restrictions reflecting that the Shares have not been registered
under the Securities Act of 1933, as amended, may be placed on
individual certificates issued.
Very truly yours,
/s/ VIVIAN M. KRUEGER
- --------------------------------
VIVIAN M. KRUEGER
cc: Pacific Stock Transfer Company
<PAGE> 1
EXHIBIT 12.2
April 22, 1999
N.E.C. Properties, Inc.
6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada 89103
Re: N.E.C. Properties, Inc.
Gentlemen:
The undersigned is the record owner of 750,000 shares of the common stock of
N.E.C. Properties, Inc., par value $.001 per share (the "Shares), such Shares
are eligible for sale under Rule 144 promulgated under the Securities Act of
1933, as amended, subject to certain limitations included in said Rule.
On January 14, 1999, the Company filed its Form 10SB12G with the Securities and
Exchange Commission. Thereafter, during the pendency of said filing, the
undersigned, together with the other majority shareholders, and each of them,
agreed as follows:
1. The undersigned will not sell, contract to sell, or make any
other disposition of, or grant any purchase option for the
sale of, any of the shares of the common stock owned by the
undersigned, directly or indirectly, until such time as the
Company has entered into a merger or acquisition or the
Company is no longer classified as a "blank check" company, as
that term is defined in the Form 10SB12G on file with the
Securities and Exchange Commission, whichever first occurs.
2. The undersigned acknowledges that Pacific Stock Transfer
Company, 5855 S. Pecos Road, Suite D, Las Vegas, Nevada 89l20,
the transfer agent for the Company, has been advised of the
restrictions described herein and that any attempts by the
undersigned to violate said restriction may result in legal
action(s) by the Company. The undersigned further agrees,
upon the request of the Company, that in addition to any other
restrictions reflecting that the Shares have not been registered
under the Securities Act of 1933, as amended, may be placed on
individual certificates issued.
Very truly yours,
/s/ JEFFERY D. ANDRE
- --------------------------------
JEFFERY D. ANDRE
cc: Pacific Stock Transfer Company
<PAGE> 1
EXHIBIT 12.3
April 22, 1999
N.E.C. Properties, Inc.
6767 W. Tropicana Avenue, Suite 207
Las Vegas, Nevada 89103
Re: N.E.C. Properties, Inc.
Gentlemen:
The undersigned is the record owner of 185,000 shares of the common stock of
N.E.C. Properties, Inc., par value $.001 per share (the "Shares), such Shares
are eligible for sale under Rule 144 promulgated under the Securities Act of
1933, as amended, subject to certain limitations included in said Rule.
On January 14, 1999, the Company filed its Form 10SB12G with the Securities and
Exchange Commission. Thereafter, during the pendency of said filing, the
undersigned, together with the other majority shareholders, and each of them,
agreed as follows:
1. The undersigned will not sell, contract to sell, or make any
other disposition of, or grant any purchase option for the
sale of, any of the shares of the common stock owned by the
undersigned, directly or indirectly, until such time as the
Company has entered into a merger or acquisition or the
Company is no longer classified as a "blank check" company, as
that term is defined in the Form 10SB12G on file with the
Securities and Exchange Commission, whichever first occurs.
2. The undersigned acknowledges that Pacific Stock Transfer
Company, 5855 S. Pecos Road, Suite D, Las Vegas, Nevada 89l20,
the transfer agent for the Company, has been advised of the
restrictions described herein and that any attempts by the
undersigned to violate said restriction may result in legal
action(s) by the Company. The undersigned further agrees,
upon the request of the Company, that in addition to any other
restrictions reflecting that the Shares have not been registered
under the Securities Act of 1933, as amended, may be placed on
individual certificates issued.
Very truly yours,
/s/ PAIGE D. PRICE
- --------------------------------
PAIGE D. PRICE
cc: Pacific Stock Transfer Company
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,860,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (360)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 110
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (110)
<INCOME-TAX> 0
<INCOME-CONTINUING> (110)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (110)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
