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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALPHATECH, INC.
(Name of small business issuer in its charter)
Delaware 6770 [52-2207190]
(State of jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
13400 Northup Way, Suite 40, Bellevue, WA 98005 Tel: 1-800-495-5586
(Address and telephone number of principal executive offices)
Suite 1108 - 777 West Broadway, Vancouver, B.C. Canada V5Z 4J7
(Address of principal place of business or
intended principal place of business)
Butcher & Williams, P.S. Suite 3827 - 1001 Fourth Avenue,
Seattle WA 98154 (206) 682 7626
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public is as soon as practicable after
the effective date of this Registration Statement and Prospectus.
Butcher & Williams, P.S.
Suite 3827
1001 Fourth Avenue
Seattle, WA 98154
(206) 682-7626
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 (the "Securities Act") or until the registration
statement shall become effective on such date as the Securities Exchange
Commission (the "Commission"), acting pursuant to said Section 8(a), may
determine.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum Maximum
Title of Each Class of Amount Offering Aggregate Amount of
Securities Being Being Price Per Offering Registration
Registered (1) Registered Share (2) (2) Fee
- ---------------------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
Shares of Common Stock 6,000,000 $0.001 $6,000 $100
TOTAL 6,000,000 $6,000 $100
</TABLE>
(1) Between December 21, 1999 and the date hereof, the Company sold 20,000
Series A Preferred Shares (See "Certain Transactions" and "Description of
Securities").
(2) Estimated for purposes of computing the registration fee pursuant to Rule
457.
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Cross Reference Sheet
Showing the Location In Prospectus of Information Required by Items of Form SB-2
Part I. Information Required in Prospectus
Item No. Required Item Location or Caption
- -------- ---------------------------------- -------------------
1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and outside
Prospectus front cover of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus of Prospectus and Outside
Front cover Page of
Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Prospectus Summary -
Price Determination of
Offering Price; Risk
Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of Securities
13. Interest of Named Experts Legal Opinions; Experts
14. Disclosure of Commission Position Statement as to
on Indemnification Indemnification
15. Organization Within Last Management; Certain
Five Years Transactions
16. Description of Business Proposed Business,
Remuneration
17. Management's Discussion and Proposed Business -
Analysis or Plan of Plan of Operation
Operation
18. Description of Property Proposed Business
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19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Prospectus Summary;
Related Stockholder Matters Market for the Company's
Common Stock
21. Executive Compensation Remuneration of
Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
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PROSPECTUS
ALPHATECH, INC.
(A Delaware Corporation)
6,000,000 Shares of Common Stock Offered
at $.001 per Share
ALPHATECH. INC. (the "Company") is offering for sale 6,000,000 shares (the
"Shares") of its common stock (the "Common Stock" or "Common Shares"), $0.0001
par value per share, at a purchase price of $.001 per Share.
Neither the Commission nor any State Securities Commission has approved
or disapproved of these securities, or passed upon the adequacy or accuracy of
this prospectus. Any representation to the contrary is a criminal offense.
There is no public market for our securities at this time, and none may
develop.
>> The Shares shall be sold exclusively by the Company on a "best-efforts,
all or none basis" for a period of ninety (90) days (which may be
extended an additional ninety (90) days).
>> This offering will be conducted directly by our officers and director
without the use of a professional underwriter or securities dealer.
>> The Company's offering is being made in compliance with Rule 419 of
Regulation C. This type of offering is for "blank check"
companies-those without any existing plan and is intended as a vehicle
for us to eventually acquire an asset or combine in some fashion with
another company that has business operations. While we will explain in
further detail in the text the details of such an offering, in this
type of offering 10% of the proceeds may be paid to brokers or salesman
who place the offering (none are paid in this offering) or 10% may be
paid to us, and the balance is held in an escrow account until an
acquisition is affirmed. At that time, we will file an amendment to
this offering which relates to that acquisition, and you will be given
the opportunity to affirm your investment, or you can have your money
back (less amounts paid to underwriters and us).
>> Persons, who are our officers or Directors, are current shareholders,
or who otherwise are affiliated or have a connection with us may
purchase some of this offering.
>> This offering is highly speculative and there are risks in this
offering; please see "Risk Factors".
<TABLE>
<CAPTION>
Amount Offered Price to the Public Proceeds to the Company
---------------- ------------------- ----------------------
<S> <C> <C>
>> Minimum Offering: 1,000,000 Shares $0.001 Per Share $1,000
>> Maximum Offering: 6,000,000 Shares $0.001 Per Share $6,000
</TABLE>
>> Proceeds from this offering will be deposited in an escrow account (the
"Escrow Account") at U.S. Bank, N.A. (the "Escrow Agent"),
280 H Street, Blaine, WA 98230 until the minimum of $1,000 is received.
After that, we may use $100 of the proceeds, plus 10% of the excess
received over $1,000. All funds will be returned if we do not meet the
minimum sales of $1,000 within 90 days of the date hereof (which may be
extended by an additional 90 days at our sole discretion), and in
addition you may receive back your investment (less the 10% used by us)
in the event that you do not affirm your investment when you are given
the opportunity by an amended prospectus describing the acquisition we
conclude, or if we should not conclude an acquisition within 180- days
of the date hereof.
>> Upon the minimum of $1,000 being sold and until the offering is closed,
all investors will have Shares issued to them which they may vote. You
will not have possession of them however, as they will also be
deposited with the Escrow Agent which is holding your funds. You will
only receive your Shares after you affirm your investment.
>> Blue Sky fees, legal fees, accounting fees, printing fees, and filing
fees, are estimated at $11,000 or more; additional amounts will be
required for the Reconfirmation process. We have used the proceeds from
a private placement and borrowing by us to pay this amount. Any
borrowing for this purpose will be repaid from the proceeds when and as
released to us
ALPHATECH, INC.
13400 Northup Way, Suite 40,
Bellevue, WA 98005
Tel: 1-800-495-5586
The date of this Prospectus is , 2000
---------
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TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY ...................................................... 6
The Company........................................................... 6
The Offering.......................................................... 6
Compliance with Rule 419.............................................. 7
Risk Factors.......................................................... 7
Determination of Offering Price....................................... 7
Use of Proceeds....................................................... 7
Summary Financial Information......................................... 7
What Rule 419 Provides for an Investor in this Offering............... 8
Specific Acquisition Criteria......................................... 9
Amended Prospectus (Post-Effective Amendment)......................... 9
Reconfirmation Offering............................................... 9
Release of Deposited Securities and Deposited Funds................... 9
RISK FACTORS............................................................. 10
DILUTION................................................................. 12
USE OF PROCEEDS.......................................................... 13
CAPITALIZATION........................................................... 13
PROPOSED BUSINESS........................................................ 14
History and Organization............................................. 14
Plan of Operation.................................................... 14
Evaluation of Business Combinations.................................. 15
Business Combination(s).............................................. 16
Form and Structure of Acquisition.................................... 17
Investment Company Regulation........................................ 18
Employees............................................................ 18
Facilities........................................................... 18
Year 2000 Issues..................................................... 18
MANAGEMENT............................................................... 18
Biography............................................................ 18
Management May Engage in New Other Blank Check Companies............. 19
Remuneration of Management........................................... 19
Management Involvement............................................... 19
Management Control................................................... 19
STATEMENT AS TO INDEMNIFICATION.......................................... 19
MARKET FOR THE COMPANY'S COMMON STOCK.................................... 19
Certain Transactions..................................................... 20
PRINCIPAL STOCKHOLDERS................................................... 20
DESCRIPTION OF SECURITIES................................................ 20
Common Stock......................................................... 20
Future Financing..................................................... 21
Prepaids and Due to Shareholders..................................... 21
Preferred Shares..................................................... 21
Reports to Stockholders.............................................. 21
Dividends............................................................ 21
Transfer Agent....................................................... 21
PLAN OF DISTRIBUTION..................................................... 22
EXPIRATION DATE.......................................................... 22
LITIGATION............................................................... 22
LEGAL OPINIONS........................................................... 23
EXPERTS.................................................................. 23
FURTHER INFORMATION...................................................... 23
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PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified in its entirety by the more detailed information and
financial statements (including notes thereto) appearing elsewhere in the
prospectus and in the registration statement on Form SB-2 (the "Registration
Statement") which we have filed with the Commission. Investors should carefully
consider the information set forth in this prospectus under the heading "Risk
Factors".
THE COMPANY
ALPHATECH, INC. was organized under the laws of the State of Delaware
on December 21, 1999. Our Company was organized as a shell company with a
business purpose to acquire an asset or to acquire or merge with a business or
company via a "reverse merger" (the "Business Combination"). Our management
believes that our characteristics as an enterprise with minimal liabilities and
flexibility in structuring will make us an attractive combination candidate.
None of our officers, directors, promoters, their affiliates or associates have
had any preliminary contact or discussions with any representative of the owners
of any business regarding the possibility of an acquisition or merger
transaction and we have no present plans to do so. We do not intend to engage in
the business of investing, reinvesting or trading in securities as its primary
business or pursue any business which would cause us to be an "investment
company" pursuant to the Investment Company Act of 1940.
Since organization, the Company's business activities have been limited
to the sale of initial shares and preparation of the registration statement and
prospectus for this initial public offering. We will not engage in any
substantive commercial business following the offering. Our principal business
objective will be to seek long-term growth potential in a Business Combination
venture rather than to seek immediate, short-term earnings. We do not intend to
restrict our search to any specific asset, business, industry or geographical
location. We may seek a Business Combination in the form of an asset that we
believe will generate profitable revenues, or in the form of 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, or 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 its shares, while avoiding what it may
deem to be adverse consequences of undertaking a public offering itself, such as
time delays, significant expense, potential loss of voting control and
compliance with various Federal and State securities laws. (See "Plan of
Operation").
If we are successful in completing a "reverse merger" with another
company, then investors in the Company will likely be minority shareholders in
the merged company.
We maintain our offices at 13400 Northup Way, Suite 40, Bellevue, WA
98005. Our telephone number is 1-800-495-5586.
THE OFFERING
At present, there are 20,000 shares of preferred stock issued and
outstanding which are owned by our president and secretary-treasurer (See
"Principal Stockholders"). The shares of Preferred Stock may, in certain
instances, be converted into shares of Common Stock on a 1:1 basis. At present,
there are no shares of Common Stock issued and outstanding; after the completion
of this offering there may be a maximum of 6,000,000 shares of Common Stock (or
6,020,000 shares if the shares of Preferred Stock are converted) and a minimum
of 1,000,000 shares of Common Stock (or 1,020,000 shares if the shares of
Preferred Stock are converted) issued and outstanding.
Once this offering has closed, our present officers and directors will
own approximately 0.3% of the then outstanding shares of Common Stock if the
maximum of 6,000,000 Common Shares are sold and 2% of the then outstanding
shares if the minimum of 1,000,000 Shares are sold. These calculations are based
on the assumptions that: (1) All the shares of Preferred Stock are converted
into shares of Common Stock; and (2) Our Management does not acquire any Shares
in this Offering.
We may, in our sole discretion, terminate the offering at any time,
either prior to the sale of the minimum of 1,000,000 shares or, prior to the
sale of the maximum of 6,000,000 shares.
We are offering: 6,000,000 Shares of Common Stock, at
$0.0001 par value at $0.001 per Share.
(See "Description of Securities".)
We had no Common Stock outstanding
prior to the offering: We had 20,000 Series A Preferred Shares
outstanding that convert to 20,000
shares of Common Stock.
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Common Stock to be
outstanding after the offering:..... 1,000,000 shares if the minimum sold
or 1,020,000 shares if the minimum sold
and all 20,000 Preferred Shares convert
to shares of Common Stock.
6,000,000 shares if the maximum number
of shares is sold or 6,020,000 shares if
the maximum sold and all 20,000
Preferred Shares convert to shares of
Common Stock.
COMPLIANCE WITH RULE 419
We are a blank check company and thus this offering is being conducted in
compliance with the Commission's Rule 419. Investors have certain rights and
will receive the substantive protection provided by that Rule. These include:
>> The securities purchased by 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 the funds and investors'
common share certificates can be released from escrow we are required
to update the Registration Statement and prospectus in a timely manner
with current information about the merger, the merger candidate
including audited financial statements, and the financial impact on our
Company, and to provide this information to investors within five days
after the effective date of the amended registration statement and
prospectus. Additionally, we are required to furnish investors with
this current prospectus, including the terms of the merger agreement.
This new prospectus will contain a reconfirmation offer.
>> Investors will have from 20 to 45 business days from the effective date
of the amended prospectus to decide to reconfirm their investment and
remain as an investor or alternately, require the return of their
investment, minus certain deductions.
>> Any investor not making any decision after 45 days will have their
investment funds returned within 5 days.
>> If we do not complete an acquisition meeting the specified criteria
within 18 months from the date of this prospectus, all of the funds
held in escrow will be returned to investors.
>> If we extend the offering an additional 6 months, the Company will have
only 12 months in which to consummate a merger or acquisition. (See
"What Rule 419 provides for an Investor in this Offering-Reconfirmation
Offering").
RISK FACTORS
Investments in our securities are highly speculative, involve a high
degree of risk, and should be purchased only by persons who can afford to lose
their entire investment. See "Risk Factors" for special risks concerning our
Company and "Dilution" for information concerning dilution of the book value of
the investors' shares from the public offering. (See "Risk Factors" and
"Dilution").
DETERMINATION OF OFFERING PRICE
The offering price of $0.001 per Share for the Shares we are offering
has been arbitrarily determined by our management. This price bears no relation
to our assets, book value, or any other customary investment criteria, including
our prior operating history. Among factors considered by us in determining the
offering price were estimates of our business potential, our limited financial
resources, the amount of equity and control desired to be retained by our
present shareholders, the amount of dilution to public investors and the general
condition of the securities markets. (See "Risk Factors-Investment
Risks-Arbitrary Determination of Offering Price.")
USE OF PROCEEDS
Of the $1,000 to $6,000 offering proceeds deposited into the Escrow
Account, 10% ($100-$600) may be released to us prior to a reconfirmation
offering whereby you may reconfirm your investment as provided by Rule 419. We
can use these funds, and we intend to do so. These funds will be used to pay
some of our expenses. If we acquire an asset or make a Business Combination by
merger, acquisition or otherwise, we will also receive the remainder of the
offering proceeds providing the assets or Business Combination meets the
standards of Rule 419. Until such an event occurs, the balance of the proceeds
will remain in the non-interest-bearing Escrow Account maintained by the Escrow
Agent pursuant to Rule 419 of Regulation C. We cannot use the funds on deposit
to acquire a target asset, or business (the "Target Business"). We may use part
or all of the deposited funds after release to repay part of our debt or to pay
for operating expenses, such as legal and accounting expenses that accrue while
we are seeking an asset or a combination or to repay loans incurred for that
purpose (See "Use of Proceeds.")
SUMMARY FINANCIAL INFORMATION
The following unaudited summary of the Company's financial information was taken
from the audited financial statements included as part of this prospectus.
<TABLE>
<CAPTION>
Unaudited December 21, 1999 (inception)
-----------------------------
<S> <C>
Statement of Operations Data:
Net Revenues......................... $ 00
Net Loss............................. $ 00
Net Loss Per Share................... $ 00
Shares Outstanding................... 20,000 Preferred
</TABLE>
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<TABLE>
<CAPTION>
Pro-Forma
After
Offering (2)
As of -----------------------------------
Unaudited December 21, 1999(1) Minimum Maximum
-------------------- --------------- ---------------
<S> <C> <C> <C>
Balance Sheet Data:
Working Capital.................. $ (11,000) $ (10,000)(3) $ (5,000)(3)
Total Assets..................... $ 0.00 $ 1,000 $ 6,000
Short Term Debt.................. $ 11,000 $ 11,000 $ 11,000
Total Liabilities................ $ 11,000 $ 11,000 $ 11,000
---------- ----------- ----------
Shareholders' Equity... $ (11,000) $ (10,000) $ (5,000)
========== =========== ==========
</TABLE>
(1) $200 was a receivable for a private placement of Preferred Shares at
inception (subsequently received), and $11,000 was loaned to us. We
have thus spent $11,000. This was paid for legal, accounting filing
fees printing and related offering expenses.
(2) 90% of this amount ($900 - $5,400) will be restricted pursuant to Rule
419. Upon the sale of all the Shares in this offering, the Company
will receive from $1,000 to $6,000, all of which must be deposited in
the Escrow Account. $100 to $600 may be used by the Company as capital
in order to seek a Business Combination, to pay down debt, or for
other purposes.
(3) This amount does not include any costs of the Offering.
WHAT RULE 419 PROVIDES FOR AN INVESTOR IN THIS OFFERING
Rule 419 has requirements governing how the proceeds from this type of
offering are maintained, and what happens to securities issued to the account of
an investor, but not delivered until the investment is reconfirmed. These
include:
>> Rule 419 requires that offering proceeds after deduction for
underwriting commissions, underwriting expenses and dealer allowances,
if any, and the securities purchased by investors in this offering, be
deposited into an escrow or trust account and governed by an agreement
which contains certain terms and provisions specified by the Rule.
>> Under Rule 419, the funds and investors' common share certificates
will be released from escrow only after we have met the following
three basic conditions.
- First, we must execute an agreement for the acquisition of a
business or assets for which the fair value of the business
or asset represents at least 80% of the maximum offering
proceeds. For purposes of the offering, the fair value of
the business or assets to be acquired must be at least
$4,800 (80% of $6,000).
- Second, we must amend this prospectus, which includes the
terms of a reconfirmation offer that must contain conditions
prescribed by the rules. The amended prospectus must also
contain information regarding the acquisition candidate and
its business, including audited financial statements.
- Third, we must conduct the reconfirmation offer and satisfy
all of the prescribed conditions, including the condition
that investors holding a certain minimum number of shares
must elect to remain investors.
>> After we submit a signed representation to the Escrow Agent that the
requirements of Rule 419 have been met and after the acquisition is
consummated, the balance of the funds from this offering held in
escrow for business purposes and the share certificates held in escrow
can be released to investors.
- To meet the requirements of Rule 419, we have entered into an escrow
agreement with the Escrow Agent U.S. Bank, N.A. which provides that:
>> The proceeds are to be deposited into the Escrow Account maintained by
the Escrow Agent promptly upon receipt. Rule 419 permits 10% of the
funds to be released to us from the escrow account prior to the
reconfirmation offering. The funds held in the escrow account and
dividends or interest thereon, if any, are to be held for the sole
benefit of the investors and can only be invested in bank deposits, in
money market mutual funds or federal government securities or
securities for which the principal or interest is guaranteed by the
federal government.
>> All securities issued in connection with the offering and any other
securities issued with respect to such securities, including
securities issued with respect to stock splits, stock dividends or
similar rights are to be deposited directly into the Escrow Account
promptly upon issuance. The identity of the investors is to be
included on the stock certificates or other documents evidencing the
investors' common shares. The investors' common shares held in the
Escrow Account are to remain as issued, and are to be held for the
sole benefit of the investors who retain the voting rights, if any,
with respect to the common shares held in their names. The common
shares held in the Escrow Account or any interest in the common shares
may not be transferred or disposed of other than by will or the laws
of descent and distribution, or pursuant to a qualified domestic
relations order as defined by the Internal Revenue Code of 1986 or
Table 1 of the Employee Retirement Income Security Act.
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>> Warrants, convertible securities or other derivative securities
relating to common shares held in the Escrow Account may be exercised
or converted in accordance with their terms; provided that, however,
the securities received upon exercise or conversion together with any
cash or other consideration paid in connection with the exercise or
conversion are to be promptly deposited into the Escrow Account.
SPECIFIC ACQUISITION CRITERIA
Rule 419 requires that before the funds and the investors' common shares
can be released from the escrow account, we must first execute an agreement to
acquire an acquisition candidate meeting certain specified criteria. These are:
>> The agreement must provide for the acquisition of a business or
assets for which the fair value of the business or assets
represents at least 80% of the maximum offering proceeds.
>> For purposes of the offering, the fair value of the business or
assets to be acquired must be at least $4,800 (80% of $6,000).
AMENDED PROSPECTUS (POST-EFFECTIVE AMENDMENT)
Once an agreement governing the acquisition of a business or assets meeting
the above 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 candidates and its
business or assets, including audited financial statements;
>> The results of this offering and the use of the funds disbursed
from the Escrow Account.
>> The terms of the reconfirmation offer mandated by Rule 419, which
includes certain prescribed conditions which must be satisfied
before the funds and investors' common shares 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 all 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 pro rata portion of
the deposited 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.
>> Depending upon whether the business combination or other transaction
requires a shareholders vote, a sufficient amount of the shares
required for such an action of those that elect to confirm the
acquisition for the transactions to be approved.
>> If a consummated acquisition has not occurred by 18 months from the
date of this prospectus, the funds held in the Escrow Account shall be
returned to all investors on a pro rata basis within 5 business days
by first class mail or other equally prompt means.
RELEASE OF DEPOSITED SECURITIES AND DEPOSITED FUNDS
The funds and common shares may be released to us and the investors,
respectively, 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 a Target Business
or assets for which the fair market value of the business represents
at least $4,800 (80% of the maximum offering proceeds) and have filed
the required post-effective amendment;
>> The post-effective amendment has been declared effective;
>> The mandated reconfirmation offer having the conditions prescribed by
Rule 419 has been completed and that the Company has satisfied all of
the prescribed conditions of the reconfirmation offer.
>> The acquisition of the business or assets have a fair value of at
least $4,800 (80% of the maximum proceeds).
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RISK FACTORS
You should consider our Common Stock to be an extremely high risk
investment. Some of the risk factors associated with your proposed investment
are listed below. However you should carefully read the entire prospectus in
evaluating a possible investment in our stock.
COMPANY AND MANAGEMENT RISKS
TIME SPENT BY MANAGEMENT: Our management is engaged in other activities and
will only spend a small amount of time working on possible acquisitions.
They will rely on consultants to help them. While they are not currently
involved in any other "blank check" type companies, they most likely will
do so in the future.
EXPERIENCE OF MANAGEMENT: Our management has little experience in this
industry. There is no key man insurance.
INSUFFICIENT CAPITAL: We have very little capital. We previously sold $200
in Preferred Stock and borrowed the balance needed for our offering
expenses. We have nothing left from that offering or borrowing. There will
be released to us from this offering until affirmation from $100 to $600.
We expect to use that amount to repay our borrowings in part. We will have
no funds otherwise available for operations until we have effected an
acquisition transaction and sufficient investors have affirmed the deal.
Even that sum of money will likely not be sufficient to accomplish our
goals. We will have to provide to you substantial disclosures before you
can elect to affirm your investment. This will require the expenditure of
significant expenses in legal, accounting and related expenditure that we
will need to borrow or secure privately. We do not have any way of knowing
if we can be successful in getting more money for these purposes.
RECENTLY ORGANIZED COMPANY: We have been recently formed and have as yet
had no significant business activities. Neither our company nor our
management have ever effected a transaction such as we contemplate, and we
will have to rely on the advice of others and the availability of
attractive targets to effect an acquisition.
NO PRESENT IDENTIFICATION OF INDUSTRY OR TARGET BUSINESS: We have not
conducted any market research to identify a particular industry, or a
possible acquisition candidate within an industry, nor have we made any
prior arrangements for a deal. Because of this, we do not know if a deal
can be made that you will approve.
CHANGE OF MANAGEMENT CONTROL: If we meet our objective of a business
acquisition transaction, we expect that the new business venture will
control most of the stock, and thus our current management will most likely
be replaced. When you consider the qualification of our management team,
remember that they will most likely only be acting as such until the
acquisition transaction. After that a new team who may not be as well
qualified as the current team will control the combined companies.
CONFLICTS OF INTEREST: Our management is not currently affiliated or
associated with any other blank check company. Our management may become
involved with the promotion of other blank check companies in the future,
and a potential conflict of interest may occur in the event of such
involvement. Management has an interest in the Company's outstanding
preferred shares. These may be sold in whole or part in connection with a
combination transaction, which would present possible conflict for
Management in assessing the desirability of a transaction. In addition, the
consultants that our management intends to retain are actively involved in
the stock market and will have conflicting objectives with respect to other
acquisitions they may be retained to assist. Management and consultants
retained by management will be free to consider other business
opportunities.
INTENSE COMPETITION: We are a small player in an acquisition business
dominated by large players. There are many venture firms and similar
entities that have substantial amounts of capital and management expertise
that would be attractive to the targets we may identify. Our acquisition
candidates may thus only be those that a venture firm would not consider.
Among this pool we will also be competing with other "blank check" type
companies who may have better management, more money, or better contacts
than we do.
NOT A DIVERSIFIED COMPANY: We do not expect to be a diversified company in
the near future. We believe that only one deal in a specified area is
possible given our capital structure.
INVESTMENT COMPANY ACT CONSIDERATIONS: We may have restrictions placed on
our activities and types of deals if we are determined to be an investment
company regulated by the Investment Company Act of 1940. We do not believe
that our activities place us under that Act. The SEC may take the position
that our type of company should be subject to that Act. The SEC has not
said whether or not it considers us subject to the Investment Company Act.
RISKS OF LEVERAGE, DEBT FINANCING: We may utilize debt or other leverage
techniques when we undertake our acquisition transaction. This has certain
risks among which are the risk of foreclosure or unavailability of other
debt if unsuccessful.
INVESTMENT RISKS
PUBLIC MARKET CONSIDERATIONS: Our strategy of effecting a business
acquisition transaction depends on the existence of an active stock market
where merger or acquisition with our "public" company is considered
desirable. If there should be a market change, in all likelihood there
would be no value in our company
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<PAGE> 11
FUNDS HELD IN ESCROW: If we are not able to convince a sufficient number of
investors to affirm their investment then we may not be able to complete
the proposed acquisition(s) in which case all funds (less the 10% released
to us) must be returned to investors. You will have no access for up to 18
months to the funds that you invest as these funds will be held in the
Escrow Account, and you will receive no interest.
LIQUIDITY RISKS: Generally, you will not be able to directly or indirectly
transfer the shares of common stock which will be issued to you and held in
the Escrow Account until the acquisition transaction(s) has been affirmed
as required by Rule 419.
NO ASSURANCE OF A PUBLIC MARKET: Because our shares are not traded now and
may never be traded, your Shares will be illiquid if you invest. You cannot
transfer shares you have purchased that are held in the Escrow Account.
After an acquisition is affirmed by investors holding shares in this
offering, there will not be an active trading market and there may never be
one. Whether a trading market will ever develop will depend on a number of
factors including the quality of the acquisition we secure, and the general
market conditions at that time.
TIME VALUE OF MONEY: Since there is a time-value in you being able to
immediately realize a return on your investment, you may be better off
investing in a defined business company where an immediate effect can occur
as a result of your investment.
TAX CONSIDERATIONS: If we are able to effect an acquisition transaction we
hope to be able to qualify it as a tax-free reorganization under the
Internal Revenue Code. These types of reorganizations are complex and
sometimes are found not to qualify, in which case the tax consequences
could defeat the proposed transactionl or be detrimental to investors.
NO DIVIDENDS: As a shareholder, you should not expect to receive any
dividends. At present we have no assets from which to pay dividends nor do
we expect to pay dividends for the foreseeable future.
POTENTIAL FUTURE SALES OF RULE 144 SHARES: In addition to the Common Shares
that will be registered if the business acquisition is affirmed, there are
other shares which may be traded under Rule 144 that will be held by
persons who either invested prior to this offering, or who may invest
privately during this offering or after it has been concluded. These
shares, to the extent they can be traded under Rule 144, will compete for
investors on resale along with shares sold in this offering. Currently
there are 20,000 preferred shares (the "Preferred Shares" or "Preferred
Stock") outstanding which convert to 20,000 Common Shares. If 1,000,000
Shares are sold in this offering, this would add almost 2% additional
shares to the possible "float". Other shares may be sold privately, but we
do not know how many. Rule 144 is complex, but in general where there is a
private sale, the purchaser is not able to sell his shares publicly until a
least one year has passed, and then may only do so through the market in a
specified manner. After two years, non-affiliates (generally persons who
are not officers, directors, or control persons of the company) may sell
their shares freely if a market exists, but affiliates still have certain
restrictions on resale, including volume limitations. The volume
limitations as to an affiliate generally, and for a non affiliate after one
year and up to two years from the acquisition, is 1% of the outstanding
shares of the class sold during a quarter, or a greater amount if the
trading volume is sufficient.
ARBITRARY DETERMINATION OF OFFERING PRICE: We arbitrarily set the offering
price of $0.001/Share. We have no operating history, assets, intangibles,
or other basis to support that price or any other price. We established the
price and the amount of shares based on what we thought would be the best
profile for acquisitions and how much cash would be needed.
CONTROL BY PRESENT MANAGEMENT AND SHAREHOLDERS: Right now two shareholders,
who are the Company's president and secretary, control us because of the
20,000 Preferred Shares they hold, which vote equivalent to 40,000 Common
Shares. After this offering is completed there will be at least 1,000,000
Common Shares issued which are held in the Escrow Account until affirmation
or return of the investment. These shares may be voted, but not
transferred, and thus may be able to control our company.
DILUTION: You will experience some dilution because all of the assets shown
on the December 21, 1999 balance sheet will have been consumed by
organization costs and other costs related to this offering. New investors
will experience immediate and substantial book value dilution upon
completion of this offering (See "Dilution").. The value of your investment
may be further diluted upon the consummation of a Business Combination.
AVAILABLE EXEMPTIONS FOR SECONDARY SALE OF SHARES: State and Provincial
Securities laws limit where this offering may be made primarily and whether
a secondary sale by an investor may be made. We intend for primary sales to
be in Canada, overseas, and possibly in New York State and Delaware.
Secondary sales will depend on what exemptions are available, such as the
manual exemption (Standard and Poor) or our reporting status.
PENNY STOCK RULES: Right now, we would be considered a "penny stock", which
generally is a stock trading under $5.00. Because of abuses in such stocks,
the SEC has promulgated certain rules regarding the risk disclosures to be
made to investors and other disclosures. This often has the result of
reducing trading in such stocks and making it more difficult for investors
to sell their shares.
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<PAGE> 12
DILUTION
The net tangible book value deficit of our Company as of December 21, 1999
was $0.00 or $0.00 per share. Net tangible book value is determined by
subtracting the total assets from total liabilities, but intangible assets are
not included in total assets. (See "Financial Statements").
The public offering price per Share is $0.001. The pro forma December 21,
1999 net tangible book value per share after the minimum offering of $1,000 will
be $.001 and after the maximum offering of $6,000 will be $0.001 {the number of
shares used to calculate the per share net tangible book value includes all
shares sold in this offering plus the 20,000 outstanding Preferred Shares as if
converted to shares of Common Stock (See "Certain Transactions")}. The shares
purchased by investors in this offering will thus be diluted $.001
Dilution represents the difference between the public offering price and
the pro forma net tangible book value per share immediately after the completion
of the public offering. The following tables illustrates the dilution to be
experienced by investors in the offering:
DILUTION TABLE 1
----------------
<TABLE>
<S> <C>
Public offering price per Share $ 0.001
Net tangible book value deficit per share before offering $ 0.00
Pro forma net tangible book value per share after offering $ .001
Increase per share attributable to shares offered hereby $ .001
Dilution to public investors $ .001
</TABLE>
DILUTION TABLE 2
----------------
<TABLE>
<CAPTION>
December 21, 1999, Before the Offering:
Number of Preferred Shares Money received for shares Net tangible book value per share (deficit)
- -------------------------- ------------------------- -------------------------------------------
<S> <C> <C>
20,000 $200 ($.00)
</TABLE>
<TABLE>
<CAPTION>
After the Offering (pro forma) Pro forma net tangible book value
Total number of all Shares (1) Total amount of money received for all Shares per Share (1)
- ------------------------------ --------------------------------------------- ---------------------------------
Minimum Maximum Minimum Maximum Minimum Maximum
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
1,020,000 6,020,000 $1,200 $6,200 $.001 $.001
</TABLE>
DILUTION TABLE 3
----------------
<TABLE>
<CAPTION>
Pro forma net tangible book value per Net tangible book value per Increase per Share attributed
Share after Offering (1) Share deficit before Offering (1) to Shares offered (1)
- ------------------------------------- --------------------------------- -----------------------------
<S> <C> <C>
$.001 $.001 $.001
</TABLE>
DILUTION TABLE 4
----------------
<TABLE>
<CAPTION>
Dilution to public
Public Offering price per Share Pro forma net tangible book value per Share after Offering (1) investors(1)
- ------------------------------- -------------------------------------------------------------- ------------------
<S> <C> <C>
$.001 .001 $.001
</TABLE>
As of the date of this prospectus, the following table sets forth the
percentage of equity to be purchased by public investors in this offering
compared to the percentage of equity to be owned by the present stockholders,
and the comparative amounts paid for the shares by the public investors as
compared to the total consideration paid by the present stockholders of the
Company. (See "Certain Transactions" and "Financial Statements").
DILUTION TABLE 5
----------------
<TABLE>
<CAPTION>
Approx. % of total Approx.% of total
Shares purchased Shares outstanding Total consideration consideration(1)
---------------------- ------------------- ----------------------- -----------------
Minimum Maximum Minimum Maximum Minimum Maximum Minimum Maximum
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Investors: 1,000,000 6,000,000 (99%) (99%) $1,000 $6,000 99% 99%
Existing
Stockholders (1): 20,000 20,000 (1%) (1%) $ 200 $ 200 1% 1%
</TABLE>
(1) Assumes Preferred Shares are converted to Common Shares; Preferred Shares
had a subscription receivable of $200, as of December 21, 1999.
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<PAGE> 13
USE OF PROCEEDS
The gross proceeds of this offering will range from $1,000 to $6,000.
Pursuant to Rule 419 under the Securities Act, after all of the Shares are sold,
10% of the funds held in escrow ($100 to $600) may be released from escrow to
us. We intend to request release of this 10%. In the event that we do not
request release of these funds, we will receive these funds in the event an
acquisition transaction is consummated in accordance with Rule 419. Upon the
consummation of an initial acquisition transaction and the reconfirmation by
you, which must precede the final consummation, pursuant to Rule 419, the
balance of the funds held in escrow will be released to us (plus any dividends
received, but less any portion disbursed to us pursuant to Rule
419(b)(2)(C)(vi).
<TABLE>
<CAPTION>
Percentage
Amount Total
--------------------- ------------------------
Minimum Maximum Minimum Maximum
------- ------- ------- -------
<S> <C> <C> <C> <C>
Escrowed funds pending
acquisition transaction (1)(2) $1,000 $6,000 100% 100%
</TABLE>
(1) Does not include the estimated $11,000 of offering expenses; an additional
sum will be required for the Reconfirmation process, which is expected to
be substantially greater than the original Offering expenses. The expenses
of the offering will be paid by money in the Company's treasury and from
borrowings by the Company.
(2) The Company expects to request release of 10% of investors' funds ($100 to
$600) pursuant to Rule 419.
While we presently anticipate that we will be able to locate and consummate
an acquisition transaction, which adheres to the criteria discussed under "What
Rule 419 Provides for an Investor in this Offering", if we determine that this
will require additional funds, we may seek additional amounts through loans,
issuance of additional securities or through other financing arrangements. We
have not made such arrangements so far, and we do not know if we will be able to
do on an acceptable basis. You will not, unless required by law, participate in
the determination of whether to obtain additional financing or as to the terms
of such financing. Because of our limited resources, it is likely that we will
become involved in only one acquisition transaction.
The proceeds from this Offering, when available to us, plus any funds which
we may borrow, are intended to be utilized for the payments of our offering
expenses and expenses incurred by us for investigating and, if a suitable
opportunity is found, acquiring or investing in a business or asset, and for
preparing and filing a post-effective amendment. Investigation costs with
respect to a particular business opportunity will consist primarily of costs for
attorneys and accountants. There is no limit on such costs, and they may be
substantial. If a decision is made not to proceed with any given business
opportunity, such costs would not be recoverable.
We do not intend to advertise or promote our Company as a going concern,
but rather will search for acquisition transaction candidates.
If we succeed in arranging for an acquisition transaction we expect there
will be a change in our management. In that event, they may decide to change the
policies as to our stated use of proceeds. They will have the discretion to do
this, subject to our liabilities, which have accrued and must be paid. No
compensation will be paid or due or owing to any officer or director until after
transaction is effected. We do expect to hire outside consultants to assist us
in securing a suitable partner, but we have not yet finalized any arrangements
for these consultants.
Our present management does not intend to use either the amounts previously
invested or any borrowings for payments to them, but rather solely to pay
offering expenses. After an acquisition transaction is made and affirmed by you,
if our present management is still on board, they may utilize the amounts
released for working capital as they see fit and may also borrow additional
funds they believe are necessary for operations. Some funds may be paid to them
as compensation, but no arrangements have been made as to this yet.
The proceeds received in this offering will be put into the Escrow Account
pending consummation of an acquisition and reconfirmation by you. These 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
as placed by our Escrow Agent U.S. BANK, N.A.
CAPITALIZATION
The following table sets forth the capitalization of our Company as of December
21, 1999, and as adjusted to give effect to the sale of 1,000,000 to 6,000,000
Shares offered by us.
<TABLE>
<CAPTION>
December 21, 1999
Pro-Forma As Adjusted
----------------- ------------------------
Actual Minimum Maximum
------ ------- -------
<S> <C> <C> <C>
Short-term debt(1) $11,000 $11,000 $11,000
</TABLE>
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<PAGE> 14
<TABLE>
<CAPTION>
December 21, 1999
Pro-Forma As Adjusted
----------------- ------------------------
Actual Minimum Maximum
----------------- ------- -------
<S> <C> <C> <C>
Stockholders' equity:
Preferred Shares, Series A $0.0001 $ 200 $ 200 $ 200
Par value. 1,000,000 shares authorized,
20,000 shares issued. (2)
Common Stock, $0.0001 par value;
authorized 30,000,000 shares,
issued and outstanding
0 shares and 1,000,000 - 6,000,000
Shares, pro-forma as adjusted (3) 0 $ 1,000 $ 6,000
Additional paid-in capital
Deficit accumulated during
the development period $ (0.00) $ (0.00) $ (0.00)
Stockholders' equity $ 0 0 0
------- ------- -------
Total capitalization $11,200 $12,200 $17,200
======= ======= =======
</TABLE>
(1) For the terms of our short-term debt, see "Certain Transactions" and
"Description of Securities".
(2) For a description of our Preferred Stock, see "Description of Securities".
Payment for Preferred Shares had not been received at December 21, 1999.
Payment was received thereafter. See also "Certain Transactions".
(3) For a description of our Common Stock, see "Description of Securities".
PROPOSED BUSINESS
HISTORY AND ORGANIZATION
Our Company was organized under the laws of the State of Delaware on
December 21, 1999. Since inception, we have directed our efforts to
organizational efforts and to obtaining initial financing. We were formed as a
vehicle to pursue an asset purchase or a Business Combination and to date, we
have not engaged in any business activities other than those described herein.
So far, we have not identified, conducted negotiations, or entered into a letter
of intent with respect to a probable acquisition of assets or Business.
Our initial public offering will comprise of 1,000,000 - 6,000,000 Shares
of Common Stock at a purchase price of $0.001 per Share.
We are filing this registration statement in order to effect a public
offering for our securities. (See "Description of Securities").
PLAN OF OPERATION
We were organized for the purposes of creating a corporate vehicle to seek,
investigate and, if this investigation warrants, engaging in Business
Combinations presented to us by persons or firms who or which desire to employ
our funds in their business or to seek the perceived advantages of a
publicly-held corporation. If we merge with a business or company then this will
likely be done via a "reverse merger". Our principal business objective is to
seek long-term growth potential in a Business Combination venture rather than to
seek immediate, short-term earnings. We do not intend to restrict our search to
any specific business, industry or geographical location.
We do not have any business activities which provide cash flow. The costs
of identifying, investigating, and analyzing Business Combinations will be paid
with borrowed money in our treasury. You 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 investors
will entrust their investment monies to our management before they have a chance
to analyze any ultimate use to which their money will be put. Although
substantially all of the funds raised in this offering are intended to be
utilized generally to effect a Business Combination, these proceeds are not
otherwise being designated for any specific purposes. Pursuant to Rule 419, you
will have an opportunity to evaluate the specific merits or risks of only the
Business Combination(s) selected by our management. Cost overruns will be borne
equally by all our current shareholders. Cost overruns will not be charged to
our Company, but is to be funded through current shareholders' voluntary
contribution of capital or lenders who may be affiliates.
We may seek a Business Combination in the form of 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, or 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 its shares, while avoiding what it may deem to be
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<PAGE> 15
adverse consequences of undertaking a public offering itself, such as time
delays, significant expense, potential loss of voting control and compliance
with various Federal and State securities laws.
We will not acquire assets or a Target Business unless the fair value of
the assets or Target Business represents at least $4,800 (80% of the maximum
offering proceeds). To determine the fair market value of a Target Business, our
management will examine the audited financial statements (including balance
sheets and statements of cash flow and stockholders' equity) of any candidate
Target Business, focusing attention on a potential Target Business' assets,
liabilities, sales and net worth. In addition, our management will participate
in a personal inspection of any potential Target Business. If we determine that
the financial statements of a proposed Target Business do not clearly indicate
what the fair market value is, we will obtain an opinion from an investment
banking firm which is a member of National Association of Securities Dealers,
Inc., (the "NASD") for that purpose. (See "What Rule 419 provides for an
Investor in this Offering-Reconfirmation Offering").
Based upon our management's assessment that the owners of the Target
Business(es) will want to assume our voting control (to avoid tax consequences
or to have complete authority to manage the business), it is probable we will
combine with just one Target Business. We also anticipate that upon consummation
of a Business Combination and a change of control that our current officers and
directors will be removed or will resign. None of our officers or directors have
had any preliminary contact or discussions with a representative of another
entity regarding a business Combination. Accordingly, any Target Business that
is selected could be a financially unstable Company or an entity in its early
stage of development or growth (including entities without established records
of sales or earnings). In that event we will become subject to numerous risks
inherent in the business and operations of these financially unstable and early
stage or potential emerging growth companies. In addition, we could affect a
Business Combination with an entity in an industry characterized by a high level
of risk. (See "Risk Factors").
Our management anticipates that because of our limited financing we will
likely be able to effect only one potential Business Combination and that there
will be dilution for our present and prospective shareholders which is likely to
occur as a result of our management's plan to offer a controlling interest to a
Target Business in order to achieve a tax free reorganization. This lack of
diversification should be considered a substantial risk in investing in our
Company because it will not permit us to offset potential losses from one
venture against gains from another.
We believe that the selection of a Business Combination will be complex and
extremely risky. Because of general economic conditions, rapid technological
advances being made in some industries, and shortages of available capital, our
management believes that there are numerous firms seeking even the limited
additional capital, which the Company will have, or the benefits of a publicly
traded corporation. These perceived benefits 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, and other factors. Potentially available
Business Combinations may occur in many different industries and with businesses
at various stages of development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely difficult
and complex.
If we have not consummated an acquisition that meets the necessary
requirements within 18 months of the date of this Prospectus, then Rule 419
requires us to return the funds held in escrow to all shareholders on a pro-rata
basis. If we then determine that we are unable to conduct any business
whatsoever we would then, in our sole discretion, seek stockholder approval to
liquidate the Company. If such a liquidation of the Company were to occur at
some point in time after we have complied with the provisions of Rule 419, then
all stockholders of the Company, including those owning shares purchased
privately, will receive the liquidated assets on a pro-rata basis.
EVALUATION OF BUSINESS COMBINATIONS
Our officers and directors will supervise the analysis of potential
Business Combinations; however, none is a professional business analyst (See
"Management"). Our management intends to concentrate on identifying preliminary
prospective Business Combinations which may be brought to our attention through
the Company's present associations. In analyzing prospective Business
Combinations, they will consider among other factors:
>> available technical, financial, and managerial resources;
>> working capital and other financial requirements;
>> history of operation, if any; and prospects for the future;
>> nature of present and expected competition;
>> quality and experience of management services which may be
available and the depth of that management;
>> potential for further research, development, or exploration;
>> specific risk factors not now foreseeable but which then may be
anticipated to impact the proposed activities of the Company;
>> potential for growth or expansion;
>> potential for profit;
>> perceived public recognition or acceptance or products, services,
or trades; name identification; and other relevant factors.
Although it is anticipated that locating and investigating specific
business proposals may take at least several months, the time such process will
take can by no means be assured. However, such process cannot exceed, in any
event, the 18-month
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<PAGE> 16
time schedule set forth in Rule 419. (See "What Rule 419 Provides for an
Investor in this Offering"). The time and costs required to select and evaluate
a business candidate (including conducting a due diligence review) and to
structure and consummate the Business Combination (including negotiating
relevant agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state corporate laws) cannot presently be
ascertained with any degree of certainty.
Our officers and directors will meet personally with management and key
personnel of the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, our management intends to utilize written
reports and personal investigation to evaluate the above factors.
We anticipate that certain potential Business Combinations may be brought
to our attention from various unaffiliated sources, including securities
broker/dealers, investment bankers, venture capitalists, bankers, other members
of the financial community, and affiliated sources. While we do not presently
anticipate engaging the services of professional firms that specialize in
business acquisitions on any formal basis, we may engage such firms in the
future, in which event we may pay a finder's fee or other compensation.
As our Company will be subject to Section 15 (d) of the Securities Exchange
Act of 1934 (the "Exchange Act"), we will be required to furnish certain
information about significant acquisitions, including audited financial
statements for the Company(ies) 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.
Any Business Combination will present certain risks. Many of these risks
cannot be adequately identified prior to selection, and you will therefore
depend on the ability of our management to identify and evaluate those risks. In
the case of a portion of the potential combinations available to us, it may be
anticipated that their promoters were unable to develop a going concern or that
such business is in its development stage and it has not generated significant
revenues from its principal business activity prior to the merger or
acquisition. Because of this inability there is a risk, even after the
consummation of the Business Combination(s) and the related expenditure of our
Company's funds, that the combined enterprises will still be unable to become a
going concern or advance beyond the development stage. Many of the potential
combinations available to us may involve new and untested products, processes,
or market strategies, which may not succeed. The Company and, therefore, you as
its shareholders will assume those risks.
BUSINESS COMBINATION(S)
When we implement 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.
You should note that any merger or acquisition effected by our Company can
be expected to have a significant dilutive effect on the percentage of shares
held by the shareholders, including you who have purchased Shares in this
offering. On the consummation of a Business Combination, the Target Business
will have significantly more assets than us; therefore, our management plans to
offer a controlling interest in us to the Target Business. While we cannot
predict the actual terms of a transaction, we 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, as amended.
In order to obtain tax-free reorganization, 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 that event, our shareholders, including you, would retain
less than 20% of the issued and outstanding shares of the surviving entity; this
would result in significant dilution in your equity. Our management may choose
to make these tax provisions available to us. Also, a majority of all our
directors and officers may resign as directors and officers, as part of the
terms of the acquisition transaction. (See " Risk Factors" and "Dilution").
We believe 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 consummated, or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market, which may develop in our Common Stock, may have a depressive effect on
such a market.
As a part of our officers' and directors' investigation of an acquisition
target, they intend to meet personally with target management and key personnel,
visit and inspect target material facilities, obtain independent analysis or
verification of certain information provided, check references of target
management and key personnel, and take other reasonable investigative measures,
to the extent of our limited financial resources and management expertise.
The manner of the Business Combination will depend on the nature of the
Target Business, the respective needs and desires of our Company and other
parties, the management of the Target Business opportunity, and our relative
negotiating strength vs. that of the target management.
If at any time prior to the completion of this offering we enter
negotiations with a possible merger candidate and a transaction becomes
probable, then this offering will be suspended so that an amendment can be filed
which will include
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<PAGE> 17
financial statements (including balance sheets and statements of operations,
cash flows and stockholders' equity) of the proposed target.
Our Company will not purchase the assets of any company, which is
beneficially owned by any of our officers, directors, promoters, affiliates, or
associates. Furthermore, we intend to adopt a procedure so that a special
meeting of our shareholders will be called to vote upon a Business Combination
with an affiliated entity, and shareholders who also hold securities of such
affiliated entity will be required to vote their shares of our outstanding stock
in the same proportion as our publicly held shares are voted. Our officers and
directors have not approached and have not been approached by any person or
entity with regard to any 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 our promoters, our management or their
affiliates or associates, disclosure as to this fact will be included in the
post-effective amendment, thereby allowing you the opportunity to fully evaluate
the Business Combination.
Our Company has adopted a policy that we will not pay a finder's fee to any
member of our management for locating a merger or acquisition candidate. No
member of our 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 our successor management after a change in management control
resulting from a Business Combination.
We are an insignificant player among the firms, which engage in Business
Combinations. There are many established venture capital and financial concerns,
which have significantly greater, financial and personnel resources and
technical expertise we do. In view of our combined limited financial resources
and our 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, blank check public companies located
throughout the United States
We do not intend to advertise or promote our Company. Instead, our
management will actively search for potential Target Businesses. In the event we
decide to advertise (for example, in the form of an advertisement in a legal
publication) to attract a Target Business, the cost of such advertising will be
assumed by our management.
FORM AND STRUCTURE OF ACQUISITION
There are a number of various methods and forms by which we may structure a
transaction to acquire an asset or another business. We may use, without
limitation, one of the following forms:
>> A leveraged buyout transaction in which most of the purchase price is
provided by borrowings (typically secured by the asset which is
acquired or by the assets of an acquired business). Such borrowings
are intended to be repaid out of the cash flow generated by the asset
or by the business.
>> A merger or consolidation of the acquired corporation into or with us.
>> A merger or consolidation of the acquired corporation into or with a
subsidiary of us that is organized to facilitate the acquisition; or a
merger or consolidation of such a subsidiary into or with the acquired
corporation.
>> An acquisition of all or a controlling amount of the stock of the
acquired corporation followed by a merger of the acquired Business
into us.
>> An acquisition of an asset(s) from its owner or of the asset(s) of a
business by us or by a subsidiary that we organize for such a purpose.
>> A merger or consolidation of us with or into the acquired business or
a subsidiary of the acquired business.
A combination of any of the above.
The actual form and structure of an asset purchase or a Business
Combination may be also dependent upon numerous other factors including factors
pertaining to the owner of the asset, or to the acquired business and its
stockholders as well as potential tax and accounting treatments afforded to any
Business Combination. We may utilize cash from this offering, equity, debt or a
combination of these as consideration in effecting an asset acquisition or a
Business Combination.
Although we have no commitments as of the date of this prospectus to issue
any shares of Common Stock other than as described in this prospectus, we will,
in all likelihood, issue a substantial number of additional shares in connection
with any Business Combination. To the extent that such additional shares are
issued, dilution to the interest of our stockholders may occur. Additionally, if
a substantial number of shares of Common Stock are issued in connection with a
Business Combination, a change in control of us will likely occur.
If we issue securities as part of an acquisition, it cannot be predicted
whether such securities will be issued in reliance upon exemptions from
registration under applicable federal or state securities laws or will be
registered for public distribution. When registration of securities is required,
substantial cost may be incurred and time delays encountered. In addition, the
issuance of additional securities and their potential sale in any trading market
which may develop in our Common Stock, of which there is no assurance, may
depress the price of our Common Stock in such market. Additionally, such
issuance of
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<PAGE> 18
additional securities by us would result in a decrease in the percentage of our
issued and outstanding shares of Common Stock by the purchasers who are buying
shares of Common Stock in this offering.
There are currently no limitations relating to our ability to borrow funds
to increase the amount of capital available to us to effect an asset acquisition
or a Business Combination or otherwise finance the operations of an acquired
business. The amount and nature of any borrowings by us will depend on numerous
considerations, including our capital requirements, our perceived ability to
meet debt service on such borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or otherwise sought, would be
available on terms that we deem to be commercially acceptable and in our best
interest. Any inability we may have to borrow funds for an additional infusion
of capital into an acquired business may have material adverse effects on our
financial condition and future prospects. To the extent that debt financing
ultimately proves to be available, any borrowings may subject us to various
risks traditionally associated with incurring indebtedness, including the risks
of interest rate fluctuations and insufficiency of cash flow to pay principal
and interest. Furthermore, an acquired business may have already incurred debt
financing and, therefore, all risks associated with such debt financing.
INVESTMENT COMPANY REGULATION
The Investment Company Act defines an "investment company" as an issuer
which is or holds itself out as being engaged primarily in the business of
investing, reinvesting or trading of securities. While we do not intend to
engage in such activities, we could become subject to regulations under the
Investment Company Act in the event we obtain or continue to hold a minority
interest in a number of enterprises. We could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act. Accordingly, our management will continue to review our activities
from time to time with a view toward reducing the likelihood that we could be
classified as an "Investment Company."
EMPLOYEES
We presently have no employees. Each of our officers and directors is
engaged in outside business and the amount of time they will devote to our
business will only be between five (5) and twenty (20) hours per person per
month. We expect to use attorneys and accountants as necessary, and do not
anticipate a need to engage any full-time employees so long as we are seeking
and evaluating business opportunities. The need for employees and their
availability will be addressed in connection with any decision we make of
whether or not to acquire an asset or participate in a specific business
opportunity. Upon completion of the public offering, we believe that our
President and our other officers and directors will devote the time necessary
each month to our affairs until a successful business opportunity has been
acquired.
FACILITIES
Our Company is presently using the office of MedCam, Inc at 13400 Northup
Way, Suite 40, Bellevue, WA 98005 at no cost to us pursuant to an oral agreement
which may be terminated on 30 days notice. Such arrangement is expected to
continue after completion of this offering only until a Business Combination is
consummated. We do not own any equipment, and do not intend to own any upon
completion of this offering.
YEAR 2000 ISSUES
Since we have no operations, we do not anticipate incurring significant
expense with regard to Year 2000 issues.
MANAGEMENT
Our officers and directors, and further information concerning them are as
follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Raynard von Hahn (1) 40 President, Director
Suite 206 - 2260 West 2nd Avenue
Vancouver, B.C. V6K 1H9
Donald Sutton (1) 50 Secretary-Treasurer,
Director
15482 - 91st Ave.
Surrey, B.C. V3R 9C1
</TABLE>
(1) May be deemed "Promoters" of the Company, as that term is defined under the
Securities Act of 1933.
BIOGRAPHY
Raynard von Hahn holds a Bachelor of Commerce degree from the University of
British Columbia and a Bachelor of Law degree from the University of Western
Ontario. He is a member of the Law Society of British Columbia and has had
several years experience in litigation. Mr. von Hahn is the president of Power
Pleadings Inc., a company which provides software
18
<PAGE> 19
solutions to litigation law firms. He has been involved in the start-up,
financings and corporate development of several publicly-listed companies,
including resource and high-technology companies.
Donald Sutton holds an Associate of Arts degree (Mathematics & Sociology)
from Brigham Young University. Since 1989 he has been the president of D.W.
Sutton , Inc. a private consulting firm. D.W. Sutton Inc. provides telemarketing
services to public and private companies.
MANAGEMENT MAY ENGAGE IN NEW OTHER BLANK CHECK COMPANIES
Our management does not now have any interest in any other blank check
company, but may have in the future. Consultants that the Company may hire may
have such interests, and this may occur before we have selected an acquisition
target. Competing searches for combination candidates among blank check
affiliates may present conflicts of interest. Our management intends to present
each Business Combination candidate to you and the other shareholders for their
approval. There are currently no other such blank check affiliates seeking
combination candidates. (See " Risk Factors - Conflicts of Interest").
REMUNERATION OF MANAGEMENT
None of our officers or directors receive any cash remuneration, and none
is to receive or accrue any remuneration or reimbursements of expenses from us
upon completion of this offering. No remuneration of any nature has been paid
for or is on account of services rendered by a director in such capacity. None
of the officers and directors intends to devote more than 20 hours a month of
his time to the Company's affairs. Our management holds 20,000 preferred shares
and will be compensated for the work involved in administering the Company and
in seeking out and completing a successful Business Combination by the sale of
or by the increase in value of these preferred shares if and when such a
Business Combination is consummated.
MANAGEMENT INVOLVEMENT
We have not yet conducted any business activities, and aside from the
search for shareholders associated with our formation, our management has done
no work with or for us. All of our management will speak to business associates
and acquaintances and will search The New York Times, The Wall Street Journal
and other business publications for Target Businesses. After the closing of this
offering, our management intends to search for, evaluate and negotiate with a
Target Business. Management has not divided these duties among its members. No
member of management has any distinct influence over the others in connection
with their participation in the Company's affairs.
MANAGEMENT CONTROL
Our Management does not intend to divest themselves of ownership and
control of us prior to the consummation of an acquisition or merger transaction.
This policy is based on an unwritten agreement among management.
STATEMENT AS TO INDEMNIFICATION
Section 145 of the Delaware General Corporation Law provides for
indemnification of our officers, directors, employees and agents. Complete
disclosure of this statute is provided in Part II hereof. This information can
be examined as described in "Further Information".
Under Article XI of the Company's bylaws we will indemnify and hold
harmless to the fullest extent authorized by the Delaware General Corporation
Law, any of our directors, officers, agents or employees, against all expense,
liability and loss reasonably incurred or suffered by such person in connection
with us.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling us pursuant to
the foregoing provisions, we have been informed that in the opinion of the
Commission such indemnification is against the public policy as expressed in the
Securities Act and is therefore, unenforceable.
MARKET FOR THE COMPANY'S COMMON STOCK
Prior to this date, there has been no trading market for our Common Stock.
Pursuant to the requirements of Rule 15g-8 of the Exchange Act, a trading market
will not develop prior to or after the effectiveness of this prospectus or while
the Common Stock under this offering is maintained in escrow. The Common Stock
under this offering will remain in escrow until the Company's consummation of a
Business Combination pursuant to the requirements of Rule 419. There are
currently two holders of the Company's outstanding Preferred Stock and no
holders of Common Stock. Current shareholders will have a small fraction of the
Common Stock (20,000 shares) after conversion compared to the amount of this
Offering 1,000,000 to 6,000,000 Shares. However, current shareholders or our
affiliates may purchase Shares in this offering and thus may have a substantial
portion of the outstanding shares thereafter. We do not believe there is any
likelihood of an active public trading market, as that term is commonly
understood, developing for the shares unless there is a business combination of
some type. There can be no assurance that a trading market will develop upon the
consummation of a Business Combination and the subsequent release of the Common
Stock and other escrowed shares from escrow. To date, neither our Company nor
anyone acting on its behalf has taken any affirmative steps to retain or
encourage any broker dealer to act as a market maker for our Common Stock.
Further, there have been no discussions or understandings, preliminary or
otherwise, between us or anyone acting on our behalf and any market
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<PAGE> 20
maker regarding the participation of any such market maker in the future trading
market, if any, for the our Common Stock. (See "Risk Factors - No Assurance of a
Public Market" and "Risk Factors - Control by Present Management and
Shareholders").
We do not anticipate that any such negotiations, discussions or
understandings will take place prior to the execution of an acquisition
agreement. Management expects that discussions in this area will ultimately be
initiated by the party or parties controlling the entity or assets which we may
acquire. That party or parties may employ consultants or advisors to obtain
market makers, but present management of the Company has no current intention of
so doing. None of our officers, directors or controlling shareholders has in the
past used particular consultants or advisers, and we have no set criteria to use
in its possible evaluation of any consultants or advisers.
The 20,000 shares of our Preferred Stock currently outstanding are
"restricted securities" as that term is defined in the Securities Act of 1933.
Pursuant to Rule 144 of the Securities Act, if all the Shares being offered
hereto are sold, the holders of the restricted securities may each sell the
Preferred Shares or the 20,000 Common Shares (after conversion of Preferred
Shares) during any three (3) month period after December 21, 2000.
CERTAIN TRANSACTIONS
We were incorporated in the State of Delaware on December 21,1999 and we
issued 20,000 Preferred Shares to two shareholders at $0.01 per share, for a
total of $200. The current breakdown of share ownership by shareholder may be
found in the section on principal stockholders (See "Principal Stockholders").
After December 21, 1999, we consummated our bridge financing in order to
pay certain organizational expenses, the costs of the bridge financing and
general costs of this offering. The following investor loaned the Company an
aggregate of $11,000 and was issued a promissory note in that amount (the
"Note"), which Note bears interest at the rate of 7% per annum, payable at the
consummation of a Business Combination.
<TABLE>
<CAPTION>
Name of Noteholder Amount of Loan
- ------------------ --------------
<S> <C>
Raynard von Hahn $ 11,000
---------
Total $ 11,000
=========
</TABLE>
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our Company's Common Stock as of the date of this prospectus, and
as adjusted to reflect the sale of the shares offered hereby and conversion to
Common by Preferred Shares, by (i) each person who is known by us to own
beneficially more than 5% of the Company's outstanding Common Stock; (ii) each
of the Company's officers and directors; and (iii) all directors and officers of
the Company as a group.
<TABLE>
<CAPTION>
Name/Address Shares of Percent of Percent of
Beneficial Common Stock (2) Class Owned Class Owned
Owner Beneficially Owned Before Offering After Offering (3)
- ------------ ------------------ --------------- ------------------
<S> <C> <C> <C>
Raynard von Hahn (1) 19,800 99% 1%
Suite 206 - 2260 West 2nd Avenue
Vancouver, B.C. V6K 1H9
Mr. Donald Sutton (1) 200 1% -
15482 - 91st Ave.
Surrey, B.C. V3R 9C1
Total Officers 20,000 100% 1%
and Directors
(2 Persons)
------ ---- --
Total 20,000 100% 1%
====== ==== ==
</TABLE>
(1) May be deemed "promoters" of the Company, as that term is defined under the
Securities Act of 1933, as amended.
(2) Common Shares each have one vote; Preferred Shares each have two votes.
(3) Does not include Shares which may be purchased in this offering.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our Company is authorized to issue 30,000,000 shares of Common Stock,
$0.0001 par value per share (the "Common Shares" or "Common Stock"), of which no
shares were issued and outstanding as of the date of this prospectus. Each
outstanding
20
<PAGE> 21
share of Common Stock is entitled to one vote, either in person or by proxy, on
all matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of Common Stock (i) have equal ratable rights to dividends from
funds legally available therefor, when, as and if declared by our Board of
Directors; (ii) are entitled to share ratably in all of our assets available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of our affairs; (iii) do not have preemptive, subscription or conversion
rights, or redemption or sinking fund provisions applicable thereto; and (iv)
are entitled to one non-cumulative vote per share on all matters on which
stockholders may vote at all meetings of our stockholders.
All shares of Common Stock which are the subject of this offering, when
issued, will be fully paid for and non-assessable. The holders of shares of
Common Stock of the Company do not have cumulative voting rights, which means
that the holders of more than 50% of such outstanding shares voting for the
election of directors can elect all of the directors of the Company if they so
choose and, in such event, the holders of the remaining shares will not be able
to elect any of the Company's directors.
FUTURE FINANCING
In the event that the proceeds of this offering are not sufficient to
enable us to successfully find a Business Combination we may seek additional
financing. In this case we shall approach our shareholders and potential lenders
for loans. At this time we believe that the proceeds of this offering will be
sufficient for that purpose and therefore do not expect to issue any additional
securities before the consummation of a Business Combination; however
substantial additional debt may be required to fund the costs of the
Reconfirmation Process, which may be substantially more than the original
Offering costs. This is likely to be provided by affiliates. Availability of
such funds will be a prerequisite to professionals being retained to provide
services associated with the Reconfirmation. 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 a financing through the
issuance of additional securities and have no present plans to do so. We will
not use the funds held in escrow as collateral or security for any loan or debt
incurred. Further, the escrowed funds will not be used to pay back any loan or
debts incurred by us. If we do require additional financing, there is no
guarantee that such financing will be available to it or if available that such
financing will be on terms acceptable to us. (See "Use of Proceeds").
PREPAIDS AND DUE TO SHAREHOLDERS
Officers of our Company have advanced $11,000 for legal and accounting
costs related to our organization, audit and SEC filings. This amount has been
recorded as prepaid expenses and deposits as at December 21, 1999. Additionally
we have agreed to pay $1,000 for related costs; shareholders of our Company will
initially finance this amount.
PREFERRED SHARES
Our Company is authorized to issue 1,000,000 shares of Series A Preferred
Stock, $0.0001 par value per share (the "Preferred Shares" or "Preferred
Stock"), of which 20,000 Preferred Shares were issued and outstanding as of the
date of this prospectus. Each Preferred Share is entitled to two votes and may,
in certain instances, at the option of the Company or the holder be converted
into one share of Common Stock. Preferred Shares have certain rights to:
(a) dividends;
(b) preference over Common Shares in the event of:
i. liquidation, dissolution, or winding-up of the Company, or
ii. payment (if any) to Company shareholders in the event of a merger
or share exchange of the Company, or a sale or other disposition
of all or substantially all of the assets of the Company; and
(c) "piggyback" registration in the event that they have been converted
into Common Shares and the Company plans to effect a public
registration of its Common Shares subject to underwriter approval.
REPORTS TO STOCKHOLDERS
We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practicable at the end of each fiscal
year, November 30, 2000. We also intend to furnish our shareholders with
quarterly reports for the first three quarters of each year which contain
unaudited financial information.
DIVIDENDS
We were only recently organized, have no earnings, and have paid no
dividends to date. Since we were formed as a blank check company with our only
intended business being the search for an appropriate Business Combination, we
do not anticipate having any earnings until such time that a Business
Combination is reconfirmed by our stockholders. However, there are no assurances
that upon the consummation of a Business Combination, we will have earnings or
issue dividends. Therefore, it is not expected that cash dividends, if any, will
be paid to our stockholders until after a Business Combination is reconfirmed.
TRANSFER AGENT
Our Company will act as its own transfer agent until a post-effective
amendment has been filed.
21
<PAGE> 22
PLAN OF DISTRIBUTION
Our Company hereby offers the right to subscribe for up to 6,000,000 Common
Shares at $0.001 per Share. We propose to offer the Shares directly on a "best
efforts, all or none basis", and no compensation is to be paid to any person in
connection with the offer and sale of the Shares. Our officers and directors
will distribute prospectuses related to this offering. We estimate approximately
400 prospectuses shall be distributed in such a manner. Our management intends
to distribute prospectuses to acquaintances, friends and business associates.
The offering shall be conducted by Mr. Raynard von Hahn and Mr. Donald Sutton.
While our Officers and Directors will not receive any compensation for their
services in connection with the offering, we will reimburse them for their
reasonable expenses. Although Mr. von Hahn and Mr. Sutton are "associated
persons" of our Company as that term is defined in Rule 3a4-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), they are
deemed not to be brokers for the following reasons: (1) the officers and
directors 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 his/her
participation in the sale of the our securities; (2) they will not be
compensated in connection with their participation in the sale of the Company's
securities by the payment of commission or other remuneration based either
directly or indirectly on transactions in securities; (3) none of them are an
associated person of a broker or dealer at the time of his/her participation in
the sale of the Company's securities; and (4) each associated person shall
restrict his/her participation to the following activities:
(a) Preparing any written communication or delivering such
communication through the mails or other means that does not involve
oral solicitation by the associated person of a potential purchaser;
(b) Responding to inquiries of 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 of 1933 or other
offering document; or
(c) Performing ministerial and clerical work involved in effecting any
transaction.
As of the date of this Prospectus, we have retained no broker in connection
with the sale of securities being offered hereby. In the event that a broker who
may be deemed an Underwriter is retained by us, an amendment to our Registration
Statement will be filed with the Commission.
Neither our Company nor anyone acting on its behalf including our
shareholders, officers, directors, promoters, affiliates or associates will
approach a market maker or take any steps to request or encourage a market in
these securities either prior or subsequent 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 of any such market maker in the future trading market (if any) for
our securities, nor do we have any plans to engage in such discussions. We do
not intend to use consultants to obtain market makers. No member of management,
promoter or anyone acting at their direction will recommend, encourage or advise
investors 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. Our investors shall make their own decisions regarding whether to
hold or sell their Shares. We will not exercise any influence over investors'
decisions.
METHOD OF SUBSCRIBING
You may subscribe by filling in and signing the subscription agreement and
delivering it, prior to the expiration date (as defined below), to us at 13400
Northrup Way, Suite 40, Bellevue, WA 98005. The subscription price of $0.001 per
Share must be paid in cash or by check, bank draft or postal express money order
payable in United States dollars to Alphatech, Inc. and U.S. Bank. This offering
is being made on a "minimum of $1,000, maximum of $6,000 best efforts, all or
none basis." Thus, unless at least 1,000,000 shares are sold, none will be sold.
Our Company's officers, directors, current shareholders and any of their
affiliates or associates may purchase a portion of the Shares offered in this
offering on the same terms and conditions as apply to all other investors. The
aggregate number of Shares which may be purchased by these persons shall not
exceed 20% of the number of Shares sold in this offering. Those purchases may be
made in order to close the "all or nothing" offering. Shares purchased by our
officers, directors and principal shareholders will be acquired for investment
purposes and not with a view towards reselling such shares thereafter.
EXPIRATION DATE
This offering will expire 90 days from the date of this prospectus (or 180
days from the date of this prospectus if extended by the Company).
LITIGATION
Our Company is not presently a party to any litigation, nor to the
knowledge of management is any material litigation threatened against us.
22
<PAGE> 23
LEGAL OPINIONS
Butcher & Williams, P.S. Suite 3827 - 1001 Fourth Avenue, Seattle WA 98154,
our special counsel, has rendered an opinion that the Shares are validly issued.
EXPERTS
The balance sheet of the Company as of December 21, 1999 (inception), and
the related statements of operations, changes in stockholders' deficit and cash
flows for the initial period from inception (date of incorporation) through
December 21, 1999 included in this prospectus and incorporated by reference in
the Registration Statement, have been audited by W. Alan Jorgensen, CPA,
independent auditor, as stated in the audit report appearing herein, and are
included in reliance upon the reports of such firm as expert in accounting and
auditing.
FURTHER INFORMATION
We have filed with the Commission, a Registration Statement on Form SB-2
with respect to the securities offered by this prospectus. This prospectus omits
certain information contained in the Registration Statement as permitted by the
Rules and Regulations of the Commission. Reports and other information filed by
the Company may be inspected and copied at the public reference facilities of
the Commission in Washington, D.C. Copies of such material can be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rate or at the Commission's website, www.sec.gov. Statements
contained in this prospectus as to the contents of any contract or other
document referred to are not complete and where such contract or other document
is an exhibit to the Registration Statement, each such statement is deemed
qualified and amplified in all respects by the provisions of the exhibit.
23
<PAGE> 24
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Alphatech, Inc.
Bellevue, Washington
I have audited the accompanying balance sheet of Alphatech, Inc. (a
development stage company) as of December 21, 1999 (inception), and the related
statement of operations, stockholders' equity, and cash flows as of the date of
inception. These financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Alphatech, Inc., and the
results of its operations and its cash flows as of December 21, 1999 (inception)
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Alphatech, Inc. will continue as a going concern. The Company's lack of
substantial capitalization or apparent sources of financing and operations
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1 to
the financial statements. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
W. Alan Jorgensen
Certified Public Accountant
December 27, 1999
Seattle, Washington
24
<PAGE> 25
ALPHATECH, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 21, 1999 (INCEPTION DATE)
25
<PAGE> 26
ALPHATECH, INC.
(A Development Stage Company)
BALANCE SHEET
DECEMBER 21, 1999 (INCEPTION)
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Deposits and organization costs 11,000
--------
Total Current Assets 11,000
--------
TOTAL ASSETS $ 11,000
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Advances from Shareholders $ 11,000
--------
TOTAL CURRENT LIABILITIES 11,000
--------
Commitments and Contingencies -
STOCKHOLDERS' EQUITY
Preferred stock: 1,000,000 Shares $0.0001 par value authorized,
Series A: authorized, issued, & outstanding- 20,000 shares 2
Common stock: 30,000,000 shares, $0.0001par, authorized,
issued and outstanding: none
Additional paid in capital 198
Subscriptions receivable (200)
Accumulated earning or losses -
--------
TOTAL STOCKHOLDERS' EQUITY -
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,000
========
</TABLE>
See accompanying notes to the financial statements.
26
<PAGE> 27
ALPHATECH, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
DECEMBER 21, 1999 (INCEPTION)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net income or loss $ -
ADJUSTMENTS TO RECONCILE NET LOSS
TO NET CASH USED BY OPERATING ACTIVITY
Increase in prepaids and deposits $ (11,000)
---------
NET CASH USED BY OPERATING ACTIVITIES (11,000)
INVESTING ACTIVITIES -
FINANCING ACTIVITIES -
Proceeds shareholders' advances 11,000
---------
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,000
Increase (Decrease) in cash Beginning of period -
---------
END OF PERIOD $ -
=========
</TABLE>
See accompanying notes to the financial statements.
27
<PAGE> 28
ALPHATECH, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
DECEMBER 21, 1999 (INCEPTION)
<TABLE>
<S> <C>
REVENUES $ -
EXPENSES
General and administrative -
-----------
TOTAL EXPENSES -
Net income or loss $ -
===========
Net income or loss per share n/a
===========
Weighted average number of shares outstanding: n/a
===========
</TABLE>
See accompanying notes to the financial statements.
28
<PAGE> 29
ALPHATECH, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
DECEMBER 21, 1999 (INCEPTION)
<TABLE>
<CAPTION>
Series A
Preferred Common Stock
---------------- ---------------
Additional Cumulative
per Paid in Subscription Earnings or
share Shares Amount Shares Amount Capital Receivable Deficits Totals
-------- ------ ------ ------ ------ ---------- ------------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning balances - $ - - $ - $ - - $ - $ -
subscribed at inception $ 0.0001 20,000 2 - - 198 (200) - -
------ ---- --- ---- ------- ----- ------ -----
December 21, 1999, balances 20,000 $ 2 - $ - $ 198 (200) $ - $ -
====== ==== === ==== ======= ===== ====== =====
</TABLE>
See accompanying notes to the financial statements.
29
<PAGE> 30
ALPHATECH, INC.
Notes to the Financial Statements
December 21, 1999 (Inception)
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION Alphatech, Inc. (the "Company") was incorporated on December 21,
1999 (inception) in the state of Delaware as a "blank check" or "shell" company.
The Company is in the development stage. All activity of the Company to date has
been related to organization and proposed fund raising. Management has elected a
November 30 year-end for the Company. The principal purpose of the Company is to
acquire an asset or to merge with an operating company in a reverse merger
transaction; that is, the shareholders of the Company will likely become the
minority shareholders in an operating entity. This transaction will be accounted
for as a recapitalization of the merger partner, if and when it occurs. No
merger partner has been identified. The Company's plans in this regard involve
filing a registration statement under the SEC's shelf registration rules, Rule
419.
GOING CONCERN There is substantial doubt about the ability of the Company to
continue as a going concern inasmuch as it has no identifiable sources of
revenue or commitments for other financing to sustain it until, if and when, an
asset or a merger partner is located and the transaction is completed.
Continuing as a going concern is dependent on locating adequate financing from
borrowing or capital contributions to meet the Company's legal, accounting and
other administrative costs until an asset or a merger partner can be located.
Management's plans include seeking an asset or a merger partner and securing
financing to meet its regulatory filing obligations and other financial
commitments.
If a qualified acquisition or business combination has not been arranged within
18 months of the effective date of the registration statement that is filed
under the SEC's Rule 419, then the Company may seek stockholder approval to
liquidate itself.
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS The Company considers (and the financial statements
reflect) all highly liquid short-term investments with original maturity of
three months or less as cash. Subsequent to the balance sheet date, $200 was
received in payment of the subscription receivable.
INCOME TAXES The financial statements are presented as of the day of inception
(December 21, 1999) and the Company has not had operating tax issues.
NET INCOME OR LOSS PER SHARE As of the date of presentation the Company has not
had operations and therefore no loss or income per share is presented. The
Company's complex capital structure involves common shares and preferred shares.
20,000 of the Series A preferred shares have been issued. These preferred shares
may have a significant dilutive effect on any income per share.
NOTE 2 DEPOSITS AND ADVANCES FROM SHAREHOLDERS
Officers of the Company have advanced $11,000 for filing fees, legal, and
accounting costs related to the organization of the Company, audit and SEC
filings. This amount has been recorded as Deposits as of December 21, 1999.
Additionally, the Company has agreed to pay $1,000 for related costs, which
amount is expected to be initially financed by shareholders of the Company.
NOTE 3 PREFERRED STOCK
The Board of Directors has the authority, without further stockholder action, to
determine the preferences, limitations, and relative rights of the preferred
stock, subject to the requirements of the Delaware Business Corporation Act. As
a general matter, Series A preferred stock has rights and preferences superior
to common shares. These include voting rights, preferences to dividends,
payments from transactions related to mergers or acquisitions, conversion
features, preferences in liquidation and winding up of the Company, and other
rights and preferences.
SERIES A PREFERRED The Company is authorized to issue 1,000,000 shares of Series
A preferred stock. Each of the Company's preferred shareholder is entitled to
two votes per preferred share, while each common share entitles the shareholder
to one vote per share. At December 21, 1999, 20,000 shares of Series A preferred
stock were issued and outstanding.
The holders of the Series A preferred shares are entitled to receive (if and
when) declared by the Board, a non-cumulative preference of 10% on cash
dividend, up to $0.10 maximum total accumulated dividends per Series A share.
Series A shares and any accumulated dividends will be adjusted by stock splits,
or other corporate action so that there will be no dilution in the Series A
preferences or relative percentage outstanding.
Under certain circumstances each share of preferred stock can be converted into
one share of common stock.
30
<PAGE> 31
NOTE 4 FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments include cash, receivables, accounts payable,
notes payable and receivables from stockholders and related parties. Except for
notes receivable from stockholders and loans from stockholders, the Company
believes that the fair value of these financial instruments approximates their
carrying amounts based on current market indicators, such as prevailing market
rates. It is not practicable to estimate the fair value of notes receivable from
stockholders and loans from stockholders, due primarily to the uncertainty
surrounding the timing of cash flows.
NOTE 5 COMMITMENTS AND CONTINGENCIES
OFFICE LEASE The Company maintains its administrative offices at 13400 Northup
Way, Suite 40, Bellevue, WA at no cost, and without a written lease agreement.
However, the principals of the Company are located in Vancouver, B.C., and
Surrey, B.C.
YEAR 2000 ISSUE The Year 2000 Issue arises because many computerized systems use
two digits rather than four to identify a year. Date-sensitive systems may
recognize the year 2000 as 1900 or some other date, resulting in errors when
data using year 2000 dates is processed. In addition, similar problems may arise
in some systems which use certain dates in 1999 to represent something other
than a date. Management believes that at the Company's present and anticipated
level of business activity, the Year 2000 Issue will not have an impact on its
operations for the foreseeable future.
31
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Delaware General Corporation Law, as amended, provides for the
indemnification of the Company's officers, directors and corporate employees and
agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS; INSURANCE. --
(a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as
to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all
the circumstance of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of
this section, or in defense of any claim, issue or matter therein, he shall
be indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2)
if such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director to repay such amount if it shall ultimately be determined that he
is not entitled to be indemnified by the corporation as authorized in this
section. Such expenses including attorneys' fees incurred by other
employees and agents may be so paid upon such terms and conditions, if any,
as the board of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under this section.
32
<PAGE> 33
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation including absorbed in a consolidation of merger which, if its
separate existence had continued, would have had power and authority to
indemnify its directors, officers and employees or agents so that any
person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under this section with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation
which imposes duties on, or involves services by, such director, officer,
employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in
a manner he reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted
in a manner "not opposed to the best interests of the corporation" as
referred to in this section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized
or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
Article 7.4 of the Company's By-laws provides for the indemnification of the
Company's officers, directors, and corporate employees and agents under certain
circumstances as follows:
Article 7.4- provides that the Company will hold harmless and will indemnify all
officers, directors, employees and agents of the Company against all expense,
liability and loss reasonably incurred or suffered by such person in its
connection as such with the Company. The Company shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such person
(except against the Company) only if the Company's Board of Directors authorized
such proceeding.
If the Company does not pay a claim under the above paragraph in full within 30
days after the Company has received a written claim, the claimant may at anytime
thereafter bring suit against the Company to recover the unpaid amount of the
claim. If the claimant is successful, it is entitled to be paid the expense of
prosecuting such claim, as well.
Notwithstanding any limitations in other sections of the By-laws, the Company
will, to the fullest extend permitted by Section 145 of the General Corporation
Law of Delaware, indemnify any and all persons whom it has the power to
indemnify against any and all of the expense, liabilities and loss, and this
indemnification shall not be deemed exclusive of any other rights to which the
indemnities may be entitled under any By-law, agreement, or otherwise, both as
to action in his/her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such persons.
The Company may, at its own expense, maintain insurance to protect itself and
any director, officer, employee or agent of the Company against any such
expense, liability or loss, whether or not the Company would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.
ITEM 25. EXPENSES OF ISSUANCE AND DISTRIBUTION
The other expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered are estimated as follows:
<TABLE>
<S> <C>
Escrow Fee $ 0.00
Securities and Exchange Commission ??
Registration Fee $ 100.00
Legal Fees $ 10,000.00
Accounting Fees $ 2,500.00
Printing and Engraving $ 2,000.00
Blue Sky Qualification Fees and Expenses $ ??-
Miscellaneous $ .00
Transfer Agent Fee $ .00
TOTAL $ .00
</TABLE>
Item 26. Recent Sales of Unregistered Securities
The Company issued 20,000 Series A Preferred Shares between December 21, 1999
and February 29, 2000 to its initial stockholders for $200, or $0.01 per Share.
33
<PAGE> 34
<TABLE>
<CAPTION>
Shares Purchased(2) Paid
------------------- ----
<S> <C> <C>
Raynard von Hahn (1) 19,800 $ 198
Suite 206 - 2260 West 2nd Avenue
Vancouver, B.C. V6K 1H9
Donald Sutton (1) 200 $ 2
15482 - 91st Ave.
Surrey, B.C. V3R 9C1
Total 20,000 $ 200
------ ------
</TABLE>
(1) May be deemed "Promoters" of the Company, as that term is defined under the
Securities Act of 1933.
(2) These Shares were sold under the exemption of Section 4(2) of the
Securities Act of 1933.
Neither the Company nor any person acting on its behalf offered or sold the
securities by means of any form of general solicitation or general advertising.
Each purchaser represented in writing that he/she acquired the securities for
his own account. A legend was placed on the certificates stating that the
securities have not been registered under the Act and setting forth the
restrictions on their transferability and sale. Each purchaser signed a written
agreement that the securities will not be sold without registration under the
Act or exemption therefrom.
Item 27.
EXHIBITS
3.1 Certificate of Incorporation.
3.1.1 Certificate of Designation of Rights of Series A Preferred Shares
3.2 By-Laws.
4.1 Specimen Certificate of Common Stock.
4.6 Form of Escrow Agreement.
5.0 Opinion and Consent of Counsel.
24.0 Consent Of Independent Auditors
Item 28.
UNDERTAKINGS
The registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
Effective Date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement,
including (but not limited to) any addition or deletion of a managing
underwriter.
34
<PAGE> 35
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be treated 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 thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) To deposit into the escrow account at the closing, certificates in such
denominations and registered in such names as required by the Company to permit
prompt delivery to each purchaser upon release of such securities from the
escrow account in accordance with Rule 419 of Regulation C under the Securities
Act. Pursuant to Rule 419, these certificates shall be deposited into an escrow
account, not to be released until a business combination is consummated.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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 Seattle, WA, on
- -March 3 ,2000
ALPHATECH, INC.
BY:
/S/ President
Raynard von Hahn, President
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.
Name Dated______________________
Mr. Raynard von Hahn
President, Director
Name Dated______________________
Mr. Donald Sutton
Vice President, Secretary-Treasurer, Director
35
<PAGE> 1
EXHIBIT NO. 3.1
CERTIFICATE OF INCORPORATION
OF
ALPHATECH INC.
FIRST. The name of this corporation shall be:
Alphatech, Inc..
SECOND. Its registered office in the State of Delaware is to be located at 1013
Centre Road, in the City of Wilmington, County of New Castle and its registered
agent at such address is CORPORATION SERVICE COMPANY.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
FOURTH. The total number of shares of stock which this corporation is authorized
to issue is: Thirty-one million (31,000,000) shares, of $0.0001 par value, of
which there are authorized 1,000,000 preferred shares and 30,000,0000 common
shares. Shares of a Class may be increased or decreased (but not below those
outstanding) without an affirmative vote of that Class by an affirmative vote of
a majority of the stock of the Corporation entitled to vote thereon irrespective
of ss.242(b)(2) of the Delaware Corporate Code. Each common share shall have one
vote, and each preferred share, or Series thereof, shall have two votes per
share as is specified in the Designation of Rights and Preferences for said
preferred shares or series thereof. The Board of Directors of the Corporation is
authorized, to the maximum extent provided by law, unless otherwise provided
herein, to provide for the issuance of preferred shares or to provide for the
issuance of shares of preferred stock in one or more series, to establish from
time to time the number of shares in each such series, and to fix the
designations, voting powers, preferences, rights and qualifications, limitations
or restrictions of the shares of preferred stock or such series. Shares may be
redeemable or convertible on such terms as conditions as may be determined by
the Board of Directors
SIXTH. Section 203
The Corporation expressly elects not to be governed by the provisions of Section
203 of the Delaware Corporate code.
SEVENTH. The name and address of the incorporator is as follows:
-----------------------
Micki Shilling
1013 Centre Road
Wilmington, DE 19805
EIGHTH The Board of Directors shall have the power to adopt, amend or repeal the
by-Laws.
NINTH. The personal liability of Directors of the Corporation is eliminated to
the fullest extent permitted by the provisions of Para 7 of Subsection (b) of
ss.102 of the Delaware Corporation Code, as the same may be amended; subject
thereto, no director shall be personally liable to the Corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director.
TENTH. The number of Directors which the Corporation initially shall have is two
(2) and their names and addresses are:
Raynard von Hahn
13400 Northup Wa Suite 40
Bellevue, WA 98005
Donald Sutton
13400 Northup Wa Suite 40
Bellevue, WA 98005
ELEVENTH. The Corporation reserves the right to amend this Certificate and all
rights provided hereunder are subject thereto.
IN WITNESS WHEREOF, the undersigned, being the incorporator hereinbefore named,
has executed, signed and acknowledged this certificate of Incorporation this
December 21, 1999.
36
<PAGE> 2
/s/ Micki Shilling
-----------
Micki Shilling
Incorporator
37
<PAGE> 1
EXHIBIT NO. 3.1.1
CERTIFICATE OF DESIGNATION OF RIGHTS OF SERIES A PREFERRED SHARES
OF
ALPHATECH, INC.
Pursuant to Section 151 (g) of Title 8 of the General Corporate Law of the State
of Delaware and Article IV of the Articles of Incorporation, the Directors
hereby designate
The voting powers, designations, preferences, rights and qualifications,
limitations and restrictions of:
"SERIES A PREFERRED SHARES"
And there is authorized to be issued 20,000 shares thereof with the
following rights, terms and preferences:
1. DIVIDENDS.
Right to Preferential Dividends. Subject to the rights and preferences of
other classes or series of Preferred Shares, the holders ("the "Holders") of the
then outstanding Series A Preferred Shares {except when there shall have been
either a notification of election for conversion by the Holders under Section
5(a), hereunder, or the conditions shall have been fulfilled for a conversion by
the Company as provided in Section 5(b) hereunder, whether or not notification
thereof has been made by the Company, (unless the Company shall expressly give
notice it elects not to require such conversion)} shall be entitled to receive,
if, when, and as declared by the Board, out of any funds legally available
therefor, a non-cumulative preference of 10% on cash dividends up to $0.10
maximum total accumulated dividends per Series A Preferred Share held thereby.
These dividends shall be payable, when and as declared by the Board. Dividends
on the Series A Preferred Shares shall be non-cumulative, there shall be no
minimum dividends, and no rights shall accrue to the Holders of the Series A
Preferred Shares in the event that the Company shall fail to declare or pay
dividends on the Series A Preferred Shares, whether or not the earnings of the
Company in that previous fiscal year were sufficient to pay such dividends in
whole or in part. In the event that the number of outstanding Series A Preferred
Shares are adjusted by stock split, reverse split, or other corporate action,
the preference stated herein shall be adjusted accordingly. The balance of any
such dividends so declared shall be allocated as between Series A Preferred
Shares and Common Shares as if said Series A Preferred Shares had been converted
to Common Shares based on the Conversion Ratio (as adjusted) provided herein,
and as to any other classes or series of Preferred Shares in accordance with the
rights and preferences thereof.
2. LIQUIDATION RIGHTS OF SERIES A PREFERRED SHARES.
(a) Preference. Subject to the rights and preferences of other classes or
series of Preferred Shares in the event of any liquidation, dissolution, or
winding-up of the Company, whether voluntary or involuntary, {except when there
shall have been either a notification of election for conversion by the Holders
under Section 5(a), hereunder, or the conditions shall have been fulfilled for a
conversion by the Company as provided in Section 5(b) hereunder, whether or not
notification thereof has been made by the Company, (unless the Company shall
expressly give notice it elects not to require such conversion)} the Holders of
the Series A Preferred Shares then outstanding shall be entitled to be paid out
of the assets of the Company available for distribution to its shareholders,
whether such assets are capital, surplus, or earnings, before any payment or
declaration and setting apart for payment of any amount which shall be made in
respect of the Common Stock, an amount equal to $0.10 per Series A Preferred
Share held thereby plus an amount equal to all declared and unpaid dividends
thereon, less accumulated total dividends paid thereto (but not less than zero).
If upon any liquidation, dissolution, or winding up of the Company, whether
voluntary or involuntary, the assets to be distributed to the Holders of the
Series A Preferred Shares shall be insufficient to permit the payment to such
shareholders of the full preferential amount aforesaid, then all of the assets
of the Company to be distributed shall be distributed ratably to the Holders of
the Series A Preferred Shares, subject to any rights or preferences of any other
classes or series of Preferred Shares, on the basis of the number of shares of
Series A Preferred Shares so held.
(b) Payments to Common Stock. After the preferred payment of $0.10 per Series A
Preferred Share is made to Holders of the Series A Preferred Shares the Holders
of the Series A Preferred Shares shall be entitled to share with Common Shares,
based on the adjusted conversion ratio of Preferred Series A Shares to Common
Shares as if converted, and as to other Classes or Series of Preferred Shares
based on the conversion ratio of said Shares to Common as if converted or as
otherwise provided in the rights and designations thereof as may from time to
time be made by the Board of Directors, all remaining assets of the Company to
be distributed.
(c) Effect of Adjustments of Shares. In the event that the number of outstanding
Series A Preferred Shares are adjusted by stock split, reverse split, or other
corporate action, the preference stated herein shall be adjusted accordingly.
3. MERGER, CONSOLIDATION.
(a) Preference. Subject to the rights and preferences of other classes or
series of Preferred Shares in the event of any merger or share exchange of the
Company, or a sale or other disposition of all or substantially all of the
assets of the Company {except when there shall have been either a notification
of election for conversion by the Holders under Section 5(a), hereunder, or the
conditions shall have been fulfilled for a conversion by the Company as provided
in Section 5(b) hereunder, whether or not notification thereof has been made by
the Company, (unless the Company shall expressly give notice it elects not to
require such conversion)} the Holders of the Series A Preferred Shares then
outstanding shall be entitled to receive, before any payment or declaration and
setting apart for payment of any amount shall be made in respect of the Common
Stock, for each share of such Series A Preferred Stock so held, in cash or in
securities (including, without limitation, debt securities) received from the
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acquiring corporation, at the closing of any such transaction, an amount equal
to $0.10 per Series A Preferred Share, plus an amount equal to all declared and
unpaid dividends thereon, less total accumulated dividends paid thereto (but not
less than zero). In the event that the number of outstanding Series A Preferred
Shares are adjusted by stock split, reverse split, or other corporate action,
the preference stated herein shall be adjusted accordingly.
(b) Remaining Proceeds. Subject to the rights and preferences of other
classes or series of Preferred Shares after the payment or distribution to the
Holders of the Series A Preferred Shares of the full preferential amount, the
Holders of the Series A Preferred Shares, Holders of other Series or Classes of
Preferred Shares according to the Rights and Designations thereof and Holders of
Common Stock then outstanding shall be entitled to receive ratably, with all
Series A Preferred Shares treated as if it had been converted into Common Stock
pursuant to Section 5 hereof, all remaining proceeds of the Company to be
distributed.
(c) Valuation of securities received pursuant to a merger, share exchange,
sale of substantially all the assets or similar transaction. In the event that a
transaction occurs pursuant to which non-cash assets are received and to which
this Section applies, the assets received for the purposes of this Section shall
be valued as follows:
(i) If the assets received are securities that are listed on NASDAQ or
an exchange, the value shall be deemed to be the 3 day high average closing
price (or average between bid/ask if OTC) on such exchange or NASDAQ over
the 30 day period prior to the closing of the transaction by which the
securities are received.
(ii) If the assets received are of readily ascertainable market value,
then that value shall be used.
(iii) If the assets are unlisted securities or other assets that do
not have a readily ascertainable value, the Board of Directors in good
faith will value said assets.
(iv) The fact that assets exist which may require a valuation process
as described herein shall not delay closing the transaction by which the
assets are being received.
(d) Notice. With respect to any transaction which involves a merger or
exchange of shares, or a sale of substantially all the assets not in the
ordinary course of business, the Series A shareholders shall receive not
less than ten days notice of the transaction and the terms and conditions
thereof.
4. VOTING RIGHTS.
(a) Each Holder of Series A Preferred Shares shall be entitled to vote on
all matters whatever upon which shareholders may vote, including election of the
Board of Directors and, except as otherwise expressly provided herein, shall be
entitled to the number of votes that equal twice the number of Common Shares to
which said Series A Preferred Shares could be converted (adjusted for
consolidations and dividends of Common Shares).
(b) Unless otherwise required by law, Series A Preferred shareholders and
Common shareholders shall vote together on all matters upon which shareholders
are permitted to vote and not as separate classes. In those cases where Series A
Preferred Shareholders are required by law to vote as a separate class, the vote
required by said class for approval of the proposed action shall be a simple
majority of the class.
(c) Voting rights shall be adjusted in the event of adjustments in the
Conversion Ratio, except that increases or reductions that apply equally to
Series A Preferred Shares and Common Shares shall not cause an adjustment to be
made.
5. CONVERSION.
The Company and the Holders of Series A Preferred Shares shall have the
following conversion rights:
(a) Right to Convert. Each share of Series A Preferred Shares shall be
convertible, if there shall be sufficient Common Shares authorized and issuable
therefor at the option of the Holder as follows, (i) none for the 12 month
period following issuance to the Holder unless a greater amount is approved by
the Company; (ii) 100% of the Series A Preferred Shares held by the Holder may
be converted to Common Shares following the initial twelve months after issuance
to the Holder thereof, into fully paid and non assessable shares of Common Stock
at the Conversion Rate set forth in Section 5(c) hereunder (as adjusted). In the
event that Series A Preferred Shares subject thereto shall have been
transferred, the time period for conversion shall be measured from the date of
issuance to the initial Holder hereof.
(b) Automatic Conversion at Election of Company.
(i) Each share of Series A Preferred Shares shall automatically at
the election of the Company be converted into shares of Common
Stock based on the then effective Conversion Rate set forth in
Section 5(c) hereunder (as adjusted) if any one of the following
shall occur: (A) The Holders of 51% of the Series A Preferred
Shares outstanding have given notice of election to convert as
provided herein in Section 6; (B) The Board of Directors of the
Company shall have approved a plan of reorganization, exchange,
merger or consolidation to which the Company is a party, or an
acquisition of the Company; (C) Immediately upon the closing of
an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as
amended, with respect to the Common Stock of the Company
(including shares
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registered by selling Series A Preferred shareholders) where the
amount of such securities sold is $5,000,000 or more; (D) When
the Company shall have a net worth of $5,000,000 or more; (E)
After the Common Shares shall have been listed on NASDAQ for a
period of not less than three months.
(ii) Upon the occurrence of any of the events specified in paragraph
5(b)(i) and the election (if applicable) being so made by the
Company, the outstanding shares of Series A Preferred Shares
shall be converted automatically without any further action by
the Holders of such Series A Preferred Shares and whether or not
the certificates representing such Series A Preferred Shares are
surrendered to the Company or its transfer agent; provided
however, that the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon
the conversion unless the certificates evidencing such Series A
Preferred Shares are either delivered to the Company or its
transfer agent, or the Holder notifies the Company or its
transfer agent that such certificate have been lost, stolen or
destroyed and executes an agreement satisfactory to the Company
to indemnify the Company from any loss incurred by it in
connection with such certificates. The conversion shall be deemed
to have occurred immediately prior to the business day on which
the Series A certificates are to be surrendered, and the person
entitled to receive the Common shares upon such a conversion
shall be deemed a Common Shareholder of record as of that date.
(c) Conversion Rate, adjustments. Except as provided elsewhere herein for
adjustment of conversion based on share price, recapitalization or other
factors, the Conversion Rate is One Common Share for One Series A Preferred
Share. The Conversion Rate shall be subject to adjustment from time to time as
provided below; no adjustment shall apply after a Series A Preferred Share has
been converted.
(d) Mechanics of Conversion. Each Holder of Series A Preferred Shares who
desires to convert the same into shares of Common Stock shall surrender the
certificate, duly endorsed, at the office of the Company or of any transfer
agent for the Series A Preferred Shares or Common Stock, and shall give written
notice to the Company at such office that such Holder elects to convert the same
and shall state therein the number of shares of Series A Preferred Shares being
converted. Thereupon the Company shall promptly issue and deliver to such Holder
a certificate or certificates for the number of shares of Common Stock to which
such Holder is entitled. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
certificate representing the Series A Preferred Shares to be converted, and the
person entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record Holder of such shares
of Common Stock on such date.
(e) Adjustment for Stock Splits and Combinations. If the Company at any
time or from time to time effects a subdivision of the outstanding Common Stock,
the Conversion Rate then in effect immediately before that subdivision shall be
proportionately increased, and conversely, if the Company at any time or from
time to time combines the outstanding shares of Common Stock into a smaller
number of shares, the Conversion Rate then in effect immediately before the
combination shall be proportionately decreased. Any adjustment under this
subsection (e) shall become effective at the close of business on the date the
subdivision or combination becomes effective. Subdivisions or combinations of
Series A Preferred Shares shall be similarly considered to compute the final
adjustment to the Conversion Rate to reflect stock splits and combinations.
(f) Adjustments for Reclassification, Exchange and Substitution. In the
event that at any time or from time to time, the Common Stock issuable upon the
conversion of the Series A Preferred Shares is changed into the same or a
different number of shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend or a reorganization, merger, exchange of
shares, or sale of assets, provided for elsewhere in this Section), then and in
any such event each Holder of Series A Preferred Shares shall have the right
thereafter to convert such stock into the kind and the maximum amount of stock
and other securities and property receivable upon such recapitalization,
reclassification or other change, by Holders of shares of Common Stock into
which such shares of Series A Preferred Shares could have been converted
immediately prior to such recapitalization, reclassification or change, all
subject to further adjustment as provided herein.
(g) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there is a capital reorganization of the Common Stock
(other than a recapitalization, subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this Section) or a merger or
exchange of shares of the Company with or into another corporation, or the sale
of all or substantially all of the Company's properties and assets to any other
person, then as a part of such reorganization, merger, consolidation or sale,
provision shall be made so that the Holders of the Series A Preferred Shares
shall have the right thereafter to convert such stock into the number of shares
of stock or other securities or property to which a Holder of the number of
shares of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section with respect to the rights of the Holders of the Series A Preferred
Shares after the reorganization, merger, consolidation or sale to the end that
the provisions of this Section (including adjustment of the Conversion Rate then
in effect and the number of shares receivable upon conversion of the Series A
Preferred Shares) shall be applicable after that event and be as nearly
equivalent as may be practicable.
(h) Fractional Shares. Series A Preferred Shares may be issued in
fractional amounts.
(i) Reservation of Stock Issuable Upon Conversion. The Company shall at all
times reserve and keep available out of
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its authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Shares, such number of
its shares of Common Stock as shall from time to time be sufficient to effect
the conversion of all outstanding shares of the Series A Preferred Shares that
shall be convertible at that time; and if at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then outstanding shares of the Series A Preferred Shares that
shall be convertible at that time, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as shall be
sufficient for such purpose. Should this action require the affirmative vote of
the Holders of Series A Preferred Shares, whether as a Class or voted with
Common Shares, said Holders of Series A Preferred Shares shall be deemed solely
for this purpose to have consented thereto, and shall be deemed to irrevocably
constitute management of the Company as their proxy and attorney in fact solely
for this purpose to execute such documents as may be required to effect this
consent.
6. REGISTRATION RIGHTS
(a) At any time after Series A Preferred Shares shall have been converted
into Common Shares at the election of the Company as provided in Section 5(b)
and the Company shall have exercised its right to require conversion thereunder,
or if the Holders of a majority of the Series A Preferred Shares shall have
given notice of election for Conversion as provided in Section 5(a), the Holders
of a majority of the Series A Preferred Shares may request "piggyback'
registration of the Common Shares in conjunction with a registration planned by
the Company subject to underwriter approval.
(b) Upon such a request being made by the Holders of a majority of the
Series A Preferred Shares, the Company will notify all of the remaining Holders
of Series A Preferred Shares as well as all Holders of Common Shares who shall
have previously converted Series A Preferred Shares (but not the successor
thereof if by sale), and they shall be deemed to have requested the registration
and shall be fully subject thereto.
(c) The Company will use its best efforts to effect a single public
registration on the appropriate form available thereto of all converted shares.
The Company may subject such registered Shares to a pooling arrangement. The
Company will be under no obligation to secure an underwriter or other seller for
the shares and sales of shares after the registration will be solely the
responsibility of the Holder thereof.
(d) To the extent required to effect the registration, converting
shareholders shall fully cooperate with the Company and its counsel. Failure to
cooperate will entitle the Company to exclude a Holder from the registration.
7. EFFECT OF ISSUANCE OF OTHER SERIES OF PREFERRED SHARES
(a) Nothing contained in this designation of rights shall limit the
ability of the Company to authorize and issue other Series of
Preferred Shares or other classes of Preferred Shares with rights or
preferences that are senior to these Series A Preferred Shares or that
limit or reduce the rights or preferences of these Series A Preferred
Shares. In the event that other Series or Classes of Preferred Shares
are authorized and issued, unless otherwise provided in the
designation of rights of said other Series or Classes, these Series A
Preferred Shares shall vote on all matters based on the conversion
rates adjusted into common shares provided herein, and said such other
preferred shares shall have such voting rights as is provided in the
designation thereof; thus, if there were 1000 Series A Preferred
Shares Issued, they would have the voting rights of 2,000 Shares of
Common Stock; all Common Shareholders, and all Preferred Shareholders
shall vote together, and Preferred Shares would have the voting weight
based on their conversion into common shares. There shall be no class
votes of these Series A Preferred Shares unless said vote is
non-waivable and is required by law.
(b) Unless otherwise provided in the designation of rights and preferences
of other preferred shares, any preferences of these Series A Preferred
Shares shall be ratable with other series or classes of Preferred
Shares that may be hereafter designated.
Dated this 23rd day of December
By: Raynard von Hahn
/S/ DESIGNATED OFFICER
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EXHIBIT NO. 3.2
BYLAWS
OF
ALPHATECH, INC.
ARTICLE I - OFFICES
1.1 Registered Office: The registered office shall be established and maintained
at and shall be the registered agent of the Corporation in charge hereof.
1.2 Other Offices: The corporation may have other offices, either within or
without the State of Delaware, at such place or places the Board of Directors
may from time to time appoint or the business of the corporation may require,
provided, however, that the corporation's books and records shall be maintained
at such place within the continental United States or Canada as the Board of
Directors shall from time to time designate.
ARTICLE II- STOCKHOLDERS
2.1 Place of Stockholders' Meetings: All meetings of the stockholders of the
Corporation shall be held at such place or places, within or outside the State
of Delaware as may be fixed by the Board of Directors from time to time or as
shall be specified in the respective notices thereof.
2.2 Date and Hour of Annual Meetings of Stockholders: An annual meeting of
stockholders shall be held each year within five months after the close of the
fiscal year of the Corporation.
2.3 Purpose of Annual Meetings: At each annual meeting, the stockholders shall
elect the members of the Board of Directors for the succeeding year. At any such
annual meeting any further proper business may be transacted.
2.4 Special Meetings of Stockholders: Special meetings of the stockholders or
any class or series thereof entitled to vote may be called by the President or
by the Chairman of the Board of Directors, or at the request in writing by
stockholders of record owning at least fifty (50%) percent of the issued and
outstanding voting shares of common stock of the corporation.
2.5 Notice of Meetings of Stockholders: Except as otherwise expressly required
or permitted by law, not less than ten days nor more than sixty days before the
date of every stockholders' meeting the Secretary shall give to each stockholder
of record entitled to vote at such meeting, written notice, served personally,
by mail, by telefax or by telegram, stating the place, date and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which
the meeting is called. Such notice, if mailed, shall be deemed to be given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address for notices to such stockholder as it appears on the
records of the corporation.
2.6 Quorum of Stockholders:
(a) Unless otherwise provided by the Certificate of Incorporation or
by law, at any meeting of the stockholders, the presence in person or
by proxy of stockholders entitled to cast a majority of the votes
thereat shall constitute a quorum. The withdrawal of any shareholder
after the commencement of a meeting shall have no effect on the
existence of a quorum, after a quorum has been established at such
meeting.
(b) At any meeting of the stockholders at which a quorum shall be
present, a majority of voting stockholders, present in person or by
proxy, may adjourn the meeting from time to time without notice other
than announcement at the meeting. In the absence of a quorum, the
officer presiding thereat shall have power to adjourn the meeting from
time to time until a quorum shall be present. Notice of any adjourned
meeting, other than announcement at the meeting, shall not be required
to be given except as provided in paragraph (d) below and except where
expressly required by law.
(c) At any adjourned session at which a quorum shall be present, any
business may be transacted which might have been transacted at the
meeting originally called but only those stockholders entitled to vote
at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof, unless a new record date is fixed
by the Board of Directors.
(d) If an adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a
notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
2.7. Chairman and Secretary of Meeting: The President shall preside at meetings
of the stockholders. The Secretary shall act as secretary of the meeting or if
he is not present, then the presiding officer may appoint a person to act as
secretary of the meeting.
2.8. Voting by Stockholders: Except as may be otherwise provided by the
Certificate of Incorporation or these by-laws, at every meeting of the
stockholders each stockholder shall be entitled to one vote for each share of
voting stock standing in his name on
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the books of the corporation on the record date for the meeting. Except as
otherwise provided by these by-laws, all elections and questions shall be
decided by the vote of a majority in interest of the stockholders present in
person or represented by proxy and entitled to vote at the meeting.
2.9. Proxies: Any stockholder entitled to vote at any meeting of stockholders
may vote either in person or by proxy. Every proxy shall be in writing,
subscribed by the stockholder or his duly authorized attorney-in-fact, but need
not be dated, sealed, witnessed or acknowledged.
2.10. Inspectors: The election of directors and any other vote by ballot at any
meeting of the stockholders shall be supervised by a least two inspectors. Such
inspectors may be appointed by the presiding officer before or at the meeting;
or if one or both inspectors so appointed shall refuse to serve or shall not be
present, such appointment shall be made by the officer presiding at the meeting.
2.11. List of Stockholders:
(a) At least ten days before every meeting of stockholders, the
Secretary shall prepare and make a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and
showing the address of each stockholder and the number of shares
registered in the name of each stockholder.
(b) During ordinary business hours, for a period of at least ten days
prior to the meeting, such list shall be open to examination by any
stockholder for any purpose germane to the meeting, either at a place
within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.
(c) This list shall also be produced and kept at the time and place of
the meeting during the whole time of the meeting, and it may be
inspected by any stockholder who is present.
(d) The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required
by this Section 2.11 or the books of the corporation, or to vote in
person or by proxy at any meeting of stockholders.
2.12. Procedure at Stockholders' Meetings: Except as otherwise provided by these
by-laws or any resolutions adopted by the stockholders or Board of Directors,
the order of business and all other matters of procedure at every meeting of
stockholders shall be determined by the presiding officer.
2.13. Action By Consent Without Meeting: Unless otherwise provided by the
Certificate of Incorporation, any action required to be taken at any annual or
special meeting of stockholders, or any action which may be taken at any annual
or special meeting, may be taken without a meeting, without prior notice and
without a vote, if a consent in writing (the "Consent Resolution"), setting
forth the action so taken, shall be signed by the holders of outstanding stock
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. The Consent Resolution shall be sent to all
shareholders of record. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing.
ARTICLE III- DIRECTORS
3.1 Powers of Directors: The property, business and affairs of the corporation
shall be managed by its Board of Directors which may exercise all the powers of
the corporation except such as are by the law of the State of Delaware or the
Certificate of Incorporation or these by-laws required to be exercised or done
by the stockholders.
3.2 Number, Method of Election, Terms of Office of Directors: The number of
directors which shall constitute the Board of Directors shall be set at two (2)
directors unless and until otherwise determined by a vote of a majority of the
entire Board of Directors. Each Director shall hold office until the next annual
meeting of stockholders and until his successor is elected and qualified,
provided, however, that a director may resign at any time. Directors need not be
stockholders.
3.3 Vacancies on Board of Directors; Removal:
(a) Any director may resign his office at any time by delivering his
resignation in writing to the Chairman of the Board or to the
President. It will take effect at the time specified therein or, if no
time is specified, it will be effective at the time of its receipt by
the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the
registration.
(b) Any vacancy in the authorized number of directors may be filled by
majority vote of the stockholders and any director so chosen shall
hold office until the next annual election of directors by the
stockholders and until his successor is duly elected and qualified or
until his earlier resignation or removal.
(c) Any director may be removed with or without cause at any time by
the majority vote of the stockholders given at a special meeting of
the stockholders called for that purpose.
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3.4 Meetings of the Board of Directors:
(a) The Board of Directors may hold their meetings, both regular and
special, either within or outside the State of Delaware.
(b) Regular meetings of the Board of Directors may be held at such
time and place as shall from time to time be determined by resolution
of the Board of Directors. No notice of such regular meetings shall be
required. If the date designated for any regular meeting be a legal
holiday, then the meeting shall be held on the next day which is not a
legal holiday.
(c) The first meeting of each newly elected Board of Directors shall
be held immediately following the annual meeting of the stockholders
for the election of officers and the transaction of such other
business as may come before it. If such meeting is held at the place
of the stockholders' meeting, no notice thereof shall be required.
(d) Special meetings of the Board of Directors shall be held whenever
called by direction of the Chairman of the Board or the President or
at the written request of any one director.
(e) The Secretary shall give notice to each director of any special
meeting of the Board of Directors by mailing the same at least three
days before the meeting or by telegraphing, telexing, telefaxing, or
delivering the same not later than the date before the meeting.
Unless required by law, such notice need not include a statement of the business
to be transacted at, or the purpose of, any such meeting. Any and all business
may be transacted at any meeting of the Board of Directors. No notice of any
adjourned meeting need be given. No notice to or waiver by any director shall be
required with respect to any meeting at which the director is present.
3.5. Quorum and Action: Unless provided otherwise by law or by the Certificate
of Incorporation or these by-laws, a majority of the Directors shall constitute
a quorum for the transaction of business; but if there shall be less than a
quorum at any meeting of the Board, a majority of those present may adjourn the
meeting from time to time. The vote of a majority of the Directors present at
any meeting at which a quorum is present shall be necessary to constitute the
act of the Board of Directors.
3.6. Presiding Officer and Secretary of the Meeting: The President, or, in his
absence a member of the Board of Directors selected by the members present,
shall preside at meetings of the Board. The Secretary shall act as secretary of
the meeting, but in his absence the presiding officer may appoint a secretary of
the meeting.
3.7. Action by Consent Without Meeting: Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes or proceedings of the Board or committee.
3.8. Action by Telephonic Conference: Members of the Board of Directors, or any
committee designated by such board, may participate in a meeting of such board
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting.
3.9. Committees: The Board of Directors shall, by resolution or resolutions
passed by a majority of Directors designate one or more committees, each of such
committees to consist of one or more Directors of the Corporation, for such
purposes as the Board shall determine. The Board may designate one or more
directors as alternate members of any committee, who may replace any absent or
disqualified member at any meeting of such committee.
3.10 Compensation of Directors: Directors shall receive such reasonable
compensation for their service on the Board of Directors or any committees
thereof, whether in the form of salary or a fixed fee for attendance at
meetings, or both, with expenses, if any, as the Board of Directors may from
time to time determine. Nothing herein contained shall be construed to preclude
any Director from serving in any other capacity and receiving compensation
therefor.
ARTICLE IV- OFFICERS
4.1 Officers, Title, Elections, Terms:
(a) The elected officers of the corporation shall be a President, a
Treasurer and a Secretary, and such other officers as the Board of
Directors shall deem advisable. The officers shall be elected by the
Board of Directors at its annual meeting following the annual meeting
of the stockholders, to serve at the pleasure of the Board or
otherwise as shall be specified by the Board at the time of such
election and until their successors are elected and qualified.
(b) The Board of Directors may elect or appoint at any time, and from
time to time, additional officers or agents with such duties as it may
deem necessary or desirable. Such additional officers shall serve at
the pleasure of the Board or otherwise as shall be specified by the
Board at the time of such election or appointment. Two or more offices
may be held by the same person.
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(c) Any vacancy in any office may be filled for the unexpired portion
of the term by the Board of Directors.
(d) Any officer may resign his office at any time. Such resignation
shall be made in writing and shall take effect at the time specified
therein or, if no time has been specified, at the time of its receipt
by the corporation. The acceptance of a resignation shall not be
necessary to make it effective, unless expressly so provided in the
resignation.
(e) The salaries of all officers of the corporation shall be fixed by
the Board of Directors.
4.2. Removal of Elected Officers: Any elected officer may be removed at any
time, either with or without cause, by resolution adopted at any regular or
special meeting of the Board of Directors by a majority of the Directors then in
office.
4.3. Duties:
(a) President: The President shall be the principal executive officer
of the corporation and, subject to the control of the Board of
Directors, shall supervise and control all the business and affairs of
the corporation. He shall, when present, preside at all meetings of
the stockholders and of the Board of Directors, unless a majority of
those present vote for another person to preside at such meeting. He
shall see that all orders and resolutions of the Board of Directors
are carried into effect (unless any such order or resolution shall
provide otherwise), and in general shall perform all duties incident
to the office of president and such other duties as may be prescribed
by the Board of Directors from time to time.
(b) Treasurer: The Treasurer shall (1) have charge and custody of and
be responsible for all funds and securities of the Corporation; (2)
receive and give receipts for moneys due and payable to the
corporation from any source whatsoever; (3) deposit all such moneys
due and payable to the corporation in such banks, trust companies, or
other depositories as shall be selected by resolution of the Board of
Directors; and (4) in general perform all duties incident to the
office of treasurer and such other duties as from time to time may be
assigned to him by the President or by the Board of Directors. He
shall, if required by the Board of Directors, give a bond for the
faithful discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
(c) Secretary: The Secretary shall (1) keep the minutes of the
meetings of the stockholders, the Board of Directors, and all
committees, if any, of which a secretary shall not have been
appointed, in one or more books provided for that purpose; (2) see
that all notices are duly given in accordance with the provisions of
these by-laws and as required by law; (3) be custodian of the
corporate records and of the seal of the corporation and see that the
seal of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal, is duly authorized;
(4) keep a register of the post office address of each stockholder
which shall be furnished to the Secretary by such stockholder; (5)
have general charge of stock transfer books of the Corporation; and
(6) in general 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 President or by the Board of Directors.
ARTICLE V - CAPITAL STOCK
5.1 Stock Certificates:
(a) Every holder of stock in the corporation shall be entitled to have
a certificate signed by, or in the name of, the corporation by the
President and by the Treasurer or the Secretary, certifying the number
of shares owned by him.
(b) If such certificate is countersigned by a transfer agent other
than the corporation or its employee, or by a registrar other than the
corporation or its employee, the signatures of the officers of the
corporation may be facsimiles, and, if permitted by law, any other
signature may be a facsimile.
(c) In case any officer who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such
officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the
date of issue.
(d) Certificates of stock shall be issued in such form not
inconsistent with the Certificate of Incorporation as shall be
approved by the Board of Directors, and shall be numbered and
registered in the order in which they were issued.
(e) All certificates surrendered to the corporation shall be canceled
with the date of cancellation, and shall be retained by the Secretary,
together with the powers of attorney to transfer and the assignments
of the shares represented by such certificates, for such period of
time as shall be prescribed from time to time by resolution of the
Board of Directors.
5.2 Record Ownership: A record of the name and address of the holder of each
certificate, the number of shares represented thereby and the date of issue
thereof shall be made on the corporation's books. The corporation shall be
entitled to treat the holder of any share of stock as the holder in fact
thereof, and accordingly shall not be bound to recognize any equitable or other
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claim to or interest in any share on the part of any other person, whether or
not it shall have express or other notice thereof, except as required by law.
5.3 Transfer of Record Ownership: Transfer of stock shall be made on the books
of the corporation only by direction of the person named in the certificate or
his attorney, lawfully constituted in writing, and only upon the surrender of
the certificate therefor and a written assignment of the shares evidenced
thereby. Whenever any transfer of stock shall be made for collateral security,
and not absolutely, it shall be so expressed in the entry of the transfer if,
when the certificates are presented to the corporation for transfer, both the
transferor and the transferee request the corporation to do so.
5.4 Lost, Stolen or Destroyed Certificates: Certificates representing shares of
stock of the corporation shall be issued in place of any certificate alleged to
have been lost, stolen or destroyed in such manner and on such terms and
conditions as the Board of Directors from time to time may authorize.
5.5 Transfer Agent; Registrar; Rules Respecting Certificates: The corporation
may maintain one or more transfer offices or agencies where stock of the
corporation shall be transferable. The corporation may also maintain one or more
registry offices where such stock shall be transferable. The Board of Directors
may make such rules and regulations as it may deem expedient concerning the
issue, transfer and registration of stock certificates.
5.6 Fixing Record Date for Determination of Stockholders of Record: The Board of
Directors may fix, in advance, a date as the record date for the purpose of
determining stockholders entitled to notice of, or to vote at, any meeting of
the stockholders or any adjournment thereof, or the stockholders entitled to
receive payment of any dividend or other distribution or the allotment of any
rights, or entitled to exercise any rights in respect of any change, conversion
or exchange of stock, or to express consent to corporate action in writing
without a meeting, or in order to make a determination of the stockholders for
the purpose of any other lawful action. Such record date in any case shall be
not more than sixty days nor less than ten days before the date of a meeting of
the stockholders, nor more than sixty days prior to any other action requiring
such determination of the stockholders. A determination of stockholders of
record entitled to notice 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.
5.7. Dividends: Subject to the provisions of the Certificate of Incorporation,
the Board of Directors may, out of funds legally available therefor at any
regular or special meeting, declare dividends upon the capital stock of the
corporation as and when they deem expedient. Before declaring any dividend there
may be set apart out of any funds of the corporation available for dividends,
such sum or sums as the Board of Directors from time to time in their discretion
deem proper for working capital or as a reserve fund to meet contingencies or
for equalizing dividends or for such other purposes as the Board of Directors
shall deem conducive to the interests of the corporation.
ARTICLE VI - SECURITIES HELD BY THE CORPORATION
6.1 Voting: Unless the Board of Directors shall otherwise order, the President,
the Secretary or the Treasurer shall have full power and authority, on behalf of
the corporation, to attend, act and vote at any meeting of the stockholders of
any corporation in which the corporation may hold stock, and at such meeting to
exercise any or all rights and powers incident to the ownership of such stock,
and to execute on behalf of the corporation a proxy or proxies empowering
another or others to act as aforesaid. The Board of Directors from time to time
may confer like powers upon any other person or persons.
6.2 General Authorization to Transfer Securities Held by the Corporation
(a) Any of the following officers, to wit: the President and the
Treasurer shall be, and they hereby are, authorized and empowered to
transfer, convert, endorse, sell, assign, set over and deliver any and
all shares of stock, bonds, debentures, notes, subscription warrants,
stock purchase warrants, evidence of indebtedness, or other securities
now or hereafter standing in the name of or owned by the corporation,
and to make, execute and deliver, under the seal of the corporation,
any and all written instruments of assignment and transfer necessary
or proper to effectuate the authority hereby conferred.
(b) Whenever there shall be annexed to any instrument of assignment
and transfer, executed pursuant to and in accordance with the
foregoing paragraph (a), a certificate of the Secretary of the
corporation in office at the date of such certificate setting forth
the provisions of this Section 6.2 and stating that they are in full
force and effect and setting forth the names of persons who are then
officers of the corporation, then all persons to whom such instrument
and annexed certificate shall thereafter come, shall be entitled,
without further inquiry or investigation and regardless of the date of
such certificate, to assume and to act in reliance upon the assumption
that the shares of stock or other securities named in such instrument
were theretofore duly and properly transferred, endorsed, sold,
assigned, set over and delivered by the corporation, and that with
respect to such securities the authority of these provisions of the
by-laws and of such officers is still in full force and effect.
ARTICLE VII - MISCELLANEOUS
7.1 Signatories: All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
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7.2 Seal: The seal of the corporation shall be in such form and shall have such
content as the Board of Directors shall from time to time determine.
7.3 Notice and Waiver of Notice: Whenever any notice of the time, place or
purpose of any meeting of the stockholders, directors or a committee is required
to be given under the law of the State of Delaware, the Certificate of
Incorporation or these by-laws, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the holding
thereof, or actual attendance at the meeting in person or, in the case of any
stockholder, by his attorney-in-fact, shall be deemed equivalent to the giving
of such notice to such persons.
7.4 Indemnity: The corporation shall hold harmless and will indemnify its
directors, officers, employees and agents against all expense, liability and
loss reasonably incurred or suffered by such person in its connection as such
with the corporation to the fullest extent allowed by law, provided, however,
that it shall be within the discretion of the Board of Directors whether to
advance any funds in advance of the disposition of any action, suit or
proceeding, and provided further that nothing in this section 7.4 shall be
deemed to obviate the necessity of the Board of Directors to make any
determination that the indemnification of the director, officer or employee is
proper under the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of Section 145 of the Delaware
General Corporation Law. If the Company does not pay a claim under the above
paragraph in full within 30 days after the Company has received a written claim,
the claimant may at anytime thereafter bring suit against the Company to recover
the unpaid amount of the claim. If the claimant is successful, it is entitled to
be paid the expense of prosecuting such claim, as well.
Notwithstanding any limitations in other sections of the By-laws, the Company
will, to the fullest extend permitted by Section 145 of the General Corporation
Law of Delaware, indemnify any and all persons whom it has the power to
indemnify against any and all of the expense, liabilities and loss, and this
indemnification shall not be deemed exclusive of any other rights to which the
indemnities may be entitled under any By-law, agreement, or otherwise, both as
to action in his/her official capacity and as to action in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such persons.
7.5 Fiscal Year: Except as from time to time otherwise determined by the Board
of Directors, the fiscal year of the corporation shall end on November 30th.
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EXHIBIT NO. 4.1
SPECIMEN STOCK CERTIFICATE
Incorporated Under the Laws of the State of Delaware
ALPHATECH, INC.
Total Authorized Issue 30,000,000 Shares Par Value $0.0001 each Common
Stock, 1,000,000 shares Par Value $0.0001 each Preferred Stock
This is to certify that is the owner of fully paid and
non-assessable shares of the above corporation
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of the Certificate properly
endorse. Witness, the seal of the Corporation and the signatures of its duly
authorized officers.
Dated _________
Secretary President
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ESCROW AGREEMENT (PUBLIC OFFERING)
AGREEMENT made this 24 day of December, 1999 by and among the Issuer whose
name and address appears on the Information Sheet (as defined herein) attached
to this Agreement, and US BANK, 280 H Street, Blaine, WA 98230 (the "Escrow
Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (the "Registration Statement") covering a
proposed public offering of its securities (collectively, the "Securities", and
individually, a "Share") as described on the Information Sheet; and
WHEREAS, the Issuer proposes to offer the Securities for sale to the public on a
"best efforts, all or none basis" at the price per Share all as set forth on the
Information Sheet; and
WHEREAS, the Issuer proposes to establish an escrow account with the Escrow
Agent in connection with such public offering and the Escrow Agent is willing to
establish such escrow account on the terms and subject to the conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto hereby agree as follows:
1. INFORMATION SHEET.
Each capitalized term not otherwise defined in this Agreement shall have the
meaning set forth for such term on the Information Sheet which is attached to
this Agreement and is incorporated by reference herein and made a part hereof
(the "Information Sheet").
2. ESTABLISHMENT OF ESCROW ACCOUNT.
2.1 The parties hereto shall establish a non-interest bearing escrow account at
the office of the Escrow Agent, and bearing the designation set forth on the
Information Sheet (the "Escrow Account").
2.2 On or before the date of the initial deposit in the Escrow Account pursuant
to this Agreement, the Issuer shall notify the Escrow Agent in writing of the
effective date of the Registration Statement (the "Effective Date") and the
Escrow Agent shall not be required to accept any amount for deposit in the
Escrow Account prior to its receipt of such notification.
2.3 The Offering Period, which shall be deemed to commence on the Effective
Date, shall consist of the number of calendar days or business days set forth on
the Information Sheet. The Offering Period shall be extended by an Extension
Period only if the Escrow Agent shall have received written notice thereof at
least five (5) business days prior to the expiration of the Offering Period. The
Extension Period, which shall be deemed to commence on the next calendar day
following the expiration of the Offering Period, shall consist of the number of
the calendar days or business days set forth on the Information Sheet. The last
day of the Offering Period, or the last day of the Extension Period (if the
Escrow Agent has received written notice thereof as hereinabove provided), is
referred to herein as the "Termination Date." After the Termination Date, the
Issuer shall not deposit, and the Escrow Agent shall not accept, any additional
amounts representing payments by prospective purchasers.
3. DEPOSITS IN THE ESCROW ACCOUNT.
3.1 Upon receipt, the Issuer shall promptly deposit all monies received from
investors to the Escrow Agent. All of these deposited proceeds (the "Deposited
Proceeds") shall be in the form of checks or money orders. All checks or money
orders deposited into the Escrow Account shall be made payable to "Alphatech,
Inc. and US Bank". Any check or money order payable other than to the Escrow
Agent as required hereby shall be returned to the prospective purchaser, or if
the Escrow Agent has insufficient information to do so, then to the Issuer
(together with any Subscription Information, as defined below, or other
documents delivered therewith) by noon of the next business day following
receipt of such check by the Escrow Agent, and such check shall be deemed not to
have been delivered to the Escrow Agent pursuant to the terms of this Agreement.
The Deposited Proceeds and interest or dividends thereon, if any, shall be held
for the sole benefit of the purchasers of the securities.
3.2 The Deposited Proceeds shall be invested in either:
(a) an obligation that constitutes a "deposit" as that term is defined in
Section (3)(1) of the Federal Deposit Insurance Act;
(b) securities of any open-end investment company registered under the
Investment Company Act of 1940 that holds itself out as a money market fund
meeting the conditions of paragraphs (c)(2), (c)(3), and (c)(4) of Rule 2a-7
under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations guaranteed as to
principal or interest by, the United States.
3.3 Simultaneously with each deposit into the Escrow Account, the Issuer shall
inform the Escrow Agent by confirmation slip or other writing of the name and
address of the prospective purchaser, the number of Securities subscribed for by
such purchaser,
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and the aggregate dollar amount of such subscription (collectively, the
"Subscription Information").
3.4 The Escrow Agent shall not be required to accept for deposit into the Escrow
Account checks which are not accompanied by the appropriate Subscription
Information. Checks and money orders representing payments by prospective
purchasers shall not be deemed deposited in the Escrow Account until the Escrow
Agent has received in writing the Subscription Information required with respect
to such payments.
3.5 The Escrow Agent shall not be required to accept any amounts representing
payments by prospective purchasers, whether by check or money order, except
during the Escrow Agent's regular banking hours. Any check, money order or cash
not received prior to 1:00 P.M. shall be deposited the following business day.
3.6 Interest or dividends earned on the Deposited Proceeds, if any, shall be
held in the Escrow Account until the Deposited Proceeds are released in
accordance with the provisions of Section 4 of the Escrow Agreement. If the
Deposited Proceeds are released to a purchaser of the securities, the purchaser
shall receive interest or dividends earned, if any, on such Deposited Proceeds
up to the date of release. If the Deposited Proceeds held in the Escrow Account
are released to the Company, any interest or dividends earned on such funds up
to the date of release may be released to the Company.
3.7 The Issuer shall deposit the Securities directly into the Escrow Account
promptly upon issuance (the "Deposited Securities"). The identity of the
purchaser of the Securities shall be included on the Common Stock and Warrant
certificates.
3.8 The Deposited Securities shall be held for the sole benefit of the
purchasers. No transfer or other disposition of Securities held in the Escrow
Account or any interest related to such Securities shall be permitted other than
by will or the laws of descent and distribution, or pursuant to a qualified
domestic relations order as defined by the Internal Revenue Code of 1986, as
amended, or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.
3.9 The Escrow Agent shall refund any portion of the Deposited Proceeds prior to
disbursement of the Deposited Proceeds in accordance with Section 4 hereof upon
instructions in writing signed by the Issuer.
4. DISBURSEMENT FROM THE ESCROW ACCOUNT.
4.1 The Deposited Proceeds may be released to the Company and the Securities
delivered to the purchaser or other registered holder only at the same time as
or after:
(a) the Escrow Agent has received a signed representation from the Company,
together with an opinion of counsel, that the following events have already
occurred and the following requirements have already been met:
(1) An agreement(s) has been executed for the acquisition(s) of a
business(es) or assets that will constitute the business (or a line of
business) of the Company and for which the fair value of the business(es)
or net assets to be acquired represents at least 80 percent of the maximum
offering proceeds, including proceeds received or to be received upon the
exercise or conversion of the Securities offered, but excluding amounts
payable to non-affiliates for underwriting commissions, underwriting
expenses, and dealer allowances, if any,
(2) The Company has filed a post-effective amendment that:
(i) Discloses the information specified by the SB-2 registration
statement form and Industry Guides, including financial statements of
the Company and of the company or business with which it plans to
merge or acquire (the "Target Company"), and pro forma financial
information required by the SB-2 and applicable rules and regulations;
(ii) Discloses the results of the initial offering, including but not
limited to:
(A) The gross offering proceeds received to date, specifying the
amounts paid for underwriter commissions, underwriting expenses
and dealer allowances, if any, amounts disbursed to the Company,
and amounts remaining in the Escrow Account; and
(B) The specific amount, use and application of funds disbursed
to the Company to date, including, but not limited to, the
amounts paid to officers, directors, promoters, controlling
shareholders or affiliates, either directly or indirectly,
specifying the amounts and purposes of such payments; and
(iii) Discloses the terms of the offering as described pursuant to
Section 4 of this Escrow Agreement;
(3) The terms of the offering provided, and the Company satisfied, the
following conditions:
(i) Within five business days after the effective date of the
post-effective amendment(s), the Company shall send by first class
mail or other equally prompt means, to each purchaser of securities
held in escrow, a copy of the prospectus contained in the
post-effective amendment and any amendment or supplement thereto;
(ii) Each purchaser shall have no fewer than 20 business days and no
more than 45 business days from the
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effective date of the post-effective amendment to notify the Company
in writing that the purchaser elects to remain an investor. If the
Company has not received such written notification by the 45th
business day following the effective date of the post-effective
amendment, funds and interest or dividends, if any, held in the Escrow
Account shall be sent by first class mail or other equally prompt
means to the purchaser within five business days;
(iii) The acquisition(s) meeting the criteria set forth in paragraph
(a) (1) of this Section 4 will be consummated if a sufficient number
of purchasers confirm their investments; and
(iv) If a consummated acquisition(s) meeting the requirements of this
section has not occurred by a date 18 months after the Effective Date,
the Deposited Proceeds shall be returned by first class mail or
equally prompt means to the purchaser within five business days
following that date; and
(b) An acquisition(s) has been consummated meeting the requirements set
forth in Section 4.1(a)(2)(iii) of this Escrow Agreement.
4.2 In the event that at the close of regular banking hours on the Termination
Date less than the minimum offering of 1,000,000 Shares have been sold (the
"Minimum Offering"), the Escrow Agent shall promptly refund to each prospective
purchaser the amount of payment received from such purchaser held in Escrow
without interest thereon or deduction therefrom, and the Escrow Agent shall
notify the Issuer of its distribution of the Deposited Proceeds.
4.3 In the event that at any time up to the close of banking hours on the
Termination Date the Minimum Offering or more Shares have been sold, the Escrow
Agent shall notify the Issuer of such fact in writing within a reasonable time
thereafter. The Escrow Agent shall hold the Deposited Proceeds until the events
described in Section 4.1 of this Escrow Agreement take place.
4.4 Upon disbursement of the Deposited Proceeds pursuant to the terms of this
Section 4, the Escrow Agent shall be relieved of all further obligations and
released from all liability under this Agreement. It is expressly agreed and
understood that in no event shall the aggregate amount of payments made by the
Escrow Agent exceed the amount of the Deposited Proceeds.
5. RIGHTS, DUTIES AND RESPONSIBILITIES OF ESCROW AGENT.
It is understood and agreed that the duties of the Escrow Agent are purely
ministerial in nature, and that:
5.1 The Escrow Agent shall not be responsible for the performance by the Issuer
of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the Issuer any
Subscription Information pertaining to prospective purchasers unless such
Subscription Information is accompanied by checks or money orders representing
the payment of money, nor shall the Escrow Agent be required to keep records of
any information with respect to payments deposited by the Issuer except as to
the amount of such payments; however, the Escrow Agent shall notify the Issuer
within a reasonable time of any discrepancy between the amount delivered to the
Escrow Agent therewith. Such amount need not be accepted for deposit in the
Escrow Account until such discrepancy has been resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to enforce
collection of any check delivered to it hereunder. The Escrow Agent, within a
reasonable time, shall return to the Issuer any check received which is
dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy, act in
reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is given
to the Escrow Agent pursuant to this Agreement without the necessity of the
Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent shall not
be obligated to make any inquiry as to the authority, capacity, existence or
identity of any person purporting to give any such notice or instructions or to
execute any such certificate, instrument or other document. The Escrow Agent
must, however, determine for itself whether the conditions permitting the
release of the funds in the Escrow Account have been met.
5.5 In the event that the Escrow Agent shall be uncertain as to its duties or
rights hereunder or shall receive instructions with respect to the Escrow
Account or the Deposited Proceeds which, in its sole determination, are in
conflict either with other instructions received by it or with any provision of
this Agreement, the Escrow Agent, at its sole option, may deposit the Deposited
Proceeds (and any other amounts that thereafter become part of the Deposited
Proceeds) with the registry of a court of competent jurisdiction in a proceeding
to which all parties in interest are joined. Upon the deposit by the Escrow
Agent of the Deposited Proceeds with the registry of any court, the Escrow Agent
shall be relieved of all further obligations and released from all liability
hereunder.
5.6 The Escrow Agent shall not be liable for any action taken or omitted
hereunder, or for the misconduct of any employee, agent or attorney appointed by
it, except in the case of willful misconduct. The Escrow Agent shall be entitled
to consult with counsel of its own choosing and shall not be liable for any
action taken, suffered or omitted by it in accordance with the advice of such
counsel.
5.7 The Escrow Agent shall have no responsibility at any time to ascertain
whether or not any security interest exists in the Deposited Proceeds or any
part thereof or to file any financing statement under the Uniform Commercial
Code with respect to the
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Deposited Proceeds or any part thereof.
5.8 The Escrow Agent shall determine whether or not the Offering has been
successful, and if it determines that less than the Minimum Offering has been
sold, thus rendering the Offering unsuccessful, the Escrow Agent shall return
the proceeds of the Offering to the investors on a pro-rata basis.
6. AMENDMENT; RESIGNATION.
This Agreement may be altered or amended only with the written consent of the
Issuer and the Escrow Agent. The Escrow Agent may resign for any reason upon
seven (7) business days written notice to the Issuer. Should the Escrow Agent
resign as herein provided, it shall not be required to accept any deposit, make
any disbursement or otherwise dispose of the Deposited Proceeds, but its only
duty shall be to hold the Deposited Proceeds for a period of not more than ten
(10) business days following the effective date of such resignation, at which
time
(a) if a successor escrow agent shall have been appointed and written
notice thereof (including the name and address of such successor
escrow agent) shall have been given to the resigning Escrow Agent by
the Issuer and such successor escrow agent, the resigning Escrow Agent
shall pay over to the successor escrow agent the Deposited Proceeds,
less any portion thereof previously paid out in accordance with this
Agreement, or
(b) if the resigning Escrow Agent shall not have received written notice
signed by the Issuer and a successor escrow agent, then the resigning
Escrow Agent shall promptly refund the amount in the Deposited
Proceeds to each prospective purchaser without interest thereon or
deduction therefrom, and the resigning Escrow Agent shall notify the
Issuer in writing of its liquidation and distribution of the Deposited
Proceeds;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Deposited Proceeds to a successor Escrow
Agent or distribution of the Deposited Proceeds pursuant to this Section 6.
7. REPRESENTATIONS AND WARRANTIES.
The Issuer hereby represents and warrants to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective purchasers have,
or shall have any lien, claim or security interest in the Deposited Proceeds or
any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on file in any
jurisdiction claiming a security interest in or describing (whether specifically
or generally) the Deposited Proceeds or any part thereof.
7.3 The Subscription Information submitted with each deposit shall, at the time
of submission and at the time of the disbursement of the Deposited Proceeds, be
deemed a representation and warranty that such deposit represents a bona fide
sale to the purchaser described therein of the amount of Securities set forth in
such Subscription Information.
7.4 All of the information contained in the Information Sheet is, as of the date
hereof and will be, at the time of any disbursement of the Deposited Proceeds,
true and correct.
8. FEES AND EXPENSES.
The Escrow Agent shall be entitled to the Escrow Agent Fee set forth in the
Information Sheet, payable upon execution of this Agreement. In addition, the
Issuer agrees to reimburse the Escrow Agent for any reasonable expenses incurred
in connection with this Agreement, including, but not limited to, reasonable
counsel fees, but not including the review of this Agreement.
9. INDEMNIFICATION AND CONTRIBUTION.
9.1 The Issuer (referred to as the "Indemnitor") agrees to indemnify the Escrow
Agent and its officers, directors, employees, agents and shareholders (jointly
and severally the "Indemnitees") against, and hold them harmless of and from,
any and all loss, liability, cost, damage and expense, including, without
limitation, reasonable counsel fees, which the Indemnitees may suffer or incur
by reason of any action, claim or proceeding brought against the Indemnitees
arising out of or relating in any way to this Agreement or any transaction to
which this Agreement relates, unless such action, claim or proceeding is the
result of the willful misconduct of the Indemnitees.
9.2 If the indemnification provided for in this Section 9 is applicable, but for
any reasons held to be unavailable, the Indemnitor shall contribute such amounts
as are just and equitable to pay, or to reimburse the Indemnitees for the
aggregate of any and all losses, liabilities, costs, damages and expenses,
including counsel fees, actually incurred by the Indemnitees as a result of or
in connection with, and any amount paid in settlement of any action, claim or
proceeding arising out of or relating in any way to, any actions or omissions of
the Indemnitor.
9.3 Any Indemnitee which proposes to assert the right to be indemnified under
this Section 9, promptly after receipt of notice of
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commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Indemnitor under this Section
9, will notify the Indemnitor of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served, but the omission so to notify
the Indemnitor of any such action, suit or proceeding shall not relieve the
Indemnitor from any liability which they may have to any Indemnitee otherwise
than under this Section 9. In case any such action, suit or proceeding shall be
brought against any Indemnitee and it shall notify the Indemnitor of the
commencement thereof, the Indemnitor shall be entitled to participate in and, to
the extent that they shall wish, to assume the defense thereof, with counsel
satisfactory to such Indemnitee. The Indemnitee shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such Indemnitee unless:
(i) the employment of counsel by such Indemnitee has been authorized by
the Indemnitor,
(ii) the Indemnitee shall have concluded reasonably that there may be a
conflict of interest among the Indemnitor and the Indemnitee in the
conduct of the defense of such action (in which case the Indemnitor
shall not have the right to direct the defense of such action on
behalf of the Indemnitee) or
(iii) the Indemnitor in fact shall not have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses
of counsel shall be borne by the Indemnitor.
9.4 The Indemnitor agrees to provide the Indemnitees with copies of all
registration statements pre- and post-effective amendments to such registration
statements including exhibits, whether filed with the SEC prior to or subsequent
to the disbursement of the Deposited Proceeds.
9.5 The provisions of this Section 9 shall survive any termination of this
Agreement, whether by disbursement of the Deposited Proceeds, resignation of the
Escrow Agent or otherwise.
10. GOVERNING LAW AND ASSIGNMENT.
This Agreement shall be construed in accordance with and governed by the laws of
the State of Washington and shall be binding upon the parties hereto and their
respective successors and assigns; provided, however, that any assignment or
transfer by any party of its rights under this Agreement or with respect to the
Deposited Proceeds shall be void as against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow Agent; and
(b) the Escrow Agent shall have consented in writing to such assignment or
transfer.
11. NOTICES.
All notices required to be given in connection with this Agreement shall be sent
by registered or certified mail, return receipt requested, or by hand delivery
with receipt acknowledged, or by the Express Mail service offered by the United
States Post Office or by Canada Post, and addressed, if to the Issuer, at its
address set forth on the Information Sheet, and if to the Escrow Agent, to: US
Bank, Attention: Trust Department, 280 H Street, Blaine, WA 98230.
12. SEVERABILITY.
If any provision of this Agreement or the application thereof to any person or
circumstance shall be determined to be unpaid or unenforceable, the remaining
provisions of this Agreement or the application of such provision to persons or
circumstances other than those to which it is held invalid or unenforceable
shall not be affected thereby and shall be valid and enforceable to the fullest
extent permitted by law.
13. CLOSING.
The closing shall take place within 90 days of the Effective Date unless an
additional 90 days is approved by the Company, but in no instance later than 180
days after the Effective Date.
14. PRONOUNS.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular, or plural as the context may require.
15. CAPTIONS.
All captions are for convenience only and shall not limit or define the term
thereof.
16. EXECUTION IN SEVERAL COUNTERPARTS.
This Agreement may be executed in several counterparts or by separate
instruments and all of such counterparts and instruments shall constitute one
agreement, binding on all of the parties herein.
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17. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings (written or oral) of the parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day
and year first above written.
THE ISSUER: ALPHATECH, INC.
By:
/s/ Raynard von Hahn
- ---------------------
Authorized Signatory
ESCROW AGENT: US BANK
By:
/s/ Lisa McGriff
- ---------------------
Authorized Signatory
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US BANK
ESCROW AGREEMENT INFORMATION SHEET
1. THE COMPANY
ALPHATECH, INC.
Address:
13400 Northup Way, Suite 40, Bellevue, WA 98005
State of incorporation or organization:
Delaware
2. THE UNDERWRITER
Self-Underwriting
State of incorporation or organization:
Delaware
3. THE SECURITIES
Description of the Securities to be offered (e.g., shares of common stock or
warrants for common stock, debentures, units consisting of shares and warrants,
etc.):
Shares of Common Stock.
4. TYPE OF OFFERING
Registration Statement filed on Form SB-2
Offering Statement filed pursuant to Regulation C of the General Rules
and Regulations under the Securities Act of 1933.
5. OFFERING AMOUNT:
$1,000 minimum; $6,000 maximum
6. PLAN OF DISTRIBUTION OF THE SECURITIES
Offering Period: 90 (calendar days)
Extension Period: 90 (calendar days)
Collection Period, if any: -0- (calendar days)
7. THE ESCROW ACCOUNT
Title of the Escrow Account: ALPHATECH, INC. ESCROW ACCOUNT.
8. ESCROW ACCOUNT FEE
Amount due on execution of the Escrow Agreement:
$ Fee for each check disbursed pursuant to the terms of the Escrow
Agreement (unsuccessful offering): Up to 35 checks at no charge per
month; thereafter $0.15 each. $ Fee for each subscriber in excess of
the first fifty subscribers: ______ $ Fee for each check returned
pursuant to the terms of the Escrow Agreement: $3.00.
All other fees will be negotiated on the basis of service requirements.
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EXHIBIT NO. 5.0
April 4, 2000
SECURITIES AND EXCHANGE COMMISSION
Seattle, WA.
Re: Alphatech, Inc.
To Whom It May Concern:
This opinion is given in connection with the registration with the Securities
and Exchange Commission of 1,000,000 to 6,000,000 Shares of Common Stock at a
price of $0.001 per Share, for sale in the Company's proposed public offering.
We have examined the originals and copies of the corporate instruments,
certificates and other documents of the Company and interviewed representatives
of the Company to the extent we deemed it necessary in order to form the basis
for the opinion hereafter set forth. In such examination we have assumed the
genuineness of all signatures and authenticity of all documents submitted to us
as certified photostatic copies. As to all questions of fact material to this
opinion, which have not been independently established, we have relied upon
statements or certificates of officers or representatives of the Company.
All of the 1,000,000 to 6,000,000 Shares being registered are now authorized but
unissued shares.
Based upon the foregoing, we are of the opinion that the 1,000,000 to 6,000,000
Shares of Common Stock of the Company being registered for sale by the Company,
when issued and sold pursuant to this Registration Statement, will be legally
issued, fully paid and non-assessable.
The undersigned hereby consents to the use of this opinion in connection with
such Registration Statement and its inclusion as an exhibit accompanying such
Registration Statement.
Very truly yours,
BUTCHER & WILLIAMS, P.S.
Bruce Butcher J.S.D
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EXHIBIT NO. 24.0
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement of Alphatech, Inc. on Form
SB-2 of our Independent Auditor's Report dated December 27, 1999 appearing in
the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
W. Alan Jorgensen & Company
Certified Public Accountants
57
