As filed with the Securities and Exchange Commission on December 17, 1999
Registration No. 333-
=============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SPECIAL ACQUISITIONS, INC.
(Name of small business issuer in its charter)
Nevada 6770 33-0852869
(State Or Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation Classification Code Number) Identification No.)
or Organization)
1945 South Poplar Street
Denver, CO 80224
(303) 758-2803
(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
---------------------------
Scott D. Bengfort, President
11403 Corta Playa Laguna
San Diego, California 92124
(619) 848-6601
(Name, Address and Telephone Number of Agent For Service)
---------------------------
Copy To:
Robert C. Weaver, Jr., Esq.
721 Devon Court
San Diego, CA 92109-8007
(858) 488-4433
---------------------------
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined
by market conditions and other factors.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Each Class Amount to be Price Per Offering Registration
of Securities Registered Share Price Fee
Common Stock, (1) 60,000 $5.00 $300,000 $ 79.20
$.001 par value
------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
PART I - INFORMATION REQUIRED IN PROSPECTUS
SPECIAL ACQUISITIONS, INC.
Cross-Reference Sheet
Showing Location in the Prospectus of
Information Required by Items of Form SB-2
Form SB-2 Item Number and Caption Location In Prospectus
1. Front of Registration Statement and
Outside Front Cover of Prospectus....... Outside Front Cover
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Inside Front Cover Page
3. Summary Information and Risk Factors..... Summary; Risk Factors
4. Use of Proceeds.......................... Use of Proceeds
5. Determination of Offering Price.......... Determination of Offering
Price
6. Dilution................................. Dilution
7. Selling Security Holders................. +
8. Plan of Distribution..................... Plan of Distribution
9. Legal Proceedings........................ Business - Legal
Proceedings
10. Directors, Executive Officers,
Promoters and Control Persons........... Management
11. Security Ownership of Certain
Beneficial Owners and Management........ Principal Security Holders
12. Description of Securities................ Description of Securities
13. Interest of Named Experts and Counsel.... Legal Matters, Experts
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Management -
Indemnification
15. Organization Within Last Five Years...... Certain Transactions
16. Description of Business.................. Business
17. Management's Discussion and Analysis
or Plan of Operation.................... Plan of Operation, Rule 419
Escrow Of Proceeds And
Stock Prior To An
Acquisition
18. Description of Property.................. Business - Facilities
19. Certain Relationships and Related
Transactions............................ Certain Transactions
20. Market for Common Equity and Related
Stockholder Matters..................... Description of Securities
21. Executive Compensation................... Management - Executive
Compensation
22. Financial Statements..................... Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and Financial
Disclosure.............................. *
_________
(*) None or Not Applicable
The information in this Prospectus is not complete and may be changed. The
Selling Security Holders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective.
This Prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT TO COMPLETION, DATED DECEMBER ___, 1999 PROSPECTUS
SPECIAL ACQUISITIONS, INC.
Minimum 20,000 Shares/ Maximum 60,000 Shares
Of Common Stock
Offering Price $5.00 Per Share
We are a startup company organized in the State of Nevada to pursue a
business combination in the Internet Industry.
We are offering these shares through our directors and officers without the
use of a professional underwriter. We will not pay commissions on stock
sales.
This is our initial public offering, and no public market currently exists
for our shares. The offering price may not reflect the market price of our
shares after the offering.
Investing in our common stock involves risks. You should not purchase our
common stock unless you can afford to lose your entire investment. See "RISK
FACTORS" beginning on page XX of this prospectus.
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have those organizations
determined that this prospectus is accurate or complete. Any representation
otherwise is a criminal offense.
Offering
Price to Public (1)
Discount (2)
Proceeds to
Company (3)
Per Share
$ 5.00
$0
$ 5.00
Minimum 20,000
$100,000
$0
$100,000
Maximum 60,000
$300,000
$0
$300,000
(Notes on following page.)
The date of this prospectus is ______, 1999
SPECIAL ACQUISITIONS, INC.
1945 South Poplar Street
Denver, CO 80224
(303) 758-2803
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is
legal to sell these securities. The information in this document may only be
accurate on the date of this document.
Dealer Prospectus Delivery Obligation
Until 90 days after the date when the funds and securities are released from
the escrow account, all dealers effecting transactions in the shares, whether
or not participating in this distribution, may be required to deliver a
prospectus. This is in addition to the obligation of dealers to deliver a
prospectus when acting as underwriters to their unsold allotments or
subscriptions.
TABLE OF CONTENTS
Page
Summary...................................................................
Risk Factors..............................................................
Rule 419 Escrow Of Proceeds And Stock Prior To An Acquisition.............
Use of Proceeds...........................................................
Determination of Offering Price...........................................
Dilution..................................................................
Plan of Operation.........................................................
Business..................................................................
Management................................................................
Certain Transactions......................................................
Principal Security Holders................................................
Description of Securities.................................................
Selling Stockholders......................................................
Plan of Distribution......................................................
Legal Matters.............................................................
Experts...................................................................
Where You Can Find Additional Information.................................
Index to Financial Statements.for period ended November 30, 1999..........F-1
SUMMARY
This summary highlights information we present more fully elsewhere in this
prospectus. You should read this entire prospectus carefully.
About Us
We are a blank check company subject to Rule 419. We were organized as a
vehicle to acquire or merge with a business or company operating in the
Internet industry. We have no present plans, proposals, agreements,
arrangements or understandings to acquire or merge with any specific business
or company nor have we identified any specific business or company for a
merger with us. Our management, however, is always looking for potential
merger candidates.
Since our formation, our activities have been limited to the sale of initial
shares for our organization and our preparation of this registration
statement and prospectus for our initial public offering. We will not engage
in any substantive commercial business following the offering until we make
an acquisition.
Corporate Information
We were incorporated under Nevada law on March 26, 1999.
Our offices are at 1945 South Poplar Street, Denver, CO 80224. Our telephone
number is (303) 758-2803.
This Offering
Securities offered Common Stock, $0.001 par value,
20,000 share minimum
60,000 share maximum
Price per Share $5.00
Common stock outstanding 130,000 shares
prior to the offering
Common stock to be 190,000 shares
outstanding after
the maximum offering
Risk Factors
Investments in our securities are highly speculative, involve a high degree
of risk, and should be purchased only by you if you can afford to lose your
entire investment. See "Risk Factors" for special risks concerning us and
"Dilution" for information concerning dilution of the book value of your
shares from the public offering.
Compliance with Rule 419
You have certain rights and will receive the substantive protection provided
by Rule 419 under the Securities Act of 1933. To that end:
The securities purchased by you and other investors and the funds
received in the offering will be deposited and held in the escrow account
until an acquisition meeting specific criteria is completed.
Before the acquisition can be completed and before the funds can be
released to us and securities can be released to you, we are required to
update the registration statement with a post-effective amendment.
Within the five days after the effective date, we are required to
furnish you with the prospectus containing the terms of a reconfirmation
offer and information regarding the proposed acquisition candidate and our
business, including audited financial statements.
Use of Proceeds
Of the offering proceeds deposited into the escrow account, if we obtain the
minimum of $100,000, 10% may be released to us prior to a confirmation
offering in which you reconfirm your investment in accordance with procedures
required by Rule 419. However, we do not intend to request release of any
funds from the escrow. Thus all of the escrowed funds will be available for
a business combination that is closed under the provisions of Rule 419.
We have not incurred and do not intend to incur in the future any debt from
anyone other than management for our organizational activities. Any debt to
management will not be repaid out of escrowed funds. Management is not aware
of any circumstances under which this policy, through its own initiative, may
be changed.
RISK FACTORS
An investment in our Common Stock involves a high degree of risk and should
only be made by investors who can afford to lose their entire investment.
You should carefully consider the risks and uncertainties described below and
other information in this Prospectus before deciding to invest in our Common
Stock. The risks described herein are intended to highlight risks that are
specific to us and are not the only ones we face. Additional risks and
uncertainties, such as those that apply to the business we acquire may also
impair our business operations. Risks and uncertainties, in addition to those
we describe below, that are presently not known to us or that we currently
believe are not material, may subsequently become material and may also
impair our financial condition.
If any of the following risks actually occur, our business, results of
operations and financial condition could be materially, adversely affected.
This could cause the trading price of our Common Stock to decline and a loss
of part or all of any investment in our Common Stock.
FORWARD LOOKING STATEMENTS. The words "may," "will," "expect," "anticipate,"
"believe," "continue," "estimate," "project," "intend," and similar
expressions used in this Prospectus are intended to identify forward-looking
statements. You should not place undue reliance on these forward-looking
statements, which speak only as of the date made. We undertake no obligation
to publicly release the result of any revision of these forward-looking
statements to reflect events or circumstances after the date they are made or
to reflect the occurrence of unanticipated events. You should also know that
such statements are not guarantees of future performance and are subject to
risks, uncertainties and assumptions. Should any of these risks or
uncertainties materialize, or should any of our assumptions prove incorrect,
actual results may differ materially from those included within the forward-
looking statements.
GOING CONCERN CONTINGENCY. The Company has minimal capital resources
presently available to meet obligations that normally can be expected to be
incurred by similar companies, and with which to carry out its planned
activities. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
ANTICIPATED CHANGE IN CONTROL AND MANAGEMENT. We anticipate we will
experience a change of control upon the closing of a business combination. In
addition, our current manager and director will resign. We cannot assure you
of the experience or qualification of new management either in the operation
of our activities or in the operation of the business, assets or property
being acquired.
NO ACQUISITION CANDIDATE IDENTIFIED. As of the date of this prospectus, we
have not entered into or negotiated any arrangements for a business
combination with an acquisition candidate. Since we have not yet attempted to
seek a business combination, and due to our lack of experience, there is only
a limited basis upon which to evaluate our prospectus for achieving our
intended business objectives.
NO ACCESS TO YOUR FUNDS WHILE HELD IN ESCROW. If we are unable to locate an
acquisition candidate meeting these acquisition criteria, you will have to
wait 18 months from the date of this prospectus before a proportionate
portion of your funds are returned, without interest. You will be offered
return of your proportionate portion of the funds held in escrow only upon
the reconfirmation offering required to be conducted upon execution of an
agreement to acquire an acquisition candidate which represents 80% of the
maximum offering proceeds.
FAILURE OF SUFFICIENT NUMBER OF INVESTORS TO RECONFIRM INVESTMENT. A
business combination with an acquisition candidate cannot be closed unless,
for the reconfirmation offering required by Rule 419, we can successfully
convince you and a sufficient number of investors representing 80% of the
maximum offering proceeds to elect to reconfirm your investments. If, after
completion of the reconfirmation offering, a sufficient number of investors
do not reconfirm their investment, the business combination will not be
closed. In such event, none of the securities held in escrow will be issued
and the funds will be returned to you on a proportionate basis.
Up to 80% of the shares may be purchased by our officers, directors, current
shareholders and any of their affiliates or associates. It is likely that
such insiders will elect to reconfirm a proposed business combination
reducing or eliminating your effect on the outcome of the 80% required
reconfirmation.
EXTREMELY LIMITED CAPITALIZATION. As of November 30, 1999, there were
$19,500 of assets and $5,000 of liabilities. There was $12,500 available in
cash on hand. Assuming the sale of all the shares in this offering, we will
receive net proceeds of approximately $300,000, all of which must be
deposited in the escrow account. It should be noted however that we may
receive no or nominal proceeds from this offering that would significantly
restrict our operations and would have a materially adverse effect on our
business and investors. Therefore, we may require additional financing in the
future in order to close a business combination. This financing may consist
of the issuance of debt or equity securities. These funds might not be
available, if needed, or might not be available on terms acceptable to us. It
is unlikely that we will need additional funds, but we may if an acquisition
candidate insists we obtain additional capital. Such financing will not occur
without shareholder approval
NO TRANSFER OF ESCROWED SECURITIES. No transfer or other disposition of the
escrowed securities is permitted other than by will or the laws of descent
and distribution, or under a qualified domestic relations order as defined by
the Internal Revenue Code of 1986 as amended, or Title 7 of the Employee
Retirement Income Security Act, or the related rules. Under Rule 15g-8, it is
unlawful for any person to sell or offer to sell the securities or any
interest in or related to the securities held in the Rule 419 escrow account
other than under a qualified domestic relations order in divorce proceedings.
Therefore, any and all contracts for sale to be satisfied by delivery of the
securities and sales of derivative securities to be settled by delivery of
the securities are prohibited. You are further prohibited from selling any
interest in the securities or any derivative securities whether or not
physical delivery is required.
COMPETITION. In relation to our competitors, we are and will continue to be
an insignificant participant in the business of seeking business
combinations. A large number of established and well-financed entities,
including venture capital firms, have recently increased their merger and
acquisition activities. Nearly all such entities have significantly greater
financial resources, technical expertise and managerial capabilities than we
and, consequently, we will be at a competitive disadvantage in identifying
suitable merger or acquisition candidates and successfully consummating a
proposed merger or acquisition. Also, we will be competing with a large
number of other small, blank check companies.
CONFLICT OF INTEREST - MANAGEMENT'S FIDUCIARY DUTIES. A conflict of interest
may arise between management's personal financial benefit and management's
fiduciary duty to you. You should note that management can purchase up to 80%
of the stock in this offering and thus may own 57.00% of us after the
offering is completed. Our management would therefore have continuing
control. Further, management's interest in their own financial benefit may at
some point compromise their fiduciary duty to you. No proceeds from this
offering will be used to purchase directly or indirectly any shares of the
common stock owned by management or any present shareholder, director or
promoter.
Our director and Officer are or may become, in their individual capacities,
an officer, director, controlling shareholder and/or partner of other
entities engaged in a variety of businesses. Douglas E. Greer is engaged in
business activities outside of us, and the amount of time he will devote to
our business will only be about five (5) to twenty (20) hours each per month.
There exist potential conflicts of interest including allocation of time
between us and such other business entities.
We will not purchase the assets of any company which is beneficially owned by
any of our officer, director, promoters, affiliates or associates.
POSSIBLE DISADVANTAGES OF BLANK CHECK OFFERING. Our business will most
likely involve the acquisition of or merger with a company which does not
need substantial additional capital but which desires to establish a public
trading market for our shares. A company which seeks our participation in
attempting to consolidate our operations through a merger, reorganization,
asset acquisition, or some other form of combination may desire to do so to
avoid what they may deem to be adverse consequences of themselves undertaking
a public offering. Factors considered may include:
Time delays
Significant expense
Loss of voting control
The inability or unwillingness to comply with various federal and
State laws enacted for your protection
In making an investment in us, you may be doing so under terms that may
ultimately be less favorable than making an investment directly in a company
with a specific business. You may not be afforded an opportunity to
specifically approve or consent to any particular stock buy-out transaction.
LACK OF DIVERSIFICATION. In the event we are successful in identifying and
evaluating a suitable business combination, we will in all likelihood, be
required to issue our common stock in an acquisition or merger transaction.
Inasmuch as our capitalization is limited and the issuance of additional
common stock will result in a dilution of interest for present and
prospective shareholders, we will only negotiate one acquisition or merger.
REGULATION. Although we will be subject to regulation under the Securities
Act of 1933, as amended (the "Securities Act") and the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), management believes we will not
be subject to regulation under the Investment Company Act of 1940. The
regulatory scope of the Investment Company Act of 1940 was enacted
principally for the purpose of regulatory vehicles for pooled investments in
securities, extends generally to companies primarily in the business of
investing, reinvesting, owning, holding or trading securities. The Investment
Company Act may, however, also be deemed to be applicable to a company which
does not intend to be characterized as an investment company but which
engages in activities which may be deemed to be within the definition of the
scope of certain provisions of the Investment Company Act. We believe that
our principal activities will not subject us to regulation under the
Investment Company Act. Nevertheless, we might be deemed to be an investment
company. The offering funds may be invested primarily in certificates of
deposit, interest bearing savings accounts or government securities. In the
event we are deemed to be an investment company, we may be subject to certain
restrictions relating to our activities, including restrictions on the nature
of our investments and the issuance of securities. We have obtained no formal
determination from the Securities and Exchange Commission as to our status
under the Investment Company Act of 1940.
TAXATION. In the course of any acquisition or merger we may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both us and the acquisition candidate. Presently, under the
provisions of federal and various state tax laws, a qualified reorganization
between business entities will generally result in tax-free treatment to the
parties to the reorganization. While we expect to undertake any merger or
acquisition so as to minimize federal and state tax consequences to both us
and the acquisition candidate, such business combination might not meet the
statutory requirements of a reorganization or the parties might not obtain
the intended tax-free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both federal and
state taxes that may have a substantial adverse effect on us.
CONTROL BY PRESENT MANAGEMENT AND SHAREHOLDERS. Assuming the sale of all the
shares offered to persons other than existing shareholders, the shares of
common stock purchased by the public will represent 31.6% of our outstanding
common stock after the completion of this offering. Therefore, our present
stockholders will own 68.4% of us and will continue to be able to elect our
director, appoint our officer, and control our affairs and operations. Our
articles of incorporation do not provide for cumulative voting.
LIMITATIONS ON SHARE RESALE. Initially, our securities may be sold in New
York State and the State of Florida only (although we are considering
registering the shares in other states), and may be resold by you in New York
and Florida only until a resale exemption is available in other states.
NO UNDERWRITER. We are selling the shares through our directors and officers
without the use of a professional securities underwriting firm. Consequently,
there may be less due diligence performed in conjunction with this offering
than would be performed in an underwritten offering.
SHARES ELIGIBLE FOR FUTURE SALE. Of the common shares outstanding after the
offering, the up to 60,000 shares sold in this offering will be registered
with the SEC and can be freely resold, unless they are acquired by our
directors, executive officers or other persons or entities that they control
or who control them. Our directors, executive officers, and persons or
entities that they control or who control them will be able to sell shares of
stock so long as they do so without violating SEC Rule 144. The remaining
130,000 outstanding shares may only be sold under the Rule 144 until such
time as they are registered. We have made no guarantees to any of our
existing shareholders that we will, in fact register their shares and their
shares, nor are their shares being registered in this offering.
Rule 144 provides that director, executive officer, and persons or entities
that they control or who control them may sell shares of common stock in any
three-month period in an amount limited to the greater of:
-1% of our outstanding shares of common stock or
The average weekly trading volume in our common stock during the four
calendar weeks preceding a sale.
Sales under the rule also must be made without violating:
- Manner-of-sale provisions in the market through a broker at current
market prices
- Notice requirements forms must be filed with the SEC
- Requirement of availability of public information about us current in
filing required SEC reports.
We cannot predict the effect that sales of shares or the availability of
shares for sale will have on the any market price that may exist for our
common stock after completion of the offering. It is likely that sales of
substantial amounts of our common stock in the public market could drive our
stock price down.
RULE 419 ESCROW OF PROCEEDS
AND STOCK PRIOR TO AN ACQUISITION
Acquisition Criteria
Rule 419 requires that, before your offering funds can be released to us and
our securities can be released to you, we must execute an agreement to
acquire a candidate meeting certain specified criteria. The agreement must
provide for the acquisition of a business or assets for which the fair value
of the business represents at least 80% of the maximum offering proceeds. The
agreement must include, as a precondition to its closing, a requirement that
the number of investors representing 80% of the maximum offering proceeds
must elect to reconfirm their investment. For purposes of this offering, the
fair value of the business or assets to be acquired must be at least $240,000
(80% of $300,000).
Post-Effective Amendment
Once the agreement governing the acquisition of a business meeting the
required criteria has been executed, Rule 419 requires us to update the
registration statement with a post-effective amendment. The post-effective
amendment must contain information about the proposed acquisition candidate
and their business, including audited financial statements, the results of
this offering and the use of the funds disbursed from the escrow account. The
post-effective amendment must also include the terms of the reconfirmation
offer mandated by Rule 419. The reconfirmation offer must include certain
prescribed conditions which must be satisfied before the funds and securities
can be released from escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the post-
effective amendment. Under Rule 419, the terms of the reconfirmation offer
must include the following conditions:
- - The prospectus contained in the post-effective amendment will be sent to
each investor whose securities are held in the escrow account within 5
business days after the effective date of the post-effective amendment.
- Each investor will have no fewer than 20 and no more than 45 business
days from the effective date of the post-effective amendment to notify us in
writing that the investor elects to remain an investor.
- If we do not receive written notification from any investor within 45
business days following the effective date, the proportionate portion of the
funds and any related interest or dividends held in the escrow account on
such investor's behalf will be returned to the investor within 5 business
days by first class mail or other equally prompt means.
- The acquisition will be closed only if a minimum number of investors
representing 80% of the maximum offering proceeds equaling $80,000 elect to
reconfirm their investment.
- If a closed acquisition has not occurred within 18 months from the date
of this prospectus, the funds held in the escrow account shall be returned to
all investors on a proportionate basis within 5 business days by first class
mail or other equally prompt means.
Release Of Securities And Funds
The funds will be released to us, and the securities will be released to you,
only after:
- The escrow agent has received a signed representation from us and any
other evidence acceptable by the escrow agent that
We have executed an agreement for the acquisition of an acquisition
candidate for which the fair market value of the business represents at least
80% of the maximum offering proceeds and has filed the required post-
effective amendment.
The post-effective amendment has been declared effective.
We have satisfied all of the prescribed conditions of the reconfirmation
offer.
The closing of the acquisition of the business with a fair value of at
least 80% of the maximum proceeds.
DILUTION
The difference between the public offering price per share and the pro forma
net tangible book value per share of our Common Stock after this offering
constitutes the dilution to investors in this offering. Net tangible book
value per share is determined by dividing our net tangible book value (total
tangible assets less total liabilities) by the number of our outstanding
common shares.
The following table illustrates, as of November 30, 1999, the dilution to
investors in this offering:
Maximum Minimum
Public offering price per Share $ 5.00 $ 5.00
Net tangible book value per
Share, before this offering $ .1131 .1311
Increase per Share attributable
to Payment by new investors $ 1.5432 .6516
Net tangible book value per Share,
after this offering $ 1.6563 .7647
Dilution to new investors per Share $ 3.3437 4.2353
As of the date hereof there are currently no plans, proposals, arrangements
or understandings with respect to the sale of additional securities to any
persons for the period commencing with the closing of this offering and our
identification of a business acquisition.
For the maximum offering following table compares between existing
shareholders and investors:
the number of shares of our Common Stock held,
their percentage ownership of such shares,
the total consideration paid,
the percentage of total consideration paid, and
the average price per share:
Shares Purchased Total Consideration Price Per
Amount Percentage Paid Percentage Share
Existing
Shareholders 130,000 68.4% $ 14.700.00 4.7% $ .1131
New Investors 60,000 31.6% 300,000.00 95.3% $5.000
Total 190,000 100.0% 314,700.00 100.0% $1.6563
USE OF PROCEEDS
The proceeds received in this offering will be put into the escrow account
pending closing of a business combination and reconfirmation by your. Such
funds will be in an insured depository institution account in either a
certificate of deposit, interest bearing savings account or in short term
government securities.
After we reach the offering minimum of $100,000 and prior to the
reconfirmation of the offering, Rule 419 permits 10% of the funds to be
released from escrow to us. We do not intend to request release of these
funds therefore all of the funds will be used by the business acquisition.
Under Rule 419, after the reconfirmation offering and the closing of the
business combination the escrow funds plus any interest received, but less
any amount returned to investors who did not reconfirm their investment under
Rule 419, will be released to us and used as working capital.
DETERMINATION OF OFFERING PRICE
We set the offering price of $5.00 per share arbitrarily. This price bears
no relation to our assets, book value, or any other customary investment
criteria, including our prior operating history or lack thereof. Among
factors considered by us in determining the offering price were:
Estimates of our business potential
Our limited financial resources
The amount of equity desired to be retained by present shareholders
The amount of dilution to the public
The general condition of the securities markets
PLAN OF OPERATION
We are a development stage entity, and have neither engaged in any operations
nor generated any revenues to date. Our expenses to date, which have been
funded by our current shareholders and management, are approximately $1500.
Substantially all of our expenses will be from our efforts to identify a
suitable acquisition candidate and close the acquisition. These expenses
will be funded from cash on hand, or if additional funds are required, by
loans from management.
Management may agree to fund our cash requirements until an acquisition is
closed. So long as management does so, we will have sufficient funds to
satisfy our cash requirements and do not expect to have to raise additional
funds during the Rule 419 escrow period of up to 18 months from the date of
this prospectus. This is primarily because we anticipate incurring no
significant expenditures. Before the conclusion of this offering, we
anticipate our expenses to be limited to accounting fees, legal fees,
telephone, mailing, filing fees, occupational license fees, and transfer
agent fees.
We may seek additional financing. At this time we believe that the funds on
hand will be sufficient for funding our operations until we find an
acquisition and therefore do not expect to issue any additional securities
before the closing of a business combination. However, we may issue
additional securities, incur debt or procure other types of financing if
needed. We have not entered into any agreements, plans or proposals for such
financing and as of present have no plans to do so. We will not use the
offering funds as collateral or security for any loan or debt incurred.
Further, the offering funds will not be used to pay back any loan or debts
incurred by us. If we do require additional financing, this financing may not
be available to us, or if available, it may be on terms unacceptable to us.
Year 2000 Issues
The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result, date-
sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of normal business activities.
Because we currently have no operations, we do not anticipate incurring
significant expense with regard to Year 2000 issues.
BUSINESS
Overview
Since inception, our primary activity has been directed to organizational
efforts and obtaining initial financing. We were formed as a vehicle to
pursue a business combination. We have not engaged in any preliminary
efforts intended to identify possible business combination and have neither
conducted negotiations concerning nor entered into a letter of intent
concerning any such acquisition candidate. We are filing this registration
statement in order to initiate a public offering for our securities.
Operations
We were organized for the purposes of creating a corporate vehicle to seek,
investigate and, if such investigation warrants, engage in business
combinations presented to us by persons or firms who or which desire to
employ our funds in their business or who seek the perceived advantages of a
publicly-held corporation. Our principal business objective will be to seek
long-term growth potential in a business combination in the Internet Industry
rather than to pursue immediate, short-term earnings.
We do not currently engage in any business activities that provide any cash
flow. The costs of identifying, investigating, and analyzing business
combinations will be paid with cash on hand or loaned by management. Persons
purchasing shares in this offering and other shareholders will most likely
not have the opportunity to participate in any of these decisions. Our
proposed business is sometimes referred to as a "blank check" company because
you will entrust your investment monies to our management before they have a
chance to analyze any ultimate use to which this money may be put. Although
substantially all of the funds of this offering are intended to be utilized
generally to close a business combination, such proceeds are not otherwise
being designated for any specific purposes. Under Rule 419, as a prospective
investor you will have an opportunity to evaluate the specific merits or
risks of only the business combination that management decides to enter into.
We may seek a business combination with firms which:
Have recently commenced operations
Are developing companies in need of additional funds for expansion into
new products or markets
Are seeking to develop a new product or service
Are established businesses which may be experiencing financial or
operating difficulties and are in need of additional capital
A business combination may involve the acquisition of, or merger with, a
company which does not need substantial additional capital but which desires
to establish a public trading market for our shares, while avoiding what they
may deem to be adverse consequences of undertaking a public offering itself,
such as:
Time delays
Significant expense
Loss of voting control
Compliance with various federal and state securities laws
We will not acquire a candidate unless the fair value of the acquisition
candidate represents 80% of the maximum offering proceeds. To determine the
fair market value of an acquisition candidate, our management will examine
the audited financial statements, including balance sheets and statements of
cash flow and stockholders' equity, focusing attention on assets,
liabilities, sales and net worth. If we determine that the financial
statements of a proposed acquisition candidate do not clearly indicate that
the fair market value test has been satisfied, we will obtain an opinion from
an investment banking firm which is a member of National Association of
Securities Dealers, Inc. to the satisfaction of such criteria.
Based upon the probable desire on the part of the owners of acquisition
candidates to assume voting control over us in order to avoid tax
consequences or to have complete authority to manage the business, we will
combine with just one acquisition candidate. This lack of diversification
should be considered a substantial risk in investing in us because we will
not permit us to offset potential losses from one venture against gains from
another.
Upon closing of a business combination, there will be a change in control
that will result in the resignation of our present officer and director.
Although our officers and directors, from time to time, have discussions with
companies that are looking to be acquired, our officer or director has had no
preliminary contact or discussions with any representative of any other
entity regarding a business combination with us. Accordingly, any acquisition
candidate that is selected may be a financially unstable company or an entity
in an early stage of development or growth, including entities without
established records of sales or earnings. Accordingly, we may become
subjected to numerous risks inherent in the business and operations of
financially unstable and early stage or potential emerging growth companies.
In addition, we may effect a business combination with an entity in the
Internet industry, an industry characterized by a high level of risk.
Although management will endeavor to evaluate the risks inherent in an
acquisition candidate, there can be no assurance that we will properly
ascertain or assess all significant risks.
We anticipate that the selection of a business combination will be complex
and extremely risky. Management believes that there are numerous firms
seeking even the limited additional capital that we will have and/or the
benefit of a publicly traded corporation because of:
General economic conditions.
Rapid technological advances being made in the Internet industry.
Shortages of available capital.
Such perceived benefit of a publicly traded corporation may include:
- Facilitating or improving the terms on which additional equity financing
may be sought.
- Providing liquidity for the principals of a business.
- Creating a means for providing incentive stock options or similar
benefits to key employees.
- Providing liquidity, subject to restrictions of applicable statutes, for
all shareholders.
Evaluation of Business Combinations
The analysis of business combinations will be undertaken by us under the
supervision of our officer and director, who is not a professional business
analyst.
Because we will be subject to Section 13 or 15(d) of the Exchange Act, we
will be required to furnish certain information about significant
acquisitions, including audited financial statements for the business
acquired, covering one, two or three years depending upon the relative size
of the acquisition. Consequently, acquisition prospects that do not have or
are unable to obtain the required audited statements may not be appropriate
for acquisition so long as the reporting requirements of the Exchange Act are
applicable. In the event our obligation to file periodic reports is suspended
under Section 15(d), we intend on voluntarily filing such reports.
Any business combination will present certain risks. Many of these risks
cannot be adequately identified prior to selection, and your must, therefore,
depend on the ability of management to identify and evaluate such risks. In
the case of some of the potential combinations available to us, it is
possible that the promoters of an acquisition candidate have been unable to
develop a going concern or that such business is in our development stage in
that it has not generated significant revenues from its principal business
activity prior to our merger or acquisition. There is a risk, even after the
closing of a business combination and the related expenditure of our funds,
that the combined enterprises will still be unable to become a going concern
or advance beyond the development stage. The combination may involve new and
untested products, processes, or market strategies that may not succeed. Such
risks will be assumed by us and, therefore, our shareholders.
Business Combinations
In implementing a structure for a particular business acquisition, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also purchase
stock or assets of an existing business. The manner of the business
combination will depend on:
The nature of the acquisition candidate
The respective needs and desires of us and other parties
The management of the acquisition candidate opportunity
The relative negotiating strength of us and such other management
You should note that any merger or acquisition closed by us can be expected
to have a significant dilutive effect on our current shareholders and
purchasers in this offering. On the closing of a business combination, the
acquisition candidate will have significantly more assets and/or potential
than us; therefore, management plans to offer a controlling interest in us to
the acquisition candidate. While the actual terms of a transaction to which
we may be a party cannot be predicted, we may expect that the parties to the
business transaction will find it desirable to avoid the creation of a
taxable event and thereby structure the acquisition in a so-called tax-free
reorganization under Sections 368(a)(1) or 351 of the Internal Revenue Code
of 1954. In order to obtain tax-free treatment under the code, it may be
necessary for the owners of the acquired business to own 80% or more of the
voting stock of the surviving entity. In such event, our shareholders,
including investors in this offering, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would be likely
to result in significant dilution in the equity of such shareholders.
Management may choose to comply with these provisions. In addition, our
director and officer may, as part of the terms of the acquisition
transaction, resign as director and officer. Management may retain shares of
the common stock (unless those shares, as part of the terms of the
acquisition transaction, are sought by an acquisition candidate).
Management will not actively negotiate or otherwise consent to the purchase
of any portion of their common stock as a condition to or for a proposed
business combination unless such a purchase is requested by an acquisition
candidate as a condition to a merger or acquisition. Our officers and
directors have agreed to comply with this provision. Management is unaware of
any circumstances under which such policy through their own initiative may be
changed.
We anticipate that any securities issued in a reorganization would be issued
in reliance on exemptions from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated
element of this transaction, we may agree to register such securities either
at the time the transaction is closed, under certain conditions, or at
specified times thereafter. The issuance of substantial additional securities
and their potential sale into any trading market that may develop in our
common stock may have a depressive effect on such market.
If at any time prior to the completion of this offering we enter negotiations
with a possible merger candidate and such a transaction becomes probable,
then this offering will be suspended so that an amendment can be filed which
will include financial statements (including balance sheets and statements of
cash flow and stockholders' equity) of the proposed target.
We will not enter into a business combination with any company, which is in
any way wholly or partially beneficially owned by any officer, director,
promoter or affiliate or associate of us. Our officers and directors have not
approached and have not been approached by any person or entity with regard
to any specific proposed business ventures with us. We will evaluate all
possible business combinations brought to us. If at any time a business
combination is brought to us by any of our promoters, management, or their
affiliates or associates, disclosure as to this fact will be included in the
post-effective amendment, thereby allowing the investors the opportunity to
fully evaluate the business combination.
We have adopted a policy that we will not pay a finder's fee to any member of
management for locating a merger or acquisition candidate. No member of
management intends to or may seek and negotiate for the payment of finder's
fees. In the event there is a finder's fee, it will be paid at the direction
of the successor management after a change in management control resulting
from a business combination.
We will remain an insignificant player among the firms that engage in
business combinations. There are many established venture capital and
financial concerns which have significantly greater financial and personnel
resources and technical expertise than us. In view of our combined limited
financial resources and limited management availability, we will continue to
be at a significant competitive disadvantage compared to our competitors.
Also, we will be competing with a large number of other small public, blank
check companies located throughout the United States.
Finding a Business Combination
Our management will actively search for potential acquisition candidates
through internet websites where companies post their intentions to be
acquired. In addition, we may have our own web-site or use other web sites so
that companies seeking to be acquired can find us easily. Any such web-site
will allow interested companies to answer a due diligence questionnaire, and
provide us with the information necessary to review and analyze their
potential as a candidate. We may also decide to advertise our intention to
acquire a company in legal or other publications. The cost of such
advertising will be paid from the cash on hand, and if additional funds are
required, such cost will be assumed by management.
Employees
We presently have no employees. Our officers and directors are engaged in
business activities outside of us, and the amount of time he will devote to
our business will only be approximately 5% of their work week. Upon
completion of the public offering, it is anticipated that management will
devote the time necessary each month to our affairs or until a successful
acquisition of a business has been completed.
Facilities
We are presently using the office of our Secretary, at no cost, as our
office. Such arrangement is expected to continue after completion of this
offering until a business combination is closed. There is currently no
written rental agreement. We presently own no equipment, and do not intend
to own any upon completion of this offering.
Legal Proceedings
We are not currently a party to any material legal proceedings.
MANAGEMENT
Executive Officers, Directors and Other Significant Employees
Name Age Title
Scott D. Bengfort 50 President, Director
Chief Executive Officer, Treasurer
Brian S. French 32 Secretary, Director
Chief Financial Officer, Treasurer
Scott D. Bengfort, our President, Chief Executive Officer, and a Director,
will devote approximately 5% of his time to our affairs. His
responsibilities will include management of our operations as well as our
administrative and financial activities. Scott has been a licensed Real
Estate Agent with RE/MAX Associates in La Jolla, California since 1999. For
over five years, he has been President of Financial Intelligence, Inc., a
private personal services Nevada corporation. Financial Intelligence is the
parent company of NetWarriors (www.netwarriors.com), an Internet services
company specializing in Internet strategy development and website building,
consulting, and the formation of strategic alliances. Financial Intelligence
also owns the World Home Mart (www.worldhomemart.com) an as yet undeveloped
Internet company. Soctt is a member of the Microsoft Site Builders Network
and Microsoft Direct Access, programs that keep members up to date with the
advancements and future developments in the information technology industry.
He holds a Bachelor of Science degree from the University of Iowa. He has
numerous certifications of completion of Microsoft software, HTML, and
computer hardware courses from New Horizons Computer Learning Center and
Vortex Data Systems.
Brian S. French, our Secretary, Chief Financial Officer, Treasurer, and a
Director, will devote approximately 5% of his time to our affairs. He has
over ten years of combined experience in the areas of business management and
corporate finance. Currently he serves as Controller and Chief Information
Officer for Advanced Systems Group, Inc., a systems integrator specializing
in enterprise class UNIX computing solutions. From 1993 to 1996 he was
Controller for Hamon Contractors, a major highway contractor. From 1986 to
1993, he was the Controller for Aspen Marine Group, Inc.
Board of Directors
Our board of directors consists of six (6) authorized members and we
currently have four (4) directors and two (2) vacancies. The terms of the
Board of Directors will expire at the next annual meeting of stockholders.
No directors have been compensated for their activities as directors. In the
future, our non-employee directors may be reimbursed for expenses incurred in
connection with attending board and committee meetings and compensated for
their services as board or committee members. We may also grant non-employee
directors options to purchase our common stock pursuant to the terms of our
1999 Stock Plan. See "Executive Compensation--Stock Plans."
Executive Officers
Our officers are elected by the Board of Directors and hold office at the
will of the Board.
Blank Check Companies
Our management has been involved a previous blank check offering within the
past five (5) years. Brian French is a Director and Secretary of California
Applied Research, Inc. ("CAR"). CAR is a "Blank check" company that filed an
SB-2 registration statement for a public offering and raised $100,000 of
offering funds that went into a Rule 419 escrow. CAR was unable to complete
a prescribed acquisition within 18 months and subsequently returned the
investor funds. CAR deregistered all of securities under the SB-2
registration and is no longer a reporting company. CAR is presently seeking
an acquisition.
Management Involvement
We have conducted no business as of yet. Our officers and directors will be
the primary person involved in locating an acquisition candidate by speaking
to business associates and acquaintances and searching the New York Times,
the Wall Street Journal, other business publications and the Internet for
acquisition candidates.
Management Control
Management may not divest themselves of ownership and control of us prior to
the closing of an acquisition or merger transaction. This policy is based on
an unwritten agreement among management. Management is not aware of any
circumstances under which such policy through their own initiative may be
changed.
Indemnification
Our articles of incorporation provide that we shall indemnify, to the full
extent permitted by Nevada law, any of our directors, officers, employees or
agents who are made, or threatened to be made, a party to a proceeding by
reason of the fact that he or she is or was one of our directors, officers,
employees or agents against judgments, penalties, fines, settlements and
reasonable expenses incurred by the person in connection with the proceeding
if specified standards are met. Although indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to our directors,
officers and controlling persons under these provisions, we have been advised
that, in the opinion of the SEC, indemnification for liabilities arising
under the Securities Act of 1933 is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
Conflicts of Interest
Our proposed business raises potential conflicts of interest between us and
its officers and directors. We have been formed for the purpose of locating
suitable business opportunities in which to participate. Each member of
management will not be devoting full time to us and is engaged in various
other business activities. From time to time, in the course of such
activities they may become aware of investment and business opportunities and
may be faced with the issue of whether to involve us in such a transaction.
Our management is required by our by-laws to bring business opportunities to
us insofar as they relate to business opportunities in which we have
expressed an interest. Because our business is to locate a suitable business
venture, management is required to bring such business opportunities to us.
Potential conflicts may arise if a member of management does not disclose
such potential business opportunities.
Members of management have organized other companies as "blank check" or
"blind pool" companies in the future and offer their securities to the
public. Management may have conflicts in the event that another "blank
check" or "blind pool" company associated with management is actively seeking
the acquisition of properties and businesses that are identical or similar to
those that we may seek, should we complete this Blank Check Offering.
A conflict will not be present as between us and another affiliated "blank
check" or "blind pool" if, before the we begin seeking acquisitions, such
other blank check" or "blind pool" (1) enters into any understanding,
arrangement or contractual commitment to participate in, or acquire, any
business or property; and (2) ceases its search for additional properties or
businesses identical or similar to those we may seek.
Conflicts also may not be present to the extent that potential business
opportunities are appropriate for us but not for other affiliated "blank
check" or "blind pool" (or vice versa), because of such factors as the
difference in working capital available to us. If, however, at any time we
and any other firms affiliated with management are simultaneously seeking
business opportunities, management may fact the conflict of whether to submit
a potential business acquisition to us or to such other firms. In the event
that an opportunity is appropriate to both the us and another affiliated
"blank check" or "blind pool" management intends to first offer such
opportunity to that entity that first closed sale of its securities.
We will not invest the proceeds of this Blank Check Offering in any entity
affiliated with management with approval of either a majority of the
disinterested directors or approval of disinterested shareholders holding a
majority of our voting stock not owned by our officers and directors,
beneficially and of record. Further, and in any event, we must comply with
the reconfirmation offering requirements of Rule 419. We have established no
other guidelines or procedures for resolving potential conflicts. Failure by
management to resolve conflicts of interest in our favor may result in
liability of management to us. Management has and will continue to have an
affirmative obligation to disclose conflicts of interest to our Board of
Directors or shareholders.
Other potential conflicts of interest include
The potential payment of a finder's fee, other than from the proceeds of
this Blank Check Offering, to members of management, to our shareholders or
their affiliates if they bring a proposed business venture to us and we enter
into such business venture;
Demands on management's time from their other business interests; and
The preferences, notwithstanding other possible factors, to utilized the
legal services of a major shareholder.
Executive Compensation
No compensation has been paid to any officers or directors since inception.
We may pay any of the following types of compensation or other financial
benefit to our management or current stockholders:
Consulting Fees
- Finders' Fees
- Sales of insiders' stock positions in whole or in part to the private
company, the blank check company and/or principals thereof.
- Any other methods of payments by which management or current
shareholders receive funds, stock, other assets or anything of value whether
tangible or intangible
Employment Agreements
None of our executive officers are subject to an employment agreement at this
time. We intend to enter into employment contracts with some of our
executive officers in the near future.
CERTAIN TRANSACTIONS
In May 1999, the four founding shareholders received an aggredate of 124,000
shares of our common stock for cash and services rendered.
In October 1999, an officer received 1,000 shares of our common stock for
services rendered.
We have agreed to pay our corporate attorney, who is also a stockholder,
$5,000 cash for his legal services relative to the public offering at the
time of an acquisition.
PRINCIPAL SECURITY HOLDERS
The following tables set forth information regarding the beneficial owners of
our Common Stock, as of November 30, 1999, by the following individuals or
groups:
Each of our executive officers;
Each of our directors;
Each person, or group of affiliated persons, whom we know beneficially
owns more than 5% of our outstanding stock; and
All of our directors and executive officers as a group.
Except as otherwise noted, and subject to applicable community property laws,
to the best of our knowledge, the persons named in this table have sole
voting and investing power with respect to all of the shares of common stock
held by them.
As of the table date we had 130,000 common shares outstanding.
Name and Amount and Percent of Class
Address of Nature of Before After After
Beneficial Beneficial the Maximum Minimum
Owner Ownership Offering Offering Offering
Scott D. Bengfort (1)(2) 31,000 23.8% 16.3% 20.7%
11403 Corta Playa Laguna
San Diego, CA 92124
Brian S. French (1)(2) 2,000 1.6% 1.0% 1.4%
1945 South Poplar Street
Denver, CO 80224
Dave Schwartz (2) 31,000 23.8% 16.3% 20.7%
9201 East Mississippi Ave.
#E105
Denver, CO 80231
J. Michael Spinali (2) 31,000 23.8% 16.3% 20.7%
15524 Riparian Road
Poway, CA 92064
Robert C. Weaver, Jr.(2) 31,000 23.8% 16.3% 20.7%
721 Devon Court
San Diego, CA 92109
Named Officers and 33,000 20.2% 14.8% 18.0%
Directors As a Group
(1) Officer or Director.
(2) Control person.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue up to 10,000,000 shares of Common Stock, $.001 par
value, of which 130,000 shares were issued and outstanding as of November 30,
1999. All outstanding shares of our common stock are fully paid and
nonassessable and the shares of our common stock offered by this prospectus
will be, upon issuance, fully paid and nonassessable. The following is a
summary of the material rights and privileges of our common stock.
VOTING. Holders of our common stock are entitled to cast one vote for each
share held at all shareholder meetings for all purposes, including the
election of directors. The holders of more than 50% of the voting power of
our common stock issued and outstanding and entitled to vote and present in
person or by proxy, together with any preferred stock issued and outstanding
and entitled to vote and present in person or by proxy, constitute a quorum
at all meetings of our shareholders. The vote of the holders of a majority of
our common stock present and entitled to vote at a meeting, together with any
preferred stock present and entitled to vote at a meeting, will decide any
question brought before the meeting, except when Colorado law, our articles
of incorporation, or our bylaws require a greater vote and except when
Colorado law requires a vote of any preferred stock issued and outstanding,
voting as a separate class, to approve a matter brought before the meeting.
Holders of our common stock do not have cumulative voting for the election of
directors.
DIVIDENDS. Holders of our common stock are entitled to dividends when, as and
if declared by the board of directors out of funds available for
distribution. The payment of any dividends may be limited or prohibited by
loan agreement provisions or priority dividends for preferred stock that may
be outstanding.
PREEMPTIVE RIGHTS. The holders of our common stock have no preemptive rights
to subscribe for any additional shares of any class of our capital stock or
for any issue of bonds, notes or other securities convertible into any class
of our capital stock.
LIQUIDATION. If we liquidate or dissolve, the holders of each outstanding
share of our common stock will be entitled to share equally in our assets
legally available for distribution to our shareholders after payment of all
liabilities and after distributions to holders of preferred stock legally
entitled to be paid distributions prior to the payment of distributions to
holders of our common stock.
Dividends
No dividends have been declared with respect to our Common Stock since
inception. We are not likely to pay any dividends in the foreseeable future.
We intend to reinvest any earnings in its operations.
Transfer Agent
We are currently acting as our own transfer agent. After completion of this
Offering we will choose a registered transfer agent for our Common Stock.
PLAN OF DISTRIBUTION
We offer the right to subscribe for up to 60,000 shares at $5.00 per share.
We are offering the shares directly on a best efforts, 20,000 share minimum
basis. No compensation is to be paid to any person for the offer and sale of
the shares.
Our directors and officers plan to distribute prospectuses related to this
offering. We estimate up to 100 prospectuses will be distributed in such a
manner to acquaintances, friends and business associates.
Up to 80% of the shares may be purchased by our officers, directors, current
shareholders and any of their affiliates or associates.
Although our directors and officers are associated persons of us as that term
is defined in Rule 3a4-1 under the Exchange Act, they is deemed not to be a
broker for the following reasons:
They are not subject to a statutory disqualification as that term is
defined in Section 3(a)(39) of the Exchange Act at the time of their
participation in the sale of our securities. They will not be compensated
for their participation in the sale of our securities by the payment of
commission or other remuneration based either directly or indirectly on
transactions in securities.
They are not an associated person of a broker or dealers at the time of
their participation in the sale of our securities.
- They will restrict their participation to the following activities:
Preparing any written communication or delivering such
communication through the mails or other means that does not involve oral
solicitation by them of a potential purchaser;
Responding to inquiries of a potential purchasers in a
communication initiated by the potential purchasers, provided however, that
the content of such responses are limited to information contained in a
registration statement filed under the Securities Act or other offering
document;
Performing ministerial and clerical work involved in effecting any
transaction.
As of the date of this Prospectus, no broker has been retained by us for the
sale of securities being offered. In the event a broker who may be deemed an
underwriter is retained by us, an amendment to our registration statement
will be filed.
Neither we nor anyone acting on our behalf including our shareholders,
officers, directors, promoters, affiliates or associates will request or
encourage a market in these securities prior to an acquisition of any
business opportunity. There have been no preliminary discussions or
understandings between us or anyone acting on our behalf and any market maker
regarding the participation in the future trading market, if any, for our
securities. We may use consultants to obtain market makers to commence
trading after an acquisition. No member of management, promoter or anyone
acting at their direction will recommend, encourage or advise you to open
brokerage accounts with any broker-dealer that is obtained to make a market
in the shares subsequent to the acquisition of any business opportunity.
Investors in this offering must make their own decisions regarding whether to
hold or sell their shares. We will not exercise any influence over your
decisions.
Limited State Registration
Initially, our securities may be sold in New York State and Florida only
(although we are considering registering the shares in other states) pursuant
to exemption from registration provisions contained in Sections 359-e, New
York Codes, and Section 517.061(11), Florida Statutes. See "Risk Factors" for
a discussion of the resale limitations that result from this limited state
registration.
Method of Subscribing
Persons may subscribe by filling in and signing the subscription agreement
and delivering it, prior to the expiration date, to us. The subscription
price of $5.00 per share must be paid in cash or by check, bank draft or
postal express money order payable in United States dollars to our order. You
may not pay in cash.
Expiration Date
This offering will expire 180 days from the date of this prospectus.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed upon for
us by Robert C. Weaver, Jr., Esq., San Diego, California. He is presently
the holder of 31,000 shares of our Common Stock.
EXPERTS
Our financial statements at November 30, 1999, appearing in this Prospectus
and Registration Statement have been audited by Boros & Farrington PC,
independent auditor, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
This prospectus is a part of a registration statement on Form SB-2 filed by
us with the SEC under the Securities Act. This Prospectus omits certain
information contained in the registration statement, and we refer you to the
registration statement and to the exhibits to the registration statement for
additional information about the common stock and us.
We upon registration we will file annual, quarterly and special reports, and
other information with the SEC. You may read and copy any document we file
with the SEC at the SEC's public reference room located at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the SEC's public reference rooms located
at it's regional offices in New York, New York and Chicago, Illinois. Please
call the SEC at 1-800-SEC-0300 for further information on the operation of
public reference rooms. You can also obtain copies of this material from the
SEC's Internet web site (http://www.sec.gov) that contains reports, proxy
statements and other information regarding registrants that file
electronically with the SEC.
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Financial Statements
and
Independent Auditor's Report
November 30, 1999
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Table of Contents
Page
Independent Auditor's Report F-1
Audited Financial Statements:
Balance Sheet F-2
Statements of Operations F-3
Statements of Changes in Stockholders' Equity F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Special Acquisitions, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheet of Special Acquisitions, Inc.
at November 30, 1999 and the related statements of changes in stockholders'
equity, operations, and cash flows for the period from March 26, 1999 (date
of inception) to November 30, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Special Acquisitions, Inc.
at November 30, 1999, and the results of its operations and its cash flows
for the period then ended, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. However, the Company has minimal
capital resources presently available to meet obligations which normally can
be expected to be incurred by similar companies, and with which to carry out
its planned activities. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in
regard to this matter are discussed in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
Boros & Farrington PC
San Diego, California
December 7, 1999
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Balance Sheet
November 30, 1999
ASSETS
Current assets
Cash $12,500
Other assets
Organization costs 2,000
Deferred public offering costs 5,000
$19,500
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accrued liabilities $ 5,000
Contingencies and commitments (notes 2, 4 and 5)
Stockholders' equity
Common stock, $.001 par value per share;
10,000,000 shares authorized; 130,000 shares
issued and outstanding 130
Additional paid-in capital 14,570
Deficit accumulated during the development stage (200)
14,500
$19,500
The accompanying notes are an integral part of this statement.
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Statement of Operations
From March 26, 1999 (Date of Inception) To November 30, 1999
Expenses
Stock issued for services $ 200
Weighted average number of shares 125,000
Net loss per common share $(0.002)
The accompanying notes are an integral part of this statement.
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional During
Common Stock Paid-In Development
Shares Amount Capital Stage Total
<S> <C> <C> <C> <C> <C>
Shares issued as of May 5, 1999
during the formation of the Company, for
services valued at $.02 per share to:
Officers and directors 124,000 $124 $ 1,876 $ - $ 2,000
Shares issued to officer for
services of $0.20
per share in October 1999 1,000 1 199 - 200
Shares issued for cash at $2.50 per
share in November 1999 5,000 5 12,495 - 12,500
Net loss for the period - - - (200) (200)
Balance at November 30, 1999 130,000 $130 $14,570 $(200) $14,500
</TABLE>
The accompanying notes are an integral part of this statement.
SPECIAL ACQUISITIONS, INC.
(A Development Stage Company)
Statement of Cash Flows
From March 26, 1999 (Date of Inception) To November 30, 1999
Cash flows from operating activities
Net loss $ (200)
Non-cash items included in the net loss
Stock issued for services 200
Net cash from operating activities -
Cash flows from financing activities
Proceeds from sale of common stock 12,500
Increase in cash $12,500
The accompanying notes are an integral part of this statement.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization. Special Acquisitions, Inc. (the "Company") was incorporated
under the laws of the State of Nevada on March 26, 1999. The Company is in
the development stage as more fully defined in Statement No. 7 of the
Financial Accounting Standards Board. Planned principal operations of the
Company have not yet commenced, and activities to date have been limited to
its formation and obtaining its initial capitalization. The Company intends
to seek, investigate and, if such investigation warrants, acquire an interest
in business opportunities presented to it by persons who or firms which
desire to employ the Company's funds in their business or seek the perceived
advantages of a publicly held corporation.
Deferred Costs Related To Proposed Public Offering. Costs incurred in
connection with the proposed public offering of common stock have been
deferred and will be charged against capital if the offering is successful or
against operations if it is unsuccessful.
Shares Issued In Exchange For Services. The fair value of shares issued in
exchange for services rendered to the Company was determined by the Company's
officers and directors.
Income Taxes. The Company has made no provision for income taxes because of
financial statement and tax losses since its inception. As of November 30,
1999, the Company has deferred tax assets of approximately $2,000 relating
primarily to the capitalization of start-up costs for tax purposes. A
valuation allowance has been provided to reduce the deferred tax assets to
zero.
Net Loss Per Common Share. The net loss per common share is computed by
dividing the net loss for the period by the weighted average number of shares
outstanding. For purposes of computing the weighted average number of
shares, all stock issued with regards to the founding of the Company is
considered to be "cheap stock" as defined in SEC Staff Accounting Bulletin 4D
and is therefore counted as outstanding for the entire period.
Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect certain reported amounts and
disclosures. Accordingly, actual results could differ from those estimates.
2. GOING CONCERN CONTINGENCY
The Company has minimal capital resources presently available to meet
obligations which normally can be expected to be incurred by similar
companies, and with which to carry out its planned activities. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
In order to begin any significant operations, the Company will have to
pursue other sources of capital, such as additional equity financing as
discussed in Note 4. There is no assurance that the Company will be able to
obtain such financing. The accompanying financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
3. RELATED PARTY TRANSACTIONS
In October 1999, an officer of the Company received 1,000 shares of common
stock for services rendered.
See also Note 5 regarding a legal fee relative to the public offering of
common stock.
4. CONTINGENT PUBLIC OFFERING OF COMMON STOCK
On May 5, 1999, the board of directors authorized the Company to sell in a
public offering a minimum of 5,000 and a maximum of 100,000 shares of common
stock pursuant to an effective registration statement on Form SB-2 filed
under the Securities Act of 1933. Each share shall have a purchase price of
$5.00. On November 19, 1999 the board, by resolution, changed the offering
to a minimum of 20,000 and a maximum of 60,000 shares of common stock.
Proceeds from the public offering shall be deposited into an escrow account
with an independent third party, pursuant to an escrow agreement between the
Company and the Escrow Agent. The securities to be issued to investors must
also be deposited into this escrow account. The deposited funds and the
deposited securities may not be released until an acquisition, meeting
certain specified criteria, has been made and a sufficient number of
investors reconfirm their investment in accordance with certain specified
procedures. Pursuant to these procedures, a new prospectus, which describes
an acquisition candidate and its business and includes audited financial
statements, must be delivered to all investors. The Company must return the
pro rata portion of the deposited funds to any investor who does not elect to
remain an investor. Unless a sufficient number of investors elect to remain
investors, all investors will be entitled to the return of a pro rata portion
of the deposited proceeds (and any interest earned thereon) and none of the
deposited securities will be issued to investors. In the event an
acquisition is not consummated within 18 months of the effective date, the
deposited proceeds will be returned on a pro rata basis to all investors.
5. LEGAL FEE
The Company has agreed to pay its corporate attorney, who is also a
stockholder of the Company, $5,000 cash for his legal services relative to
the public offering upon the registration statement for the public offering
(see Note 4 above) becoming effective. This obligation has been accrued in
the accompanying balance sheet and the costs are included in deferred public
offering costs.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Nevada Revised Statutes Section 78.7502, 78.751, and 78.752 allow us to
indemnify our officers, directors and any corporate agents in terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act. Our certificate of incorporation and our bylaws provide for
indemnification of our directors, officers, employees and other agents to the
extent and under the circumstances permitted by Nevada law. We may enter into
agreements with our directors and executive officers that require us, among
other things, to indemnify them against certain liabilities that may arise by
reason of their status or service as directors and executive officers to the
fullest extent permitted by Delaware law. We have also purchased directors
and officers liability insurance, which provides coverage against certain
liabilities including liabilities under the Securities Act.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of this offering in connection with the issuance and
distribution of the securities being registered, all of which are to be paid
by the Registrant, are as follows:
Registration Fee $ 79.20
Legal Fees and Expenses................................... 5,000.00
Accounting Fees and Expenses.............................. 1,000.00
Printing.................................................. 200.00
Miscellaneous Expenses.................................... 720.80
Total............................................ $ 7,000.00
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
(a) The following is a summary of our transactions during the last three
years preceding the date hereof involving sales of our securities that were
not registered under the Securities Act.
In May 1999, founding shareholders received 124,000 shares of common stock
for cash and services rendered.
In October 1999, an officer received 1,000 shares of common stock for
services rendered.
In November and December 1999, we issued to investors 5,000 shares of common
stock for cash in the amount of $12,500.
The sales and issuances of securities in the transactions described above
were deemed to be exempt from registration under the Securities Act in
reliance upon Section 4(2) of the Securities Act, Regulation D promulgated
thereunder. These sales were made without general solicitation or
advertising. The recipients of securities in each transaction represented
their intentions to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and
appropriate legends were affixed to the securities issued in such
transactions. All recipients had adequate access, through their relationship
with us to information about us.
(b) There were no underwritten offerings employed in connection with any
of the transactions set forth in Item 26(a).
ITEM 27. EXHIBITS.
The following exhibits are filed with this Registration Statement:
Number Description
1.1 Subscription Agreement (**)
1.2 Escrow Agreement under Rule 419 (**)
3.1 Articles of Incorporation (*)
3.2 By-Laws (*)
4.1 Specimen Common Stock Certificate (**)
5.1 Opinion Regarding Legality*(*)
23.1 Consent of Counsel (**)
23.2 Consent of Expert (*)
24.1 Power of Attorney (see page II-5 of this filing) (*)
27.1 Financial Data Schedule (*)
- ------------------------------
(*) Filed herewith.
(**) To be filed by amendment
ITEM 28. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as express in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by
a director, officer or controlling person of the small business issuer 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 small business issuer 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 Securities Act and will be
governed by the final adjudication such issue.
(5) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the small business issuer under Rule 424(b)(1), or (4) or
497(h) under the Securities Act as part of this registration statement as of
the time the Commission declared it effective.
(6) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
POWER OF ATTORNEY
The Registrant and each person whose signature appears below hereby appoints
Scott D. Bengfort as their attorney-in-fact, with full power to act alone, to
sign in the name and in behalf of the Registrant and any such person,
individually and in each capacity stated below, any and all amendments,
including post-effective amendments, to this Registration Statement.
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 San Diego, State of California, on December 17, 1999.
SPECIAL ACQUISITIONS, INC. (Registrant)
By:/s/_______________________________
Scott D. Bengfort
President, Chief Executive Officer
Date: 12/17/99
By:/s/_______________________________
Brian S. French
Chief Financial Officer, Secretary
Date: 12/17/99
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/_______________________________ 12/17/99
Scott D. Bengfort Chairman, Director,
Chief Executive Officer
President
/s/_______________________________ 12/17/99
Brian S. French Chief Financial Officer,
Secretary
ARTICLES OF INCORPORATION
OF
SPECIAL ACQUISITIONS, INC.
FIRST. The name of the corporation is:
SPECIAL ACQUISITIONS, INC.
SECOND. That the name of the agent for service of process
is Marilyn K. Radloff and that
the office of agent for service or process is located at 115 Taums
Circle, Town of Reno, County of washee,
Zip Code 89511, State of Nevada, and that the corporation may
maintain an office, or offices within or without
the State of Nevada as may from time to time be designated by the
Board of Directors, or by the by-laws of
said corporaflon. and that this corporation may conduct all
corporation business of every kind and nature,
including the holding of all meetings of directors and stockholders
outside the State of Nevada as well as
within the State of Nevada-
THIRD. The objects for which this corporation is formed are
to engage in any lawful activity.
FOURTH. That the total number of voting common stock
authorized that may be used by
the corporation is TEN MILLION (10,000,000) shares of stock with a
par value of $001 per share and no other
class of stock shall be authorized. Said shares may be issued by
the corporation from time to time for such
considerations as may be fixed from time to time by the Board of
flirectors.
FIFTH: The governing board of this corporation shall be
know as directors, and the
number of directors may from time to time be increased or decreased
in such manner as shall be provided by
the by-laws or this corporation, providing that the number or
directors shall not be reduced to less than three
(3), except in cases where all the shares of the Corporation are
unissued or owned beneficially and of record
by either one or two stockholders, the number of directors may be
less than three (3) but not less than the
number of stockholders.
-1-
The names and post office address of the first Board of
Directors, which shall be two (2) in
number, is as fcllows:
Scoff Bengfort
11403 Coite Playa Laguna
San Diego, CA 92124-1540
J. Michael Spinali
15574 Riparian Road
Poway, CA 92064
SIXTH. The capital stock, after the amount of the
subscription price or par value has
been paid in, shall not be subject to assessment to pay the debts of
the corporationH
SEVENTH: The name and post office address of the
incorporator signing the Articles of
Incorporation is as follows:
Scoff IBengfon
11403 Corte Playa Laguna
San Diego, CA 92124-1540
EIGHTH: The corporation is to have perpetual existence
NINTH: In furtherance but not in limitation of the powers
conferred by statute, the Board
is expressly authorized;
subject to the by-Laws, if any, adopted by the stockholders,
to make, alter or amend the by-Laws
of the corporation;
to flx the amount to be reserved as working capital over and
above its capital stock paid in: to
authorize and cause to be executed, mortgages and liens upon the real
and personal property of the
Corporation; and
by Resolution passed by a majority of the whole Board, to
designate one (1) or more committees,
each committee to consist of one or more of the directors or the
corporation, which to the extent provided in
the Resolution, or in the by-laws of the corporation, shall have and
may exercise the powers of the Board of
Directors in the management of the business and afairs of the
corporat'onE Such committee, or commiflees,
shall have such name, or names as may be s+ated in the by-Paws of the
corporation, or as may be determined
from time to time by Resolution adopted by the Board of flirectorsE
when and as authorized by the affirmative vote of the
stockholders holding stock and entitling
them to exercise at least a majority of the voting power given at a
stockholders' meeting called for that
purpose, or when authorized by the wriffen consent of the holders of
at least a majority of the voting stock
of Directors
2
issued and outstanding, the Board or Directors shall have power and
authority at any meeting, to self, lease
or exchange all of the property and assets of the corporation,
including its good will and its corporate
fmnchises, upon such terms and conditions as its Board of Directors
deems expedient and in the best
interest of the corporation.
TENTH: No shareholder shall be entitled as a matter of right
to subscribe for or receive
additional shares of any class of stock of the corporation, whether
now or hereafter authorized, or any
bonds, debentures or securities convertible into stock, but such
additional shares of stock or other
securities convertible into stock may be issued or disposed of by
the Board of Directors to such persons
and on such terms as in its discretion it shall deem advisable.
ELEVENTH: This corporation reserves the right to amend,
alter, change or repeal any
provision contained in the Articles of lncorpomtion, in a manner now
or hereafter prescribed by statute, or
by the Articles of Incorporation, and all rights conferred upon
stockholders here are granted subject to this
reservation -
I
I, THE UNDERSIGNED, being the Incorporator hereinbefore
named for the purpose of forming
a corporation pursuant to the General Corporation Law of the State
of Nevada, do make and file these
Articles of Incorporation, hereby declaring and certifying that the
5 herein stated are true, and
accordingly have hereunto set my hand this
STATE OF CALIFONIA )
COUNTY OF SAN DIEGO}
On this 26th day of March, 1999, before me, the undersigned,
a Notary Public in and for the County of San Diego, State of California
personally appeared Scott Bengfort who proved to me upon satisfactory
evidence, to be the person whose
name is suhscribed to the foregoing instrument and acknowledged to me that
he/she executed the same
Anita Hansen
Notary Public
-3-
BY-LAWS OF SPECIAL ACQUISITIONS, INC.
A Nevada corporation
(Adopted May 5, 1999)
ARTICLE I - SHAREHOLDERS
Section 1. Annual Meeting. The regular annual meeting of the shareholders of
the Corporation shall be held at the office of the Corporation in San Diego,
California Las Vegas, , or at such other place as may be ordered by
the Board of Directors, on the 2nd2nd Thursday of May each year, if
it be not a legal holiday and if it be a legal holiday, then on the next
succeeding day not a legal holiday; provided, however, that the Board of
Directors may postpone such meeting for a period of time not in excess of
90 days upon appropriate resolution. The officers of the
Corporation shall present their annual reports and the Secretary shall have on
file for inspection and reference, an authentic list of the shareholders,
giving the amount of shares held by each as shown by the share books of the
Corporation, 10 days before the annual meeting. If there is a failure to hold
the annual meeting for a period of 90 days after the date designated therefor
the board of directors shall order a meeting to be held upon the application
of any shareholder to the Corporation.
Section 2. Special Meetings. Special meetings of the shareholders may be
called by the Chairman of the Board of Directors, the President, a Vice
President or on call signed by one or more shareholders holding an aggregate
of not less than 20% of the outstanding shares entitled to vote at
the meeting. The Board of Directors may designate any place as the place for
any annual meeting or for any special meeting called by the Board of
Directors. If a special meeting shall be called otherwise than by the Board
of Directors, the place of meeting shall be in the city of the principal
office of the Corporation. Calls for special meetings shall specify the time,
place and object or objects thereof, and no other business than that specified
in the call shall be considered in any such meeting.
Section 3. Notice of Meetings. Written notice stating the place, date and
hour of the meeting, and, in case of a special meeting, the purpose for which
the meeting is called, shall be delivered not less than 10 nor more
than 50 days before the date of the meeting, either personally or by mail
(postal, express, facimile or electronic), by or at the direction of the
President or the Secretary, or the officer or person calling the meeting, to
each shareholder of record entitled to vote at such meeting, except that if
the authorized capital shares are to be increased, at least 20 days'
notice shall be given. If requested by the person or persons lawfully calling
such meeting, the Secretary shall give notice thereof, at corporate expense.
Any shareholder may waive notice of any meeting. Notice to shareholders of
record, if mailed, shall be deemed given as to any shareholder of record, when
deposited in the mail (postal, express, facimile or electronic), addressed to
the shareholder at his address as it appears on the stock transfer books of
the Corporation, with postage thereon prepaid, but if three successive letters
mailed to the last-known address of any shareholder of record are returned or
acknowledged as undeliverable, no further notices to such shareholders shall
be necessary, until another address for such shareholder is made known to the
Corporation.
Section 4. Action Without a Meeting. Except as may otherwise be provided by
the Articles of Incorporation or By-Laws, any action required to be taken at
any annual or special meeting of shareholders may be taken without a meeting
and without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed (in original or facimile) by the holders of outstanding
shares having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
Section 5. Closing Transfer Books. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
purpose, the Board of Directors may provide that the share transfer books
shall be closed for any stated period not exceeding 50 days. If
the share transfer books shall be closed for the purpose of determining
shareholders entitled to notice of or to vote at a meeting of shareholders,
such date in any case to be not more than 50 days and, in case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action requiring such determination of shareholders is to be taken. If the
share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting of
shareholders, or shareholders entitled 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 or
shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such a
determination shall apply to any adjournment thereof. The officer or agent
having charge of the share transfer books for shares of the Corporation shall
make, at least 10 days before each meeting of shareholders, a complete record
of the shareholders entitled to vote at such meeting, or any adjournment
thereof, arranged in alphabetical order, with the address of and the number of
shares held by each, which record, for a period of ten days before each such
meeting, shall be kept on file at the principal office of the Corporation, and
shall be subject to inspection by any shareholder for any purpose germane to
the meeting at any time during usual hours. Such record shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any shareholder for any purpose germane to the
meeting during the whole time of the meeting. The original share transfer
books shall be prima facie evidence as to who are the shareholders entitled to
examine such record or transfer books or to vote at any meeting of
shareholders.
Section 6. Election of Directors. Subject to Section 1 of Article II of
these By-Laws and the Articles of Incorporation, at each annual meeting of the
shareholders of the Corporation, a number of directors equal to the number
whose terms are expiring shall be elected to serve until their successors are
duly elected and qualified, unless they sooner resign. Election of directors
shall be by such of the shareholders as attend for the purpose, either in
person or by proxy, provided that if a majority of the outstanding
shares entitled to vote is not represented, in person or by proxy, such
meeting may be adjourned by the shareholders present for a period not
exceeding 50 days at any one adjournment. At such election of
directors, cumulative voting shall not be allowed.
Section 7. Quorum. A majority of the outstanding shares entitled
to vote exclusive of treasury shares, represented in person or by proxy, shall
be necessary to constitute a quorum at meetings of the shareholders. If a
quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, except in those cases where it is
otherwise provided by law. In the absence of a quorum, those present in
person or by proxy may adjourn the meeting from time to time without further
notice but in no event for a period to exceed 50 days at any one adjournment.
At such adjourned meeting at which a quorum shall be present or represented,
any business may be transacted which might have been transacted at the meeting
as originally noticed. The shareholders present at a duly organized meeting
may continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, if any action
taken is approved by a majority of the shareholders required to initially
constitute a quorum.
Section 8. Proxies. Any shareholder entitled to vote may be represented at
any regular or special meeting of the shareholders by a duly executed proxy.
The proxy shall be in writing and properly signed and filed with the Secretary
before or at the time of the meeting. No proxy shall be valid after 11 months
from the date of its execution, unless otherwise provided in the proxy.
Section 9. Order of Business. The order of business at the annual meeting
and so far as is practicable at all other meetings of the shareholders, shall
be as follows:
(1) Calling of roll.
(2) Proof of due notice of meeting.
(3) Reading and disposal of any unapproved minutes.
(4) Annual reports of officers and committees.
(5) Election of directors.
(6) Unfinished business.
(7) New business.
(8) Adjournment.
ARTICLE II - DIRECTORS
Section 1. Number and Qualifications. The property interests, business and
transactions of the Corporation shall be managed and conducted by a Board of
Directors which, except as otherwise provided for in the Articles of
Incorporation, shall consist of not less than 3 nor more than 11
persons (however, if there are less than 3 shareholders, the number of
directors maybe less than 3 but not less than the number of shareholders), as
shall be fixed from time to time by the Board of Directors, as hereinafter
provided. The Board of Directors shall be elected annually by ballot of the
holders of the shares of the Corporation entitled to vote thereon for the term
of one year and shall serve until the election and qualification of their
successors, unless they sooner resign. The number of directors may be
increased at any time by a majority vote of the whole Board of Directors. The
number of directors may be decreased at any time by a majority vote of the
whole Board of Directors, except that no decrease in the number of directors
shall have the effect of shortening the terms of any incumbent director.
Section 2. Duties. The Board of Directors shall exercise a general
supervision over the affairs of the Corporation, authorize the issuance and
sale of shares of the Corporation, receive and pass upon the reports of the
Secretary and Treasurer, audit all bills and accounts against the Corporation
and fix or delegate authority to fix the compensation of officers and
employees of the Corporation. The Board may direct any officer or officers of
the Corporation to transact any particular branch of business which it may see
fit to designate. The Board of Directors may, from time to time, employ such
persons as the Board may deem necessary for the carrying on of the business of
the Corporation, any of whom may also be officers or directors of the
Corporation.
Section 3. Committees. The Board of Directors by resolution passed by a
majority of the whole Board of Directors may designate from among its members
an Executive Committee, or one or more other committees each of which, to the
extent provided in the resolution or in the Articles of Incorporation or the
By-Laws of the Corporation, shall have all the authority of the Board of
Directors, but no such committee shall have the authority of the Board of
Directors in reference to amending the Articles of Incorporation, adopting a
plan of merger or consolidation, recommending to the shareholders the sale,
lease, exchange or other disposition of all or substantially all the property
and assets of the Corporation otherwise than in the usual and regular course
of its business, recommending to the shareholders a voluntary dissolution of
the Corporation or a revocation thereof, or amending the By-Laws of the
Corporation. The designation of such committees and the delegation thereto
shall not operate to relieve the Board of Directors, or any member thereof, of
any responsibility imposed by law.
Section 4. Vacancies. Any director may resign at any time by giving written
notice to the President or to the Secretary of the Corporation. Such
resignation shall take effect at the time specified therein; and unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of a majority of the remaining
Directors through less than a quorum of the Board of Directors. A director
elected to fill a vacancy shall be elected for the unexpired term of his
predecessor in office. Any directorship to be filled by reason of an increase
in the number of directors shall be filled by the affirmative vote of a
majority of the directors then in office, or by an election at an annual
meeting or at a special meeting of the shareholders called for that purpose.
A director chosen to fill a position resulting from an increase in the number
of directors shall hold office until the next annual meeting of shareholders
and until his successor has been elected and qualified.
Section 5. Meetings. The annual meeting of the Board of Directors shall be
held immediately following the annual shareholders' meeting. The Board of
Directors shall meet at such other time or times as they may from time to time
determine. Special meetings of the Board of Directors may likewise be held on
the written call of the Chairman of the Board, the President or of any two
members of the Board.
Section 6. Place of Meeting. The Board of Directors of any committee
designated by such Board may hold its meetings at such place or places as the
Board may from time to time determine, or, with respect to its meetings, as
shall be specified or fixed in the respective notices or waivers of notice or
such meetings.
Section 7. Conference Telephone. One or more directors may participate in a
meeting of the Board, of a committee of the Board or of the stockholders, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other.
Participation in this manner shall constitute presence in person at such
meeting.
Section 8. Special Meetings; Notice. Special meetings of the Board of
Directors or any committee designated by such Board, shall be held whenever
called by the President or by two of the directors. Notice of each such
meeting shall be mailed to each director, addressed to him at his address as
it appears on the records of the Corporation, at least three days before the
day on which the meeting is to be held, or shall be sent to him at such place
by telegram, or be delivered personally, not later than one day before the day
on which the meeting is to be held. The notice of each such special meeting
shall indicate briefly the subjects thereof. No notice of the time, place or
purpose of any meeting of the Board of Directors or any committee designated
by such Board need be given to any director or committee person who attends in
person or who, in writing executed and filed with the records of the meeting,
either before or after the holding thereof, waives such notice. No notice
need be given of any adjourned meeting of the Board of Directors.
As to any director who shall sign the minutes of any special or regular
directors' meeting, such meeting shall be deemed to have been legally and duly
called, noticed, held and construed as if all the directors were actually
present at said meeting, and all who signed the minutes were duly noticed or
waived notice, and the signature of any director to the minutes of a meeting
shall for all purposes and as to all persons be held to be an approval of the
action thereof.
Section 9. Action Without a Meeting. Except as may otherwise be provided by
the Articles of Incorporation or By-Laws, members of the Board of Directors or
any committee designated by such Board may participate in a meeting of the
Board or committee by means of conference, telephone, or similar
communications equipment by which all persons participating in the meeting can
contemporaneously understand each other. Such participation shall constitute
presence in person at a meeting. Any action required to be taken by the Board
of Directors, or a committee thereof, or any other action which requires
director approval may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed (in original or facimile)
by all of the directors or all the committee members entitled to vote thereon.
Section 10. Quorum and Manner of Acting. A majority of the number of member
of the Board of Directors shall form a quorum for the transaction of business
at any regular or special meeting of the Board of Directors. Except as
otherwise provided by law, by the Articles of Incorporation, or by these By-
Laws, the act of a majority of the directors present, provided the same
constitute a quorum, shall be the act of the Board of Directors. In the
absence of a quorum, a majority of the directors present may adjourn the
meeting from time to time until a quorum be had. Each director shall have one
vote.
Section 11. Election of Officers. At the first meeting of the Board of
Directors, after the annual election, the Chairman of the Board and/or the
President, the Secretary, and the Treasurer/Chief Financial Officer shall be,
and any Vice President(s) may be, elected to serve for the ensuing year and
until the election of their respective successors, and an Executive Committee
may be elected. Election shall be by ballot and the majority of the votes
cast shall be necessary to elect. Any vacancies that occur may be filled by
the Board of Directors for the unexpired term.
Section 12. Compensation of Directors. Unless otherwise restricted by the
Articles of Incorporation, the Board of Directors shall have the authority to
fix the compensation of directors. The directors may be paid their expenses,
if any, of attendance at each meeting of the Board of Directors and may be
paid a fixed sum for attendance at each meeting of the Board of Directors or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor. Members of special or Executive Committees may be allowed like
compensation for attending committee meetings.
Section 13. Advisory Directors and Advisory Committee Members. The Board of
Directors from time to time may appoint one or more persons to be Advisory
Directors or Advisory Members of one or more committees who shall not by such
appointment be members of the Board of Directors. Advisory Directors or
Advisory Members shall be available from time to time to perform special
assignments specified by the President or the Board of Directors, to attend
meetings of the Board of Directors upon invitation and to furnish consultation
to the Board. The period during which the title shall be held may be
prescribed by the Board of Directors. If no period is prescribed, the title
shall be held at the pleasure of the Board.
Section 14. Removal. Any director may be removed from office, either with or
without cause, at any time and another person may be elected to his place, to
serve for the remainder of his term, at any special meeting of shareholders
called for the purpose, by vote of the holders of the majority of the shares
then entitled to vote at an election of the directors. In case any vacancy so
created shall not be filled by the shareholders at such meeting, such vacancy
may be filled by the directors as provided hereinabove.
ARTICLE III - OFFICERS
Section 1. Number. The officers of this Corporation shall be a President, a
Secretary, and a Treasurer/Chief Financial Officer. The Corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board,
one or more Vice Presidents, and such other officers as may be appointed in
accordance with the provisions of this Article. One person may hold any two
of said offices (except the same person shall not be both President and Vice
President, or President and Secretary), but no such officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law or by these By-Laws or by resolution of the
Board of Directors to be executed, acknowledged or verified by any two or more
officers. The officers of the Corporation shall be natural persons of age
eighteen years or older.
Section 2. Appointment, Term of Office and Qualification. The officers of
this Corporation shall be chosen annually by the Board of Directors. Each
officer, except such officers as may be appointed in accordance with the
provisions of this Article, shall hold his office until his successor shall
have been duly chosen and qualified, or until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided.
Section 3. Salaries. Salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
Section 4. Subordinate Officers, etc. The Board of Directors may appoint
such other officers to hold office for such period, have such authority and
perform such duties as the Board of Directors may delegate. The Board of
Directors may also delegate to any officer the power to appoint any such
subordinate officers.
Section 5. Removal. The officers may be removed either with or without
cause, by the vote of a majority of the whole Board of Directors at a special
meeting of the Board called for this purpose. The officers appointed in
accordance with the provisions of Section 4 of this Article may be
removed, either with or without cause, by the Board of Directors, by a
majority vote of the directors present at the meeting or by a superior officer
upon whom such power of removal may be conferred by the Board of Directors.
Section 6. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or the Secretary
of the Corporation. Any such resignation shall take effect at the time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
Section 7. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of the term by the Board of Directors, but in the case of a vacancy
occurring in the office filled in accordance with the provisions of Section
4 of this Article, such vacancy may be filled by any superior
officer upon whom such power may be conferred by the Board of Directors.
Section 8. Chairman of the Board. The Chairman of the Board, if one shall be
elected, shall preside at all meetings of the Board of Directors, and shall
appoint all committees except such as are required by statute, these by-laws
or a resolution of the Board of Directors or of the Executive Committee to be
otherwise appointed and shall have such other duties as may be assigned to him
from time to time by the Board of Directors. In recognition of notable and
distinguished services to the Corporation, the Board of Directors may
designate one of its members as honorary Chairman, who shall have such duties
as the Board may, from time to time, assign to him by appropriate resolution,
excluding, however, any authority or duty vested by law or these By-Laws in
any other officer.
Section 9. The President. The President shall be the active executive
officer of the Corporation and shall exercise detailed supervision over the
business of the Corporation and over its several officers, subject, however,
to the control of the Board of Directors. He shall preside at all meetings of
the shareholders, and in general, shall perform all duties incident to the
office of President and such other duties as from time to time may be assigned
to him by the Board of Directors.
The President shall execute all deeds, conveyances, deeds of trust, bonds and
other contracts requiring a seal, under the seal of the Corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the Board of Directors to some officer or agent of the Corporation.
Section 10. The Vice President. The Vice President, if any, shall perform
such duties as are given to him by these By-Laws or assigned by the Board of
Directors. The Vice President shall perform all the duties of the President,
in case of the disability or absence of the President, and when so acting,
shall have all the powers of, and be subject to all the restrictions upon, the
President. The Board of Directors may from time to time appoint more than one
Vice President, each of which shall perform the duties designated by the Board
of Directors. In the absence of the President, the Vice President designated
from time to time by the President shall perform the duties of the President.
Section 11. The Secretary. The Secretary shall:
(a) Keep the minutes of the meeting of the shareholders and of the Board of
Directors in books provided for such purpose.
(b) See that all notices are duly given in accordance with the provisions of
these By-Laws or as required by law.
(c) Be custodian of the records and of the seal of the Corporation and see
that such seal is affixed to all share certificates prior to their issue and
to all documents, the execution of which on behalf of the Corporation under
its seal, is duly authorized in accordance with the provisions of these By-
Laws.
(d) Have charge of the share books of the Corporation and keep or cause to be
kept the share and transfer books in such manner as to show at any time the
amount of the shares of the Corporation issued and outstanding, the manner in
which and the time when such shares were paid for, the names, alphabetically
arranged and the addresses of the holders of record; and exhibit during the
usual business hours of the Corporation to any director, upon application, the
original or duplicate share ledger.
(e) Sign with the President or a Vice President certificates for shares of
the Corporation.
(f) See that the books, reports, statements, certificates and all other
documents and records of the Corporation required by law are properly kept and
filed.
(g) In general, to perform all duties incident to the office of Secretary and
such other duties as, from time to time, may be assigned to him by the Board
of Directors or by the President.
(h) The Board of Directors may appoint an Assistant Secretary who shall have
such powers and perform such duties as may be prescribed for them by the
Secretary of the Corporation or by the Board of Directors.
Section 12. The Treasurer/Chief Financial Officer. The Treasurer/Chief
Financial Officer shall:
(a) Have charge and custody of, and be responsible for, all funds and
securities of the Corporation.
(b) Keep and maintain, or cause to be kept and maintained adequate and
correct accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, earnings (or surplus) and shares.
(c) From time to time render a statement of the condition of the finances of
the Corporation at the request of the Board of Directors.
(d) Receive and give receipts for monies due and payable to the Corporation
from any source whatsoever.
(e) In general, perform all duties incident to the office of Treasurer/Chief
Financial Officer, and such other duties as from time to time may be assigned
to him by the Board of Directors or by the President. The Treasurer/Chief
Financial Officer may be required to give a bond for the faithful performance
of his duties in such sum and with such surety as may be determined by the
Board of Directors. Any such bond shall be obtained at the Corporation's
expense.
(f) The Board of directors may appoint an Assistant Treasurer who shall have
such powers and perform such duties as may be prescribed for them by the
Treasurer of the Corporation or by the Board of Directors, and the Board of
Directors shall require the Assistant Treasurer to give a bond to the
Corporation in such sum and with such security as it shall approve, as
conditioned for the faithful performance of their duties as Assistant
Treasurer, the expense of such bond to be borne by the Corporation.
ARTICLE IV - CAPITAL STOCK
Section 1. Unissued Stock. Subject to such limitations as may be contained
in the Articles of Incorporation of the Corporation, the Board of Directors
shall have the authority to issue from time to time the whole or any part of
any unissued balance of the authorized Capital Stock of the Corporation to
such persons, for such consideration, whether cash, property, services or
expenses, and on such terms as the Directors may from time to time determine
without first offering the same for subscription to stockholders of the
Corporation.
Section 2. Certificates. Each shareholder of the Corporation whose shares of
Capital Stock have been paid for in full shall be entitled to a certificate
showing the number of shares and the class or series of shares of the
Corporation standing on the books in his name. Each certificate shall be
numbered, bear the signature of the President, or in case of his inability to
act, the signature of the Vice President and of the Secretary, and the seal of
the Corporation, and be issued in numerical order from the respective share
certificate book. Where a certificate is countersigned by a transfer agent or
registrar other than the Corporation or its employee, the signatures of such
officers may be facsimiles. Every certificate for shares of stock which are
subject to any restriction on transfer pursuant to the Articles of
Incorporation, the By-Laws or any agreement to which the Corporation is a
party, shall have the restriction noted conspicuously on the certificate and
shall also set forth on the face or back either the full text of the
restriction or a statement of the existence of such restriction and a
statement that the Corporation will furnish a copy to the holder of such
certificate upon written request and without charge. Every certificate issued
when the Corporation is authorized to issue more than one class or series of
stock shall set forth on its face or back either the full text of the
preferences, voting powers, qualifications and special and relative rights of
the shares of each class and series authorized to be issued or a statement of
the existence of such preferences, powers, qualifications and rights, and a
statement that the Corporation will furnish a copy thereof to the holder of
such certificate upon written request and without charge.
Section 3. Transfer. Transfers of all shares shall be made upon the proper
share books of the Corporation upon presentation and surrender of the duly
endorsed certificates or certificates representing the transferred shares and
payment of all applicable stock-transfer taxes. Surrendered certificates
shall be canceled and attached to the corresponding stubs of the share
certificate book and a new certificate issued to the parties entitled thereto.
Section 4. Lost Certificates. The Board of Directors may order a new
certificate for shares to be issued in the place of any certificate of the
Corporation alleged to have been lost, stolen, or destroyed, but in either
such case, the owner of the lost certificate shall first cause to be given to
the Corporation, an affidavit that the certificate(s) have been lost, stolen,
or destroyed, and post a bond in such sum not less than the par value of such
lost, stolen, or destroyed certificate for shares, at the election of said
Board, as indemnity against any loss or claim that the Corporation may incur
by reason of the issuance of such certificate, but the Board of Directors may,
in its discretion, refuse to replace any lost certificate save upon the order
of some court having jurisdiction in such matters.
Section 5. Share and Transfer Books. The share and transfer books of the
Corporation shall be kept in its principal office and shall be open during
usual business hours to the inspection for any proper purpose, of any
shareholder of the Corporation upon written demand, under oath, stating the
purpose thereof. A proper purpose shall mean a purpose reasonably related to
such person's interest as a stockholder. All other books and records and a
copy of the share and transfer books of the Corporation shall be kept in such
place as shall be designated by the Board of Directors and shall be subject to
inspection only as provided by law.
Section 6. Issuance of Fractional Shares of Scrip. The Corporation may issue
fractions of a share, arrange for the disposition of fractional interests by
those entitled thereto, pay in cash the fair market value of fractions of a
share as of the time when those entitled to receive such fractions are
determined, or issue script in registered or bearer form which shall entitle
the holder to receive a certificate for a full share upon the surrender of
such scrip aggregating a full share. A certificate for a fractional share
shall, but scrip shall not, unless otherwise provided therein, entitle the
holder to exercise voting rights, to receive dividends thereon and to
participate in any of the assets of the Corporation in the event of
liquidation. The Board of Directors may cause such scrip to be issued subject
to the condition that it shall become void if not exchanged for certificates
representing full shares before a specified date, or subject to the condition
that the shares for which the script is exchangeable may be sold by the
Corporation and the proceeds thereof distributed to the holders of such scrip,
or subject to any other conditions which the Board of Directors may deem
advisable.
Section 7. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than 50 nor less
than 10 days before the date of such meeting, nor more than 10 days prior to
any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of or to
vote at a meeting of stockholders shall be at the close of business on the day
next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting
is held.
(b) The record date for determining stockholders for any other purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.
(c) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 8. Dividends. The Board of Directors may declare and pay dividends
upon the outstanding shares of the Corporation from time to time and to such
extent as they deem advisable in the manner and upon the terms and conditions
provided by statute and the Articles of Incorporation.
ARTICLE V - TRANSACTIONS WITH RELATED PARTIES
The Corporation may enter into contracts or transact business with one or more
of its directors, officers, or shareholders or with any corporation,
association, trust company, organization or other concern in which any one or
more of its directors, officers or shareholders are directors, officers,
trustees, shareholders, beneficiaries or otherwise interested, or with anyone
in which any one or more of its directors, officers or shareholders is in any
way interested, and in the absence of fraud, no such contract or transaction
shall be invalidated or in any way affected by the fact that such directors,
officers or shareholders of the Corporation have or may have interests which
are or might be adverse to the interest of the Corporation even though the
vote or action of the directors, officers or stockholders having such adverse
interests may have been necessary to obligate the Corporation upon such
contract or transaction. At any meeting of the Board of Directors of the
Corporation, or any duly authorized committee thereof, which shall authorize
or ratify any such contract or transaction, any such directors, may vote or
act thereat with like force and effect as if he had not such interest,
provided, in such case, the nature of such interest (though not necessarily
the extent or details thereof) shall be disclosed or shall have been known to
the directors or a majority thereof. A general notice that a director or
officer is interested in any corporation or other concern of any kind above
referred to shall be sufficient disclosure as to such director or officer with
respect to all contracts and transactions with such corporation or other
concern. No director shall be disqualified from holding office as director or
officer of the Corporation by reason of any such adverse interests. In the
absence of fraud, no director, officer or shareholder having such adverse
interest shall be liable to the Corporation or to any shareholder or creditor
thereof or to any other person for any loss incurred by it under or by reason
of such contract or transaction, nor shall any such director, officer or
shareholder be accountable for any gains or profits realized thereon.
ARTICLE VI - CORPORATE OPPORTUNITIES DOCTRINE
The officers, directors and other members of management of this Corporation
shall be subject to the doctrine of corporate opportunities only insofar as it
applies to business opportunities in which this Corporation has expressed an
interest as determined from time to time by the Corporation's minutes. When
such areas of interest are delineated, all such business opportunities within
such areas of interest which come to the attention of the officers, directors
and other members of management of this Corporation shall be disclosed
promptly to the Corporation and made available to it. The Board of Directors
may reject any business opportunity presented to it and thereafter any
officer, director or other member of management may avail himself of such
opportunity. Until such time as this Corporation, through its Board of
Directors, has designated an area as one to which the doctrine of corporate
opportunities applies, the officers, directors and other members of management
of this Corporation shall be free to engage in such areas of interest on their
own. The provisions hereof shall not limit the rights of any officer,
director or other member of management of this Corporation to continue a
business existing prior to the time that such area of interest is designated
by this Corporation. This provision shall not be construed to release any
employee of the Corporation (other than an officer, director or member of
management) from any duties which he may have to the Corporation.
ARTICLE VII - INDEMNIFICATION
The Corporation shall, to the extent legally permissible, indemnify any
director, officer, agent or employee as to any liabilities and expenses in
which they may be involved or may be threatened, while serving or thereafter,
by reason of being or having been such a director, officer, agent or employee,
except with respect to any matter as to which he shall have been adjudicated
in any proceeding not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Corporation. Such
indemnification shall not be deemed exclusive or deny any other rights to
which those indemnified may be entitled.
ARTICLE VIII - AMENDMENTS
Any and all provisions of these By-Laws may be altered, amended, repealed or
added to by the vote or written consent of the shareholders entitled to
exercise a majority of the voting power of the Corporation, or, subject to the
rights of the shareholders, by the Board of Directors.
ARTICLE IX - MISCELLANEOUS PROVISIONS
Section 1. Corporate Seal. The Corporate seal shall be circular in form and
shall have inscribed thereon the name of the Corporation, the date and state
of incorporation, and the word "SEAL".
Section 2. Benefit Program. Directors shall have the power to install and
authorize any pension, profit sharing, stock option, loan, guarantee,
insurance, welfare, educational, bonus, health and accident or other benefit
program which the Board deems to be in the best interest of the Corporation,
at the expense of the Corporation, and to amend or revoke any plan so adopted.
Section 3. Disallowed Compensation. Any payments made to an officer or
employee of the Corporation such as a salary, commission, bonus, interest,
rent, travel or entertainment expense incurred by him, which shall be
disallowed in whole or in part as a deductible expense by the Internal Revenue
Service, shall be reimbursed by such officer or employee to the Corporation to
the full extent of such disallowance. It shall be the duty of the directors,
as a Board, to enforce payment of each such amount disallowed. In lieu of
payment by the officer or employee, subject to the determination of the
directors, proportionate amounts may be withheld from his future compensation
payments until the amount owed to the Corporation has been recovered.
Section 4. Stock in Other Corporations. Except as the directors may
otherwise designate, the President, or any other person designated in writing
by the President, shall have full power and authority to vote, represent and
exercise on behalf of this Corporation, any and all rights and powers incident
to any securities of other corporations or organizations which may be held by
this Corporation.
Section 5. Fiscal Year. The fiscal year of the Corporation shall be adopted
by resolution of the Board of Directors.
Adopted by resolution of the Incorporator on May 5, 1999.
/s/_____________________________________
Scott D. Bengfort , Incorporator
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the inclusion in this Prospectus on Form SB-2 of our report
dated December 7, 1999 relative to our audit of the financial statements of
Special Acquisitions, Inc. at November 30, 1999, and for the period from
March 26, 1999 (date of inception) to November 30, 1999, and to the reference
to our firm under the heading "Experts" therein.
Boros & Farrington PC
San Diego, California
December 7, 1999
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
November 30, 1999 consolidated financial statements] and is qualified in its
entirety by reference to such financial statements and the notes thereto.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 2,053,922
<SECURITIES> 0
<RECEIVABLES> 946,855
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,243,527
<PP&E> 1,027,417
<DEPRECIATION> 63,916
<TOTAL-ASSETS> 4,743,584
<CURRENT-LIABILITIES> 1,517,301
<BONDS> 0
2,500,000
0
<COMMON> 88,942
<OTHER-SE> (114,357)
<TOTAL-LIABILITY-AND-EQUITY> 4,743,584
<SALES> 1,505,053
<TOTAL-REVENUES> 1,505,053
<CGS> 709,387
<TOTAL-COSTS> 969,284
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,482
<INCOME-PRETAX> (115,939)
<INCOME-TAX> 0
<INCOME-CONTINUING> (115,939)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (115,939)
<EPS-BASIC> (.0)
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