U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers
Under Section 12(b) or (g) of
the Securities Exchange Act of 1934
LAPITOS ACQUISITION CORPORATION
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(Name of Small Business Issuer)
Delaware 95-4739149
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(State or Other Jurisdiction of I.R .S. Employer Identification
Incorporation or Organization) Number
1800 Century Park East, Suite 600, Los Angeles, CA 90067
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(Address of Principal Executive Offices including Zip Code)
310/229-5722
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(Issuer's Telephone Number)
Securities to be Registered Under Section 12(b) of the Act: None
Securities to be Registered Under Section 12(g) of the Act:
Common Stock, $.0001 Par Value
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(Title of Class)
Information contained in this Registration Statement includes forward-
looking statements which can be identified by the use of forward looking
terminology such as "believes", "expects", "may", "desires", "will",
"should", "projects", "estimates", "contemplates", "anticipates", or any
negative or other variations of these or comparable terminology. No
assurance can be given that the future results described in the forward-
looking statements will be achieved. Such information also includes
cautionary statements identifying important factors with respect to such
forward-looking statements, including certain risks and uncertainties that
could cause actual results to vary materially from the projections and
other expectations described in such forward-looking statements. Other
factors, such as the general state of the economy, competition,
unanticipated business opportunities, availability of financing, government
regulation and market acceptance and the like, could also cause actual
results to vary materially from the future resultscovered in such forward-
looking statements. All other persons are cautioned that any such forward-
looking statements are not assurances, forecasts or guarantees of future
performance due to related risks and uncertainties, and the actual results
may differ materially from those projected. The accompanying information
contained in this Registration Statement, including without limitation the
information set forth under "Risk Factors", identify important factors that
could cause such differences. All subsequent written and oral forward-
looking statements attributable to the Company, its subsidiaries or persons
acting on their behalf are qualified in their entirety by the foregoing
discussion, any related cautionary statements and reference to the reports
and statements the Company hereafter files with the United States
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended.
PART I
ITEM 1. BUSINESS.
Lapitos Acquisition Corporation (the "Company") was incorporated on
February 3, 1999 under the laws of the State of Delaware to engage in any
lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions. The Company has been in the developmental stage
since inception and has no operations to date other than issuing shares to
its original shareholders.
The Company will attempt to locate and negotiate with a business
entity for the merger of that target company into the Company. In certain
instances, a target company may wish to become a subsidiary of the Company
or may wish to contribute assets to the Company rather than merge. No
assurances can be given that the Company will be successful in locating or
successfully negotiating a transaction with any target company.
The Company has been formed to provide a method for a foreign or
domestic private company to become a reporting ("public") company whose
securities are qualified for trading in the United States secondary market.
PERCEIVED BENEFITS
There are certain perceived benefits to being a reporting company
with a class of publicly traded securities. These are commonly thought to
include the following:
* the ability to use registered securities to make
acquisitions of assets or businesses;
* increased visibility in the financial community;
* the facilitation of borrowing from financial institutions;
* improved trading efficiency;
* shareholder liquidity;
* greater ease in subsequently raising capital;
* compensation of key employees through stock options;
* enhanced corporate image;
* a presence in the United States capital markets.
POTENTIAL TARGET COMPANIES
A business entity, if any, which might be interested in a business
combination with the Company may include the following:
* a company for which a primary purpose of becoming public
is the use of its securities for the acquisition of
assets or businesses;
* a company that is unable to find an underwriter of its
securities or is unable to find an underwriter of
securities on terms acceptable to it;
* a company that wishes to become public with less
dilution of its common stock than would occur upon an
underwriting;
* a company that believes it will be able obtain
investment capital on more favorable terms after it has
become public;
* a foreign company that desires an initial entry into
the United States' securities market;
* a special situation company, such as a company seeking a
public market to satisfy redemption requirements under a
qualified Employee Stock Option Plan;
* a company that seeks one or more of the other perceived
benefits of becoming a public company.
A business combination with a target company will normally involve
the transfer to the target company of the majority of the issued and
outstanding common stock of the Company, and the substitution by the target
company of its own management and board of directors.
No assurances can be given that the Company will be able to enter
into a business combination, that the terms of any such business
combination will be favorable to the Company, or that the nature of the
business of potential target companies will be satisfactory to the
Company's management.
The proposed business activities described herein classify the
Company as a blank check company. See "GLOSSARY". The Securities and
Exchange Commission and many states have enacted statutes, rules and
regulations limiting the sale of securities of blank check companies.
Management does not intend to undertake any efforts to cause a market to
develop in the Company's securities until such time as the Company has
successfully implemented its business plan described in this Registration
Statement. Accordingly, the shareholders of the Company have executed and
delivered a "lock-up" letter agreement affirming that such shareholders
will not sell or otherwise transfer their shares of the Company's common
stock except in connection with or following completion of a merger,
acquisition or other business combination resulting in the Company no
longer being classified as a blank check company. The shareholders have
deposited their stock certificates with the Company's management to
implement the restrictions contained in the lockup letter agreement.
The Company is voluntarily filing this Registration Statement with
the Securities and Exchange Commission and is under no obligation to do so
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
RISK FACTORS
The Company, its business plan and any offering of its securities are
subject to numerous risk factors which prospective investors should
carefully consider, including the following:
NO OPERATING HISTORY OR REVENUE AND MINIMAL ASSETS. The Company has
had no operating history nor any revenues or earnings from operations. The
Company has no significant assets or financial resources. The Company
will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination,
although there can be no assurance that an appropriate target company will
be located. This may result in the Company incurring a net operating loss,
which will increase continuously until the Company can consummate a
business combination with such a target company. There is no assurance
that the Company can identify an appropriate target company or consummate
such a business combination with such appropriate target company.
SPECULATIVE NATURE OF THE COMPANY'S PROPOSED OPERATIONS. The success
of the Company's proposed plan of operation will depend to a great extent
on the operations, financial condition and management of a target company
that may be identified in the future. While management will prefer
business combinations with entities having established operating histories,
there can be no assurance that the Company will be successful in locating
target companies meeting such criteria. In the event the Company completes
a business combination, of which there can be no assurance, the success of
the Company's operations will be dependent upon management of the target
company and numerous other factors relating to the target company beyond
the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions of
business entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers and
acquisitions of companies which may be merger or acquisition target
candidates for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial
infrastructure than the Company and, consequently, the Company will be at a
competitive disadvantage in identifying possible business opportunities and
successfully completing an appropriate business combination. Moreover, the
Company will compete with numerous other small public companies in the
business of seeking merger or acquisition candidates.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION--NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no current
arrangement, agreement or understanding with respect to engaging in a
merger or business combination with, or acquisition of, a specific business
entity. There can be no assurance that the Company will be successful in
identifying and evaluating suitable business opportunities or in
consummating a business combination. Management has not identified any
particular industry or specific business within an industry for evaluation
by the Company. There is no assurance that the Company will be able to
negotiate a business combination on terms favorable to the Company. The
Company has not established any minimum length of operating history or
specified level of earnings, assets, net worth or other criteria which a
target company must have achieved, or without which the Company would not
consider a business combination with such business entity. Accordingly,
the Company may enter into a business combination with a business entity
having no significant operating history, and/or which has operating losses,
limited or no potential for immediate earnings, limited assets, negative
net worth or other negative characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While
seeking a business combination, management anticipates devoting only a
limited amount of time per month to the business of the Company. The
Company's sole officer has entered into a written employment agreement with
the Company that does not obligate him to devote his full time and
attention exclusively to the business and affairs of the Company. The
Company has not obtained key man life insurance on its officer and
director. Notwithstanding the combined limited experience and time
commitment of management, the loss of the services of this individual would
adversely affect achievement of the Company's business plan and its
likelihood of continuing operations.
CONFLICTS OF INTEREST--GENERAL. The Company's sole officer and
director participates in other business ventures which may compete directly
with the Company's proposed or future business. Additional conflicts of
interest and non-arms length transactions may also arise in the future.
Management has adopted a policy that the Company will not seek a merger or
other business combination with, or acquisition of, any entity in which any
member of management serves as an officer, director or partner, or in which
they or their family members own or hold any ownership interest. See "ITEM
5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS--Conflicts
of Interest."
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Section 13
of the Securities Exchange Act of 1934 (the "Exchange Act") requires
companies subject thereto to provide certain information about significant
acquisitions including certified financial statements for the company
acquired covering one or two years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by some
target companies to prepare such financial statements may significantly
delay or essentially preclude consummation of an otherwise desirable
business combination by the Company. Acquisition prospects that do not
have or are unable to obtain the required audited financial statements may
not be appropriate for acquisition so long as the applicable reporting
requirements of the Exchange Act require such audited financial statements.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, market research
indicating that demand exists for the transactions contemplated by the
Company. Even in the event demand exists for a merger, business
combination or acquisition of the type contemplated by the Company, there
is no assurance the Company will be successful in negotiating satisfactory
terms and conditions and consummating any such business combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with only one business entity. Consequently, the
Company's activities will be limited to those engaged in by the business
entity, which the Company merges with or acquires. The Company's inability
to diversify its activities into a number of areas may subject the Company
to economic fluctuations within a particular business or industry and
therefore increase the risks associated with the Company's operations.
REGULATION UNDER INVESTMENT COMPANY ACT. Although the Company will
be subject to regulation under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company Act
of 1940, insofar, as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages in
business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be subject
to regulation under the Investment Company Act of 1940. In such event, the
Company would be required to register as an investment company and could be
expected to incur significant registration and compliance costs. The
Company has obtained no formal determination from the Securities and
Exchange Commission as to the status of the Company under the Investment
Company Act of 1940 and, consequently, any violation of the Investment
Company Act could subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a target company obtaining a
controlling interest in the Company. Any such business combination may
require shareholders of the Company to sell or transfer all or a portion of
the Company's common stock held by them. The resulting change in control
of the Company will likely result in removal of the present officer and
director of the Company and a corresponding reduction in or elimination of
his participation in the future affairs of the Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. Currently, the Company's primary plan of operation is to
consummate a business combination with a business entity which, in all
likelihood, will result in the Company issuing securities to shareholders
of such business entity. The issuance of previously authorized and
unissued common stock of the Company would result in reduction in
percentage of shares owned by the present shareholders of the Company and
would most likely result in a change in control or management of the
Company.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the Company
may undertake. Currently, such transactions may be structured so as to
result in tax-free treatment to both companies and/or their shareholders,
in certain instances, pursuant to various federal and state tax provisions.
The Company intends to structure any business combination so as to minimize
the federal and state tax consequences to the Company, any target company
and their respective shareholders; however, there can be no assurance that
such business combination will meet the statutory requirements of a tax-
free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non-qualifying
reorganization could result in the imposition of both federal and state
taxes, which might have an adverse effect on the parties to the transaction
and make more difficult the consummation of a business combination with a
target company.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management anticipates that the Company will request that
any potential business opportunity provide audited financial statements.
One or more attractive business opportunities may choose to forego the
possibility of a business combination with the Company rather than incur
the expenses associated with preparing audited financial statements. In
such case, the Company may choose to obtain certain representations as to
the target company's assets, liabilities, revenues and expenses prior to
consummating a business combination, with further representations that an
audited financial statement would be provided after closing of such a
transaction. Closing documents relative thereto may include representations
that the audited financial statements will not materially differ from the
representations included in such closing documents, however, there can be
no assurance in such circumstances that such audited financial statements
will be provided or that the results of operations will not so materially
differ.
POSSIBLE PRICE VOLATILITY. Although it is impossible to predict the
nature of any secondary trading market for the Company's common stock that
may arise in the future, the market prices for securities of emerging
companies historically have been highly volatile. Subsequent to
consummation of a business combination and the development of any trading
market, if any, future announcements concerning the Company or its
competitors, including the results of testing, technological innovations or
new commercial products, government regulations and developments concerning
proprietary rights or litigation may have a significant impact on the price
of the Company's securities in any such secondary trading.
SHARES ELIGIBLE FOR FUTURE SALE. Sales of a substantial number of
shares of the Company's Common Stock in any secondary market arising
following consummation of a business combination could adversely affect the
market price of the Common Stock. The 750,000 shares of Common Stock issued
to the Company's sole director and officer are eligible and the 4,250,000
shares of Common Stock issued to TransGlobal Financial Corporation will
become eligible for sale in the publlic market, subject to compliance with
Rule 144 under the Act. Rule 144 generally provides that beneficial owners
of shares who have held such shares for one (1) year may sell within a
three-month period a number of shares not exceeding the greater of one
percent of the total outstanding shares or the average trading volume of
the shares during the four calendar weeks preceding such sale. The 750,000
shares issued to the Company's sole officer and director were issued
pursuant to Rule 701 under the Act which does not impose the one (1) year
holding period otherwise imposed under Rule 144. These 750,000 shares could
be sold in accordance with Rule 144 commencing 90 days from the date of
this Registration Statement at various times thereafter. There can be no
assurance that sales of these securities will not depress the price of the
Company's common stock or otherwise adversely affect any secondary market
that might arise subsequent to consummation of any business combination.
NO DIVIDENDS ANTICIPATED. The Company has never paid any dividends
on its securities and does not anticipate the payment of dividends in the
foreseeable future.
ITEM 2. PLAN OF OPERATION
The Company intends to merge with or acquire a business entity in
exchange for the Company's securities. The Company has no particular
acquisition in mind and has not entered into any negotiations regarding
such an acquisition. Neither the Company's officer and director nor any
affiliate has engaged in any negotiations with any representative of any
company regarding the possibility of an acquisition or merger between the
Company and such other company or identified any particular acquisition
candidate.
Management anticipates seeking out a target company through
solicitation. Such solicitation may include newspaper or magazine
advertisements, mailings and other distributions to law firms, accounting
firms, investment bankers, financial advisors and similar persons, the use
of one or more World Wide Web sites and similar methods. No estimate can
be made as to the number of persons who will be contacted or solicited and
no assurance can be given that any of the persons contacted or solicited
will be interested in consummating a business combination. Management may
engage in such solicitation directly or may employ one or more other
entities to conduct or assist in such solicitation. Management and its
affiliates may pay referral fees to consultants and others who refer target
businesses for mergers into public companies in which management and its
affiliates have an interest. Payments are made if a business combination
occurs, and may consist of cash or a portion of the stock in the Company
retained by management and its affiliates, or both. Additionally, the
Company's sole officer and director may receive a referral fee or other
compensation from the target business with which the Company consummates a
business combination.
The Company has no full time employees. The Company's president has
agreed to allocate a portion of his time to the activities of the Company
up to a maximum of 10 hours per month, without cash compensation. The
president anticipates that the business plan of the Company can be
implemented by his devoting no more than 10 hours per month to the business
affairs of the Company and, consequently, conflicts of interest may arise
with respect to the limited time commitment by such officer.
Management is currently involved with soliciting target companies on
behalf of blank check companies, and is involved in creating additional
blank check companies similar to this one. A conflict may arise in the
event that another blank check company with which management is affiliated
actively seeks a target company. Management anticipates that target
companies will be located for the Company and other blank check companies
in chronological order of the date of formation of such blank check
companies or by lot. Other blank check companies that may be formed,
however, may differ from the Company in certain matters such as place of
incorporation, number of shares and shareholders, working capital, types of
authorized securities, or other characteristics. It may be that a target
company may be more suitable for or may prefer a certain blank check
company formed after the Company. In such case, a business combination
might be negotiated on behalf of the more suitable or preferred blank check
company regardless of date of formation or choice by lot. See "ITEM 5,
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS--Current Blank
Check Companies"
The By-Laws of the Company provide that the Company shall indemnify
officers and directors of the Company for certain costs, expenses and
liabilities, which can include costs, expenses and liabilities arising
under the securities laws and limits or diminishes the liability of the
Company's officers and directors for certain breaches of duty to the
Company. Therefore, assets of the Company could be used or attached to
satisfy any costs, expenses and liabilities subject to such
indemnification.
GENERAL BUSINESS PLAN
The Company's business plan is to seek, investigate and, if such
investigation warrants, acquire an interest in a business entity which
desires to seek the perceived advantages of a corporation which has a class
of securities registered under the Exchange Act. The Company will not
restrict its search to any specific business, industry, or geographical
location and the Company may participate in a business venture of almost
any kind or nature. Management anticipates that it will be able to
participate in only one potential business venture because the Company has
nominal assets and limited financial resources. See ITEM F/S, "FINANCIAL
STATEMENTS." This lack of diversification should be considered a
substantial risk to the shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against
gains from another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public
marketplace to raise additional capital in order to develop or acquire new
products or expand into new markets, to facilitate research and
development, or for other corporate purposes. In connection with any such
business combination, the Company may acquire assets, establish wholly
owned subsidiaries in various businesses or acquire existing businesses as
subsidiaries.
The Company anticipates that the selection of a business opportunity
in which to participate will be complex and extremely risky. Management
believes (but has not conducted any research to confirm) that there are
business entities seeking the perceived benefits of a corporation
registered under the Exchange Act. Such perceived benefits may include
facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for incentive stock options or similar
benefits to key employees, increasing the opportunity to use securities for
acquisitions, providing liquidity for shareholders and other factors.
Business opportunities may be available in many different industries and at
various stages of development, all of which will make the task of
comparative investigation and analysis of such business opportunities
difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business entities with any cash or other assets.
Management, however, believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a public company without incurring the cost and time required
to conduct an initial public offering. Management has not conducted market
research and is not aware of any statistical data to support the perceived
benefits of a merger, acquisition or other business combination for the
owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the sole officer and director of the Company, who
has a business analysis background. In analyzing prospective business
opportunities, although there can be no assurance that management will
identify all potentially material characteristics of a business
opportunity, management plans on evaluating such matters as available
technical, financial and managerial resources; working capital and other
financial requirements; history of operations, if any; prospects for the
future; nature of present and expected competition; the quality and
experience of management services which may be available and the depth of
that management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which then may
be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition or acceptance of products, services, or stock in trade;
name identification; and other relevant factors. This discussion of
certain proposed criteria is not meant to be restrictive of the Company's
unlimited discretion to search for and enter into business combinations
with any business or opportunity management deems appropriate.
The Exchange Act requires that any merger or acquisition candidate
comply with certain reporting requirements, which include providing audited
financial statements to be included in the reports filed by the Company
under the Exchange Act. Currently, the Company does not intend to acquire
or merge with any company for which audited financial statements cannot be
obtained at or within a reasonable period of time after closing of the
proposed transaction. See ITEM 1, REQUIREMENT OF FINANCIAL STATEMENTS MAY
DISQUALIFY BUSINESS OPPORTUNITIES.
The Company may enter into a business combination with a business
entity that desires to establish a public trading market for its shares. A
target company may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a business
combination with the Company. Such perceived adverse consequences may
include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders or the inability to obtain an underwriter or
to obtain an underwriter on satisfactory terms.
The Company will not restrict its search to any specific kind of
business or entity, but may acquire or combine with a venture which is in
its preliminary or development stage, which is already in operation, or in
any later stage of its business life. Currently, it is impossible to
predict the character or development stage of any business with which the
Company may become engaged, because almost any business may need to seek
additional capital, may desire to have its shares publicly traded, or may
seek other perceived advantages which the Company may offer.
Management of the Company, which in all likelihood will not be
experienced in matters relating to the business of a target company, will
rely upon its own efforts in accomplishing the business objectives of the
Company. Although there can be no assurance, outside consultants or
advisors may be utilized by the Company to assist in the search for
qualified target companies. If the Company does retain such an outside
consultant or advisor, any cash fee earned by such person will need to be
assumed by the target company, as the Company has limited cash assets with
which to pay such obligation. Notwithstanding the foregoing, management of
the Company reserves the right to use shares of the Company in lieu of cash
to compensate such consultants or advisors in appropriate situations.
Following a business combination the Company may benefit from the
services of others in regard to accounting, legal services, underwriting
and corporate public relations. If requested by a target company,
management may recommend one or more underwriters, financial advisors,
accountants, law firms, public relations firms or other consultants to
provide such services. There can be no assurance that any of these
advisors will succeed in materially improving the Company's operations.
A potential target company may have an agreement with a consultant or
advisor providing that services of the consultant or advisor be continued
after any business combination or that a liquidated damage or severance
amount be paid upon termination of services of such consultant or advisor.
Additionally, a target company may be presented to the Company only on the
condition that the services of a consultant or advisor be continued after a
merger or acquisition. Such preexisting agreements of target companies for
the continuation of the services of attorneys, accountants, advisors or
consultants might materially affect the operations of any such target
company and could be a factor in the selection of a target company.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition,
the Company may become a party to a merger, consolidation, share exchange,
reverse merger, reorganization, joint venture, or licensing agreement with
another corporation or entity. It may also acquire stock or assets of an
existing business. Upon the consummation of a transaction, it is likely
that the present management and shareholders of the Company will no longer
control the Company. In addition, it is likely that the Company's officer
and director will, as part of the terms of the acquisition transaction,
resign and be replaced by one or more new officers and directors.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemptions from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated term of the transaction, the
Company may agree to register all or a part of such securities immediately
after the transaction is consummated or at specified times thereafter. If
such registration occurs, of which there can be no assurance, such
registration will be undertaken only after the Company, (a) has entered
into an agreement for a business combination; or (b) has consummated a
business combination, and (c) the Company is no longer considered a blank
check company. Until such time as this occurs, the Company will not
register any additional securities. Currently, there is no secondary
market for trading of the Company's securities and there can be no
assurance that one will develop in the future. Notwithstanding the
foregoing, issuance of additional securities and their potential sale into
any trading market which may develop in the Company's securities may
depress the market value of the Company's securities in the future if such
a market develops. See Item 1, SHARES ELIGIBLE FOR FUTURE SALE.
While the terms of a business transaction which the Company might
deem acceptable cannot be predicted, it is expected that the parties to
such business transaction will desire to avoid the creation of a taxable
event and will therefore insist on structuring the acquisition as a "tax-
free" reorganization under Sections 351 or 368 of the Internal Revenue Code
of 1986, as amended (the "Code"). While management of the Company may try
to accomodate this insistence, there can be no assurance that a particular
acquisition or business combination can be structured as a tax-free
reorganization, which might make more difficult, if not impossible, certain
other desirable business combinations.
With respect to any merger or acquisition negotiations with a target
company, management expects to focus on the percentage of the Company which
target company shareholders would acquire in exchange for their
shareholdings in or the assets of the target company. Depending upon,
among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a substantially lesser
percentage ownership interest in the Company following any merger,
acquisition or other business combination. The percentage of ownership may
be subject to significant dilution in the event the Company acquires a
target company with substantial assets. Any merger, acquisition or
business combination effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the
Company's shareholders prior to consummation of such business combination.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate agreements. Although the terms of
such agreements cannot be predicted, generally such agreements will require
certain representations and warranties of the parties thereto, specify
certain events of default, detail the terms of closing, identify conditions
which must be satisfied by the parties prior to and after such closing,
outline the manner of paying costs and expenses of the transaction,
including costs associated with the Company's attorneys and accountants,
and include various other terms.
Currently, it is management's intention that the Company not acquire
or merge with any entity unless management believes the entity can provide
audited financial statements at or within a reasonable period after closing
of the proposed transaction. The Company is subject to all of the
reporting requirements imposed by the Exchange Act. Included in these
requirements is the duty of the Company to file audited financial
statements as part of or within 60 days following its Form 8-K to be filed
with the Securities and Exchange Commission upon consummation of a merger,
acquisition or other business combination, as well as the Company's audited
financial statements included in its annual report on Form 10-K (or 10-KSB,
as applicable). If such audited financial statements are not available at
closing, or within the time parameters necessary to insure the Company's
compliance with the requirements of the Exchange Act, or if the audited
financial statements provided do not conform to the representations made by
the target company, the closing documents may provide that the proposed
transaction will be voidable at the discretion of the current management of
the Company.
TransGlobal Financial Corporation, the principal shareholder of the
Company, has agreed that it will advance to the Company reasonable
additional funds, which the Company needs for operating capital and for
costs and expenses in connection with searching for or consummating an
acquisition or merger. Such advances will be made pursuant to customary
debt instruments and security documentation, provided that TransGlobal does
not anticipate repayment unless the owners of the business which the
Company acquires or merges with agree to repay all or a portion of such
advances. Although TransGlobal has reserved the right to review each
request from the Company on a case by case basis, there is no minimum or
maximum amount that TransGlobal Financial Corporation will advance to the
Company. The Company will not borrow any funds to make any payments to the
Company's promoters, management or their affiliates or associates.
The Board of Directors has passed a resolution, which contains a
policy that the Company will not seek an acquisition, merger or other
business combination with any entity in which the Company's officer,
director, and shareholders or any affiliate or associate serves as an
officer or director or holds any ownership interest in excess of 5% of the
outstanding equity or voting rights.
COMPETITION
The Company will remain an insignificant participant among firms that
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's extremely limited financial resources
and limited management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's competitors.
ITEM 3. DESCRIPTION OF PROPERTY
Currently, the Company has no properties and has no agreements to
acquire any properties. The Company currently uses the offices of
TransGlobal Financial Corporation at no cost to the Company. TransGlobal
Financial Corporation has agreed to continue this arrangement until the
Company completes an acquisition, merger or other business combination.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of April 28, 1999, the number of
shares and percentage of all outstanding shares owned by each person known
by the Company to be the beneficial owner of five percent or more of the
Company's Common Stock, all directors individually and all directors and
officers of the Company as a group. Except as noted, each person has sole
voting and investment power with respect to the shares shown.
<TABLE>
<CAPTION>
Amount of
Name and Address Beneficial Percentage
of Beneficial Owner Ownership of Class
------------------- ---------- ----------
<S> <C> <C>
TransGlobal Financial Corporation(1)(2) 4,250,000 85%
1800 Century Park East
Suite 600
Los Angeles, CA 90067
Mike M. Mustafoglu (2) 750,000 15%
1800 Century Park East
Suite 600
Los Angeles, CA 90067
Mike M. Mustafoglu (2) 5,000,000 100%
1800 Century Park East
Suite 600
Los Angeles, CA 90067
All Executive Officers and
Directors as a Group (1 Person) 5,000,000 100%
</TABLE>
(1) TransGlobal Financial Corporation is an affiliate of Mike M.
Mustafoglu, the person who incorporated of the Company under the laws of
Delaware and prepared this registration statement. Mike M. Mustafoglu is
the sole shareholder of TransGlobal Financial Corporation. TransGlobal
Financial Corporation provides services for Mike M. Mustafoglu,
particularly in regard to locating private companies that may wish to go
public, and has agreed to act as an initial shareholder in certain
companies to be formed by Mike M. Mustafoglu. Since TransGlobal Financial
Corporation has fewer than 100 shareholders and is not making and does not
intend to make a public offering of its securities, management believes
that TransGlobal Financial Corporation is not deemed to be an investment
company by virtue of an exemption provided under the Investment Company Act
of 1940, as amended.
(2) Mike M. Mustafoglu owns 100% of TransGlobal Financial
corporation and is considered the beneficial owner of the shares of common
stock of the Company owned by TransGlobal.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The Company has one director and officer as follows:
Name Age Positions and Offices Held
---- --- --------------------------
Mike M. Mustafoglu 49 Director, President, Secretary,
There are no agreements or understandings for the sole officer and
director to resign at the request of another person and the above-named
officer and director is not acting on behalf of nor will act at the
direction of any other person, provided that the sole officer and director
may agree to resign in connection with the consummation of a business
combination with another entity.
Set forth below is a description of the sole director and officer of
the Company, all positions and offices with the Company that he has held,
the period during which he has such offices, and his business experience
during at least the last five years:
Mike M. Mustafoglu received a Bachelor of Science in Electrical
Engineering from Wichita State University in 1974 and a Master of Business
Administration in Finance from the University of Houston in 1978. From
1974-1977, Mr. Mustafoglu was a geophysicist with Shell Oil Company. From
1977-1984, Mr. Mustafoglu was employed by Getty Oil Company of Los Angeles
in various corporate and financial planning capacities. From 1984-1992, Mr.
Mustafoglu served in various executive management positions for companies
affiliated with a privately-held entity known as Oxbow Corporation. Oxbow
group companies were engaged in venture investing, energy production,
metals and coal trading, industrial production, publishing and technology.
During this time, Mr. Mustafoglu was vice-president of Oxbow Resources, and
President of the following companies: Oxbow Energy, Inc., Pacific Basin
Transportation, Inc., Oxbow Hydrocarbons, Inc. and PetroPort Terminal
Corporation. From 1991 to date, Mr. Mustafoglu has been president of
TransGlobal Financial Corporation, specializing in consulting and financial
planning for emerging growth companies. Mr. Mustafoglu is a past member of
the Board of Directors of ECO2, Inc. (NASDAQ SmallCap; 1992-1995), Serv-
Tech, Inc. (NASDAQ NMS; 1995-1996), Corgenix Medical Corporation (OTC BB)
in 1998 and U.S. Medical Group, Inc. (OTC BB; 1996-1999). He currently
serves as the sole director and officer of Financial Depot Online, Inc.
(OTC BB) and has been in that position since 1996.
PREVIOUS BLANK CHECK COMPANIES
Previously the officers, directors or control persons of the Company
have not been involved in any blank check companies.
CURRENT BLANK CHECK COMPANIES
Mr. Mustafoglu is the president, sole director and a beneficial
shareholder of Girne Acquisition Corporation and Kyrenia Acquisition
Corporation. Each of these companies has filed a registration statement on
Form 10-SB under the Exchange Act, which as of the date of this
Registration Statement has not been declared effective. The initial
business purpose of each of these companies is to engage in a merger or
acquisition with an unidentified company or companies and each will be
classified as a blank check company until completion of a business
acquisition.
Mr. Mustafoglu anticipates being involved with additional blank check
companies registering under the Securities Act or under the Exchange Act.
RECENT TRANSACTIONS BY BLANK CHECK COMPANIES
None.
CONFLICTS OF INTEREST
The Company's officer and director has organized and expects to
organize other companies of a similar nature and purpose as the Company.
Consequently, there are potential inherent conflicts of interest in acting
as an officer and director of the Company. Insofar as the officer and
director is engaged in other business activities, management anticipates
that it will devote only a minor amount of time to the Company's affairs.
The Company does not have a right of first refusal pertaining to
opportunities that come to management's attention insofar as such
opportunities may relate to the Company's proposed business operations, and
the Company will compete for such opportunities with other blank check
companies that the Company's sole officer and director has incorporated.
A conflict may arise in the event that another blank check company
with which management is affiliated is formed and actively seeks a target
company. It is anticipated that target companies will be located for the
Company and other blank check companies in chronological order of the date
of formation of such blank check companies or by lot. However, any blank
check companies that may be formed may differ from the Company in certain
characteristics such as place of incorporation, number of shares and
shareholders, working capital, types of authorized securities, or other
matters. It may be that a target company may be more suitable for or may
prefer a certain blank check company formed after the Company. In such
case, a business combination might be negotiated on behalf of the more
suitable or preferred blank check company regardless of date of formation
or choice by lot. Mr. Mustafoglu will be responsible for seeking,
evaluating, negotiating and consummating a business combination with a
target company that may result in terms providing benefits to Mr.
Mustafoglu.
Mr. Mustafoglu is the president of TransGlobal Financial Corporation,
a consulting firm located in Los Angeles, CA. As such, demands may be
placed on the time of Mr. Mustafoglu, which will detract from the amount of
time he is able to devote to the Company. Currently, Mr. Mustafoglu
intends to devote as much time to the activities of the Company as may be
required to accomplish its objectives up to a maximum of ten (10) hours per
week under the terms of an employment agreement entered into with the
Company. Should such a conflict arise, however, there can be no assurance
that Mr. Mustafoglu would not attend to other matters prior to those of the
Company. Mr. Mustafoglu projects that initially up to ten hours per month
of his time may be spent locating a target company which amount of time
would increase if the analysis of, and negotiations and consummation of a
business combination with, a target company are conducted.
Mr. Mustafoglu owns 100% of TransGlobal Financial Corporation which,
in turn, owns 4,250,000 shares of common stock of the Company. Mr.
Mustafoglu personally owns 750,000 shares of the Company's common stock
issued to him under Rule 701 promulgated under the Act. Management of the
Company does not presently intend to issue any other securities, or rights
to purchase securities, of the Company to management or promoters, or their
affiliates or associates, prior to the completion of a business
combination. At the time of a business combination, management expects
that some or all of the shares of Common Stock owned by TransGlobal
Financial Corporation and the shares of Common Stock owned by Mike M.
Mustafoglu will be purchased or acquired by the target company or its
shareholders. The amount of Common Stock sold or retained by TransGlobal
Financial Corporation or Mike M. Mustafoglu, if any, cannot be determined
at this time.
The terms of business combination may include provisions requesting
that Mr. Mustafoglu remain a director or officer of the Company and/or that
consulting firms owned by Mr. Mustafoglu be retained to provide services to
the Company. The terms of a business combination may provide for a payment
by cash or other consideration to TransGlobal Financial Corporation and/or
Mr. Mustafoglu for the purchase of all or part of their common stock of the
Company by a target company. Mr. Mustafoglu would directly benefit from
such employment, engagement or payment. Such benefits may influence Mr.
Mustafoglu's choice of a target company.
The Company may agree to pay finder's fees, as appropriate and
allowed, to unaffiliated persons who refer a target company to the Company
where that reference results in a business combination. The amount of any
finder's fee will be subject to negotiation, and cannot be estimated at
this time. No finder's fee of any kind will be paid to management or
promoters of the Company or to their associates or affiliates. No loans of
any type have, or will be, made to management or promoters of the Company
or to any of their associates or affiliates, other than advancements that
may be made by TransGlobal Financial Corporation to the Company.
The Company's officer and director, its promoter and their affiliates
or associates have not had any negotiations with and there are no present
arrangements or understandings with any representatives of the owners of
any business or company regarding the possibility of a business combination
with the Company.
The Company will not enter into a business combination, or acquire
any assets of any kind for its securities, in which management or promoters
of the Company or any affiliates or associates have any interest, direct or
indirect, in excess of 5% of the target company's outstanding equity or
voting interests.
Management has adopted certain policies involving possible conflicts
of interest, including prohibiting any of the following transactions
involving management, promoters, shareholders or their affiliates:
(i) Any lending by the Company to such persons;
(ii) The issuance of any additional securities to such
persons prior to a business combination;
(iii) The entering into any business combination
or acquisition of assets in which such
persons have any interest, direct or
indirect, in excess of 5% of the target company's outstanding
equity or voting interests; or
(iv) The payment of any finder's fees to such persons.
These policies have been adopted by the Board of Directors of the
Company, and any changes in these provisions require the approval of the
Board of Directors. Currently, management does not intend to propose any
such action and does not anticipate that any such action will occur.
There are no binding guidelines or procedures for resolving potential
conflicts of interest between Mike M. Mustafoglu, TransGlobal Financial
Corporation and the Company, or between the Company and any other blank
check company Mr. Mustafoglu controls. Failure by management to resolve
conflicts of interest in favor of the Company could result in liability of
management to the Company. However, any attempt by shareholders to enforce
this liability of management to the Company would most likely be
prohibitively expensive and time consuming.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934, management
believes the Company will not be subject to regulation under the Investment
Company Act of 1940 insofar as the Company will not be engaged in the
business of investing or trading in securities. In the event the Company
engages in business combinations which result in the Company holding
passive investment interests in a number of entities the Company could be
subject to regulation under the Investment Company Act of 1940. In such
event, the Company would be required to register as an investment company
and could be expected to incur significant registration and compliance
costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under
the Investment Company Act of 1940. Any violation of the Investment
Company Act would subject the Company and its operations to material
adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION.
Currently, except with respect to the shares of the Company's common
stock issued to Mr. Mustafoglu under his employment agreement pursuant to
Rule 701, the Company's sole officer and director does not receive any
compensation for his services rendered to the Company, has not received
such compensation in the past, and is not accruing any compensation
pursuant to any agreement with the Company.
The sole officer and director of the Company will not receive any
finder's fee, either directly or indirectly, as a result of his efforts to
implement the Company's business plan outlined in this Registration
Statement. However, the officer and director of the Company anticipates
receiving benefits as a beneficial owner of shares of the Company and may
receive a finder's fee or other compensation from a target company with
which the Company consummates a business combination. See "ITEM 4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for the
benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has issued a total of 5,000,000 shares of Common
Stock to the following persons for a total of $500 in cash or other
consideration:
<TABLE>
<CAPTION>
Name Number of Total Shares Consideration
---- ---------------------- -------------
<S> <C> <C>
TransGlobal Financial
Corporation 4,250,000 $425
Mike M. Mustafoglu 750,000 $75
</TABLE>
The proposed business activities described herein classify the
Company as a blank check company. See "GLOSSARY". The Securities and
Exchange Commission and many states have enacted statutes, rules and
regulations limiting the sale of securities of blank check companies.
Management does not intend to undertake any efforts to cause a market to
develop in the Company's securities until such time as the Company has
successfully implemented its business plan described herein and is thereby
no longer deemed a blank check company. Accordingly, the shareholders of
the Company have executed and delivered a "lock-up" letter agreement,
affirming that such shareholders shall not sell their shares of the
Company's common stock except in connection with or following completion of
a merger, acquisition or other business combination resulting in the
Company no longer being classified as a blank check company. The
shareholders have deposited their stock certificates with the Company,
which currently does not intend to release the certificates except in
connection with or following the completion of a merger, acquisition or
business combination.
ITEM 8. DESCRIPTION OF SECURITIES.
The authorized capital stock of the Company consists of 100,000,000
shares of Common Stock, par value $.0001 per share, and 20,000,000 shares
of Preferred Stock, par value $.0001 per share. The following statements
relating to the capital stock set forth the material terms of the Company's
securities; however, reference is made to the more detailed provisions of,
and such statements are qualified in their entirety by reference to, the
Certificate of Incorporation and the By-laws of the Company, copies of
which are filed as exhibits to this registration statement.
COMMON STOCK
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders of the Company.
Holders of common stock do not have cumulative voting rights. Holders of
common stock are entitled to share ratably in dividends, if any, as, when
and if such dividends are 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 the Company, 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.
Holders of common stock have no preemptive rights to purchase the
Company's common stock. There are no conversion or redemption rights,
liquidation preferences or sinking fund provisions with respect to the
Company's common stock.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
20,000,000 shares of preferred stock, $.0001 par value per share, of which
no shares have been issued and are currently outstanding. The Board of
Directors is authorized to provide for the issuance of 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
and liquidation rights. Any future issuance of preferred stock may have
the effect of delaying, deferring or preventing a change in control of the
Company without further action by the shareholders and may adversely affect
the voting and other rights of the holders of common stock. At present,
the Company has no plans to issue any preferred stock or adopt any series,
preferences or other classification of preferred stock.
The issuance of shares of Preferred Stock, or the issuance of rights
to purchase such shares, could be used to discourage an unsolicited tender
offer or other unsolicited acquisition proposal. For instance, the
issuance of a series of Preferred Stock might impede a business combination
by including class voting rights that would enable the holder to block such
a transaction, or frustrate a business combination by including voting
rights that would provide a required percentage vote of the stockholders.
In addition, under certain circumstances, the issuance of Preferred Stock
could dilute or otherwise adversely affect the voting power of the holders
of the Common Stock. Although the Board of Directors is required to make
any determination to issue such stock based on its judgment as to the best
interests of the stockholders of the Company, the Board of Directors could
act in a manner that would discourage an acquisition attempt or other
transaction that some, or a majority, of the stockholders might believe to
be in their best interests or in which stockholders might receive a premium
for their stock over the then market price of such stock, if any. The Board
of Directors does not intend to seek stockholder approval prior to any
issuance of currently authorized stock, unless otherwise required by law or
stock exchange rules. The Company has no present plans to issue any
Preferred Stock, although there can be no assurance that the Company will
not issue any Preferred Stock in the future.
DIVIDENDS
The payment of dividends, if any, will be made within the discretion of the
Company's Board of Directors and will be contingent upon the Company's
revenues and earnings, if any, capital requirements and financial
conditions. The Company presently intends to retain all earnings, if any,
for use in its business operations and accordingly, the Board of Directors
does not anticipate declaring any dividends prior to consummating a
business combination, subsequent to which the payment of dividends, if any,
will be made by the Board of Directors of the combined entity, in its sole
discretion.
GLOSSARY
"Blank Check" Company As defined in Section 7(b)(3) of the
Securities Act, a "blank check" company is a
development stage company that has no
specific business plan or purpose or has
indicated that its business plan is to
engage in a merger or acquisition with an
unidentified company or companies and is
issuing "penny stock" securities as defined
in Rule 3a51-1 of the Exchange Act.
"The Company" Lapitos Acquisition Corporation, the company
whose common stock is the subject of this
registration statement.
"Exchange Act" The Securities Exchange Act of 1934, as
amended.
"Penny Stock" A Penny Stock Security, as defined in Rule 3a51-1
of the Exchange Act, is any equity security other
than a security (i) that is a reported security
(ii) that is issued by an investment company (iii)
that is a put or call issued by the Option Clearing
Corporation (iv) that has a price of $5.00 or more
(except for purposes of Rule 419 of the Securities
Act) (v) that is registered on a national
securities exchange (vi) that is authorized for
quotation on the NASDAQ Stock Market, unless other
provisions of Rule 3a51-1 are not satisfied, or
(vii) that is issued by an issuer with (a) net
tangible assets in excess of $2,000,000, if in
continuous operation for more than three years or
$5,000,000 if in operation for less than three
years or (b) average revenue of at least $6,000,000
for the last three years.
"TransGlobal Financial
Corporation" TransGlobal Financial Corporation, a private
company owned by management of the Company.
TransGlobal Financial Corporation provides
services for the Company, particularly in regard to
locating private companies that may wish to
commence reporting status under the Exchange Act,
and has agreed to act as an initial shareholder in
certain companies formed by Mike M. Mustafoglu.
"Securities Act" The Securities Act of 1933, as amended.
"Small Business Issuer" As defined in Rule 12b-2 of the Exchange Act, a
"Small Business Issuer" is an entity (i) which has
revenues of less than $25,000,000 (ii) whose public
float (the outstanding securities not held by
affiliates) has a value of less than $25,000,000
(iii) which is a United States or Canadian issuer
(iv) which is not an Investment Company and (v) if
a majority-owned subsidiary, whose parent
corporation is also a small business issuer.
PART II
ITEM 1. MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET PRICE. There is no secondary trading market for the
Company's Common Stock at present and there has been no trading market to
date. There is no assurance that a trading market will ever develop or, if
such a market does develop, that it will continue to function and be
stable.
The Securities and Exchange Commission has adopted Rule 15g-9 which
defines a "penny stock" in the same manner as Rule 3a-51-1. Prior to any
transaction involving a penny stock, unless exempt, the rules require: (i)
that a broker or dealer approve a person's account for transactions in
penny stocks and (ii) the broker or dealer receive from the investor a
written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and objectives of
the person; and (ii) make a reasonable determination that the transactions
in penny stocks are suitable for that person and that the person has
sufficient knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker or dealer
must also deliver, prior to any transaction in a penny stock, a disclosure
schedule prepared in accordance with requirements of the Commission
relating to the penny stock market, which, in highlight form (i) sets forth
the basis on which the broker or dealer made the suitability determination
and certain other information related to the disclosure schedule, the
suitability of the investment and the investors rights under the Rule, and
(ii) confirms that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. The broker must also
disclose to the investor the risks of investing in penny stocks in both
public offerings and in secondary trading, and the commissions payable to
both the broker-dealer and the registered representative, current
quotations for the securities and the rights and remedies available to an
investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the
penny stock held in the account and information on the limited trading
market for penny stocks. The foregoing discussion is a summary only and
investors should refer to the complete text of the penny stock rules, with
respect to which this summary is qualified in its entirety.
In order to qualify for listing on the NASDAQ SmallCap Market (R), a
company must have at least (i) net tangible assets of $4,000,000 or market
capitalization of $50,000,000 or net income for two of the last three years
of $750,000; (ii) public float of 1,000,000 shares with a market value of
$5,000,000; (iii) a bid price of $4.00; (iv) three market makers; (v) 300
shareholders and (vi) an operating history of one year or, if less than one
year, $50,000,000 in market capitalization. For continued listing on the
NASDAQ SmallCap Market (R), a company must have at least (i) net tangible
assets of $2,000,000 or market capitalization of $35,000,000 or net income
for two of the last three years of $500,000; (ii) a public float of 500,000
shares with a market value of $1,000,000; (iii) a bid price of $1.00; (iv)
two market makers; and (v) 300 shareholders.
If, after consummating a business combination, the Company does not
meet the qualifications for listing on the NASDAQ SmallCap Market (R), the
Company's securities may be traded in the over-the-counter ("OTC") market.
The OTC market 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 are offered by one or more broker-
dealers rather than the "specialist" common to stock exchanges. The
Company may apply for listing on the NASD OTC Bulletin Board or may offer
its securities in what are commonly referred to as the "pink sheets" of the
National Quotation Bureau, Inc. To qualify for listing 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 the company for listing on the Bulletin Board.
If the Company is unable initially to satisfy the requirements for
quotation on the NASDAQ SmallCap Market (R) or becomes unable to satisfy
the requirements for continued quotation thereon, and trading, if any, is
conducted in the OTC market, a shareholder may find it more difficult to
dispose of, or to obtain accurate quotations as to the market value of, the
Company's securities.
(B) HOLDERS. Currently, there are two holders of the Company's
Common Stock. On February 28, 1999, the Company issued 5,000,000 of its
Common Shares to these shareholders for cash or other consideration valued
at $.0001 per share for a total price of $500. The issued and outstanding
shares of the Company's Common Stock were issued in accordance with the
exemptions from registration afforded by Sections 3(b) and 4(2) of the
Securities Act of 1933 and Rules 506 and 701 promulgated thereunder.
(C) DIVIDENDS. The Company has not paid any dividends to date, and
has no plans to do so in the immediate future.
ITEM 2. LEGAL PROCEEDINGS.
There is no litigation pending or threatened by or against the
Company.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and there
are no disagreements with its accountants over matters of financial
disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Company has sold securities which
were not registered pursuant to exemptions under the Securities Act as
follows:
<TABLE>
<CAPTION>
Number of
Date Name Shares Consideration
---- ---- --------- -------------
<S> <C> <C> <C>
February 28, 1999 TransGlobal Financial 4,250,000 $425
Corporation (1)
February 28, 1999 Mike M. Mustafoglu (2) 750,000 $75
</TABLE>
------------
(1) Mr. Mustafoglu, the president and sole director of the
Company, is the sole director and shareholder of TransGlobal Financial
Corporation and is therefore considered to be the beneficial owner of the
common stock of the Company issued to TransGlobal Financial Corporation.
With respect to the sales made to TransGlobal Financial Corporation, the
Company relied on Section 4(2) of the Securities Act of 1933, as amended
and Rule 506 promulgated thereunder.
(2) With respect to the sales made to Mike M. Mustafoglu, the Company
relied upon Section 3(b) of the Securities Act of 1933, as amended and Rule
701 promulgated thereunder.
The shareholders of the Company have executed and delivered a "lock-
up" letter agreement, which provides that such shareholders shall not sell
the securities except in connection with or following the consummation of a
merger, acquisition or other business combination. Further, each
shareholder has placed its stock certificates with the Company until such
time. Any liquidation by the current shareholders after the release from
the "lock-up" selling limitation period may have a depressive effect upon
the trading price of the Company's securities in any future market that may
develop, of which there can be no assurance.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees and agents,
against expenses incurred in any action, suit or proceeding. The By-laws
of the Company provide for indemnification of directors and officers to the
fullest extent permitted by the General Corporation Law of the State of
Delaware.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY 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.
<PAGE>
PART F/S
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS
JUNE 30, 1999
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
LAPITOS ACQUISITION CORPORATION
F-1
<PAGE>
LAPITOS ACQUISITION CORPORATION
Index to Financial Statements
------------------------------------------------------------------
Page
Report of Independent Certified Public Accountants F-3
Financial Statements
Balance Sheet at June 30, 1999 F-4
Statements of Operations for the period
February 28, 1999 (date of inception)
through June 30, 1999 F-5
Statements of Stockholders' Equity for the period
February 28, 1999 (date of inception)
through June 30,1999 F-6
Statements of Cash Flows for the period
February 28, 1999 (date of inception)
through June 30, 1999 F-7
Notes to Financial Statements F-8 to F-9
F-2
<PAGE>
STEFANOU & COMPANY, LLP
Certified Public Accountants
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
--------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Lapitos Acquisition Corporation
Los Angeles, California
We have audited the accompanying balance sheet of Lapitos Acquisition
Corporation, (a development stage company) as of June 30, 1999 and the
related statements of operations, stockholders' equity, and cash flow for
the period February 28, 1999 (date of inception) through June 30, 1999.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on the financial
statements based upon 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 our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Lapitos
Acquisition Corporation (a development stage company) at June 30, 1999 and
the results of its operations and its cash flow for the period February 28,
1999 (date of inception) through June 30, 1999 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As shown in the financial
statements, the Company has incurred net losses since its inception. This
condition raises substantial doubt about the Company's ability to continue
as a going concern. Management's plans in regard to this matter is
described in Note C. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Stefanou & Company, LLP
---------------------------
Stefanou & Company, LLP
McLean, Virginia
August 19, 1999
F-3
<PAGE>
LAPITOS ACQUISITION CORPORATION
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash $ 500
Other Assets:
Organization costs, less accumulated amortization of $5 78
------
$ 578
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Advance from related party (Note B) $ 333
------
333
Stockholders' equity:
Preferred stock, par value, $.0001 per share;
authorized, 20,000,000 shares; none issued -
Common stock, par value, $.0001 per share; authorized,
100,000,000 shares; issued 5,000,000 shares 500
Deficit accumulated during development stage (255)
------
245
------
$ 578
======
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
LAPITOS ACQUISITION CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period February 28, 1999 (date of inception) through June 30, 1999
<TABLE>
<S> <C>
Cost and expenses
Professional fee $ 250
Amortization 5
------
Net loss $ 255
======
Loss per common share (basic and assuming dilution) $ 0.00
======
Weighted average common shares outstanding 5,000,000
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
LAPITOS ACQUISITION CORPORATION
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period February 28, 1999 (date of inception) through June 30, 1999
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in- Accumulated
Shares Amount Capital Deficit Total
-------- ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of common
stock for cash 5,000,000 $500 - - $ 500
Net loss - - - (255) (255)
--------- ---- ---- ----- -----
Balance at
June 30, 1999 5,000,000 $500 $ - $(255) $ 245
========= ==== ==== ===== =====
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
LAPITOS ACQUISITION CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOW
For the period February 28, 1999 (date of inception) through June 30, 1999
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (255)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization 5
Changes in assets and liabilities:
Advance from related party 333
------
Net cash provided by operating activities 83
Cash flows from investing activities:
Organization costs (83)
------
Net cash used in investing activities (83)
Cash flows from inverting activities:
Issuance of common stock 500
------
Net cash provided by financing activities 500
Net increase in cash
Cash - beginning of period 500
Cash - end of period -
------
$ 500
======
</TABLE>
See accompanying notes to financial statements
F-7
<PAGE>
LAPITOS ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE A - SUMMARY OF ACCOUNTING POLICIES
A summary of the significant accounting policies applied in the
preparation of the accompanying financial statement follows.
BUSINESS OPERATIONS
Lapitos Acquisition Corporation (the "Company") was incorporated in
the state of Delaware on February 28, 1999. The Company is in the
development stage and its efforts have been principally devoted to raising
capital. To date, the Company has generated no sales revenues, has
incurred expenses and has sustained losses. Consequently, its operations
are subject to all the risks inherent in the establishment of a new
business enterprise.
INCOME TAXES
Income taxes are provided based on the liability method for financial
reporting purposes in accordance with the provisions of Statements of
Financial Standards No. 109, "Accounting for Income Taxes". Deferred and
prepaid taxes will be provided for on items which are recognized in
different periods for financial and tax reporting purposes.
CASH EQUIVALENTS
For purposes of the accompanying financial statement, the Company
considers all highly liquid debt instruments purchased with a maturity date
of three months or less to be cash equivalents.
EARNINGS PER SHARE
Earnings per common share will be based upon the weighted average
number of shares outstanding.
ORGANIZATION COSTS
Organization costs are being amortized over five years.
USE OF ESTIMATES
The preparation of financial statement in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE B - RELATED PARTIES
The Company's president and sole director is also the sole shareholder
of entities which own 100% of the Company's issued and outstanding common
stock. These entities have advanced $333 to the Company as of June 30,
1999.
F-8
<PAGE>
LAPITOS ACQUISITION CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999
NOTE C - GOING CONCERN
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in
the accompanying financial statements during the period February 28, 1999
(date of inception) through June 30, 1999, the Company incurred a loss of
$245. This factor among others may indicate that the Company will be
unable to continue as a going concern for a reasonable period of time.
The Company's existence is dependent upon management's ability to
develop profitable operations. Management is devoting substantially all of
its efforts to establishing a new business, however the planned principal
operations have not commenced. The accompanying statements do not include
any adjustments that might result should the Company be unable to continue
as a going concern.
F-9
<PAGE>
PART III
ITEM 1. INDEX TO EXHIBITS.
EXHIBIT NUMBER DESCRIPTION
(3) Articles of Incorporation and By-laws:
3.1** Certificate of Incorporation
3.2** By-Laws
(10) Material Contracts
10.1** Employment Agreement with Mike M. Mustafoglu
Dated February 3, 1999
10.2** Lock-Up Agreement with TransGlobal Financial
Corporation Dated February 22, 1999
10.3** Lock-Up Agreement with Mike M. Mustafoglu
Dated February 22, 1999
(23) Consents of Experts
23.1** Consent of Certified Public Accountants
(27)** Financial Data Schedule
-----------------
** Filed Herewith
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant caused this registration statement to be signed on its
behalf by the undersigned thereunto duly authorized.
LAPITOS ACQUISITION CORPORATION
By: /s/ Mike M. Mustafoglu
Sole Director, President
September 15, 1999
CERTIFICATE OF INCORPORATION OF LAPITOS ACQUISITION CORPORATION
ARTICLE I
The name of the Corporation is Lapitos Acquisition Corporation.
ARTICLE II
The period of duration of the Corporation is perpetual.
ARTICLE III
The purpose for which this Corporation is organized is to engage in any
lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
ARTICLE IV
The total number of shares of stock which the Corporation has authority
to issue is 100,000,000 shares of Common Stock with $.0001 par value of per
share. In addition, the Corporation's Certificate of Incorporation authorizes
the issuance of 20,000,000 shares of Preferred Stock, $.0001 par value per
share. The Board of Directors is authorized to provide for the issuance of
the 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.
ARTICLE V
The Registered Office of the Corporation in the State of Delaware is to
be located at 9 east Loockerman Street, #214, Dover, Delaware 19901, in the
County of Kent, and the name of the registered agent in charge thereof is
National Registered Agents, Inc.
ARTICLE IV
The name and mailing address of the Incorporator of the Corporation is
as follows.
Philip K. Akalp
26500 West Agoura Road, Suite 361
Calabasas, CA 91302
I, the Undersigned, for the purpose of forming a corporation under the
laws of the State of Delaware, do make, file and record this Certificate, and
do certify that the facts herein stated are true, and I have accordingly
hereunto set my hand this 2nd day of February, 1999. Philip K. Akalp,
Incorporator.
BY-LAWS
Of
Lapitos Acquisition Corporation
OFFICES
ARTICLE I.
Section 1.
Office. The office of the corporation will be located at 1800 Century Park
East, Suite 600, Los Angeles, California 90067.
Section 2.
Additional Offices. The corporation may also have offices and places of
business at such other places as the Board of Directors may from time to time
determine or the business of the corporation may require.
MEETINGS OF SHAREHOLDERS
ARTICLE II.
SECTION 1.
Place of Meetings. The annual meeting of the shareholders for the election of
directors and all special meetings of shareholders for that or for any other
purpose may be held in such place within or without the State of California
as shall be stated in the notice of the meeting, or in a duly executed waiver
of notice thereof.
SECTION 2.
Date of Annual Meetings. The annual meeting of shareholders shall be held on
April 1 of each year, if not a legal holiday, and if a legal holiday then on
the next business day following, at which they shall elect a Board of Directors
and transact such other business as may properly be brought before the meeting.
SECTION 3.
Notice of Annual Meeting. Written notice of the annual meeting, the place, date
and hour of the meeting shall be given personally or by mail to each shareholder
entitled to vote thereat, not less than fifteen, nor more than sixty days prior
to the meeting.
SECTION 4.
Special Meetings. Special meetings of the shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the Chairman of the Board, if any, the
President or the Board of Directors, and shall be called by the President or
the Secretary at the request in writing of a majority of the Board of
Directors, or at the request in writing of shareholders owning at least sixty-
seven percent in amount of the shares of stock of the corporation issued and
out-standing and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
SECTION 5.
Notice of Special Meeting. Written notice of a special meeting of shareholders,
stating the place, date and hour of the meeting, the purpose or purposes for
which the meeting is called and at whose direction it is being issued, shall
be given personally by mail to each shareholder entitled to vote thereat, not
less than fifteen nor more than sixty days prior to the meeting.
SECTION 6.
Quorum. Except at otherwise provided by the Certificate of Incorporation, the
holders of a majority of the shares of stock of the corporation issued and
outstanding and entitled to vote thereat, present in person or represented
by proxy, shall be requisite for and shall constitute a quorum at all meetings
of the shareholders for the transaction of business. If, however, such
quorum shall not be perfect or represented at any meeting of the shareholders,
the shareholders entitled to vote thereat, present in person or represented
by proxy, shall have power to adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business as may be transacted which might have
been transacted at the meeting as originally noticed.
SECTION 7.
Presiding Officer; Order of Business. Meetings of the stockholders shall be
presided over by the Chairman of the Board, or, if he or she is not present,
by the Chief Executive Officer, or if he or she is not present, by the
President, or if he or she is not present, by a Vice-President, or if neither
the Chairman of the Board nor the Chief Executive Officer nor the President
or a Vice-President is present, by a chairman to be chosen by a majority of
the shareholders entitled to vote at the meeting who are present in person or
by proxy. The Secretary of the Corporation, or, in his or her absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present, the shareholders present
at the meeting shall choose any person present to act as secretary of the
meeting.
The order of business shall be as follows:
i. Call to order of meeting
ii. Proof of notice of meeting
iii. Reading of minutes of last previous annual meeting
iv. Reports of officers
v. Reports of committees
vi. Election of directors
vii. Miscellaneous business
SECTION 8.
Voting. At any meeting of the shareholders every shareholder having the right to
vote shall be entitled to vote in person, or by proxy appointed by an instrument
in writing subscribed by such shareholder. Except as otherwise provided by law
or the Certificate of Incorporation, each shareholder of record shall be
entitled to one vote for every share of such stock standing in his name on
the books of the corporation. All elections shall be determined by a
plurality vote, and except as otherwise provided by law or the Certificate
of Incorporation, all other matters shall be determined by vote of a
majority of the shares present or represented at such meeting and voting on
such questions.
SECTION 9.
Proxies. Every proxy must be executed in writing by the shareholder or by his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date of its execution unless it shall have specified therein
its duration. Every proxy shall be revocable at the pleasure of the person
executing it or of his personal representatives or assigns, except in those
cases where an irrevocable proxy is permitted by law.
SECTION 10.
Consents. Whenever by any provision of statute or of the Certificate of
Incorporation or of these by-laws, the vote of shareholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action, the meeting and vote of shareholders may be dispensed with, if all
the shareholders who would have been entitled to vote upon the action if such
meeting were held shall consent in writing to such corporate action being
taken.
SECTION 11.
List of Shareholders. A complete list of the shareholders of the Corporation
entitled to vote at the ensuing meeting, arranged in alphabetical order, and
showing the address of the number of shares owned by each shareholder shall
be prepared by the Secretary, or other officer of the Corporation having
charge of the Stock Transfer Books. This list shall be kept on file for a
period of at least ten days prior to the meeting at the registered office of
the Corporation in the State of California and shall be subject to inspection
during usual business hours by any shareholder. This list shall also be
available at the meeting and shall be open to inspection by any shareholder
at any time during the meeting. The original Stock Transfer Books shall be
prima facie evidence of which shareholders are entitled to examine the list
or to vote at any meeting of the shareholders.
Failure to comply with the requirements of this Section shall not affect the
validity of any action taken at any meetings of the shareholders.
DIRECTORS
ARTICLE III.
SECTION 1.
Number; Tenure; Removal. The number of directors which shall constitute the
entire board shall be fixed and may be altered by resolution adopted by a
vote of a majority of the entire Board of Directors, or by the shareholders.
Directors shall be elected at the annual meeting of the shareholders, except as
provided in Section 2 of this Article III, and each director shall be elected
to serve until his successor has been elected and has qualified.
Any director may resign at any time. The Board of Directors may, by majority
vote of all directors then in office, remove a director for cause.
SECTION 2.
Vacancies. If any vacancies occur in the Board of Directors by reason of the
death, resignation, retirement, disqualification or removal from office of
any director, or if any new directorships are created, all of the directors
then in office, although less than a quorum, may, by majority vote, choose a
successor or successors, or fill the newly created directorship, and the
directors so chosen shall hold office until the next annual election of
directors and until their successors shall be duly elected and qualified,
unless sooner displaced; provided, however, that if in the event of any such
vacancy, the directors remaining in office shall be unable, by majority vote,
to fill such vacancy within thirty (30) days of the occurrence thereof, the
President or the Secretary may call a special meeting of the shareholders at
which a new Board of Directors shall be elected to serve until the next
annual election of directors and until their successors shall be duly elected
and qualified, unless sooner displaced.
MEETINGS OF THE BOARD
ARTICLE IV.
SECTION 1.
Place. The Board of Directors of the corporation may hold meetings, both
regular and special, either within or without the State of California.
SECTION 2.
First Meetings. The first meeting of each newly elected Board of Directors
shall be held at the same place as and immediately following the annual
meeting of shareholders, and no notice of such meeting shallbe necessary to
the newly elected directors in order legally to constitute the meeting,
provided a quorum shall be present. In the event such meeting is not held at
the time and place so fixed, the meeting may be held at such time and place
as shall be specified in a notice given as hereinafter provided for special
meeting of the Board of Directors, or as shall be specified in a written waiver
signed by all of the directors.
SECTION 3.
Regular Meetings. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
SECTION 4.
Special Meetings. Special meetings of the board may be called by the Chairman
of the Board, if any, or by the President or Vice President on two days'
notice by mail or on one day's notice personally by telephone or by telegram
to each director; special meetings shall be called by the Chairman, President,
Vice President or Secretary in like manner and on like notice on the written
request of two directors.
SECTION 5.
Quorum. At all meetings of the board a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business, and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation.
If a quorum shall not be present at any meeting of the Board of Directors
either in person or by telephone conference call, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 6.
Action. Any action required or permitted to be taken by the Board or any
committee thereof may be taken without a meeting if all of the members of the
Board or committee consent in writing to the adoption of a resolution
authorizing such action. The resolution and written consents thereto by the
members of the Board or committee shall be filed with the minutes of the
proceeds of the Board or committee. Any one or more members of the Board of
Directors or any committee there may participate in a meeting of such board
or committee by means of a conference telephone or similar means of
communications equipment allowing all persons participating to hear each
other at the same time. Participation by such method shall constitute
presence in person at the meeting.
SECTION 7.
Compensation. Each director shall be entitled to receive as compensation for
his services such sum as shall from time to time be fixed by resolution of
the Board, and each director shall be entitled to reimbursement for all
traveling expenses incurred by him in attending any such meeting. Nothing
herein contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 8.
Dividends. Subject always to provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine
whether any, and, if so, what part, of the funds legally available for the
payment of dividends shall be so declared and paid to the shareholders of the
Corporation. The Board of Directors may fix a sum which may be set aside
over and above the paid-in capital of the Corporation for working capital or
as a reserve for any proper purpose, and from time to time may increase,
diminish, and vary this fund in the Board's absolute judgment and discretion.
COMMITTEES OF DIRECTORS
ARTICLE V.
SECTION 1.
Creation. The Board of Directors may, by resolution or resolutions adopted by a
majority of the entire Board, designate one or more committees, each committee
to consist of two or more of the directors, which, to the extent provided in
said resolution or resolutions and within the limitations prescribed by
statute, shall have and may exercise the powers of the Board of Directors
in the management of the business and affairs of the corporation, and may
have power to authorize the seal of the corporation to be affixed to all
papers which may require it.
NOTICES
ARTICLE VI.
SECTION 1.
Form; Delivery. Notices to directors and shareholders shall be in writing and
may be delivered personally or by mail. Notice by mail shall be deemed to be
given at the time when the same shall be deposited in the post office or a
letter box, in a postpaid sealed wrapper, and shall be addressed to directors
or shareholders at their addresses appearing on the records of the
corporation, unless any such director or shareholder shall have filed with
the Secretary of the corporation a written request that notices intended for
him be mailed to some other address, in which case the notice shall be mailed
to the address designated in such request. Notice to directors may also be
given by telephone or by telegram.
SECTION 2.
Waiver. Whenever a notice is required to be given by any statute, the
Certificate of Incorporation or these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to such notice, whether before or
after the time stated thereon, shall be deemed equivalent thereto.
OFFICERS
ARTICLE VII.
SECTION 1.
Officers. The officers of the corporation shall be a President and one or more
Vice Presidents, a Secretary and a Treasurer. Any two or more offices may be
held by the same person, except the offices of President and Secretary,
unless the corporation has only one shareholder who serves as both President
and Secretary. The Board of Directors may also elect a Chairman of the Board
and may elect or appoint such other officers as it may determine.
SECTION 2.
Term of Office; Removal. All officers shall hold office for such term as may
be prescribed by the Board of Directors. Any officer elected or appointed by
the board may be removed with or without cause at any time by the board.
SECTION 3.
Compensation. The compensation of all elected officers of the corporation shall
be fixed by the Board of Directors, and the compensation of appointed officers
and agents shall either be so fixed or shall be fixed by officers thereunto
duly authorized.
SECTION 4.
Vacancies. If the office of any officer becomes vacant for any reason, the
Board of Directors may fill such vacancy. Any officer so appointed or
elected by the board shall serve only until such time as the unexpired term
of his predecessor shall have expired unless reelected or re-appointed.
SECTION 5.
The Chairman of the Board. If there be a Chairman of the Board of Directors,
he shall preside at all meetings of the shareholders and directors and shall
have such other powers and duties as may from time to time be assigned by the
board.
SECTION 6.
The President. The President shall be the Chief Executive Officer of the
corporation. In the absence of the Chairman of the Board, or if there be
no Chairman, he shall preside at all meetings of the shareholders and
directors. He shall be ex-officio a member of all standing committees,
have general and active management and control of the business and
affairs of the corporation subject to the control of the Board of Directors,
and shall see that all orders and resolutions of the board are carried into
effect. The President shall execute in the name of the corporation all deeds,
bonds, mortgages, contracts, and other instruments requiring a seal, under
the seal of the corporation, except where required or permitted by law to
be otherwise signed and executed and except where the signing and execution
thereof shall be expressly delegated by the Board of Directors to some other
officer or agent of the corporation.
SECTION 7.
The Vice President. The Vice President, if any, or, if there be more than one,
the Vice Presidents, in the order of their seniority or in any other order
determined by the board shall, in the absence or disability of the President,
perform the duties and exercise the powers of the President, and shall
generally assist the President and perform such other duties as the Board of
Directors shall prescribe.
SECTION 8.
The Secretary. The Secretary shall attend all meetings of the board and all
meetings of the shareholders and record all votes and the minutes of all
proceedings in a book to be kept for that purpose and shall perform like
duties for the standing committees when required. He shall give, or cause to
be given, notice of all meetings of the shareholders and special meetings of
the Board of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, under whose supervision
he shall act. He shall keep in safe custody the seal of the corporation and,
when authorized by the board, affix the same to any instrument requiring it
and, when so affixed, it shall be attested by his signature or by the
signature of the Treasurer or an Assistant Secretary or Treasurer. He shall
keep in safe custody the certificate books and stock bonds and such other
books and papers as the board may direct and shall perform all other duties
incident to the office of Secretary.
SECTION 9.
The Assistant Secretaries. The Assistant Secretaries, if any, in order of
their seniority, shall, in the absence or disability of the Secretary,
perform the duties and exercise the powers of the Secretary and shall perform
such other duties as the Board of Directors shall prescribe.
SECTION 10.
The Treasurer. The Treasurer shall have the care and custody of the corporate
funds, and other valuable effects, including securities, and shall keep full
and accurate accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the corporation in such depositories as may be
designated by the Board of Directors. The Treasurer shall disburse the funds
of the corporation as may be ordered by the board, taking proper vouchers for
such disbursements, and shall render to the President and directors, at the
regular meetings of the board, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition of the
corporation.
SECTION 11.
The Assistant Treasurer. The Assistant Treasurers, if any, in the order of
their seniority, shall, in the absence or disability of the Treasurer,
perform the duties and exercise the power of the Treasurer and shall perform
such other duties as the Board of Directors shall prescribe.
SECTION 12.
The Controller. The Controller, if any, shall maintain adequate records of all
assets, liabilities and transactions of the corporation and shall have adequate
audits thereof currently and regularly made. In conjunction with other officers,
he shall initiate and enforce measures and procedures whereby the business of
the corporation shall be conducted with the maximum safety, efficiency and
economy.
SECTION 13.
Voting of Securities. Unless otherwise ordered by the Board of Directors, the
Chairman or the President shall have full power and authority on behalf of
the corporation to vote in person or by proxy at any meetings of the
stockholders of any corporation in which the Corporation may hold stock, and
at any such meetings shall possess and may exercise any and all rights and
powers incident to the ownership of such stock. The Board of Directors may,
by resolution, from time to time confer like powers upon any other person or
persons.
SHARE CERTIFICATES
ARTICLE VIII.
SECTION 1.
Form; Signatures. The certificates for shares of the corporation shall be in
such form as shall be determined by the Board of Directors and shall be
numbered consecutively and entered in the books of the corporation as they
are issued. Each certificate shall exhibit the registered holder's name and
the number and class of shares, and shall be signed by the Chairman of the
Board, President or a Vice President and the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary, and shall bear the
seal of the corporation. In case any officer or officers who have signed
shall cease to be such officer or officers of the corporation, whether
because of death, resignation or otherwise, before such certificate or
certificates have been delivered by such corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person
or persons who signed such certificate or certificates had not ceased to
be such officer or officers of the corporation.
SECTION 2.
Lost Certificates. The Board of Directors may direct a new share certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate to be lost or destroyed. When authorizing such issue of a new
certificate or certificates, the Board of Directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of
such lost or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond on such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost or destroyed.
SECTION 3.
Registered Shareholders. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares
to receive dividends, and to vote as such owner, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares
on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State
of Delaware.
SECTION 4.
Record Date. For the purpose of determining the shareholders entitled to notice
of or to vote at any meeting of shareholders or any adjournment thereof, or
to express consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other
action affecting the interests of shareholders, the Board of Directors may
fix, in advance, a record date. Such date shall not be more than sixty days
nor less than ten days before the date of any such meeting, nor more than
sixty days prior to any other action. In each such case, except as otherwise
provided by law, only such persons as shall be shareholders of record on the
date so fixed shall be entitled to notice of, and to vote at, such meeting
and any adjournment thereof, or to express such consent or dissent, or to
receive payment of such dividend, or such allotment of rights, or otherwise
to be recognized as shareholders for the related purpose, notwithstanding
any registration of transfer of shares on the books of the corporation after
any such record date so fixed.
GENERAL PROVISIONS
ARTICLE IX.
SECTION 1.
Checks. All checks or demands for money and notes of the corporation shall be
signed by such officer or officers or such other person or persons as the
Board of Directors may from time to time designate.
SECTION 2.
Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of
the Board of Directors.
SECTION 3.
Corporate Seal. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Lapitos Acquisition Corporation." The seal may be used by causing it or a
facsimile thereof to be impressed, affixed, reproduced or otherwise.
AMENDMENTS
ARTICLE X.
SECTION 1.
Power to Amend. The Board of Directors shall have the power to amend, alter,
or repeal these by-laws, and to adopt new by-laws, from time to time, by an
affirmative vote of a majority of the whole Board as then constituted,
provided that notice of the proposal to make, alter, amend, or repeal the
by-laws was included in the notice of the directors' meeting at which such
action takes place. At the next shareholders' meeting following any action
by the Board of Directors, the shareholders, by a majority vote of those
present and entitled to vote, shall have the power to alter or repeal by-laws
newly adopted by the Board of Directors, or to restore to their original
status by-laws which the Board may have altered or repealed, and the notice
of such shareholders' meeting shall include notice that the shareholders
will be called on to ratify the action taken by the Board of Directors with
regard to the by-laws.
SECTION 2.
Amendment Affecting Election of Directors. If any by-laws regulating an
impending election of directors is adopted, amended or repealed by the board,
there shall be set forth in the notice of the next meeting of shareholders
for the election of directors the by-law so adopted, amended or repealed,
together with a concise statement of the changes made.
INDEMNIFICATION
ARTICLE XI.
Indemnification of Directors and Officers. The Corporation shall indemnify
each of its directors, officers, and employees whether or not then in service
as such (and his or her executor, administrator, and heirs), against all
reasonable expenses actually and necessarily incurred by him or her in
connection with the defense of any litigation to which the individual may
have been made a party because he or she is or was a director, officer, or
employee of the Corporation. The individual shall have no right to
reimbursement, however, in relation to matters as to which he or she has been
adjudged liable to the Corporation for negligence or misconduct in the
performance of his or her duties, or was derelict in the performance of his
or her duty as director, officer or employee by reason of willful misconduct,
bad faith, gross negligence or reckless disregard of the duties of his or
her office or employment. The right to indemnity for expenses shall also
apply to the expenses of suits, which are compromised or settled if the court
having jurisdiction of the matter shall approve such settlement.
The foregoing right of indemnification shall be in addition to, and not
exclusive of, all rights to which such director, officer or employee may
be entitled by law or otherwise.
EMPLOYMENT AGREEMENT
Agreement made as of February 3,1999 Lapitos Acquisition Corporation, a
Deleware corporation (the "Company") and Mike M. Mustafoglu("EMPLOYEE").
RECITALS
A. EMPLOYEE currently serves as President of the company.
B. EMPLOYEE possesses intimate and valuable knowledge of the
business and affairs of the Company and its policies, procedures,
methods and personnel.
C. The Company desires to assure EMPLOYEE's continued services to
the Company.
D. EMPLOYEE is willing to commit himself to serve the Company and
its affiliates on the terms provided herein.
TERMS AND CONDITIONS
In consideration of the preceding premises of the respective covenants
and agreements of the parties contained herein, and other good and valuable
consideration, the receipt and adequacy of which is hereby acknowledged,
the parties agree as follows:
1. EMPLOYMENT. The company agrees to employ EMPLOYEE, and EMPLOYEE
agrees to be employed by the Company, for the period beginning as of the
date of this Agreement, and ending upon termination pursuant to paragraph 1
(c) hereof (the "employment period").
(a) SERVICES. During the employment period, EMPLOYEE will serve
as the President of the Company and will have general supervision
over, and responsibility for the executive management of the Company,
and shall perform such duties relative thereto and discharge such
other responsibilities as the Company of the Board of Directors shall
assign to him, from time to time. EMPLOYEE shall report directly to,
be accountable to, and be subject to the authority of, the Board.
EMPLOYEE will devote his best efforts and his business time and
attention (except for vacation periods and reasonable periods of
illness or other incapacity),as needed in the sole discretion of the
Employee, to the business of the Company and its affiliates, which
time and attention shall not exceed ten (10) hours per week. The
Board of Directors of the Company reserves to itself the right from
time to time to designate the officers of the Company and to assign
the duties and responsibilities of the Employees and officers of the
Company, including without limitation, the office, if any, held by
EMPLOYEE. In this regard, the Board of Directors may from time to time
assign additional duties to EMPLOYEE, and may from time to time assign
to other Employees or officers of the Company duties to be discharged
by EMPLOYEE. For purposes of this Agreement, the term "affiliates"
means any corporation, partnership, joint venture, trust or
unincorporated association controlled by or under common control with
the Company.
(b) SALARY, BONUS, AND BENEFITS. The Company will issue to
Employee 750,000 shares of its Common Stock under Rule 701 of the
Securities and Exchange Commission ("SEC") for: (1) services Employee
has rendered in forming the Company and preparing its filings with the
SEC and (2) for compensation during the employment period to
administer the Company. Following the end of each fiscal year, the
Board, in its sole discretion, may award a bonus to EMPLOYEE, as
determined by the Board if in its judgement EMPLOYEE has met the goals
and objectives approved by the Board for such year. At the end of each
fiscal year of the Company, the Board shall review EMPLOYEE'
compensation and make such adjustments as it deems appropriate, taking
into account EMPLOYEE' performance and the performance of the Company.
(c) TERMINATION. The employment period will continue until the
first to occur of (i) the consummation of a business combination
between the Company and a target company, (ii) EMPLOYEE' resignation,
death or Disability (as defined below), (iii) a determination by the
Board in its good faith judgement that termination of EMPLOYEE'
employment is in the best interests of the Company under circumstances
which would not constitute termination for Cause (in which EMPLOYEE
will be entitled to severance pay as described at paragraph 1 (d)
below and such severance benefits shall be EMPLOYEE' only remedy with
respect to such termination), or (iv) the date on which EMPLOYEE is
terminated by the Board for Cause (as defined below). For purposes of
this Agreement, the term "Cause" means (i) the commission of an act by
EMPLOYEE involving fraud, embezzlement or a felony, (ii) the
commission of any act by EMPLOYEE constituting financial dishonesty
against the Company or any of its affiliates, (iii) the commission by
EMPLOYEE of any other criminal act involving moral turpitude which (a)
brings the Company or any of its affiliates into public disrepute or
disgrace or (b) causes, or in the good faith determination of the
Board of Directors of the Company, could cause material harm to the
customer relations, operations or business prospects of the Company of
any of its affiliates, (iv) the violation by EMPLOYEE of any material
provision of this Agreement, (v) the commission by EMPLOYEE of any
other act which is contrary to the Company's interests for his
personal benefit (and the fail to remedy such act within 15 days
following notification by the Company to EMPLOYEE of the occurrence of
such an act), (vi) willful disobedience to the lawful directives of
the Company and/or the Board of Directors of the Company, or (vii)
failure to adequately perform, in the good faith judgement of the
Board of Directors, the services, duties and responsibilities
assigned to EMPLOYEE by the Company and/or the Board of Directors of
the Company, whether or not such failure is intentional. "Disability"
shall mean the inability of EMPLOYEE to perform his normal duties and
functions under this Agreement for a continuous period of at least
three months or a recurring illness that is likely to prevent EMPLOYEE
from performing his normal duties and functions under this Agreement
for more than four months during any 12-month period as determined in
the good faith opinion by a physician selected by the Board.
(d) SEVERANCE PAY. In the event that EMPLOYEE' employment is
terminated without cause pursuant to paragraph 1 (c) (iii) above, the
Company will may EMPLOYEE all amounts due to EMPLOYEE as salary
pursuant to paragraph 1 (b), and maintain for EMPLOYEE the health and
disability insurance pursuant to paragraph 1 (b) (i), through the
first to occur of (i) the second anniversary of the employment
termination date or (ii) the third anniversary of the date of this
Agreement (such salary to be paid in monthly installments through such
third anniversary date) provided that EMPLOYEE should at all time
honor and comply with the provisions of paragraphs 2,3 and 5 of this
Agreement.
2. CONFIDENTIAL INFORMATION. Employee acknowledges that the
information, observations, date, customer and supplier lists, processes,
formulas, product compositions, manufacturing techniques, standards,
protocols, drawings, rresearch and related data, specifications, know-how
and trade secrets (collectivrly "Confidential Information") obtained by the
business or affairs of the Company and the affiliates are the property of
the Company and itd affiliates. Therefore, Employee agrees that he will not
disclose to any unauthorized person or entity (other than in the ordinary
course of business) or use for his own account or the account of a third
party any of such Confidential Information without the prior written
consent of the Board, unless and to the extent that the aformentioned
matters (i) become generally known to ans available for use by the public
other than as a result of Employee's acts or omissions to act or the
wrongful acts or omissions to act of another or (ii) such disclosure is
required by court order or force of law. Employee agrees to deliver to the
Company at the termination of is employment, or at any other time the
Company may request, all memoranda, notes, plans, records, reports and
other documents (and copies thereof) containing any Confidential
Information or relating to the business of the Company and its affiliates
which he may then posses or have under his control.
3. SEVERABILITY. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality, or
unenforceability will not effect any other provision or any other
jurisdiction, but this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invlid, illegal or unenforceable provision
had never bee contained herein.
4. BLUE LINING. If any court of competent jurisdiction determines
that any of the restrictive covenants in this Agreement, or any party
thereof, is invalid or uneforceable because of the geographic or temporal
scope of such provision, it is the intention and agreement of the parties
that such court shall have the power to reduce the geographic or temporal
scope of such provision, as the case may be, and, in its reduced form, such
provisin shall then be enforceable.
5. RESTRICTIONS ON RIGHT TO COMPETE. There will be no restrictions
on the Employee to engage in any other enterprise or business venture
regardless of whether that engagement competes with the Company's business.
The Company agrees that during the term of the Employment Period (as
defined in paragraph 1 (c )) the Employee can, directly or indirectly,
either for himself or for any other person, partnership, corporation, joint
venture, business trust, cooperative, limited partnership or any other
entity, participate in any enterprise involving the same or similar
business or research and development in which the Company is engaged at any
time during Employee's employment or upon termination. For purposes of this
Agreement, the term "participate" includes any direct or indirect interest
in any enterprise, whether as an officer, director, Employee, partner, sole
proprietor, agent, representative, independent contractor, consultant,
creditor, owner or otherwise. The geographical area covered by this
covenant is the world. The Company agrees that this covenant is reasonable
with respect to its duration, geographical area and scope.
6. NOTICES. Any notice provided for in this Agreement must be in
writing and will be deemed to have been given (i)when personally delivered,
(ii) one business day after being sent by Federal Express or other similar
overnight delivery service or (iii) three business days after being mailed
by first class mail, to the recipient at the address below indicated:
To the Company:
Lapitos Acquisition Corporation
1800 Century Park East, Suite 600
Los Angeles, CA 90067
To Employee:
Mr. Mike M. Mustafoglu
1800 Century Park East, Suite 600
Los Angeles, CA 90067
or such other address or to the attention of such
person as the recipient party shall have specified by prior written notice
to the sending party.
7. COMPLETE AGREEMENT. This Agreement embodies the complete agreement
and understanding of the parties with respect to the subject matter of this
Agreement and supersedes and preempts any prior negotiations,
understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way.
8. COUNTERPARTS. This Agreement may be executed on separate
counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
9. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and
inure to the benefit of and enforceable by Employee and the Company and
their respective successors and assigns, except that Employee may not asign
any of his rights or obligations under paragraphs 1,2,3,4 and 5.
10. CHOICE OF LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the
internal law, and not the law of conflicts, of the State of Deleware.
11. REMEDIES. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages
by reason of breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injuctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
12. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be
amended or waived only with the prior written consent of the Company and
Employee.
IN WITNESSWHEREOF, the parties have executed this Agreement on the day and
year first above written.
LAPITOS ACQUISITION CORPORATION
/s/ Mike M. Mustafoglu
President
EMPLOYEE:
/S/ Mike M. Mustafoglu
TransGlobal Financial Corporation
1800 Century Park East, Suite 600
Los Angeles, CA 90067
Lapitos Acquisition Corporation
1800 Century Park East, Suite 600
Los Angeles, CA 90067
Re: Lock Up Agreement with Lapitos Acquisition Corporation
Gentlemen:
As part of the sale of the shares of Common Stock of Lapitos
Acquisition Corporation (the "Company") to the undersigned (the "Holder"),
the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and the holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the
Company's Common Stock, $.0001 par value(the "Stock") at the date hereof
and during the pendency of this letter agreement that the Holder will not
transfer, sell, contract to sell, devise, gift, assign, pledge,
hypothecate, distribute or grant any option to purchase or otherwise
dispose of, directly or indirectly, its shares of Stock of the Company
owned beneficially or otherwise by the Holder except in connection with or
following completion of a merger, acquisition or other transaction by the
Company resulting in the Company no longer being classified as a blank
check company as defined in Section 7(b)(3) of the Securities Act of 1933,
as amended. Any attempted sale, transfer or other disposition in violation
of this letter agreement shall be null and void. The Holder further agrees
that the Company (i) may instruct its transfer agent not to transfer such
securities (ii) may provide a copy of this letter agreement to the
Company's transfer agent for the purpose of instructing the Company's
transfer agent to place a legend on the certificate(s) evidencing the
securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such
securities is subject to the terms of this letter agreement and (iii) may
issue stop-transfer instructions to its transfer agent for the period
contemplated by this letter agreement for such securities. This letter
agreement shall be binding upon the Holder, its agents, heirs, successors,
assigns and beneficiaries. Any waiver by the Company of any of the terms
and conditions of this letter agreement in any instance must be in writing
and must be duly executed by the Company and the Holder and shall not be
deemed or construed to be a waiver of such term or condition for thefuture,
or of any subsequent breach thereof. The Holder agrees that any breach of
this letter agreement will cause the Company and the third party
beneficiaries irreparable damage for which there is no adequate remedy at
law. If there is a breach or threatened breach of this letter agreement by
the Holder, the Holder hereby agrees that the Company and the third party
beneficiaries shall be entitled to the issuance of an immediate injunction
without notice to restrain the breach or threatened breach. The Holder also
agrees that the Company and all third party beneficiaries shall be entitled
to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 22nd day of February, 1999.
THE HOLDER
By: /s/ Mike M. Mustafoglu
President, TransGlobal Financial Corporation
Mike M. Mustafoglu
1800 Century Park East, Suite 600
Los Angeles, CA 90067
Lapitos Acquisition Corporation
1800 Century Park East, Suite 600
Los Angeles, CA 90067
Re: Lock Up Agreement with Lapitos Acquisition Corporation
Gentlemen:
As part of the sale of the shares of Common Stock of Lapitos
Acquisition Corporation (the "Company") to the undersigned (the "Holder"),
the Holder hereby represents, warrants, covenants and agrees, for the
benefit of the Company and the holders of record (the "third party
beneficiaries") of the Company's outstanding securities, including the
Company's Common Stock, $.0001 par value(the "Stock") at the date hereof
and during the pendency of this letter agreement that the Holder will not
transfer, sell, contract to sell, devise, gift, assign, pledge,
hypothecate, distribute or grant any option to purchase or otherwise
dispose of, directly or indirectly, its shares of Stock of the Company
owned beneficially or otherwise by the Holder except in connection with or
following completion of a merger, acquisition or other transaction by the
Company resulting in the Company no longer being classified as a blank
check company as defined in Section 7(b)(3) of the Securities Act of 1933,
as amended. Any attempted sale, transfer or other disposition in violation
of this letter agreement shall be null and void. The Holder further agrees
that the Company (i) may instruct its transfer agent not to transfer such
securities (ii) may provide a copy of this letter agreement to the
Company's transfer agent for the purpose of instructing the Company's
transfer agent to place a legend on the certificate(s) evidencing the
securities subject hereto and disclosing that any transfer, sale, contract
for sale, devise, gift, assignment, pledge or hypothecation of such
securities is subject to the terms of this letter agreement and (iii) may
issue stop-transfer instructions to its transfer agent for the period
contemplated by this letter agreement for such securities. This letter
agreement shall be binding upon the Holder, its agents, heirs, successors,
assigns and beneficiaries. Any waiver by the Company of any of the terms
and conditions of this letter agreement in any instance must be in writing
and must be duly executed by the Company and the Holder and shall not be
deemed or construed to be a waiver of such term or condition for thefuture,
or of any subsequent breach thereof. The Holder agrees that any breach of
this letter agreement will cause the Company and the third party
beneficiaries irreparable damage for which there is no adequate remedy at
law. If there is a breach or threatened breach of this letter agreement by
the Holder, the Holder hereby agrees that the Company and the third party
beneficiaries shall be entitled to the issuance of an immediate injunction
without notice to restrain the breach or threatened breach. The Holder also
agrees that the Company and all third party beneficiaries shall be entitled
to pursue any other remedies for such a breach or threatened breach,
including a claim for money damages.
Agreed and accepted this 22nd day of February, 1999.
THE HOLDER
By: /s/ Mike M. Mustafoglu
STEFANOU & COMPANY, LLP
1360 Beverly Road
McLean, Virginia 22101
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Form 10 Registration Statement of
our report as of June 30, 1999, dated August 19, 1999 relating to the
financial statements of Lapitos Acquisition Corporation which appear in such
Form 10.
STEFANOU & COMPANY, LLP
1360 Beverly Road
McLean, Virginia 22101
August 19, 1999
<TABLE> <S> <C>
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF LAPITOS ACQUISITION CORPORATION AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> JUN-30-1999
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<CURRENT-ASSETS> 500
<PP&E> 0
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<TOTAL-ASSETS> 578
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0
0
<COMMON> 500
<OTHER-SE> (255)
<TOTAL-LIABILITY-AND-EQUITY> 578
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