As filed with the SEC on March 24, 1999 SEC Registration No. 333-71659
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
4 Brandon - I, Inc.
(Name of small business
issuer in our charter)
Florida 6770
[applied for]
(State or jurisdiction of (Primary Standard Industrial
(I.R.S. Employer
incorporation or organization Classification Code Number)
Identification No.)
2503 W. Gardner Ct. Tampa FL 33611 (813) 831-9348
(Address and telephone number of principal executive offices)
2503 W. Gardner Ct. Tampa FL 33611 (813) 831-9348
(Address of Principal place of business or intended principal place of business)
Michael T. Williams, 2503 W. Gardner Ct. Tampa FL 33611 (813) 831-9348
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public as soon as practicable after
the effective date of this registration statement and Prospectus.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay our effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become closing in accordance with Section 8(a) of the
securities Act of 1933 or until the registration statement shall become closing
on such date as the Commission, acting under said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount Proposed Amount of
securities Being Being Maximum Maximum Registration
Registered Registered offering Aggregate Fee
offering
shares of common stock 100,000 $0.05 $5,000 $100.00
TOTAL 100,000 $5,000 $100.00
Estimated for purposes of computing the registration fee under Rule 457.
1
<PAGE>
INITIAL PUBLIC OFFERING PROSPECTUS
4 Brandon - I, Inc.
100,000 shares of common stock offered at $0.05 per share
We are offering for sale 100,000 shares of common stock, $.05 par value per
share, at a purchase price of $0.05 per share. The shares shall be sold
exclusively by us on a best-efforts for a period of ninety days, which may be
extended an additional ninety days. This offering will be conducted directly by
us without the use of a professional underwriter or securities dealer. There is
no minimum offering.
Our offering is being made in compliance with rule 419 of SEC Regulation C,
under which the offering proceeds and the securities to be issued to purchasers
will be placed in an escrow account until the offering has been reconfirmed by
our shareholders and a business has been acquired in accordance with the
provisions of such rule. Under SEC Rule 3a51-1(d) under the Exchange Act, the
securities being offered hereto constitute penny stock, and as such, certain
sales restrictions apply to these securities. Up to 80% of the offering may be
purchased by officers, directors, our current shareholders and any of their
affiliates or associates.
No public market currently exists for our common stock. No public market may
ever develop. Even if a market develops, you may not be able to sell your
shares.
This is a highly risky investment. We have described these risks under the
caption "High Risk Factors" beginning on page *.
None of the Securities and Exchange Commission, any state securities
commission, or any other government agency has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Offering Information
Per share Total
Initial public offering price.......... $.05 $5,000.00
Underwriting discounts/commissions (1) $.00 $ .00
Estimated offering expenses (1)......... $.00 $ .00
Net offering proceeds to 4 Brandon - I, $.05 $5,000.00
Inc.......
Note on following page
This initial public offering prospectus is dated *.
(1) We are offering these shares ourselves without the use of a professional
underwriter. We will not pay commissions on stock sales. Mr. Williams, our
President, will pay all offering costs, including filing, printing, legal,
accounting, transfer agent and escrow agent fees estimated at $10,000.
2
<PAGE>
TABLE OF CONTENTS
LIMITED STATE REGISTRATION..............................................4
PROSPECTUS SUMMARY......................................................5
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419...................7
HIGH RISK FACTORS.......................................................9
Anticipated Change in Control and Management.........................9
No Acquisition Candidate Identified.................................10
No Use of Consultants...............................................10
No Access to Your Funds while Held In Escrow........................10
Failure of Sufficient Number of Investors to Reconfirm Investment...10
No Transfer of Escrowed Securities..................................10
Unspecified Industry and Acquired Business; Unascertained Risks.....11
Conflict of Interest - Management's Fiduciary Duties................11
Possible Disadvantages of Blank Check Offering......................12
Lack of Diversification.............................................12
Regulation..........................................................12
Taxation............................................................13
Control by Present Management and Shareholders......................13
Limitations on Share Resale.........................................13
No Underwriter......................................................13
Opting Out of Some Provisions of Florida Law........................13
DILUTION...............................................................14
USE OF PROCEEDS........................................................14
PROPOSED BUSINESS......................................................15
PLAN OF OPERATION......................................................20
RELATED PARTY TRANSACTIONS.............................................21
DESCRIPTION OF CAPITAL STOCK...........................................22
SHARES ELIGIBLE FOR FUTURE SALE........................................24
MANAGEMENT.............................................................25
PRINCIPAL SHAREHOLDER..................................................27
WHERE CAN YOU FIND MORE INFORMATION?...................................30
MARKET FOR OUR COMMON STOCK............................................28
REPORTS TO STOCKHOLDERS................................................28
PLAN OF DISTRIBUTION...................................................28
LEGAL PROCEEDINGS......................................................31
LEGAL MATTERS..........................................................31
INTEREST OF NAMED COUNSEL..............................................31
FINANCIAL STATEMENTS ............................................... F- 1
3
<PAGE>
Under the terms of an escrow agreement, upon receipt by us, your funds will
immediately be deposited in the escrow account which will be maintained by *.
All your checks or money orders must be made payable to 4 Brandon - I, Inc. and
*, as escrow agent.
Other terms of the escrow agreement which have been included to comply with
rule 419 will govern the treatment of the shares purchased by you and your funds
tendered in payment for the shares. Under the rule 419 escrow provisions, the
common stock certificates evidencing the shares are to be issued in the
respective names of you and other investors and promptly deposited into the
escrow account upon issuance. Your funds will remain as deposited in the escrow
account.
Rule 419 permits 10% of the proceeds to be disbursed to us from the rule
419 escrow account prior to the closing of a business combination. We are
entitled to 10% of the funds of this offering, but our current management does
not intend to request release of these funds from the escrow account. We will
receive these funds in the event a business combination is closed under the
provisions of rule 419.
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and if given or made, such information or representations must not
be relied upon as having been authorized by us. This prospectus does not
constitute an offer to sell or a solicitation of any offer to buy any securities
in any jurisdiction in which such offer or solicitation would be unlawful. The
delivery of this prospectus shall not under any circumstances create any
implication that there has not been any change in our affairs since the date
hereof; however, any changes that may have occurred are not material to an
investment decision. In the event there has been any material changes in our
affairs of us, a post-effective amendment will be filed. We reserve the right to
reject any order, in whole or in part, for the purchase of any of the shares
offered.
Until 90 days after the date when the funds and securities are released from the
escrow account, all dealers effecting transactions in the shares, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters to their unsold allotments or subscriptions.
LIMITED STATE REGISTRATION
Our securities may be sold in New York State and the Florida only, pursuant to
exemption from registration provisions available in such states. See Risk
Factors for a discussion of the resale limitations that result from this limited
state registration.
4
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because this is a summary, it may not contain all of the information that you
should consider before receiving a distribution of our in the common stock. You
should read this entire prospectus carefully.
4 Brandon - I, Inc.
We were organized as a vehicle to acquire or merge with a business or
company. We believe that our characteristics as an enterprise with nominal
liabilities and flexibility in structuring will make us an attractive
combination candidate. None of our officers, directors, promoters, their
affiliates or associates have had any preliminary contact or discussions and
there are no present plans, proposals, arrangements or understandings with any
representative of the owners of any business regarding the possibility of an
acquisition or merger transaction. We do not intend to engage in the business of
investing, reinvesting or trading in securities as our primary business or
pursue any business that would render us an investment company under the
Investment Company Act .
Since our organization, our activities have been limited to the sale of
initial shares for our organization and our preparation in producing a
registration statement and prospectus for our initial public offering. We will
not engage in any substantive commercial business following the offering. We
maintain our office at 2503 W. Gardner Ct. Tampa FL 33611. Our phone number is
(813) 831-9348.
The Offering
Securities offered................................................. 100,000
shares of common stock, $.05
par value, being offered at $0.05
per share. (See
"Description securities".)
Common stock outstanding
prior to the offering.............................................. 100 shares.
Common stock to be
outstanding after the offering............................... 100,100 shares.
Offering Conducted in Compliance with rule 419
We are a blank check company, and consequently this offering is being
conducted in compliance with the rule 419. You have certain rights and will
receive the substantive protection provided by the rule. To that end:
o The securities purchased by you and other investors and the funds
received in the offering will be deposited and held in the escrow
account until an acquisition meeting specific criteria is completed.
5
<PAGE>
o Before the acquisition can be completed and before the funds can be
released to us and securities can be released to you, we are required
to update the registration statement with a post-effective amendment.
o Within the five days after the effective date, we are required to
furnish you with the prospectus containing the terms of a
reconfirmation offer and information regarding the proposed acquisition
candidate and our business, including audited financial statements.
o According to rule 419, you must have no fewer than 20 and no more than
45 business days from the effective date of the post-effective
amendment to decide to reconfirm your investment and remain an investor
or alternately, require the return of your investment, minus certain
deductions.
o If you or any investor does not make any decision within this 45 day
period, we will automatically return your investment funds.
o The rule further provides that if we do not complete an acquisition
meeting the specified criteria within 18 months of the date of this
prospectus, all of your funds in the escrow account must be returned to
you. If the offering period is extended to our 6 month limit, we will
have only 12 months in which to close a merger or acquisition.
High Risk Factors
Investments in our securities are highly speculative, involve a high degree
of risk, and should be purchased only by you if you can afford to lose your
entire investment. See High Risk Factors for special risks concerning us and
Dilution for information concerning dilution of the book value of your shares
from the public offering.
Determination Of Offering Price
The offering price of $0.05 per share for the shares has been arbitrarily
determined by us. This price bears no relation to our assets, book value, or any
other customary investment criteria, including our prior operating history.
Among factors considered by us in determining the offering price were:
o Estimates of our business potential
o Our limited financial resources
o The amount of equity desired to be retained by the present shareholder
o The amount of dilution to public investors
o The general condition of the securities markets
Use of Proceeds
Of the $5,000 offering proceeds deposited into the escrow account, 10% or
$500 may be released to us prior to a reconfirmation offering in which you
reconfirm your investment in accordance with procedures required by rule 419.
However, we do not intend to request release of these funds from the escrow
account. Accordingly, we will receive all of the escrowed funds in the event a
business combination is closed under the provisions of rule 419. The funds will
remain in the non-interest-bearing escrow account maintained by *, which * is to
act as escrow agent under rule 419. No portion of the funds will be expended to
acquire an acquisition candidate. The funds will be transferred to the
acquisition candidate when a business combination is closed. To the extent that
our common stock is used as consideration to close a business combination, the
6
<PAGE>
balance of the funds expended will be used to finance the operation of the
acquisition candidate.
We have not incurred and do not intend to incur in the future any debt from
anyone other than management for our organizational activities. Debt to
management will not be repaid. Management is not aware of any circumstances
under which this policy, through their own initiative, may be changed.
Accordingly, no portion of the proceeds are being used to repay debt. Management
has accrued $60,000 of compensation prior to the closing of a business
combination. As present management will resign after a business combination, no
remuneration, if any, will be paid to them after such business combination.
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposit of Offering Proceeds and Securities
Rule 419 requires that offering proceeds after deduction for underwriting
commissions, underwriting expenses and dealer allowances, if any, and the
securities purchased by you and other investors in this offering, be deposited
into an escrow or trust account governed by an agreement which contains certain
terms and provisions specified by rule 419. Under rule 419, the funds will be
released to us and the securities will be released to you only after we have met
the following three basic conditions:
o First, we must execute an agreement for an acquisition meeting certain
prescribed criteria.
o Second, we must file a post-effective amendment to the registration
statement which includes the terms of a reconfirmation offer that must
contain conditions prescribed by the rules. The post-effective
amendment must also contain information regarding the acquisition
candidate and business, including audited financial statements.
o Third, we must conduct the reconfirmation offer and satisfy all of the
prescribed conditions, including the condition that a certain minimum
number of investors must elect to remain investors.
After we submit a signed representation to the escrow agent that the
requirements of rule 419 have been met and after the acquisition is closed, the
escrow agent can release the funds and securities.
Accordingly, we have entered into an escrow agreement with * which provides
that:
o The proceeds are to be deposited into the escrow account
maintained by the escrow agent promptly upon receipt. Rule 419
permits 10% of the funds to be released to us prior to the
reconfirmation offering, but we are not exercising our right to
obtain these funds. The funds and any dividends or interest
thereon, if any, are to be held for the sole benefit of
investors and can only be invested in bank deposit, in money
market mutual funds or federal government securities or
securities for which the principal or interest is guaranteed by
the federal government.
o All securities issued for the offering and any other securities
issued to such securities, including securities issued to stock
split, stock dividends or similar rights are to be deposited
directly into the escrow account promptly upon issuance. Your
7
<PAGE>
name must be included on the stock certificates or other documents
evidencing the securities. The securities held in the escrow account are
to remain as issued, and are to be held for your sole benefit. You
retain the voting rights, if any, to the securities held in your name.
The securities held in the escrow account may neither be transferred or
disposed of nor any interest created in them other than by will or the
laws of descent and distribution, or under a qualified domestic
relations order as defined by the Internal Revenue Code of 1986 or Table
1 of the Employee Retirement Income Security Act.
o Warrants, convertible securities or other derivative securities relating
to securities held in the escrow account may be exercised or converted
in accordance with their terms; provided that, however, the securities
received upon exercise or conversion together with any cash or other
consideration paid for the exercise or conversion are to be promptly
deposited into the escrow account.
Prescribed Acquisition Criteria
Rule 419 requires that before the funds and the securities can be released,
we must first execute an agreement to acquire an acquisition candidate meeting
certain specified criteria. The agreement must provide for the acquisition of a
business or assets for which the fair value of the business represents at least
80% of the maximum offering proceeds. The agreement must include, as a
precondition to its closing, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm their
investment. For purposes of the offering, the fair value of the business or
assets to be acquired must be at least $4,000 (80% of $5,000).
Post-Effective Amendment
Once the agreement governing the acquisition of a business meeting the
required criteria has been executed, rule 419 requires us to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information about the proposed acquisition candidate and
their business, including audited financial statements, the results of this
offering and the use of the funds disbursed from the escrow account. The
post-effective amendment must also include the terms of the reconfirmation offer
mandated by rule 419. The reconfirmation offer must include certain prescribed
conditions which must be satisfied before the funds and securities can be
released from escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Under rule 419, the terms of the reconfirmation offer
must include the following conditions:
o The prospectus contained in the post-effective amendment will be sent
to each investor whose securities are held in the escrow account within
5 business days after the effective date of the post-effective
amendment.
o Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to notify
us in writing that the investor elects to remain an investor.
8
<PAGE>
o If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion
of the funds and any related interest or dividends held in the escrow
account on such investor's behalf will be returned to the investor
within 5 business days by first class mail or other equally prompt
means.
o The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $4,000 elect
to reconfirm their investment.
o If a closed acquisition has not occurred by * (18 months from the date
of this prospectus), the funds held in the escrow account shall be
returned to all investors on a proportionate basis within 5 business
days by first class mail or other equally prompt means.
Release Of Securities And Funds
The funds will be released to us and the securities will be released to you
only after:
o The escrow agent has received a signed representation from us and any
other evidence acceptable by the escrow agent that:
o We have executed an agreement for the acquisition of an
acquisition candidate for which the fair market value of the
business represents at least 80% of the maximum offering
proceeds and has filed the required post-effective amendment.
o The post-effective amendment has been declared effective.
o The mandated reconfirmation offer having the conditions
prescribed by rule 419 has been completed.
oWe have satisfied all of the prescribed conditions of the reconfirmation offer.
o The closing of the acquisition of the business with the fair value of
at least 80% of the maximum proceeds.
HIGH RISK FACTORS
There is a high degree of risk is associated with an investment in shares in
a company like ours. You should know that our business, financial condition or
results of operations, and, more importantly, that of any business we acquire,
could be materially and adversely affected by any of the following risks. You
should carefully consider the following factors in addition to the other
information in this prospectus before acquiring the shares.
Anticipated Change in Control and Management.
Upon the successful completion of a business combination, we anticipate that we
will have to issue to the acquisition candidate our authorized but unissued
9
<PAGE>
common stock which when issued will comprise a majority of our then issued and
outstanding shares of common stock. Therefore, we anticipate that upon the
closing of a business combination there will be a change of control of us. In
addition, existing management and directors will resign. We cannot assure you of
the experience or qualification of new management either in the operation of our
activities or in the operation of the business, assets or property being
acquired.
No Acquisition Candidate Identified.
As of the date of this prospectus, we have not entered into or negotiated any
arrangements for a business combination with an acquisition candidate. Since we
have not yet attempted to seek a business combination, and due to our lack of
experience, there is only a limited basis upon which to evaluate our prospectus
for achieving our intended business objectives.
No Use of Consultants.
We will not hire or pay anything to outside consultants to help us find an
acquisition candidate. We will only engage in a business combination with an
acquisition candidate that finds us directly or is referred by friends or
associates of management who will receive no compensation for making the
referral. Because management has little experience in managing companies similar
to us, the non-use of paid outside consultants may increase our difficulties in
finding an acquisition candidate.
No Access to Your Funds while Held In Escrow.
You will be offered return of your proportionate portion of the funds held in
escrow only upon the reconfirmation offering required to be conducted upon
execution of an agreement to acquire an acquisition candidate which represents
80% of the maximum offering proceeds. If we are unable to locate an acquisition
candidate meeting these acquisition criteria, you will have to wait 18 months
from the date of this prospectus before a proportionate portion of your funds
are returned, without interest.
Failure of Sufficient Number of Investors to Reconfirm Investment.
A business combination with an acquisition candidate cannot be closed unless,
for the reconfirmation offering required by rule 419, we can successfully
convince you and a sufficient number of investors representing 80% of the
maximum offering proceeds to elect to reconfirm your investments. If, after
completion of the reconfirmation offering, a sufficient number of investors do
not reconfirm their investment, the business combination will not be closed. In
such event, none of the securities held in escrow will be issued and the funds
will be returned to you on a proportionate basis.
Up to 80% of the shares may be purchased by our officers, directors,
current shareholders and any of their affiliates or associates. Shares purchased
by such insiders will be included in determining whether investors representing
80% of the maximum offering proceeds elect to reconfirm your investment. The
benefit of an objective 80% reconfirmation by you may be reduced or eliminated,
as it is likely that such insiders will elect to reconfirm a proposed business
combination.
No Transfer of Escrowed Securities.
10
<PAGE>
No transfer or other disposition of the escrowed securities is permitted other
than by will or the laws of descent and distribution, or under a qualified
domestic relations order as defined by the Internal Revenue Code of 1986 as
amended, or Title 7 of the Employee Retirement Income Security Act, or the
related rules. Under Rule 15g-8, it is unlawful for any person to sell or offer
to sell the securities or any interest in or related to the securities held in
the rule 419 escrow account other than under a qualified domestic relations
order in divorce proceedings. Therefore, any and all contracts for sale to be
satisfied by delivery of the securities and sales of derivative securities to be
settled by delivery of the securities are prohibited. You are further prohibited
to sell any interest in the securities or any derivative securities whether or
not physical delivery is required.
Unspecified Industry and Acquired Business; Unascertained Risks.
To date, we have not selected any particular industry in which to concentrate
our business combination efforts. In relation to our competitors, we are and
will continue to be an insignificant participant in the business of seeking
business combinations. A large number of established and well-financed entities,
including venture capital firms, have recently increased their merger and
acquisition activities. Nearly all such entities have significantly greater
financial resources, technical expertise and managerial capabilities than us
and, consequently, we will be at a competitive disadvantage in identifying
suitable merger or acquisition candidates and successfully consummating a
proposed merger or acquisition. Also, we will be competing with a large number
of other small, blank check companies.
Conflict of Interest - Management's Fiduciary Duties.
A conflict of interest may arise between management's personal financial benefit
and management's fiduciary duty to you. You should note that our present
shareholder can purchase up to 80% of the stock in this offering and thus may
own 80% of us after the offering is completed. He would therefore have
continuing control. Further, management's interest in their own financial
benefit may at some point compromise their fiduciary duty to you. No proceeds
from this offering will be used to purchase directly or indirectly any shares of
the common stock owned by management or any present shareholder, director or
promoter.
Our director and officers are or may become, in their individual capacities,
officers, directors, controlling shareholders and/or partners of other entities
engaged in a variety of businesses. Michael T. Williams is engaged in business
activities outside of us, and the amount of time he will devote to our business
will only be about five (5) to twenty (20) hours each per month. There exists
potential conflicts of interest including allocation of time between us and such
other business entities.
Conflicts with other blank check companies with which members of management are
currently and may become affiliated in the future will arise in the pursuit of
business combinations. To aid the resolution of such conflicts, we will adopt
the following procedure: All candidates will first be presented to us and any
other companies that intend to file a registration statement under the
Securities Act of 1933 to sell their securities prior to entering into a
business combination agreement based upon the effective date of each
registration statement. If there are no other companies that have filed such
registration statements, then based upon the time and date on which such
companies were formed.
We will not purchase the assets of any company which is beneficially owned by
any of our officers, director, promoter or affiliate or associate.
11
<PAGE>
We have described additional information concerning these matters in the section
entitled Related Party Transactions.
Possible Disadvantages of Blank Check Offering.
Our business will most likely involve the acquisition of or merger with a
company which does not need substantial additional capital but which desires to
establish a public trading market for our shares. A company which seeks our
participation in attempting to consolidate our operations through a merger,
reorganization, asset acquisition, or some other form of combination may desire
to do so to avoid what they may deem to be adverse consequences of themselves
undertaking a public offering. Factors considered may include:
o Time delays
o Significant expense
o Loss of voting control
o The inability or unwillingness to comply with various federal and state
laws enacted for your protection
In making an investment in us, you may be doing so under terms which may
ultimately be less favorable than making an investment directly in a company
with a specific business.
Lack of Diversification.
In the event we are successful in identifying and evaluating a suitable business
combination, we will in all likelihood, be required to issue our common stock in
an acquisition or merger transaction. Inasmuch as our capitalization is limited
and the issuance of additional common stock will result in a dilution of
interest for present and prospective shareholders, we will only negotiate one
acquisition or merger. Consequently, our lack of diversification may subject us
to economic fluctuation within a particular industry in which an acquisition
candidate conducts business.
Regulation.
Although we will be subject to regulation under the Securities Act and the
Exchange Act, management believes we will not be subject to regulation under the
Investment Company Act . The regulatory scope of the Investment Company Act was
enacted principally for the purpose of regulatory vehicles for pooled
investments in securities, extends generally to companies primarily in the
business of investing, reinvesting, owning, holding or trading securities. The
Investment Company Act may, however, also be deemed to be applicable to a
company which does not intend to be characterized as an investment company but
which, nevertheless, engages in activities which may be deemed to be within the
definition of the scope of certain provisions of the Investment Company Act. We
believe that our principal activities will not subject we to regulation under
the Investment Company Act. Nevertheless, we will might be deemed to be an
investment company. The offering funds may be invested primarily in certificates
of deposit, interest bearing savings accounts or government securities. In the
event we are deemed to be an investment company, we may be subject to certain
restrictions relating to our activities, including restrictions on the nature of
our investments and the issuance of securities. We have obtained no formal
12
<PAGE>
determination from the Securities and Exchange Commission as to our status under
the Investment Company Act .
Taxation.
In the course of any acquisition or merger we may undertake, a substantial
amount of attention will be focused upon federal and state tax consequences to
both us and the acquisition candidate. Presently, under the provisions of
federal and various state tax laws, a qualified reorganization between business
entities will generally result in tax-free treatment to the parties to the
reorganization. While we expect to undertake any merger or acquisition so as to
minimize federal and state tax consequences to both us and the acquisition
candidate, such business combination might not meet the statutory requirements
of a reorganization or the parties might not 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 that may have a
substantial adverse effect on us.
Control by Present Management and Shareholders.
Assuming the sale of all the shares offered, and the purchase of 80% of such
shares by management, the shares of common stock purchased by the public will
represent 20% of our outstanding common stock after the completion of this
offering. Therefore, our present stockholders will own an 80% interest in the
corporation and will continue to be able to elect all of our directors, appoint
our officers, and control our affairs and operations. Our articles of
incorporation do not provide for cumulative voting. There are currently no
non-management shareholders.
Limitations on Share Resale.
Our securities may be sold in New York State and the Florida only, and, upon
release from escrow, may be resold by you in New York and Florida only until a
resale exemption is available in other states. We will require and opinion of
counsel that any requested transfer is in full compliance with all federal and
state securities law.
No Underwriter.
We are selling the shares ourselves without the use of a professional securities
underwriting firm. Consequently, there may be less due diligence performed in
conjunction with this offering than would be performed in an underwritten
offering.
Opting Out of Some Provisions of Florida Law.
We have elected to opt out of the affiliated transactions provision of Florida
law. This means that our transactions with management and persons or entities
that control or are controlled by management do not have to be done in a manner
required under that provision. The provision generally requires approval by
non-affiliated parties. Nonetheless, we have adopted certain policies
concerning affiliated transactions, as described in the section entitled
Related Party Transactions. These policies have substantially the same effect
as the statute. We have elected to opt out of the control share acquisition
provision of Florida law. This means that a future issuance of shares having
20% or more of the aggregate number of votes that can be cast on any matter by
13
<PAGE>
our shareholders does not have to be done in a manner required under that
provision, which in general requires shareholder approval of such a
transaction.
DILUTION
At December 31, 1998, we had a net tangible book value of -$247. The
following table sets forth the dilution to persons purchasing shares in this
offering without taking into account any changes in our net tangible book value,
except the sale of 100,000 shares at the offering price and receipt of $5,000,
less offering expenses. The net tangible book value per share is determined by
subtracting total liabilities from our tangible assets divided by the total
number of shares of common stock outstanding.
- -------------------------------------------------------------------------------
December 31, 1998 100,000 shares sold
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Public offering price per n/a $0.05
share
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net tangible book value 0 n/a
per share of
common stock before the
offering(1)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Pro forma net tangible n/a $0.05
book value per share
of common stock after the
offering
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Increase to net tangible n/a at least $0.05
book value per share
attributable to purchase
of common stock by new
investors
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Dilution to new investors n\a $0.00
- -------------------------------------------------------------------------------
(1) Our net tangible book value per share is determined by dividing the number
of shares of Common Stock outstanding into the our net tangible book value
and is less than zero prior to this offering.
USE OF PROCEEDS
The gross proceeds of this offering will be $5,000. Under rule 419, after
all of the shares are sold, 10% of the funds ($500) may be released from escrow
to us. We intend not to request release of any of this amount. Accordingly, we
will receive these funds in the event a business combination is closed in
accordance with rule 419. None of these funds have been allocated for any
specific purpose.
14
<PAGE>
Under rule 419, after the reconfirmation offering and the closing of the
business combination, $5,000, plus any dividends received, but less any amount
returned to you and other investors who did not reconfirm their investment under
rule 419, will be released to us.
Amount Percent
Escrowed funds pending
business combination (1)(2) $5000 100%
----- ----
Total $5000 100%
(1) Does not include the estimated $10,000 of offering expenses. The expenses of
the offering will be paid by a loan from our management.
(2) We will not request a release of 10% of these funds under rule 419.
We will not advertise or promote ourselves. Instead, our management will use
previously established contacts to search for potential acquisition candidates.
Upon the closing of a business combination, there will be a change in our
management, which management may decide to change the policies as to the use of
proceeds as stated herein. Our present management anticipates that the funds
will be used by the post-merger management at their sole discretion. Other than
the $60,000 in accrued salary to our president, no compensation will be paid or
due or owing to any officer or director until after a business combination is
closed. Such policy is based upon a written agreement between management and us.
Management is unaware of any circumstances under which such policy through their
own initiative may be changed.
Present management may loan us up to $50,000, which is not repayable. This
policy is based upon a written agreement among management. Management is unaware
of any circumstances under which such policy through their own initiative may be
changed.
The proceeds received in this offering will be put into the escrow account
pending closing of a business combination and reconfirmation by investors. Such
funds will be in an insured depository institution account in either a
certificate of deposit, interest bearing savings account or in short term
government securities as placed by *.
PROPOSED BUSINESS
History and Organization
We were organized under the laws of the State of Florida in September,
1998. Since inception, our primary activity has been directed to organizational
15
<PAGE>
efforts and obtaining initial financing. We were formed as a vehicle to pursue a
business combination. We have not engaged in any preliminary efforts intended to
identify possible business combination and have neither conducted negotiations
concerning nor entered into a letter of intent concerning any such acquisition
candidate.
Operations
We were organized for the purposes of creating a corporate vehicle to seek,
investigate and, if such investigation warrants, engage in business combinations
presented to us by persons or firms who or which desire to employ our funds in
their business or to seek the perceived advantages of publicly-held corporation.
Our principal business objective will be to seek long-term growth potential in a
business combination venture rather than to seek immediate, short-term earnings.
We will not restrict our search to any specific business, industry or
geographical location.
We do not currently engage in any business activities that provide any cash
flow. The costs of identifying, investigating, and analyzing business
combinations will be paid with money in our treasury or loaned by management.
Persons purchasing shares in this offering and other shareholders will most
likely not have the opportunity to participate in any of these decisions. Our
proposed business is sometimes referred to as a "blank check" company because
you will entrust your investment monies to our management before they have a
chance to analyze any ultimate use to which their money may be put. Although
substantially all of the funds of this offering are intended to be utilized
generally to close a business combination, such proceeds are not otherwise being
designated for any specific purposes. Under rule 419, prospective investors who
invest in us will have an opportunity to evaluate the specific merits or risks
of only the business combination management decides to enter into. Cost overruns
will be borne by management. This is based on an written agreement between
management and us.
We may seek a business combination in the form of firms which:
o Have recently commenced operations
o Are developing companies in need of additional funds for expansion into
new productsor markets
o Are seeking to develop a new product or service
o Are established businesses which may be experiencing financial or
operating difficulties and are in need of additional capital
A business combination may involve the acquisition of, or merger with, a company
which does not need substantial additional capital but which desires to
establish a public trading market for our shares, while avoiding what they may
deem to be adverse consequences of undertaking a public offering itself, such
as:
o Time delays
o Significant expense
o Loss of voting control
o Compliance with various federal and state securities laws
We will not acquire an acquisition candidate unless the fair value of the
acquisition candidate represents 80% of the maximum offering proceeds. To
16
<PAGE>
determine the fair market value of an acquisition candidate, our management will
examine the audited financial statements, including balance sheets and
statements of cash flow and stockholders' equity, of any candidate, focusing
attention on a potential acquisition candidate's assets, liabilities, sales and
net worth. If we determine that the financial statements of a proposed
acquisition candidate do not clearly indicate that the fair market value test
has been satisfied, we will obtain an opinion from an investment banking firm
which is a member of National Association of Securities Dealers, Inc. to the
satisfaction of such criteria.
Based upon the probable desire on the part of the owners of acquisition
candidates to assume voting control over us in order to avoid tax consequences
or to have complete authority to manage the business, we will combine with just
one acquisition candidate. This lack of diversification should be considered a
substantial risk in investing in us because we will not permit us to offset
potential losses from one venture against gains from another.
Upon closing of a business combination, there will be a change in control
which will result in the resignation of our present officers and directors.
None of our officers or directors have had any preliminary contact or
discussions with any representative of any other entity regarding a business
combination. Accordingly, any acquisition candidate that is selected may be a
financially unstable company or an entity in our early stage of development or
growth, including entities without established records of sales or earnings.
Accordingly, we may become subjected to numerous risks inherent in the business
and operations of financially unstable and early stage or potential emerging
growth companies. In addition, we may effect a business combination with an
entity in an industry characterized by a high level of risk. Although management
will endeavor to evaluate the risks inherent in a particular industry or
acquisition candidate, there can be no assurance that we will properly ascertain
or assess all significant risks.
We anticipate that the selection of a business combination will be complex
and extremely risky. Management believes that there are numerous firms seeking
even the limited additional capital which we will have and/or the benefit of a
publicly traded corporation because of:
o General economic conditions
o Rapid technological advances being made in some industries
o Shortages of available capital
Such perceived benefit of a publicly traded corporation may include:
o Facilitating or improving the terms on which additional equity financing may
be sought o Providing liquidity for the principals of a business o Creating a
means for providing incentive stock options or similar benefit to key
employees
o Providing liquidity, subject to restrictions of applicable statutes, for all
shareholders
Potentially available business combinations 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.
17
<PAGE>
Evaluation of Business Combinations
The analysis of business combinations will be undertaken by or under the
supervision of our officers and director, none of whom is a professional
business analyst. Management intends to concentrate on identifying preliminary
prospective business combinations which may be brought to our attention through
present associations. In analyzing prospective business combinations, management
will consider only that the proposed acquisition candidate can pay all of the
amounts due our present management.
Because we will be subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, we will be required to furnish certain information about
significant acquisitions, including audited financial statements for the
business acquired, covering one, two or three years depending upon the relative
size of the acquisition. Consequently, 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 Exchange Act are
applicable. In the event our obligation to file periodic reports is suspended
under Section 15(d), we intend on voluntarily filing such reports.
Any business combination will present certain risks. Many of these risks
cannot be adequately identified prior to selection, and you must, therefore,
depend on the ability of management to identify and evaluate such risks. In the
case of some of the potential combinations available to us, it is possible that
the promoters of an acquisition candidate have been unable to develop a going
concern or that such business is in our development stage in that it has not
generated significant revenues from its principal business activity prior to our
merger or acquisition. There is a risk, even after the closing of a business
combination and the related expenditure of our funds, that the combined
enterprises will still be unable to become a going concern or advance beyond the
development stage. The combination may involve new and untested products,
processes, or market strategies which may not succeed. Such risks will be
assumed by us and, therefore, our shareholders.
Business Combinations
In implementing a structure for a particular business acquisition, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also purchase
stock or assets of an existing business. The manner of the business combination
will depend on:
o The nature of the acquisition candidate
o The respective needs and desires of us and other parties o The management of
the acquisition candidate opportunity
o The relative negotiating strength of us and such other management
You should note that any merger or acquisition closed by us can be expected
to have a significant dilutive close on the percentage of shares held by our
then-shareholders, including purchasers in this offering. On the closing of a
business combination, the acquisition candidate will have significantly more
assets than us; therefore, management plans to offer a controlling interest in
us to the acquisition candidate. While the actual terms of a transaction to
which we may be a party cannot be predicted, we may be expected that the parties
to the business transaction will find we 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 . In
18
<PAGE>
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 us, including you in this
offering, would retain less than 20% of the issued and outstanding shares of the
surviving entity, which would be likely to result in significant dilution in the
equity of such shareholders. Management may choose to comply with these
provisions. In addition, all of our directors and officers will, as part of the
terms of the acquisition transaction, resign as directors and officers.
Management will not actively negotiate or otherwise consent to the purchase
of any portion of their common stock as a condition to or for a proposed
business combination unless such a purchase is requested by an acquisition
candidate as a condition to a merger or acquisition. Our officers and director
have agreed to comply with this provision which is based on a written agreement
among management. Management is unaware of any circumstances under which such
policy through their own initiative may be changed.
We anticipate that any securities issued in a reorganization would be
issued in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of this transaction, we may agree to register such securities either at the time
the transaction is closed, under certain conditions, or at specified times
thereafter. The issuance of substantial additional securities and their
potential sale into any trading market which may develop in our common stock may
have a depressive effect on such market.
If at any time prior to the completion of this offering we enter
negotiations with a possible merger candidate and such a transaction becomes
probable, then this offering will be suspended so that an amendment can be filed
which will include financial statements (including balance sheets and statements
of cash flow and stockholders' equity) of the proposed target.
We will not enter into a business combination with any company which is in
any way wholly or partially beneficially owned by any officer, director,
promoter or affiliate or associate of us. Our officers and directors have not
approached and have not been approached by any person or entity with regard to
any proposed business ventures to us. We will evaluate all possible business
combinations brought to us. If at any time a business combination is brought to
us by any of our promoters, management, or their affiliates or associates,
disclosure as to this fact will be included in the post-effective amendment,
thereby allowing the public investors the opportunity to fully evaluate the
business combination.
We have adopted a policy that we will not pay a finder's fee to any member
of management for locating a merger or acquisition candidate. No member of
management intends to or may seek and negotiate for the payment of finder's
fees.
We do not intend to advertise or promote ourselves. Instead, our
management will actively search for potential acquisition candidates. In the
event management decides to advertise in the form of an ad in a legal
publication to attract an acquisition candidate, the cost of such advertising
will be assumed by management.
Employees
We presently have no employees. Each of our officers and director are engaged in
business activities outside of us, and the amount of time they will devote to
19
<PAGE>
our business will only be between five (5) and twenty (20) hours per person per
week. Upon completion of the public offering, it is anticipated that management
will devote the time necessary each month to our affairs of until a successful
business opportunity has been acquired.
Facilities
We are presently using the office of Michael T. Williams, 2503 W. Gardner
Ct., Tampa FL, at no cost as our office. Such arrangement is expected to
continue after completion of this offering only until a business combination is
closed, although there is currently no such agreement between us and Mr.
Williams. We at present own no equipment, and do not intend to own any upon
completion of this offering.
Year 2000 Issues
Because we currently have no operations, we do not anticipate incurring
significant expense with regard to Year 2000 issues.
PLAN OF OPERATION
We are a development stage entity, and have neither engaged in any
operations nor generated any revenues to date. We have no assets. Our expenses
to date, all funded by a loan from management, are $247 plus the $100 SEC
filing fee paid in 1999. We also owe $60,000 in salary to our management. We
expect this obligation to be paid by the acquisition candidate as part of the
acquisition agreement.
Substantially all of our expenses that must be funded by management will be
from our efforts to identify a suitable acquisition candidate and close the
acquisition. Management has orally agreed to fund our cash requirements until
an acquisition is closed. So long as management does so, we will have
sufficient funds to satisfy our cash requirements and do not expect to have to
raise additional funds during the entire rule 419 escrow period of up to 18
months from the date of this prospectus. This is primarily because we
anticipate incurring no significant expenditures. Before the conclusion of this
offering, we anticipate our expenses to be limited to accounting fees, legal
fees, telephone, mailing, filing fees, occupational license fees, and transfer
agent fees.
We may seek additional financing. At this time we believe that the funds to
be provided by management will be sufficient for funding our operations until we
find an acquisition and therefore do not expect to issue any additional
securities before the closing of a business combination. However, we may issue
additional securities, incur debt or procure other types of financing if needed.
We have not entered into any agreements, plans or proposals for such financing
and as of present have no plans to do so. We will not use the offering funds as
collateral or security for any loan or debt incurred. Further, the offering
funds will not be used to pay back any loan or debts incurred by us. If we do
require additional financing, this financing may not be available to us, or if
available, may not be on terms acceptable to us.
We expect no Year 2000 problems, as our business is not dependent upon any
computer. However, the business we acquire could experience interruptions in its
business and significant losses if it or its customers or vendors rely on
computer information systems that are unable to accurately process dates
beginning on January 1, 2000.
20
<PAGE>
RELATED PARTY TRANSACTIONS
A conflict of interest may arise between management's personal financial benefit
and management's fiduciary duty to you. You should note that our present
shareholder can purchase up to 80% of the stock in this offering and thus may
own 80% of us after the offering is completed. He would therefore have
continuing control. Further, management's interest in their own financial
benefit may at some point compromise their fiduciary duty to you. Any remedy
available under the laws of Florida, if management's fiduciary duties are
compromised, will most likely be prohibitively expensive and time consuming.
We have established the a policy that prohibits transactions with or payment of
anything of value to any present officers, director, promoter or affiliate or
associate or any company that is in any way or in any amount beneficially owned
by any of our officers, director, promoter or affiliate or associate, except as
follows:
o Williams Law Group, P.A. will provide but will not be paid anything by
us for legal services.
o We owe our president, Michael T. Williams, $60,000 in salary. The
acquisition candidate must agree to pay this debt in the acquisition
agreement.
Our director and officers are or may become, in their individual capacities,
officers, directors, controlling shareholders and/or partners of other entities
engaged in a variety of businesses. Michael T. Williams is engaged in business
activities outside of us, and the amount of time he will devote to our business
will only be about five (5) to twenty (20) hours each per month. There exists
potential conflicts of interest including allocation of time between us and such
other business entities.
Conflicts with other blank check companies with which members of management are
currently and may become affiliated in the future will arise in the pursuit of
business combinations. These conflicts will involve only Michael T. Williams.
Mr. M. T. Williams has in the past formed other what would be deemed blank check
entities for himself. He intends to continue to do so in the future. None of
these entities has or will engage in any public offering of its securities prior
to entering into a business combination agreement. None of such entities has
entered into an agreement to acquire any business or has acquired any business.
To aid the resolution of these conflicts, he and we have agreed to the following
procedure:
o None of these existing blank check entities will file registration
statements under the Securities Act to sell their securities prior to
entering into a business combination agreement.
o All acquisition candidates will first be presented to us and any other
blank check companies that file a registration statement under the
Securities Act to sell their securities prior to entering into a
business combination agreement in order starting with the company with
the earliest effective date of a registration statement. If there are
no other affiliated blank check companies that have filed these
21
<PAGE>
registration statements, then acquisition candidates will be presented
based upon the earliest time and date on which such companies were
formed.
Mr. M. T. Williams may render services to blank check companies formed by others
in the future. Part of his compensation may be in securities of such companies.
However, he will not own more than 5% of any of these companies and will not be
able to control them in any way. Thus, such companies will not be subject to the
procedures described above.
All of the foregoing are subject to a written agreement between management an
us. Management is not aware of any circumstances under which the policies
described in this section, or any other section, of this prospectus, through
their own initiative, may be changed.
DESCRIPTION OF CAPITAL STOCK
-------------------------------------------------------------------------
Authorized Capital Stock Under Our Shares Of Capital Stock Outstanding
Articles Of Incorporation After offering
-------------------------------------------------------------------------
-------------------------------------------------------------------------
50,000,000 shares of common stock 100,100 shares of common stock
-assuming all shares are sold
-------------------------------------------------------------------------
-------------------------------------------------------------------------
20,000,000 shares of preferred stock No shares of preferred stock
-------------------------------------------------------------------------
All significant provisions of our capital stock are
summarized in this prospectus. However, the following description isn't complete
and is governed by applicable Florida law and our articles of incorporation and
bylaws. We have filed copies of these documents as exhibits to the registration
statement related to this prospectus.
Common Stock
You have voting rights for your shares.
You and all other common stockholders may cast one vote for each share held
of record on all matters submitted to a vote. You have no cumulative voting
rights in the election of directors This means, for example, that if there are
three directors up for election, you cannot cast 3 votes for one director and
none for the other two directors.
You have dividend rights for your shares.
You and all other common stockholders are entitled to receive dividends and
other distributions when declared by our board of directors out of the assets
and funds available, based upon your percentage ownership of us. Florida law
prohibits the payment of any dividends where, after payment of the dividend, we
would be unable to pay our debts as they come due in the usual course of
business or our total assets would be less than the sum of our total liabilities
plus any amounts the law requires to be set aside. We will not pay dividends.
You should not expect to receive any dividends on shares in the near future,
even after a merger. This investment is inappropriate for you if you need
dividend income from an investment in shares.
You have rights if we go out of business forever.
22
<PAGE>
If we go out of business forever, you and all other common stockholders
will be entitled to share in the distribution of assets remaining after payment
of all money we owe to others and any priority payment required to be made to
our preferred stockholders. Our directors, at their discretion, may borrow funds
without your prior approval, which potentially further reduces the amount you
would receive if we go out of business forever.
You have no right to acquire shares of stock based upon your percentage
ownership of our shares when we sell more shares of our stock to other people.
We do not provide our stockholders with preemptive rights to subscribe for
or to purchase any additional shares offered by us in the future. The absence of
these rights could, upon our sale of additional shares of common or preferred
stock, result in a decrease in the percentage ownership that you hold or
percentage of total votes you may cast.
Preferred Stock
Our board of directors can issue preferred stock at any time with any
legally-permitted rights and preferences without your approval.
Our board of directors, without your approval, is authorized to issue
preferred stock. They can issue different classes of preferred stock, with some
or all of the following rights or any other rights they think are appropriate
and that are legal:
o Voting
o Dividend
o Required or optional repurchase by us
o Conversion into common stock, with or without additional payment o Payments
preferred stockholders will receive before common stockholders if we go out
of business forever
The issuance of preferred stock could provide us with flexibility for
possible acquisitions and other corporate purposes. But it also could render
meaningless your right to vote your stock on a matter that you are entitled to
vote on because preferred stockholders could own shares with a majority of the
votes required on any issue. Someone interested in buying our company may not
follow through with their plans because they could find it more difficult to
acquire, or be discouraged from acquiring, a majority of our outstanding stock
because we issue preferred stock.
We may issue class A preferred stock in a merger.
This preferred stock could entitle persons owning common stock of the
acquisition candidate to convert into more shares of our stock after the merger
based upon the following formula:
23
<PAGE>
----------------------------------------------------------------
1 - the fraction [Average of Bid and Ask Price for the first 20
days the common stock trades upon any established securities
market/a specific dollar value to be determined in the merger
agreement]
divided by
{the fraction [Average of Bid and Ask Price for the first 20 days
the common stock trades upon any established securities market/ the
same dollar value]}
The company being acquired will tell us what they want the specific
dollar value to be.
----------------------------------------------------------------
Here's how the formula would work. Assume the average bid/ask for the 20-day
period was $2.00 and the specific dollar value was $3.00. When we plug these
numbers into the formula, we get the following calculation:
----------------------------------------------------------------
1 - the fraction [Average of Bid and Ask Price for the first 20 days
the common stock trades upon any established securities market [This
number is 2]/ a specific dollar value to be determined in the merger
agreement [This number is 3]] [This number is then calculated: 1 -
2/3 = 1/3.]
divided by
{the fraction [Average of Bid and Ask Price for the first 20 days
the common stock trades upon any established securities market [This
number is 2]/ a specific dollar value to be determined in the merger
[This number is 3]]} [This number is then calculated: 2/3]
To finish our computation, we do the following: 1/3 divided by
2/3 = .5
This means that, in this example, .5 additional shares of our
stock for each share of common stock issued to shareholders in
the company acquired in the merger would be issued upon
conversion of this preferred stock. The actual number of
shares issued could vary.
----------------------------------------------------------------
Transfer Agent and Registrar
We are the transfer agent and registrar for our stock.
SHARES ELIGIBLE FOR FUTURE SALE
Of the shares outstanding after the offering, the 100,000 shares sold in
this offering will have been registered with the SEC and can be freely resold,
except if they are acquired by our directors, executive officers or other
persons or entities that they control or who control them. Our directors,
executive officers, and persons or entities that they control or who control
them will be able to sell shares of stock so long as they do so without
violating SEC rule 144. The remaining 100 outstanding shares may only be sold
under the rule.
24
<PAGE>
The rule provides that directors, executive officers, and persons or
entities that they control or who control them may sell shares of common stock
in any three-month period in an amount limited to the greater of:
o 1% of our outstanding shares of common stock
o The average weekly trading volume in our common stock during the four
calendar weeks preceding a sale
Sales under the rule also must be made without violating:
o Manner-of-sale provisions - in the market through a broker at current market
prices o Notice requirements - forms must be filed with the SEC o Requirement of
availability of public information about us - current in filing
required SEC reports.
We cannot predict the effect that sales of shares or the availability of
shares for sale will have on the any market price that may exist for our common
stock after completion of the offering. We do know that sales of substantial
amounts of our common stock in the public market could drive down our stock
price.
MANAGEMENT
The following table and subsequent discussion sets forth information about
our directors and executive officers, each of whom will serve in the same
capacity with us upon completion of the offering, but will resign upon the
closing of the merger. Each director and executive officer was elected to his
position in September, 1998.
Name Age Title
Michael T. Williams 50 President, Treasurer and Director
M. Brandon Williams 18 Secretary
Michael T. Williams responsibilities will include management of our
operations as well as our administrative and financial activities. Since 1975
Mr. Williams has been in the practice of law, initially with a government
agency, and since then in private practice. He was also chief executive officer
of Florida Community Cancer Centers, Dunedin, FL from 1991-1995. He received a
BA from the University of Kansas and a JD from the University of Pennsylvania.
M. Brandon Williams is the son of Michael T. Williams. He is currently a
senior at Tampa Preparatory School, Tampa, FL. From 1994 to date, he has been a
student at Tampa Prep and at a high school in Besancon, France. He has held no
full-time jobs.
Our directors all hold office until the next annual meeting of shareholders
and the election of their successors. Directors receive no compensation for
serving on the board other than reimbursement of reasonable expenses incurred
in attending meetings. Officers are appointed by the board and serve at their
discretion.
25
<PAGE>
Executive Compensation
The following table sets forth all compensation awarded to, earned by, or paid
for services rendered to us in all capacities during the fiscal year ended
December 31, 1998, by our other executive officers whose salary and bonus for
fiscal year 1998 exceeded $100,000.
Summary Compensation Table
Long-Term Compensation Awards
Name and Principal Annual Compensation -
Position 1998
Salary ($) Bonus ($) Number of Shares Underlying
---------- ---------
Options (#)
Michael T. Williams, None None None
President
We have agreed orally to pay Michael T. Williams $60,000 of salary for all
services rendered and to be rendered from January 1, 1999 until the acquisition
closes. This debt will be assumed and paid by the acquisition candidate.
Except as described above, we will not pay any of the following types of
compensation or other financial benefit to our management or current
stockholders:
o Consulting Fees
o Finders' Fees
o Sales of insiders' stock positions in whole or in part to the private
company, the blank check company and/or principals thereof
o Any other methods of payments by which management or current
shareholders receive funds, stock, other assets or anything of value
whether tangible or intangible
These provisions are the subject of a written agreement between management and
our current stockholders and us. Management is not aware of any circumstances
under which this policy, through their own initiative, may be changed.
Management Involvement
Only Michael T. Williams has been involved in our affairs. We have
conducted no business as of yet, and aside from the search for shareholders
associated with our formation, management has done no work with or for us. Mr.
Michael T. Williams will be the primary person involved in locating an
acquisition candidate by speaking to business associates and acquaintances, who
will not be paid referral fees, and searching the New York Times, the Wall
Street Journal and other business publications for acquisition candidates.
Management Control
26
<PAGE>
Management may not divest themselves of ownership and control of us prior
to the closing of an acquisition or merger transaction. This policy is based on
an unwritten agreement among management. Management is not aware of any
circumstances under which such policy through their own initiative may be
changed.
Statement Concerning Indemnification
Our directors are bound by the general standards for directors provisions in
Florida law. These provisions allow our directors in making decisions to
consider any factors as they deems relevant, including our long-term prospects
and interests and the social, economic, legal or other effects of any proposed
action on the employees, suppliers or our customers, the community in which the
we operate and the economy. Florida law limits our directors' liability.
We have agreed to indemnify all our directors, meaning that we will pay for
damages they incur for properly acting as directors. The SEC believes that this
indemnification may not be given for violations of the Securities Act of 1933
that governs the distribution of our securities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the registrant
under the foregoing provisions, the registrant has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against the public policy as expressed in the securities Act and is therefore,
unenforceable.
PRINCIPAL SHAREHOLDER
The following table sets forth information about our current shareholder.
The person named below has sole voting and investment power with respect to the
shares. The numbers in the table reflect shares of common stock held as of the
date of this prospectus and also reflect shares that may be acquired by Mr.
Williams under the offering. The numbers in this table assume 100,100 shares of
common stock outstanding following the offering:
Shares Owned Percentage
Before After offering Before offering After
offering offering
- --------------------------------------------------------------------------------
Michael T. 100 80,100 100% 80%
Williams
100100%
2503 W. Gardner
Ct.
Tampa FL 33611
- --------------------------------------------------------------------------------
All directors and 100 80,100 100% 80%
officers as a
group -
2 persons
- --------------------------------------------------------------------------------
Mr. Williams may be deemed our promoter, as that term is defined under the
Securities Act of 1933.
27
<PAGE>
MARKET FOR OUR COMMON STOCK
Prior to the date hereof, there has been no trading market for our common
stock. Under the requirements of Rule 15g-8 of the Exchange Act, a trading
market will not develop prior to or after the effectiveness of this prospectus
or while the common stock under this offering is maintained in escrow. The
common stock under this offering will remain in escrow until our closing of a
business combination under the requirements of rule 419. There is currently one
holder of our outstanding common stock. The outstanding common stock was sold in
reliance upon an exemption from registration contained in Section 4(2) of the
Securities Act. Assuming management purchases 80% of the shares in this
offering, which is their current intention, current shareholders will own 80% of
the outstanding shares upon completion of the offering. As a result, there is no
likelihood of an active public trading market, as that term is commonly
understood, developing for the shares. There can be no assurance that a trading
market will develop upon the closing of a business combination and the
subsequent release of the common stock and other escrowed shares from escrow. To
date, neither we nor anyone acting on our behalf has taken any affirmative steps
to retain or encourage any broker dealer to act as a market maker for our common
stock. Further, there have been no discussions or understandings, preliminary or
otherwise, between us or anyone acting on our behalf and any market maker
regarding the participation of any such market maker in the future trading
market, if any, for our common stock.
Present management does not anticipate that any such negotiations,
discussions or understandings shall take place prior to the execution of an
acquisition agreement. Management expects that discussions in this area will
ultimately be initiated by the party or parties controlling the entity or assets
which we may acquire. Such party or parties may employ consultants or advisors
to obtain such market maker, but our present management has no intention of
doing so at the present time.
There are no outstanding options or warrants to purchase, or securities
convertible into, our common equity. The 100 shares of our common stock
currently outstanding are restricted securities as that term is defined in the
Securities Act.
Reports to Stockholders
We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practicable at the end of each fiscal
year. Our fiscal year ends on December 31st.
PLAN OF DISTRIBUTION
We offer the right to subscribe for 100,000 shares at $0.05 per share. We
propose to offer the shares directly on a best efforts, no minimum basis, and no
compensation is to be paid to any person for the offer and sale of the shares.
Our president may distribute prospectuses related to this offering. We estimate
approximately 100 to 200 prospectuses shall be distributed in such a manner. He
intends to distribute prospectus to acquaintances, friends and business
associates.
28
<PAGE>
The offering shall be conducted by our president. Although he is an associated
person of us as that term is defined in Rule 3a4-1 under the Exchange Act, he is
deemed not to be a broker for the following reasons:
o He is not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of his
participation in the sale of our securities.
o He will not be compensated for his participation in the sale of our
securities by the payment of commission or other remuneration based
either directly or indirectly on transactions in securities.
o He is not an associated person of a broker or dealers at the time of
his participation in the sale of our securities.
o He will restrict his participation to the following activities:
o Preparing any written communication or delivering such communication
through the mails or other means that does not involve oral
solicitation by him of a potential purchaser;
o Responding to inquiries of a potential purchasers in a
communication initiated by the potential purchasers, provided
however, that the content of such responses are limited to
information contained in a registration statement filed under the
Securities Act or other offering document
o Performing ministerial and clerical work involved in effecting any
transaction.
As of the date of this Prospectus, no broker has been retained by us for the
sale of securities being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement will
be filed.
Neither we nor anyone acting on our behalf including our shareholders, officers,
directors, promoters, affiliates or associates will approach a market maker or
take any steps to request or encourage a market in these securities either prior
or subsequent to an acquisition of any business opportunity. There have been no
preliminary discussions or understandings between us or anyone acting on our
behalf and any market maker regarding the participation of any such market maker
in the future trading market, if any, for our securities, nor do we have any
plans to engage in such discussions. We do not intend to use consultants to
obtain market makers. No member of management, promoter or anyone acting at
their direction will recommend, encourage or advise you to open brokerage
accounts with any broker-dealer that is obtained to make a market in the shares
subsequent to the acquisition of any business opportunity. Our investors shall
make their own decisions regarding whether to hold or sell their shares. We
shall not exercise any influence over your decisions.
Arbitrary Determination of Offering Price.
The initial offering price of $0.05 per share has been arbitrarily determined by
us, and bears no relationship whatsoever to our assets, earnings, book value or
any other objective standard of value. Among the factors considered by us were:
o The lack of operating history
o The proceeds to be raised by the offering
o The amount of capital to be contributed by the public in proportion to the
amount of stock to be retained by present stockholders
29
<PAGE>
o The current market conditions in the over-the-counter market
Possible Lack of Market for Your Shares
Under rule 419, all securities purchased in an offering by a blank check
company, as well as securities issued for an offering to underwriters, promoters
or others as compensation or otherwise, must be placed in the rule 419 escrow
account. These securities will not be released from escrow until the closing of
a merger or acquisition as provided for in rule 419. There is no present market
for our common stock of us and there may not be any active and liquid public
trading market developing following the release of securities from the rule 419
account. Thus, shareholders may find we difficult to sell their shares. To date,
neither we nor anyone acting on our behalf has taken any affirmative steps to
request or encourage any broker dealer to act as a market maker for our common
stock. Further, there have been no discussions or understandings, preliminary or
otherwise, between us or anyone acting on our behalf and any market maker
regarding the participation of any such market maker in the future trading
market, if any, for our common stock. Our present management has no intention of
seeking a market maker for our common stock at any time prior to the
reconfirmation offer to be conducted prior to the closing of a business
combination. Our officers after the closing of a business combination may employ
consultants or advisors to obtain such market makers. Management expects that
discussions in this area will ultimately be initiated by the management in
control of the entity after a business combination is reconfirmed by the
stockholders.
Method of Subscribing
Persons may subscribe by filling in and signing the subscription agreement and
delivering it, prior to the expiration date, to us. The subscription price of
$0.05 per share must be paid in cash or by check, bank draft or postal express
money order payable in United States dollars to our order.
Our officers, directors, current shareholders and any of their affiliates or
associates may purchase a portion of the shares offered in this offering. The
aggregate number of shares which may be purchased by them shall not exceed 80%
of the number of shares sold in this offering. Shares purchased by our officers,
directors and principal shareholders will be acquired for investment purposes
and not with a view towards distribution.
Expiration Date
This offering will expire 90 days from the date of this prospectus, or 180
days from the date of this prospectus if extended by us.
WHERE CAN YOU FIND MORE INFORMATION?
We have not previously been required to comply with the reporting
requirements of the Securities Exchange Act of 1934. We have filed with the SEC
a registration statement on form SB-2 to register the offer and sale of the
shares. This prospectus is part of that registration statement, and, as
permitted by the SEC's rules, does not contain all of the information in the
registration statement. For further information about us and the shares offered
under this prospectus, you may refer to the registration statement and to the
exhibits and schedules filed as a part of the registration statement. You can
review the registration statement and its exhibits and schedules at the public
reference facility maintained by the SEC at Judiciary Plaza, Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the regional offices of the
SEC at 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp
30
<PAGE>
Center, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661. Please
call the SEC at 1-800-SEC-0330 for further information on the public reference
room. The registration statement is also available electronically on the World
Wide Web at http://www.sec.gov.
You can also call or write us at any time with any questions you may have.
We'd be pleased to speak with you about any aspect of our business and this
offering.
LEGAL PROCEEDINGS
We not a party to or aware of any pending or threatened lawsuits or other
legal actions.
LEGAL MATTERS
The validity of the shares offered under this prospectus is being passed
upon for us by Williams Law Group, P.A., Tampa FL.
INTEREST OF NAMED COUNSEL
Mr. M. T. Williams is the principal and sole stockholder of Williams Law
Group, P.A. Mr. Williams is currently our president, director and sole
shareholder.
FINANCIAL STATEMENTS
The following are our financial statements, with independent auditor's
report, for the period ending December 31, 1998.
31
<PAGE>
4 BRANDON - I, INC.
(A Development Stage Enterprise)
TABLE OF CONTENTS
- --------------------------------------------------------------------------
Independent Auditors' Report F-2
Financial Statements as of and for the period
September 24, 1998
(date of incorporation) to December 31, 1998:
Balance Sheet F-3
Statement of Operations F-4
Statement of Stockholder's Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
<PAGE>
[Letterhead of BEARD NERTNEY KINGERY CROUSE & HOHL P.A.]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of 4 BRANDON - I, Inc.:
We have audited the balance sheet of 4 BRANDON - I, Inc. (the "Company"), a
development stage enterprise, as of December 31, 1998, and the related
statements of operations, stockholder's equity and cash flows for the period
September 24, 1998 (date of incorporation) to December 31, 1998. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and the disclosures in the financial statements. An audit also
includes assessing the accounting principles used and the significant estimates
made by management, as well as the overall financial statement presentation. We
believe our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
1998, and the results of its operations and its cash flows for the period
September 24, 1998, (date of incorporation) to December 31, 1998 in conformity
with generally accepted accounting principles.
BEARD NERTNEY KINGERY CROUSE & HOHL P.A.
January 20, 1999
F-2
<PAGE>
4 BRANDON - I, Inc.
(A Development Stage Enterprise)
BALANCE SHEET AS OF DECEMBER 31, 1998
----------------------------------------------
ASSETS $ 0
------
=======
LIABILITIES AND STOCKHOLDER'S EQUITY
STOCKHOLDER'S EQUITY:
Common stock - $.01 par value:
50,000,000 shares
authorized; 100 shares issued
and outstanding $ 1
Preferred Stock - $.01 par value;
20,000,000 shares
authorized; 0 shares 0
issued and outstanding
Additional paid-in 246
capital
Deficit accumulated during the (247)
development stage
-------
TOTAL $ 0
=======
- ----------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
F-3
<PAGE>
4 BRANDON - I, Inc.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
for the period September 24, 1998 (date of
incorporation)
to December 31, 1998
----------------------------------------------
EXPENSES
Organization costs $ 247
-------
NET LOSS $ 247
=======
NET LOSS PER SHARE:
Basic $ 2.47
=======
Weighted average number
of shares 100
=======
----------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
F-4
<PAGE>
4 BRANDON - I, Inc.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDER'S EQUITY
for the period September 24, 1998 (date of incorporation)
to December 31, 1998
- ---------------------------------------------------------------------------
Deficit
Accumulated
Additional During
the
Common Preferred Paid- Development
Shares Value Shares Value in Stage Total
Capital
------- ----- ----- ----- -------- ------ ------
Balances, September 0 $ 0 0 $ 0 $ 0 $ 0 $ 0
24, 1998 (date of
incorporation)
Proceeds from the
issuance
of common stock 100 1 246 247
Net loss for the
period,
September 24, 1998
(date of incorporation)
to December 31, 1998 (247) (247)
------ ------ ----- ----- ------- -------- -------
Balances December 100 $ 1 0 $ 0 $ 246 $ (247) $ 0
31, 1998
====== ====== ===== ====== ======= ======== =======
- ---------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
F-5
<PAGE>
4 BRANDON - I, Inc.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
for the period September 24, 1998 (date of
incorporation)
to December 31, 1998
- ----------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (247)
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance
of common stock 247
-------
NET INCREASE IN CASH AND CASH 0
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING 0
OF PERIOD -------
CASH AND CASH EQUIVALENTS, END OF $ 0
PERIOD =======
SUPPLEMENTAL DISCLOSURES
Interest paid $ 0
=======
- ----------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
F-6
<PAGE>
4 BRANDON - I, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
4-BRANDON - I, Inc. (the "Company") was incorporated under the laws of the state
of Florida on September 24, 1998. The Company is considered to be in the
development stage, as defined in Financial Accounting Standards Board Statement
No. 7. The Company intends to effect a merger or other similar business
combinations or to establish new businesses. The planned principal operations of
the Company have not commenced, therefore accounting policies and procedures
have not yet been established.
NOTE B - INCOME TAXES
The Company, with the consent of its stockholder, has elected under the Internal
Revenue Code to be an S Corporation. In lieu of corporate income taxes, the
stockholders of an S Corporation are taxed on their proportionate share of the
Company's taxable income. Therefore, no provision or liability for income taxes
has been included in these financial statements.
In conjunction with the proposed common stock offering (Note C) the Company will
terminate its S election. If the Company was as a "C" corporation for income tax
purposes, the Company would be required to pay an entity-level income tax.
The following presents the proforma net loss as if the Company was a "C"
corporation. The presentation used is in accordance with Financial Accounting
Standard Statement No. 109, "Accounting for Income Taxes".
Net loss before income taxes $ (79)
Income tax expense (benefit) (0)
Net Loss $ (79)
=========
No benefit for income taxes has been recorded because the Company would
establish a valuation allowance to fully reserve the related asset.
NOTE C - PROPOSED COMMON STOCK OFFERING
The Company intends to file a registration statement for the sale of up
to 100,000 shares of the Company's common stock at $0.05 per share. The
existing shareholders do not intend to offer any shares for sale,
however they may purchase up 80% of the shares being registered. The
F-7
<PAGE>
offering is on a best efforts, no minimum basis. As such, there will be no
escrow of any of the proceeds of the offering and the Company will have the
immediate use of such funds to finance its operations.
NOTE D - COMMITMENTS
On January 1, 1999, the Company agreed orally to pay Michael T. Williams
$60,000 for all services rendered from January 1, 1999 until the closing of an
acquisition. This debt will be assumed and paid by the acquisition candidate
- --------------------------------------------------------------------------
F-8
<PAGE>
Part 11 - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 22. Indemnification of directors and Officers.
The information required by this Item is incorporated by reference to
"Indemnification" in the Prospectus herein.
Item 23. Other Expenses of Issuance and Distribution.
SEC Registration Fee $100
Blue Sky Fees and Expenses 1000
Legal Fees and Expenses 0
Printing and Engraving Expenses 6,500
Accountants' Fees and Expenses 1,000
Miscellaneous 1,400
-----
Total $10,000
The foregoing expenses, except for the SEC fees, are estimated.
Item 24. Recent Sales of Unregistered Securities.
The following sets forth information relating to all previous sales of Common
Stock by the Registrant which sales were not registered under the Securities
Act of 1933.
None
Item 25. Exhibits.
The following exhibits are filed with this Registration Statement:
Number Exhibit Name
1 *Escrow Agreement in Accordance with rule 419 under the Securities Act of
1933, as amended
3.1*Articles of Incorporation
3.2*By-Laws
5 Opinion Regarding Legality
10.1 **Subscription Agreement
10.2 Agreement between Management and the Company
24.1 Consent of Counsel
24.2 Consent of Expert
*Previously filed
**To be filed by amendment
All other Exhibits called for by Rule 601 of Regulation S-B are not applicable
to this filing. Information pertaining to our Common Stock is contained in our
Articles of Incorporation and By-Laws.
Item 26. Undertakings.
32
<PAGE>
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offer or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section I 0(a)(3) of the Securities
Act of 193 3; (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.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof. (3) To remove from
registration by means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the Offering.
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted under
authority conferred to that section.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant under its Certificate of Incorporation or provisions of Florida law,
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. If 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.
33
<PAGE>
SIGNATURES
Under the requirements of the Securities Act of 1933,the registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Amendment 2 to Form SB-2 and has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized by power of attorney, in the City of Tampa, State of
Florida, March 18, 1999.
4 Brandon - I, Inc.
/s/ Michael T. Williams
President, Treasurer, and director
/s/ M. Brandon Williams
Secretary
34
<PAGE>
As filed with the SEC on March 24, 1999 SEC Registration No.
333-71659
SECURITIES AND EXCHANGE COMMISSION
As filed with the SEC on March 24, 1999 SEC Registration No. 333-71659
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
AMENDMENT NO. 2
REGISTRATION STATEMENT
ON FORM SB-2
UNDER
THE SECURITIES ACT OF 1933
4 BRANDON - I, INC.
(Consecutively numbered pages 36 through 48 of this Registration Statement)
35
<PAGE>
INDEX TO EXHIBITS
- -------------------------------------------------------------------------
EXHIBIT NO. SEC REFERENCE TITLE OF DOCUMENT LOCATION
NUMBER
- -------------------------------------------------------------------------
1 1 Escrow Agreement Page 37
- -------------------------------------------------------------------------
2 3.1 Articles of Incorporation Previously
filed
- -------------------------------------------------------------------------
3 3.2 Bylaws Previously
filed
- -------------------------------------------------------------------------
4 5 Consent of Williams Law Page 42
Group P.A.
- -------------------------------------------------------------------------
Subscription Agreement
5 10.1 To be filed
by amendment
- -------------------------------------------------------------------------
Agreement between
6 10.2 Management and the Page 44
Company
- -------------------------------------------------------------------------
7 23.1 Consent of Beard, Page 47
Nertney, Kingery, Crouse
& Hohl, P.A.
- ------------------------------------------------------------------------
8 23.2 Consent of Williams Law (See Exhibit
Group P.A. (See Exhibit 4) 4)
- -------------------------------------------------------------------------
36
<PAGE>
EXHIBIT 1
Escrow Agreement
37
<PAGE>
EXHIBIT 1
ESCROW AGREEMENT IN ACCORDANCE WITH RULE 419
UNDER THE SECURITIES ACT OF 1933
ESCROW AGREEMENT dated as of __________, 1999 (the "Agreement") by and between 4
Brandon - I, Inc., a Florida corporation (the "Company") and *. (the "Escrow
Agent").
The Company, through its officers and director and selected broker-dealers, will
sell up to 100,000 shares of Common Stock, par value $.05 (the "shares"), as
more fully described in the Company's definitive Prospectus dated
________________ , 1999 comprising part of the company's Registration Statement
on Form SB-2, as amended (the "Registration Statement") under the Securities Act
of 1933, as amended (the "Act") (File NO. *) declared effective on
__________________ (the "Prospectus").
The Company desires that the Escrow Agent accept all offering proceeds, with no
deduction for underwriting commissions, underwriting expenses and dealer
allowances or amounts permitted to be released to the Company under Rule
419(b)(2)(vi), a copy of which rule is attached hereto and made a part hereof,
to be derived by the company from the sale of the shares (the "Offering
Proceeds"), as well as the share certificates representing the shares issued in
connection with the company's offering, in escrow, to be held and disbursed as
hereinafter provided.
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter set forth, the parties hereto agree as follows:
1. Appointment of Escrow Agent. The company hereby appoints the Escrow Agent
to act in accordance with and subject to the terms of this Agreement, and
the Escrow Agent hereby accepts such appointment and agrees to act in
accordance with and subject to such terms.
2. Deposit of Offering Proceeds and share Certificates. Subject to Rule 419,
upon the Company's receipt and acceptance of subscriptions and Offering
Proceeds, the Company shall promptly deliver to the Escrow Agent a certified
or bank check in the amount of the Offering Proceeds drawn to the order of
the Escrow Agent or, alternatively, drawn to the order of the company but
endorsed by the company for collection by the Escrow Agent and credited to
the Escrow Account.
All share certificates representing the Shares issued in connection with
the Company's offering shall also be deposited by the Company directly into
the Escrow Account promptly upon issuance. The identity of the purchasers of
the securities shall be included on the stock certificates or other documents
evidencing such securities. Securities held in the Escrow Account are to
remain as issued and deposited and shall be held for the sole benefit of the
purchasers, who shall have voting rights with respect to securities held in
their names, as provide be applicable state law. No transfer or other
disposition of securities held in the Escrow Account or any interest related
such securities shall be
38
<PAGE>
permitted other than by will or the laws of descent and distribution, or
pursuant to a qualified domestic relations order as defined by the Internal
Revenue code of 1986 as amended [26 U.S.C. 1 et seq.], or Title 1 of the
Employee Retirement Income Security Act [29 U.S.C. 1001 et seq.], or the
rules thereunder.
Warrants, convertible securities or other derivative securities, if nay,
relating to securities held in the Escrow Account may be exercised or
converted in accordance with their terms; provided however, that securities
received upon exercise or conversion, together with any cash or other
consideration paid in connection with the exercise or conversion, are
promptly deposited into the Escrow Account.
3. Disbursement of the Escrow Account. Upon the earlier of (i) receipt by the
Escrow Agent of a signed representation from the Company to the Escrow Agent,
that the requirements of Rule 419(e)(1) and (e)(2) have been met, and
consummation of an acquisition meeting the requirements of Rule 419(e)(2) or
(ii) written notification from the Company to the Escrow Agent to deliver the
Offering Proceeds to another escrow agent in accordance with Paragraph 4
then, in such event, the Escrow Agent shall disburse the Offering Proceeds
(inclusive of any interest thereon) to the Company and the securities to the
purchasers or registered holders identified on the deposited securities or
deliver the Offering Proceeds and securities to such other escrow agent, as
the case may be, whereupon the Escrow Agent shall be released from further
liability hereunder.
Notwithstanding the foregoing, if an acquisition meeting the
requirements of Rule 419(e)(1) has not occurred by a date within 18 months
after the effective date of the Registration Statement, funds held in the
Escrow Account shall be returned by first class mail or equally prompt means
to the purchasers within five business days following that date.
4. Concerning the Escrow Agent.
The Escrow Agent shall not be liable for any actions taken or omitted by it,
or any action suffered by it to be taken or omitted by it, in good faith and
in the exercise of its own best judgment, and may rely conclusively and
shall be protected in acting upon any order, notice demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement , instrument , report or other paper or document (not only as to
its due execution and the validity and effectiveness of its provision, but
also as to the truth and acceptability of any information therein contained)
which is believed by the Escrow Agent to be genuine and to be signed or
presented by the proper person or person.
39
<PAGE>
The Escrow Agent shall not be bound by any notice or demand, or any waiver,
modification, termination or rescission of this Agreement unless evidenced
by a writing delivered to the Escrow Agent signed by the proper party or
parties and, if the duties or rights of the Escrow Agent are affected,
unless it shall have given its prior written consent thereto.
The Escrow Agent shall not be responsible for the sufficiency or accuracy,
the form of, or the execution validity, value or genuineness of any document
or property received, held or delivered by it hereunder, or of any signature
or endorsement thereon, or for any lack of endorsement thereon, or for any
description therein, nor shall the Escrow Agent be responsible or liable in
any respect on account of the identity, authority or rights of the person
executing or delivering or purporting to execute or deliver any document or
property paid or delivered by the Escrow Agent under the provisions hereof.
The Escrow Agent shall not be liable for any loss which may be incurred by
reason of any investment of any monies or properties which it holds
hereunder. The Escrow Agent shall have the right to assume, in the absence
of written notice to the contrary from the proper person or persons, that a
fact or an event by reason of which an action would or might be taken by the
Escrow Agent does not exist or has not occurred, without incurring liability
for any action taken or omitted, in good faith and in the exercise of its
own best judgment, in reliance upon such assumption.
The Escrow Agent shall be indemnified and held harmless by the Company form
and against any expenses, including counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or other
proceeding involving any claim, or in connection with any claim or demand,
which in any way directly or indirectly arises out of or relates to this
Agreement, the services of the Escrow Agent hereunder, the monies or other
property held by it hereunder or any such expense or loss. Promptly after
the receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall, if a
claim in respect thereof shall be made against the other parties hereto,
notify such parties thereof in writing; but the failure by the Escrow Agent
to give such notice shall not relieve any party form any liability which
such party may have to the Escrow Agent hereunder. Upon the receipt of such
notice, the Escrow Agent, in its sole discretion, may commence an action in
the nature of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Account or it may deposit the Escrow Account with
the clerk of any appropriate court or it may retain the Escrow Account
pending receipt of a final, non-appealable order of a court having
jurisdiction over all of the parties hereto directing to whom and under what
circumstances the Escrow Account is to be disbursed and delivered.
The Escrow Agent shall be entitled to reasonable compensation from the
Company for all services rendered by it hereunder.
From time to time on and after the date hereof, the Company shall deliver or
cause to be delivered to the Escrow Agent such further documents and
instruments and shall do or cause to be done such further acts as the Escrow
Agent shall reasonably request (it being understood that the Escrow Agent
shall have no obligation to make such request) to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance
herewith or to assure itself that it is protected in acting hereunder.
40
<PAGE>
The Escrow Agent may resign at any time and be discharged from its duties as
Escrow Agent hereunder by its giving the Company at least thirty (30) days'
prior written notice thereof. As soon as practicable after its resignation,
the Escrow Agent shall turn over to a successor escrow agent appointed by
the Company, all monies and property held hereunder upon presentation of the
document appointing the new escrow agent and its acceptance thereof. If no
new escrow agent is so appointed in the sixty (60) day period following the
giving of such notice of resignation, the Escrow Agent may deposit the
Escrow Account with any court it deems appropriate.
The Escrow Agent shall resign and be discharged form its duties as Escrow
Agent hereunder if so requested in writing at anytime by the Company,
provided, however, that such resignation shall become effective only upon
acceptance of appointment by a successor escrow agent as provided above.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not
be relieved from liability thereunder for its own gross negligence or its
own willful misconduct.
5. Miscellaneous.
This Agreement shall for all purposes be deemed to be made under and shall
be construed in accordance with the laws of the State of Florida.
This Agreement contains the entire agreement of the parties hereto with
respect to the subject matter hereof and, except as expressly provided
herein, may not be changed or modified except by an instrument in writing
signed by the party to be charged.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation thereof.
This Agreement shall be binding upon and inure to the benefit of the
respective parties hereto and their legal representatives, successors and
assigns.
Any notice or other communication required or which may be given hereunder
shall be in writing and either be delivered personally or be mailed,
certified or registered mail, return receipt requested, postage prepaid, and
shall be deemed given when so delivered personally or, if mailed, two (2)
days after the date of mailing. The parties may change the persons and
addresses to which the notices or other communications are to be sent by
giving written notice to any such change in the manner provided herein for
giving notice.
WITNESS the execution of this Agreement as of the date first above written.
4 Brandon - I, INC.
By: ______________________________________
President
This Escrow Agreement is accepted as of the ______ day of _____________,
1999.
By: _______________________________________
Authorized Representative
41
<PAGE>
EXHIBIT 4
OPINION and CONSENT OF Williams Law Group P.A.
42
<PAGE>
WILLIAMS LAW GROUP, P.A.
2503 West Gardner Court
Tampa, FL 33611
March 18, 1999
4 Brandon - I, INC.
RE: Registration Statement on Form SB-2
Gentlemen:
I have acted as your counsel in the preparation on a Registration Statement
on Form SB-2 (the "Registration Statement") filed by you with the Securities and
Exchange Commission covering shares of Common Stock of 4 Brandon - I, Inc. (the
"Stock").
In so acting, I have examined and relied upon such records, documents and
other instruments as in our judgment are necessary or appropriate in order to
express the opinion hereinafter set forth and have assumed the genuineness of
all signatures, the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us
certified or photostatic copies.
Based on the foregoing, I am of the opinion that:
The Stock, when issued and delivered in the manner and/or the terms
described in the Registration Statement (after it is declared effective), will
duly and validly issued, fully paid and nonassessable;
I hereby consent to the reference to my name in the Registration Statement
under the caption "Legal Matters" and to the use of this opinion as an exhibit
to the Registration Statement.
Very truly yours,
/S/Michael T. Williams
- - -----------------------------------
Michael T. Williams
43
<PAGE>
EXHIBIT 6
Agreement between Management and the Company
44
<PAGE>
AGREEMENT
4 Brandon - I, Inc., a Florida corporation and Michael T. Williams, individually
and as president, treasurer and director of 4 Brandon - I do hereby agree as
follows:
o Other than the $60,000 in accrued salary to our president, no
compensation will be paid or due or owing to any officer or director
until after a business combination is closed. Any such compensation paid
must be in accordance with this agreement.
o Present management may loan us up to $50,000, which is not
repayable.
o Management will not actively negotiate or otherwise consent to the
purchase of any portion of their common stock as a condition to or for a
proposed business combination unless such a purchase is requested by an
acquisition candidate as a condition to a merger or acquisition.
o We have not incurred and do not intend to incur in the future any debt
from anyone other than management for our organizational activities.
Debt to management will not be repaid.
o We prohibit transactions with or payment of anything of value to any
present officers, director, promoter or affiliate or associate or any
company that is in any way or in any amount beneficially owned by any of
our officers, director, promoter or affiliate or associate, except as
follows:
o Williams Law Group, P.A. will provide but will not be paid
anything by us for legal services.
o We owe our president, Michael T. Williams, $60,000 in salary. The
acquisition candidate must agree to pay this debt in the
acquisition agreement.
o Conflicts with other blank check companies with which members of
management are currently and may become affiliated in the future
will arise in the pursuit of business combinations. These
conflicts will involve only Michael T. Williams. Mr. M. T.
Williams has in the past formed other what would be deemed blank
check entities for himself. He intends to continue to do so in
the future. None of these entities has or will engage in any
public offering of its securities prior to entering into a
business combination agreement. None of such entities has
entered into an agreement to acquire any business or has
acquired any business.
o None of these existing blank check entities will file registration
statements under the Securities Act to sell their securities prior
to entering into a business combination agreement.
o All acquisition candidates will first be presented to us and any
other blank check companies that file a registration statement
under the Securities Act to sell their securities prior to entering
into a business combination agreement in order starting with the
company with the earliest effective date of a registration
statement. If there are no other affiliated blank check companies
that have filed these
45
<PAGE>
registration statements, then acquisition candidates will be
presented based upon the earliest time and date on which such
companies were formed.
o Mr. M. T. Williams may render services to blank check companies formed
by others in the future. Part of his compensation may be in securities
of such companies. However, he will not own more than 5% of any of these
companies and will not be able to control them in any way. Thus, such
companies will not be subject to the procedures described above.
o We have agreed orally to pay Michael T. Williams $60,000 of salary for
all services rendered and to be rendered from January 1, 1999 until the
acquisition closes. This debt will be assumed and paid by the
acquisition candidate.
o Except as described in this agreement, we will not pay any of the
following types of compensation or other financial benefit to our
management or current stockholders:
o Consulting Fees
o Finders' Fees
o Sales of insiders' stock positions in whole or in part to the
private company, the blank check company and/or principals thereof
o Any other methods of payments by which management or current
shareholders receive funds, stock, other assets or anything of
value whether tangible or intangible
o Management may not divest themselves of ownership and control of us
prior to the closing of an acquisition or merger transaction.
o We have not incurred and do not intend to incur in the future any debt
from anyone other than management for our organizational activities.
Debt to management will not be repaid.
o Upon the closing of a business combination, there will be a change
in our management, which management may decide to change the
policies as to the use of proceeds as stated herein. Our
present management anticipates that the funds will be used by
the post-merger management at their sole discretion. Other than
the $60,000 in accrued salary to our president, no compensation
will be paid or due or owing to any officer or director until
after a business combination is closed.
Signed on March 17, 1999.
4 Brandon - I, Inc.
/s/ Michael T. Williams, President
/s/ Michael T. Williams
Individually and as president, treasurer and director of 4 Brandon -I, Inc.
46
<PAGE>
EXHIBIT 7
CONSENT OF BEARD, NERTNEY, KINGERY, CROUSE & HOHL, P.A.
47
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated January 20, 1999
relating to the financial statements of 4 Brandon - I, Inc.
which appear in such Prospectus.
Tampa Bay, Florida
March 22, 1999
BEARD NERTNEY KINGERY CROUSE & HOHL P.A.
48
<PAGE>
