As filed with the Securities and Exchange Commission on December ___, 1999.
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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TORBAY HOLDINGS, INC.
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(Exact Name of registrant as specified in its charter)
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<S> <C> <C>
Delaware 52-2143186 5064
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Number) Classification Code Number)
</TABLE>
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Maison Saumarez
Route de Cobo
Castel, Guernsey, C.I., GY5 7RZ
United Kingdom
011 44 1481 46044
(Address, including zip code, and telephone
number, including area code, of registrant's principal
executive offices)
Alexander Gordon Lane
4 Mulford Place, # 2G
Hempstead, New York 11550
516/229-2023
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act,
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please check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
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- ---------------------------------------------------------------------------------------------------------------------
Title of Each Class of Securities to be Amount to be Proposed Proposed Amount of
Registered Registered Maximum Maximum Registration
Offering Price Aggregate Fee (1)(2)
Per Share Offering
Price
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Shares of Common Stock held by Selling 5,100,000 $.10(1) $510,000 $148
Securityholders
- ---------------------------------------------------------------------------------------------------------------------
Shares of Common Stock held by Selling 700,000 $.10(1) $ 70,000 $ 21
Securityholders upon conversion of
Series 1 Convertible Preferred Stock
(ordinary conversion) (3)
- ---------------------------------------------------------------------------------------------------------------------
TOTAL 5,800,000 $580,000 $169(4)
- ---------------------------------------------------------------------------------------------------------------------
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(1) There is no current market for the securities and the dollar amount of the
shares to be registered is de minimis based upon the estimated per share of
common stock book value ($.10).
(2) Estimated solely for the purpose of calculating the registration fee based
on Rule 457(f)(2).
(3) Should the "superconversion" provision of the Series 1 convertible
preferred sock apply, the balance of the shares converted pursuant thereto
shall not be registered pursuant to this registration statement.
(4) Paid simultaneously with the filing hereof.
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PROSPECTUS Subject to Completion, Dated December ___, 1999
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement which has been filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting and offer to buy
these securities in any state where the offer or sale is not permitted.
TORBAY HOLDINGS, INC.
5,800,000 shares of Common Stock to be sold by the Holders thereof
The registration statement of which this prospectus is a part relates to the
offer and sale of (1) 5,100,000 shares of common stock of Torbay Holdings, Inc.,
a recently created Delaware corporation ("Torbay" or the "Company") by the 38
holders thereof; and (2) 700,000 shares of common stock issuable upon the
conversion of shares of Series 1 convertible preferred stock. See "Description
of Securities." All costs incurred in the registration of the share are being
borne by Torbay.
Prior to this offering, there has been no public market for the Torbay's common
stock. No assurances can be given that a public market will develop following
completion of this offering or, if developed, that it will be sustained.
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Price to Public (1) Underwriting Discounts Proceeds to Company or
and Commissions (2) Other Persons
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<S> <C> <C> <C>
Per Share unknown $0 (3)
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(1) All the share are being sold by the selling securityholders and no offering
price has been determined. Each selling securityholder will sell its securities
in separate transactions at prices to be negotiated at that time.
(2) The share are being sold by the selling securityholders and Torbay has no
agreements or understandings with any broker or dealer for the sales of such
shares. A selling securityholder may determine to use a broker-dealer in the
sale of its securities and the commission paid to such broker-dealer, if any,
will be determined at that time. Prior to the involvement of any such
broker-dealer, such broker-dealer must seek and obtain clearance of the
compensation arrangements from the National Association of Securities Dealers,
Inc. In such event, Torbay will file a post effective amendment identifying such
broker-dealer(s).
(3) Torbay will not receive any proceeds from the sale of the shares. The
selling securityholders will receive the proceeds from the sale of the shares.
See "DESCRIPTION OF SECURITIES".
Following the completion of this offering, certain broker-dealers may
be the principal market makers for the securities offered hereby. Under these
circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. No assurance can be given that any market
making activities of the market makers, if commenced, will be continued.
In connection with this offering, certain broker-dealers may engage in
passive market making transactions in Torbay's Common Stock on Nasdaq in
accordance with Rule 103 of Regulation M.
These securities involve a high degree of risk and substantial dilution. See
"RISK FACTORS" beginning on page 4.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
passed upon the adequacy or accuracy of this Prospectus.
Any representation to the contrary is a criminal offense.
------------------------
The date of this Prospectus is December ________, 1999
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PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified by, the
more detailed information set forth in this Prospectus, which should be read in
its entirety.
All references to "dollars," "U.S. dollars," "$," or "US$" are to
United States dollars, and all references to "pounds" or "(pound)" are to
British pounds sterling. As of December 14, 1999, the official exchange rate was
(pound)0.620501 to $1.00, or $1.6116 to (pound)1.
Risk Factors
There are substantial risk factors involved in investment in Torbay.
Investment in Torbay is speculative and no assurances can be made of any return
to investors. See "RISK FACTORS".
Torbay
Torbay is a development stage company that has developed and intends to
market household appliances designed to be attractive to a premium, upscale
market.
Torbay maintains its executive offices at Maison Saumarez, Route de
Cobo, Castel, Guernsey, Channel Islands, GY5 7RZ, United Kingdom. Its telephone
number is 011 44 1481 46044 and its fax number is 011 44 1481 46402.
Trading Market
There is currently no trading market for Torbay's securities. Torbay
intends to apply for admission to quotation of its Securities on the NASD OTC
Bulletin Board. There can be no assurance that Torbay will qualify for quotation
of its securities on the NASD OTC Bulletin Board. See "RISK FACTORS-Absence of
Trading Markets" and "DESCRIPTION OF SECURITIES-Admission to Quotation on Nasdaq
Small Cap Market or the NASD OTC Bulletin Board".
Selected Financial Data
The following table sets forth selected financial information in U.S.
dollars concerning Torbay for the period from March 22, 1999 (inception) to July
23, 1999.
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<CAPTION>
At November 30, 1999 At July 23, 1999
-----------------------------------------------
(unaudited) (Audited)
<S> <C> <C>
Balance Sheet Data:
- -------------------
Current assets $ 21,748 $ 446,500
Fixed and other assets 414,928 289,928
Total Assets 436,676 736,428
Total Liabilities 77,920 233,760
Stockholders' equity (deficit) 358,756 502,668
Total Liabilities and Equity $ 436,676 736,428
</TABLE>
The selected financial data above is a summary only and has been
derived from and is qualified in its entirety by reference to Torbay's financial
statements and the July 23, 1999 report related thereto from Weinberg & Company,
Certified Public Accountants, included elsewhere in this Prospectus. See
"EXPERTS" and "FINANCIAL STATEMENTS."
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RISK FACTORS
The securities offered hereby are speculative in nature and involve a
high degree of risk. The securities offered hereby should be purchased only by
persons who can afford to lose their entire investment. Therefore, each
prospective investor should, prior to purchase, consider very carefully the
following risk factors, as well as all of the other information set forth
elsewhere in this Prospectus and the information contained in the financial
statements, including all notes thereto.
Torbay has not commenced manufacturing or marketing operations
Although certain products have been produced for testing and marketing
trials, Torbay, and its operating subsidiary Designer Appliances, Ltd., have not
commenced manufacturing of any products nor entered into any distribution
agreements to market any products that it may produce. Torbay's operations are
subject to the risks and competition inherent in the establishment of a
relatively new business enterprise. There can be no assurance that future
operation will be profitable. Revenues and profits, if any, will depend upon
various factors, including market acceptance of its concepts, market awareness,
dependability of its distribution network, and general economic conditions.
There is no assurance that Torbay will achieve its expansion goals and the
failure to achieve such goals would have an adverse impact on it.
Torbay requires additional funding
Torbay anticipates that it will only be able to commence operations
upon of the anticipated proceeds from a proposed private placement of $1,000,000
of its equity securities which it plans to commence following the effectiveness
of this registration statement. There can be no assurance that Torbay will be
able to complete any sales of its securities, or receive sufficient
capitalization with which to commence manufacturing or marketing operations. If
Torbay is not able to complete an offering of its securities, it will need to
raise capital through alternative methods such as borrowing from a bank or other
financial institution. Torbay has not established a limit as to the amount of
debt it may incur nor has it adopted a ratio of its equity to a debt allowance.
If Torbay needs to obtain additional financing, there is no assurance that
financing will be available from any source, or that it will be available on
terms acceptable to Torbay, or that any future offering of securities will be
successful. Torbay could suffer adverse consequences if it is unable to obtain
additional capital when needed.
Torbay is currently operating at a loss
Torbay has had no sales or revenues to date. Torbay has maintained its
operations to date through the private placement of $600,000 of its securities.
Its ability to develop operations is dependent upon its ability to advertise its
products and generate sales of its products. If Torbay is unable to sell
sufficient amount of its products at a sufficiently profitable level, it will
need to raise additional capital through the placement of its securities or from
other debt or equity financing. If Torbay is not able to raise such financing or
to obtain alternative sources of funding, management will be required to curtail
operations. There is no assurance that Torbay will be able to continue to
operate if a sufficient level of sales cannot be generated.
Uncertainty as to the continuation of Torbay as a going concern
The unaudited financial statements of Torbay of November 30, 1999,
reflect an accumulated net loss of $173,912 for the period March 22, 1999
(inception) through November 30, 1999. These conditions raise substantial doubt
about Torbay's ability to continue as a going concern if sufficient additional
funding is not acquired or alternative sources of capital developed to meet
Torbay's working capital needs.
Torbay is entering a competitive field
There is substantial competition in the market for upscale household
appliances. Competitors may offer similar
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or identical or better products to those being developed by Torbay. There are
numerous well-established competitors, including national, regional and local
designers, manufacturers and retailers which may possess substantially greater
financial, marketing, personnel and other resources than Torbay. Torbay may not
be able to market or sell its products if faced with direct product competition
from these larger companies. There is no assurance that Torbay will find
suppliers or be able to establish a distribution network or that its goods will
find a market sufficient to meet its financial obligations.
Torbay has a limited advertising budget
Goods aimed at a luxury market are often marketed through the media
which may result in high advertising costs. Torbay may not have the resources
available to purchase enough media exposure to find a market for its products.
Torbay is dependent on its suppliers
Torbay intends to enter into supply contracts with at least two
suppliers for each specific component of its products. However, Torbay currently
has no contracts with suppliers, and even if it establishes such contracts,
there can be no assurance that supply will be timely and meet its requirements.
There can be no assurance that any of Torbay's suppliers will continue their
relationship with Torbay.
Torbay is dependant on retail outlets
Torbay intends to market its products through upscale department
stores, boutiques and designer outlets. Torbay does not currently have any
arrangements or agreements with any such stores to carry its products once
produced. There can be no assurance that Torbay will be able to locate retail
outlets to stock the its products, what shelving space prominence those outlets
will give Torbay's products, or whether the Company's products will be given a
lower profile in the future.
Torbay's issued Preferred Stock has conversion rights
Torbay has designated and issued 700,000 shares of Series 1 Convertible
Preferred Stock. Each share of Series 1 Convertible Preferred Stock is
convertible into ten shares of common stock of Torbay at such time or times, if
any, that the subsidiary of Torbay, whose common shares were acquired in
exchange for the Series 1 Convertible Preferred Stock, has returned a net profit
to Torbay of $1,000,000 in any one year within five years of issuance of such
Series 1 Convertible Preferred Shares. In the event that after such five year
term the Series 1 Convertible Preferred Shares have not been so converted, each
share not then converted shall be automatically converted into one share of
Common Stock of Torbay. Each share of Series 1 Convertible Preferred Stock shall
be entitled to one vote on all matters on which such shareholders may vote. In
addition, Torbay may, without further action or vote by its shareholders,
designate and issue additional series or shares of Preferred Stock. The terms of
the Series 1 Convertible Preferred Stock may adversely affect the equity
ownership of the holders of the Common Stock and may in turn reduce the value of
the Common Stock. Should each share of the Series 1 Convertible Preferred Stock
be converted into ten shares of Common Stock, the holders of the Common Stock
would suffer substantial dilution in their equity ownership of the Company.
Trademark protection and proprietary marks
Notwithstanding the pending registration of certain trade names with
the British Trademark Office, there is no assurance that Torbay will be able to
enforce against use of any of its marks. There is also no assurance that Torbay
will be able to prevent competitors from using the same or similar names, marks,
concepts or appearances or that it will have the financial resources necessary
to protect its marks against infringing use.
Intellectual Property Matters
The Company acquired the intellectual property rights to certain of its
products from a member of its
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management and to other products from Michael Beard, an unaffiliated individual.
While the Company seeks to protect its intellectual property rights, there is no
assurance that any of the Company's rights will be enforceable in protecting the
trade names and products it owns or licenses. It is also possible that the
Company will encounter claims from prior users of a similar name in areas where
the Company operates.
There is no current trading market for the Company's securities
There is no current trading market for Torbay's Common Stock and there
is no assurance that one will develop. Pursuant to the Registration Statement of
which this Prospectus is a part, Torbay has registered the Common Stock owned by
its existing stockholders under the Securities Act of 1933, as amended, in order
to establish a trading market for its Common Stock on the NASD Bulletin Board,
however, no underwriter for the registration will be retained, and no market
makers have committed to becoming market makers for the Company's Common Stock,
and there is no assurance that any market makers will do so. No assurance can be
given that an active trading market in the Company's securities will develop or
be sustained.
Penny Stock Regulation
Upon commencement of trading in the Company's stock, if such occurs (of
which there can be no assurance) the Company's Common Stock may be deemed a
penny stock. Penny stocks generally are equity securities with a price of less
than $5.00 per share other than securities registered on certain national
securities exchanges or quoted on the Nasdaq Stock Market, provided that current
price and volume information with respect to transactions in such securities is
provided by the exchange or system. The Company's securities may be subject to
"penny stock rules" that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally those with assets in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 together with their
spouse). For transactions covered by these rules, the broker-dealer must make a
special suitability determination for the purchase of such securities and have
received the purchaser's written consent to the transaction prior to the
purchase. Additionally, for any transaction involving a penny stock, unless
exempt, the "penny stock rules" require the delivery, prior to the transaction,
of a disclosure schedule prescribed by the Commission relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements must be sent disclosing recent
price information on the limited market in penny stocks. Consequently, the
"penny stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock restrictions will not
apply to the Company's securities if such securities maintain a market price of
$5.00 or greater. There can be no assurance that the price of the Company's
securities will reach or maintain such a level.
Torbay has no operating history
Torbay has recently been formed as a development stage company, and
will act as a holding company for latestage developmental, or early-stage
commercial companies. Its first acquisition, Designer Appliances, was formed to
manufacture and distribute upscale household appliances and other consumer
goods. Torbay has no previous operating history other than through its
subsidiary, Designer Appliances Ltd., which has had operations but has reflected
losses since it commenced operations in 1999.
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Speculative nature of appliance industry
The household appliances and furnishings industry is extremely
competitive and the commercial success of any product is often dependent on
factors beyond the control of Torbay, including but not limited to market
acceptance and retailers' prominently shelving and selling the products. Torbay
may experience substantial cost overruns in manufacturing and marketing its
products, and may not have sufficient capital to successfully complete any of
its projects. Torbay may not be able to manufacture or market its products
because of industry conditions, general economic conditions, competition from
other manufacturers and distributors, or lack of acceptance for its products by
consumers or retail outlets. Torbay may also incur uninsured losses for
liabilities which arise in the ordinary course of business in the manufacturing
industry, or which are unforeseen, including but not limited to trademark
infringement, product liability, and employment liability. See "BUSINESS."
Torbay's operations are dependent on expertise of its key officers
Colin Peter Gervaise-Brazier is President and a director of Torbay and
a director of Designer Appliances. William Thomas Large is Vice President and a
director of Torbay and President and a director of Designer Appliances.
Virtually all decisions concerning the conduct of the business of Designer
Appliances are made by Messrs. Brazier and Large. The loss of their services for
any reason would have a material adverse effect on Torbay's business and
operations and its prospects for the future. Torbay does not have "key man" life
insurance on the lives of any of its executive officers.
Conflicts of interest
The officers or directors of Torbay have participated in and may
continue to participate in other entities which engage in activities similar to
those of Torbay. Conflicts of interest may arise as a result of such officers or
directors involvement with other ventures which may compete directly or
indirectly with Torbay. See "MANAGEMENT -- Possible Conflicts of Interest."
Torbay has never paid dividends
Torbay has never paid cash dividends on its common stock and no cash
dividends are expected to be paid on the Common Stock in the foreseeable future.
Torbay anticipates that for the foreseeable future all of its cash resources and
earnings, if any, will be retained for the operation and expansion of its
business.
Issuance of future securities may dilute investors' share value
The Certificate of Incorporation of Torbay authorizes the issuance of a
maximum of 100,000,000 shares of common stock, $.0001 par value, and 20,000,00
shares of preferred stock, $.0001 par value. As of the date hereof there are
5,150,000 shares of common stock outstanding and 700,000 shares of its Series 1
Convertible Preferred Stock outstanding. The future issuance of all or part of
the remaining authorized common stock may result in substantial dilution of the
common stock held by Torbay's then shareholders, including purchasers of the
shares offered herein. Any common stock issued in the future may be valued on an
arbitrary basis by Torbay. The issuance of Torbay's securities for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares offered hereby, and might have an adverse
effect on any trading market, should a trading market develop for Torbay's
common stock. See "BUSINESS".
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The possibility of Torbay issuing preferred stock with certain preferences may
depress market price of the common stock
Torbay has 20,000,000 shares of non-designated Preferred Stock
authorized which it may issue from time to time by action of the Board of
Directors. As of the date hereof, Torbay has designated and issued 700,000
shares of Series 1 Convertible Preferred Stock. The Board of Directors may
designate voting and other preferences without shareholder consent which
designations may give the holders of the preferred stock voting control and
other preferred rights such as liquidation and dividends. The authority of the
Board of Directors to issue such stock without shareholder consent may have a
depressive effect on the market price of Torbay's common stock even prior to any
such designation or issuance of the preferred stock.
Officers and directors have limited liability and have indemnity rights
The Certificate of Incorporation and By-Laws of Torbay provide that
Torbay indemnify its officers and directors against losses sustained or
liabilities incurred which arise from any transaction in such officer's or
director's respective managerial capacity unless such officer or director
violates a duty of loyalty, did not act in good faith, engaged in intentional
misconduct or knowingly violated the law, approved an improper dividend, or
derived an improper benefit from the transaction. Torbay's Certificate of
Incorporation and By-Laws also provide for the indemnification by it of its
officers and directors against any losses or liabilities incurred as a result of
the manner in which such officers and directors operate Torbay's business or
conduct its internal affairs, provided that in connection with these activities
they act in good faith and in a manner which they reasonably believe to be in,
or not opposed to, the best interests of Torbay, and their conduct does not
constitute gross negligence, misconduct or breach of fiduciary obligations.
Enforceability of certain civil liabilities
Most of the Company's officers and directors reside outside the United
States. The Company anticipates that a substantial portion of the assets that
may be developed or acquired by it will be located outside the United States
and, as a result, it may not be possible for investors to effect service of
process within the United States upon the officers or directors, or to enforce
against Torbay's assets or against such person judgements obtained in United
States courts predicated upon the liability provisions, and most particularly
the civil liability provisions, of the United States securities laws or state
corporation or other law.
Unforeseen risks of acquired companies
Companies that may be acquired by Torbay or with which Torbay may enter
into a business relationship may face competition from more established or
better financed companies. In addition, any one or more of these companies may
produce or manufacture equipment, technology or other goods that pose inherent
risks in production or operation. It is impossible to foresee these risks
herein, but Torbay will consider such risks before entering into any business
combination.
Selling securityholders may sell shares at any price or time
After effectiveness hereof, the selling securityholders may offer and
sell their shares at a price and time determined by them in accordance with
applicable federal and state securities laws. Affiliates of Torbay will be
subject to limitations of Rule 144 of the General Rules and Regulations of the
Securities and Exchange Commission ("Rule 144") including its volume limitations
in the sale of their shares. The timing of such sales and the price at which the
shares are sold by the selling securityholders could have an adverse effect upon
the public market for the shares should one develop.
Additional shares, if issued, may come into market as shares become available
for resale pursuant to Rule 144
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Torbay may issue additional common stock without registration. Such
shares of Torbay would be "restricted securities" as such term is defined in
Rule 144. In general, under Rule 144, if adequate public information is
available with respect to a company, a person who has satisfied a one year
holding period as to his restricted securities or an affiliate who holds
unrestricted securities may sell, within any three month period, a number of
that company's shares that does not exceed the greater of one percent of the
then outstanding shares of the class of securities being sold or, if the
security is trading on the Nasdaq Stock Market or on an exchange, the average
weekly trading volume during the four calendar weeks prior to such sale. Sales
of restricted securities by a person who is not an affiliate of Torbay and who
has satisfied a two year holding period may be made without any volume
limitation. The outstanding restricted securities of Torbay may become eligible
for sale in the public market pursuant to Rule 144 without additional capital
contribution to Torbay. Possible or actual sales of Torbay's common stock may
have a material adverse effect on the market price of Torbay's common stock
should a public trading market develop.
Computer systems facing unknown problems on change to year 2000
Many existing computer programs use only two digits to identify a year
in such program's date field. These programs were designed and developed without
consideration of the impact of the change in the century for which four digits
will be required to accurately report the date. If not corrected, many computer
applications could fail or create erroneous results by or following the year
2000 ("Year 2000 Problem"). Many of the computer programs containing such date
language problems have not been corrected by the companies or governments
operating such programs. Although Torbay's operations are not computer dependent
or reliant, Torbay could be impacted by the failure of other domestic and
international companies and countries to timely correct their computer systems,
telephone systems, mail and package delivery systems, transportation systems,
financial systems, and others. Torbay's operations are dependent on the
Internet, the telephone system, and delivery systems. If any of these systems or
systems of other companies or countries by which Torbay is affected become
inoperational, Torbay will be directly and significantly affected. The extent or
duration of the problems connected with the Year 2000 Problem are impossible to
predict.
AVAILABLE INFORMATION
Torbay has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 under the Securities Act
with respect to the securities offered hereby. This prospectus does not contain
all the information contained in that registration statement. For further
information regarding Torbay and the securities offered hereby, reference is
made to the registration statement, including all exhibits and schedules
thereto, which may be inspected without charge at the public reference
facilities of the Commission's Washington, D.C. office, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or on the Commission's home page on the World Wide Web at
http://www.sec.gov. Each statement contained in this prospectus with respect to
a document filed as an exhibit to the registration statement is qualified by
reference to the exhibit for its complete terms and conditions.
Torbay will provide without charge to each person who receives a copy
of this prospectus, upon written or oral request by such person, a copy of any
of the information incorporated herein by reference, not including exhibits.
Such requests should be made in writing to Torbay Holdings, Inc., Maison
Saumarez, Route de Cobo, Castel, Guernsey, C.I., GY5 7RZ, United Kingdom or by
telephone at 011 44 1481 46044.
Torbay is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith files reports
and other information with the Commission. Reports, proxy statements and other
information filed by Torbay can be inspected and copied on the Commission's home
page on the World Wide Web
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at http://www.sec.gov or at the public reference facilities of the Commission,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
following Regional Offices: 7 World Trade Center, Suite 1300, New York, New York
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies can be obtained from the Commission by mail at
prescribed rates. Request should be directed to the Commission's Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
THE COMPANY: TORBAY HOLDINGS, INC.
Torbay Holdings, Inc. Background
Torbay is a development stage company created to act as a holding
company for late-stage developmental, or early-stage commercial, companies.
Torbay was incorporated on March 24, 1999 as a Delaware corporation named
Acropolis Acquisition Corporation, which changed its name to Torbay Holdings,
Inc. on July 14, 1999. Torbay acquired Designer Appliances, Limited, a United
Kingdom corporation which has developed and anticipates marketing household
appliances designed to be attractive to a premium, upscale market, as a
wholly-owned subsidiary on July 19, 1999.
On October 27, 1999, Torbay Acquisition Corporation, a reporting
company under the Securities Exchange Act of 1934, as amended, merged into the
Company. The Company became a successor issuer to Torbay Acquisition Corporation
pursuant to Rule 12g-3(a) of the General Rules and Regulations of the Securities
and Exchange Commission.
Operations
Torbay has produced for testing and marketing trials 300 units of the
Telstar I vacuum cleaner See "Products". Torbay initially intends to subcontract
manufacture of the product components and to be responsible for final product
assembly so as to manage product quality.
Products
Telstar I Designer Vacuum Cleaner. A rocket shaped cylinder vacuum
cleaner made of polished aluminum and incorporating the latest in filtration
technology. It is bagless and features the High Efficiency Particle Arrester
(HEPA) medical grade filter that removes allergens in dirt associated with
asthma. It has a large (50ft.) cleaning radius that typically allows cleaning an
entire floor without stopping. Torbay anticipates that the Telstar I will be
built to British Electric Approval and German TUV standards, which relate to
electrical safety and manufacturing practices. This product is expected to sell
for (pound)150 to stores and (pound)300 retail.
Telstar II Designer Vacuum Cleaner/Table. This is the Telstar I vacuum
cleaner with a glass tabletop accessory. When not in use, the vacuum cleaner
serves as a base for the glass tabletop and the entire unit appears as an
attractive and functional coffee table. This product is designed for an
environment where storage space is at a premium. Torbay may choose to market
this product under the name "Sputnik" or as the "Telstar Space Station". The
tabletop model has been developed as a working prototype and additional
expenditure, when available, is planned on testing, tooling and packaging. This
product is expected to sell for (pound)100 to (pound)125 above the cost of the
Telstar I vacuum cleaner.
Mistral I Desktop Fan. This is a desktop fan, cased in polished
aluminum, which utilizes the same "retro" design as the Telstar I Vacuum
Cleaner. The Mistral I fan is partially developed and, development will be
completed as finances permit. This product is expected to sell for (pound)60-70
to stores and retail for (pound)100-125.
Torbay has begun development of additional products, including a
toaster, a kettle, space heater and heated
11
<PAGE>
hearth screen. See "Trademarks" herein.
Marketing
The Company intends to operate directly in the United Kingdom with its
own sales team. Potential distributors have been identified to expand this
activity across the European continent. Management believes that contracts may
be finalized when production and payment schedules can be predicted with
reasonable certainty. These distributors will purchase products and bear all
costs of sales and distribution in their territories. Non-critical component
supply of "off the shelf" items will be limited to preferred suppliers of
appropriate components who provide warranties and indemnities for delays in
production and shipping. Management believes that manufacturing contracts can be
finalized when production and payment schedules can be predicted with reasonable
certainty. Critical components such as product body parts which are specific to
the Company's products will be dual sourced.
The sales objectives are in what is believed to be a niche sector of
the appliance market which addresses the most expensive end of that market.
Sales activity will be focused upon designer retail outlets such as The Conran
Shops, Harrods and Selfridges. No contracts have been entered into to date, and
there is no assurance that any contracts will be entered into, or if entered
into, that any such contracts can be maintained.
Major Competitors
The Company believes that there is no single major competitor in the
United Kingdom and Europe competing in the upscale small domestic appliance
sector. The Company is not aware of a competitor who manufactures and sells a
vacuum cleaner protected by a similar design. See "Trademarks" herein. Torbay is
not aware of a competitor who sells a vacuum cleaner that converts to a piece of
furniture when it is not in use. The market for its other anticipated products
is diverse.
For comparison the following table of the Company's product versus
others is provided for the Telstar I vacuum cleaner and other vacuum cleaners.
<TABLE>
<CAPTION>
Make Model Noise Cleaning Dirt Capacity Weight
(dB) Radius (Liters) (Kgs)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Designer
Appliances Telstar I 67/66 16.0m 10.0 7.6
Electrolux Excellio Electronic 74 12.5m 4.0 7.8
Excellio Combi 74 12.5m 4.0 7.3
Excellio Remote 70 12.5m 4.0 7.3
Bosch Perfecta 85 72 9.5m 3.2 8.7
Activa 60 75 8.5m 3.8 7.2
Hoover Alpina Filtra N/A 12.5m 4.0 6.9
Alpina N/A 12.5m 4.0 6.9
Miele S 324I 73 10m 4.0 8.0
S 251 73 9.5m 4.0 7.9
Dyson DCO2 67 9m (est.) 4 (est.) 6.3
</TABLE>
All data taken from manufacturers' published marketing material.
Patents and trademarks
The following trademark registrations or applications for registration
have been made with the British patent office:
<TABLE>
<S> <C>
Telstar I vacuum cleaner design protection British trademark registration no. 2 066 378
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
The name "Telstar" British trademark application no. 2 209 241
The name "Sputnik" British trademark application no. 2 209 243
The tabletop design for the Telstar II, Granted British trademark registration no. 2 082 459
Sputnik or Telstar Space Station
The combined vacuum and table product Granted British trademark registration no. 2 085 669
The"Mistral" table top fan design Granted British trademark registration no. 2 066 377
and trademark application no. 2 209 473
Toaster design British trademark application no. 2 209 244.
</TABLE>
Employees
Torbay has two full-time employees and two part-time employees,
including its executive officers.
Offices/Property
Torbay currently leases office space in the parish of Castel, Guernsey,
in the Channel Islands of Great Britain. The Company has a one-year lease
expiring August 30, 2000, and the rent is (pound)5,200 per annum.
Currently, Designer Appliances has no facilities, but has identified a
manufacturing facility in South Manchester, United Kingdom, containing
approximately 2,500 - 5,000 square feet, which it anticipates to lease when it
has the financing to do so.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares
being offered herein,
DIVIDEND POLICY
Torbay presently does not intend to pay cash dividends on its common
stock in the foreseeable future and intends to retain future earnings, if any,
to finance the expansion and development of its business. Any future decision of
Torbay's Board of Directors to pay dividends will be made in light of Torbay's
earnings, financial position, capital requirements and other relevant factors
then existing.
PLAN OF OPERATION
Overview
Torbay is a development stage company that, through its subsidiary
Designer Appliances, has developed and intends to market household appliances
designed to be attractive to a premium, upscale market.
Management believes that they have identified an underexploited
opportunity in the premium-priced market for household and domestic appliances,
featuring attractively designed exteriors. There is no assurance that Torbay
will be able to successfully manufacture or market these items.
13
<PAGE>
Results and Plan of Operations
Torbay has had insignificant sales and revenue. Since inception Torbay
and its subsidiary Designer Appliances have focused on organizational activities
and research and development of the Company's products and marketing strategies.
Management estimates that it will require approximately $1,000,000 for
the calendar year 2000 and a total capitalization of $1,400,000 over the next
two years for the Company to commence manufacturing and marketing operations.
The Company expects to privately place approximately $1,000,000 in equity
securities with qualified investors known to management, as soon as possible
following effectiveness of this prospectus. However, there is no assurance that
the Company will be able to achieve capitalization in order to commence
manufacturing and marketing activities.
Torbay's ability to develop its operations is dependent upon its
receiving additional capital financing. Torbay may raise capital by the sale of
its equity securities, through an offering of debt securities, or from borrowing
from a financial institution. Torbay does not have a policy on the amount of
borrowing or debt that it can incur.
Liquidity and Capital Resources
Torbay, including its subsidiary Designer Appliances, has incurred
start-up costs, including administrative costs and research and development
costs. To date Torbay has received funds from sales of its securities and from
loans. It has primarily used the proceeds from the sale of the securities of
Designer Appliances (prior to becoming a subsidiary) for payment of operating
costs to date.
Since inception, Torbay has received an aggregate of $600,000 from the
sale of its securities. Designer Appliances issued a promissory note in an
aggregate amount of $155,840 for the cost of purchasing the intellectual
property rights to its products, which has been repaid in full by the Company
from subscription proceeds.
Torbay had a net loss of $173,912 from operating activities for the
period ended November 30, 1999.
The cash flow of Torbay from financing activities from inception to
November 30, 1999 was primarily from the receipt of proceeds from sales of
securities.
The financial statements appearing elsewhere in this Prospectus have
been prepared assuming that Torbay will continue as a going concern. Torbay's
ability to continue its operations is dependent upon its receipt of revenues
through sales of its products or through raising capital through debt or equity
financing or borrowings, or a combination of the foregoing. The Company will not
begin marketing its products until after capitalization from the private
placement of its securities. If sufficient additional funding is not acquired,
alternative sources developed, or revenues from sales not received, the Company
would be required to curtail its operations and there would be substantial doubt
about its ability to continue as a going concern.
Torbay believes that proceeds from capitalization via a private
placement of its securities and funds from earlier subscriptions will be
sufficient to pay its currently anticipated expenses including payment of
salaries, rent and payments to professionals and to continue its developmental
and marketing operations for the next 12 months. If additional funds are
required, Torbay will endeavor to sell additional securities until sales
proceeds materialize.
14
<PAGE>
MANAGEMENT
Officers and Directors
The following table sets forth certain information with respect to
Torbay's directors, executive officers and key consultants:
Name Position
- ---- --------
Francis Guy Lewis Askham Chairman and Director
Colin Peter Gervaise-Brazier President, Chief Executive Officer and Director
Alexander Gordon Lane Secretary and Director
William Thomas Large Vice President and Director
The Company currently has four directors. All directors hold office
until the next annual meeting of stockholders and until their successors are
elected. Officers are elected to serve, subject to the discretion of the Board
of Directors, until their successors are appointed. Directors do not receive
cash compensation for their services to Torbay as directors, but are reimbursed
for expenses actually incurred in connection with attending meetings of the
Board of Directors.
Francis Guy Lewis Askham, 68, Chairman and a director of Torbay, has
served in such capacities since October 1999. Mr. Askham is a Chartered
Accountant and consultant, and continues in such capacities. Mr. Askham
graduated from Hustpierpoint College, Sussex, England, and is a Fellow of the
Fellow Institute of Chartered Accountants in England and Wales. Mr. Askham has
also served as a director and chairman of Wilshaw plc since 1991, a director and
deputy chairman of Southampton Leisure Holdings plc since January 1997, a
director of GS Telecoms, Inc. since August 1999, a director of International
Energy Group plc, and was formerly a director of Baldwin plc, M & W plc, and
Rhino Group plc, all located in Great Britain and all of whose securities trade
on the London Stock Exchange.
Colin Peter Gervaise-Brazier, 56, President, Chief Executive Officer
and a director of Torbay, has served in such capacities since September 1999.
Mr. Gervaise-Brazier has been a retailing executive in Great Britain for over 25
years. From October 1995 until September 1999, Mr. Gervaise-Brazier was General
Manager of Vale Garage, Ltd., the G.M. Vauxhall Motors franchise for the Isle of
Guernsey. Mr. Gervaise-Brazier attended Elizabeth College, Guernsey, and also
attended senior management courses at Vauxhall College, Luton, England. Since
August 1999, Mr. Gervaise-Brazier has also been Chief Executive Officer and a
director of GS Telecom Ltd., an electronic retailing company whose stock trades
on the NASD Bulletin Board.
Alexander Gordon Lane, 58, Secretary and a director of Torbay, has
served in such capacities since October 1999. Mr. Lane has been a Financial
Consultant since 1998 and continues in such capacity. Mr. Lane has been in the
financial services business for over 30 years. From 1993 to 1998, he was a
principal of Intercontinental Exchange Partners, New York, as a capital markets
broker in the interest and foreign exchange areas. Mr. Lane has an aeronautics
degree from Wandsworth Technical College in London.
William Thomas Large, 44, has been Vice President and a director of
Torbay since July 1999 and President of Designer Appliances since October 1998.
From October 1996 until October 1998, Mr. Large was Chairman, Chief Executive
Officer, a director and a major stockholder of DeltaTheta Ltd., a heating and
cooling technology company in Cheshire, England. From February 1997 until
September 1998, Mr. Large also served as a director of DeltaMonitor Ltd, a
medical devices company in Cheshire, England. From December 1996 until June
1997, Mr. Large also served as a director of SoundAlert Ltd, a company that
manufactured emergency vehicle sirens. From September 1994 until July 1996, Mr.
Large was a director of AromaScan plc, a publicly-listed instrumentation and
technology company in Cheshire, England. Mr. Large graduated from Manchester
Metropolitan University, in Manchester, England, and is the author or co-author
of eight articles and two books relating to biochemical analysis.
Related Transactions
Pursuant to a Deed of Assignment of Intellectual Property Rights by
William Thomas Large to Designer Appliances Ltd. dated June 10, 1999, Mr. Large
assigned all of his right, title and interest in and to the design rights to the
vacuum cleaner products, toaster, fan, kettle, space heater and heated hearth
screen products now being developed
15
<PAGE>
by the Company. Mr. Large's consideration for the assignment consisted of 20,000
shares of Series 1 Convertible Preferred Stock of the Company, valued at
(pound)20,000, and (pound)50,000 in cash to be paid within six months of the
date thereof. Payment has been deferred for an additional six months by
agreement of the parties. The terms of the assignment were not the result of
arms'-length negotiations.
Executive Compensation
Mr. Askham currently receives no salary from the Company. The Company
anticipates that he will receive a salary of (pound)12,000 per year. He earns no
other remuneration from the Company or its subsidiary..
Mr. Gervaise-Brazier's salary is (pound)60,000 per year. He earns no
other remuneration from the Company or its subsidiary..
Mr. Lane currently receives no salary from the Company. After
capitalization, he will receive a salary of (pound)12,000 per year. He earns no
other remuneration from the Company or its subsidiary..
Mr. Large's salary is(pound)60,000 per year. He is eligible for a
performance bonus of up to 100% of his base salary.
Employment Agreements
Torbay has not entered into any employment agreements with its
executive officers or other employees to date. Torbay may enter into employment
agreements with them in the future.
Possible Conflicts of Interest
Certain members of the company's management are also in management
positions with other companies and currently devote less than their full time to
the business of the Company. There can be no assurance that devotion of less
than his full time will not have an adverse effect on the business of the
Company. In addition, certain members of management may experience conflicts of
interest with respect to allocation of business time among the Company and any
other companies in which they hold management positions. See "Officers and
Directors" herein.
Indemnification of Officers, Directors, Employees and Agents
The Certificate of Incorporation and Bylaws of Torbay provide that
Torbay shall, to the fullest extent permitted by applicable law, as amended from
time to time, indemnify all directors of Torbay, as well as any officers or
employees of Torbay to whom Torbay has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers provided that this provision shall not eliminate or limit the
liability of a director
For breach of the director's duty of loyalty to the corporation or its
stockholders;
For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
Under Section 174 (relating to liability for unauthorized acquisitions
or redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Delaware; or
For any transaction from which the director derived an improper
personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
16
<PAGE>
The effect of the foregoing is to require Torbay to indemnify the
officers and directors of Torbay for any claim arising against such persons in
their official capacities if such person acted in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
TORBAY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES
AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Effective
Date of this prospectus regarding the beneficial ownership of Torbay's common
stock by each officer and director of Torbay and by each person who beneficially
owns in excess of five percent of Torbay's common stock.
<TABLE>
<CAPTION>
Shares of Common Stock Percentage of Shares of Class Owned
Name, Position and Address Beneficially Owned (1) Prior to Offering After Offering (2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Francis Guy Lewis Askham 50,000 * *
Chairman, Director
Spinney Corner Church Lane
Brashfield
Romsey Harris 505OQH
United Kingdom
Colin Peter Gervaise-Brazier 525,000 (3) 10.19% *
President, Director
La Belle Epoque
Les Treacheries
L'Islet St. Sampsons
Guernsey, Channel Islands GY2 4SN
United Kingdom
Alexander Gordon Lane 50,000 * *
Secretary, Director
4 Milford Place
Hempstead, New York 11550
William Thomas Large 119,000 (4) 2.03% (4) *
Vice President, Director
38 Chapel Lane
Bucklow Hill, Knutsford
Cheshire WA16 6RH
United Kingdom
All directors and 744,000 (5) 12.72% (5) *
Executive officers as
A group (4 persons)
</TABLE>
17
<PAGE>
<TABLE>
<S> <C> <C> <C>
Armadillo Worldwide Limited 500,000 9.71% *
P.O. Box 313, Anson Court
La Route des Camps
St. Martins
Guernsey, Channel Islands
INC Limited 500,000 9.71% *
C/o Trident Corporate
Services (Bahamas) Limited
1st Floor, Kings Court
Bay Street
P.O. Box N-3944
Nassau, Bahamas
Direct Trustees Limited 500,000 9.71% *
P.O. Box 307
Guernsey GY1 3SH
United Kingdom
D.J. Limited 500,000 (6) 9.71% *
10 Queen Street
P.O. Box HM114
Hamilton HMEX
Bermuda
David G. Jones 750,000 (6) 14.56% *
10 Queen Street
P.O. Box HM 1154
Hamilton HMEX
Bermuda
Kevin W. Haddon-Harris 770,000 (6) 14.95% *
48 Par La Ville Road
Hamilton, Bermuda HM11
Joanna Dorothy Gervaise-Brazier 375,000 7.28% *
La Belle Epoque
Les Treacheries
L'Islet St. Sampsons
Guernsey, Channel Islands
GY2 4SN
United Kingdom
Martyn Paul Trebert 508,000 9.86% *
Pleinmont, Torteaval
Guernsey, Channel Islands
GY8 0P
United Kingdom
</TABLE>
* Less than 1% percent
18
<PAGE>
(1) Based upon 5,150,000 shares outstanding as of the date hereof
(2) Assumes that all shares registered herein will be sold.
(3) Includes 150,000 shares owned by Colin Peter Gervaise-Brazier and
375,000 shares owned by Joanna Dorothy Gervaise-Brazier, Mr.
Gervaise-Brazier's wife.
(4) Includes common stock underlying Series 1 Convertible Preferred Stock.
Each share of Series 1 Convertible Preferred Stock is convertible into
ten shares of common stock of Torbay at such time or times, if any,
that the subsidiary of Torbay, whose common shares were acquired in
exchange for the Series 1 Convertible Preferred Stock, (Designer
Appliances) has returned a net profit to Torbay of $1,000,000 in any
one year within five years of issuance of such Series 1 Convertible
Preferred Shares. In the event that after such five year term the
Series 1 Convertible Preferred Shares have not been so converted, each
share not then converted shall be automatically converted into one
share of common stock of Torbay. The amount stated assumes conversion
on a 1:1 ratio, and a then- outstanding capitalization of 5,850,000
common shares after conversion. Includes 12,000 shares of Series 1
Convertible Preferred Stock given by Mr. Large to his minor children.
(5) Includes common stock underlying Series 1 Convertible Preferred Stock.
The stated amount assumes conversion on a 1:1 ratio, and a
then-outstanding capitalization of 5,850,000 common shares after
conversion.
(6) D.J. Limited is an investment partnership owned 50% each by David G.
Jones and Kevin W. Haddon-Harris. Half of D.J. Limited's shares are
allocated to Mr. Jones' beneficial ownership and half of D.J. Limited's
shares are allocated to Mr. Haddon-Harris. Mr. Haddon-Harris' ownership
also includes 20,000 shares owned by Mr. Haddon-Harris' wife.
SELLING SECURITYHOLDERS
The Company is registering for offer and sale by the 38 holders thereof
5,100,000 shares of common stock held by securityholders of the Company. The
Company is also registering for offer and sale 700,000 shares of common stock to
be issued at a 1:1 conversion ratio to the holders of the Series 1 Convertible
Preferred Stock. Should the "superconversion" provision of the Series 1
Convertible Preferred Stock apply, the balance of the shares issued pursuant
thereto shall not be registered.
The selling securityholders will offer their securities for sale on a
continuous or delayed bases pursuant to Rule 415 under the 1933 Act. See "RISK
FACTORS - Additional shares, if issued, may come into market as shares become
available for resale pursuant to Rule 144" and "Selling Securityholders May Sell
Shares at any Price or Time."
The Company is applying for admission to the NASD OTC Bulletin Board
for its common stock; however, there can be no assurance that the common tsock
will be accepted for quotation thereon. See "RISK FACTORS - No Current Trading
Market for the Company's Securities" and "DESCRIPTION OF SECURITIES - Admission
to Quotation to Nasdaq SmallCap Market and Bulletin Board."
All of the selling securityholders' securities registered hereby will
become tradeable on the effective date of the registration statement of which
this prospectus is a part.
The following table sets forth the beneficial ownership of the shares
of the Company held by each person who is a selling securityholder and by all
selling securityholders as a group.
19
<PAGE>
<TABLE>
<CAPTION>
Name and Address of Percentage of Common Stock Owned
Beneficial Owner Shares of Common Stock Prior to Offering (1) After Offering (2)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Armadillo Worldwide Ltd. 500,000 9.71% *
P.O. Box 336, Anson Court
Les Camps
St. Martins, Guernsey
United Kingdom
Askham, Francis Guy Lewis 50,000 * *
Spinney Coner Church Lane
Brashfield
Romsey Harris 505OQH
United Kingdom
Cannon Trust Company Limited 10,000 * *
as Trustees of The Bateleur Trust
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Cannon Trust Company Limited 10,000 * *
as Trustees of The Kid Trust
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Carey, Allister Francis de Lisle 16,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Chambers, Andrew Maxwell 16,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
D.J. Limited 500,000 9.71% *
10 Queen Street
P.O. Box HM 1154
Hamilton HMEX
Bermuda
</TABLE>
20
<PAGE>
<TABLE>
<S> <C> <C> <C>
Direct Trustees Limited 500,000 9.71% *
P.O. Box 307
Guernsey GY1 3SH
United Kingdom
Dobson, Miles, jointly 7,000 * *
with Mrs. Maria Dobson
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
First Class Investments 150,000 2.91% *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Freer, Richard J.S. 35,000 * *
Moorlands Cottage
30 Parsons Lane
Devonshire DV06
Bermuda
Gervaise-Brazier, Colin Peter 150,000 2.91% *
Les Treacheries
L'Islet St. Sampsons
Guernsey, Channel Island GY2 4SN
United Kingdom
Gervaise-Brazier, Joanna Dorothy 350,000 6.80% *
La Belle Epoque
Les Treacheries
L'Islet St. Sampsons
Guernsey, Channel Island GY2 4SN
United Kingdom
Grimwood, Andrew 15,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
</TABLE>
21
<PAGE>
<TABLE>
<S> <C> <C> <C>
Guggino, Lisa 10,000 * *
226 97th Street
Brooklyn, New York
Haddon Harris, Zephora B. 20,000 * *
48 Par-La-Ville Road
Suite 605
Hamilton H11
Bermuda
Haddon-Harris, Kevin W. 500,000 9.71% *
48 Par-La-Ville Road
Suite 444
Hamilton H11
Bermuda
Hill, Brian 10,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Houmet Holdings SA 25,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
INC Limited 500,000 9.71% *
c/o Trident Corporate
Services (Bahamas) Limited
1st Floor, Kings Court
Bay Street
P.O. Box N-3944
Nassau, Bahamas
Lane, Alexander Gordon 50,000 * *
4 Milford Place
Hempstead, New York 11550
McKillop, James K. 125,000 2.43 *
1875 Century Park East
Suite 1165
Los Angeles, California 90067
Mercator Trustees Limited, 30,000 * *
as Trustees of The
Carey Retirement Annuity Trust
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
</TABLE>
22
<PAGE>
<TABLE>
<S> <C> <C> <C>
O'Brien, Gerald 5,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Payne, Pierre 10,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Pybus, Michael Robert 5,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Pybus, Paul Randall 2,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Rihoy, Jeremy 15,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Sadeh, Nir 35,000 * *
48 Par-La-Ville Road
Suite 444
Hamilton, HM11
Bermuda
</TABLE>
23
<PAGE>
<TABLE>
<S> <C> <C> <C>
Spurling, Anne 25,000 * *
Marine Villa
116 Harbour Road
Warwick PG01
Bermuda
Thursfield, David E. 10,000 * *
6 Wells Lane
Warren, New Jersey 07059
TPG Capital Corporation 125,000 2.43% *
1504 R Street, NW
Washington, D.C. 20009
Trebert, Martyn Paul 508,000 9.86% *
Ulvia
Rue de la Vallee
Tortival
Guernsey CI GY8 0P
Great Britain
Wallis, John 3,000 * *
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Watson, Colin Roy, jointly with 3,000 * *
Mrs. Christine Watson
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
Willcox, Fred, jointly with 10,000 * *
Mrs. Isabelle Willcox
c/o Brewin Dolphin
Anson Court
Les Camps
St. Martins, Guernsey
Channel Islands
United Kingdom
TOTAL 5,100,000 99.03% *
</TABLE>
24
<PAGE>
* Less than 1%
(1) Based on 5,150,000 common shares outstanding.
(2) Assumes that all shares registered pursuant to the Registration
Statement of which this Prospectus is a part will be sold.
No Set Offering Price
The shares will be offered by the selling securityholders in private
transactions. There is not and will not be any set offering price.
Market Making
If, at some time, Torbay meets the requirements of the Nasdaq SmallCap
Market it will apply for listing thereon. If it should be accepted for listing
thereon, then certain broker-dealers may engage in passive market making
transactions in Torbay's common stock in accordance with Rule 103 of Regulation
M.
Following the completion of this offering, certain broker-dealers may
be the principal market makers for the securities offered hereby. Under these
circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. No assurance can be given that any market
making activities, if commenced, will be continued.
Resales of the Securities under State Securities Laws
The National Securities Market Improvement Act of 1996 ("NMSIA") limits
the authority of states to impose restrictions upon sales of Securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the
Securities in the secondary market may be made pursuant to Section 4(1) of the
Securities Act (sales other than by an issuer, underwriter or broker). It is
anticipated that following the Effective Date the Securities will be eligible
for resale in the secondary market in each state.
DESCRIPTION OF SECURITIES
Authorized Capital
The total number of authorized shares of stock of Torbay is one hundred
million (100,000,000) shares of common stock with a par value of $.0001 per
share and twenty million (20,000,000) shares of non-designated preferred shares
with a par value of $.0001 per share.
Common Stock
Torbay's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of common stock, $.0001 value per share, of which 5,150,000
shares are issued and outstanding as of the date hereof.
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution or winding up of Torbay, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are
fully paid and non-assessable.
25
<PAGE>
Holders of common stock have no preemptive rights to purchase Torbay's
common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.
All outstanding shares of common stock are validly issued, fully paid
and nonassessable, and all shares to be sold and issued as contemplated hereby
will be fully paid and nonassessable when sold in accordance with the terms
hereof and pursuant to a valid and current prospectus. The Board of Directors is
authorized to issue additional shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further stockholder
action.
Noncumulative Voting
Each holder of common stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Shares of common stock
do not have cumulative voting rights. The holders of more than 50 percent of the
shares voting for the election of directors can elect all the directors if they
choose to do so and, in such event, the holders of the remaining shares will not
be able to elect any person to the Board of Directors.
Penny Stock Regulation
If the market price of the Torbay common stock, if a market for its
common stock develops and is maintained, is or falls below $5.00 per share, then
the common stock of Torbay may be considered "penny stock". Penny stocks
generally are equity securities with a price of less than $5.00 per share other
than securities registered on certain national securities exchange or quoted on
the Nasdaq Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. Torbay's securities may be subject to "penny stock" rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure scheduled prescribed by the
commission related to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information on the limited
market in penny stocks. Consequently, the "penny stock" rules may restrict the
ability of broker-dealers to sell Torbay's securities.
Preferred Stock
Torbay's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of preferred stock, $.0001 par value per share. Torbay has
designated and issued 700,000 shares of its preferred stock as Series 1
Convertible Preferred Stock. Each share of Series 1 Convertible Preferred Stock
is convertible into ten shares of common stock of Torbay at such times or times,
if any, that the subsidiary of Torbay, whose common shares were acquired in
exchange for the Series 1 Convertible Preferred Stock, has returned a net profit
to Torbay of $1,000,000 in any one year within five years of issuance of such
Series 1 Convertible Preferred Shares. In the event that after such five year
term the Series 1 Convertible Preferred Shares have not been converted, each
share not then converted shall be automatically converted into one share of
Common Stock of Torbay. Each share of Series 1 Convertible Preferred Stock shall
be entitled to one vote on all matters on which such shareholders may vote. In
addition, Torbay may, without further action or vote by its shareholders,
designate and issue additional series or shares of preferred stock.
The terms of the Series 1 Convertible Preferred Stock may adversely
affect the equity ownership of the holders of the common stock and may in turn
reduce the value of the common stock.
In the case of voluntary or involuntary liquidation, dissolution or
winding up of Torbay, holders of shares of
26
<PAGE>
preferred stock are entitled to receive the liquidation preference before any
payment or distribution is made to the holders of common stock or any other
series or class of Torbay's stock hereafter issued that ranks junior as to
liquidations rights to the preferred stock, but holders of the shares of the
preferred stock will not be entitled to receive the liquidation preference of
such shares until the liquidation preference of any other series or class of
Torbay's stock hereafter issued that ranks senior as to liquidation rights to
the preferred stock ("senior liquidation stock") has been paid in full. The
holders of preferred stock and all series or classes of Torbay's stock hereafter
issued that rank on a parity as to liquidation rights with the preferred stock
are entitled to share ratable, in accordance with the respective preferential
amounts payable on such stock, in any distribution (after payment of the
liquidation preference of the senior liquidation stock) which is not sufficient
to pay in full the aggregate of the amounts payable thereon. After payment in
full of the liquidation preference of the shares of the preferred stock, the
holders of such shares will not be entitled to any further participation in any
distribution of assets by Torbay. Neither a consolidation or merger of Torbay
with another corporation, nor a sale or transfer of all or part of Torbay's
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of Torbay.
The Board of Directors is authorized to provide for the issuance of
additional shares of preferred stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof without any further
vote or action by the shareholders. Any shares of preferred stock so issued
would have priority over the common stock with respect to dividend or
liquidation rights. Any future issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of Torbay without
further action by the shareholders and may adversely affect the voting and other
rights of the holders of common stock. At present, Torbay has no plans to issue
any further preferred stock nor adopt any further series, preferences or other
classification of preferred stock.
Additional information describing stock
The above descriptions concerning the stock of Torbay do not purport to
be complete. Reference is made to Torbay's Certificate of Incorporation and
by-laws which are included in the registration statement of which this
prospectus is a part and which are available for inspection at Torbay's offices.
Reference is also made to the applicable statutes of the State of Delaware for a
more complete description concerning rights and liabilities of shareholders.
Admission to Quotation on Nasdaq SmallCap Market or NASD OTC Bulletin Board
Torbay intends to apply for quotation of its common stock on the NASD
OTC Bulletin Board. The over-the-counter market ("OTC") differs from national
and regional stock exchanges in that it (1) is not situated in a single location
but operates through communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation on the NASD OTC Bulletin
Board, an equity security must have one registered broker-dealer, known as the
market maker, willing to list bid or sale quotations and to sponsor such a
company listing. If it meets the qualifications for trading securities on the
NASD OTC Bulletin Board Torbay's securities will trade on the NASD OTC Bulletin
Board until such future time, if at all, that Torbay applies and qualifies for
admission for listing on the Nasdaq SmallCap Market. There can be no assurance
that Torbay will qualify or if qualified that it will be accepted for listing of
its securities on the Nasdaq SmallCap Market.
To qualify for admission for listing on the Nasdaq SmallCap Market, an
equity security must, in relevant summary, (1) be registered under the
Securities Exchange Act of 1934; (2) have at least three registered and active
market makers, one of which may be a market maker entering a stabilizing bid;
(3) for initial inclusion, be issued by a company with $4,000,000 in net
tangible assets, or $50,000,000 in market capitalization, or $750,000 in net
income in two of the last three years (if operating history is less than one
year then market capitalization must be at least $50,000,000); (4) have a public
float of at least 1,000,000 shares with a value of at least $5,000,000; (5) have
a minimum bid price of $4.00 per share; and (6) have at least 300 beneficial
shareholders.
27
<PAGE>
Trading of shares
No market currently exists for Torbay's securities. No market makers
have been approached, or have agreed to become market makers for the Torbay's
common stock. There is no assurance that any market makers will agree to attempt
to create a market for the common stock, or if a trading market does occur, that
it will be sustained.
Transfer Agent and Registrar
The Company intends to secure the services of StockTrans, Ardmore,
Pennsylvania, to act as transfer agent and Registrar for its securities.
Reports to shareholders
Torbay will furnish to its shareholders annual reports containing
audited financial statements examined and reported upon, and with an opinion
expressed by, an independent certified public accountant. Torbay may issue other
unaudited interim reports to its shareholders as it deems appropriate.
LEGAL MATTERS
Legal proceedings
Torbay is not a party to any litigation and management has no knowledge
of any threatened or pending litigation against Torbay.
Legal opinion
Cassidy & Associates, Washington, D.C. has given its opinion as
attorneys-at-law that the common stock, and the common stock underlying the
Series 1 Convertible Preferred Stock, when issued pursuant to the terms thereof,
will be fully paid and non-assessable.
James M. Cassidy, a principal of Cassidy & Associates, is an officer
and director and controlling shareholder of TPG Capital Corporation, which owns
125,000 shares of the common stock of Torbay.
EXPERTS
The financial statements in this Prospectus have been included in
reliance upon the report of Weinberg & Company, P.A., Certified Public
Accountants, and upon the authority of such firm as expert in accounting.
FINANCIAL STATEMENTS
The consolidated audited financial statements for the period March 22,
1999 (inception) to July 23, 1999 and unaudited financial statements for the
period March 22, 1999 through November 30, 1999.
28
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
29
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------
PAGE 1 - INDEPENDENT AUDITORS' REPORT
PAGE 2 - CONSOLIDATED BALANCE SHEET AS OF
JULY 23, 1999
PAGE 3 - CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY FOR THE
PERIOD FROM MARCH 22, 1999 (INCEPTION)
TO JULY 23, 1999
PAGE 4 - 9 - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of:
Torbay Holdings, Inc. and Subsidiary
(A Development Stage Company)
We have audited the accompanying consolidated balance sheet of Torbay Holdings,
Inc. and subsidiary (a development stage company) as of July 23, 1999 and the
related consolidated statement of changes in stockholders' equity for the period
from March 22, 1999 (inception) to July 23, 1999. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of Torbay Holdings, Inc.
and subsidiary (a development stage company) as of July 23, 1999, in conformity
with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
November 30, 1999
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF JULY 23, 1999
ASSETS
------
CURRENT ASSETS
Due from attorney's escrow $ 144,500
Stock subscription receivable 300,000
Prepaid expenses 2,000
---------
Total current assets 446,500
---------
OTHER ASSETS
Deferred acquisition and registration costs 25,000
Intangible assets 264,928
---------
Total other assets 289,928
---------
TOTAL ASSETS $ 736,428
- ------------ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Note payable $ 155,840
Due to related party 77,920
---------
Total liabilities 233,760
---------
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value,
20 million shares authorized, 700,000
Series 1 convertible shares issued
and outstanding 70
Common Stock, $.0001 par value, 100
million shares authorized, 4,850,000
issued and outstanding 485
Additional paid in capital 630,613
---------
631,168
Less stock subscription receivable (128,500)
---------
Total stockholders' equity 502,668
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 736,428
- ------------------------------------------
See accompanying notes to consolidated financial statements.
2
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 22, 1999
(INCEPTION) TO JULY 23, 1999
<TABLE>
<CAPTION>
Deficit
Additional Accumulated
Common Stock Preferred Stock Paid-in During Devel- Subscriptions
Shares Amount Shares Amount Capital opment Stage Receivable Total
-------- ------- -------- ------ ----------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
to founder 5,000,000 $ 500 - $ - $ - $ - - $ 500
Cancellation of original
founder shares (5,000,000) (500) - - - - - (500)
Issuance of preferred
stock for acquisition
of subsidiary - - 700,000 70 31,098 - - 31,168
Issuance of common stock
for cash 4,850,000 485 - - 599,515 - $(128,500) 471,500
Net income for the period
from March 22, 1999
(inception) to
July 23, 1999 - - - - - - - -
--------- ------- --------- ------ --------- ------- --------- --------
4,850,000 $ 485 700,000 $ 70 $ 630,613 $ - $(128,500) $502,668
========= ======= ========= ====== ========= ======= ========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF JULY 23, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Torbay Holdings, Inc. (a development stage company) ("the Company") was
incorporated in Delaware under the name Acropolis Acquisition Corporation on
March 24, 1999 to serve as a vehicle to effect a merger, exchange of capital
stock, asset acquisition or other business combination with a domestic or
foreign private business. At July 23, 1999 the Company had not yet commenced any
operations, and all activity to date relates to the Company's formation,
business acquisition and proposed fund raising. The Company's fiscal year end is
December 31.
The Company's ability to commence operations is contingent upon its ability to
raise the capital it will require through the issuance of equity securities,
debt securities, bank borrowings or a combination thereof.
B. Agreement and Plan of Reorganization
In July 1999, the Company effected an Agreement and Plan of Reorganization
whereby the Company acquired all of the issued and outstanding securities of
Designer Appliances Limited a UK Corporation (DAL) in exchange for an aggregate
of 700,000 shares of the Company's Series 1 Convertible Preferred Stock. The
designation, preferences and rights of the Preferred Stock are detailed in Note
7A. As a result of the agreement, DAL became a wholly owned subsidiary of the
Company.
C. Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Torbay Holdings,
Inc. and its wholly owned subsidiary, Designer Appliances Limited. All
significant intercompany balances and transactions have been eliminated in the
consolidation. The financial statements of the UK subsidiary have been
translated into United States dollars at current exchange rates as to assets and
liabilities.
D. Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
E. Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
4
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONT'D
E. Income Taxes - Cont'd
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. There were no current or deferred income tax
expenses or benefits due to the Company not having any operations for the period
ended July 23, 1999.
F. New Accounting Pronouncements
The Financial Accounting Standards Board has recently issued several new
accounting pronouncements. Statement No. 129, "Disclosure of Information about
Capital Structure" establishes standards for disclosing information about an
entity's capital structure, is effective for financial statements for periods
ending after December 15, 1998 and has been adopted by the Company as of
December 31, 1998. Statement No. 130, "Reporting Comprehensive Income"
establishes standards for reporting and display of comprehensive income and its
components, and is effective for fiscal years beginning after December 15, 1997.
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers, and is effective for financial statements
for periods beginning after December 15, 1997. The Company believes that its
adoption of Statements 130 and 131 will not have a material effect on the
Company's financial position or results of operations.
NOTE 2 - DUE FROM ATTORNEY'S ESCROW
The Company had not yet established a bank account as of the balance sheet date.
The Company's attorney has been collecting and disbursing funds on behalf of the
Company via an escrow account. As of July 23, 1999, the balance of the escrow
account was $144,500 which represents the net of $171,500 of funds received for
common stock issuances (See Note 7B), $25,000 of funds disbursed for deferred
acquisition and registration costs (See Note 4) and $2,000 of funds disbursed
for prepaid expenses.
5
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
NOTE 3 - STOCK SUBSCRIPTION RECEIVABLE
On July 23, 1999, the Company issued 300,000 common shares to an individual in
exchange for a $300,000 stock subscription. This amount has been classified as a
current asset, instead of a reduction of equity, since the funds were received
on August 6, 1999, prior to the issuance of the financial statements.
NOTE 4 - DEFERRED ACQUISITION AND REGISTRATION COSTS
On June 2, 1999, the Company entered into a consulting agreement with TPG
Capital Corporation (See Note 9) for the future preparation and filing of forms
with the Securities and Exchange Commission and assistance with obtaining
listings and one or more market makers. The Company has paid $25,000 (See Note
2) towards this contract through July 23, 1999 which has been recorded as
deferred acquisition and registration costs. These costs will be written off in
the future against the funds generated from the filings and listings.
NOTE 5 - INTANGIBLE ASSETS
In June 1999, DAL, which was not a subsidiary of the Company at that time,
entered into an agreement for the purchase of all interests relating to the
registered and unregistered design rights of certain assets. The total purchase
price paid was $155,840, represented by a promissory note issued by DAL (See
Note 6) and acquired by the Company in the acquisition discussed in Note 1(B).
On June 10, 1999, DAL, which was not a subsidiary of the Company at that time,
entered into an agreement with a related party for the purchase of intellectual
property rights for certain products. The total purchase price for these rights
was $109,088. DAL issued shares of common stock in the amount of $31,168 in
addition to a note payable in the amount of $77,920 (See Note 6). Pursuant to
the acquisition discussed in Note 1(B), the Company acquired the note payable
and issued preferred stock in exchange for the $31,168 of common stock.
The cost of the above design rights and intellectual property rights will be
amortized over a five-year period. No amortization has been provided as of July
23, 1999, as the Company has not commenced operations. The Company is presently
exploring the development of this technology.
NOTE 6 - NOTES PAYABLE
The Company acquired an agreement with an individual to acquire all interests
relating to the registered and unregistered design rights of certain appliances
for a note in the amount of the purchase price of $155,840 (See Notes 1(B) and
5). The note is non-interest bearing and is to be paid upon receipt of the
unconditional assignment of the design rights to the Company.
6
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
NOTE 6 - NOTES PAYABLE - CONT'D
In addition, the Company acquired an agreement with a related party to acquire
several design rights of certain appliances at a purchase price of $109,088 (See
Notes 1(B) and 5). The Company issued shares of common stock in the amount of
$31,168 in addition to a note payable in the amount of $77,920. The note is
non-interest bearing and is to be fully paid within six months of the agreement
date of June 10, 1999.
NOTE 7 - STOCKHOLDERS' EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock at
$.0001 par value, with such designations, voting and other rights and
preferences as may be determined from time to time by the Board of Directors.
The Company designated 700,000 shares of its preferred stock as "Series 1
Convertible Preferred Stock". The par value of the series is $.0001. Each share
is convertible into ten shares of common stock of the Company at such time that
the subsidiary of the Company, for which such shares were used for the
acquisition thereof, has returned a net profit to the Company of $1,000,000 in
any one year within five years of issuance of such shares. In the event that
after such five-year term the shares have not been converted, each share not
converted shall be automatically converted into one share of common stock of the
Company. Each share of the Series 1 stock is entitled to one vote on all matters
on which such shareholders are lawfully entitled to vote and are not entitled to
receive dividends.
In July 1999, the Company issued 700,000 shares of Series 1 Convertible
Preferred Stock valued at $31,168 pursuant to an Agreement and Plan of
Reorganization with Designer Appliances Limited (See Notes 1B and 5).
B. Common Stock
The Company is authorized to issue 100,000,000 shares of common stock at $.0001
par value. The Company originally issued 5,000,000 shares to TPG Capital
Corporation in exchange for $500. They later cancelled those shares.
On July 23, 1999, the Company issued 4,850,000 shares of common stock to various
parties for gross proceeds of $600,000. At July 23, 1999, the Company had
received funds of $171,500 towards the stock issuance. The remaining proceeds to
be received are classified as a current stock subscription receivable asset of
$300,000 (See Note 3) and stock subscription receivable contra-equity in the
amount of $128,500.
7
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
NOTE 8 - RELATED PARTIES
As described in Notes 5 and 6, DAL purchased certain intangible assets from a
related party to DAL. Such assets were then acquired by the Company.
Legal counsel to the Company is a firm owned by a director of the Company who is
also the controlling owner of TPG Capital Corporation, a former shareholder of
the Company.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
On June 2, 1999, the Company entered into a consulting agreement with TPG
Capital Corporation ("TPG"), a former shareholder of the Company, for its
services and the services of its affiliates. The services relate to future
preparation and filing of forms with the Securities and Exchange Commission in
order to qualify as a publicly traded company, assisting the Company with
obtaining listings for its securities and introducing the Company to one or more
market makers.
The fee for these services is $150,000, of which $25,000 was paid on June 2,
1999 by the attorney's escrow account on behalf of the Company (See Note 2). The
$25,000 payment has been recorded in the financial statements as deferred
acquisition and registration costs (See Note 4). In addition to the above fee,
the Company granted TPG a five-year transferable warrant to acquire up to
250,000 registered shares of the Company's common stock at an exercise price of
$1.00 per share. The Company has yet to execute and deliver a form of common
stock purchase warrant agreement to TPG. Therefore, the accompanying financial
statements do not include any adjustments that might result from the issuance of
this warrant.
NOTE 10 - SUBSEQUENT EVENTS
A. Rule 506 Offering
On August 19, 1999 the Company entered into a subscription agreement, pursuant
to Rule 506 of the Securities and Exchange Commission, with a corporation for
the purchase of 50,000 shares of the Company's common stock for a total
subscription price of $5. As of the date of this audit report, the shares were
not issued.
B. Merger Agreement
Effective October 26, 1999, the Company and Torbay Acquisition Corp., an
inactive Delaware shell corporation and a reporting company under the Securities
Exchange Act of 1934, as amended, entered into and consummated a merger
agreement whereby the Company acquired all of the outstanding shares of common
stock of Torbay Acquisition Corp. in a transaction in which the Company remained
as the surviving entity and became the successor issuer pursuant to rule
12g-3(a) of the General Rules and Regulations of the Securities and Exchange
Commission.
8
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF JULY 23, 1999
NOTE 10 - SUBSEQUENT EVENTS - CONT'D
C. Assignment of Designs
August 24, 1999, the Company and a related party entered into an "Assignment of
Designs" whereby the related party transferred all interests to the registered
and unregistered design rights of certain appliances upon receipt of amounts due
(See Note 6). The Company paid the $155,840 owed to the individual on September
2, 1999 plus agreed legal costs.
D. Offering
The Company is in the process of filing form SB-2 to register common stock held
by Selling Securityholders.
9
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
AS OF NOVEMBER 30, 1999
UNAUDITED
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
AS OF NOVEMBER 30, 1999
(UNAUDITED)
-----------
ASSETS
------
CURRENT ASSETS
Cash $ 10,917
Due from attorney's escrow 8,831
Prepaid expenses 2,000
---------
Total current assets 21,748
---------
OTHER ASSETS
Deferred acquisition and registration costs 150,000
Intangible assets 264,928
---------
Total other assets 414,928
---------
TOTAL ASSETS $ 436,676
- ------------ =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES
Due to related party $ 77,920
---------
Total liabilities 77,920
---------
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value,
20 million shares authorized, 700,000
Series 1 convertible shares issued
and outstanding 70
Common Stock, $.0001 par value, 100
million shares authorized, 5,100,000
issued and outstanding 510
Additional paid-in capital 630,588
Accumulated deficit (173,912)
---------
457,256
Less stock subscription receivable (98,500)
---------
Total stockholders' equity 358,756
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 436,676
- ------------------------------------------ =========
See accompanying notes to financial statements.
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 22, 1999 (INCEPTION)
THROUGH NOVEMBER 30, 1999
(UNAUDITED)
-----------
OPERATING EXPENSES
Directors Remuneration $ 32,600
Legal and professional services 67,556
Telephone 3,085
Rent expense 2,088
Computer Expenses 1,956
Consulting fees 39,120
Office and miscellaneous expenses 8,340
Auto Expenses 12,007
----------
Total Operating Expenses 166,752
----------
LOSS FROM OPERATIONS (166,752)
----------
OTHER EXPENSE
Interest expense 7,160
----------
Total Other Expense 7,160
----------
NET LOSS $ (173,912)
- -------- ==========
See accompanying notes to financial statements.
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
FOR THE PERIOD FROM MARCH 22, 1999
(INCEPTION) TO NOVEMBER 30, 1999
--------------------------------
<TABLE>
<CAPTION>
Deficit
Additional Accumulated
Common Stock Preferred Stock Paid-in During Devel- Subscriptions
Shares Amount Shares Amount Capital opment Stage Receivable Total
-------- ------- -------- ------ ---------- ------------- -------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock
to founder 5,000,000 $ 500 - $ - $ - $ - - $ 500
Cancellation of original
founder shares (5,000,000) (500) - - - - - (500)
Issuance of preferred stock
for acquisition of
subsidiary - - 700,000 70 31,098 - - 31,168
Issuance of common stock
for cash 4,850,000 485 - - 599,515 - $( 98,500) 501,500
Issuance of common stock in
connection with merger 250,000 25 - - ( 25) - - -
Net income for the period
from March 22, 1999 (inception)
to November 30, 1999 - - - - - (173,912) - (173,912)
--------- ------- --------- ------- --------- ------------- -------- ----------
5,100,000 $ 510 700,000 $ 70 $ 630,588 $ (173,912) $( 98,500) $ 358,756
========= ======= ========= ======= ========= ============= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 22, 1999(INCEPTION)
THROUGH NOVEMBER 30, 1999
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (173,912)
----------
Net Cash used in Operating Activities (173,912)
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable (155,840)
Deferred acquisition & registration costs (125,000)
Proceeds from Subscription Receivable 330,000
----------
Net cash provided by
financing activities 49,160
----------
DECREASE IN CASH AND
CASH EQUIVALENTS (124,752)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 144,500
----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 19,748
- ----------------------------------------- ==========
Cash paid during the period for:
- --------------------------------
Interest $ 7,160
See accompanying notes to financial statements.
<PAGE>
TORBAY HOLDINGS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
AS OF NOVEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Torbay Holdings, Inc. (a development stage company) ("the Company") was
incorporated in Delaware under the name Acropolis Acquisition
Corporation on March 24, 1999 to serve as a vehicle to effect a merger,
exchange of capital stock, asset acquisition or other business
combination with a domestic or foreign private business. At November
30, 1999 the Company had not yet commenced any operations, and all
activity to date relates to the Company's formation, business
acquisition and proposed fund raising. The Company's fiscal year end is
December 31.
Effective October 26, 1999, the Company and Torbay Acquisition Corp.,
an inactive Delaware shell corporation and a reporting company under
the Securities Exchange Act of 1934, as amended, entered into and
consummated a merger agreement whereby the Company acquired all of the
outstanding shares of common stock of Torbay Acquisition Corp. in a
transaction in which the Company remained as the surviving entity and
became the successor issuer pursuant to rule 12g-3(a) of the General
Rules and Regulations of the Securities and Exchange Commission.
The Company's ability to commence operations is contingent upon its
ability to raise the capital it will require through the issuance of
equity securities, debt securities, bank borrowings or a combination
thereof.
B. Agreement and Plan of Reorganization
In July 1999, the Company effected an Agreement and Plan of
Reorganization whereby the Company acquired all of the issued and
outstanding securities of Designer Appliances Limited a UK Corporation
(DAL) in exchange for an aggregate of 700,000 shares of the Company's
Series 1 Convertible Preferred Stock. The designation, preferences and
rights of the Preferred Stock are detailed in Note 7A. As a result of
the agreement, DAL became a wholly owned subsidiary of the Company.
C. Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Torbay
Holdings, Inc. and its wholly owned subsidiary, Designer Appliances
Limited. All significant intercompany balances and transactions have
been eliminated in the consolidation. The financial statements of the
UK subsidiary have been translated into United States dollars at
current exchange rates as to assets and liabilities.
<PAGE>
D. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
E. Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. There were no current or deferred income
tax expenses or benefits due to the Company not having any operations
for the period ended November 30, 1999.
F. New Accounting Pronouncements
The Financial Accounting Standards Board has recently issued several
new accounting pronouncements. Statement No. 129, "Disclosure of
Information about Capital Structure" establishes standards for
disclosing information about an entity's capital structure, is
effective for financial statements for periods ending after December
15, 1998 and has been adopted by the Company as of December 31, 1998.
Statement No. 130, "Reporting Comprehensive Income" establishes
standards for reporting and display of comprehensive income and its
components, and is effective for fiscal years beginning after December
15, 1997. Statement No. 131, "Disclosures about Segments of an
Enterprise and Related Information" establishes standards for the way
that public business enterprises report information about operating
segments in annual financial statements and requires that those
enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services,
geographic areas, and major customers, and is effective for financial
statements for periods beginning after December 15, 1997. The Company
believes that its adoption of Statements 130 and 131 will not have a
material effect on the Company's financial position or results of
operations.
NOTE 2 - DUE FROM ATTORNEY'S ESCROW
The Company's attorney has been collecting and disbursing funds on
behalf of the Company via an escrow account. As of November 30, 1999,
the balance of the escrow account was $8,831.
<PAGE>
NOTE 3 - DEFERRED ACQUISITION AND REGISTRATION COSTS
On June 2, 1999, the Company entered into a consulting agreement with
TPG Capital Corporation (See Note 9) for the future preparation and
filing of forms with the Securities and Exchange Commission and
assistance with obtaining listings and one or more market makers. The
Company has paid $150,000 (See Note 2) towards this contract through
November 30, 1999 which has been recorded as deferred acquisition and
registration costs. These costs will be written off in the future
against the funds generated from the filings and listings.
NOTE 4 - INTANGIBLE ASSETS
In June 1999, DAL, which was not a subsidiary of the Company at that
time, entered into an agreement for the purchase of all interests
relating to the registered and unregistered design rights of certain
assets. The total purchase price paid was $155,840, represented by a
promissory note issued by DAL (See Note 5) and acquired by the Company
in the acquisition discussed in Note 1(B).
On June 10, 1999, DAL, which was not a subsidiary of the Company at
that time, entered into an agreement with a related party for the
purchase of intellectual property rights for certain products. The
total purchase price for these rights was $109,088. DAL issued shares
of common stock in the amount of $31,168 in addition to a note payable
in the amount of $77,920 (See Note 5). Pursuant to the acquisition
discussed in Note 1(B), the Company acquired the note payable and
issued preferred stock in exchange for the $31,168 of common stock.
The cost of the above design rights and intellectual property rights
will be amortized over a five-year period. No amortization has been
provided as of November 30, 1999, as the Company has not commenced
operations. The Company is presently exploring the development of this
technology.
NOTE 5 - NOTES PAYABLE
The Company acquired an agreement with an individual to acquire all
interests relating to the registered and unregistered design rights of
certain appliances for a note in the amount of the purchase price of
$155,840 (See Notes 1(B) and 4). As of November 30, 1999, the note has
been paid in full.
In addition, the Company acquired an agreement with a related party to
acquire several design rights of certain appliances at a purchase price
of $109,088 (See Notes 1(B) and 5). The Company issued shares of common
stock in the amount of $31,168 in addition to a note payable in the
amount of $77,920. The note is non-interest bearing and was to be fully
paid within six months of the agreement date of June 10, 1999. The due
date of the note was extended to June 10, 2000.
NOTE 6 - STOCKHOLDERS' EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock
at $.0001 par value, with such designations, voting and other
<PAGE>
rights and preferences as may be determined from time to time by the
Board of Directors.
The Company designated 700,000 shares of its preferred stock as "Series
1 Convertible Preferred Stock". The par value of the series is $.0001.
Each share is convertible into ten shares of common stock of the
Company at such time that the subsidiary of the Company, for which such
shares were used for the acquisition thereof, has returned a net profit
to the Company of $1,000,000 in any one year within five years of
issuance of such shares. In the event that after such five-year term
the shares have not been converted, each share not converted shall be
automatically converted into one share of common stock of the Company.
Each share of the Series 1 stock is entitled to one vote on all matters
on which such shareholders are lawfully entitled to vote and are not
entitled to receive dividends.
In July 1999, the Company issued 700,000 shares of Series 1 Convertible
Preferred Stock valued at $31,168 pursuant to an Agreement and Plan of
Reorganization with Designer Appliances Limited
(See Notes 1B and 4).
B. Common Stock
The Company is authorized to issue 100,000,000 shares of common stock
at $.0001 par value. The Company originally issued 5,000,000 shares to
TPG Capital Corporation in exchange for $500. They later cancelled
those shares.
On July 23, 1999, the Company issued 4,850,000 shares of common stock
to various parties for gross proceeds of $600,000. At November 30,
1999, the Company had received funds of $171,500 towards the stock
issuance. The remaining proceeds to be received are classified as a
current stock subscription receivable asset of $300,000 (See Note 3)
and stock subscription receivable contra-equity in the amount of
$128,500.
On October 26, 1999, 250,000 shares of common stock were issued to TPG
Capital Corporation (See Note 7) in connection with the merger with
Torbay Acquisition Corp. (See Note 1(A)).
NOTE 7 - RELATED PARTIES
As described in Notes 5 and 6, DAL purchased certain intangible assets
from a related party to DAL. Such assets were then acquired by the
Company.
Legal counsel to the Company is a firm owned by a director of the
Company who is also the controlling owner of TPG Capital Corporation, a
shareholder of the Company.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
On June 2, 1999, the Company entered into a consulting agreement with
TPG Capital Corporation ("TPG"), a shareholder of the Company, for its
services and the services of its affiliates. The services relate to
future preparation and filing of forms with the Securities and
<PAGE>
Exchange Commission in order to qualify as a publicly traded company,
assisting the Company with obtaining listings for its securities and
introducing the Company to one or more market makers. The fee for these
services is $150,000, of which all has been paid as of November 30,
1999 by the attorney's escrow account on behalf of the Company (See
Note 2). The $150,000 payment has been recorded in the financial
statements as deferred acquisition and registration costs (See Note 3).
In addition to the above fee, the Company granted TPG a five-year
transferable warrant to acquire up to 250,000 registered shares of the
Company's common stock at an exercise price of $1.00 per share. The
Company has yet to execute and deliver a form of common stock purchase
warrant agreement to TPG. Therefore, the accompanying financial
statements do not include any adjustments that might result from the
issuance of this warrant.
NOTE 9 - RULE 506 OFFERING
On August 19, 1999 the Company entered into a subscription agreement,
pursuant to Rule 506 of the Securities and Exchange Commission, with a
corporation for the purchase of 50,000 shares of the Company's common
stock for a total subscription price of $5. As of the date of these
financial statements, the shares were not issued.
NOTE 10 - SUBSEQUENT EVENTS
VV. Offering
The Company is in the process of filing form SB-2 to register common
stock held by Selling Securityholders.
<PAGE>
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 may not
be relied on as having been authorized by the Company. Neither the delivery of
this prospectus nor any sale made hereunder shall under any circumstances create
an implication that there has been no change in the affairs of the Company since
the date hereof. This prospectus does not constitute an offer to sell, or
solicitation of any offer to buy, by any person in any jurisdiction in which it
is unlawful for any such person to make such offer or solicitation. Neither the
delivery of this prospectus nor any offer, solicitation or sale made hereunder,
shall under any circumstances create any implication that the information herein
is correct as of any time subsequent to the date of the prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary..............................................................
Risk Factors....................................................................
Available Information...........................................................
The Company ....................................................................
Use of Proceeds.................................................................
Dividend Policy.................................................................
Business........................................................................
Plan of Operation...............................................................
Management......................................................................
Security Ownership of Certain
Beneficial Owners and Management............................................
Selling Securityholders.........................................................
Description of Securities.......................................................
Plan of Distribution............................................................
Legal Matters...................................................................
Experts.........................................................................
Index to Financial Statements...................................................
Until 90 days after the date of this Prospectus, all dealers effecting
transactions in the registered Securities, whether or not participating in this
distribution, may be required to deliver a Prospectus.
<PAGE>
=======================
TORBAY HOLDINGS, INC.
----------
PROSPECTUS
----------
December ___, 1999
=======================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Torbay is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. The Certificate of Incorporation and
the By-Laws of Torbay provide for indemnification of directors and officers to
the fullest extent permitted by the General Corporation Law of the State of
Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director:
For any breach of the director's duty of loyalty to the corporation or
its stockholders;
For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
Under Section 174 (relating to liability for unauthorized acquisitions
or redemptions of, or dividends on, capital stock) of the General
Corporation Law of the State of Delaware; or
For any transaction from which the director derived an improper
personal benefit.
Torbay's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
TORBAY PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES
AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 169
Fees and Expenses of Accountants 15,000
Fees and Expenses of legal counsel 10,000
Blue Sky Fees and Expenses 3,500
Printing and Edgarizing Expenses 10,000
Miscellaneous Expenses 3,700
TOTAL $42,369
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On July 23, 1999, pursuant to an Agreement and Plan of Reorganization
among Torbay, Designer Appliances, Ltd. ("DAL"), and the shareholders of DAL,
the outstanding shares of DAL were exchanged for an aggregate of 700,000 shares
of Series 1 Convertible Preferred Stock of Torbay pursuant to Rule 506 of
Regulation D of the General Rules and Regulations of the Securities and Exchange
Commission.
<PAGE>
On July 23, 1999, pursuant to Rule 506 of Regulation D of the General
Rules and Regulations of the Securities and Exchange Commission, Torbay issued
an aggregate of 4,850,000 shares of common stock to 19 investors for an
aggregate consideration of $485.
On August 26, 1999, pursuant to Rule 506 of Regulation D of the General
Rules and Regulations of the Securities and Exchange Commission, Torbay issued
an aggregate of 50,000 shares of common stock to 300 accredited investors for an
aggregate consideration of $5.
On October 26, 1999, pursuant to the Agreement and Plan of Merger of
Torbay Acquisition Corporation with and into Torbay Holdings, Inc., Torbay
Holdings issued 250,000 shares of common stock pursuant to Rule 506 of
Regulation of the General Rules and Regulations of the Securities and Exchange
Commission to TPG Capital Corporation in exchange for all the outstanding shares
of common stock of Torbay Acquisition Corporation.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1** Certificate of Incorporation of Torbay Holdings, Inc., as amended
3.2** By-Laws of Torbay Holdings, Inc.
4.1** Certificate of Designation with respect to Series 1 Convertible Preferred
Stock of Torbay Holdings, Inc.
4.2 Form of Common Stock Certificate
5.1* Opinion of Cassidy & Associates
10.1* Deed of Assignment of Intellectual Property Rights by W. Thomas Large to
Designer Appliances Ltd. dated June 10, 1999
10.2* Agreement among Michael Beard, 3T Designs Ltd and Designer Appliances Ltd
dated June 12, 1999 with respect to registered and unregistered design
rights
21.1* Subsidiaries of Torbay Holdings, Inc.
24.1 Consent of Weinberg & Company, certified public accountant
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27.1 Financial Data Schedule
- --------
* To be filed by Amendment
** Previously filed
(b) The following financial statement schedules are included in this
Registration Statement
None
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement;
(i) To include any Prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the registration statement;
<PAGE>
(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.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission is that such indemnification is against public
policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of Prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of Prospectus
filed by the registrant pursuant to Rule 424(B)(1) or 497(h)
under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared
effective.
(ii) For the purpose of determining any liability under the
Securities Act of 1933, each 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Torbay Holdings, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and has duly caused
this Registration Statement on Form SB-2 to be signed on its behalf by the
undersigned, thereunto duly authorized, in __________________________ on the
23rd day of December, 1999.
TORBAY HOLDINGS, INC.
By: /s/ Colin Peter Gervaise-Brazier
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Francis Guy Lewis Askham Chairman and Director December 23, 1999
/s/ Colin Peter Gervaise-Brazier President, December 23, 1999
Chief Executive Officer
and Director
Alexander Gordon Lane Secretary and Director December ____, 1999
/s/ William Thomas Large Vice President and Director December 23, 1999
</TABLE>
