AS FILED WITH THE SECURITIES & EXCHANGE COMMISSION ON October 27, 1999
File No. _________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------------------------------------
NATIONAL REHAB PROPERTIES, INC.
-------------------------------
(Name of small business issuer in its charter)
Nevada 65-0439467
- --------------------------------------------------------------------------------
(State of (Primary Industrial (IRS Employer
Incorporation) Classification Number) I.D. Number)
2921 NW Sixth Avenue, Miami, Florida 33127 (305) 573-8882
---------------------------------------------------------
(Address and telephone number of principal executive offices
and principal place of business)
CSC/The United States Corporation Co.
1013 Centre Road
Wilmington, Delaware
(302) 998-0595
------------------------------------------------------------------
(Name, address and telephone number of agent for service)
Copies to:
Richard P. Greene, P.A.
2455 East Sunrise Boulevard, Suite 905
Fort Lauderdale, Florida 33304
(954) 564-6616
Fax: (954) 561-0997
Approximate date of proposed commencement of sale to the public: From time to
time after the Registration Statement becomes effective.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================
Proposed
Amount of Proposed Maximum
Shares Maximum Aggregate Amount of
Title of Each Class of To be Offer Price Offering Registration
Securities to be Registered Registered Per Share(1) Price Fee
- --------------------------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Common Stock 10,000,000 $0.25 $2,500,000 $695.00
================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee based
upon the average of the bid and asked price in the over the counter
market on October 22, 1999.
The Company hereby amends the Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Acts of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
ii
<PAGE>
CROSS REFERENCE SHEET
Pursuant to 501(B) of Regulation S-K showing location in the Prospectus of
information required by Items 1 through 21, Part I, of Form S-B
Cross Reference Sheet between Items of Form SB-2 and Prospectus
FORM SB-2 ITEM NUMBER AND CAPTION PROSPECTUS CAPTIONS
1. Front of Registration Statement and Outside Front Cover Page of
Outside Front Cover Page of Prospectus
Prospectus
2. Inside Front and Outside Back Cover Inside Front Cover Page;
Pages of Prospectus Experts, Available Information;
Back Cover Page
3. Summary Information and Risk Factors Prospectus Summary, Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Outside Front Cover Page, Plan
of Distribution
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management; Principal
Promoters and Control Persons Shareholders
11. Security Ownership of Certain
Beneficial Owners and Management Principal Shareholders
12. Description of Securities
Description of Securities
13. Interest of Named Experts and
Counsel Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act Securities and Exchange
Liabilities Commission Policy
15. Organization within last five years
Prospectus Summary; The Company;
Business
iii
<PAGE>
16. Description of Business Business
17. Management's Discussion and Analysis Management's Discussion and
or Plan of Operation Analysis of Financial Condition
and Plan of Operation
18. Description of Property Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Related Front Cover Page; Capitaliza-
Stockholder Matters tion; Dividends; Description of
Securities; Principal
Shareholders
21. Executive Compensation Management
22. Financial Statements Selected Financial Data;
Financial Statements
23. Changes in and Disagreements with Not applicable
Accountants on Accounting and
Financial Disclosure
iv
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
10,000,000 SHARES OF COMMON STOCK
National Rehab Properties, Inc. (the "Company") hereby offers for sale
10,000,000 shares (the "Shares") of its Common Stock. The Company will offer to
sell the Shares, the proceeds of which will be utilized as set forth in the "Use
of Proceeds" section set forth herein. The Company's Common Stock is quoted on
the OTC Electronic Bulletin Board under the symbol NRPI. On October 21, 1999,
the closing bid quotation for the Common Stock was $____________.
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND
INVOLVE A HIGH DEGREE OF RISK. THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT IN THE COMPANY WITHOUT A MATERIALLY
ADVERSE IMPACT ON THEIR STANDARD OF LIVING OR FINANCIAL SECURITY. THEREFORE,
PRIOR TO PURCHASE, EACH PROSPECTIVE INVESTOR SHOULD CONSIDER VERY CAREFULLY THE
FOLLOWING RISK FACTORS (SEE "RISK FACTORS" BEGINNING ON PAGE 6) AND CONFLICTS OF
INTEREST, AS WELL AS ALL OTHER INFORMATION SET FORTH ELSEWHERE IN THE
PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE OR
THE SECURITIES AND EXCHANGE COMMISSION NOR HAS ANY STATE OR THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Price to Discounts and Proceeds to the
Public Commissions Company
Per Share $____ $ -0- $_____
Total Offering $_________ $ -0- $_________
The securities offered by the Company's Officers and Directors on a
"best efforts" basis. Officers and Directors selling any of the Shares will not
be entitled to receive a commission, and will have the right to accept or reject
subscriptions. It is expected that delivery of certificates representing the
securities will be made against payment therefor on or about ___________, 2000
in Fort Lauderdale, Florida (the "Closing"). No registered representatives of
any NASD member firm will be involved in the sale of any of the Shares
registered hereby.
Date of this Prospectus is ___________, 2000
1
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and the financial statements, including the notes
thereto, appearing elsewhere in this Prospectus.
SUMMARY OF THE OFFERING
Shares of Common Stock which may be offered by the Company............10,000,000
OTC Bulletin Board Symbol...................................................NRPI
SUMMARY OF THE BUSINESS
The Company was formed on October 1, 1993 under the laws of the state
of Florida. On December 15, 1994, the Company merged with Mister Las Vegas
("MLV"), a Nevada corporation which was formed on October 18, 1971 and was a
non-reporting, public company. The merger created National Rehab Properties,
Inc., a Nevada corporation, authorized to transact business in Florida on August
17, 1995.
The residential construction industry in general is one that is
continually and rapidly expanding. The Company specializes in investing in and
revitalizing homes in established older residential neighborhoods in urban areas
that have been abandoned by the middle-class which typically moves outward from
the inner cities into the newer suburban developments. The Company either buys
vacant lots and builds a single family home thereon, or buys an abandoned house
and renovates it. In either case, the Company then sells the home for a profit.
Renovated or rebuilt starter homes were valued at approximately $30,000 in 1981,
$45,000 in 1987, $60,000 in 1994, $70,000 in 1997, and $85,000 in 1999. The
years ahead should find properties in this affordable housing market at the
$90,000 range or higher.
Over the past 30 years, the market targeted by the Company continues to
be fruitful regardless of national inflation or economic stagnation. The
Company's management believes the real estate market will continue to be ripe
for the Company's future investments. Thousands of homes suffer foreclosure and
abandonment every year, creating an unlimited supply of lots and dilapidated
homes which fit the Company's investment standards.
The Company has a successful record of identifying and purchasing
distressed or foreclosed properties, completing renovations on those properties
rapidly and inexpensively, and marketing the properties to qualified first-time
buyers who can buy the properties with little or no down payment. The Company
typically sells a property for $90,000 and produces a profit of $15,000 per sale
for the Company. The complete buy-repair or build-resell process for each
property takes approximately six months. The intended result is an annual
pre-tax return of approximately $30,000 on a $60,000 investment.
The United States Department of Housing and Urban Development (HUD) and
the Federal Housing Administration (FHA) support the cities and their
residential neighborhoods with programs designed to work with developers to
create low down payment housing. Being favorable to lower income citizens, these
programs are non-subsidized by the government and carry their own weight in
Washington's bureaucratic environment where charity is often scorned. As a rule,
the federal government favors private ownership over public housing and
tenant/renter situations. The HUD and FHA programs are specifically aimed at the
low-income neighborhoods of America in an attempt to maintain the nation's
existing housing
2
<PAGE>
stock which has depreciated and declined due to foreclosure, abandonment and old
age. The Community Reinvestment Act (CRA) requires banks all over the nation to
invest in these neighborhoods. It is up to the private and public sectors to
engage these encouraging and sound programs and make them successful. The
Company takes advantage of that challenge by revitalizing abandoned urban
neighborhoods, and in so doing, helps hundreds of working-class families realize
the American dream of home ownership.
Past Operations
The Company's business is real estate and in order to buy real estate
for the Company business of rehabilitating houses or building houses,
construction financing is necessary. Through the years, the Company has
constantly had difficulty in borrowing money from banks due to lack of cash in
the corporate bank account. This is evidenced by the income of the years 1994
through 1997 (Federal Income Tax report was as follows for the years 1994 though
1997: $61,965 - 1994; $73,886 - 1995; $76,684 - 1996; $20,369 - 1997; ($344,064)
- - 1998). In May of 1997, the Company entered into a line of credit for
$1,500,000 with an investment banking company. The interest rate was between 15%
and 18% per year with an equal amount in placement fees. Additionally, the
Company had to give the lender 4,000,000 shares of restricted stock. The Company
entered into this agreement due to lack of credit for the rehabilitation of
houses. In 1997, the Company opened an office in New Orleans, Louisiana, because
that city has 39,000 declared houses in need of repair. In 1997 and 1998, the
Company did 25 houses in New Orleans and between the points and interest the
Company lost approximately $240,000. In 1998, the Company left New Orleans as it
was determined that the excessive rate of interest being charged for the money
borrowed, the Company could not be profitable. As of December 31, 1998, the
inventory of Company-owned houses in New Orleans, houses with the excessively
high interest rates, was zero. In December 1998, the Company, through it's legal
counsel, filed a lawsuit against the lender and it's president for civil and
criminal usury in Dade County Circuit Court. In that lawsuit the Company is
asking for return of principal, damages and return of the stock issued to the
defendants, et al. That stock (400,000 shares post split) is currently partially
held in escrow with the courts and partially still in restricted form pending
the result of the litigation.
In 1997, a receivable of $105,000 was written off by the Company due to
the bankruptcy of the debtor, an original incorporate of the Company.
In January, 1999, the Company did a reverse split of it's stock on a 1
for 10 basis and proceeded to raise $557,500 from the sale and/or conversion
into common stock of senior subordinated debentures. In addition, the Company
raised $211,500 from the sale of its restricted stock during the 1999 fiscal
year. The reverse split was done in order to reduce the number of shares
outstanding so that it would be possible to attract investment capital to the
Company through the sale of Common Stock.
Present Operations
The Company is currently based in Miami where the building plan is 100
houses per 12 month period. As a public Company, National Rehab Properties, Inc.
is traded over-the-counter as a bulletin board stock under the symbol NRPI.
In 1999, the Company purchased 17 building sites in Miami for cash,
filed for building permits and is proceeding forward with construction. A profit
of $300,000 is expected from the completion of these sales. Those houses will be
encumbered by mortgages from a Miami lending institution. The decision to build
houses in Miami was the result of a market study showing a large demand for
first
3
<PAGE>
time buyer homes and the large number of vacant lots in the mature residential
neighborhoods the Company is accustomed to dealing in. Due to it's cash
position, the Company expects to acquire construction financing for the Miami
project. The Miami project of 100 houses is contingent upon construction
financing.
The Company has made a deposit on a 20 acre tract of land with a
purchase price of $280,000 in Vero Beach, Florida. The Company anticipates
improving the land with road and utilities and platting the land for 100 single
family home sites. The Company anticipates a land and acquisition loan from a
local lending institution for the cost of construction of improvements to the
land and the Company further anticipates building the houses with construction
financing and reselling the houses in the local economy. The Company has funds
available to purchase the land without financing. Known as "Eagle Trace," the
project is estimated to create a profit for the Company of $3,500,000. This
project is contingent upon construction financing for the land improvements and
home construction.
The Company has a signed contract to purchase an aluminum manufacturing
plant that produces aluminum and glass railings, storm shutters and aluminum
windows for sale in South Florida. In 1998, the Company had $4,600,000 in sales
revenues, however was not profitable due to lack of cash to finance the sale of
its products awaiting construction draws. National Rehab Properties, Inc. is
acquiring 80% of the company and the Company's financials will be consolidated
with the parent company. The Company anticipates acquiring financing for its
receivables through a factoring company for the subsidiary. The receivable
financing will be the only debt of the company. At that time it is anticipated
that the subsidiary will be able to increase revenues to $12,000,000 per year
and it is projected that the net income will result in $2,000,000 to the bottom
line of the Company. The Company has the funds for acquisition, however, the
receivable financing funds are not yet in place and therefore the potential
profitability of the acquisition target is not secure. The Company feels that
the supply of users for the target's products are immense because the
acquisition target is one of three companies that are licensed to build products
passing the newest hurricane protection laws. There can be no assurance that the
contemplated acquisition will occur and, if consummated, that it will provide
profitable operations for the Company.
The Company's offices are located at 2921 NW 6th Avenue, Miami, Florida
33127. Its telephone number is (305) 573-8882.
4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The summary financial data set forth below is derived from and should
be read in conjunction with the financial statement, including the notes
thereto, appearing elsewhere in this Prospectus.
Statements of Operations Data
Year Ended September 30,
Ten Months
Ended July 31
------------------------------
1998 1999
----------- -----------
Total Revenue $ 937,951 $ 379,881
Total Costs and Expenses 1,282,015 350,239
Profit (Loss) From Operations (344,064) 29,642
Net Profit (Loss) Applicable
to Common Shareholders $ (344,064) $ 29,642
Net Profit (Loss) per Common Share $ (0.0352) $ 0.0121
Weighted Average Number of Shares
of Common Stock 9,773,700 2,442,450
Balance Sheet Data:
Year Ended September 30,
Working capital $ (211,115) $ 714,674
Total Assets 1,163,738 963,438
Total Liabilities 1,033,319 189,099
Stockholders' Equity $ 130,419 $ 774,339
5
<PAGE>
RISK FACTORS
The Securities offered herein involve a high degree of risk.
Accordingly, before deciding to purchase, investors should carefully consider
the following risk factors along with the other matters discussed herein.
CONTROL BY MANAGEMENT
Following completion of this Offering, the present principal
shareholders will maintain voting control of the Company based on the issuance
of 1,000,000 Class A Common Shares, which entitle the holder thereof to 20 votes
for every share held. The purpose of issuing these shares is to insure that
current management will maintain control of the Company despite maintaining
beneficial ownership of less than a majority of the shares of the Company's
Common Stock. Furthermore, the disproportionate vote afforded the Class A Common
Stock will prevent or impede potential acquirors from seeking to acquire control
of the Company, which could have a depressive effect on the price of the
Company's securities. There is no public market for the Class A Common Stock and
no market will develop. The Class A Common Stock is non-transferable except to a
family member.
BROAD DISCRETION OVER USE OF PROCEEDS
Management will have broad discretion over the use of proceeds from the
potential sale of the Shares offered hereby. Although management will endeavor
to act in the best interests of the shareholders, there can be no assurance that
the decision to utilize proceeds will prove profitable to the Company. (See "Use
of Proceeds".)
IMMEDIATE AND SUBSTANTIAL DILUTION
Purchasers of the Shares along with current shareholders will incur
substantial and immediate dilution as a result of the issuance of the Shares
offered hereby. (See "Dilution".)
STOCK MARKET VOLATILITY
General market price declines or market volatility in the future could
adversely affect the price of the Company's Common Stock. In recent years, the
stock markets in general, and securities of small capitalization companies in
particular, have experienced extreme price fluctuations in response to such
occurrences as quarterly variations in operating results, changes in earnings
estimates, and announcements concerning strategic relationships and other events
or facts. This pattern of extreme volatility in the stock market, which in many
cases was unrelated to actual operating performance, may adversely affect the
price of the Company's Common Stock.
OTC BULLETIN BOARD LISTING REQUIREMENTS
The Company expects to complete this registration of its Common Stock
and to file the appropriate form to become a fully reporting Company under the
Securities Exchange Act of 1934, as amended. Under the new rules for continued
listing on the Bulletin Board, companies are required to become fully reporting.
Although the Company intends to complete all required filings on a timely basis,
there can be no assurance that the Company will not be de-listed from the
Bulletin Board. If de-listed, the market will almost certainly reflect a
depressive affect on the price of the Company's Common Stock.
6
<PAGE>
RISK OF LOW-PRICED STOCK; PENNY STOCK REGULATIONS
Based upon the price of the Company's Common Stock as currently traded
on the OTC Bulletin Board, the Company may be subject to Rule 15g-9 under the
Exchange Act which imposes additional sales practice requirements on
broker-dealers which sell securities to persons other than established customers
and "accredited investors." For transactions covered by this Rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received a purchasers written consent to the transaction prior to sale.
Consequently, the Rule may adversely affect the ability of the broker-dealers to
sell the Company's securities and may affect the ability of the purchasers in
this Offering to sell any of the securities acquired hereby in the secondary
market.
The Commission adopted regulations which generally define a "penny
stock" to be any non-Nasdaq equity security that has a market price (as therein
defined) of less than $5.00 per share, subject to certain exceptions. Since the
Company's securities may be subject to the existing rules on penny stock, the
market liquidity for the Company's securities could be severely adversely
affected.
POSSIBLE LOSS OF ENTIRE INVESTMENT
Prospective investors should be aware that if the Company is not
successful in the operation of its current business, or any future acquisition
endeavors, their entire investment in the Company could become worthless. In
addition, the Company's success is highly dependent upon the receipt of funds
from this Offering. Even if the Company is successful in its operations and
potential acquisitions, there can be no assurances that investors will derive a
profit from their investment.
GOVERNMENT REGULATION
The Company will be subject to applicable provisions of federal and
state securities laws and to regulations specifically governing the real estate
industry, specifically those governing federally backed mortgage programs. The
operations of the Company will also be subject to regulations normally incident
to business operations (e.g., occupational safety and health acts, workmen's
compensation statutes, unemployment insurance legislation and income tax and
social security related regulations). Although the Company will make every
effort to comply with applicable regulations, it can provide no assurance of its
ability to do so, nor can it predict the effect of these regulations on its
proposed activities.
NEED FOR ADDITIONAL FUNDS
The Company will require substantial additional funding to further its
real estate operations and business objectives. Although the Company believes
that such funds will become available from sources including cash flow from its
operations, bank loans, factoring or sale of additional securities, it has not
formulated any specific plan for raising additional funds, including sale of
additional equity securities, as of the date of this Prospectus. There can be no
assurance that such additional funds would be available when needed or that they
would be available on attractive terms or that raising additional funds from the
Shares offered hereby would not result in substantial reduction in the value of
the Company's shares.
7
<PAGE>
NO ASSURANCE OF COMMERCIAL SUCCESS; UNCERTAINTY OF MARKET ACCEPTANCE
The Company competes in the highly competitive market for real estate
development and housing construction. The Company's prospects for success will
therefore depend on its ability to successfully market its houses to buyers. As
a result, demand and market acceptance for the Company's houses is subject to a
high level of uncertainty. The Company currently has limited financial,
personnel and other resources to undertake the extensive activities that will be
necessary to acquire and build its houses and related real estate projects.
There is no assurance that the Company will be able to formalize expanded
marketing arrangements or that its marketing efforts will result in substantial
additional revenues. See "Business".
DEPENDENCE UPON KEY MANAGEMENT
The Company is dependent upon the members of management set forth
herein. Accordingly, the Company will be adversely affected if the services of
such persons ceased to be available to the Company.
COMPETITION
The Company may compete against other companies engaged in the same or
similar business of the Company. These companies may have substantially greater
financial, technical, personnel and other resources than the Company and may
have established reputations for success in the real estate industry. The
ability of the Company to compete will depend on its ability to continually
locate and develop suitable real estate projects. There is no assurance that the
Company will be able to compete successfully against potentially stronger
competitors in the real estate industry.
POTENTIAL LACK OF LIQUIDITY
The Company's Common Stock currently trades on the OTC Bulletin Board
under the symbol NRPI. Stocks trading on the OTC Bulletin Board generally
attract a smaller number of market makers and a less active public market and
may be subject to significant volatility. Sales of substantial amounts of shares
of the Company's common stock in the public market pursuant to additional
capital financing transactions which may be undertaken by the Company in the
future could adversely affect the market price of the Company's Common Stock and
the Company's ability to raise equity capital in the future and may make it more
difficult for an investor to liquidate his investment in the Company.
NO CASH DIVIDENDS
The Company has not paid, nor does it presently contemplate the payment
of, any cash dividends on its Common Stock.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS SET FORTH HEREIN, THESE
SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING AN INVESTMENT
IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND OTHER FACTORS SET
FORTH IN THIS PROSPECTUS. THESE SECURITIES SHOULD ONLY BE PURCHASED BY PERSONS
WHO CAN AFFORD A TOTAL LOSS OF THEIR INVESTMENT IN THE COMPANY AND HAVE NO
IMMEDIATE NEED FOR A RETURN OF THEIR INVESTMENT.
8
<PAGE>
USE OF PROCEEDS
No assurance can be given that any or all of the Shares of Common Stock
will be sold. Accordingly, as far as can be determined as of the date of the
Prospectus, the proceeds received by the Company upon sale of the Shares will be
used for purchase and development of real estate properties, acquisitions, and
marketing expenses. Specifically, 120 single family homes in Miami will require
$3.6 million, 20 acres for Vero Beach land development will require $900,000 and
the Southern Aluminum Manufacturing acquisition will require $1 million. There
can be no assurance that the Company will receive any or all of the proceeds
from this Offering required to complete these projects.
MARKET FOR SECURITIES
The Company's Common Stock is traded in the over-the-counter market and
is included in the NASD Electronic Bulletin Board under the symbol NRPI. Trading
began on July 4, 1994.
The following is the range of bid and ask prices for the Company's
Common Stock for the periods indicated:
High Low
---- ---
December 30, 1998 $.39 $.25
March 31, 1999 .53 .48
June 30, 1999 .49 .42
September 30, 1999 .25 .22
The above represents inter-dealer quotations which do not include
retail mark-ups, markdowns, or commissions, and do not necessarily represent
actual transactions.
The approximate number of record holders of the Company's Common Stock
as of October 19, 1999 was approximately 800.
DIVIDEND POLICY
The Company has not paid any dividends on its Common Stock, and it is
not anticipated that any dividends will be paid in the foreseeable future. The
Board of Directors intends to follow a policy of retaining earnings, if any, to
finance the growth of the Company. The declaration and payment of dividends in
the future will be determined by the Board of Directors in light of conditions
then existing, including the Company's earnings, financial condition, capital
requirements and other factors.
9
<PAGE>
DILUTION
As of July 31, 1999, the Net Tangible Book Value Per Share of Common
Stock Outstanding, calculated by dividing the Net Tangible Book Value by the
number of outstanding shares of Common Stock, was $0.14.
After the closing of this Offering and assuming all Shares are sold,
with proceeds to the Company of $2,500,000 from the sale of Common Stock, the
new investors will have an immediate and substantial dilution in their
investment of $0.04 per share and shareholders prior to this Offering will have
an increase of $0.07 per share.
The following table illustrates the dilution contained in this
Offering:
Registration Statement Offering price per Share $0.25
Net tangible book value per share before Offering $0.14
Increase per share attributable to payment by new
investors, if all Shares are sold $0.07
Net tangible book value per Share after sale
of all Shares $0.21
Dilution to new investors if all Shares are sold $0.04
10
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
July 31, 1999, and as adjusted to give effect to the issuance and sale of the
10,000,000 Shares offered hereby at $0.25 per Share. This table should be read
in conjunction with the financial statements and the notes thereto included
elsewhere in this Prospectus.
September 30, 1998
------------------------------
Actual As Adjusted
----------- -----------
Stockholders' Equity
Common Stock, $.001 par value,
40,000,000 Shares Authorized;
5,538,757 Shares Outstanding;
15,538,757 Outstanding as
Adjusted Pro Forma $ 5,539 $ 15,539
Additional Paid in Capital 981,099 3,471,099
Accumulated Deficit (212,300) (212,300)
Total Stockholders' Equity $ 774,338 $ 3,274,338
Total Capitalization $ 774,338 $ 3,274,338
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
OVERVIEW
The following is a discussion of the financial condition and results of
operations of the Company for the twelve months of operations from October 1,
1997 until the close of the fiscal year September 30, 1998. The financial
condition information does not include the accounts of the Company after the
close of the fiscal year ending September 30, 1998, however, the period of 1994
through 1999 is discussed. The Company is current in its federal and state tax
filings, as seen in the accompanying statements.
The Company specializes in investing in and revitalizing homes in
established older residential neighborhoods in urban areas that have been
abandoned by the middle-class which typically moves outward from the inner
cities into the newer suburban developments. The Company either buys vacant lots
and builds a single family home thereon, or buys an abandoned house and
renovates it. In either case, the Company then sells the home for a profit.
Renovated or rebuilt starter homes were valued at approximately $30,000 in 1981,
$45,000 in 1987, $60,000 in 1994, $70,000 in 1997, and $85,000 in 1999. The
years ahead should find properties in this affordable housing market at the
$90,000 range or higher. Over the past thirty years, the market targeted by the
Company continues to be fruitful regardless of national inflation or economic
stagnation. The real estate market will continue to be ripe for the Company's
future investments. Thousands of homes suffer foreclosure and abandonment every
year, creating an unlimited supply of lots and dilapidated homes which fit the
Company's investment standards.
The Company has a successful record of identifying and purchasing
distressed or foreclosed properties, completing renovations on those properties
rapidly and inexpensively, and marketing the properties to qualified first-time
buyers who can buy the properties with little or no down payment. The Company
typically sells a property for $90,000 and produces a profit of $15,000 per sale
for the Company. The complete buy-repair or build-resell process for each
property takes approximately six months. The intended result is an annual
pre-tax return of approximately $30,000 on a $60,000 investment.
The United States Department of Housing and Urban Development (HUD) and
the Federal Housing Administration (FHA) support the cities and their
residential neighborhoods with programs designed to work with developers to
create low down payment housing. Being favorable to lower income citizens, these
programs are non-subsidized by the government and carry their own weight in
Washington's bureaucratic environment where charity is often scorned. As a rule,
the federal government favors private ownership over public housing and
tenant/renter situations. The HUD and FHA programs are specifically aimed at the
low-income neighborhoods of America in an attempt to maintain the nation's
existing housing stock which has depreciated and declined due to foreclosure,
abandonment and old age. The Community Reinvestment Act ("CAR") requires banks
all over the nation to invest in these neighborhoods. It is up to the private
and public sectors to engage these encouraging and sound programs and make them
successful. The Company takes advantage of that challenge by revitalizing
abandoned urban neighborhoods, and in so doing, helps hundreds of working-class
families realize the American dream of home ownership.
PAST OPERATIONS
The Company's business is real estate and in order to buy real estate
for the Company business of rehabilitating houses or building houses,
construction
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financing is necessary. Through the years the Company has constantly had
difficulty in borrowing money from banks due to lack of cash in the corporate
bank account. This is evidenced by the income of the years 1994 through 1997.
(Federal Income Tax report for the years 1994 though 1997: $61,965 - 1994;
$73,886 - 1995; $76,684 - 1996; $20,369 - 1997; ($344,064) - 1998.) In May of
1997 the Company entered into a line of credit for $1,500,000 with an investment
banking company. The interest rate was between 15 and 18 per cent per year with
an equal amount in placement fees. Additionally the Company had to give the
lender 4,000,000 shares of restricted stock. The Company entered into this
agreement due to lack of credit for the rehabilitation of houses. In 1997 the
Company opened an office in New Orleans, La. because that city has 39,000
declared houses in need of repair. In 1997 and 1998 the Company did 25 houses in
New Orleans and between the points and interest the Company lost approximately
$240,000. In 1998 the Company left New Orleans as it was determined that with
excessive rate of interest being charged for the money borrowed, the Company
could not be profitable. As of December 31, 1998 the inventory of Company owned
houses in New Orleans, houses with the excessively high interest rates, was
zero. In December 1998 the Company, through it's legal counsel filed a lawsuit
against the lender and it's president for civil and criminal usury, in Dade
County Circuit Court. In that lawsuit the Company is asking for return of
principal, damages and return of the stock issued to the defendants et al. That
stock (400,000 shares post split) is currently partially held in escrow with the
courts and partially still in restricted form pending the result of the
litigation.
In 1997 a receivable of $105,000 was written off by the Company due to
the bankruptcy of the debtor, an original incorporator of the Company.
In January, 1999 the Company did a reverse split of it's stock on a 1
for 10 basis and proceeded to raise $557,500 from the sale and/or conversion
into Common Stock of senior subordinated debentures. In addition, the Company
raised $211,500 from the sale of its restricted stock during the 1999 fiscal
year. The reverse split was done in order to reduce the number of shares
outstanding so that it would be possible to attract investment capital to the
Company through the sale of Common Stock.
PRESENT OPERATIONS
The Company is currently based in Miami, where the building plan is 100
houses per 12 month period. As a public Company, National Rehab Properties, Inc.
is traded over-the-counter as a Bulletin Board stock under the symbol NRPI.
In 1999, the Company purchased 17 building sites in Miami for cash,
filed for building permits and is proceeding forward with construction. A profit
of $300,000 is expected from the completion of these sales. Those houses will be
encumbered by mortgages from a Miami lending institution. The decision to build
houses in Miami was result of market study showing large number of demand for
first time buyer homes and the large number of vacant lots in the mature
residential neighborhoods the Company is accustomed to dealing in. Due to it's
cash position the Company expects to acquire construction financing for the
Miami project. The Miami project of 100 houses is contingent upon construction
financing.
The Company has made a deposit on a 20 acre tract of land with a
purchase price of $280,000 in Vero Beach, Florida. The Company anticipates
improving the land with road and utilities and platting the land for 100 single
family home sites. The Company anticipates a land and acquisition loan from a
local lending institution for the cost of construction of improvements to the
land and the Company further anticipates building the houses with construction
financing and
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<PAGE>
reselling the houses in the local economy. The Company has funds available to
purchase the land without financing. Known as "Eagle Trace" the project is
estimated to create a profit for the Company of $3,500,000. This project is
contingent upon construction financing for the land improvements and home
construction.
The Company has a signed contract to purchase an aluminum manufacturing
plant that produces aluminum and glass railings, storm shutters and aluminum
windows for sale in South Florida. In 1998 the Company had $4,600,000 in sales
revenues, however was not profitable due to lack of cash to finance the sale of
its products awaiting construction draws. The Company is acquiring 80% of the
company and the company's financials will be consolidated with the parent
company. The Company anticipates acquiring financing for its receivables through
a factoring company for the subsidiary. The receivable financing will be the
only debt of the company. At that time it is anticipated that the subsidiary
will be able to increase revenues to $12,000,000 per year and it is projected
that the net income will result in $2,000,000 to the bottom line of the Company.
The Company has the funds for acquisition, however, the receivable financing
funds are not yet in place and therefore the potential profitability of the
acquisition target is not secure. The Company feels that the supply of users for
the target's products are immense because the acquisition target is one of three
companies that are licensed to build products passing the newest hurricane
protection laws. However, there can be no assurance that all of the acquisitions
will be consummated as timely as the Company would hope.
OVERHEAD
The monthly costs of the corporate offices of the Company are estimated
to be approximately $20,000 per month. The monthly expense of $20,000 includes
payroll, payroll taxes, dues and subscriptions, utilities for the corporate
offices, health insurance for the employees, general liability insurance, office
supplies, postage and freight, professional fees for accounting, legal and other
consultants, corporate office rent, repairs and maintenance primarily for office
equipment, telephone expenses and travel and entertainment
LIQUIDITY AND CAPITAL RESOURCES
Prior to the Company's inception as a publicly owned Company on the
effective date of August 17, 1995, the Company relied upon loans originated by
its founder, Richard S. Astrom, to finance working capital needs when operations
did not provide enough cash flow. Additionally, the Company has relied upon bank
financing to acquire properties and thereby operate the Company. The bank
financing has required the personal guarantee of Mr. Astrom. In the future the
Company needs to acquire additional investments for the Company with the
proceeds of mortgage funding or public offerings of stock. However, the Company
has sufficient funds to continue operations and new acquisitions will also
supply additional funds to continue operations. Therefore, any future funding
will result from business expansion and/or improvements to the Company's
financial lending structure. Thus, the Company does not have a schedule of
future funds to be acquired and quantified because it is difficult to estimate
when, or if, business expansion will occur or when, if financial lucrative
opportunities present themselves. If funds are required in the future they will
be generated from stock sales or from the mortgaging of real estate. The can be
no assurance that any such funds will be available on favorable terms and
conditions when the capital is required.
At the end September 30, 1998, the Company had $13,754 in the bank and
in the quarter ending December 1998 the Company showed a profit of $212,792. In
the first months of 1999, the Company raised approximately $557,500 from the
sale of
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its securities. The Company will use these monies as well as cash from stock
sales in its investments. Should that cash flow prove insufficient, the Company
will slow construction, acquire additional mortgage financing and/or sell
additional stock.
FUTURE
In addition to these real estate ventures, the Company is in
negotiations with several additional acquisitions. The Company plans to acquire
sufficient mortgage financing and increase its sales volume to 200 homes in the
1999-2000 fiscal year, generating $3,000,000 of pretax net income. In the
2000-2001 fiscal year, those figures are projected to double with sales rising
to 400 houses and net income rising to $6,000,000. Projected sales for the
2001-2002 fiscal year are set at 500 houses with $7,500,000 of net income. These
projections mandate the Company's ownership of mortgage companies, title
companies and long-term, symbiotic relationships with building contractors. In
these operations, the Company intends to remain a leader in the ongoing task of
rebuilding the nation's decaying urban housing stock and to make a tangible,
long-lasting contribution to American society.
The Company has successfully practiced its buy low, renovate or build,
and sell high strategy in several southeastern communities. It is now active in
Miami, Florida and is planning expansions to other similar markets in Florida
and Georgia. Ultimately, the Company's goal is to buy, build or renovate, and
resell thousands of distressed properties in the working-class sections of
larger east coast and Sunbelt cities.
The Company plans to sell the 100 homes at "Eagle Trace" and do
additional subdivisions with similar characteristics both in economics and type
of real estate.
The Company plans to develop the aluminum manufacturing plant into a
much larger manufacturer, acquiring its competition, and expanding into the
Caribbean for sales. The Company expects $2,000,000 to $3,000,000 monthly sales
from the aluminum manufacturing plant assuming successful completion of the
acquisition.
Management believes the Company will be able to continue supporting
itself with operational cash flow. However, no assurances can be given that
present factors such as favorable economy and attractive interest rates will
continue, the effect of which might severely impact the ability of the Company
to sustain itself in the future.
Lastly, the Company believes that with its growth and profitability it
will be able to acquire additional funding in the future. The funding will be
utilized to support working capital, if necessary, and to make additional
acquisitions and investments. The availability and terms of these funding
arrangements will depend upon market and other conditions. There can be no
assurances that such additional funding will be available on favorable terms.
15
<PAGE>
BUSINESS
COMPANY BACKGROUND
National Rehab Properties, Inc. was incorporated in Florida in 1993 and
completed a reverse merger with a Nevada corporation in 1994. The Company has
over 800 stockholders and is approved by NASD to be publicly traded on the OTC
Bulletin Board. The Company finances its real estate projects with first
mortgages from banks at low bank rates. With its managerial and financial
resources fully developed, the Company will continue to be a leader in business
and to set an example of how a profitable, public company can use its assets and
resources in conjunction with governmental agencies to develop and improve local
communities.
The real estate market of South Florida is ripe for this type of
development. Thousands of homes and lots go through foreclosure and abandonment
yearly and become available at attractive prices and fit the Company profile.
These properties can become the inventor for the Company to buy and resell, and
create profits. The Company does not feed off financial failure and economic
stagnation, but to the contrary, the Company encourages economic growth not only
by investing in older neighborhoods but by providing jobs to local contractors.
There is an unlimited supply of lots and dilapidated homes available to
supply the Company with product for resale. The cities are mandated by public
policy to maintain the neighborhoods in a safe, lawful and orderly manner, which
includes that vacant houses be boarded at all times. Owners of vacant houses are
notified if their houses are not lawfully kept, after a short period of time the
house is demolished at the owner's expense and the lot left clear. The Company
looks to invest in these homes either before or after demolition at the
appropriate price.
In order for the Company to buy real estate for the Company's business
of rehabilitating houses or building houses, construction financing is
necessary. Through the years the Company has constantly had difficulty in
borrowing money from banks due to lack of cash in the corporate bank account.
This is evidenced by the income of the years 1994 through 1997. In May of 1997
the Company entered into a line of credit for $1,500,000 with an investment
banking company. The interest rate was between 15 and 18 per cent per year with
an equal amount in placement fees. Additionally the Company had to give the
lender 4,000,000 shares of restricted stock. The Company entered into this
agreement due to lack of credit for the rehabilitation of houses. In 1997 the
Company opened an office in New Orleans, La. because that city has 39,000
declared houses in need of repair. In 1997 and 1998 the Company did 25 houses in
New Orleans and between the points and interest the Company lost approximately
$240,000. In 1998 the Company left New Orleans as it was determined that with
excessive rate of interest being charged for the money borrowed, the Company
could not be profitable. As of December 31, 1998 the inventory of Company owned
houses in New Orleans, houses with the excessively high interest rates, was
zero. In December 1998 the Company, through it's legal counsel filed a lawsuit
against the lender and it's president for civil and criminal usury, in Dade
County Circuit Court. In that lawsuit the Company is asking for return of
principal, damages and return of the stock issued to the defendants et al. That
stock (400,000 shares post split) is currently partially held in escrow with the
courts and partially still in restricted form pending the result of the
litigation.
In 1997, a receivable of $105,000 was written off by the Company due to
the bankruptcy of the debtor, an original incorporator of the Company.
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<PAGE>
In January, 1999, the Company did a reverse split of it's stock on a 1
for 10 basis and proceeded to raise approximately $557,500 from free trading
stock issued as a result of conversion of senior subordinated convertible
debentures pursuant to an exemption provided for under Rule 504 of Regulation D.
The reverse split was done in order to reduce the number of shares outstanding
so that it would be possible to attract investment capital to the Company
through the sale of its Common Stock.
THE MARKET ENVIRONMENT
The following provides a description of the market environment in which
the Company currently operates.
The real estate values of "starter homes" in the United States has kept
pace with inflation for the past 30 years, while values of other areas of the
real estate market have gone through depression-like periods. These starter
homes are found in older established residential neighborhoods. In particular,
the increase of the interest rates to 20% in 1981 and the tax law change of 1986
severely lowered the value of real estates. However, the market that is targeted
by the Company did not feel the same strains produced by the economy. These
renovated "starter homes" were $30,000 in 1981; $45,000 in 1987; $60,000 in
1994; $70,000 in 1997, and $85,000 in 1999.
The homes sold in these neighborhoods are sold with low down payments.
The buyers are usually minorities and/or immigrants and first time home buyers,
not often educated in the language of home ownership. Since the 1960's, the big
cities of the United States have been abandoned by the middle-class in favor of
the suburbs, leaving the older and smaller dwellings to first-time home buyers.
Economists refer to this market as the "affordable housing" market.
In the past, low cost homes in the Miami market have been filled by
buyers as soon as they became available. In the 1950's, the market was veterans
returning from World War II and the Korean War. In the 1960's, the influx of
Hispanic immigrants into Miami filled the void left by those people desiring to
live in the suburbs. Throughout the 1970's and 1980's, Haitians, Jamaicans,
Cubans, Nicaraguans, Panamanians, Hondurans, Venezuelans, Mexicans, and
Colombians have made Miami their home. The immigration into this multi-cultural
city has not slowed much into the 1990's. Miami has become a large ethnic blend
of many nationalities. All of these people need places to call home. It is
within this population and older established residential neighborhoods that the
Company has specialized in selling houses priced less than $90,000.
Nationally, home ownership is only 27% in many of these areas. Housing
and Urban Development's ("HUD") national housing initiative goal is over 70%
home ownership. The goal of the Company is to convert those tenants into
homeowners.
HUD and the Federal Housing Administration ("FHA") support the cities
and their residential neighborhoods with low down payment housing programs.
These financing programs are very favorable to lower income citizens. The
Community Reinvestment Act ("CAR") requires banks to invest in these
neighborhoods. The government favors private ownership over public housing and
tenant-renter situations. It is up to the private and public sectors to engage
these sound programs and make them successful. The Company has taken that
challenge by revitalizing urban neighborhoods and, in so doing, helps hundreds
of working- class families realize the American dream of home ownership.
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<PAGE>
BUSINESS STRATEGIES
The Company has two strategies in fulfilling the first part of its
Business Plan.
1. (A) Buy distressed and foreclosed homes for approximately $15,000
that need as much as $35,000 for repairs. The total investment usually
approaches $40,000 - $50,000. The Company then sells the home for $75,000 -
$80,000 within 6 months.
(B) Buy vacant lots for $7,500. The Company contracts with a
building contractor to build a 1,300 square foot house for $55,000 and sells it
for $90,000 while under construction. Within 6 months the new home is built,
sold and closed. With adequate funds, hundreds of these homes can be purchased
in many of America's large metropolitan cities.
The HUD programs are specifically aimed at the low income neighborhoods
of America and to maintain the nation's existing housing stock which has
depreciated and declined due to foreclosures, abandonment, and old age.
2. Subdivision development is an area of the development business into
which the Company is embarking at its project in Vero Beach called "Eagle
Trace." This market is known as the retiree market selling to retirees moving
from the northern cities to retire, live close to golf courses, the ocean,
hospitals, and shopping. The buyers are looking for a new of approximately 1,800
square feet, two car garage, and possibly a pool for approximately $125,000. The
land and subdivision improvements cost the Company $10,000 per lot and with
sales at $25,000 per lot, profit of $15,000 per lot are expected. The Company
plans on developing subdivisions of 70 to 100 homes. Additional profits will be
earned by building the houses in the subdivision and selling the homes.
Management feels that at that size, they have an economies of size, and Company
risk is limited.
3. Apartment development is felt to be very lucrative due to demand and
high rental prices for new apartments in the South Florida region. With the
financing-mortgage plans available to the Company (7% interest and 40 year term
mortgage), the Company anticipates building 50 to 100 unit apartment projects
and capture a niche that is not being developed by many developers in South
Florida at this time.
COMPETITION
The market for real estate development and housing construction is
highly competitive and subject to economic changes, regulatory developments and
emerging industry standards. The Company believes that the principal competitive
factors in its markets are conformance to building standards, reliability,
safety, price and quality of its final product. There can be no assurance that
the Company will compete successfully in the future with respect to these or
other factors.
EMPLOYEES
As of September 30, 1998, substantially all of the activities of the
Company are undertaken by its current officers and directors. The Company has
four employees as of this filing.
LITIGATION
On December 18, 1998, the Company filed a lawsuit against Goodbody
International, Inc. and its CEO for damages in excess of $15,000 in the Circuit
Court of the 11th Judicial Circuit in and for Dade County, Florida. This lawsuit
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<PAGE>
alleges civil and criminal usury violations, and requests cancellation of all
stock certificates purchased by GBI, and return of all interest plus adjudicated
penalties. It is not known as of the date of this Prospectus the outcome of the
lawsuit with GBI.
FACILITIES
The Company currently maintains its executive offices on a rent-free
basis pursuant to a month to month arrangement with the landlord.
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<PAGE>
MANAGEMENT
The directors and executive officers of the Company are as follows:
Name Age Position
------------------ --- ---------
Richard Astrom 52 President, CEO and Director
Christopher Astrom 28 Vice President, Secretary and Director
RICHARD ASTROM
Richard Astrom currently serves as President, Chief Executive Officer
and Chairman of the Board of Directors of the Company. Mr. Astrom has extensive
experience in the first-time home buyer's market. Throughout his career in real
estate, Mr. Astrom has devoted himself to the needs of people seeking to own a
piece of the American dream. Mr. Astrom is a graduate of the University of Miami
with a Bachelor's degree in Business Administration and a major in Finance. As a
certified real estate broker, he has been active as a salesperson, developer,
and real estate investor since 1969. For more than 25 years, Mr. Astrom has
specialized in rehabilitating the existing housing stock of Miami, one of
America's largest and fastest growing cities. He gained invaluable experience
outside of the Miami area by adequately filling the roll of vice president and
sales manager of a 200 home retirement community in Ocala, Florida, selling land
and home packages. He was the primary developer of the land, recreation
facilities, and housing stock. He also sold commercial properties and land in
the same area, including 40 to 100 acres parcels for horse farms. As founder and
president of the Company, he has helped make dreams come true for hundreds of
South Florida families. He has directed the Company through a December 1994
merger with a publicly owned and traded company.
CHRISTOPHER ASTROM
Christopher Astrom currently serves as Vice President, Secretary and
Director of the Company. Christopher manages all corporate acquisitions. He has
experience in the analysis of market areas and their resale ability. In
addition, he has developed management systems to control costs of acquisition
and rehab thereby helping to insure Company profitability. The Company spread
between purchase and sale is usually the same thus ensuring its approximate
$15,000 gross profit per sale. Christopher received his Bachelor of Arts in
Business Administration from the School of Business at the University of
Florida.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the total compensation paid to the
Company's chief executive officer for the last three completed fiscal years. No
executive officer of the Company received compensation of $100,000 or more
during any such year.
<TABLE>
<CAPTION>
Name and Other Annual
Principal Position Year Total Income Bonus Compensation
- ------------------ ---- ------------ ----- ------------
<S> <C> <C> <C> <C>
Richard Astrom 1998 $50,000 $-0- $-0-
President & CEO 1997 $50,000 $-0- $-0-
1996 $50,000 $-0- $-0-
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Christopher Astrom 1998 $15,000 $-0- $-0-
Vice President & 1997 $-0- $-0- $-0-
Secretary 1996 $-0- $-0- $-0-
</TABLE>
DIRECTOR COMPENSATION
No fees are paid for director services at the time of this Offering,
however, reasonable travel and lodging expenses associated with Company meetings
may be reimbursed.
SECURITIES AND EXCHANGE COMMISSION POLICY
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company, the Company has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
CERTAIN TRANSACTIONS
Richard Astrom, President, CEO and Director, is the father of
Christopher Astrom, Vice President, Secretary and Director, of the Company.
As of October, 1999, 1,933,000 shares of the Company's Common Stock
have been issued as a result of conversion of previously issued senior
subordinated convertible debentures. There is the potential for up to an
additional 4,067,000 shares to be issued in the future as a result of conversion
of currently outstanding senior subordinated convertible debentures.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of October 22, 1999, the beneficial
ownership of the Company's Common Stock by (i) the only persons who own of
record or are known to own, beneficially, more than 5% of the Company's Common
Stock; (ii) each director and executive officer of the Company; and (iii) all
directors and officers as a group.
Percent of
Number of Outstanding
Name Shares Common Stock
- ------------------------- --------- ------------
Richard and Pamela Astrom 285,000 15.0%
Christopher Astrom(1)(2) 10,000 0.5%
Officers and Directors 295,000 15.5%
as a group (2 persons)
- -----------------
(1) Does not include 6,000,000 options to acquires shares of the Company's
Common Stock at a price of $.0001 per share. Mr. Astrom has executed a
promissory note in the amount of $20,000 for these options which were authorized
in consideration for Mr. Astrom receiving no compensation during 1996 and 1997.
(2) Does not include 1,000,000 shares of Class A Common Stock issued to Mr.
Astrom, each share entitling him to 20 votes per share.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue 40,000,000 shares of Common Stock
with $.0001 par value. The holders of the Common Stock are entitled to one vote
per each share held and have the sole right and power to vote on all matters on
which a vote of stockholders is taken. Voting rights are non-cumulative. The
holders of shares of Common Stock are entitled to receive dividends when, as and
if declared by the Board of Directors, out of funds legally available therefore
and to share pro-rata in any distribution to stockholders. The Company
anticipates that any earnings will be retained for use in its business for the
foreseeable future. Upon liquidation, dissolution, or winding up of the Company,
the holders of the Common Stock are entitled to receive the net assets held by
the Company after distributions to the creditors. The holders of Common Stock do
not have any preemptive right to subscribe for or purchase any shares of any
class of stock. The outstanding shares of Common Stock and the shares offered
hereby will not be subject to further call or redemption and will be fully paid
and non-assessable.
CLASS A COMMON STOCK
The Company is authorized to issue 2,000,000 shares of Class A Common
Stock with $.0001 par value.
The Class A Common Stock are substantially identical on a
share-for-share basis except that the holders of Class A Common Stock have 20
votes per share on each matter considered by stockholders while holders of the
Common Stock have only 1 vote per share. The difference in voting rights
increases the voting power of the holders of Class A and accordingly has an
anti-takeover effect. The existence of the Class A Common Stock may make the
Company a less attractive target for a hostile takeover bid or render more
difficult or discourage a merger
22
<PAGE>
proposal, an unfriendly tender offer, a proxy contest, or the removal of
incumbent management. Those seeking to acquire the Company through a business
combination will be compelled to obtain the approval of the holders of Class A
Common Stock before any such business combination can be consummated.
The Class A Common Stock is non-transferable by a holder, except to an
immediate family member or family trust. There are 1,000,000 shares of Class A
Common Stock issued and outstanding held by one shareholder.
PLAN OF DISTRIBUTION
This Offering is being conducted on a self-underwritten basis by
officers, directors and employees of the Company. The entire purchase price of
the Shares is payable in full upon subscription. The Company may discount the
Shares. Officers, directors and employees of the Company will receive no
commissions in connection with the sale of the Shares offered hereby.
The Offering period will continue for 180 days from the effective date
of this Prospectus unless extended by the Company for an additional 180 day
period.
The Offering price for purposes of calculating the filing fee is set at
$.25 per share. The price at which the Shares may actually be sold will be
determined by the market price of the Common Stock as of the date of sale. The
Company may offer the Shares at no more than a 25% discount to the closing bid
price on the day prior to the sale. Accordingly, the final offering price of the
shares can't be determined as of the date hereof.
LEGAL MATTERS
The validity of the securities offered hereby is being passed upon for
the Company by Richard P. Greene, P.A., 2455 E. Sunrise Boulevard, Suite 905,
Ft. Lauderdale, Florida 33304.
EXPERTS
The financial statements appearing in this Prospectus and Registration
Statement have been audited by Cummings-Grayson & Co., P.A., as set forth in
their report thereon appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form SB-2 under the Securities Act with respect to the
securities offered hereby. This Prospectus, filed as a part of the Registration
Statement, does not contain certain information set forth in or annexed as
exhibits to the Registration Statement, and reference is made to such exhibits
to the Registration Statement for the complete text thereof. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement and to the exhibits filed as
part thereof, which may be inspected and copied at the public reference
facilities of the Commission in Washington, D.C., and at the Commission's
regional offices at 500 West Madison Street, Chicago, IL 60604; 7 World Trade
Center, New York, NY 10048; and 5757 Wilshire Boulevard, Los Angeles, CA 90034;
and copies of such material can be obtained from the Public Reference Section of
the Commission, 450 5th Street, N.W., Washington, DC 20549, at prescribed rates
and are available on the World Wide Web at: http://www.sec.gov.
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<PAGE>
CUMMINGS-GRAYSON & CO., P.A. CERTIFIED PUBLIC ACCOUNTANTS
915 NW 1st AVENUE, BAY 3A NONPROFIT & RELIGIOUS ORGANIZATION CONSULTANT
MIAMI, FLORIDA 33136 QUICKBOOKS & PEACHTREE COMPUTER PROFESSIONALS
TELEPHONE: (305) 377-1952
FAX: (305) 377-1621
A U D I T R E P O R T
NATIONAL REHAB PROPERTIES, INC.
SEPTEMBER 30, 1998
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
TABLE OF CONTENTS
Independent Auditor's Report 1
Balance Sheet 2
Statement of Income and Retained Earnings 3
Statements of Cash Flows 4
Notes to Financial Statements 5 - 10
Statement of Selling, General and Administrative Expenses 11
Report on Internal Control 12
<PAGE>
CUMMINGS-GRAYSON & CO., P.A. CERTIFIED PUBLIC ACCOUNTANTS
915 NW 1st AVENUE, BAY 3A NONPROFIT & RELIGIOUS ORGANIZATION CONSULTANT
MIAMI, FLORIDA 33136 QUICKBOOKS & PEACHTREE COMPUTER PROFESSIONALS
TELEPHONE: (305) 377-1952
FAX: (305) 377-1621
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
of National Rehab Properties, Inc.
We have audited the accompanying balance sheet of National Rehab Properties,
Inc. as of September 30, 1998 and the related statements of income, retained
earnings, and cash flows for the year then ended. These financial statements are
the responsibility of the Organization's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of National Rehab Properties, Inc.
as of September 30, 1998, and results of its operation for the year then ended
in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basis financial
statements taken as a whole. The accompanying Statement of Selling, General, and
Administrative Expenses are presented for the purpose of additional analysis,
and is a required part of the basic financial statements. Such information has
been subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
aspects in relation to the basic financial statements taken as a whole.
/s/ Cummings-Grayson & Co.
CUMMINGS-GRAYSON & COMPANY, P.A.
Miami, Florida
May 30, 1999
1
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
BALANCE SHEET
AS OF SEPTEMBER 30,1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash in Bank $13,754 $8,223
Inventory 671,228 770,364
Prepaid Interest 807 1,076
Prepaid Points 71,838 0
---------- ----------
TOTAL CURRENT ASSETS 757,627 779,663
NET FIXED ASSETS 4,103 6,734
LONG-TERM ASSETS
Employee Receivable 320,091 222,250
Mortgages and Notes Receivable 53,376 145,673
---------- ----------
TOTAL LONG-TERM ASSETS 373,467 367,923
LAND HELD FOR INVESTMENT 22,283 89,133
OTHER ASSETS
Security Deposits 700 0
Organizational Costs 5,558 8,337
Property Deposits 0 8,400
---------- ----------
TOTAL OTHER ASSETS 6,258 16,737
---------- ----------
TOTAL ASSETS $1,163,738 $1,260,190
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $0 $7,102
Customer Deposits 1,350 0
Mortgages Payable 967,392 758,430
---------- ----------
TOTAL CURRENT LIABILITIES 968,742 765,532
LONG TERM LIABILITIES
Notes Payable 27,349 63,841
Income Tax Payable 37,228 37,228
---------- ----------
TOTAL LONG-TERM LIABILITIES 64,577 101,069
---------- ----------
TOTAL LIABILITIES 1,033,319 866,601
STOCKHOLDERS' EQUITY
Common Stock 281,835 200,941
Additional Paid In Capital 88,303 88,303
Retained Earnings (239,719) 104,345
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 130,419 393,589
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,163,738 $1,260,190
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
AS OF SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
REVENUES
Real Estate Sales $934,200 $0
Rental Income 419 45,832
Management Income 0 87,500
Fee Income 0 7,500
---------- ----------
TOTAL REVENUE 934,619 140,832
COST OF HOUSES SOLD 1,163,556 0
---------- ----------
GROSS PROFIT/(LOSS) (228,937) 140,832
OPERATING EXPENSES
Selling, General, and Administrative 54,826 129,938
Depreciation and Amortization 5,189 4,899
Interest 48,836 0
Rent 9,608 10,872
---------- ----------
TOTAL OPERATING EXPENSES 118,459 145,709
OTHER INCOME (EXPENSES)
Interest Income 2,207 17,704
Miscellaneous Income 1,925 12,448
Loss on Sale of Van (800) 0
---------- ----------
3,332 30,152
INCOME BEFORE INCOME TAX PROVISION (344,064) 25,275
INCOME TAX PROVISION 0 4,906
---------- ----------
NET INCOME/(LOSS) (344,064) 20,369
BEGINNING RETAINED EARNINGS 104,345 83,976
---------- ----------
ENDING RETAINED EARNINGS (239,719) 104,345
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
NATIONAL REHAB PROPERTIES, INC
CASH FLOW STATEMENT
AS OF SEPTEMBER 30,1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (344,064) 20,369
Adjustments to reconcile net income to net cash provided
by operating activities
Prior Period Adjustments 0 0
Depreciation & Amortization 5,199 4,899
Loss on the Sale of Asset 800
(Increase) Decrease in:
Inventory 99,136 (703,305)
Homeowners Title Receivable 0 2,700
Prepaid Interest and Points (71,569) (1,076)
Increase (Decrease) in:
Trade Accounts Payable (7,102) (6,612)
Customer Deposits 1,350 0
Mortgage Notes Payable 208,962 (37,659)
Income Tax Payable 0 4,906
---------- ----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (107,288) (715,778)
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of Equipment (1,059) (6,048)
Sale of Equipment 470 0
Employee Loans Made (97,841) (90,929)
Mortgage Loans Advanced (9,068) 855
Notes Written Off and Advanced 101,365 (7,129)
Sale of Land 66,850 0
Property Deposits 8,400 (8,400)
Security Deposits (700) 5,565
---------- ----------
NET CASH PROVIDED BY
INVESTING ACTIVITIES 68,417 (106,086)
CASH FLOWS FROM FINANCING ACTIVITIES
Debt Reduction (36,492) 0
Net borrowings for property acquisition 0 758,430
Stock sales & warrants issued 80,894 55,894
---------- ----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 44,402 814,324
---------- ----------
NET INCREASE (DECREASE) IN CASH 5,531 (7,540)
CASH AT BEGINNING OF YEAR 8,223 15,763
---------- ----------
CASH AT END OF YEAR 13,754 8,223
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
NATIONAL REHAB PROPERTIES, INC
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30,1998
NOTE I - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
National Rehab Properties, Inc. (NRPI) is the result of a merger between two
Corporations on December 15, 1994. National Rehab Properties, Inc., was formed
on October 1, 1993 in the state of Florida, and Mister Las Vegas (MLV), which
was formed on October 18, 1971 in the state of Nevada. The merger created
National Rehab Properties, Inc., a Nevada Corporation, authorized to transact
business in the state of Florida on August 17, 1995. The newly formed
Corporation took on MLV's non-reporting status as a public company.
The Corporation's primary objective is to purchase residential properties,
renovate the acquired properties, and hold the refurbished, reconstructed
properties for sale, or buy lots and build houses for resale. National Rehab
Properties, Inc.'s accounting procedures are based on the American Institute of
Certified Public Accountants (AICPA) Audit and Accounting Guide. "Construction
Contractor". The Company intends to sell its inventory in the normal course of
doing business.
CASH
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or less to
be cash equivalents.
REVENUE AND COST RECOGNITION
Revenue from fixed-price contracts are recognized using completed contract
method. The cost of earned revenue, and the resulting gross profit on a contract
are reported in the financial statements only when a contract has been completed
or substantially completed. Revenue recognition is deferred on each contract
until progress reaches a level of completion sufficient to establish the
probable outcome.
Construction costs of projects under contract include all direct material and
labor costs and those indirect costs related to contract performance. Selling,
general, and administrative costs are charged to expense as incurred. Provisions
for estimated losses on the uncompleted contracts are made in the period in
which such losses are determined. Changes in estimated profitability are
recognized in the period in which the revisions are determined.
5
<PAGE>
INCOME TAXES
The Company's accounts for income taxes are in accordance with SFAS No. 96,
"Accounting for Income Taxes". Deferred tax balances are determined by using the
tax rate based on currently enacted tax laws expected to be in effect when the
taxes are actually paid or recorded. Income taxes are provided for the tax
effects of transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes related primarily to differences between
the bases of long-term contracts and installment notes receivable for financial
and income tax reporting.
ORGANIZATION COSTS
Organization costs are pertaining to corporate organization, corporate merger,
attorney's fees and registration of stock. These costs are amortized over 60
months.
NOTE 2 - INVENTORY
Inventory consists of residential single family homes and duplexes held for
resale, and is valued at the lower of cost or market value. Cost includes
acquisition, renovation and carrying costs specifically identified with each
unit. The following is a list of the homes and duplexes held as inventory as of
September 30, 1998.
LOCATION COST
1718 N. Robertson Street, New Orleans, La. $ 73,349.18
2104-06 Desire Street, New Orleans, La. 25,622.59
2116 Dryades, New Orleans, La. 84,426.76
2120 Desire, New Orleans, La. 102,960.52
2122 Dryades, New Orleans, La. 51,326.39
2525-27 South Galvez Street, New Orleans, La. 38,086.14
2627 S Robertson, New Orleans, La. 62,599.91
2817-19 Orleans, New Orleans, La. 50,375.69
2829-371 Gen Taylor, New Orleans, La. 48,941.27
6215 Dauphine Street, New Orleans, La. 72,661.79
2127-29 Clara Street, New Orleans, La. 26,360.35
2252 N Villere Street, New Orleans, La. 34,517.19
-----------
Total $671,227.78
===========
6
<PAGE>
NOTE 3 - EMPLOYEE RECEIVABLE
Employee receivable is made up of amounts advanced to or on behalf of the
president, Richard Astrom in the amount of $311,004 and $9,087 paid to or on
behalf of Christopher Astrom.
NOTE 4 -LONG-TERM RECEIVABLES
MORTGAGES RECEIVABLE
Mortgages receivable of $34,124 are due from persons that purchased properties
from National Rehab Properties primarily during 1994, and mortgages of $11,752
were originated during the fiscal year of 1998, equaling a total of $45,876.
NOTES RECEIVABLE
Notes receivable originating of $101,365 as of September 30, 1998 was written
off since it was considered to be uncollectible due to the bankruptcy of the
debtor.
During the year ended September 30, 1997, there was an additional note
receivable of $7,500 created when funds were extended to Shelter One, Inc.,
which will be payable in lump sum, upon the sale of the related property or an
acquisition of a new mortgage. The was no activity during the year ended
September 30, 1998, thus, the balance remained $7,500.
NOTE 5 -PROPERTY & EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided over the
estimated useful lives of the respective assets, generally three to five years,
on a straight-line basis.
<TABLE>
<CAPTION>
1998 1997
---- ----
PROPERTY TYPE COST LIFE DEPRECIATION EXPENSE
------------------------ ------ ---- --------------------------
<S> <C> <C> <C> <C>
Office Furniture $ 125 7 Yr $ 15 $ 22
Computer & Office Equip. 3,465 5 Yr 664 827
Automobiles 4,265 5 Yr 1,557 1,093
Computer Software 581 3 Yr 194 178
----- ---- ----- -----
Total $8,436 $2,430 $2,120
====== ====== ======
</TABLE>
7
<PAGE>
NOTE 6 - INVESTMENT PROPERTY
In October 1993, approximately 40 acres of land was contributed by the Company's
stockholder as paid-in-capital. The land has been recorded at its net realizable
value based on its appraised value on the date for the transfer. The Company
intends to hold the property for long-term appreciation. As of November 24,
1997, two-thirds (2/3) of the land was sold for net profit of $600.
NOTE 7 - RELATED PARTY TRANSACTION
Richard Astrom is the president of National Rehab, Inc., and owes the Company
$311,004, which is considered material.
During the audit of the purchased properties renovations, it was observed that
an entity named Jazz land Rehab Properties, Inc. was contracted on various
occasions. This entity is wholly owned by Christopher Astrom, who is also the
vice-president of National Rehab Properties, Inc.
NOTE 8 - LIABILITIES
Mortgages payables amounting $967,392 are all expected to be repaid within
twelve months, thus, it is a short-ten-n liability. As of May 30, 1999, all of
the properties were sold.
On August 26, 1997, a liability was incurred of $4,341, which was collateralized
by the purchase of two automobiles. The balance as of fiscal year end is $3,250.
Prior to October 1994, a private investor (Conder lent the Company $50,000,
which is secured by a mortgage on the Company's investment property. As of
October 1995, the private investor lent an additional $9,500 to National Rehab
Properties, Inc. To bring the total notes payable amount to $9,500. On November
29, 1997, this liability was reduced by $35,401 since the land was sold and the
mortgage was paid off by 67% as well.
NOTE 9 - STOCKHOLDERS EQUITY
40,000,000 shares of common stock are authorized by the Company. Of this amount
9,773,700 were outstanding as of fiscal year end. Also as of the audit report
date, 3, 100,000 shares had been issued (due to a reverse stock split in
January, 1999).
NOTE 10 -INCOME TAX
This fiscal year resulted in a loss, thus, there was no additional tax
liability. The prior year income
8
<PAGE>
tax liability was not liquidated as of audit report date, therefore current
year's income tax liability remained the same as before ($37,228). However, as
of the audit issuance date, this income tax liability was fully paid.
NOTE 11 - LEASE
On August 20, 1997, National Rehab Properties, Inc. signed a lease, with
Christopher Astrom as the corporate representative, with Arthur Pittari, as the
landlord, for the premises located at 918 St. Peter Street, New Orleans, La.
70118. The Company moved its daily operations from Miami, Florida to New
Orleans, La., starting in December, 1996, and consummating the move in August,
1997, as evidenced by the lease agreement. The lease is on a month to month
basis for a monthly fee of $700.
In November, 1998, National Rehab Properties, Inc. relocated back to Miami,
Florida, and established his operating facility at 2921 NW 6th Avenue, Miami,
Florida, 33127. This is also the office of Encore Builder's, Inc., who builds
houses for National Rehab Properties, Inc. to resell. There is no charge for the
rental of space and the relationship will exist as long as it is mutually
beneficial.
NOTE 12 - OTHER COMMITMENTS
As of July 3, 1997, Goodbody International, Inc. (GBI) granted a line of credit
to National Rehab Properties, Inc., for Mortgages related to NRPI's business of
buying, renovating, and reselling properties. The chief executive officer
executed the agreement on behalf of GBI. The unused portion of the credit line
as of September 30, 1998, was $967,392.
NOTE 13 - ECONOMIC DISCLOSURE
In order to operate the affairs of the Company, it is imperative that a
financing arrangement is established. That arrangement is with International
Holdings, Inc. and the line of credit, which supports primarily all of the
purchasing and renovating activities of the Company, and impacts an estimated
70% of all assets and liabilities. This relationship is considered material to
the short-term and long-term goals and objectives of NRPI.
NOTE 14 - CONTINGENCIES
On December 18, 1998, NRPI filed a lawsuit against Goodbody International, Inc.
and its CEO for damages in excess of $15,000 in the Circuit Court of the 11th
Judicial Circuit in and for Dade County, Florida. This lawsuit alleges civil and
criminal usury violations, and requests cancellation of all stock certificates
purchased by GBI, and return of all interest plus adjudicated penalties.
9
<PAGE>
It is not known as of the date of audit report issuance, June 15, 1999, the
outcome of the lawsuit with GBI.
NOTE 15 - SUBSEQUENT EVENTS
As of the date of report issuance, June 15, 1999, the New Orleans inventory has
been reduced to zero.
On January 15, 1999, the Corporation authorized the reverse split of its common
stock on a 1 for 10 basis. The Corporation was also authorized to obtain a new
CUSIP number for the Corporation's stock certificates as required for the split.
As of audit report issuance date, 3,100,000 were outstanding.
10
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
STATEMENT OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
AS OF SEPTEMBER 30,1998 AND 1997
1998 1997
--------- ---------
Advertising $5,117 $2,032
Appraisals and Credit Reports 1,830 0
Auto & Lease 2,497 2,732
Bank Charges 722 781
Commissions 6,000 6,851
Copier Rental 0 3,004
Messenger and Delivery 379 0
Insurance Expense -General 1,255 5,108
Management Fee 0 65,000
Lease Expenses 1,953 3,863
Miscellaneous Expenses 0 1,370
Office Expenses 9,029 4,946
Postage 280 1,388
Professional Fees 8,344 8,182
Repairs and Maintenance 1,205 1,639
Taxes -Other 259 0
Telephone and Telegraph 8,977 7,186
Travel 218 5,024
Securities Administration 3,889 0
Utilities 2,872 10,832
--------- ---------
Total Expenses $54,826 $129,938
========= =========
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
CUMMINGS-GRAYSON & CO., P.A. CERTIFIED PUBLIC ACCOUNTANTS
915 NW 1st AVENUE, BAY 3A NONPROFIT & RELIGIOUS ORGANIZATION CONSULTANT
MIAMI, FLORIDA 33136 QUICKBOOKS & PEACHTREE COMPUTER PROFESSIONALS
TELEPHONE: (305) 377-1952
FAX: (305) 377-1621
REPORT ON INTERNAL CONTROL
To the Board of Directors
of National Rehab Properties, Inc.
We have examined the internal control structure of National Rehab Properties,
Inc. in effect at September 30, 1998. Our examination was conducted in
accordance with standards established by the American Institute of Certified
Public Accountants.
The management of National Rehab Properties, Inc., is responsible for
establishing and maintaining an internal control structure. In fulfilling that
responsibility, estimates and judgments by management are required to assess the
expected benefits and related costs of control procedures. The objectives of the
internal control structure are to provide reasonable assurance that financial
data are recorded, processed, summarized, and reported consistent with the
assertions embodied in the financial statements. The internal -control structure
comprises the control environment, the accounting system and the control
procedures.
Because of inherent limitations in any internal control structure, errors or
irregularities may nevertheless occur and not be detected. Also, projection of
any evaluation of the structure to future periods is subject to the risk that
policies or procedures may become inadequate because of changes in conditions or
that the degree of compliance with policies or procedures may deteriorate.
In our opinion, the internal control structure of National Rehab Properties,
Inc., in effect at September 30, 1998, taken as a whole, was sufficient to meet
the objectives stated above insofar as those objectives pertain to the
prevention or detection of errors or irregularities in amounts that would be
material in relation to the financial statements.
/s/ Cummings-Grayson & Co.
CUMMINGS-GRAYSON & CO., P.A.
Miami, Florida 33136
May 30, 1999
12
<PAGE>
National Rehab Properties, Inc. Page 1
Balance Sheet -Unaudited
May 31,1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Current Assets
Bank -Gulf Bank $ 178,779.41
Accounts Receivable-Officers 1 344,258.75
Accounts Receivable-Officers 2 32,341.39
Mortgages Receivable 38,467.54
Debenture Subscriptions 500,000.00
Notes Receivable 10,500.00
Inventory 72,801.00
--------------
Total Current Assets $ 1,177,148.09
Fixed Assets
Autos and Trucks 54,679.66
Accumulated Depreciation -1,581.82
Office Equipment 4,170.88
Accumulated Depreciation -2,134.46
--------------
Net Fixed Assets $ 55,134.26
Other Assets
Investment Property -Land 22,283.25
Organizational Costs 3,705.08
--------------
Total Other Assets $ 25,988.33
-----------------
Total Assets $ 1,258,270.68
=================
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 2
Balance Sheet - Unaudited
May 31, 1999
<TABLE>
<CAPTION>
Liabilities and
<S> <C> <C>
Liabilities
Investors' Accounts $ 24,099.46
Notes and Mortgages Payable 850,000.00
----------------
Total Liabilities $ 874,099.46
Stockholders' Equity
Common Stock 448,335.00
Additional Paid-In Capital 88,303.00
Retained Earnings -241,941.46
Net Profit/Loss 89,474.68
----------------
Total Stockholders' Equity $ 384,171.22
----------------
Total Liabilities and Equity $ 1,258,270.68
================
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 1
Income Statement - Unaudited
For The Eight Months Ended May 31,1999
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Income
Sales $ 153,100.00 40.7
Commission Income 7,300.00 1.9
Interest Income 2,315.74 0.6
Miscellaneous Income 627.15 0.2
Gain on Disposition of Houses 212,792.07 56.6
---------------
Total Income 376,134.96 100.0
Cost of Houses Sold
Cost of Houses Sold 108,313.50 28.8
Closing Costs 28,212.30 7.5
Real Estate Taxes -234.16 0.1
Architectural Fees 2,000.00 0.5
---------------
Total Cost of Houses Sold 138,291.64 36.8
--------------
Gross Profit $ 237,843.32 63.2
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 2
Income Statement - Unaudited
For The Eight Months Ended May 31,1999
<TABLE>
<CAPTION>
General and Administrative
Expenses
<S> <C> <C> <C>
Advertising $ 320.00 0.1
Appraisals 3,528.75 0.9
Auto Expenses 3,859.17 1.0
Bank Charges 627.23 0.2
Commissions 1,000.00 0.3
Debenture Expenses 45,500.00 12.1
Depreciation 1,998.08 0.5
Dues and Subscriptions 250.00 0.1
Management Fees 39,086.65 10.4
Messenger and Delivery 192.50 0.1
Insurance Expense 134.75 0.0
Lease Expense 464.32 0.1
Office Expenses 889.01 0.2
Organization Expense 1,852.48 0.5
Postage 47.75 0.0
Professional Fees 27,604.43 7.3
Promotion 1,402.50 0.4
Rent 1,400.00 0.4
Repairs and Maintenance 176.18 0.0
Taxes - Other 298.75 0.1
Telephone and Telegraph 4,932.97 1.3
Travel 8,741.41 2.3
Stock Expenses 3,640.01 1.0
Utilities 421.70 0.1
-------------
Total Expenses $ 148,368.64 39.4
---------------
Net Profit/Loss $ 89,474.68 23.8
===============
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
KENNETH H. ROBINSON
Accounting and Income Tax Service
15605 S.W. 77th Court
Miami. Florida 33157
305-235-7783
September 29, 1999
National Rehab Properties, Inc.
2921 N.W. 6th Avenue
Miami, Florida 33127
Gentlemen:
I have compiled the accompanying Balance Sheet of National Rehab Properties,
Inc. as of July 31, 1999, and the related Statement of Income for the ten months
then ended in accordance with standards established by the American Institute of
Certified Public Accountants.
A compilation is limited to presenting in the form of Financial Statements
information that is the representation of management. Accordingly, we do not
express an opinion or any other form of assurance on them.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the Financial Statements, they might influence the user's
conclusions about the Company's financial position, results of operations, and
changes in financial position. Accordingly, these Financial Statements are not
designed for those who are not informed about such matters.
Respectfully submitted,
/s/ Kenneth H. Robinson
--------------------------
Kenneth H. Robinson
Accountant
<PAGE>
National Rehab Properties, Inc. Page 1
Balance Sheet - Unaudited
July 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Current Assets
Bank - Gulf Bank $ 55,509.51
MMA - Gulf Bank 201,229.78
Accounts Receivable-Officers I 288,225.65
Accounts Receivable-Officers 2 -283.69
Mortgages Receivable 25,799.90
Notes Receivable 10,500.00
Inventory 245,791.65
Prepaid Advertising 52,000.00
Prepaid Loan Fee 5,000.00
---------------
Total current Assets $ 883,772.80
Fixed Assets
Autos and Trucks 54,679.66
Accumulated Depreciation -8,168.82
Office Equipment 4,816.01
Accumulated Depreciation -2,187.30
---------------
Net Fixed Assets $ 49,139.55
other Assets
Investment Property - Land 22,283.25
Deposits on Land 5,000.00
Organizational Costs 3,241.96
---------------
Total Other Assets $ 30,525.21
---------------
Total Assets $ 963,437.56
===============
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 2
Balance Sheet - Unaudited
July 31, 1999
<TABLE>
<CAPTION>
Liabilities and
<S> <C> <C>
Liabilities
Investors' Accounts $ 24,099.46
Notes and Mortgages Payable 312,500.00
--------------
Total Liabilities $ 336,599.46
Stockholders, Equity
Common Stock 750,835.00
Additional Paid-In Capital 88,303.00
Retained Earnings -241,941.46
Net Profit/Loss 29,641.56
--------------
Total Stockholders' Equity $ 626,838.10
---------------
Total Liabilities and Equity $ 963,437.56
===============
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 1
Income Statement - Unaudited
For The Ten Months Ended July 31, 1999
<TABLE>
<CAPTION>
Income
<S> <C> <C> <C> <C>
Sales $ 153,100.00 40.3
Commission Income 7,300.00 1.9
Interest Income 6,061.69 1.6
Miscellaneous Income 627.15 0.2
Gain on Disposition of Houses 212,792.07 56.0
---------------
Total Income 379,880.91 100.0
Cost of Houses Sold
Cost of Houses Sold 108,313.50 28.5
Closing Costs 28,212.30 7.4
Interest Expense 527.77 0.1
Real Estate Taxes -234.16 0.1
---------------
Total Cost of Houses Sold 136,819.41 36.0
---------------
Gross Profit $ 243,061.50 64.0
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
National Rehab Properties, Inc. Page 2
Income Statement - Unaudited
For The Ten Months Ended July 31, 1999
<TABLE>
<CAPTION>
General and Administrative
Expenses
<S> <C> <C> <C> <C>
Advertising $ 1,453.42 0.4
Auto Expenses 5,535.56 1.5
Bank Charges 627.23 0.2
Commissions 1,000.00 0.3
Debenture Expenses 71,500.00 18.8
Depreciation 8,637.92 2.3
Dues and Subscriptions 250.00 0.1
Management Fees 39,086.65 10.3
Messenger and Delivery 336.34 0.1
Office Expense 3,226.32 0.8
Organization Expense 2,315.60 0.6
Professional Fees 41,755.25 11.0
Rent 1,400.00 0.4
Registration Fees 298.75 0.1
Telephone and Telegraph 7,210.45 1.9
Travel 14,956.58 3.9
Stock Expenses 4,307.75 1.1
Utilities 421.70 0.1
Tax Expense 576.11 0.2
Loss on Mortgage Foreclosure 8,524.31 2.2
-------------
Total Expenses $ 213,419.94 56.2
--------------
Net Profit/Loss $ 29,641.56 7.8
==============
</TABLE>
SEE ACCOUNTANT'S COMPILATION REPORT.
<PAGE>
=====================================
No dealer, salesperson or other person is authorized to give any
information or make any representations not contained in this Prospectus with
respect to the offering made hereby. This Prospectus does not constitute an
offer to sell any of the securities offered hereby in any jurisdiction where, or
to any person to whom, it is unlawful to make such an offer. Neither the
delivery of this Prospectus nor any sale made hereunder will, under any
circumstances, create an implication that there has been no change in the
information set forth herein or in the business of the Company since the date
hereof.
-----------------
TABLE OF CONTENTS
PAGE
----
Prospectus Summary . . . . . . 2
Risk Factors . . . . . . . . . 6
Use of Proceeds. . . . . . . . 9
Dividends. . . . . . . . . . . 9
Dilution . . . . . . . . . . . 10
Capitalization . . . . . . . . 11
Management's Discussion and
Analysis of Results of
Operations and Financial
Condition . . . . . . . . . . 12
Business . . . . . . . . . . . 16
Management . . . . . . . . . . 20
Certain Transactions . . . . . 21
Principal Shareholders . . . . 22
Description of Securities. . . 22
Plan of Distribution . . . . . 23
Legal Matters. . . . . . . . . 23
Experts. . . . . . . . . . . . 23
Available Information. . . . . 23
Financial Statements . . . . .
----------------
Until ___________, 2000 (365 days after date of this Prospectus), all
persons effecting transactions in the Shares whether or not participating in
this distribution, may be required to deliver a Prospectus. This is in addition
to the obligation of persons to deliver a Prospectus when acting as Underwriters
and with respect to their unsold allotments or subscriptions.
=====================================
NATIONAL REHAB
PROPERTIES, INC.
10,000,000 SHARES
----------
PROSPECTUS
----------
________, 2000
=====================================
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the expenses in connection with the
issuance and distribution of the securities offered hereby.
SEC Registration Fee $ 695.00
Transfer Agent Fees* 3,000.00
Printing Costs* 5,000.00
Legal Fees and Expenses* 50,000.00
Accounting Fees and Expenses* 15,000.00
Blue Sky Fees and Expenses* 15,000.00
Miscellaneous* 1,305.00
-----------
Total $ 90,000.00
* Indicates expenses that have been estimated for the purpose of
filing. Printing costs include costs associated with electronic filing on EDGAR.
Item 14. Indemnification of Directors and Officers
Article IX of the Company's By-laws provides indemnification provisions
for its officers, directors, employees or agents.
The provisions of Section 78.751, Nevada Statutes, dealing with
indemnification of corporate officers, directors or agents, provide as follows:
"(1) A corporation may indemnify any person who was or is a party, or
is threatened to be made party, to any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by, or in the right of, the corporation), by reason of the
fact that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding, including
any appeal thereof, if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit, or
proceeding by judgment, order, settlement, or conviction or upon a plea of nolo
contenders or its equivalent shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in, or not opposed to, the best interests of the corporation or, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(2) A corporation shall have power to indemnify any person who was or
is a party, or is threatened to be made a party, to any threatened, pending, or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation or is or was serving at the
request of the corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit, including any
appeal thereof, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation, except that
no indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless, and only
II - 1
<PAGE>
to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability, in view
of all circumstances of the case, such person is fairly and reasonably entitled
to indemnification for such expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in subsection (1) or subsection (2), or
in defense of any claim, issue, or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
(4) Any indemnification under subsection (1) or subsection (2), unless
pursuant to a determination by a court, shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employees, or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit, or
proceeding;
(b) If such a quorum is not obtainable, or even if obtainable,
a quorum of disinterested directors so directs, by independent legal counsel in
a written opinion; or
(c) By the shareholders by a majority vote of a quorum
consisting of shareholders who were not parties to such action, suit or
proceeding.
(5) Expenses, including attorneys' fees, incurred in defending a civil
or criminal action, suit, or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon a
preliminary determination following one of the procedures set forth in
subsection (4) that the director, officer, employee, or agent met the applicable
standard of conduct set forth in subsection (1) or subsection (2) or as
authorized by the Board of Directors in the specific case and, in either event,
upon receipt of an undertaking by or on behalf of the director, officer,
employee, or agent to repay such amount, unless it shall ultimately be
determined that he is entitled to be indemnified by the corporation as
authorized in this section.
(6) A corporation shall have the power to make any other or further
indemnification of any of its directors, officers, employees, or agents under
any by-law, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, except an indemnification against
gross negligence or willful misconduct.
(7) Indemnification as provided in this section shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such a
person.
(8) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving as the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under the provisions of this section.
II - 2
<PAGE>
(9) If any expenses or other amounts are paid by way of indemnification
otherwise than by court order or action by the shareholders or by an insurance
carrier pursuant to insurance maintained by the corporation, the corporation
shall, not later than the time of delivery to shareholders of written notice of
the next annual meeting of shareholders, unless such meeting is held within 3
months from the date of such payment, and, in any event, within 15 months from
the date of such payment, deliver either personally or by mail to each
shareholder of record at the time entitled to vote for the election of directors
a statement specifying the persons paid, the amounts paid, and the nature and
status at the time of such payment of the litigation or threatened litigation."
INDEMNIFICATION UNDERTAKING
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers or
persons controlling the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is therefor unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and is
therefor unenforceable and will be governed by the final adjudication of such
issue.
Item 15. Recent Sales of Unregistered Securities
The Company as reflected post merger, was incorporated on October 18,
1971. In January, 1999, the Company effected a reverse split of its common stock
on a 1 for 10 basis. In April 1999, the Company issued senior subordinated
debentures convertible into shares of Common Stock. As of July 31, 1999,
restricted Common Stock totaling $211,500 was issued and paid for. An additional
$257,500 of Common Stock was issued upon conversion of debentures issued in
April 1999. In August of 1999, an additional $300,000 was received for the
issuance of additional senior subordinated convertible debentures.
The sales set forth above are claimed to be exempt from registration
with the Securities and Exchange Commission pursuant to Section 4(2) of the
Securities Act of 1933, as transactions by an issuer not involving any public
offering as well as pursuant to Rule 504 of Regulation D.
Item 16. List of Exhibits
EXHIBIT DESCRIPTION PAGE NO.
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Specimen Common Stock Certificate
4.2 Specimen Class A Common Stock Certificate*
5 Opinion of Registrant's Counsel
24.1 Consent of Richard P. Greene, P.A., Registrant's Counsel
24.2 Consent of Cummings-Grayson & Co., P.A., Registrant's
Accountant
-------------
* To be filed by amendment.
II - 3
<PAGE>
Item 17. Undertakings
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel, the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the questions whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)
(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. That for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II - 4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of MIAMI,
and State of Florida on OCTOBER 21, 1999.
NATIONAL REHAB PROPERTIES, INC.
By: /S/ RICHARD ASTROM
-----------------------------------
RICHARD ASTROM
President/Principal Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
- ---------- ------ -----
/S/ RICHARD ASTROM President and Director 10/21/99
- -------------------------
Richard Astrom (Principal Executive Officer)
/S/ CHRISTOPHER ASTROM Vice President and Director 10/21/99
- -------------------------
Christopher Astrom Treasurer, (Principal
Accounting Officer)
II - 5
<PAGE>
INDEX TO EXHIBITS PURSUANT TO ITEM 601 OF REGULATION S-B
EXHIBIT DESCRIPTION PAGE NO.
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Specimen Common Stock Certificate
4.2 Specimen Class A Redeemable Warrant Certificate
5 Opinion of Registrant's Counsel
24.1 Consent of Richard P. Greene, P.A., Registrant's Counsel
24.2 Consent of Cummings-Grayson & Co., P.A., Registrant's
Accountant
-------------
* To be filed by amendment.
EXHIBIT 3.1
Articles of Incorporation
FILED
1993 OCT - 1 AM 7:41
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
ARTICLES OF INCORPORATION
OF
NATIONAL REHAB PROPERTIES INC.
The undersigned incorporator hereby forms a corporation under Chapter
607 of the laws of the State of Florida.
ARTICLE I. NAME
The name of the corporation shall be:
NATIONAL REHAB PROPERTIES INC.
The address of the principal office of this corporation shall be 641 West 68th
Street, Hialeah, Florida 33014, and the mailing address of the corporation
shall be the same.
ARTICLE II. NATURE OF BUSINESS
This corporation may engage or transact in any or all lawful activities
or business permitted under the laws of the United States, the State of Florida
or any other state, country, territory or nation.
ARTICLE III. CAPITAL STOCK
The maximum number of shares of stock that this corporation is
authorized to have outstanding at any one time is 1,000 shares of common stock
having no par value per share.
<PAGE>
ARTICLE IV. REGISTERED AGENT
The street address of the initial registered office of the corporation
shall be 1201 Hays Street, Tallahassee, Florida 32301, and the name of the
initial registered agent of the corporation at that address is Corporation
Service Company.
ARTICLE V. TERM OF EXISTENCE
This corporation is to exist perpetually.
ARTICLE VI. INCORPORATOR
The name and street address of the incorporator to these Articles of
Incorporation:
Brian Courtney
Corporate Agents, Inc.
1201 Hays Street
Tallahassee, Florida 32301
The undersigned incorporator has executed these Articles of
Incorporation this first day of October, 1993.
/S/ BRIAN COURTNEY
----------------------------
Incorporator
<PAGE>
ACCEPTANCE OF REGISTERED AGENT DESIGNATED
IN ARTICLES OF INCORPORATION
Corporation Service Company, a Delaware corporation authorized to
transact business in this State, having a business office identical with the
registered office of the corporation named above, and having been designated as
the Registered Agent in the above and foregoing Articles, is familiar with and
accepts the obligations of the position of Registered Agent under Section
607.0505, Florida Statutes.
By: /S/ BRIAN COURTNEY
---------------------------------------
Authorized Service Representative
Corporation Service Company
Dated: October 1, 1993
FILED
1993 OCT - 1 AM 7:41
SECRETARY OF STATE
TALLAHASSEE, FLORIDA
<PAGE>
ACTION OF SOLE INCORPORATOR
NATIONAL REHAB PROPERTIES, INC.
-------------------------------
The undersigned, without a meeting, being the sole incorporator of the
Corporation, does hereby elect the persons listed below to serve as directors of
the corporation until the first annual meeting of shareholders and until their
successors are elected and qualify:
RICHARD ASTROM
/S/ BRIAN COURTNEY
-----------------------------
Brian Courtney
Incorporator
Dated:
<PAGE>
F I L E D
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
OCT 18 1971
JOHN KOONTZ - SECRETARY OF STATE
/S/ JOHN KOONTZ
NO. 2817-51
1 ARTICLES OF INCORPORATION
2 OF
3 MISTER LAS VEGAS.
4 KNOW ALL MEN BY THESE PRESENTS:
5 That we, the undersigned, have this day voluntarily
6 associated ourselves together for the purpose of forming a
8 hereby state and certify:
9 FIRST: That the name of said corporation shall be as
10 follows: MISTER LAS VEGAS.
11 SECOND: That the purpose and objects for which this
12 corporation is formed to engage in and carry out any lawful
13 activity, subject to expressed limitations, if any.
14 THIRD: That the location of the principal office of
15 this corporation, within the State of Nevada, is Suite 500,
16 302 E. Carson, Las Vegas, Nevada, and that the Resident Agent
17 in charge thereof is THOMAS L. PURSEL, ESQ.
18 FOURTH: That the total authorized capital stock of
19 this corporation is ONE HUNDRED THOUSAND ($100,000) DOLLARS
20 divided into ONE MILLION (1,000,000) shares of common stock of
21 the per value of TEN (10(cent)) CENTS per share.
22 FIFTH: That the capital stock of this corporation
23 shall not be subject to assessment.
24 SIXTH: The members of the governing board shall be
25 styled Directors, and the number of such Board of Directors shall
26 consist of three and the names and addresses of the first board
27 of Directors who will serve as such until their successor are
28 appointed or elected are:
29 WILLARD J. HACHT-Suite 500, 302 E. Carson, Las Vegas, Nevada
30 MILDRED L. HACHT-Suite 500, 302 E. Carson, Las Vegas, Nevada
31 THOMAS L. PURSEL-Suite 500, 302 E. Carson, Las Vegas, Nevada
32
<PAGE>
1 SEVENTH: The name and addresses of each of the incor-
2 porators signing the Articles of Incorporation, are:
3 WILLARD J. HACHT...............Suite 500, 302 E. Carson
Las Vegas, Nevada
4
THOMAS L.PURSEL................Suite 500, 302 E. Carson
5 Las Vegas, Nevada
6 KAREN F. CAESAR ...............Suite 500, 302 E. Carson
Las Vegas, Nevada
7
8 EIGHTH: That this corporation shall have perpetual 9
existence.
10 IN WITNESS WHEREOF, the undersigned incorporators have
11 executed these Articles of Incorporation this 8TH day of
12 September, 1971.
13 /S/ WILLARD J. HACHT
-------------------------
WILLARD J. HACHT
14
/S/ THOMAS L. PURSEL
-------------------------
15 THOMAS L. PURSEL
16 /S/ KAREN F. CAESAR
-------------------------
KAREN F. CAESAR
17
18 STATE OF NEVADA )
) SS:
19 COUNTY OF CLARK )
20 On this 8TH day of September, 1971, before me, a
21 Notary Public in and for the County and State, personally
22 appeared WILLARD J. HACHT, THOMAS L. PURSEL, and KAREN F.
23 CAESAR, known to me to be the persons described in and who
24 executed the foregoing Articles of Incorporation, who acknow-
25 ledged to me that they executed the same freely and voluntarily
26 and for the uses and purposes therein mentioned.
27 IN WITNESS WHEREOF, I have hereunto set my hand and
28 affixed my official seal.
29 /S/ JACK J. PURSEL
-------------------------
30 SEAL Notary Public - State of Nevada
CLARK COUNTY
31 JACK J. PURSEL
My commission expires Jan. 17, 1975
32
-2-
EXHIBIT 3.2
BYLAWS
OF
NATIONAL REHAB PROPERTIES, INC.
ARTICLE I
SHAREHOLDERS
SECTION 1. ANNUAL MEETINGS
(a) The annual meeting of the shareholders of the Corporation, shall be
held at the principal office of the Corporation in the State of Nevada or at
such other place within or without the State of Nevada as may be determined by
the Board of Directors and as may be designated in the notice of such meeting.
The meeting shall be held on the third Tuesday of February of each year or on
such other day as the Board of Directors may specify. If said day is a legal
holiday, the meeting shall be held on the next succeeding business day not a
legal holiday.
(b) Business to be transacted at such meeting shall be the election of
directors to succeed those whose terms are expiring and such other business as
may be properly brought before the meeting.
(c) In the event that the annual meeting, by mistake or otherwise,
shall not be called and held as herein provided, a special meeting may be called
as provided for in Section 2 of this Article I in lieu of and for the purposes
of and with the same effect as the annual meeting.
SECTION 2. SPECIAL MEETINGS
(a) A special meeting of the shareholders of the Corporation may be
called for any purpose or purposes at any time by the President of the
Corporation, by the Board of Directors or by the holders of not less than 10% of
the outstanding capital stock of the Corporation entitled to vote at such
meeting.
(b) At any time, upon the written direction of any person or persons
entitled to call a special meeting of the shareholders, it shall be the duty of
the Secretary to send notice of such meeting pursuant to Section 4 of this
Article I. It shall be the responsibility of the person or persons directing the
Secretary to send notice of any special meeting of shareholders to deliver such
direction and a proposed form of notice to the Secretary not less than 15 days
prior to the proposed date of said meeting.
(c) Special meetings of the shareholders of the Corporation shall be
held at such place, within or without the State of Nevada, on such date, and at
such time as shall be specified in the notice of such special meeting.
SECTION 3. ADJOURNMENT
(a) When the annual meeting is convened, or when any special meeting is
convened, the presiding officer may adjourn it for such period of time as may be
reasonably necessary to reconvene the meeting at another place and time.
(b) The presiding officer shall have the power to adjourn any meeting
of the Shareholders for any proper purpose, including, but not limited to, lack
of a quorum, securing a more adequate meeting place, electing officials to count
and tabulate votes, reviewing any shareholder proposals or passing upon any
challenge which may properly come before the meetings.
<PAGE>
(c) When a meeting is adjourned to another time or place, it shall not
be necessary to give any notice of the adjourned meeting if the time and place
to which the meeting is adjourned are announced at the meeting at which the
adjournment is taken, and any business may be transacted at the adjourned
meeting that might have been transacted on the original date of the meeting. If,
however, after the adjournment the Board fixes a new record date for the
adjourned meeting, a notice of the adjourned meeting shall be given in
compliance with Section 4(a) of this Article I to each shareholder of record on
the new record date entitled to vote at such meeting.
SECTION 4. NOTICE OF MEETINGS, PURPOSE OF MEETING, WAIVER
(a) Each shareholder of record entitled to vote at any meeting shall be
given in person, or by first class mail, postage prepaid, written notice of such
meeting which, in the case of a special meeting, shall set forth the purpose(s)
for which the meeting is called, not less than 10 or more than 60 days before
the date of such meeting. If mailed, such notice is to be sent to the
shareholder's address as it appears on the stock transfer books of the
Corporation, unless the shareholder shall be requested of the Secretary in
writing at least 15 days prior to the distribution of any required notice that
any notice intended for him or her be sent to some other address, in which case
the notice may be sent to the address so designated. Notwithstanding any such
request by a shareholder, notice sent to a shareholder's address as it appears
on the stock transfer books of this Corporation as of the record date shall be
deemed properly given. Any notice of a meeting sent by United States mail shall
be deemed delivered when deposited with proper postage thereon with the United
States Postal Service or in any mail receptacle under its control.
(b) A shareholder waives notice of any meeting by attendance, either in
person or by proxy, at such meeting or by waiving notice in writing either
before, during or after such meeting. Attendance at a meeting for the express
purpose of objecting that the meeting was not lawfully called or convened,
however, will not constitute a waiver of notice by a shareholder who states at
the beginning of the meeting, his or her objection that the meeting is not
lawfully called or convened.
(c) A waiver of notice signed by all shareholders entitled to vote at a
meeting of shareholders may also be used for any other proper purpose including,
but not limited to, designating any place within or without the State of Nevada
as the place for holding such a meeting.
(d) Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of shareholders need be specified in any written
waiver of notice.
SECTION 5. CLOSING OF TRANSFER BOOKS, RECORD DATE,
SHAREHOLDERS' LIST
(a) In order to determine the holders of record of the capital stock of
the Corporation who are entitled to notice of meetings, to vote a meeting or
adjournment thereof, or to receive payment of any dividend, or for any other
purpose, the Board of Directors may fix a date not more than 60 days prior to
the date set for any of the above-mentioned activities for such determination of
shareholders.
(b) If the stock transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least 10 days immediately
preceding such meeting.
2
<PAGE>
(c) In lieu of closing the stock transfer books, the Board of Directors
may fix in advance a date as the date for any such determination of
shareholders, such date in any case to be not more than 60 days prior to the
date on which the particular action, requiring such determination of
shareholders, is to be taken.
(d) If the stock transfer books are not closed and no record date is
fixed for the determination of shareholders entitled to notice or to vote at a
meeting of shareholders, or to receive payment of a dividend, the date on which
notice of the meeting is mailed or the date on which the resolution of the Board
of Directors declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of shareholders.
(e) When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof, unless the Board of
Directors fixes a new record date under this Section for the adjourned meeting.
(f) The officer or agent having charge of the stock transfer books of
the Corporation shall make, as of a date at least 10 days before each meeting of
shareholders, a complete list of the shareholders entitled to vote at such
meeting or any adjournment thereof, with the address of each shareholder and the
number and class and series, if any, of shares held by each shareholder. Such
list shall be kept on file at the registered office of the Corporation, at the
principal place of business of the Corporation or at the office of the transfer
agent or registrar of the Corporation for a period of 10 days prior to such
meeting and shall be available for inspection by any shareholder at any time
during usual business hours. Such list shall also be produced and kept open at
the time and place of any meeting of shareholders and shall be subject to
inspection by any shareholder at any time during the meeting.
(g) The original stock transfer books shall be prima facie evidence as
to the shareholders entitled to examine such list or stock transfer books or to
vote any meeting of shareholders.
(h) If the requirements of Section 5(f) of this Article I have not been
substantially complied with, then, on the demand of any shareholder in person or
by proxy, the meeting shall be adjourned until such requirements are complied
with.
(i) If no demand pursuant to Section 5(h) of this Article I is made,
failure to comply with the requirements of this Section shall not affect the
validity of any action taken at such meeting.
(j) Section 5(g) of this Article I shall be operative only at such
time(s) as the Corporation shall have 6 or more shareholders.
SECTION 6. QUORUM
At any meeting of the shareholders of the Corporation, the presence, in
person or by proxy, of shareholders owning a majority of the issued and
outstanding shares of the capital stock of the Corporation entitled to vote
thereat shall be necessary to constitute a quorum for the transaction of any
business. If a quorum is present, the vote of a majority of the shares
represented at such meeting and entitled to vote on the subject matter shall be
the act of the shareholders. If there shall not be quorum at any meeting of the
shareholders of the Corporation, then the holders of a majority of the shares of
the capital stock of the Corporation who shall be present at such meeting, in
person or by proxy, may adjourn such meeting from time to time until holders of
all of the shares of the capital stock shall attend. At any such adjourned
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meeting at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally scheduled.
SECTION 7. PRESIDING OFFICER, ORDER OF BUSINESS
(a) Meetings of the shareholders shall be presided over by the Chairman
of the Board, or, if he or she is not present or there is no Chairman of the
Board, by the President or, if he or she is not present, by the senior Vice
President present or, if neither the Chairman of the Board, the President, nor a
Vice President is present, the meeting shall be presided over by a chairman to
be chosen by a plurality of the shareholders entitled to vote at the meeting who
are present, in person or by proxy. The presiding officer of any meeting of the
shareholders may delegate his or her duties and obligations as the presiding
officer as he or she sees fit.
(b) The Secretary of the Corporation, or, in his or her absence, an
Assistant Secretary shall act as Secretary of every meeting of shareholders, but
if neither the Secretary nor an Assistant Secretary is present, the presiding
officer of the meeting shall choose any person present to act as secretary of
the meeting.
(c) The order of business shall be as follows:
1. Call of meeting to order.
2. Proof of notice of meeting.
3. Reading of minutes of last previous shareholders'
meeting or a waiver thereof.
4. Reports of officers.
5. Reports of committees.
6. Election of directors.
7. Regular and miscellaneous business.
8. Special matters.
9. Adjournment.
(d) Notwithstanding the provisions of Section 7(c) of this Article I,
the order and topics of business to be transacted at any meeting shall be
determined by the presiding officer of the meeting in his or her sole
discretion. In no event shall any variation in the order of business or
additions and deletions from the order of business as specified in Section 7(c)
of this Article I invalidate any actions properly taken at any meeting.
SECTION 8. VOTING
(a) Unless otherwise provided for in the Articles of Incorporation,
each shareholder shall be entitled, at each meeting and upon each proposal to be
voted upon, to one vote for each share of voting stock recorded in his name on
the books of the Corporation on the record date fixed as provided for in Section
5 of this Article I.
(b) The presiding officer at any meeting of the shareholders shall have
the power to determine the method and means of voting when any matter is to be
voted upon. The method and means of voting may include, but shall not be limited
to, vote by ballot, vote by hand or vote by voice. No method of voting may be
adopted, however, which fails to take account of any shareholder`s right to vote
by proxy as provided for in Section 10 of this Article I. In no event may nay
method of voting be adopted which would prejudice the outcome of the vote.
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SECTION 9. ACTION WITHOUT MEETING
(a) Any action required to be taken at any annual or special meeting of
shareholders of the Corporation, or any action which may be taken at any annual
or special meeting of such shareholders, may be taken without a meeting, without
prior notice and without a vote, if a consent in writing, setting forth the
action so taken, shall be signed by the holders of a majority of the
Corporation's outstanding stock.
(b) In the event that the action to which the shareholders consent is
such as would have required the filing of a certificate under Nevada corporate
law is such action had been voted on by shareholders at a meeting thereof, the
certificate filed under such other section shall state that written consent has
been given in accordance with the provisions of Section 9 of this Article I.
(c) If shareholder action is taken by written consent in lieu of
meeting signed by less than all of the Corporation's shareholders, then all non
participating shareholders shall be provided with written notice of the action
taken within 10 days after the date of the written instrument taking such
action.
(d) No action by written consent in lieu of meeting shall be valid if
it is in contravention of applicable proxy or informational rules adopted
pursuant to the Securities Exchange Act of 1934, as amended, including, without
limitation, the requirements of Section 14 thereof.
SECTION 10. PROXIES
(a) Every shareholder entitled to vote at a meeting of shareholders or
to express consent or dissent without a meeting, or his or her duly authorized
attorney-in-fact, may authorize another person or persons to act for him or her
by proxy.
(b) Every proxy must be signed by the shareholder or his or her
attorney-in-fact. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as otherwise
provided in this Section 10.
(c) The authority of the holder of a proxy to act shall not be revoked
by the incompetence or death of the shareholder who executed the proxy unless,
before the authority is exercised, written notice of any adjudication of such
incompetence or of such death is received by the corporate officer responsible
for maintaining the list of shareholders.
(d) Except when other provisions shall have been made by written
agreement between the parties, the record holder of shares held as pledges or
otherwise as security or which belong to another, shall issue to the pledgor or
to such owner of such shares, upon demand therefor and payment of necessary
expenses thereof, a proxy to vote or take other action thereon.
(e) A proxy which states that it is irrevocable is irrevocable when it
is held by any of the following or a nominee of any of the following: (i) a
pledgee; (ii) a person who has purchased or agreed to purchase the shares: (iii)
a creditor or creditors of the Corporation who extend or continue to extend
credit to the Corporation in consideration of the proxy, if the proxy states
that it was given in consideration of such extension or continuation of credit,
the amount thereof, and the name of the person extending or continuing credit;
(iv) a person who has contracted to perform services as an officer of the
Corporation, if a proxy is required by the contract of employment, if the proxy
states that
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it was given in consideration of such contract of employment and states the name
of the employee and the period of employment contracted for; and (v) a person
designated by or under an agreement as provided in Article XI hereof.
(f) Notwithstanding a provision in a proxy stating that it is
irrevocable, the proxy becomes revocable after the pledge is redeemed, the debt
of the Corporation is paid, the period of employment provided for in the
contract of employment has terminated, or the agreement under Article XI hereof
has terminated and, in a case provided for in Section 10(e) (iii) or Section
10(e) (iv) of this Article I, becomes revocable three years after the date of
the proxy or at the end of the period, if any, specified therein, whichever
period is less, unless the period of irrevocability of the proxy as provided in
this Section 10. This Section 10(f) does not affect the duration of a proxy
under Section 10(b) of this Article I.
(g) A proxy may be revoked, notwithstanding a provision making it
irrevocable, by a purchaser of shares without knowledge of the existence of the
provisions unless the existence of the proxy and its irrevocability is noted
conspicuously on the face or back of the certificate representing such shares.
(h) If a proxy for the same shares confers authority upon two or more
persons and does not otherwise provide, a majority of such persons present at
the meeting, or if only one is present then that one, may exercise all the
powers conferred by the proxy. if the proxy holders present at the meeting are
equally divided as to the right and manner of voting in any particular case, the
voting of such shares shall be prorated.
(i) If a proxy expressly so provides, any proxy holder may appoint in
writing a substitute to act in his or her place.
(j) Notwithstanding anything in the Bylaws to the contrary, no proxy
shall be valid if it was obtained in violation of any applicable requirements of
Section 14 of the Securities Exchange Act of 1934, as amended, or the Rules and
Regulations promulgated thereunder.
SECTION 11. VOTING OF SHARES BY SHAREHOLDERS
(a) Shares standing in the name of another corporation, domestic or
foreign, may be voted by the officer, agent, or proxy designated by the bylaws
of the corporate shareholder; or, in the absence of any applicable bylaw, by
such person as the board of directors of the corporate shareholder may
designate. Proof of such designation may be made by presentation of a certified
copy of the bylaws or other instrument of the corporate shareholder. In the
absence of any such designation, or in case of conflicting designation by the
corporate shareholder, the chairman of the board, president, any vice president,
secretary and treasurer of the corporate shareholder, in that order, shall be
presumed to possess authority to vote such shares.
(b) Shares held by an administrator, executor, guardian or conservator
may be voted by him or her, either in person or by proxy, without a transfer of
such shares into his or her name. Shares standing in the name of a trustee may
be voted as shares held by him or her without a transfer of such shares into his
name.
(c) Shares standing in the name of a receiver may be voted by such
receiver. Shares held by or under the control of a receiver but not standing in
the name of such receiver, may be voted by such receiver without the transfer
thereof into his name if authority to do so is contained in an appropriate order
of the court by which such receiver was appointed.
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(d) A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the pledgee.
(e) Shares of the capital stock of the Corporation belonging to the
Corporation or held by it in a fiduciary capacity shall not be voted, directly
or indirectly, at any meeting, and shall not be counted in determining the total
number of outstanding shares.
ARTICLE II
DIRECTORS
SECTION 1. BOARD OF DIRECTORS, EXERCISE OF CORPORATE POWERS
(a) All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of, the Board of Directors except as may be otherwise provided in the
Articles of Incorporation or in Shareholder's Agreement. If any such provision
is made in the Articles of Incorporation or in Shareholder's Agreement, the
powers and duties conferred or imposed upon the Board of Directors shall be
exercised or performed to such extent and by such person or persons as shall be
provided in the Articles of Incorporation or Shareholders' Agreement.
(b) Directors need not be residents of this state or shareholders of
the Corporation unless the Articles of Incorporation so require.
(c) The Board of Directors shall have authority to fix the compensation
of directors unless otherwise provided in the Articles of Incorporation.
(d) A director shall perform his or her duties as a director, including
his or her duties as a member of any committee of the Board upon which he may
serve, in good faith, in a manner he or she reasonably believes to be in the
best interests of the Corporation, and with such care as an ordinarily prudent
person in a like position would use under similar circumstances.
(e) In performing his or her duties, a director shall be entitled to
rely on information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or presented by: (i)
one or more officers or employees of the Corporation whom the director
reasonably believes to be reliable and competent in the matters presented; (ii)
legal counsel, public accountants or other persons as to matters which the
director reasonably believes to be within such persons' professional or expert
competence; or (iii) a committee of the Board upon which he or she does not
serve, duly designated in accordance with a provision of the Articles of
Incorporation or these By-Laws, as to matters within its designated authority,
which committee the director reasonably believes to merit confidence.
(f) A director shall not be considered to be acting in good faith if he
or she has knowledge concerning the matter in question that would cause such
reliance described in Section 1(e) of this Article II to be unwarranted.
(g) A person who performs his or her duties in compliance with Section
1 of this Article II shall have no liability by reason of being or having been a
director of the Corporation.
(h) A director of the Corporation who is present at a meeting of the
Board of Directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless he or she votes against
such action or abstains from voting in respect thereto because of an asserted
conflict of interest.
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SECTION 2. NUMBER, ELECTION, CLASSIFICATION OF DIRECTORS, VACANCIES
(a) The Board of Directors of this Corporation shall consist of not
less than one director. The Board shall have authority, from time to time, to
increase the number of directors or to decrease it to not less than one member,
provided that no decrease in the number of directors shall deprive a serving
director of the right to serve throughout the term of his or her election.
(b) Each person named in the Articles of Incorporation as a member of
the initial Board of Directors shall serve until his or her successor shall have
been elected and qualified or until his or her earlier resignation, removal from
office, or death.
(c) At the first annual meeting of shareholders and at each annual
meeting thereafter, the shareholders shall elect directors to hold office until
the next succeeding annual meeting, except in case of the classification of
director as permitted by Nevada corporate law. Each Director shall hold office
for the term for which he or she is elected and until his or her successor shall
have been elected and qualified or until his or her earlier resignation, removal
from office, or death.
(d) The shareholders, by amendment to these Bylaws, may provide that
the directors be divided into not more than four classes, as nearly equal in
number as possible, whose terms of office shall respectively expire at different
times, but no such term shall continue longer than four years, and at least one
fourth of the directors shall be elected annually. If Directors are classified
and the number of directors is thereafter changed, any increase or decrease in
directorship shall be so apportioned among the classes as to make all classes as
nearly equal in number as possible.
(e) Any vacancy occurring in the Board of Directors, including any
vacancy created by reason of an increase in the number of directors, may be
filled only by the Board of Directors. A director elected to fill a vacancy
shall hold office only until the next election of directors by the shareholders.
SECTION 3. REMOVAL OF DIRECTORS
At a meeting of shareholders called expressly for that purpose,
directors may be removed in the manner provided in this Section 3. Any director
or the entire Board of Directors may be removed, with or without cause, by the
vote of the holders of two-thirds of the shares then entitled to vote at an
election of directors.
SECTION 4. DIRECTOR QUORUM AND VOTING
(a) A majority of the directors fixed in the manner provided in these
Bylaws shall constitute a quorum for the transaction of business.
(b) A majority of the members of an Executive Committee or other
committee shall constitute a quorum for the transaction of business at any
meeting of such Executive Committee or other committee.
(c) The act of a majority of the directors present at a Board meeting
at which a quorum is present shall be the act of the Board of Directors.
(d) The act of a majority of the members of an Executive Committee
present at an Executive Committee meeting at which a quorum is present shall be
the act of the Executive Committee.
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(e) The act of a majority of the members of any other committee present
at a committee meeting at which a quorum is present shall be the act of the
committee.
(f) Directors may, if not contrary to applicable law, vote either in
person or by proxy, provided that the proxy holder must be either another
director, an officer or a shareholder of the Corporation; however, any director
who elects to vote by proxy more than three times during any single fiscal year
shall, unless otherwise determined by the Board of Directors, be automatically
removed as a director.
SECTION 5. DIRECTOR CONFLICTS OF INTEREST
(a) No contract or other transaction between this Corporation and one
or more of its director or any other corporation, firm, association or entity in
which one or more of its directors are Directors or officers or are financially
interested shall be either void or voidable because of such relationship or
interest or because such director or directors are present at the meeting of the
Board of Directors or a committee thereof which authorizes, approves or ratifies
such contract or transaction or because their votes are counted for such
purpose, if:
(i) The fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves or
ratifies the contract or transaction by a vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors; or
(ii) The fact of such relationship or interest is disclosed or
known to the shareholders entitled to vote and they authorize, approve or ratify
such contract or transaction by vote or written consent; or
(iii) The contract or transaction is fair and reasonable as to
the Corporation at the time it is authorized by the Board, a committee, or the
shareholders.
(b) Interested directors, whether or not voting, may be counted in
determining the presence of a quorum at a meeting of the Board of Directors or a
committee thereof which authorizes, approves or ratifies such contract or
transaction.
SECTION 6. EXECUTIVE AND OTHER COMMITTEES, DESIGNATION, AUTHORITY
(a) The Board of Directors, by resolution adopted by the full Board of
Directors, may designate from among its directors an Executive Committee and one
or more other committees each of which, to the extent provided in such
resolution or in the Articles of Incorporation or these Bylaws, shall have and
may exercise all the authority of the Board of Directors, except that no such
committee shall have the authority to : (i) approve or recommend to shareholders
actions or proposals required by Nevada corporate law to be approved by
shareholders; (ii) designate candidates for the office of director for purposes
of proxy solicitation or otherwise; (iii) fill vacancies on the Board of
Directors or any committee thereof; (iv) amend these Bylaws; (v) authorize or
approve the reacquisition of shares unless pursuant to a general formula or
method specified by the Board of Directors; or (vi) authorize or approve the
issuance or sale of, or any contract to issue or sell, shares or designate the
terms of a series of a class of shares, unless the Board of Directors, having
acted regarding general authorization for the issuance or sale of shares, or any
contract therefor, and, in the case of a series, the designation thereof has
specified a general formula or method by resolution or by adoption of a stock
option or other plan,
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authorized a committee to fix the terms upon which such shares may be issued or
sold, including, without limitation, the price, the rate or manner of payment of
dividends, provisions for redemption, sinking fund, conversion, and voting or
preferential rights, and provisions for other features of a class of shares, or
a series of a class of shares, with full power in such committee to adopt any
final resolution setting forth all the terms of a series for filing with the
Department of State under Nevada corporate law.
(b) The Board, by resolution adopted in accordance with Section 6(a) of
this Article II, may designate one or more directors as alternate members of any
such committee, who may act in the place and stead of any absent member or
members at any meeting of such committee.
(c) Neither the designation of any such committee, the delegation
thereto of authority, nor action by such committee pursuant to such authority
shall alone constitute compliance by a member of the Board of Directors, not a
member of the committee in question, with his responsibility to act in good
faith, in manner he reasonably believes to be in the best interests of the
Corporation, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances.
SECTION 7. PLACE, TIME, NOTICE AND CALL OF DIRECTORS' MEETING.
(a) Meetings of the Board of Directors, regular or special, may be held
either within or without the State of Nevada.
(b) A regular meeting of the Board of Directors of the Corporation
shall be held for the election of officers of the Corporation and for the
transaction of such other business as may come before such meeting as promptly
as practicable after the annual meeting of the shareholders of this Corporation
without the necessity of notice other than this Bylaw. Other regular meetings of
the Board of Directors of the Corporation may be held at such places as the
Board of Directors of the Corporation may from time to time resolve without
notice other than such resolution. Special meetings of the Board of Directors
may be held at any time upon call of the Chairman of the Board of Directors or a
majority of the Directors of the Corporation, at such time and at such place as
shall be specified in the call thereof. Notice of any special meeting of the
Board of Directors must be given at least two days prior thereto, if by written
notice delivered personally; or at least five days prior thereto, if mailed; or
at least two days prior thereto, if by telegram; or at least two days prior
thereto, if by telephone. If such notice is given by mail, such notice shall be
deemed to have been delivered when deposited with the United States Postal
Service addressed to the business address of such Director with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed delivered
when the telegram is delivered to the telegraph company. If notice is given by
telephone, such notice shall be deemed delivered when the call is completed.
(c) Notice of a meeting of the Board of Directors need not be given to
any Director who signs a waiver of notice either before or after the meeting.
Attendance of a Director at a meeting shall constitute a waiver of notice of
such meeting and waiver of any and all objections to the place of the meeting,
the time of the meeting, or the manner in which it has been called or convened,
except when a Director states, at the beginning of the meeting, any objection to
the transaction of business because the meeting is not lawfully called or
convened.
(d) Neither the business to be transacted at, nor the purpose of, any
regular of special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
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(e) A majority of the directors present, whether or not a quorum
exists, may adjourn any meeting of the Board of Directors to another time and
place. Notice of any such adjourned meeting shall be given to the Directors who
were not present at the time of the adjournment and, unless the time and place
of the adjourned meeting are announced at the time of the adjournment, to the
other Directors.
(f) Members of the Board of Directors may participate in a meeting of
such Board by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other at the same time. Participation by such means shall constitute
presence in person at a meeting.
SECTION 8. ACTION BY DIRECTORS WITHOUT A MEETING
(a) Any action required by Nevada corporate law to be taken at a
meeting of the Directors of the Corporation, or any action which may be taken at
a meeting of the Directors or a committee thereof, may be taken without a
meeting if a consent in writing, setting forth the action so to be taken, signed
by all of the Directors, or all of the members of the committee, as the case may
be, and is filed in the minutes of the proceedings of the Board or of the
committee. Such consent shall have the same effect as a unanimous vote.
(b) If not contrary to applicable law, directors may take action as the
Board of Directors or committees thereof through a written consent to action
signed by a number of directors sufficient to have carried a vote of the Board
of Directors or committee thereof with all members present and voting; provided,
that all directors not joining in such written instrument shall be deemed for
all purposes to have cast dissenting votes, and that all directors not parties
to such instrument shall receive written notice of all action taken through such
instrument within three days after such instrument shall have been subscribed by
the requisite number of directors required for such action.
SECTION 9. COMPENSATION
The Directors and members of the Executive and any other committee of
the Board of Directors shall be entitled to such reasonable compensation for
their services and on such basis as shall be fixed from time to time by
resolution of the Board of Directors. The Board of Directors and members of any
committee of that Board of Directors shall be entitled to reimbursement for any
reasonable expenses incurred in attending any Board or committee meeting. Any
Director receiving compensation under this Section shall not be prevented from
serving the Corporation in any other capacity and shall not be prohibited from
receiving reasonable compensation for such other services.
SECTION 10. RESIGNATION
Any Director of the Corporation may resign at any time by providing the
Board of Directors with written notice indicating the Director's intention to
resign and the effective date thereof.
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ARTICLE III
OFFICERS
SECTION 1. ELECTION, NUMBER, TERMS OF OFFICE
(a) The officers of the Corporation shall consist of a Chairman of the
Board, a Chief Executive officer, a President, a Chief Operating Officer, a
Chief Financial Officer, one or more Vice-Presidents, a Secretary and a
Treasurer, each of whom shall be elected by the Board of Directors at such time
and in such manner as may be prescribed by these Bylaws. Such other officers and
assistance officers and agents as may be deemed necessary may be elected or
appointed by the Board of Directors. The officers of the Corporation shall be
hereinafter collectively referred to as the "Officers."
(b) All officers and agents, as between themselves and the Corporation,
shall have such authority and perform such duties in the management of the
Corporation as are provided in these Bylaws, or as may be determined by
resolution of the Board of Directors not inconsistent with these Bylaws.
(c) Any two or more offices may be held by the same person, except for
the offices of President and Secretary.
(d) A failure to elect a Chairman of the Board, Chief Executive
Officer, President, Chief Operating Officer, Chief Financial Officer, a Vice
President, a Secretary or a Treasurer shall not affect the existence of the
Corporation.
SECTION 2. REMOVAL
An officer of the Corporation shall hold office until the election and
qualification of his successor; however, any Officer of the Corporation may be
removed from office by the Board of Directors whenever in its judgment the best
interests of the Corporation will be served thereby. Such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Election or appointment of an officer shall not of itself create any contract
right to employment or compensation.
SECTION 3. VACANCIES
Any vacancy in any office from any cause may be filled for the
unexpired portion of the term of such office by the Board of Directors.
SECTION 4. POWERS AND DUTIES
(a) The Chairman of the Board of Directors shall preside over meetings
of the Board of Directors and the Shareholders. Unless a separate Chief
Executive Officer is elected, the Chairman shall exercise the powers hereafter
granted to that office. Unless a Chairman of the Board is specifically elected,
the President shall be deemed to be the Chairman of the Board.
(b) The Chief Executive Officer shall be the principal officer of the
Corporation to whom all other officers shall be subordinate. In the event no
Chief Executive Officer is separately elected, such office shall be assumed by
the Chairman of the Board, and if no such office has been filled, by the
President. Except where by law the signature of the President is required or
unless the Board of Directors shall rule otherwise, the Chief Executive Officer
shall possess the same power as the President to sign all certificates,
contracts and other instruments of the Corporation which may be authorized by
the Board of Directors.
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(c) The Chief Operating Officer of the Corporation shall be responsible
for management of the day to day affairs of the Corporation, subject to
compliance with the directions of the Board of Directors and of the Chief
Executive Officer. He shall be responsible for the general day-to-day
supervision of the business and affairs of the Corporation. He shall sign or
countersign all certificates, contracts or other instruments of the Corporation
as authorized by the Board of Directors. He may, but need not, be a member of
the Board of Directors.
(d) Unless otherwise provided by specific resolution of the Board of
Directors, the President shall be the Chief Operating Officer of the
Corporation. In the absence of a separately elected or available Chief Executive
Officer or Chairman of the Board, the President shall be the Chief Executive
Officer of the Corporation and shall preside at all meetings of the shareholders
and the Board of Directors. He shall make reports to the Board of Directors. The
Board of Directors will at all times retain the power to expressly delegate the
duties of the President to any other Officer of the Corporation.
(e) The Chief Financial Officer shall be responsible for coordinating
all financial aspects of the Corporation's operations, including strategic
financial planning, supervision of the Corporation's Treasurer, Comptroller and
outside auditors. In the event an Audit Committee of the Board of Directors is
designated and serving, he shall be responsible for keeping such committee fully
and timely informed of all matters under its jurisdiction. In addition, the
Chief Financial Officer shall be responsible for overseeing preparation and
filing of all reports of the Corporation's activities required to be filed,
either periodically or on a special basis with the United States Internal
revenue Service and Securities and Exchange Commission and other federal and
state governmental agencies.
(f) The Vice President(s), if any, in the order designated by the Board
of Directors, shall exercise the functions of the President in the event of the
absence, disability, death, or refusal to act of the President. During the time
that any Vice President is properly exercising the functions of the President,
such Vice President shall have all the powers of and be subject to all
restrictions upon the President. Each Vice President shall have such other
duties as are assigned to him from time to time by the Board of Directors or by
the President of the Corporation.
(g) The Secretary of the Corporation shall keep the minutes of the
meetings of the shareholders of the Corporation, and, unless provided otherwise
by the Chairman at any meeting of the Board of Directors, the Secretary shall
keep the minutes of the meetings of the Board of Directors of the Corporation.
The Secretary shall be the custodian of the minute books of the Corporation and
such other books and records of the Corporation as the Board of Directors of the
Corporation may direct. The Secretary of the Corporation shall have the general
responsibility for maintaining the stock transfer books of the Corporation, or
of supervising the maintenance of the stock transfer books of the Corporation by
the transfer agent, if any, of the Corporation. The Secretary shall be the
custodian of the corporate seal of the Corporation and shall affix the corporate
seal of the Corporation on contracts and other instruments as the Board of
Directors may direct. The Secretary shall perform such other duties as are
assigned to him from time by the Board of Directors or the President of the
Corporation.
(h) The Treasurer of the Corporation shall be directly subordinate to
the Chief Financial Officer. In the absence of a Chief Financial Officer, such
office shall be filled by the Treasurer. The Treasurer shall have custody of all
funds and securities owned by the Corporation. The Treasurer shall cause to be
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<PAGE>
entered regularly in the proper books of account of the Corporation full and
accurate accounts of the receipts and disbursements of the Corporation. The
Treasurer of the Corporation shall render a statement of the cash, financial and
other accounts of the Corporation whenever he is directed to render such a
statement by the Board of Directors or by the President of the Corporation. The
Treasurer shall at all reasonable times make available the Corporation's books
and financial accounts to any Director of the Corporation during normal business
hours. The Treasurer shall perform all other acts incident to the Office of
Treasurer of the Corporation, and he shall have such other duties as are
assigned to him from time to time by the Board of Directors or the President of
the Corporation.
(i) Other subordinate or assistant officers appointed by the Board of
Directors or by the President, if such authority is delegated to him by the
Board of Directors, shall exercise such powers and perform such duties as may be
delegated to them by the Board of Directors, the Chief Executive Officer or by
the President, as the case may be.
(j) In case of the absence or disability of any Officer of the
Corporation and of any person authorized to act in his place during such period
of absence or disability, the Board of Directors may from time to time delegate
the powers and duties of such Officer or any Director or any other person whom
it may select.
SECTION 5. SALARIES
The salaries of all Officers of the Corporation shall, except as
otherwise determined or required by an agreement entered into among all the
shareholders of the Corporation, be fixed by the Board of Directors. No Officer
shall be ineligible to receive such salary by reason of the fact that he is also
a Director of the Corporation and receiving compensation therefor.
ARTICLE IV
LOANS TO EMPLOYEES AND OFFICERS,
GUARANTEE OF OBLIGATIONS OF EMPLOYEES AND OFFICERS
This Corporation may lend money to, guarantee any obligation of, or
otherwise assist any Officer or other employee of the Corporation or of a
subsidiary, including any Officer or employee who is a Director of the
Corporation or of a subsidiary, whenever, in the judgment of the Directors, such
loan, guarantee or assistance may reasonably be expected to benefit the
Corporation. The loan, guarantee or other assistance may be with or without
interest, and may be unsecured, or secured in such manner as the Board of
Directors shall approve including, without limitation, a pledge of shares of
stock of the Corporation. Nothing in this Articles shall be deemed to deny,
limit or restrict the powers of guarantee or warranty of this Corporation at
common law or under any statute.
ARTICLE V
STOCK CERTIFICATES, VOTING TRUSTS, TRANSFERS
SECTION 1. CERTIFICATES REPRESENTING SHARES
(a) Every holder of shares of this Corporation shall be entitled to one
or more certificates, representing all shares to which he is entitled and such
certificates shall be signed by the Chairman, Chief Executive Officer, the
President or a Vice President and the Secretary or an Assistant Secretary of the
Corporation and may be sealed with the seal of the Corporation or a facsimile
14
<PAGE>
thereof. The signatures of the Chairman, the Chief Executive Officer, the
President or Vice President and the Secretary or Assistant Secretary may be
facsimiles if the certificate is manually signed on behalf of a transfer agent
or a registrar, other than the Corporation itself or an employee of the
Corporation. In case any Officer who signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such Officer before
such certificate is issued, it may be issued by the Corporation with the same
effect as if it were executed by the appropriate Officer at the date of its
issuance.
(b) Every certificate representing shares issued by this Corporation
shall, if shares are divided into one or more classes or series with differing
rights, state that the Corporation will furnish to any shareholder upon request
and without charge a full statement of: (i) the designations, preferences,
limitations, and relative rights of the shares of each class or series
authorized to be issued, and (ii) the variations in the relative rights and
preferences between the shares of each such series, if the Corporation is
authorized to issue any preferred or special class in series and so far as the
same have been fixed and determined, and the authority of the Board of Directors
to fix and determine, the relative rights and preferences of subsequent series.
(c) Every certificate representing shares which are restricted as to
sale, disposition or other transfer (including restrictions based on federal or
state securities and other laws) shall state that such shares are restricted as
to transfer and shall set forth or fairly summarize upon the certificate, or
shall state that the Corporation will furnish to any shareholder upon request
and without charge a full statement of, such restrictions.
(d) Each certificate representing shares shall state upon the face
thereof: (i) the name of the Corporation; (ii) that the Corporation is organized
under the laws of the State of Nevada; (iii) the name of the person or persons
to whom issued; (iv) the number and class of shares, and the designation of the
series, if any, which such certificate represents; and (v) the par value of each
share represented by such certificate, or a statement that the shares are
without par value.
(e) No certificate shall be issued for any shares until they are fully
paid for.
SECTION 2. TRANSFER BOOKS
The Corporation shall keep at its registered office or principal place
of business or in the office of its transfer agent or registrar, a book (or
books where more than one kind, class, or series of stock is outstanding) to be
known as the Stock Book, containing the names, alphabetically arranged,
addresses and Social Security numbers of every shareholder and the number of
shares each kind, class or series of stock held of record. Where the Stock Book
is kept in the office of the transfer agent, the Corporation shall keep at its
office in the State of Nevada copies of the stock lists prepared from said Stock
Book and sent to it from time to time by said transfer agent. The Stock Book or
stock lists shall show the current status of the ownership of shares of the
Corporation provided that, if the transfer agent of the Corporation be located
elsewhere, a reasonable time shall be allowed for transit or mail.
15
<PAGE>
SECTION 3. TRANSFER OF SHARES
(a) The name(s) and address(es) of the person(s) to whom shares of
stock of this Corporation are issued, shall be entered on the Stock Transfer
Books of the Corporation, with the number of shares and date of issue.
(b) Transfer of shares of the Corporation shall be made on the Stock
Transfer Books of the Corporation by the Secretary or the transfer agent,
subject to compliance with any restrictions specified on such certificate, only
when the holder of record thereof or the legal representative of such holder of
record or the attorney-in-fact of such holder of record, authorized by power of
attorney duly executed and filed with the Secretary or transfer agent of the
Corporation, shall surrender the Certificate representing such shares for
cancellation. Lost, destroyed or stolen Stock Certificates shall be replaced
pursuant to Section 5 of this Article V.
(c) The person or persons in whose names shares stand on the books of
the Corporation shall be deemed by the Corporation to be the owner of such
shares for all purposes, except as otherwise provided pursuant to Sections 10
and 11 of Article I, or Section 4 of Article V.
(d) Shares of the Corporation capital stock shall be freely
transferable without the required Board of Directors' consent, unless such
consent requirement has been imposed pursuant to a binding written contract
subscribed to by the holder or his or her predecessor in interest.
SECTION 4. VOTING TRUSTS
(a) Any number of shareholders of the Corporation may create a voting
trust for the purpose of conferring upon a trustee or trustees the right to vote
or otherwise represent their shares, for a period not to exceed ten years, by:
(i) entering into a written voting trust agreement specifying the terms and
conditions of the voting trust; (ii) depositing a counterpart of the agreement
with the Corporation at its registered office; and (iii) transferring their
shares to such trustee or trustees for the purposes of this Agreement. Prior to
the recording of the agreement, the shareholder concerned shall render the stock
certificate(s) described therein to the Corporate Secretary who shall note on
each certificate:
"This Certificate is subject to the provisions of a voting
trust agreement dated ____________________, recorded in Minute
Book ________________, of the Corporation.
------------------------------
Secretary"
(b) Upon the transfer of such shares, voting trust certificates shall
be issued by the trustee or trustees to the shareholders who transfer their
shares in trust. Such trustee or trustees shall keep a record of the holders of
voting trust certificates evidencing a beneficial interest in the voting trust,
giving the names and addresses of all such holders and the number and class or
the shares in respect of which the voting trust certificates held by each are
issued, and shall deposit a copy of such record with the Corporation at its
registered office.
(c) The counterpart of the voting trust agreement and the copy of such
record so deposited with the Corporation shall be subject to the same right of
examination by a shareholder of the Corporation, in person or by agent or
attorney, as are the books and records of the Corporation, and such counterpart
16
<PAGE>
and such copy of such record shall be subject to examination by any holder of
record of voting trust certificates either in person or by agent or attorney,
at any reasonable time for any proper purpose.
(d) At any time before the expiration of a voting trust agreement as
originally fixed or as extended one or more times under this Section 4(d), one
or more holders of voting trust certificates may, by agreement in writing,
extend the duration of such voting trust agreement, nominating the same or
substitute trustees, for an additional period not exceeding 10 years. Such
extension agreement shall not affect the rights or obligations or persons not
parties to the agreement, and such persons shall be entitled to remove their
shares from the trust and promptly to have their stock certificates reissued
upon the expiration of the original term of the voting trust agreement. The
extension agreement shall in every respect comply with and be subject to all the
provisions of this Section 4, applicable to the original voting trust agreement
except that the 10 year maximum period of duration shall commence on the date of
adoption of the extension agreement.
(e) The trustees under the terms of the agreements entered into under
the provisions of this Section 4, shall not acquire the legal title to the
shares but shall be vested only with the legal right and title to the voting
power which is incident to the ownership of the shares.
(f) Notwithstanding generally applicable prohibitions against a
corporation's voting of treasury stock, if the Corporation is the trustee under
a voting trust, it shall have full authority to vote such shares in accordance
with the terms of the voting trust agreement, even if such agreement vests
absolute and unfettered voting discretion in the trustee and notwithstanding
that the voting trust was created at the prompting or direction of the
Corporation, its officers or directors.
SECTION 5. LOST, DESTROYED, OR STOLEN CERTIFICATES
No Certificate representing shares of stock in the Corporation shall be
issued in place of any Certificate alleged to have been lost, destroyed, or
stolen except on production of evidence, satisfactory to the Board of Directors,
of such loss, destruction or theft, and, if the Board of Directors so requires,
upon the furnishing of an indemnity bond in such amount (but not to exceed twice
the fair market value of the shares represented by the Certificate) and with
such terms and with such surety as the Board of Directors may, in its
discretion, require.
ARTICLE VI
BOOKS AND RECORDS
(a) The Corporation shall keep correct and complete books and records
of account and shall keep minutes of the proceedings of its shareholders, Board
of Directors and committees of Directors.
(b) Any books, records and minutes may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
(c) Any person who shall have been a holder of record of shares, or the
holder of record of voting trust certificates for, at least five percent of the
outstanding shares of any class or series of the Corporation, upon written
demand stating the purpose thereof, shall; subject to the qualifications
contained in subsection (d) hereof, have the right to examine, in person or by
agent or attorney, at any reasonable time or times, for any purpose, its
relevant books
17
<PAGE>
and records of account, minutes and records of shareholders and to make extracts
therefrom.
(d) No shareholder who within two years has sold or offered for sale
any list of shareholders or of holders of voting trust certificates for shares
of this Corporation or any other corporation; has aided or abetted any person in
procuring any list of shareholders or of holders of voting trust certificates
for any such purpose; or has improperly used any information secured through any
prior examination of the books and records of account, minutes, or record of
shareholders or of holders of voting trust certificates for shares of the
Corporation of any other corporation; shall be entitled to examine the documents
and records of the Corporation as provided in Section (c) of this Article VI. No
shareholder who does not act in good faith or for a proper purpose in making his
demand shall be entitled to examine the documents and records of the Corporation
as provided in Section (c) of this Article VI.
(e) Unless modified by resolution of the Shareholders, this Corporation
shall prepare not later than four months after the close of each fiscal year:
(i) A balance sheet showing in reasonable detail the financial
conditions of the Corporation as of the date of the close of its fiscal year.
(ii) A Profit and Loss statement showing the results of its
operation during its fiscal year.
(f) Upon the written request of any shareholder or holder of voting
trust certificates for shares of the Corporation, the Corporation shall mail to
such shareholder or holder of voting trust certificates a copy of its most
recent balance sheet and profit and loss statement.
(g) Such balance sheets and profit and loss statements shall be filed
and kept for at least five years in the registered office of the Corporation in
the State of Nevada and shall be subject to inspection during business hours by
any shareholder or holder of voting trust certificates, in person or by agent.
ARTICLE VII
DIVIDENDS
The Board of Directors of the Corporation may, from time to time,
declare, and the Corporation may pay dividends on its own shares, except when
the Corporation is insolvent or when the payment thereof would render the
Corporation insolvent, subject to the following provisions:
(a) Dividends in cash or property may be declared and paid, except as
otherwise provided in this Article VII, only out of the unreserved and
unrestricted earned surplus of the Corporation or out of capital surplus,
however arising, but each dividend paid out of capital surplus shall be
identified as a distribution of capital surplus, and the amount per share paid
from such capital surplus shall be disclosed to the shareholders receiving the
same concurrently with the distribution.
(b) If the Corporation shall engage in the business of exploiting
natural resources or other wasting assets and if the Articles of Incorporation
so provide, dividends may be declared and paid in cash out of depletion or
similar reserves, but each such dividend shall be identified as distribution of
such reserves and the amount per share paid from such reserves shall be
disclosed to the shareholders receiving the same concurrently with the
distribution thereof.
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(c) Dividends may be declared and paid in the Corporation's treasury
shares.
(d) Dividends may be declared and paid in the Corporation's authorized
but unissued shares, out of any unreserved and unrestricted surplus of the
Corporation, upon the following conditions:
(i) If a dividend is payable in the Corporations' own shares
having a par value, such shares shall be issued at not less than the par value
thereof and there shall be transferred to stated capital at the time such
dividend is paid an amount of surplus equal to the aggregate par value of the
shares to be issued as a dividend.
(ii) If a dividend is payable in the Corporations' own shares
without par value, such shares shall be issued at a stated value fixed by the
Board of Directors by resolution adopted at the time such dividend is declared,
and there shall be transferred to stated capital at the time such dividend is
paid an amount of surplus equal to the aggregate stated value so fixed and the
amount per share so transferred to stated capital shall be disclosed to the
shareholders receiving such dividend concurrently with the payment thereof.
(e) No dividend payable in shares of any class shall be paid to the
holders of shares of any other class unless the Articles of Incorporation so
provide or such payment is authorized by the affirmative vote or the written
consent of the holders of at least a majority of the outstanding shares of the
class which the payment is to be made.
(f) A split or division of the issued shares of any class into a
greater number of shares of the same class without increasing the stated capital
of the Corporation shall not be construed to be a stock dividend within the
meaning of this Article VII.
ARTICLE VIII
SEAL
The Board of Directors shall adopt a Corporate Seal which shall be
circular in form and shall have inscribed thereon the name of the Corporation,
the state of incorporation and the year of incorporation.
ARTICLE IX
INDEMNIFICATION
This Corporation may, in its discretion, indemnify any director,
officer, employee, or agent in the following circumstances and in the following
manner:
(a) The Corporation may indemnify any person who was or is a part, or
is threatened to be made a party to any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative (other than an action by, or in the right of, the Corporation) by
reason of the fact that he is or was a director, officer, employee, or agent of
the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys' fees
at all trial and appellate levels), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding, including any appeal thereof, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Corporation and, with respect to any criminal action or
19
<PAGE>
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonable believed to be in, or not opposed to, the best
interests of the Corporation or, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation may indemnify any person who was or is a party, or
is threatened to be made a party to any threatened, pending, or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee, or agent
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, or agent of the Corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise against expenses (including attorneys' fees at all trial and
appellate levels), actually and reasonable incurred by him in connection with
the defense of settlement of such action or suit, including any appeal thereof,
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interest of the Corporation, except that no
indemnification shall be made in respect of any claim, issue, or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless, and only to
the extent that, the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is rarely and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Director, Officer, employee, or agent of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit, or proceeding referred to in Sections (a) or (b) of this Article
IX, or in defense of any claim, issue, or matter therein, shall be indemnified
against expenses (including attorneys' fees at trial and appellate levels)
actually and reasonably incurred by him in connection therewith.
(d) Any indemnification under Sections (a) or (b) of this Article IX,
unless pursuant to a determination by a court, shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee, or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Sections (a) or (b) or this Article IX. Such determination shall initially be
made by the Board of Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit, or proceeding. If the Board
of Directors shall, for any reason, decline to make such a determination, then
such determination shall be made by the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such action, suit or
proceeding; provided, however, that a determination made by the Board of
Directors pursuant to this Section may be appealed to the shareholders by the
party seeking indemnification or any party entitled to call a special meeting of
the shareholders pursuant to Section 2 of Article I and, in such case, the
determination made by the majority vote of a quorum consisting of shareholders
who were not parties to such action, suit, or proceeding shall prevail over a
contrary determination of the Board of Directors pursuant to this Section.
(e) Expenses (including attorneys' fees at all trial and appellate
levels) incurred in defending a civil or criminal action, suit or proceeding may
be paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon a preliminary determination following one of the
procedures set forth in this Article IX, that a Director, Officer, employee or
20
<PAGE>
agent met the applicable standard of conduct set forth in this Article IX, and
upon receipt of an undertaking by or on behalf of the director, officer,
employee or agent to repay such amount, unless it shall ultimately be determined
that he is entitled to be indemnified by the Corporation as authorized in this
section.
(f) The Corporation may make any other or further indemnification,
except an indemnification against gross negligence or willful misconduct, under
any agreement, vote of shareholders or disinterested Directors or otherwise,
both as to action in the indemnified party's official capacity and as to action
in another capacity while holding such office.
(g) Indemnification as provided in this Article IX may continue as to a
person who has ceased to be a director, officer, employee or agent and may inure
to the benefit of the heirs, executors and administrators of such a person upon
a proper determination initially made by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit, or proceeding. If the Board of Directors shall, for any reason, decline to
make such a determination, then such determination may be made by the
shareholders by a majority vote of a quorum consisting of shareholders who were
not parties to such action, suit or proceeding; provided, however, that a
determination made by the Board of Directors pursuant to this Section may be
appealed to the shareholders by the party seeking indemnification or his
representative or by any party entitled to call a special meeting of the
shareholders pursuant to Section 2 or Article I and in such case, the
determination made by the majority vote of quorum consisting of shareholders who
were not parties to such action, suit, or proceeding shall prevail over a
contrary determination of the Board of Directors pursuant to this Section (g).
(h) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article IX.
(i) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders or
by an insurance carrier pursuant to insurance maintained by the Corporation, the
Corporation shall, not later than the time of delivery to shareholders or
written notice of the next annual meeting of shareholders unless such meeting is
held within three months from the date of such payment, and, in any event,
within 15 months from the date of such payment, deliver either personally or by
mail to each shareholder of record at the time entitled to vote for the election
of Directors a statement specifying the persons paid, the amount paid, and the
nature and status at the time of such payment of the litigation of threatened
litigation.
(j) This Article IX shall be interpreted to permit indemnification to
the fullest extent permitted by law. If any part of this Article shall be found
to be invalid or ineffective in any action, suit of proceeding, the validity and
effect of the remaining part thereof shall not be affected. The provisions of
this Article IX shall be applicable to all actions, claims, suits, or
proceedings made or commenced after the adoption hereof, whether arising from
acts or omissions to act occurring before or after its adoption.
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<PAGE>
ARTICLE X
AMENDMENT OF BYLAWS
The Board of Directors shall have the power to amend, alter, or repeal
these Bylaws, and to adopt new Bylaws.
ARTICLE XI
FISCAL YEAR
The Fiscal Year of this Corporation shall be determined by the Board of
Directors.
ARTICLE XII
MEDICAL REIMBURSEMENT
SECTION 1. BENEFITS
The Corporation may, subject to approval of the Board of Directors
reimburse all employees for expenses incurred by themselves and their
dependents, as defined in Section 152 of the Internal Revenue Code of 1954, as
amended (the "IRC"), for medical care, as defined in IRC Section 213(e) or any
successor section thereto, subject to the conditions and limitations hereinafter
set forth.
It is the intention of the Corporation that the benefits payable to
employees hereunder will be excluded from their gross income pursuant IRC
Section 105 or any successor section thereto.
SECTION 2. EMPLOYEES DEFINED
The term "employees" as used in this medical expense plan is hereby
defined to include all individuals employed by the corporation except the
following:
(a) Employees who have not completed three months of service as is
provided in IRC Section 105(h)(3) (b)(i), or any successor section thereto;
(b) Employees who have not attained the age of 25 years;
(c) Employees who are part-time or seasonal as is defined in IRC
Section 105(h)(3)(B)(iii) or any successor section thereto;
(d) Employees who are included in a unit of employees covered by an
agreement between employee representatives and one or more employers found to be
a collective bargaining agreement; where accident and health benefits were the
subject of good faith bargaining between such employee representatives and such
employer(s) as is defined in IRC Section 105(h)(3)(B)(iv) or any successor
section thereto;
(e) Employees who are nonresident aliens and who receive no earned
income from the employer which constitutes income from sources within the United
States as is further defined in IRC Section 105(h)(5)(B)(v) or any successor
section thereto.
SECTION 3. LIMITATIONS
(a) The Corporation will reimburse any employee no more than $5,000.00
in any fiscal year for medical care expenses;
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<PAGE>
(b) Reimbursement or payment provided under this plan will be made by
the Corporation only in the event and to the extent that such reimbursement or
payment is not provided under any insurance policy(ies), whether owned by the
Corporation or the employee, or under any other health and accident or wage
continuation plan;
(c) In the event that there is such an insurance policy or plan in
effect providing for reimbursement in whole or in part, then to the extent of
the coverage under such policy or plan, the Corporation will be relieved of any
and all liability hereunder.
SECTION 4. SUBMISSION OF PROOF
Any employee applying for reimbursement under this plan will submit to
the Corporation, at least quarterly, all bills for medical care, including
premium notices for accident or health insurance, for verification by the
Corporation prior to payment. Failure to comply herewith, may at the discretion
of the Board of Directors, terminate such employee's right to said
reimbursement.
SECTION 5. DISCONTINUATION
This plan will be subject to termination at any time by vote of the
Board of Directors; provided, however, that medical care expenses incurred prior
to such termination will be reimbursed or paid in accordance with the terms of
this plan.
SECTION 6. DETERMINATION
The Chief Executive Officer will determine all questions arising from
the administration and interpretation of the Plan except where reimbursement is
claimed by the President. In such case determination will be made by the Board
of Directors.
* * * * * *
The Undersigned, being the duly elected and acting secretary of the Corporation,
hereby certifies that the foregoing constitute the validly adopted and true
Bylaws of the Corporation, as of the date set forth below.
Dated: _________________ _____________________________
Secretary
(Corporate Seal)
23
EXHIBIT 4.1
Specimen Common Stock Certificate
[SPECIMEN]
NOT VALID UNLESS COUNTERSIGNED BY TRANSFER AGENT
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
CUSIP NO.
NUMBER SHARES
------------- --------------
------------- --------------
National Rehab Properties, Inc.
40,000,000 SHARES AUTHORIZED
PAR VALUE: $.001
THIS CERTIFIES THAT
IS THE RECORD HOLDER OF
NATIONAL REHAB PROPERTIES, INC..
TRANSFERABLE ON THE BOOKS OF THE CORPORATION IN PERSON BY DULY AUTHORIZED
ATTORNEY UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE
IS NOT VALID UNTIL COUNTERSIGNED BY THE TRANSFER AGENT AND REGISTRAR AND
REGISTERED BY THE REGISTRAR.
WITNESS THE FACSIMILE SEAL OF THE CORPORATION AND THE FACSIMILE SIGNATURES OF
ITS DULY AUTHORIZED OFFICERS.
Dated:
- ------------------ [CORPORATE ---------------
Secretary SEAL] President
=====================================================================
Countersigned & Registered: CJB TRANSFER SERVICES,
460 Inverness Dr. So.
Ste 200
Englewood, CO 80112
303-486-5873
By ___________________________
Authorized Signature
<PAGE>
NOTICE: Signature must be guaranteed by a firm which is a member of a
registered national stock exchange, or by a bank (other than a
saving bank) or a trust company. The following abbreviations,
when used in the inscription on the face of this certificate,
shall be construed as though they were written out in full
according to the applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ......Custodian.........
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right of Act ......................
survivorship and not as tenants (State)
in common
Additional abbreviations may also be used though not in the above list.
</TABLE>
For Value Received, __________, hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -----------------------------------------
- -----------------------------------------
- --------------------------------------------------------------------------------
(Please print or typewrite name and address including zip code of assignee)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
_________________________________________________________________________ Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ________________________
---------------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER
EXHIBIT 5
Law Offices
Richard P. Greene, P.A.
International Building
2455 East Sunrise Boulevard
Suite 905
Fort Lauderdale, Florida 33304
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Telephone: (954) 564-6616
Fax: (954) 561-0997
October 26, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20059
Re: National Rehab Properties, Inc.
Gentlemen:
This opinion is given in connection with the registration with the
Securities and Exchange Commission of 10,000,000 Shares of National Rehab
Properties, Inc. (the "Company"). The Shares are being registered pursuant to
the requirements of Section 5 of the Securities Act of 1933, as amended (the
"Act") pursuant to Registration Statement Number _____ filed with the United
States Securities and Exchange Commission (the "Registration Statement").
We have acted as counsel to the Company in connection with the
preparation of the Registration Statement on Form SB-2 pursuant to which the
Shares are being registered and, in so acting, have examined the originals and
copies of corporate instruments, certificates and other documents of the Company
and interviewed representatives of the Company to the extent we deemed it
necessary, in order to form the basis for the opinion hereinafter set forth.
In such examination we have assumed the genuineness of all signatures
and authenticity of all documents submitted to me as certified or photostatic
copies. As to all questions of fact material to this opinion which have not been
independently established, we have relied upon statements or certificates of
officers or representatives of the Company.
The 10,000,000 Shares of Common Stock being registered for sale by the
Company are now authorized but unissued.
<PAGE>
Securities and Exchange Commission
October 26, 1999
Page Two
Based upon the foregoing, we are of the opinion that the shares of
Common Stock of the Company being registered for sale by the Company, when
issued and sold pursuant to the Registration Statement, will be fully paid and
non-assessable and there will be no personal liability to the owners thereof.
This law firm hereby consents to the use of this opinion in connection
with the initial filing of the Registration Statement and the inclusion of this
opinion as an exhibit thereto.
Very truly yours,
RICHARD P. GREENE, P.A.
/s/ Richard P. Greene
----------------------
Richard P. Greene
For the Firm
EXHIBIT 24.1
Law Offices
Richard P. Greene, P.A.
International Building
2455 East Sunrise Boulevard
Suite 905
Fort Lauderdale, Florida 33304
------------
Telephone: (954) 564-6616
Fax: (954) 561-0997
October 26, 1999
U.S. Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20059
Re: National Rehab Properties, Inc.
Dear Sir or Madam:
This firm hereby consents to the use of its name in the Registration
Statement on Form SB-2 as filed with the U.S. Securities and Exchange Commission
on October 27, 1999.
Very truly yours,
RICHARD P. GREENE, P.A.
/s/ Richard P. Greene
----------------------
Richard P. Greene
For the Firm
EXHIBIT 24.2
CONSENT OF CUMMINGS-GRAYSON & CO., P.A.
CUMMINGS-GRAYSON & CO., P.A. CERTIFIED PUBLIC ACCOUNTANTS
915 NW 1st AVENUE, BAY 3A NONPROFIT & RELIGIOUS ORGANIZATION CONSULTANT
MIAMI, FLORIDA 33136 QUICKBOOKS & PEACHTREE COMPUTER PROFESSIONALS
TELEPHONE: (305) 377-1952
FAX: (305) 377-1621
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated September 30, 1998 in this Registration
Statement on Form SB-2 of National Rehab Properties, Inc.
/S/ MARCIA CUMMINGS-GRAYSON
---------------------------
Signature
Miami, FL
10/26/99
