As filed with the Securities and Exchange Commission on March 15, 2000
Registration No. 333-93045
=============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
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.
PROSPECTUS
SPECIAL ACQUISITIONS, INC.
Best Efforts Offering
This is our initial public offering, and no public market currently exists
for our shares.
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.
All investor funds will be placed in an escrow account at Colorado Business
Bank.
If the minimum is not subscribed for in 180 days this offering will expired
and the escrowed funds will be returned, with interest.
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 3 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 the public
Discount
Proceeds to
company
Per share
$ 5.00
$0
$ 5.00
Minimum 20,000
$100,000
$0
$100,000
Maximum 60,000
$300,000
$0
$300,000
The date of this prospectus is March 20, 2000
SPECIAL ACQUISITIONS, INC.
1945 South Poplar Street
Denver, CO 80224
(303) 758-2803
[Back Cover Page]
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................................................................... 2
Risk Factors.............................................................. 3
Rule 419 Escrow Of Proceeds And Stock Prior To An Acquisition............. 5
Dilution.................................................................. 7
Use of Proceeds........................................................... 8
Determination of Offering Price........................................... 8
Plan of Operation......................................................... 9
Business..................................................................10
Management................................................................15
Certain Transactions......................................................18
Principal Security Holders................................................18
Description of Securities.................................................19
Plan of Distribution......................................................20
Legal Matters.............................................................22
Experts...................................................................22
Where You Can Find Additional Information.................................22
Index to Financial Statements for period ended November 30, 1999..........F-1
SUMMARY
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
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
Blank check offering rules will restrict your access to the funds, prevent
transfer of the securities and impose other restrictions that adversely
affect your investment.
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 prospects for achieving our intended business objectives.
If we are unable to locate an acquisition candidate meeting the Rule
419 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.
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 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.
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.
There is substantial doubt about our ability to operate as a going concern.
We have minimal capital resources presently available to meet
obligations. We anticipate incurring no significant expenditures. We are
operating on a budget that does not allow us to be a "going concern." Based
on our business model, our only way we will become a "going concern" is to
consummate an acquisition. If we are unable to consummate an acquisition
within 18 months of the date of this prospectus your funds will be returned
to you on a proportionate basis.
Conflicts of interest may arise between management's personal financial
benefit and management's fiduciary duty to you.
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. All of our directors and
officers engage in business activities outside of us, and the amount of time
they 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.
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
operating company with a specific business.
A business combination with an operating company will result in
dilution of your percentage ownership in us. Although there is no way of
knowing the exact amount of dilution, it is likely to be substantial, even
more than 80%. An investment directly in an operating company will reduce
the risk of such a drastic dilution as (1) they are already a public company
and have no need to merge to go public; and (2) shareholders of operating
companies that merge with us need to have more than 80% of the outstanding
shares after merger to consolidate the operating company financial statements
with our financial statements.
Even if all the shares offered are sold to persons other than existing
shareholders, our present stockholders will own 68.4% of our outstanding
shares.
Thus the present shareholders will continue to be able to elect our
director, appoint our officers, and control our affairs and operations.
Initially, our securities may be sold in New York State and the State of
Florida only.
Thus the securities you buy may be resold by you only in New York and
Florida, until a resale exemption is available in other states.
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 $ .0962 .0962
Increase per share attributable
to payment by new investors $ 1.5723 .6838
Net tangible book value per share,
after this offering $ 1.6447 .7500
Dilution to new investors per share $ 3.3553 4.2500
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% $ 17.000.00 5.4% $ .1308
New Investors 60,000 31.6% 300,000.00 94.6% $5.000
Total 190,000 100.0% 317,000.00 100.0% $1.6684
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.
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 until an acquisition is closed.
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. There are no management salaries prior to an
acquisition. Based on the foregoing, even without loans from management, we
will have sufficient funds to satisfy our cash requirements during the Rule
419 escrow period of up to 18 months from the date of this prospectus.
Therefore we do not expect to issue any additional securities before the
closing of a business combination, although 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.
We will not use the offering funds as collateral or security for any loan or
debt incurred, or 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.
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 used 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 that 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 that 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
We will undertake the analysis of business combinations 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 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.
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 workweek. 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 two (2) directors and four (4) 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.
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. From 1995 to February 2000, Brian French was 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 completing a reverse merger 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 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 to use 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 aggregate 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, we have retained no broker for the sale of
securities being offered. In the event we retain a broker who may be deemed
an underwriter, 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
Deferred public offering costs 5,000
$ 17,500
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 16,870
Deficit accumulated during the development stage (4,500)
12,500
$17,500
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 $ 4,500
Weighted average number of shares 125,000
Net loss per common share $(0.04)
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 $2.50
per share in October 1999 1,000 1 2,499 - 2.500
Shares issued for cash at $2.50 per
share in November 1999 5,000 5 12,495 - 12,500
Net loss for the period - - - (4.500) (200)
Balance at November 30, 1999 130,000 $130 $14,570 $(4,500) $12,500
</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 $ (4,500)
Non-cash items included in the net loss
Stock issued for services 4,500
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 California on March 26,
1999. The Company's year end is December 31, 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.
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. The issuances were deemed to be exempt from
registration under the Securities Act in reliance upon Section 4(2) of the
Securities Act. There was no general solicitation or advertising. The
recipients represented they were sophisticated, they intended to acquire for
investment and not with a view to or for sale in connection with any
distribution, and appropriate legends were affixed to the securities issued
in such transactions. Through their relationship with us, recipients had
adequate access to information about us.
In October 1999, an officer received 1,000 shares of common stock for
services rendered. The issuance was deemed to be exempt from registration
under the Securities Act in reliance upon Section 4(2) of the Securities Act.
There was no general solicitation or advertising. The recipient represented
he was sophisticated, he intended to acquire for investment and not with a
view to or for sale in connection with any distribution, and appropriate
legends were affixed to the securities issued in such transactions. Through
his relationship with us, he had adequate access to information about us.
In November and December 1999, we issued to investors 5,000 shares of common
stock for cash in the amount of $12,500. The issuances were deemed to be
exempt from registration under the Securities Act in reliance upon Section
4(2) of the Securities Act. There was no general solicitation or advertising.
The recipients represented they were sophisticated, they intended to acquire
for investment and not with a view to or for sale in connection with any
distribution, and appropriate legends were affixed to the securities issued
in such transactions. Through their relationship with us, recipients had
adequate access 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 previously
(**) Filed herewith.
(***) Included in Exhibit 5.1
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.
SIGNATURES
Pursuant to the power of attorney granted in the originally filed
registration statement, and
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.
SPECIAL ACQUISITIONS, INC. (Registrant)
By:/s/_______________________________
Scott D. Bengfort
President, Chief Executive Officer
Date: March 14, 2000
SB-2 A2
ROBERT C. WEAVER, JR.
ATTORNEY AT LAW
721 Devon Court
San Diego, CA 92109-8007
(858) 488-4433 FAX (858) 488-2555
March 8, 2000
SPECIAL ACQUISITIONS, INC.
1945 South Poplar Street
Denver, CO 80224
Re: Registration Statement on Form Sb-2 (No. 333-93045)
Gentlepersons:
I have acted as counsel for SPECIAL ACQUISITIONS, INC., a Nevada corporation
(the "Company"), in connection with the issuance and sale by the Company of
up to 60,000 shares (the "Shares") of Common Stock, par value $.001 per
share, of the Company pursuant to the Company's Registration Statement on
Form SB-2 (No. 333-93045) which has been filed with the Securities and
Exchange Commission (the "Registration Statement").
I have examined such documents, records and matters of law as we have deemed
necessary for the purposes of this opinion, and based thereupon I am of the
opinion that the Shares, when issued and paid for in accordance with the
terms described in the Registration Statement, will be validly issued, fully
paid and nonassessable.
I hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to my firm in the Prospectus
under the caption "Legal Matters."
Sincerely,
/s/
Robert C. Weaver, Jr.
Attorney at Law
RCW/ns
