AS FILED WITH THE SECURITIES & EXCHANGE COMMISSION ON January 19, 2000
File No. _________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NUMBER ONE TO
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>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=======================================================================================
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.
<PAGE>
Public Offering
Prospectus
NATIONAL REHAB PROPERTIES, INC.
10,000,000 shares of Common Stock
$.25 per share
National Rehab Properties, Inc.
2921 NW Sixth Avenue
Miami, Florida 33127
The Offering
Per Share Total
--------- -----
Public Price ....... $0.25 $2,500,000
Proceeds to NRPI $ $
We specialize in investing in and revitalizing homes in established older
residential neighborhoods in urban areas. We either buy vacant lots and build a
single family home thereon or buy an abandoned house and renovate it.
This is a public offering and a public market currently exists for our shares.
The offering price may not reflect the market price of our shares after the
offering.
Trading Symbol:
OTC Bulletin Board -- NRPI
--------------------------
This Investment Involves a High Degree of Risk. You Should Purchase Shares Only
If You Can Afford a Complete Loss. See "Risk Factors" Beginning on Page __.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-----------------------
The securities are being 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.
January 18, 2000
<PAGE>
PROSPECTUS SUMMARY
The Offering
10,000,000 shares of common stock offered
OTC Bulletin Board Symbol - NRPI
The Company
National Rehab was formed on October 1, 1993. On August 17, 1995, we became a
public company as a result of a merger with an already existing public company.
We specialize in investing in and revitalizing homes in established older
residential neighborhoods in urban areas. Many of these homes have been
abandoned by the middle-class which typically moves outward from the inner
cities into the newer suburban developments. We either buy vacant property and
build single family homes or we buy abandoned homes and complete all
renovations. Our purpose is to sell the homes 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.
Our target market has been fruitful over the past 30 years, regardless of
national inflation or economic stagnation. We believe the real estate market
will continue to provide a good
<PAGE>
opportunity for our company's future investments. Based upon the great number of
foreclosures and abandoned properties each year, we have a virtually unlimited
supply of lots and dilapidated homes which meet our business model criteria.
National Rehab 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. We typically sell a
property for $90,000 and produce a profit of $15,000 per sale. 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 (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. National
Rehab 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
National Rehab's business is real estate and in order to buy real estate for our
business
<PAGE>
of rehabilitating houses or building houses, construction financing is
necessary. Through the years we have constantly had difficulty in borrowing
money from banks due to lack of cash in the corporate bank account. This is
evidenced by the income for the years 1994 through 1997-- Federal Income Tax
reports were as follows: $61,965 - 1994; $73,886 - 1995; $76,684 - 1996; $20,369
- - 1997; ($344,064) - 1998). In May of 1997, we 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, we had to
give the lender 4,000,000 shares of restricted stock. Our board entered into
this agreement due to lack of credit for the rehabilitation of houses. In 1997,
we opened an office in New Orleans, Louisiana because that city has 39,000
declared houses in need of repair. In 1997 and 1998, we completed 25 houses in
New Orleans and, between the points and interest, we lost approximately
$240,000. In 1998, we left New Orleans as it was determined that the excessive
rate of interest being charged for the money borrowed National Rehab 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, we filed a lawsuit against the lender and it's president for
civil and criminal usury in Dade County Circuit Court. In that lawsuit we are
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 National Rehab due to the
bankruptcy of the debtor, an original incorporator of National Rehab.
In January, 1999, we completed a reverse split of our stock on a 1 for 10 basis
and proceeded to
<PAGE>
raise $557,500 from the sale and/or conversion into common stock of senior
subordinated debentures. In addition, we raised $211,500 from the sale of
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 from the sale of our common stock.
Present Operations
Our business is currently based in Miami where we intend to build 100 houses
annually. As a public Company, National Rehab Properties, Inc. is traded
over-the-counter as a bulletin board stock under the symbol NRPI.
In 1999, we purchased 17 building sites in Miami for cash, filed for building
permits and are 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 time
buyer homes and the large number of vacant lots in the mature residential
neighborhoods National Rehab is accustomed to dealing in. Due to our cash
position, we expect to acquire construction financing for the Miami project. The
Miami project of 100 houses is contingent upon construction financing.
National Rehab has made a deposit on a 20 acre tract of land with a purchase
price of $280,000 in Vero Beach, Florida. We anticipate improving the land with
road and utilities and platting the land for 100 single family home sites. We
believe we can obtain a land and acquisition loan from a local lending
institution for the cost of construction of improvements to the land. We further
anticipate building the houses with construction financing and reselling the
houses in the local economy. We have funds available to purchase the land
without financing. The project, known as "Eagle Trace," is
<PAGE>
estimated to create a profit of $3,500,000. This project is contingent upon
construction financing for the land improvements and home construction.
National Rehab 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 aluminum 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. may
acquire 80% of the company. If acquired all financials will be consolidated with
our company. We anticipate acquiring financing for the aluminum company's
receivables through a factoring company. The receivable financing will be the
only debt of the aluminum company. At that time, it is anticipated that the
acquired company 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. We have 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. We feel that the supply of users for the
target's products is 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
our business.
Our offices are located at 2921 NW 6th Avenue,
Miami, Florida 33127 and our telephone
number is (305) 573-8882.
<PAGE>
SUMMARY FINANCIAL INFORMATION
Because this is a summary of selected financial information, it does not contain
all of the financial information that may be important to you. You should review
the entire financial statement with footnotes carefully to gain a clear
understanding of our business operations.
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
<PAGE>
RISK FACTORS
The purchase of common stock involves significant risks. You should carefully
consider the following risk factors before you purchase the common stock in this
offering.
Management will maintain voting control
<PAGE>
Following completion of this offering, the present principal shareholders will
maintain voting control of National Rehab 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 ensure that current
management will maintain control of National Rehab despite maintaining
beneficial ownership of less than a majority of the shares of National Rehab'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 National Rehab, which could have a depressive effect on the price of our
common stock. 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.
Management may decide how to spend funds
Management will have broad discretion over how to spend the funds received 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
National Rehab. (See "Use of Proceeds".)
Stock prices are unpredictable
General market price declines or market volatility in the future could be
negative with respect to the price of our 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, could cause the price of
National Rehab's common stock to go down.
OTC Bulletin Board listing requirements
National Rehab 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 National Rehab intends to complete all required filings on a timely
basis, there can be no assurance that we will not be de-listed from the Bulletin
Board. If de-listed, the market will almost certainly reflect a depressive
effect on the price of National Rehab's common stock.
Penny stock regulations and requirements for low priced stock
Based upon the price of National Rehab's common stock as currently traded on the
OTC Bulletin Board, National Rehab may be subject to Rule 15g-9 under the
Exchange Act which imposes additional sales
<PAGE>
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 our common stock and could have a negative effect on 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 of less than $5.00 per
share, subject to certain exceptions. Since National Rehab's securities may be
subject to the existing rules on penny stock, your ability to liquidate your
shares could be severely diminished.
Investors entire investment could be lost
<PAGE>
You should be aware that if we are not successful in the operation of our
current business, or any future acquisition endeavors, your entire investment in
the common stock of National Rehab could become worthless. In addition, our
success is highly dependent upon the receipt of funds from this offering. Even
if we are successful in our operations and potential acquisitions, it is not
certain that you will derive a profit from your investment.
The company will need additional funds
National Rehab will require substantial additional funding to further its real
estate operations and business objectives. Although management believes that
such funds will become available from sources including cash flow from business
operations, bank loans, factoring or sale of additional stock, it has not
formulated any specific plan for raising additional funds, including sale of
additional equity securities, as of the date of this prospectus. It is not
certain that we will be able to obtain additional funding or, if obtained, that
the terms of such funding would be favorable. This means that your shares of
common stock could lose much of their value.
National Rehab may not be successful
National Rehab competes in the highly competitive market for real estate
development and housing construction. Our prospects for success will depend on
our ability to successfully market our houses to buyers. As a result, demand and
market acceptance for our houses is subject to a high level of uncertainty. We
currently have limited financial, personnel and other resources to undertake the
extensive activities that will be necessary to acquire and build houses and
related real estate projects. If we are unable to expand our marketing efforts,
we will not generate substantial additional revenues.
National Rehab relies on its management
National Rehab is dependent upon the members of management set forth herein. If
the current management is no longer able to provide services to National Rehab,
our business will be negatively affected.
<PAGE>
Additional capital financing may affect ability to sell
National Rehab'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. If we raise additional money from the sale of
our stock, the market price could drop and your ability to sell your stock could
be diminished.
These risk factors must be carefully considered by you before purchasing common
stock offered herein. You must be able to sustain a total loss of your
investment and have no immediate need for return of your investment before
purchasing the common stock offered by National Rehab.
USE OF PROCEEDS
The money we receive from the sale of our common stock will be used as follows:
o to purchase and develop real estate properties
o to make real estate acquisitions
o to use for marketing expenses
MARKET FOR SECURITIES
Our common stock is traded in the over-the-counter market and is included in the
NASD electronic Bulletin Board under the symbol NRPI. Trading of our stock began
on July 4, 1994.
The following is the range of bid and ask prices for our 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 prices set forth above represent inter-dealer quotations which do not
include retail mark-ups, markdowns, or commissions, and do not necessarily
represent actual transactions.
On October 19, 1999, we had approximately 800 shareholders who own common stock.
DIVIDEND POLICY
We have never paid dividends to shareholders. Our board of directors intends to
use any retained earnings to grow our business. If we determine that a dividend
should be paid, we will base our decision on our financial condition relative to
earnings and capital requirements for our business.
<PAGE>
DILUTION
As of September 30, 1999, the net tangible book value per share of our common
stock currently issued and outstanding was $.10. We calculated this by dividing
the net tangible book value by the number of outstanding shares of common stock.
If we sell all the shares of common stock in this offering, we would receive
approximately $2,500,000 based upon the current market price of our common
stock. The people who buy shares of our common stock will be subject to an
immediate dilution of $.06 per share. Shareholders who owned our shares before
this offering will have an increase in value of $.08 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 $ 0.10
Increase per share attributable to payment by new
investors, if all shares are sold $ 0.08
Net tangible book value per share after sale
of all shares $ 0.18
Dilution to new investors if all shares are sold $ 0.06
CAPITALIZATION
The following table sets forth the capitalization of National Rehab as of
September 30, 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. You should read this
table carefully along with the financial statements to completely understand our
capitalization.
September 30, 1999
------------------
Actual As Adjusted
------ -----------
Stockholders' Equity
Common stock Class A voting, $.001
par value; authorized 2,000,000;
Issued and outstanding 1,000,000 $ 1,000 $ 1,000
Common stock, $.001 par value,
40,000,000 shares authorized;
9,054,773 shares outstanding;
19,054,773 outstanding as
Adjusted Pro Forma $ 9,055 $ 19,055
Additional paid in capital 1,324,190 3,814,190
Accumulated deficit (417,455) (417,455)
Total stockholders' equity $ 916,790 $ 3,416,790
Total capitalization $ 916,790 $ 3,416,790
<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 our operations for the 12 month period commencing October 1, 1997
until the close of the fiscal year September 30, 1998. The financial condition
information does not include the accounts of National Rehab after the close of
the fiscal year ending September 30, 1998, however, the period of 1994 through
1999 is discussed. We are current in our federal and state tax filings.
We specialize in renovating or rebuilding starter homes. 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 we have targeted continues to be
fruitful regardless of national inflation or economic stagnation. We believes
<PAGE>
the real estate market will continue to be ripe for our future investments.
Thousands of homes suffer foreclosure and abandonment every year, creating an
unlimited supply of lots and dilapidated homes which fit our investment
criteria.
We have 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. We typically sell a
property for $90,000 and produce a profit of $15,000 per sale. 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 and the Federal
Housing Administration support the cities and their residential neighborhoods
with programs designed to work with developers like us 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. We have
taken advantage of that challenge by revitalizing abandoned urban neighborhoods,
and in so doing, helped hundreds of working-class families realize the American
dream of home ownership.
Past Operations
Our business involves the real estate industry and in order to buy real estate
for our business of rehabilitating houses or building houses, construction
financing is necessary. Through the years, we have 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 as follows:
<PAGE>
Federal Income Tax report for the years 1994 though 1997:
o $61,965 - 1994;
o $73,886 - 1995;
o $76,684 - 1996;
o $20,369 - 1997;
o ($344,064) - 1998.
In May of 1997 we obtained 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, we had to give the lender
4,000,000 shares of restricted stock. We entered into this agreement due to lack
of credit for the rehabilitation of houses. In 1997 we opened an office in New
Orleans, Louisiana because that city has 39,000 declared houses in need of
repair. In 1997 and 1998, we completed 25 houses in New Orleans and between the
points and interest we lost approximately $240,000. In 1998, we left New Orleans
as it was determined that, with the excessive rate of interest being charged for
the money borrowed, we could not be profitable. As of December 31, 1998, we had
no more houses in inventory the inventory. In December 1998 we filed a lawsuit
in Dade County Circuit Court against the lender and it's president for civil and
criminal usury. In that lawsuit we asked 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.
<PAGE>
In 1997 we wrote off a receivable of $105,000 due to the bankruptcy of the
debtor, an original incorporator of National Rehab.
In January, 1999 we completed a reverse split of our common 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 our 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 through the sale of
common stock.
Present Operations
We are currently based in Miami, where we plan to build 100 houses per 12 month
period. To complete this proposed project, we will need to acquire construction
financing.
In 1999, we purchased 17 building sites in Miami for cash, filed for building
permits and we are 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 we are accustomed to dealing in.
We have also made a deposit on a 20 acre tract of land with a purchase price of
$280,000 in Vero Beach, Florida. We anticipate improving the land with road and
utilities and platting the land for 100 single family home sites. We believe we
can obtain a land and acquisition loan from a local lending institution for the
cost of construction of improvements to the land and we further anticipate
building the houses
<PAGE>
with construction financing and reselling the houses in the local economy. We
currently have funds available to purchase the land without financing. The
project, known as "Eagle Trace", is estimated to create a profit for National
Rehab of $3,500,000. This project is contingent upon construction financing for
the land improvements and home construction.
We have also 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 aluminum 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. We would acquire an 80% interest and
subsequently consolidate financials. We anticipate acquiring financing for its
receivables. At that time it is anticipated that our newly acquired 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 our bottom line. We have 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. Management 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.
Overhead
The monthly costs of our corporate offices 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 our inception as a publicly owned company, we relied primarily upon
loans originated by National Rehab's founder, Richard S. Astrom. These loans
helped to finance working capital needs when operations did not provide enough
cash flow. Additionally, we have relied upon bank financing to acquire
properties and pay operational costs. The bank financing has required the
personal guarantee of Mr. Astrom. In the future, we need to acquire additional
financing for the company with the proceeds of mortgage funding or public or
private offerings of stock. However, we currently have 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 our financial lending structure. Thus, we do
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, we had $13,754 in the bank and in the quarter
ending December 1998 we showed a profit of $212,792. In the first months of
1999, we raised approximately $557,500 from the sale of our securities. We will
use these monies as well as cash from stock sales for business operations.
Should that cash flow prove insufficient, we will slow construction, acquire
additional mortgage financing and/or sell additional stock.
<PAGE>
Future
In addition to these real estate ventures, we are in negotiations with several
additional acquisitions. We plan to acquire sufficient mortgage financing and
increase our 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 our ownership of
mortgage companies, title companies and long-term, symbiotic relationships with
building contractors. In these operations, we intend to remain a leader in the
ongoing task of rebuilding the nation's decaying urban housing and to make a
tangible, long-lasting contribution to American society.
We have successfully practiced our 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, our 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.
We plan to develop the aluminum manufacturing plant into a much larger
manufacturer, acquiring its competition, and expanding into the Caribbean for
sales. We expect $2,000,000 to $3,000,000 monthly sales from the aluminum
manufacturing plant assuming successful completion of the acquisition.
Management believes that we will be able to continue supporting ourselves 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 National Rehab to sustain
itself in the future.
Lastly, we believe that with our growth and profitability, we 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.
<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. We have over 800
stockholders and have been approved by NASD to be publicly traded on the OTC
Bulletin Board. We finance our real estate projects with first mortgages from
banks at low bank rates. With our managerial and financial resources fully
developed, we 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 our criteria. These properties can
become the inventory for us to buy and resell, and create profits. We do not
feed off financial failure and economic stagnation but, to the contrary,
encourage 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
us 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. We look to invest in
these homes either before or after demolition at the appropriate price.
In order for us to buy real estate for our business of rehabilitating houses or
building houses, construction financing is necessary. Through the years we have
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. We have, however, improved our capital position through the sale
of our securities and the establishment of new bank financing relationships.
This enables us to increase our potential profitability by increasing the number
of properties we are developing.
In 1997, a receivable of $105,000 was written off by National Rehab due to the
bankruptcy of the debtor, an original incorporator of National Rehab.
In January, 1999, we completed a reverse split of our common stock on a 1 for 10
basis and proceeded to raise approximately $557,500 from the issuance of comm
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 additional investment capital.
The Market Environment
The following provides a description of the market environment in which we
currently operate.
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
<PAGE>
of the interest rates to 20% in 1981 and the tax law change of 1986 severely
lowered the value of real estate. However, the market that we have targeted 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
<PAGE>
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 we have
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. Our goal is to convert those tenants into homeowners.
HUD and the Federal Housing Administration 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. We have taken that challenge by revitalizing
urban neighborhoods and, in so doing, help hundreds of working-class families
realize the American dream of home ownership.
Business Strategies
We have the following strategies in fulfilling the first part of our Business
Plan.
1. (a) Purchase 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. We then sell the home for $75,000 - $80,000 within six
months.
(b) Purchase vacant lots for $7,500. We then contract with a building
contractor to build a 1,300 square foot house for $55,000 and sell it for
$90,000 while under construction. Within six 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.
<PAGE>
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 we
are currently embarking at our 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 costs us $10,000 per lot and, with sales at $25,000 per
lot, profit of $15,000 per lot are expected. We plan 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, our
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 National Rehab, we anticipate 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. We believe 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 the date of this Prospectus, substantially all of the activities of the
company are undertaken by its current officers and directors. We currently have
four employees as of this filing.
LITIGATION
On December 18, 1998, National Rehab 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. It is not known as of the date of this Prospectus the outcome of the
lawsuit with GBI.
FACILITIES
National Rehab currently maintains its executive offices on a rent-free basis
pursuant to a month to month arrangement with the landlord.
<PAGE>
MANAGEMENT
The directors and executive officers of National Rehab 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 National Rehab. He has extensive
experience in the first-time home buyer's market. Throughout his career in real
estate, he 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, he 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 National Rehab,
he has helped make dreams come true for hundreds of South Florida families. He
has directed National Rehab 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
National Rehab. 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 ensure our profitability. The spread between
purchase and sale is usually the same thus ensuring approximately $15,000 gross
profit per sale. He received his Bachelor of Arts in Business Administration
from the School of Business at the University of Florida.
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the total compensation paid to our chief
executive officer for the last three completed fiscal years. No executive
officer 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-
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
<PAGE>
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
National Rehab, we have 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 National Rehab.
In April 1999, National Rehab sold and issued senior subordinated debentures
convertible into shares of common stock. As of July 31, 1999, restricted common
stock totaling approximately $211,500 was issued and paid for. An additional
amount of approximately $257,500 worth of common stock was issued upon
conversion of the April 1999 debentures, and in August 1999, an additional
amount of approximately $300,000 was received from the debenture conversion.
As of October, 1999, 6,000,000 shares of our common stock have been issued as a
result of conversion of previously issued senior subordinated convertible
debentures.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of January 14, 2000, the beneficial ownership
of National Rehab's common stock by (1) persons who own or are known to own of
record more than 5% of our common stock; (2) each director and executive officer
of National Rehab; and (3) all directors and officers as a group.
Number of % of Outstanding
Name Shares Common Stock
- ---- --------- ----------------
Richard and Pamela Astrom 285,000 15.0%
Christopher Astrom(1)(2) 10,000 0.5%
Officers & directors as a group (2 persons) 295,000 15.5%
- -------------------
(1) Does not include 6,000,000 options to acquire shares of our common stock
at a price of $.001 per share. Mr. Astrom has executed a promissory note
in the amount of $20,000 for these options which were authorized in
consideration for his 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 entitles him to 20 votes per share.
DESCRIPTION OF SECURITIES
Common Stock
National Rehab is authorized to issue 40,000,000 shares of common stock with
$.001 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
<PAGE>
therefore and to share pro-rata in any distribution to stockholders. We
anticipate that any earnings will be retained for use in our business for the
foreseeable future. Upon liquidation, dissolution, or winding up of National
Rehab, the holders of the common stock are entitled to receive the net assets
held by us 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
National Rehab is authorized to issue 2,000,000 shares of class A common stock
with $.001 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 one vote per share. The difference in voting rights
increases the voting power of the holders of class A common stock and
accordingly has an anti-takeover effect. The existence of the class A common
stock may make National Rehab a less attractive target for a hostile takeover
bid or render more difficult or discourage a merger proposal, an unfriendly
tender offer, a proxy contest, or the removal of incumbent management. Those
seeking to acquire National Rehab through a business combination will be
compelled to obtain the approval of the holders of class A common stock before
any
<PAGE>
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 National Rehab. This means we do not have an
underwriter and we will sell the shares directly to investors. The entire
purchase price of the shares is payable in full upon subscription. We may
discount the shares. Officers, directors and employees who sell shares 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 National
Rehab 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 Baum & Company, P.A. The financial statements have been
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
We have 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
<PAGE>
annexed as exhibits to the Registration Statement, and reference is made to such
exhibits to the Registration Statement to give investors a clear understanding
of this offering. For further information with respect to National Rehab 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.
<PAGE>
================================================================================
NATIONAL REHAB
PROPERTIES, INC.
10,000,000 shares
-------------
PROSPECTUS
-------------
January 18, 2000
================================================================================
================================================================================
No person is authorized to make any representations which are not contained in
this Prospectus. This Prospectus does not constitute an offer to sell any of our
common stock to any person in a state where such offer or sale could be
unlawful. The information contained in this Prospectus or National Rehab's
business may have changed 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 January 18, 2001 (365 days after date of this Prospectus), any person who
is involved with the offer or sale of the shares may be required to deliver a
Prospectus with respect to subscriptions for the common stock offered hereby.
================================================================================
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
AUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999 AND 1998
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
Table of Contents
Page
Independent Auditor's Report 1
Financial Statements
Balance Sheet 2
Statements of Income 3
Statements of Changes in Stockholders' Equity 4
Statements of Cash Flows 5
Notes to Financial Statements 6 - 9
<PAGE>
BAUM & COMPANY, P.A.
Certified Public Accountants
1515 University Drive - Suite 209
Coral Springs, Florida 33071
(954) 752-1712
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
National Rehab Properties, Inc.
Miami, Florida
We have audited the accompanying balance sheet of National Rehab Properties,
Inc. of September 30, 1999 and the related statements of income, changes in
stockholders' equity, and cash flows for the years ended September 30, 1999 and
September 30, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 audits provide 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.
of September 30, 1999, and the results of its operations, changes in
stockholders' equity and its cash flows for the years ended September 30, 1999
and September 30, 1998 in conformity with generally accepted accounting
principles.
/s/ Baum & Company, P.A.
December 13, 1999
Coral Springs, Florida
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
Current Assets
Cash in bank $ 411,257
Inventory - real estate holdings (Note 2 and 6) 1,216,381
Subscriptions Receivable (Note 7) 500,000
Prepaid expenses 57,000
-----------
Total Current Assets 2,184,638
-----------
Property, Plant & Equipment (Note 4)
(Net of $12,061 accumulated depreciation) 47,435
Other Assets
Investment - land 22,283
Notes Receivable (Net of allowance for bad debts of $12,000) 12,358
Organizational costs (net of $2,779 accumulated depreciation) 2,779
Deposits 25,000
Note Receivable - Related Party (Note 5) 302,000
-----------
Total Other Assets 364,420
-----------
Total Assets $ 2,596,493
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 82,203
Notes payable (Note 6) 650,000
Mortgages and debentures payable (Note 7) 947,500
-----------
Total Current Liabilities 1,679,703
-----------
Shareholders' Equity
Common stock, $.001 par value; authorized 40,000,000
Shares; issued and outstanding 9,054,773 9,055
Common stock class a voting, $.001; authorized 2,000,000
shares; issued and outstanding 1,000,000 1,000
Additional paid in capital 1,324,190
Accumulated deficit (417,455)
-----------
Total Shareholders' Equity 925,688
-----------
Total Liabilities and Shareholders' Equity $ 2,596,493
===========
See accountants' report and notes to financial statements
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
STATEMENTS OF INCOME
YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Gross sales $ 374,038 $ 935,744
Cost of sales 118,368 1,163,556
----------- -----------
Gross profit (loss) 255,670 (227,812)
Operating Expenses:
General & administrative expenses 509,543 69,623
----------- -----------
Net (loss) before other income and expense (253,873) (297,435)
Interest (expense) (14,124) (48,836)
Interest income 8,488 2,207
----------- -----------
Net (loss) $ (259,509) $ (344,064)
=========== ===========
Weighted average common shares outstanding 3,390,338 977,370
----------- -----------
Weighted average common shares outstanding fully diluted 7,715,338 977,370
----------- -----------
Loss per share $ (.0765) $ (.352)
=========== ===========
Loss per share fully diluted $ (.0336) $ (.352)
=========== ===========
</TABLE>
See accountants' report and notes to financial statements
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
Common Stock Class A Additional Retained Earnings/
------------ Common Paid-in Accumulated
#Shares Amount Voting Capital Deficit
------- ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
September 30, 1997 977,370 $ 977 $ -0- $ 288,267 $ 186,119
Net (Loss) (344,064)
----------- ----------- ----------- -----------
September 30, 1998 977,370 977 288,267 (157,946)
Additional shares issued for services
rendered Class A Voting 1,000,000 1,000 119,000
Additional shares issued for services
rendered 3,030,000 3,030 107,970
Additional shares issued for subscription
offering 2,075,004 2,075 209,425
Additional shares issued from debenture
conversion 2,972,399 2,972 599,528
Net (Loss) (259,509)
----------- ----------- ----------- ----------- -----------
September 30, 1999 10,054,773 $ 9,055 $ 1,000 $ 1,324,190 $ (417,455)
=========== =========== =========== =========== ===========
</TABLE>
See accountants' report and notes to financial statements
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
STATEMENT OF CASH FLOWS
SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net income (loss) $(259,509) $(344,064)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 10,562 5,199
Changes in assets and liabilities
(Increase) decrease in inventory of real estate holdings (951,403) 99,136
(Increase) decrease in prepaid expenses 15,645 (71,569)
Decrease in mortgages receivable 41,018
Decrease in security deposits 700
</TABLE>
See accountants' report and notes to financial statements
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background
The Company was originally incorporated in the State of Nevada on October
18, 1971 under the name of Mister Las Vegas, Inc. On December 15, 1994 the
Company merged with a privately owned company, National Rehab Properties,
Inc., a Florida corporation formed on October 1, 1993. The surviving
Nevada corporation changed its name to National Rehab Properties, Inc. and
became authorized to conduct business in the State of Florida on August
17, 1995. 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.
Real Estate Holdings Real estate investments are stated at the lower of
cost or market. Acquisition costs are allocated to respective properties
based on appraisals of the various properties acquired in the acquisition.
Income Taxes
In February 1992, the Financial Accounting Standards Board issued
Statement on Financial Accounting standards 109 of "Accounting for Income
Taxes." Under the Statement 109, deferred tax assets and liabilities are
recognized for the estimated future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. The Company has net
operating losses (NOL's) of approximately $ 417,455.
Deferred tax benefit (34% statutory rate) $ 88,233
Valuation allowance 88,233
---------
Net Benefit $ -0-
=========
Due to the uncertainty of utilizing the NOL and recognizing the deferred
tax benefit, an offsetting valuation allowance has been provided.
Revenue Recognition
Revenue is recognized under the full accrual method of accounting upon the
completed sale of real property held for development and sale. All costs
incurred directly or indirectly in acquiring and developing the real
property are capitalized.
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements
statements and the reported amounts of revenues and expenses during the
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and any
highly liquid investments with a maturity of three months or less at the
time of purchase. The Company maintains cash and cash equivalent balances
at several financial institutions which are insured by the Federal Deposit
Insurance Corporation up to $100,000. At September 30, 1999 the Company
had approximately $400,000 on deposit.
Earnings/Loss Per Share
Primary earnings per common share are computed by dividing the net income
(loss) by the weighted average number of shares of common stock and common
stock equivalents outstanding during the year. The number of shares used
for the fiscal years ended September 30, 1999 and 1998 were 3,390,338 and
977,370 respectively. Fully diluted shares for the fiscal year ended
September 30, 1999 and 1998 were 7,715,338 and 977,370 respectively.
NOTE 2 - INVENTORY
Inventory consists of residential single family homes and duplexes held
for resale, and is valued at the lower of costs or market value. Cost
includes acquisition, renovation and carrying costs specifically
identified with each unit.
NOTE 3 - LONG-TERM RECEIVABLES
Mortgages Receivable
Rehab Properties due to the irregular payment history of these types of
mortgages, the balance has been reclassified as Mortgages receivable of $
12,358, net of an allowance for bad debt of $12,000, are due from persons
that purchased properties from the Company.
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 4 - 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.
Transportation Equipment $ 54,680
Office Equipment 4,816
---------
Total 59,496
Less: Accumulated Depreciation (12,061)
Net Fixed Assets $ 47,435
=========
NOTE 5 - RELATED PARTY TRANSACTION
The president of the Company owes $302,000. The note accrues interest at
8% per annum and is payable on September 20, 2000.
The officers of the Company receive commissions for the execution of real
estate transactions. During the fiscal year ended September 30, 1999,
$121,000 was paid out and or accrued.
(See Note 7 - Capital Transactions)
NOTE 6 - MORTGAGES AND NOTES PAYABLE
Mortgage Payable
Collateralized note, bearing interest at the greater of 8.25% or
1.5% over prime lending rate. Payable monthly interest only, and
balloon payment of principal plus unpaid interest on October 1,
2000. Construction loan not currently drawn upon. $ -0-
Mortgage Payable
Collateralized note bearing interest at 8% and payable in full
plus accrued interest on June 29, 2000 600,000
Note Payable
Collateralized note, secured by real estate, due upon sale of
underlying real estate. Includes computed interest of 10%. 30,000
Note Payable - Related Party
Unsecured note, non-interest bearing, due on demand 20,000
<PAGE>
NATIONAL REHAB PROPERTIES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
NOTE 6 - MORTGAGES AND NOTES PAYABLE (Continued)
Total Notes payable 650,000
Total Non-Current Maturities -0-
--------
Total Current Maturities $650,000
========
NOTE 7 - CAPITAL TRANSACTIONS
During the fiscal year ended September 30, 1999 the following capital
transactions occurred.
A. 1,000,000 Class A voting common shares, valued at $120,000, were
issued to an officer of the Company for services rendered.
B. 3,030,000 common shares, valued at $11,000, were issued for services
rendered. 1,630,000 of these shares were issued to unrelated
parties. 1,400,000 of these shares were issued to an officer of the
Company. Subsequent to the year end, the 1,400,000 shares issued to
the officer were turned back into the corporation and canceled.
C. 2,075,004 common shares were sold through a 504(D) offering. The
Company received, net of offering expenses, $211,500.
D. 2,972,399 common shares valued at $602,500 were issued to debenture
holders as part of a conversion provision.
E. On July 30, 1999 the company offered a senior subordinated
convertible debenture. As of the year end the Company raised
$947,500. Subsequent to the year end, the offering was fully funded
with the company receiving net proceeds of $870,000. Also, all of
the debenture holders exercised the convertible provision and
6,000,000 common shares were subsequently issued.
<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
<PAGE>
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 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.
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<PAGE>
(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.
(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.
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<PAGE>
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 Baum & Company, P.A., Registrant's Accountant
- -------------
* To be filed by amendment.
** Previously filed.
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.
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<PAGE>
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:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) 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.
(c) 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.
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<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 Amendment Number One 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 January 14, 2000.
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 1/14/00
- ----------------------- (Principal Executive Officer)
Richard Astrom
/s/ Christopher Astrom Vice President and Director 1/14/00
- ----------------------- Treasurer, (Principal
Christopher Astrom Accounting Officer)
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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Registration No. _________
--------------------------------
EXHIBITS
TO
AMENDMENT NUMBER ONE
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
NATIONAL REHAB PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
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<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 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 Baum & Company, P.A., Registrant's Accountant
- -------------
* To be filed by amendment.
** Previously filed.
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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
January 18, 2000
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 Amendment Number One on Form SB-2 as filed with the U.S. Securities
and Exchange Commission on January 18, 2000.
Very truly yours,
RICHARD P. GREENE, P.A.
/s/ Richard P. Greene
----------------------
Richard P. Greene
For the Firm
RPG/evb
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BAUM & COMPANY, P.A.
Certified Public Accountants
1515 University Drive - Suite 209
Coral Springs, Florida 33071
(954) 752-1712
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report dated December 13, 1999 in this Registration Statement on Amendment
Number One to Form SB-2 of National Rehab Properties, Inc.
/s/ Baum & Company, P.A.
------------------------------
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