EXHIBIT 99.1
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
SAFE HARBOR COMPLIANCE STATEMENT
FOR FORWARD-LOOKING STATEMENTS
In passing the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"), 15 U.S.C.A. Sections 77z-2 and 78u-5 (Supp. 1996), Congress
encouraged public companies to make "forward-looking statements" by creating a
safe harbor to protect companies from securities law liability in connection
with forward-looking statements. United American Companies, Inc. ("UAC" or
the "Company") intends to qualify both its written and oral forward-looking
statements for protection under the Reform Act and any other similar safe
harbor provisions.
"Forward-looking statements" are defined by the Reform Act. Generally,
forward-looking statements include expressed expectations of future events and
the assumptions on which the expressed expectations are based. All forward-
looking statements are inherently uncertain as they are based on various
expectations and assumptions concerning future events and they are subject to
numerous known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those projected. Due to those
uncertainties and risks, the investment community is urged not to place undue
reliance on written or oral forward-looking statements of UAC. The
Company undertakes no obligation to update or revise this Safe Harbor Compliance
Statement for Forward-Looking Statements (the "Safe Harbor Statement") to
reflect future developments. In addition, UAC undertakes no obligation
to update or revise forward-looking statements to reflect changed assumptions,
the occurrence of unanticipated events or changes to future operating results
over time.
UAC provides the following risk factor disclosure in connection with
its continuing effort to qualify its written and oral forward-looking statements
for the safe harbor protection of the Reform Act and any other similar safe
harbor provisions. Important factors currently known to management that could
cause actual results to differ materially from those in forward-looking
statements include the disclosures contained in the Quarterly Report on Form
10-QSB to which this statement is appended as an exhibit and also include the
following:
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RISK FACTORS
1. The majority control by the Company's Principal Shareholders, Officers
and Directors may negatively impact the operation of the Company.
The Company's principal shareholders, officers and directors will beneficially
own ninety percent (90%) of the Company's Common Stock. As a
result, such persons will have the ability to control the Company and direct
its affairs and business. Such concentration of ownership may also have the
effect of delaying, deferring or preventing change in control of the Company.
See "Principal Stockholders."
2. Conflicts of interest between the Company and its officers and directors
may impede the operational ability of the Company.
Certain conflicts of interest exist between the Company and its officers and
directors. They have other business interests to which they devote their
attention, and they may be expected to continue to do so although management
time should be devoted to the business of the Company. As a result, conflicts
of interest may arise that can be resolved only through their exercise of such
judgment as is consistent with his fiduciary duties to the Company. See
"Management," and "Conflicts of Interest."
3. The regulation of Penny Stocks may negatively impact the potential
trading market for the Company's securities.
The Company's securities, when available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other
than established customers or accredited investors. For purposes of the rule,
the phrase "accredited investors" means, in general terms, institutions with
assets in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered
by the rule, the broker-dealer must make a special suitability determination
for the purchaser and receive the purchaser's written agreement to the
transaction prior to the sale. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this offering to sell their securities in any market
that might develop therefor.
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In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1,
15g-2, 15g-3, 15g-4, 15g-5, 15g-6, and 15g-7 under the Securities Exchange Act
of 1934, as amended. Because the securities of the Company may constitute
"penny stocks" within the meaning of the rules, the rules would apply to the
Company and to its securities. The rules may further affect the ability of
owners of Shares to sell the securities of the Company in any market that
might develop for them.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered in
recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a
few broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and
markups by selling broker-dealers; and (v) the wholesale dumping of the same
securities by promoters and broker-dealers after prices have been manipulated
to a desired level, along with the resulting inevitable collapse of those
prices and with consequent investor losses.
4. The Company's limited operating history may severely impact its
ability to operate and locate the best available business opportunity.
The Company was formed in November of 1999 for the purpose of registering its
common stock under the 1934 Act and acquiring a business opportunity. The
Company has no operating history, revenues from operations, or assets other
than cash from private sales of stock. The Company faces all of the risks of
a new business and the special risks inherent in the investigation, acquisition,
or involvement in a new business opportunity. The Company must be regarded as a
new or "start-up" venture with all of the unforeseen costs, expenses, problems,
and difficulties to which such ventures are subject.
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5. Government, State or Local regulations may limit the Company's
business opportunities.
An acquisition made by the Company may be of a business that is subject to
regulation or licensing by federal, state, or local authorities. Compliance
with such regulations and licensing can be expected to be a time-consuming,
expensive process and may limit other investment opportunities of the
Company.
6. The Company's required indemnification of its Officers and Directors
may negatively impact its operation.
The Company's Articles of Incorporation provide for the indemnification of its
directors, officers, employees, and agents, under certain circumstances,
against attorney's fees and other expenses incurred by them in any litigation
to which they become a party arising from their association with or activities
on behalf of the Company. The Company will also bear the expenses of such
litigation for any of its directors, officers, employees, or agents, upon such
person's promise to repay the Company therefor if it is ultimately determined
that any such person shall not have been entitled to indemnification. This
indemnification policy could result in substantial expenditures by the Company
which it will be unable to recoup.
7. The Company's Directors have potentially limited liability.
The Company's Articles of Incorporation exclude personal liability of its
directors to the Company and its stockholders for monetary damages for breach
of fiduciary duty except in certain specified circumstances. Accordingly, the
Company will have a much more limited right of action against its directors
than otherwise would be the case. This provision does not affect the
liability of any director under federal or applicable state securities laws.
8. The Company may have to depend upon Outside Advisors.
To supplement the business experience of its officers and directors, the
Company may be required to employ accountants, technical experts, appraisers,
attorneys, or other consultants or advisors. The selection of any such
advisors will be made by the Company's President without any input from
stockholders. Furthermore, it is anticipated that such persons may be engaged
on an "as needed" basis without a continuing fiduciary or other obligation to
the Company.
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9. There are no foreseeable dividends for the Company's shareholders.
The Company has not paid dividends on its Common Stock and does not anticipate
paying such dividends in the foreseeable future.
10. There is no public trading market for the Company's common stock.
There is no public market for the Company's common stock, and no assurance can
be given that a market will develop or that a shareholder ever will be able to
liquidate his investment without considerable delay, if at all. If a market
should develop, the price may be highly volatile. Factors such as those
discussed in this "Risk Factors" section may have a significant impact upon
the market price of the securities offered hereby. Owing to the low price of
the securities, many brokerage firms may not be willing to effect transactions
in the securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions,
state transfer taxes, if any, and any other selling costs may exceed the
selling price. Further, many lending institutions will not permit the use of
such securities as collateral for any loans.
11. Affiliates and their successors/assigns may have exposure and risk
if re-selling securities pursuant to Rule 144.
All of the outstanding shares of Common Stock held by present stockholders are
"restricted securities" within the meaning of Rule 144 under the Securities
Act of 1933, as amended.
As restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person
who has held restricted securities for a prescribed period may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1.0% of a company's outstanding
common stock or the average weekly trading volume during the four calendar
weeks prior to the sale. As a result of revisions to Rule 144 which became
effective on or about April 29, 1997, there will be no limit on the amount of
restricted securities that may be sold by a nonaffiliate after the restricted
securities have been held by the owner for a period of two years. A sale
under Rule 144 or under any other exemption from the Act, if available, or
pursuant to subsequent registrations of shares of Common Stock of present
stockholders, may have a depressive effect upon the price of the Common Stock
in any market that may develop.
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Of the total 1,500,000 shares of common stock held by present stockholders of
the Company, 1,500,000 shares which were issued pursuant to Rule 701 and may
become available for resale under Rule 144, on or about July 1, 2000. However,
recent correspondence directed from the Commission to the NASD suggests that
Rule 144 sales by affiliates or their successors/assigns will generally not
be afforded an opportunity to rely on Rule 144 for "safe harbor" re-selling
under such rule and will most likely only be able to transfer such securities
pursuant to an effective registration statement filed under the Securities
Act of 1933 (the "Act").
12. Blue Sky considerations may negatively impact the Company's ability
to sell or transfer its securities or to establish secondary trading
markets.
Because the securities registered hereunder have not been registered for
resale under the blue sky laws of any state, the holders of such shares and
persons who desire to purchase them in any trading market that might develop
in the future, should be aware that there may be significant state blue-sky law
restrictions upon the ability of investors to sell the securities and of
purchasers to purchase the securities. Some jurisdictions may not
under any circumstances allow the trading or resale of blind-pool or "blank-
check" securities. Accordingly, investors should consider the secondary market
for the Company's securities to be a limited one.
