SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
EVALUATORS GROUP, LTD.
(Name of small business issuer in its charter)
NEVADA 4813 33-0885763
(State of Incorporation) (Primary Standard Industrial IRS Employer ID
Classification Code Number)
44489 TOWN CENTER WAY, SUITE D415
PALM DESERT, CA 92260-2723
(760) 773-9227 (PHONE)
(Address and telephone number of principal executive offices)
--------------------------
18 EAST CANYON PERDIDO STREET
SANTA BARBARA, CA 93101
(805)564-8827
(805) 564-8837 (TELECOPY)
(Address of principal place of business or intended principal place of
business)
--------------------------
CORPORATE SERVICES OF NEVADA
502 NORTH DIVISION STREET
CARSON CITY, NV 89703
(775) 883-3711
(Name, address and telephone number of agent for service)
--------------------------
COPIES TO:
KENNETH G. EADE
Attorney at Law
827 State Street, Suite 26
Santa Barbara, CA 93101
(805)560-9828 (PHONE)
(805) 560-3608 (TELECOPY)
--------------------------
(Address of principal place of business or intended principal place of
business)
--------------------------
CORPORATE SERVICES OF NEVADA
502 NORTH DIVISION STREET
CARSON CITY, NV 89703
(775) 883-3711
(Name, address and telephone number of agent for service)
--------------------------
COPIES TO:
KENNETH G. EADE
Attorney at Law
827 State Street, Suite 26
Santa Barbara, CA 93101
(805)560-9828 (PHONE)
(805) 560-3608 (TELECOPY)
--------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this registration statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
----- -----
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration
statement
for the same offering. / /
----- -----
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
----- -----
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
[CAPTION]
<TABLE>
___________________________________________________________________________________________________
___________________________________________________________________________________________________
TITLE OF EACH DOLLAR PROPOSED PROPOSED
AMOUNT OF
CLASS OF SECURITIES AMOUNT TO MAXIMUM AGGREGATE MAX. AGGREGATE
REGISTRATION FEE
<F>
<S> <C> <C> <C>
<C>
Common Stock, .001 par $12,500 $.25 $12,500
$3.30
Total $12,500 $.25 $12,500
$3.30
</TABLE>
DATED MARCH 27, 2000
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
PROSPECTUS
EVALUATORS GROUP, LTD.
50,000 SHARES OF COMMON STOCK
Up to 50,000 of the shares of Common Stock offered hereby (the "Offering") are
being sold by EVALUATORS GROUP, LTD. ( the "Company").
There is no minimum contingency and no escrow or impound, and the proceeds
may be utilized by the Company in its discretion. The Company's Common Stock
is not currently listed or quoted on any quotation medium. There can be no
assurance that the Company's common stock will ever be quoted on any
quotation medium or that any market for the Company's stock will ever develop.
------------------------
THE COMMON STOCK OFFERED HEREBY IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PRICE UNDERWRITING PROCEEDS
TO DISCOUNTS AND TO PUBLIC
COMMISSIONS(2) COMPANY(1)
PRICE UNDERWRITING PROCEEDS TO
COMPANY
Per Share................ $ .25 $ 0 $ .25
Total .................. $12,500 $ 0 $12,500
(1) Before deducting expenses payable by the Company, estimated at
approximately $5,000. This offering is self-underwritten, so the Company is
not obligated to pay commissions or fees on the sales of any of the shares.
This offering is for up to 50,000 common shares. There is no minimum
contingency, and the proceeds may be used in the Company's discretion,
subject to SEC Rule 419.
(2)The shares of Common Stock are being offered by the Company through its
officers and directors on a best efforts basis subject to prior sale, when,
as, and if delivered to and accepted by the Company and subject to the
approval of certain legal matters by counsel and certain other conditions.
The Company reserves the right to withdraw, cancel or modify the Offering
and to reject any order in whole or in part.
MARCH 27, 2000
- --------------
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") under Section 12 of
the Act. In accordance therewith, the Company will file reports and other
information with the Securities and Exchange Commission ("SEC Reports, proxy
statements and other information filed by the Company can be inspected and
copied at the principal office of the Commission, Public Reference Room, 450
Fifth Street, N.W., Washington, D.C. 20549. Copies can be obtained from the
Commission at prescribed rates by writing to the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission maintains a Web site
that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the
Commission. The address of such Web site is http://www.sec.gov.
The Company has filed with the Commission a registration statement (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to sales of the shares of Common Stock
offered hereby. This Prospectus omits certain information contained in the
Registration Statement. For further information, reference is made to the
Registration Statement, the exhibits and financial statements filed as a
part thereof, which may be examined without charge at the office of the
Commission, and photocopies of which, or any portion thereof, may be
obtained upon payment of the prescribed fee.
Statements contained in this Prospectus as to the contents of any agreement
or other document referred to are not complete, and where such agreement or
other document is an exhibit to the Registration Statement, each statement
is deemed to be qualified and amplified in all respects by the provisions of
the exhibit.
PROSPECTUS SUMMARY
THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
AND CONSOLIDATED FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO,
APPEARING ELSEWHERE IN THIS PROSPECTUS, INCLUDING THE INFORMATION SET FORTH
UNDER "RISK FACTORS." CERTAIN STATEMENTS CONTAINED IN THE PROSPECTUS
SUMMARY AND ELSEWHERE IN THIS PROSPECTUS REGARDING MATTERS THAT ARE NOT
HISTORICAL FACTS, SUCH AS STATEMENTS REGARDING GROWTH TRENDS IN THE
INDUSTRY AND THE COMPANY'S GROWTH STRATEGY AND PLANS TO INTRODUCE ADDITIONAL
PRODUCTS OR SERVICES, ARE FORWARD-LOOKING STATEMENTS (AS SUCH TERM IS
DEFINED IN THE SECURITIES ACT). SINCE SUCH FORWARD-LOOKING STATEMENTS
INCLUDE RISKS AND UNCERTAINTIES, ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED HEREIN UNDER "RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" AND "BUSINESS," AS WELL AS
THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
UNLESS THE CONTEXT OTHERWISE REQUIRES, REFERENCES HEREIN TO THE "COMPANY"
REFER TO EVALUATORS GROUP, LTD., AND ITS SUBSIDIARIES.
THE COMPANY
EVALUATORS GROUP, LTD. is a development stage company, organized under the
laws of the state of Nevada on September 29, 1999. The Company is not
engaged in any operations other than organizational matters. It was formed
specifically to be a blank check or shell corporation, for the purpose of
either merging with or acquiring an operating company with operating
history and assets.
The primary activity of the Company will involve seeking merger or
acquisition candidates with whom it can either merge or acquire. The
Company has not selected any company for acquisition or merger and does not
intend to limit potential acquisition candidates to any particular field or
industry, but does retain the right to limit acquisition or merger
candidates, if it so chooses, to a particular field or industry. The
Company's plans are in the conceptual stage only.
CORPORATE BACKGROUND
The Company was organized on September 29, 1999, and has never commenced
operations. The Company is a "blank check" or "shell corporation", in the
development stage, whose plan of operations is limited to locating a merger or
acquisition candidate. The Company's common stock is not listed on any
recognized exchange or quoted on any quotation medium. There can be no
assurance that
the Company will ever acquire a suitable merger or acquisition candidate or
that its common stock will ever develop a market.
THE OFFERING
Common Stock Offered......................... Up to 50,000 shares
Common Stock Outstanding after the
Offering..................................... 300,000 SHARES(1)
Use of Proceeds.............................. Working capital
Symbol....................................... None
Risk Factors................................. The shares of Common Stock
offered hereby involve a
high degree of risk
and immediate
substantial dilution. See "Risk
Factors" and "Dilution"
Proceeds from this offering will be escrowed with a federally insured
depository pursuant to Rule 419 promulgated by the SEC. The Company will
obtain only 10% of the proceeds. All proceeds will be released back to
investors in 18 months unless and until a merger or acquisition has been
consummated and a substantial number of investors have indicated in writing
their intentions to remain as a purchaser. See A Terms of Offering and
Escrow Provisions.
(1) Figures are based on the current outstanding shares of 250,000.
SUMMARY FINANCIAL DATA
The following summary financial data should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements, including the Notes
thereto, included elsewhere in this Prospectus. The statement of operations
data for the period ended February 29, 2000 and the balance sheet data at
February 29, 2000 are derived from the Company's audited Consolidated
Financial Statements included elsewhere in this Prospectus. The consolidated
statement of operations data for the period ended February 29, 2000 is
derived from the Company's audited financial statements for those years,
which are included in this Prospectus. These statements include all
adjustments that the Company considers necessary for a fair presentation of
the financial position and results of operations at that date and for such
periods. The operating results for the period ended February 29, 2000 are
not necessarily indicative of the results to be expected for the full year
or for any future period.
[CAPTION]
BALANCE SHEET DATA:
March 31, 2000
---------------------
Assets: ............................................ $ 100
====
Liabilities - Accounts Payable ..................... $ --
----
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 25,000,000 shares,
Issued 250,000 shares at March 20, 2000 ......... 2,500
Paid-In Capital ............................... -0-
Retained Deficit ............................... (2,600)
Deficit Accumulated During the
Development Stage .............................. (2,600)
------
Total Stockholders' Equity .................... $(2,600)
-------
Total Liabilities and
Stockholders' Equity ........................ $ 100
=====
[CAPTION]
STATEMENT OF INCOME DATA:
Cumulative
Since
Inception
For period ended of
Development
2/29/2000 Stage
----------------
- --------------
Revenues: ............................... $ -- $ --
Expenses: ............................... 2,600 2,600
----- -----
Net Loss .............................. $ (2,600) $(2,600)
----- -----
Basic & Diluted loss per share ............ $ .01 $
.01
========
=========
RISK FACTORS
PROSPECTIVE INVESTORS IN THE SHARES OFFERED HEREBY SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER INFORMATION APPEARING IN
THIS PROSPECTUS.
LIMITED OPERATING HISTORY; HISTORY OF LOSSES; SIGNIFICANT ACCUMULATED AND
WORKING CAPITAL DEFICITS
The Company is a development stage company which has no operating history upon
which an evaluation of its future performance and prospects can be made. The
Company's prospects must be considered in light of the risks, expenses,
delays
and difficulties frequently encountered in establishing a new business in an
emerging and evolving industry characterized by intense competition. Since
inception, the Company has incurred significant losses.
BLANK CHECK COMPANY
The Company is a blank check company whose only plan of operations is to seek
to acquire an operating company with income and/or assets with which to
merge or acquire. There can be no assurance that the Company will be
successful in finding such a merger or acquisition candidate, and the
investor should be prepared to lose his or her entire investment.
INTENSE COMPETITION
It is unknown what industry the Company's potential merger/acquisition
candidate will be from. However, most industries are generally intensely
competitive, rapidly evolving and subject to constant technological change.
Competitors with greater financial resources than the Company are more
equipped to compete with the Company in any industry. There can be no
assurance that the Company will be able to compete successfully in any chosen.
DEVELOPMENT STAGE COMPANY
The Company is still in the development stage and has not commenced
operations. Its operations are subject to all of the risks inherent in
establishing a new business enterprise. The Company's potential for success
must be considered in light of the problem, expenses, difficulties,
complications and delays frequently encountered in connection with a new
business. No assurance can be given that the Company Post will be successful.
LIMITED CAPITAL AND NEED FOR SIGNIFICANT ADDITIONAL FINANCING
The Company anticipates that the net proceeds of this offering will satisfy
its operating cash requirements for at least 12 months after this offering
is consummated. However, no assurance can be given that The Company will
not require additional financing sooner than currently anticipated. In
order to continue with its planned operations, the Company is dependent
upon additional equity financing. There can be no assurance that
additional equity financing can be obtained.
NO PUBLIC MARKET AND POSSIBLE VOLATILITY OF COMMON STOCK PRICES
Prior to this offering, the Company's common shares have never been freely
traded and there is no public market for its stock. No assurance can be
given that an active public market will develop or be sustained after the
offering. There also can be no assurance that the Company's securities will
be quoted on any recognized quotation medium. The initial public offering
price of the shares has been arbitrarily determined by the Company. The
trading price of the securities could be subject to wide fluctuations in
response to quarter-to-quarter variations in operating results,
announcements, and other events or factors. In addition, the stock market
has from time to time experienced extreme price and volume fluctuations
which have particularly affected the market price for many companies and
which often have been unrelated to the operating performance of these
companies. These broad market fluctuations may adversely affect the market
price of the securities.
PENNY STOCK RESTRICTIONS
The Company's securities are not currently quoted on any recognized quotation
medium. While there can be no assurance that any public market will ever
develop for the Company's common stock, if such a market should develop,
trading the Company's Common Stock would be subject to the requirements of
certain rules promulgated under the Securities Exchange Act of 1934, as
amended ("Exchange Act"), which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market
price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks
associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established
customers and accredited investors (generally institutions). For these types
of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. The additional burdens imposed
upon broker-dealers by such requirements may discourage them from effecting
transactions in the Company's securities, which could severely limit the
liquidity of the Company's securities and the ability of purchasers in this
Offering to sell such securities in the secondary market.
BROAD DISCRETION IN APPLICATION OF NET PROCEEDS BY MANAGEMENT
The estimated net proceeds of the Offering has been allocated to working
capital and general corporate purposes. Accordingly, the Company's
management will have broad discretion as to the application of these
proceeds. A portion of the proceeds allocated to working capital may be used
by the Company to pay salaries, including salaries of its executive
officers, and for acquisitions. Although the Company currently has no
agreement, arrangement or understanding with respect to any acquisition,
should an acquisition opportunity be identified by the Company, the Board of
Directors may have the ability to approve such acquisition without seeking
stockholder approval.
RELATED PARTY TRANSACTIONS; POSSIBLE CONFLICTS OF INTEREST
The Company has engaged in transactions with certain of its officers,
directors and principal stockholders. The terms of such transactions were
determined without arms' length negotiations and could create, or appear to
create, potential conflicts of interest which may not necessarily be
resolved in the Company's favor. See "Certain Transactions."
DILUTION
The public offering price is substantially higher than the net tangible
book
value per share of the currently outstanding Common Stock. Investors
purchasing
shares of Common Stock in the Offering will therefore experience immediate
dilution in net tangible book value, assuming a $.25 per share offering price.
See "Dilution."
POTENTIAL ACQUISITION TO BE LIMITED TO ONE BUSINESS VENTURE
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit
the Company to offset potential losses from one venture against gains from
another.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $12,500. The Company
intends to
use these proceeds for working capital and general corporate purposes. The
allocation of the net proceeds of the Offering set forth above represents the
Company's best estimates based upon its current plans and certain assumptions
regarding industry and general economic conditions and the Company's future
revenues and expenditures. If any of these factors change, the Company may
find it necessary or advisable to reallocate some of the proceeds within the
above-described categories.
Proceeds not immediately required for the purposes described above will be
invested temporarily, pending their application as described above, in
short-term United States government securities, short-term bank certificates of
deposit, money market funds or other investment grade, short-term, interest-
bearing instruments.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations (including the costs associated with its growth
strategy), that the proceeds of the Offering, if at least the minimum number
ofshares are sold, together with its existing financial resources and cash
flow from operations, should be sufficient to satisfy its anticipated cash
requirements for the next twelve months; however, there can be no assurance
thatthis will be the case. The Company's actual cash requirements may vary
materially from those now planned and will depend upon numerous factors,
including the general market acceptance of the Company's new and existing
products and services, the growth of the Company's distribution channels,
the technological advances and activities of competitors, and other
factors. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its capital stock.
The Company currently intends to retain earnings, if any, to finance the
growth
and development of its business and does not anticipate paying any cash
dividends in the foreseeable future.
PRICE RANGE OF SECURITIES
The Company's common stock is not listed or quoted at the present time, and
there is no present public market for the Company's common stock. There can
be Thus, there can be no assurance that a public market for the
Company's common stock will ever develop.
CAPITALIZATION
The following table sets forth the short-term debt and capitalization of the
Company as of December 31, 1999, and the pro forma capitalization of the
Company
as of May 31, 2000, giving effect to the sale of the of 50,000 shares at the
price of $.25 share, after deducting estimated offering expenses. The table
should be read in conjunction with the Consolidated Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus.
COMPANY WILL NOT PROVIDE DISCLOSURE PRIOR TO ACQUISITION OR MERGER
The Company does not intend to provide shareholders with complete disclosure
documentation, including audited financial statements, concerning the target
company and its business prior to any merger or acquisition. It is
anticipated that all decisions respecting the Company=s acquisitions or
mergers with any target company will be made solely by management.
Shareholders will therefore be unable to effectively evaluate the merits of
any acquisition or merger until after the deal is completed and the Form 8-K
has been filed.
[CAPTION]
BALANCE SHEET DATA:
March 31, 2000
---------------------
Assets: ............................................ $ 100
=======
Liabilities - Accounts Payable ..................... $ --
-------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 25,000,000 shares,
Issued 250,000 shares at March 20, 2000.......... 2,500
Paid-In Capital ............................... -0-
Retained Deficit ............................... (2,600)
Deficit Accumulated During the
Development Stage .............................. (2,600)
-------
Total Stockholders' Equity .................... $ (2,600)
-------
Total Liabilities and
Stockholders' Equity ........................ $ 100
=======
[CAPTION]
STATEMENT OF INCOME DATA:
Cumulative
Since
Inception
For period ended of Development
2/29/2000 Stage
---------------- --------------
Revenues: ............................... $ -- $ --
Expenses: ............................... 2,600 2,600
----- -----
Net Loss ................................. $ (2,600) $ (2,600)
----- -----
Basic & Diluted loss per share .......... $ .01 $ .01
====== =========
As of December 31, 1999, the Company's net tangible book value was $0, or $0
per
share of common stock. Net tangible book value is the aggregate amount of The
Company's tangible assets less its total liabilities. Net tangible book value
per share represents the Company's total tangible assets less its total
liabilities, divided by the number of shares of common stock outstanding.
After
giving effect to the sale of 50,000 shares at an offering price of $.25 per
share of Common Stock, application of the estimated net sale proceeds (after
deducting offering expenses), The Company's net tangible book value as of
the
closing of this offering would increase from $0 to $.008. This represents an
immediate increase in the net tangible book value of $.008 per share to current
shareholders, and immediate dilution of $.992 per share to new investors, as
illustrated in the following table:
Public offering price per
share of common stock ........................................... $.25
Net tangible book value per share before offering................ $0
Increase per share attributable to new investors................... $.008
Net tangible book value per share after offering................... $.008
Dilution per share to new investors................................ $0.992
Percentage dilution................................................ 99.2%
SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial
Statements, including the Notes thereto, included elsewhere in this
Prospectus. The statement of operations data for the years ended 1998 and
1999 and the balance sheet data at 1998 and 1999 are derived from the
Company's Consolidated Financial Statements, which have been audited by the
Company's independent auditors, included elsewhere in this Prospectus, and
include all adjustments that the Company considers necessary for a fair
presentation of the financial position and results of operations at that
date and for such periods.
[CAPTION]
BALANCE SHEET DATA:
12/31/99 12/31/98
------- -------
Assets: ......................................$ -- $ --
======= =======
Liabilities - Accounts Payable .............. $ -- $ 200
------- -------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 250,000 shares at December 31,
1999 and 1,000 at Dec. 31,1998 1,000 100
Paid-In Capital 440 --
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (240) --
------- -------
Total Stockholders' Equity -- (1,000)
------- -------
Total Liabilities and
Stockholders' Equity $ -- $ --
======= =======
[CAPTION]
STATEMENT OF OPERATIONS DATA: Cumulative
since
inception
For the year ended of
December 31, development
----------------- stage
1999 1998
----- ----- -----
Revenues: $ - $ -- $ --
Expenses: 240 100 240
----- ----- -----
Net Loss ........... $ (240) $(100) $ (240)
----- ----- -----
Basic & Diluted loss per share $ -- $ --
===== =====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements, including the Notes thereto, appearing
elsewhere in this Prospectus.
COMPANY OVERVIEW
The Company was organized on September 29, 1999, and has never commenced
operations. The Company is a "blank check" or "shell corporation", in the
development stage, whose plan of operations is limited to locating a merger
or acquisition candidate. The Company's common stock is not listed on any
recognized exchange or quoted on any quotation medium. There can be no
assurance that the Company will ever acquire a suitable merger or
acquisition candidate or that its common stock will ever develop a market.
PLAN OF OPERATIONS-IN GENERAL
The Company was organized for the purpose of creating a corporate vehicle to
seek, investigate and, if such investigation warrants, acquire an interest
in one or more business opportunities presented to it by persons or firms
who or which desire to seek perceived advantages of a publicly held
corporation. At this time, the Company has no plan, proposal, agreement,
understanding or arrangement to acquire or merge with any specific business
or company, and the Company has not identified any specific business or
company for investigation and evaluation. No member of Management or
promoter of the Company has had any material discussions with any other
company with respect to any acquisition of that company. The Company will
not restrict its search to any specific business, industry or geographical
location, and the Company may participate in a business venture of virtually
any kind or nature. The discussion of the proposed business under this
caption and throughout is purposefully general and is not meant to be
restrictive of the Company's virtually unlimited discretion to search for
and enter into potential business opportunities. The Company's plan of
operations over the next 12 months includes the seeking of acquisition or
merger opportunities. During the next twelve months, the Company plans to
satisfy its cash requirements by additional equity financing. There can be
no assurance that the company will be successful in raising additional
equity financing, and, thus, be able to satisfy its cash requirements, which
primarily consist of legal and accounting fees at the present time. If the
company is not able to raise equity capital, and it presently has no cash
with which to satisfy any future cash requirements. The company will need a
minimum of $1,000 to satisfy its cash requirements for the next 12 months.
The company will not be able to operate if it does not obtain equity
financing. The Company has no current material commitments. The Company
depends upon capital to be derived from future financing activities such as
subsequent offerings of its stock. There can be no assurance that the
Company will be successful in raising the capital it requires. The company
does not anticipate any further research and development of any products,
nor does it expect to incur any research and development costs. The company
does not expect the purchase or sale of plant or any significant equipment,
and it does not anticipate any change in the number of its employees. The
Company has no current material commitments. The Company has generated no
revenue since its inception.
The Company is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. There can be no assurance that the Company
will be successful in raising the capital it requires through the sale of
its common stock.
The Company intends to utilize the proceeds from this offering or to obtain
funds in one or more private placements to finance the operation of any
acquired business. Persons purchasing securities in these placements and
other shareholders will likely not have the opportunity to participate in
the decision relating to any acquisition. The Company's proposed business is
sometimes referred to as a "blind pool" because any investors will entrust
their investment monies to the Company's management before they have a
chance to analyze any ultimate use to which their money may be put.
Consequently, the Company's potential success is heavily dependent on the
Company's management, which will have virtually unlimited discretion in
searching for and entering into a business opportunity. None of the officers
and directors of the Company has had any experience in the proposed business
of the Company. There can be no assurance that the Company has had any
experience in the proposed business of the Company. There can be no
assurance that the Company will be able to raise any funds in private
placement. In any private placement, management may purchase shares on the
same terms as offered in the private placement.
Management anticipates that it will only participate in one potential
business venture. This lack of diversification should be considered a
substantial risk in investing in the Company because it will not permit the
Company to offset potential losses from one venture against gains from
another. The Company may seek a business opportunity with a firm that only
recently commenced operations, or a developing company in need of
additional funds for expansion into new products or markets, or an
established company seeking a public vehicle. In some instances, a business
opportunity may involve the acquisition or merger with a corporation which
does not need substantial additional cash but which desires to establish a
public trading market for its common stock. The Company may purchase assets
and establish wholly owned subsidiaries in various business or purchase
existing businesses as subsidiaries. The Company anticipates that the
selection of a business opportunity in which to participate will be complex
and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries, and shortages of
available capital, management believes that there are numerous firms
seeking the benefits of a publicly traded corporation. Such 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 statues) for all
shareholders, and other factors. Potentially available business
opportunities may occur in many different industries and 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. As is customary in the industry, the Company may pay a finder's
fee for locating an acquisition prospect. If any such fee is paid, it will
be approved by the Company's Board of Directors and will be in accordance
with the industry standards. Such fees are customarily between 1% and 5% of
the size of the transaction, based upon a sliding scale of the amount
involved. Such fees are typically in the range of 5% on a $1,000,000
transaction ratably down to 1% in a $4,000,000 transaction. Management had
adopted a policy that such a finder's fee or real estate brokerage fee
could, in certain circumstances, be paid to any employee, officer, director
or 5% shareholder of the Company, if such person plays a material role in
bringing a transaction to the Company. As part of any transaction, the
acquired company may require that Management or other stockholders of the
Company sell all or a portion of their shares to the acquired company, or to
the principals of the acquired company. It is anticipated that the sales
price of such shares will be lower than the anticipated market price of the
Company's Common Stock at such a time. The Company's funds are not expected
to be used for purposes of any stock purchase from insiders. The Company
shareholders will not be provided the opportunity to approve or consent to
such sale. The opportunity to sell all or a portion of their shares in
connection with an acquisition may influence management's decision to enter
into a specific transaction. However, management believes that since the
anticipated sales price will potentially be less than market value, that the
potential of a stock sale will be a material factor in their decision to
enter a specific transaction. The above description of potential sales of
management stock is not based upon any corporate bylaw, shareholder or board
resolution, or contract or agreement. No other payments of cash or property
are expected to be received by Management in connection with any
acquisition. The Company has not formulated any policy regarding the use of
consultants or outside advisors, but does not anticipate that it will use
the services of such persons.
The Company has, and will continue to have, insufficient capital with which
to provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will offer owners of
business opportunities the opportunity to acquire a controlling ownership
interest in a public company at substantially less cost than is required to
conduct an initial public offering. The owners of the business opportunities
will, however, incur significant post-merger or acquisition registration
costs in the event they wish to register a portion of their shares for
subsequent sale. The Company will also incur significant legal and
accounting costs in connection with the acquisition of a business
opportunity including the costs of preparing post-effective amendments,
Forms 8-K, agreements and related reports and documents. However, the
officers and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived benefits
of a merger or acquisition transaction for the owners of a business
opportunity.
The Company does not intend to make any loans to any prospective merger or
acquisition candidates or unaffiliated third parties.
LIQUIDITY AND CAPITAL RESOURCES
The Company has never previously undertaken an offering of its common stock.
Current expenses of the Company have been contributed by its founder. The
Company has no assets and thus no liquidity and no capital resources.
BUSINESS
THE COMPANY
The Company has not engaged in any operations other than organizational
matters. It was formed in May, 1996, specifically to be a "blank check" or
"shell" corporation, for the purpose of either merging with or acquiring an
operating company with operating history and assets.
The primary activity of the Company will involve seeking merger or
acquisition candidates. The Company has not selected any company as an
acquisition or merger candidate and does not intend to limit any potential
acquisition candidate to any particular field or industry, but does, in its
sole discretion, retain the right to limit said candidates to a particular
field or industry. The Company's plan are in the conceptual stage only.
SOURCES OF OPPORTUNITIES
The Company anticipates that business opportunities for possible acquisition
will be referred by various sources, including its officers and directors,
professional advisers, securities broker-dealers, venture capitalists,
members of the financial community, and others who may present unsolicited
proposals. The Company will seek a potential business opportunity from all
known sources, but will rely principally on personal contacts of its
officers and directors as well as indirect associations between them and
other business and professional people. It is not presently anticipated that
the Company will engage professional firms specializing in business
acquisitions or reorganizations. The officers and directors of the Company
are currently employed in other positions and will devote only a portion of
their time (not more than a couple hours per week) to the business affairs
of the Company, until such time as an acquisition has been determined to be
highly favorable, at which time they expect to spend full time in
investigating and closing any acquisition. In addition, in the face of
competing demands for their time, the officers and directors may grant
priority to their full-time positions rather than to the Company.
EVALUATION OF OPPORTUNITIES
The analysis of new business opportunities will be undertaken by or under
the supervision of the officers and directors of the Company. Management
intends to concentrate on identifying prospective business opportunities
that may be brought to its attention through present associations with
management.
In analyzing prospective business opportunities, management will consider
such matters as the available technical, financial and managerial resources;
working capital and other financial requirements; history of operation, if
any; prospects for the future; present and expected competition; the quality
and experience of management services which may be available and the depth
of that management; the 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; the potential
for growth or expansion; the potential for profit; the perceived public
recognition or acceptance of products, services or trades; name
identification; and other relevant factors. Officers and directors of each
Company will meet personally with management and key personnel of the firm
sponsoring the business opportunity as part of their investigation. To the
extent possible, the Company intends to utilize written reports and personal
investigation to evaluate the above factors. The Company will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
It may be anticipated that any opportunity in which the Company
participates will present certain risks. Many of these risks cannot be
adequately identified prior to selection of the specific opportunity, and
the Company's shareholders must, therefore, depend on the ability of
management to identify and evaluate such risk. In the case of some of the
opportunities available to the Company, it may be anticipated that the
promoters thereof have been unable to develop a going concern or that such
business is in its development stage in that it has not generated
significant revenues from its principal business activities prior to the
Company's participation. There is a risk, even after the Company's
participation in the activity and the related expenditure of the 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 opportunities
may involve new and untested products, processes, or market strategies that
may not succeed. The Company and, therefore, its shareholders will assume
such risks.
The Company will not restrict its search for any specific kind of business,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is currently impossible to predict the status of any business in
which the Company may become engaged, in that such business may need
additional capital, may merely desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, franchise or licensing agreement with another corporation or
entity. It may also purchase stock or assets of an existing business. On the
consummation of a transaction, it is possible that the present management
and shareholders of the Company will not be in control of the Company. In
addition, a majority or all of the Company's officers and directors may, as
part of the terms of the acquisition transaction, resign and be replaced by
new officers and directors without a vote of the Company's shareholders.
It is anticipated that any securities issued in any such 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, the Company may agree to register
such securities either at the time the transaction is consummated, under
certain conditions or at specified time thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market in the Company's Common Stock may have a depressive effect on such
market. While the actual terms of a transaction to which the Company may be
a party cannot be predicted, it may be expected 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 1986, as amended (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the acquired
business to own 80% or more of the voting stock of the surviving entity. In
such event, the shareholders of the Company, including past and current
investors, would retain less than 20% of the issued and outstanding shares
of the surviving entity, which could result in significant dilution in the
equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification
of certain information provided, check reference of management and key
personnel, and take other reasonable investigative measures, to the extent
of the Company's limited financial resources and management expertise. The
manner in which each Company participates in an opportunity will depend on
the nature of the opportunity, the respective needs and desires of the
Company and other parties, the management of the opportunity, and the
relative negotiating strength of the Company and such other management.
With respect to any mergers or acquisitions, negotiations with target
company management will be expected to focus on the percentage of the
Company which target company shareholders would acquire in exchange for
their share holdings in the target company. Depending upon, among other
things, the target company's assets and liabilities, the Company's
shareholders will in all likelihood hold a lesser percentage ownership
interest in the Company following any merger or acquisition. The percentage
ownership may be subject to significant reduction in the event that the
Company acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a significant
dilution effect on the percentage of shares held by the Company's then
shareholders, including past and current
investors.
The Company will not have sufficient funds (unless it is able to raise funds
in a private placement) to undertake any significant development, marketing
and manufacturing of any products which may be acquired. Accordingly,
following the acquisition of any such product, the Company will, in all
likelihood, be required to either seek debt or equity financing or obtain
funding from third parties, in exchange for which the Company would probably
be required to give up a substantial portion of its interest in any acquired
product. There is no assurance that the Company will be able either to
obtain additional financing or interest third parties in providing funding
for the further development, marketing and manufacturing of any products
acquired.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements,
disclosure documents and other instruments will require substantial
management time and attention and substantial costs for accountants,
attorneys and others. If a decision were made not to participate in a
specific business opportunity the costs therefore incurred in the related
investigation would not be recoverable. Furthermore, even if an agreement is
reached for the participation in a specific business opportunity, the
failure to consummate that transaction may result in the loss of the Company
of the related costs incurred.
Management believes that the Company may be able to benefit from the use of
"leverage" in the acquisition of a business opportunity. Leveraging a
transaction involves the acquisition of a business through incurring
significant indebtedness for a large percentage of the purchase price for
that business. Through a leveraged transaction, the Company would be
required to use less of its available funds for acquiring the business
opportunity and, therefore, could commit those funds to the operations of
the business opportunity, to acquisition of other business opportunities or
to other activities. The borrowing involved in a leveraged transaction will
ordinarily be secured by the assets of the business opportunity to be
acquired. If the business opportunity acquired is not able to generate
sufficient revenues to make payments on the debt incurred by the Company to
acquire that business opportunity, the lender would be able to exercise the
remedies provided by law or by contract. These leveraging techniques, while
reducing the amount of funds that the Company must commit to acquiring a
business opportunity, may correspondingly increase the risk of loss to the
Company. No assurance can be given as to the terms or the availability of
financing for any acquisition by the Company. During periods when interest
rates are relatively high, the benefits of leveraging are not as great as
during periods of lower interest rates because the investment in the
business opportunity held on a leveraged basis will only be profitable if it
generates sufficient revenues to cover the related debt and other costs of
the financing. Lenders from which the Company may obtain funds for purposes
of a leveraged buy-out may impose restrictions on the future borrowing,
distribution, and operating policies of the Company. It is not possible at
this time to predict the restrictions, if any, which lenders may impose or
the impact thereof on the Company.
PROPERTIES
The company has an oral agreement with the Company president for use of
office
space, telephones and secretarial services supplied free of charge to the
Company. The Company has no other property.
COMPETITION
The Company is an insignificant participant among firms which engage in
business
combinations with, or financing of, development stage enterprises. There are
many established management and financial consulting companies and venture
capital firms which have significantly greater financial and personnel
resources, technical expertise and experience than the Company. In view of the
Company's limited financial resources and management availability, the Company
will continue to be at a significant competitors.
REGULATION AND TAXATION
The Investment Company Act of 1940 defines an "investment company" as an issuer
that is or holds itself out as being engaged primarily in the business of
investing, reinvesting or trading of securities. While the Company does not
intend to engage in such activities, the Company could become subject to
regulation under the Investment Company Act of 1940 in the event the Company
obtains or continues to hold a minority interest in a number of development
stage enterprises. The Company could be expected to incur significant
registration and compliance costs if required to register under the Investment
Company Act of 1940. Accordingly, management will continue to review the
Company's activities from time to time with a view toward reducing the
likelihood that the Company could be classified as an "investment company."
The Company intends to structure a merger or acquisition in such a manner as
to minimize Federal and state tax consequences to the Company and to any
target company.
PATENTS
The Company owns no patents and no Internet domain names.
EMPLOYEES
The Company's only employees at the present time are its President and
Director and its Secretary/Treasurer and Director, who will devote as much
of their time as the Board of Directors determine is necessary to carry out
the affairs of the Company. (See Directors, Executive Officers, Promoters
and Control Persons").
LEGAL PROCEEDINGS
The Company is not subject to any pending litigation, legal proceedings or
claims.
MANAGEMENT
EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS
The members of the Board of Directors of the Company serve until the next
annual meeting of stockholders, or until their successors have been
elected. The officers serve at the pleasure of the Board of Directors.
The current executive officers, key employees and directors of the Company
as follows:
NAME AGE POSITION
Robert W. Riechel 40 President/Director
Robert Riechel, Jr. 71
Secretary/Treasurer/Director
Robert W. Riechel. Mr. Riechel is the current President and Director of the
Company since its inception, is also the Chief Financial Officer and
Director of the Company since September 1999 and is a director of 517900
B.C., Ltd. Since 1958, he has been a real estate developer in Northern
California, developing single family homes, apartments, commercial
industrial buildings and luxury condominiums. Throughout his business
career, he has owned and operated lumber and building materials and nursery
businesses. Since 1972, he has been the principal owner of the Ranch Del Rey
Golf Club in Atwater, California. From 1990 through 1993, Mr. Riechel was a
director of Northern Plains Oil Corporation, and was the Northern Plans=
president from 1990 through 1991.
Robert Riechel, Jr. Mr. Riechel is the current Secretary, Treasurer and
Director of the Company since its inception, and is the President, Chief
Executive Officer and Director of the Company, and has acted in that
capacity since September, 1999. He has been the president and chief
executive officer of 517900 B.C., Ltd. since its inception. In 1988, Mr.
Riechel worked on live television broadcasts for Kurshner-Locke Productions.
From 1989 through 1990 he worked for Papazian/Hirsh developing movies of the
week and television series, and in 1990, he worked with Roger Corman in the
development of full length feature films. From 1981 through 1985, Mr.
Riechel managed a lumber and building materials business and a specialty
plants and flowers business. From 1990 through 1991, he was also vice
president and director of Northern Plains Oil Corporation. From 1993 through
1995 he was president of Immigrant Resources Incorporated, a junior capital
pool company which traded on the Alberta stock exchange. He is a graduate of
the American Academy of Dramatic Arts, 1988, and studied acting, production
and direction at UCLA and The South Coast Professional Conservatory. Since
1988, he has appeared in stage, television, film and commercials.
EXECUTIVE COMPENSATION
No compensation is paid or anticipated to be paid by the Company. It is
possible that upon an acquisition some compensation may be paid to
management. On acquisition of a business opportunity, current management
may resign and be replaced by persons associated with the business
opportunity acquired, particularly if the Company participates in a business
opportunity by effecting a reorganization, merger or consolidation. If any
member of current management remains after effecting a business opportunity
acquisition, that member's time commitment will likely be adjusted based on
the nature and method of the acquisition and location of the business which
cannot be predicted. Compensation of management will be determined by the
new board of directors, and shareholders of the Company will not have the
opportunity to vote on or approve such compensation.
Directors currently receive no compensation for their duties as directors.
EMPLOYMENT AGREEMENTS
The Company has not entered into any employment agreements with any of its
employees, and employment arrangements are all subject to the discretion of the
Company's directors, Robert W. Riechel and Robert Riechel, Jr.
PRINCIPAL STOCKHOLDERS
The following table presents certain information regarding beneficial
ownership of the Company's Common Stock as of December 31, 1999, by (I) each
person known by the Company to be the beneficial owner of more than 5% of
the outstanding shares of Common Stock, (ii) each director of the Company,
(iii) each Named Executive Officer and (iv) all directors and executive
officers as a group. Unless otherwise indicated, each person in the table
has sole voting and investment power as to the shares shown.
Shares Percent Percent
Beneficially Before After
Name and Address of Beneficial Owner Owned Offering Offering
---------------------------------- -------- -------- -------
Robert Riechel, Jr. 115,000 46% 38.33%
18 E. Canon Perdido St.
Santa Barbara, CA 93101
Robert W. Riechel 115,000 46% 38.33%
902 1600 Howe
Vancouver, B.C. Canada V6Z2L9
CERTAIN TRANSACTIONS
In connection with organizing the Company, on September 29, 1999, persons
consisting of its officers, directors, and other individuals were issued a
total of 1,000 shares of Common Stock with a par value of $.001, in return
for services. Under Rule 405 promulgated under the Securities Act of 1933,
both Robert Riechel, Jr. and Robert W. Riechel may be deemed to be promoters
of the Company. No other persons are known to Management that would be
deemed to be promoters.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, $.001 par value per share. Upon consummation of this
Offering, there will be outstanding 300,000 shares of Common Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders, including the election of
directors.
Holders of common stock do not have subscription, redemption or conversion
rights, nor do they have any preemptive rights. Holders of common stock do
not have cumulative coting rights, which means that the holders of more than
half of all voting rights with respect to common stock and Preferred Stock
can elect all of the Company's directors. The Board of Directors is
empowered to fill any vacancies on the Board of Directors created by
resignations, subject to quorum requirements.
Holders of Common Stock will be entitled to receive such dividends, if any,
as may be declared from time to time by the Board of Directors out of funds
legally available therefor, and will be entitled to receive, pro rata, all
assets of the Company available for distribution to such holders upon
liquidation.
All outstanding shares of Common Stock are, and the Common Stock offered
hereby, upon issuance and sale, will be, fully paid and nonassessable.
TRANSFER AGENT, WARRANT AGENT AND REGISTRAR
The transfer agent, warrant agent and registrar for the Common Stock is
Alexis Stock Transfer, P.O. Box 1405, Rancho Mirage, CA 92270.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this Offering, the Company will have 300,000 shares of
Common Stock outstanding. All shares sold in this offering will be freely
transferable without restriction or further registration under the
Securities Act of 1933, as amended. However, any share purchased by an
affiliate (in general, a person who is in a control relationship with the
Company), will be subject to the limitations of Rule 144 promulgated under
the Securities Act.
Under Rule 144 as currently in effect, a person (or persons whose shares are
aggregated with those of others) whose restricted shares have been fully
paid for and meet the rule's one year holding provisions, including persons
who may be deemed affiliates of the Company, may sell restricted securities
in broker's transactions or directly to market makers, provided the number
of shares sold in any three month period is not more than the greater of 1%
of the total shares of common stock then outstanding or the average weekly
trading volume for the four calendar week period immediately prior to each
such sale. After restricted securities have been fully paid for and held for
two years, restricted securities may be sold by persons who are not
affiliates of the Company without regard to volume limitations. Restricted
securities held by affiliates must continue, even after the two year holding
period, to be sold in brokers' transactions or directly to market makers
subject to the limitations described above.
Prior to this offering, no public market has existed for the Company's
shares of common stock. No predictions can be made as to the effect, if any,
that market shares or the availability of shares for sale will have on the
market price prevailing from time to time. The sale, or availability for
sale, of substantial amounts of common stock in the public market could
adversely affect prevailing market prices.
UNDERWRITING
This offering is self underwritten by the Company through its officers and
directors. Therefore, there is no underwriter or broker compensation
involved, and the Company is acting as its own underwriter.
OFFERING TERMS AND ESCROW PROVISIONS
This offering is made pursuant to Rule 419 promulgated by the SEC. All
securities issued in this offering and the gross proceeds therefrom will be
deposited promptly into an escrow account maintained by an insured
depository institution, to be held for the benefit of purchasers named and
identified in accordance with regulations of the Federal Deposit Insurance
Corporation. All deposited proceeds, interest and dividends thereon shall be
held by the depository institution as escrow for the sole benefit of the
purchasers of the securities in this offering. Deposited proceeds shall be
invested only in deposit funds of the depositary institution, securities of
any open end investment company registered under the Investment Act, or
securities that are direct obligations or guaranteed by the United States
government.
From the proceeds of each deposit into the escrow account, 10% of such
proceeds shall be released to the Company. If the Company is successful in
obtaining an agreement of a target company for acquisition or merger, which
company has assets representing 80% or more of the maximum proceeds of this
offering, the Company will file a post-effective amendment (the Amendment)
to its registration statement on From SB-2, disclosing information including
the financial statements of the Company and the Company to be acquired and
pro forma financial information, the gross offering proceeds received to the
date of the amendment, an accounting of the use and application of funds
disbursed to the Company, and the terms of this offering. Within five
business days after the effective date of the amendment, the Company will
send a copy of the prospectus contained in said amendment to each investor,
who will each have twenty (20) business days thereafter, up to a maximum of
45 business days, to notify the Company in writing that the investor intends
to remain an investor. If the Company has not received such written
notification by the 45th business day following the effective date of the
amendment, any funds contributed by the investor, along with any interest
and dividends, if any, held in the escrow account, will be sent back to the
investor by first class mail within five business days.
If a sufficient number of investors notify the Company of their intentions
to remain a purchaser and the acquisition or merger has been consummated,
upon evidence of such being presented to the escrow, the funds held in
escrow, along with any accumulated interest or dividends shall be released
to the Company. If an acquisition or merger not meeting this criteria is not
consummated within 18 months of the effective date of the initial
registration statement of which this prospectus is a part, all funds held in
escrow shall be returned by first class mail within five business days
following that date.
Interest or dividends earned on the funds, if any, shall be held in the
escrow account until the funds are released. If the funds are released to
the company, the company shall be entitled to the accrued interest on the
funds. If the funds are released to the investor, the investor shall be
entitled to the interest or dividends on the funds. Checks must be made
payable to Wells Fargo Bank as escrow agent.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Kenneth G. Eade, Santa Barbara, California.
EXPERTS
The Financial Statements and schedules of the Company as of December 31, 1999
and 1998 included in this Prospectus and elsewhere in the Registration
Statement have been audited by Robinson, Hill & Co., independent public
accountants for the Company, as set forth in its reports thereon appearing
elsewhere herein, and are included in reliance upon such reports, given upon
the
authority of such firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
The Company has filed with the SEC ("SEC") a registration statement on Form
SB-2 under Securities Act of 1933, as amended, with respect to the
securities. This prospectus, which forms a part of the registration
statements, does not contain all of the information set forth in the
registration statement as permitted by applicable SEC rules and regulations.
Statements in this prospectus about any contract, agreement or other
document are not necessarily complete. With respect to each such contract,
agreement, or document filed as an exhibit to the registration statement,
reference is made to the exhibit for a more complete description of the
matter involved, and each such statement is qualified in its entirety by
this reference.
The registration statement may be inspected without charge and copies may be
obtained at prescribed rates at the SEC's public reference facilities at
Judiciary Plaza, 450 Fifth Street NW, Room 1024, Washington, DC 20549, or on
the Internet at http://www.sec.gov.
The Company will furnish to its shareholders annual reports containing
audited financial statements reported on by independent public accountants
for each fiscal year and make available quarterly reports containing
unaudited financial information for the first three quarters of each fiscal
year.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Evaluators Group, Ltd.
Independent Auditor's Report ...................................... F-1
Balance Sheets .................................................... F-2
Statements of Income
For the period March 20, 2000 (inception)
to March 31, 2000................................................... F-3
Statements of Changes in Stockholders' Equity
For the period March 20, 2000 (inception)
to March 31, 2000................................................ F-4
Statements of Cash Flows
For the period March 20, 2000 (inception)
to March 31, 2000................................................... F-5
Notes to Consolidated Financial Statements ........................ F-6
[CAPTION]
INDEPENDENT AUDITORS' REPORT
Evaluators Group, Ltd.
(A Development Stage Company)
We have audited the accompanying balance sheets of Evaluators Group, Ltd. (a
development stage company) as of March 31, 2000, and the related statements
of operations, stockholders' equity, and cash flows for March 20, 2000
(inception) to March 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
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 audits provide a
reasonable basis for our opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of EVALUATORS GROUP, LTD. (a
development stage company) as of February 29, 2000, and the results of its
operations and its cash flows for the period September 29, 1999 (inception)
through February 29, 2000 in conformity with generally accepted accounting
principles.
Respectfully submitted
ROGER (ROGELIO) G. CASTRO
- -----------------------------
Roger (Rogelio) G. Castro
Certified Public Accountants
Salt Lake City, Utah
MARCH 31, 2000
[CAPTION]
Evaluators Group, Ltd.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
March 20, 2000
---------------------
Current Assets:
Cash: $ 100
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Advances from officer $ 2,700
-------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 25,000,000 shares,
Issued 250,000 shares at February 29,
2,500
Paid-In Capital --
Deficit accumulated during the development stage (2,600)
-------
Total Stockholders' Equity (2,600)
-------
Total Liabilities and
Stockholders' Equity $ 100
=======
[CAPTION]
Evaluators Group, Ltd.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF INCOME
Cumulative
since
inception
From inception (3/20/2000) of
Through March 31, 2000
Development
------------------------ Stage
- -----------
Income:
Sales $ -0- $ -0-
----- -----
Total Income $ -0- $
- -0-
Expenses:
General and Administrative Expenses: 2,600 2,600
------- -------
Total Expenses 2,600 2,600
------- -------
Net loss $(2,600) $(2,600)
======= =======
[CAPTION]
Evaluators Group, Ltd.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD MARCH 20, 2000 THROUGH MARCH 31, 2000
<TABLE>
Common
Additional
Shares Stock @ Paid-In
Retained
Outstanding Par Value Capital
Deficit Total
----------- ---------- -------
-------- ------
<S> <C> <C> <C>
<C> <C>
Net loss March 20, 2000
(inception) through
March 31, 2000 250,000 $2,500 -0-
$(2,600) $(2,600)
- -----------------
Balance, March 31, 2000 250,000 $2,500 -0-
$(2,600) $(2,600)
------- ------ -----
-------- --------
</TABLE>
[CAPTION]
EVALUATORS GROUP, LTD.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
Cumulative
Since
Inception
For the month ended of
March 31, 2000
Development
---------------
Stage
- -----
<S> <C>
<C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $(2,600)
$(2,600)
--------
-------
Net Cash Used provided by operating activities $ 2,600
$ 2,600
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from officers 2,700
2,700
--------
-------
Net Cash Provided (Used) by
Financing Activities 2,700
2,700
--------
-------
INCREASE IN CASH 100
100
BEGINNING CASH --
ENDING CASH $ 100
$ 100
========
=======
<CAPTION>
EVALUATORS GROUP LTD.
(A Development Stage Company)
Notes to Financial Statements
NOTE 1. DESCRIPTION OF THE BUSINESS
Description of the Business
EVALUATORS GROUP LTD., (the Company) was incorporated under the laws of the
state Nevada on March 20, 2000.
The purpose for which the Corporation is organized is to engage in any
lawful act or activity for which a corporation may be organized under the
General Corporation Law of the State of Nevada.
The Company has been in the development stage since its inception on March
20, 2000. Planned principal operations have not yet commenced.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The Company uses the accrual method of accounting.
Revenues and directly related expenses are recognized in the period when the
goods are shipped to the customers.
The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
Primary Earnings Per Share amounts are based on the weighted average number
of shares outstanding at the dates of the financial statements. Fully
Diluted Earnings Per Shares shall be shown on stock options and other
convertible issues that may be exercised within ten years of the financial
statement dates.
Depreciation; The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is depreciated (amortized) over the lesser of the length of the
related assets or the estimated lives of the assets. Depreciation is
computed on the straight-line method for reporting purposes and for tax
purposes.
Estimates; The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITY OTHER THAN THE SECURITIES OFFERED BY THIS PROSPECTUS, OR AN OFFER
TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES BY ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IS UNLAWFUL. THE DELIVERY OF THIS PROSPECTUS SHALL NOT, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS.
<CAPTION>
TABLE OF CONTENTS
PAGE
----
Available Information.......................... 2
Prospectus Summary............................. 3
Risk Factors.................................... 5
Use of Proceeds................................. 7
Dividend Policy................................. 8
Price Range of Securities....................... 9
Capitalization.................................. 8
Dilution........................................ 9
Selected Consolidated Financial Data............ 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................... 11
Business........................................ 15
Management...................................... 19
Certain Transactions............................ 20
Principal Stockholders.......................... 20
Description of Securities....................... 20
Shares Eligible for Future Sale................. 21
Underwriting.................................... 22
Legal Matters................................... 23
Experts......................................... 24
Index to Financial Statements................... 24
<CAPTION>
EVALUATORS GROUP, LTD.
50,000 SHARES OF COMMON STOCK
- -------------
PROSPECTUS
- -------------
MARCH 27, 2000
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
NRS 78.751 provides that the Company may provide in its articles of
incorporation, by laws or by agreement, to indemnify the Company's officers
and directors and affects their liability in that capacity, for any and all
costs incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the
final disposition of the action, suit or proceeding, upon receipt
of
an undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he is
not entitled to be indemnified by the corporation. The provisions of
this
subsection do not affect any rights to advancement of expenses to which
corporate personnel other than directors or officers may be entitled under
any contract or otherwise by law. The Company's By- Laws and Articles of
Incorporation, as amended, substantively provide that the Company indemnify
its officers, directors, employees and agents to the fullest extent permitted
by NRS 78.751.
ITEM 25. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION.
The Registrant estimates that expenses payable by it in connection with the
Offering described in this Registration Statement (other than the
underwriting
discount and commissions and reasonable expense allowance) will be as follows:
SEC registration fee........................................... $3.30
Printing and engraving expenses................................ $200
Accounting fees and expenses................................... $0
Legal fees and expenses (other than Blue Sky).................. $3,500
Blue sky fees and expenses (including legal and filing fees)... $1,000
Miscellaneous.................................................. $ 800
----------
Total............................................................ $5503.30
----------
----------
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following securities were issued by the Company within the past three
years and were not registered under the Securities Act.
In connection with organizing the Company, on September 29, 1999, persons
consisting of its officers, directors, and other individuals were issued a
total of 250,000 shares of Common Stock without nominal or par value, pursuant
to the exemption from registration contained within Section 4(2) of the
Securities Act of 1933, to company officers, directors, and individuals with a
relationship to Company officers and directors. On or about March 14,
2000,
counsel for the company was issued 20,000 shares in exchange for legal services
rendered.
ITEM 27. EXHIBITS
(a) The following exhibits are filed as part of this Registration Statement:
EXHIBIT
NUMBER DESCRIPTION
----------- -----------------------------------------
3.1 Articles of Incorporation
3.2 Amendment to Articles of Incorporation
3.4 By-Laws
4.1 Form of Common Stock Certificate
5.1 Opinion of Kenneth G. Eade, Attorney at Law (including
consent)
10 Form of subscription agreement
10a Form of escrow agreement
23.1 Consent of Roger G. Castro
23.2 Consent of Kenneth G. Eade (filed as part of Exhibit 5.1)
------------------------
ITEM 28. UNDERTAKINGS.
The undersigned Company hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(I) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) Include any additional or changed material information on the plan of
distribution. (2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering. (3) File a post-effective amendment to
remove from registration any of the securities that remain unsold at the end
of the offering.
(e) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant to the provisions referred to
under Item 24 of this Registration Statement, or otherwise, the Company has
been advised that in the opinion of the SEC 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 Company of expenses incurred or paid by a director,
officer or a controlling person of the Company 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
Company will, unless in the opinion of its counsel the matter has been
settled
by controlling precedent, submit to a court of competent jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication
of such issue.
(f) (1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Company under Rule 424(b)(1), or (4), or 497(h) under
the Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
SIGNATURES
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 the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in
the city of Palm Desert, state of California, on MARCH 27, 2000.
EVALUATORS GROUP, LTD.
BY: ROBERT W. RIECHEL
- ------------------------------------
Robert W. Riechel/President/Director
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the dates stated.
SIGNATURE TITLE DATE
- --------------------- ---------------- -------------
ROBERT W. RIECHEL President/Director MARCH 27, 2000
- ---------------------
Robert W. Riechel
ROBERT RIECHEL, JR. Secretary/Treasurer/Dir. MARCH 27, 2000
- ---------------------
Robert Riechel, Jr.
<CAPTION>
EXHIBIT 1.1 Articles of Incorporation
OF EVALUATORS GROUP, LTD.
A Nevada Corporation
FILED#C24090-99
September 29, 1999
IN THE OFFICE OF
DEAN HELLER
(ILLEGIBLE SIGNATURE) SECRETARY OF STATE
KNOW ALL MEN BY THESE PRESENTS:
That I, the undersigned, for the purpose of forming a corporation under the
laws of the state of Nevada, relating to the General Corporation Law.
I DO HEREBY CERTIFY THAT:
FIRST. The name of the corporation shall be:
EVALUATORS GROUP, LTD.
SECOND. The address of Corporate Services of Nevada, resident agent of
this corporation, is to be located at 502 North Division Street, Carson
City, Nevada 89703.
THIRD. This corporation is authorized to carry on any lawful business or
enterprise. This corporation may conduct all or any part of its business,
and may hold, purchase, mortgage, lease and convey real and/or personal
property, anywhere in the United States.
FOURTH. The total number of authorized capital stock of this corporation is
twenty five million (25,000,000) shares, said shares being non-assessable
and each share having a part value of one tenth of one cent ($.001). The
Board of Directors has the authority to prescribe, by resolution, the
classes, series, number of each class and series, voting powers,
designations, preferences, limitations, restrictions and relative rights of
each class and series of
FIFTH. The members of the governing board of this corporation shall be
styled as
directors over the age of eighteen (18) and their number shall be not less than
one. The initial director of this corporation shall be one, and the name and
address of the initial director is:
ROBERT W. RIECHEL
440 West Spear Street
Carson City, NV 89703
SIXTH. The name and address of the incorporator is as follows:
DON HARMER
502 NORTH DIVISION ST.
CARSON CITY, NEVADA 89703
SEVENTH. The period of existence of this corporation shall be
perpetual.
EIGHTH. No director, officer or shareholder of this corporation shall have
personal liability for damages for breach of any fiduciary duty as a
director or officer to the corporation, its shareholders or any other person
except for:
(A) Acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
(B) The payment of dividends in violation of NRS 79.300.
I, THE UNDERSIGNED, for the purpose of forming a corporation under the laws
of the state of Nevada, do make, file and record this certificate, and do
certify that the facts herein stated are true and I have accordingly
hereunto set my hand and seal this day: Wednesday, September 29, 1999.
DON HARMER
- --------------------------------
Don Harmer
STATE OF NEVADA )
) SS.:
CARSON CITY )
On this 29 day of September, 1999 personally appeared before me, a Notary
Public, Don Harmer, who acknowledged that they executed the above instrument.
SANDRA J. MENDEZ
- ---------------------------------
Notary Public
(SEAL OF NOTARY PUBLIC)
<CAPTION>
BYLAWS OF
EVALUATORS GROUP, LTD.
(the "Corporation")
Article I.
Office
The Board of Directors shall designate and the Corporation shall maintain a
principal office. The location of the principal office may be changed by the
Board of Directors. The Corporation also may have offices in such other
places as the Board may from time to time designate.
Article II.
Shareholders Meetings
1. Annual Meetings
The annual meeting of the shareholders of the Corporation shall be held at
such place within or outside the State of Nevada as shall be set forth in
compliance with these Bylaws. The meeting shall be held during the month of
June of each year. If such day is a legal holiday, the meeting may be on the
next business day. This meeting shall be for the election of Directors and
for the transaction of such other business as may properly come before it.
2. Special Meetings
Special meetings of shareholders, other than those regulated by statute,
may be called by the President upon written request of the holders of fifty
percent or more of the outstanding shares entitled to vote at such special
meeting. Written notice of such meeting stating the place, the date and hour
of the meeting, the purpose or purposes for which it is called, and the name
of the person by whom or at whose direction the meeting is called shall be
given.
3. Notice of Shareholders Meetings
The Secretary shall give written notice stating the place, day, and hour of
the meeting, and in the case of a special meeting, the purpose or purposes
for which the meeting is called, which shall be delivered not less than ten
or more than fifty days before the date of the meeting, either personally or
by mail to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his address as it
appears on the books of the Corporation, with postage thereon prepaid.
Attendance at the meeting shall constitute a waiver of notice thereof.
4. Place of Meeting
The Board of Directors may designate any place, either within or without
the State of Nevada, as the place of meeting for any annual meeting or for
any special meeting called by the Board of Directors. A waiver of notice
signed by all shareholders entitled to vote at a meeting may designate any
place, either within or without the State of Nevada, as the place for the
holding of such meeting. If no designation is made, or if a special meeting
is otherwise called, the place of meeting shall be the principal office of
the Corporation.
5. Record Date
The Board of Directors may fix a date not less than ten nor more than sixty
days prior to any meeting as the record date for the purpose of determining
shareholders entitled to notice of and to vote at such meetings of the
shareholders. The transfer books may be closed by the Board of Directors for
a stated period not to exceed fifty days for the purpose of determining
shareholders entitled to receive payment of any dividend, or in order to
make a determination of shareholders for any other purpose.
6. Quorum
A majority of the outstanding shares of the Corporation entitled to vote,
represented in person, telephonically or by proxy, shall constitute a quorum
at a meeting of shareholders. If less than a majority of the outstanding
shares are represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice. At a
meeting resumed after any such adjournment at which a quorum shall be
present or
represented, any business may be transacted, which might have been
transacted at the meeting as originally noticed.
7. Voting
A holder of an outstanding share, entitled to vote at a meeting, may vote
at such meeting in person or by proxy. Except as may otherwise be provided
in the currently filed Articles of incorporation, every shareholder shall
be entitled to one vote for each share standing in his name on the record of
shareholders. Except as herein or in the currently filed Articles of
Incorporation otherwise provided, all corporate action shall be determined
by a majority of the vote's cast at a meeting of shareholders by the holders
of shares entitled to vote thereon.
8. Proxies
At all meetings of shareholders, a shareholder may vote in person or by
proxy executed in writing by the shareholder or by his authorized
attorney-in-fact. Such proxy shall be filed with the Secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid
after six months from the date of its execution.
9. Informal Action by Shareholders
Any action required to be taken at a meeting of the shareholders, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by a majority of the shareholders entitled to vote
with respect to the subject matter thereof.
Article III.
Board Of Directors
1. General Powers
The business and affairs of the Corporation shall be managed by its Board
of Directors. The Board of Directors may adopt such rules and regulations
for he conduct of their meetings and the management of the Corporation as
they appropriate under the circumstances. The Board shall have authority to
authorize changes in the Corporation's capital structure.
2. Number, Tenure and Qualification
The number of Directors of the Corporation shall be a number between one
and five, as the Directors may by resolution determine from time to time.
Each of the Directors shall hold office until the next annual meeting of
shareholders and until his successor shall have been elected and qualified.
3. Regular Meetings
A regular meeting of the Board of Directors shall be held without other
notice than by this Bylaw, immediately after and, at the same place as the
annual meeting of shareholders. The Board of Directors may provide, by
resolution, the time and place for the holding of additional regular
meetings without other notice than this resolution.
4. Special Meetings
Special meetings of the Board of Directors may be called by order of the
Chairman of the Board or the President. The Secretary shall give notice of
the time, place and purpose or purposes of each special meeting by mailing
the same at least two days before the meeting or by telephone, telegraphing
or telecopying the same at least one day before the meeting to each
Director. Meeting of the Board of Directors may be held by telephone
conference call.
5. Quorum
A majority of the members of the Board of Directors shall constitute a
quorum for the transaction of business, but less than a quorum may adjourn
any meeting from time to time until a quorum shall be present, whereupon
the meeting may be held, as adjourned, without further notice. At any
meeting at which every Director shall be present, even though without any
formal notice, any business may be transacted.
6. Manner of Acting
At all meetings of the Board of Directors, each Director shall have one
vote. The act of a majority of Directors present at a meeting shall be the
act of the full Board of Directors, provided that a quorum is present.
7. Vacancies
A vacancy in the Board of Directors shall be deemed to exist in the case of
death, resignation, or removal of any Director, or if the authorized number
of Directors is increased, or if the shareholders fail, at any meeting of
the shareholders, at which any Director is to be elected, to elect the full
authorized number of Director to be elected at that meeting.
8. Removals
Directors may be removed, at any time, by a vote of the shareholders
holding a majority of the shares outstanding and entitled to vote. Such
vacancy shall be filled by the Directors then in office, though less than a
quorum, to hold office until the next annual meeting or until his successor
is duly elected and qualified, except that any directorship to be filled by
election by the shareholders at the meeting at which the Director is
removed. No reduction of the authorized number of Directors shall have the
effect of removing any Director prior to the expiration of his term of office.
9. Resignation
A Director may resign at any time by delivering written notification
thereof to the President or Secretary of the Corporation. A resignation
shall become effective upon its acceptance by the Board of Directors;
provided, however, that if the Board of Directors has not acted thereon
within ten days from the date of its delivery, the resignation shall be
deemed accepted.
10. Presumption of Assent
A Director of the Corporation who is present at a meeting of the Board of
Directors at which action on any corporate matter is taken shall be presumed
to have assented to the action(s) taken unless his dissent shall be placed
in the minutes of the meeting or unless he shall file his written dissent to
such action with the person acting as the secretary of the meeting before
the adjournment thereof or shall forward such dissent by registered mail to
the Secretary of the Corporation immediately after the adjournment of the
meeting. Such right to dissent shall not apply to a Director who voted in
favor of such action.
11. Compensation
By resolution of the Board of Directors, the Directors may be paid their
expenses, if any, of attendance at each meeting of the Board of Directors or
a stated salary as Director. No such payment shall preclude any Director
from serving the Corporation in any other capacity and receiving
compensation therefor.
12. Emergency Power
When, due to a national disaster or death, a majority of the Directors are
incapacitated or otherwise unable to attend the meetings and function as
Directors, the remaining members of the Board of Directors shall have all
the powers necessary to function as a complete Board, and for the purpose of
doing business and filling vacancies shall constitute a quorum, until such
time as all Directors can attend or vacancies can be filled pursuant to
these Bylaws.
13. Chairman
The Board of Directors may elect from its own number a Chairman of the
Board, who shall preside at all meetings of the Board of Directors, and
shall perform such other duties as may be prescribed from time to time by
the Board of Directors. The Chairman may by appointment fill any vacancies
on the Board of Directors.
Article IV.
Officers
1. Number
The Officers of the Corporation shall be a President, one or more Vice
Presidents, and a Secretary Treasurer, each of whom shall be elected by a
majority of the Board of Directors. Such other Officers and assistant
Officers as may be deemed necessary may be elected or appointed by the Board
of Directors. In its discretion, the Board of Directors may leave unfilled
for any such period as it may determine any office except those of President
and Secretary. Any two or more offices may be held by the same person.
Officers may or may not be Directors or shareholders of the Corporation.
2. Election and Term of Office
The Officers of the Corporation to be elected by the Board of Directors
shall be elected annually by the Board of Directors at the first meeting of
the Board of Directors held after each annual meeting of the shareholders.
If the election of Officers shall not be held at such meeting, such election
shall be held as soon thereafter as convenient. Each Officer shall hold
office until his successor shall have been duly elected and shall have
qualified or until his death or until he shall resign or shall have been
removed in the manner hereinafter provided.
3. Resignations
Any Officer may resign at any time by delivering a written resignation
either to the President or to the Secretary. Unless otherwise specified
therein, such resignation shall take effect upon delivery.
4. Removal
Any Officer or agent may be removed by the Board of Directors whenever in
its judgment the best interests of the Corporation will be served thereby,
but such removal shall be without prejudice to the contract rights, if any,
of the person so removed. Election or appointment of an Officer or agent
shall not of itself create contract rights. Any such removal shall require a
majority vote of the Board of Directors, exclusive of the Officer in
question if he is also a Director.
5. Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, or if a new office shall be created, may be
filled by the Board of Directors for the un-expired portion of the term.
6. President
The President shall be the chief executive and administrative Officer of
the Corporation. He shall preside at all meetings of the stockholders and,
in the absence of the Chairman of the Board, at meetings of the Board of
Directors. He shall exercise such duties as customarily pertain to the
office of President and shall have general and active supervision over the
property, business, and affairs of the Corporation and over its several
Officers, agents, or employees other than those appointed by the Board of
Directors. He may sign, execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds and other obligations, and shall
perform such other duties as may be prescribed from time to time by the
Board of Directors or by the Bylaws.
7. Vice President
The Vice President shall have such powers and perform such duties as may be
assigned to him by the Board of Directors or the President. In the absence
or disability of the President, the Vice President designated by the Board
or the President shall perform the duties and exercise the powers of the
President. A Vice President may sign and execute contracts and other
obligations pertaining to the regular course of his duties.
8. Secretary
The Secretary shall keep the minutes of all meetings of the stockholders
and of the Board of Directors and, to the extent ordered by the Board of
Directors or the President, the minutes of meetings of all committees. He
shall cause notice to be given of meetings of stockholders, of the Board of
Directors, and of any committee appointed by the Board. He shall have
custody of the corporate seal and general charge of the records, documents
and papers of the Corporation not pertaining to the performance of the
duties vested in other Officers, which shall at all reasonable times be open
to the examination of any Directors. He may sign or execute contracts with
the President or a Vice President thereunto authorized in the name of the
Corporation and affix the seal of the Corporation thereto. He shall perform
such other duties as may be prescribed from time to time by the Board of
Directors or by the Bylaws.
9. Treasurer
The Treasurer shall have general custody of the collection and disbursement
of funds of the Corporation. He shall endorse on behalf of the Corporation
for
collection checks, notes and other obligations, and shall deposit the same
to the credit accounts to any Director of the Corporation upon application
at the office of the Corporation during business hours; and, whenever
required by the Board of Directors or the President, shall render a
statement of his accounts. He shall perform such other duties as may be
prescribed from time to time by the Board of Directors or by the Bylaws.
10. Other Officers
Other Officers shall perform such duties and shall have such powers as may
be assigned to them by the Board of Directors.
11. Salaries
The salaries or other compensation of the Officers of the Corporation shall
be fixed from time to time by the Board of Directors, except that the Board
of Directors may delegate to any person or group of persons the power to
fix the salaries or other compensation of any subordinate Officers or
agents. No Officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he is also a Director of the
Corporation.
12. Surety Bonds
In case the Board of Directors shall so require, any Officer or agent of the
Corporation shall execute to the Corporation a bond in such sums and with
such surety or sureties as the Board of Directors may direct, conditioned
upon the faithful performance of his duties to the Corporation, including
responsibility for negligence and for the accounting for all property,
moneys or securities of the Corporation, which may come into his hands.
Article V.
Contracts, Loans, Checks And Deposits
1. Contracts
The Board of Directors may authorize any Officer or Officers, agent or
agents, to enter into any contract or execute and deliver any instrument in
the name of and on behalf of the Corporation and such authority may be
general or confined to specific instances.
2. Loans
No loan or advance shall be contracted on behalf of the Corporation, no
negotiable paper or other evidence of its obligation under any loan or
advance shall be issued in its name, and no property of the Corporation
shall be mortgaged, pledged, hypothecated or transferred as security for the
payment of any loan, advance, indebtedness or liability of the Corporation
unless and except as authorized by the Board of Directors. Any such
authorization may be general or confined to specific instances.
3. Deposits
All funds of the Corporation not otherwise employed shall be deposited from
time to time to the credit of the Corporation in such banks, trust companies
or other depositories as the Board of Directors may select, or as may be
selected by an Officer or agent of the Corporation authorized to do so by
the Board of Directors.
4. Checks and Drafts
All notes, drafts, acceptances, checks, endorsements and evidence of
indebtedness of the Corporation shall be signed by such Officer or Officers
or such agent or agents of the Corporation and in such manner as the Board
of Directors from time to time may determine. Endorsements for deposits to
the credit of the Corporation in any of its duly authorized depositories
shall be made in such manner as the Board of Directors may from time to time
determine.
5. Bonds and Debentures
Every bond or debenture issued by the Corporation shall be in the form of an
appropriate legal writing, which shall be signed by the President or Vice
President and by the Treasurer or by the Secretary, and sealed with the seal
of the Corporation. The seal may be facsimile, engraved or printed. Where
such bond or debenture is authenticated with the manual signature of an
authorized Officer of the Corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued,
the signature of any of the Corporation's Officers named thereon may be
facsimile. In case any Officer who signed, or whose facsimile signature has
been used on any such bond or debenture, shall cease to be an Officer of the
Corporation for any reason before the same has been delivered by the
Corporation, such bond or debenture may nevertheless be adopted by the
Corporation and issued and delivered as though the person who signed it or
whose facsimile signature has been used thereon had not ceased to be such
Officer.
Article VI
Capital Stock
1. Certificate of Share
The shares of the Corporation shall be represented by certificates prepared
by the Board of Directors and signed by the President. The signatures of
such Officers upon a certificate may be facsimiles if the certificate is
countersigned by a transfer agent or registered by a registrar other than
the Corporation itself or one of its employees. All certificates for shares
shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued,
with the number of shares and date of issue, shall be entered on the stock
transfer books of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled except that in case of a lost,
destroyed or mutilated certificate, a new one may be issued therefor upon
such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
2. Transfer of Shares
Transfer of shares of the Corporation shall be made only on the stock
transfer books of the Corporation by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of authority to
transfer, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the Corporation, and on surrender
for cancellation of the certificate for such shares. The corporation
authorizes the transfer of shares without medallion guarantee, such
transfers will be guaranteed by the Corporation. The person in whose name
shares stand on the books of the Corporation shall be deemed by the
Corporation to be the owner thereof for all purposes.
3. Transfer Agent and Registrar
The Board of Directors of shall have the power to appoint one or more
transfer agents and registrars for the transfer and registration of
certificates of stock of any class, and may require that stock certificates
shall be countersigned and registered by one or more of such transfer agents
and registrars.
4. Lost or Destroyed Certificates
The Corporation may issue a new certificate to replace any certificate
theretofore issued by it alleged to have been lost or destroyed. The Board
of Directors may require the owner of such a certificate or his legal
representative to give the Corporation a bond in such sum and with such
sureties as the Board of Directors may direct to indemnify the Corporation
as transfer agents and registrars, if any, against claims that may be made
on account of the issuance of such new certificates. A new certificate may
be issued without requiring any bond.
5. Consideration for Shares
The capital stock of the Corporation shall be issued for such consideration
as shall be fixed from time to time by the Board of Directors. In the
absence of fraud, the determination of the Board of Directors as to the
value of any property or services received in full or partial payment of
shares shall be conclusive.
6. Registered Shareholders
The Corporation shall be entitled to treat the holder of record of any
share or shares of stock as the holder thereof, in fact, and shall not be
bound to recognize any equitable or other claim to or on behalf of this
Corporation to any and all of the rights and powers incident to the
ownership of such stock at any such meeting, and shall have power and
authority to execute and deliver proxies and consents on behalf of this
Corporation in connection with the exercise by this Corporation of the
rights and powers incident to the ownership of such stock. The Board of
Directors, from time to time, may confer like powers upon any other person
or persons.
Article VII.
Indemnification
No Officer or Director shall be personally liable for any obligations of the
Corporation or for any duties or obligations arising out of any acts or
conduct of said Officer or Director performed for or on behalf of the
Corporation. The Corporation shall and does hereby indemnify and hold
harmless each person and his heirs and administrators who shall serve at any
time hereafter as a Director or Officer of the Corporation from and against
any and all claims, judgments and liabilities to which such persons shall
become subject by reason of his having heretofore or hereafter been a
Director or Officer of the Corporation, or by reason of any action alleged
to have heretofore or hereafter taken or omitted to have been taken by him
as such Director or Officer, and shall reimburse each such person for all
legal and other expenses reasonably incurred by him in connection with any
such claim or liability, including power to defend such persons from all
suits or claims as provided for under the provisions of the Nevada Revised
Statutes; provided, however, that no such persons shall be indemnified
against, or be reimbursed for, any expense incurred in connection with any
claim or liability arising out of his own negligence or willful misconduct.
The rights accruing to any person under the foregoing provisions of this
section shall not exclude any other right to which he may lawfully be
entitled, nor shall anything herein contained restrict the right of the
Corporation to indemnify or reimburse such person in any proper case, even
though not specifically herein provided for. The Corporation, its Directors,
Officers, employees and agents shall be fully protected in taking any action
or making any payment, or in refusing so to do in reliance upon the advice
of counsel.
Article VIII.
Notice
Whenever any notice is required to be given to any shareholder or Director
of the Corporation under the provisions of the Articles of Incorporation, or
under the provisions of the Nevada Statutes, a waiver thereof in writing
signed by the person or persons entitled to such notice, whether before or
after the time stated therein, shall be deemed equivalent to the giving of
such notice. Attendance at any meeting shall constitute a waiver of notice
of such meetings, except where attendance is for the express purpose of
objecting to the holding of that meeting.
Article IX.
Amendments
These Bylaws may be altered, amended, repealed, or new Bylaws adopted by a
majority of the entire Board of Directors at any regular or special meeting.
Any Bylaw adopted by the Board may be repealed or changed by the action of
the shareholders.
Article X.
Fiscal Year
The fiscal year of the Corporation shall be fixed and may be varied by
resolution of the Board of Directors.
Article XI.
Dividends
The Board of Directors may at any regular or special meeting, as they deem
advisable, declare dividends payable out of the surplus of the Corporation.
Article XII.
Corporate Seal
The seal of the Corporation shall be in the form of a circle and shall bear
the name of the Corporation and the year of incorporation. Such seal is not
mandatory that it be affixed to the corporate documents.
ROBERT W. RIECHEL
----------------------------
Secretary
September 29, 1999
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EXHIBIT 10a
SUBSCRIPTION AGREEMENT
EVALUATORS GROUP, LTD.
Gentlemen:
The undersigned has read and understands the matters set forth in your
prospectus dated March 27, 2000. The undersigned represents as set forth
below and subscribes to purchase ________Shares at $.25 per Share, for
$_______________, subject to your acceptance of this subscription.
This offering is made pursuant to Rule 419 promulgated by the Securities and
Exchange Commission. All securities issued in this offering and the gross
proceeds therefrom will be deposited promptly into an escrow account
maintained by an insured depostiory institution, to be held for the benefit
of purchasers named and identified in accordance with regulations of the
Federal Deposit Insurance Corporation. All deposited proceeds, interest and
dividends thereon shall be held by the depository institution as escrow for
the sole benefit of the purchasers of the securities in this offering.
Deposited proceeds shall be invested only in deposit funds of the depositary
institution, securities of any open end investment company registered under
the Investment Act, or securities that are direct obligations or guaranteed
by the United States government.
From the proceeds of each deposit into the escrow account, 10% of such
proceeds shall be released to the Company. If the Company is successful in
obtaining an agreement of a target company for acquisition or merger, which
company has assets representing 80% or more of the maximum proceeds of this
offering, the Company will file a post-effective amendment (the Amendment)
to its registration statement on From SB-2, disclosing information including
the financial statements of the Company and the Company to be acquired and
pro forma financial information, the gross offering proceeds received to the
date of the amendment, an accounting of the use and application of funds
disbursed to the Company, and the terms of this offering. Within five
business days after the effective date of the amendment, the Company will
send a copy of the prospectus contained in said amendment to each investor,
who will each have twenty (20) business days thereafter, up to a maximum of
45 business days, to notify the Company in writing that the investor intends
to remain an investor. If the Company has not received such written
notification by the 45th business day following the effective date of the
amendment, any funds contirubuted by the investor, along with any interest
and dividends, if any, held in the excrow account, will be sent back to the
investor by first class mail within five business days.
If a sufficient number of investors notify the Company of their intentions
to remain a purchaser and the acquisition or merger has been consummated,
upon evidence of such being presented to the escrow, the funds held in
escrow, along with any accumulated interest or dividends shall be released
to the Company. If an acquisition or merger not meeting this criteria is not
consummated within 18 months of the effective date of the initial
registration statement of which this prospectus is a part, all funds held in
escrow shall be returned by first class mail within five business days
following that date.
Interest or dividends earned on the funds, if any, shall be held in the
escrow account until the funds are released. If the funds are released to
the company, the company shall be entitled to the accrued interest on the
funds. If the funds are released to the investor, the investor shall be
entitled to the interest or dividends on the funds.
Checks must be made payable to Wells Fargo Bank as escrow agent.
The undersigned, if an individual, is a resident of, or, if a corporation,
partnership or trust, has as its principal place of business:
The State of New York_____
The State of Florida_____
The District of Columbia_____Other State _____________
A State foreign to U.S.A._____
Dated:______________.
If not an individual:_________________________
Signature
__________________________________________________
Name of Corporation, Trust, Print or type name of
or Partnership Signer
__________________________________________________
State where incorporated, P.O. Box or Street Address
organized, or domiciled
__________________________________________________
Print Signer's Capacity City, State and Zip Code
_________________________
Tax ID Number____________
Telefax and Phone Numbers
_________________________
Social Security No.
<CAPTION>
EXHIBIT 10b. ESCROW AGREEMENT
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (hereinafter "the agreement"), is made and entered
into as of the ____day of _____________, 2000, by and between WELLS FARGO
BANK (hereinafter "Escrow"), and EVALUATORS GROUP, LTD., a Nevada
Corporation (hereinafter "The company"), provides as follows:
1. RECITALS:
This agreement is made and entered into with reference to the following
facts and circumstances:
A. The Company has filed a registration statement to offer certain
securities of the company for sale to the public (the "offering") on form
SB-2 (hereinafter "registration statement." ) The company's registration
statement is subject to the provisions of Rule 419, (hereinafter "Rule
419")promulgated by the United States Securities and Exchange Commission
(hereinafter the "SEC"), which provides for funds from investors to be
deposited in an insured depository institution, as that term is defined in
Section 3(c)2 of the Federal Deposit Insurance Act or a separate bank
account established by a broker or dealer registered under the Exchange Act
maintaining net capital equal to or exceeding $25,000.
B. Escrow is an insured depositary institution, pursuant to Section 3(c)2 of
the Federal Deposit Insurance Act, has read and understands the provisions
of Rule 419, and will act as escrow for the deposit, holding and
disbursement of funds in the offering in strict accordance with the
provisions of Rule 419, pursuant to the following terms and conditions:
1. Deposit of securities and funds into escrow account. All securities
issued in this offering and the gross proceeds therefrom will be deposited
promptly into an escrow account maintained by escrow, to be held for the
benefit of purchasers named and identified in accordance with regulations of
the Federal Deposit Insurance Corporation.
2. Disposition of funds in escrow account. All deposited proceeds, interest
and dividends thereon shall be held by the depository institution as escrow
for the sole benefit of the purchasers of the securities in this offering.
Deposited proceeds shall be invested by escrow only in one or more of the
following types of federally insured funds:
a) Interest bearing obligations which constitute 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 17 CFR 270.2a-7
(Rule 2a-7) under the Investment Company Act; or
c) Securities that are direct obligations of, or obligations guaranteed as
to the principal or interest by, the United States; provided that
investments in government securities are inappropriate unless such
securities can be readily sold or otherwise disposed of for cash at the time
required without any dissipation of offering proceeds invested.
3. Deposit account Records. The deposit account records of the escrow must
provide that funds in the escrow account are held for the benefit of the
purchasers (hereinafter "purchaser(s)") named and identified in accordance
with 12 CFR part 330.1 of the regulations of the Federal Deposit Insurance
Corporation, and the records of the escrow, maintained in the regular course
of business, must show the name and interest of each party to the account.
4. Disposition of securities in escrow account.
A) All securities issued by the company in connection with the offering,
whether or not for cash consideration, and any other securities issued with
respect to such securities, including securities issued with respect to
stock splits, stock dividends, or similar rights, shall be deposited
directly into the escrow account promptly upon issuance. The identity of the
purchaser of the securities shall be included on the stock certificates or
other documents evidencing such securities. Sales of, or offers to sell
securities deposited in the escrow shall be restricted by the provisions of
Rule 15g-8 of the Exchange Act.
B) Securities held in the escrow account are to remain issued and deposited
and shall be held for the sole benefit of the purchasers, who shall have
voting rights, if any, with respect to securities held in their names, as
provided by applicable state law. 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 (26 U.S.C. 1, et. Seq.), or
Title 1 of the Employee Retirement Income Security Act (29 U.S.C. 1001, et.
Seq.), or the rules thereunder.
C) Warrants, convertible securities or other derivative securities relating
to securities held in the escrow or trust account may be exercised or
converted in accordance with their terms, provided, however, that securities
received upon the exercise or conversion, are promptly deposited into the
escrow account.
5. Disposition of funds deposited in escrow account. The company may receive
up to 10 percent of the proceeds of the offering, exclusive of interest or
dividends, as those proceeds are deposited into the escrow account. The
remaining funds shall be held, administered and distributed by the escrow,
according to the following terms and conditions, pursuant to Rule 419:
a) If the Company is successful in obtaining an agreement of a target
company for acquisition or merger, which company has assets representing 80%
or more of the maximum proceeds of this offering, the Company will file a
post-effective amendment (the "amendment") to its registration statement on
From SB-2, disclosing information including the financial statements of the
Company and the Company to be acquired and pro forma financial information,
the gross offering proceeds received to the date of the amendment, an
accounting of the use and application of funds disbursed to the Company, and
the terms of this offering. Within five business days after the effective
date of the amendment, the Company will send a copy of the prospectus
contained in said amendment to each investor, who will each have twenty (20)
business days thereafter, up to a maximum of 45 business days, to notify the
Company in writing that the investor intends to remain an investor. If the
Company has not received such written notification by the 45th business day
following the effective date of the amendment, any funds contributed by the
investor, along with any interest and dividends, if any, held in the escrow
account, will be sent back to the investor by first class mail within five
business days.
b) If at least 70% of the purchasers notify the Company of their intentions
to remain a purchaser and the acquisition or merger has been consummated,
upon evidence of such being presented to the escrow, the funds held in
escrow, along with any accumulated interest or dividends shall be released
to the Company, and the securities held in the escrow account shall be
released to each respective purchaser thereof. If an acquisition or merger
not meeting this criteria is not consummated within 18 months of the
effective date of the initial registration statement of which this
prospectus is a part, all funds held in escrow shall be returned by first
class mail within five business days following that date, and all securities
held in escrow for the benefit of purchaser(s) shall be returned to the
Company for cancellation. Funds of any purchaser who has not forwarded a
written notification to the Company of his or her intentions to remain a
purchaser, or who has notified the company or escrow in writing that he or
she no longer wishes to be a purchaser must be disbursed immediately by the
escrow to the purchaser, along with accrued interest and dividends, if any,
and the securities of the said purchaser shall be returned by the escrow to
the company for cancellation.
c) Interest or dividends earned on the funds, if any, shall be held in the
escrow account until the funds are released. If the funds are released to
the company, the company shall be entitled to the accrued interest on the
funds. If the funds are released to the investor, the investor shall be
entitled to the interest or dividends on the funds.
d) Funds held in the escrow account may be released to the company and
securities may simultaneously be delivered to the Investors only at the same
time as of after:
I. The escrow agent or trustee has received a signed representation from the
registrant, together with other evidence acceptable to the escrow agent or
trustee, that the requirements of Rule 419, section 2, paragraphs (e)1 and
(e)2 have been met, and
ii. Consummation of an acquisition meeting the requirements of section 2,
paragraph (e)(2)(iii) of Rule 419.
6. Limitation of liability of escrow.
A) The parties acknowledge that the escrow is acting as an independent
escrow in this matter. In the event that a suit is brought by any party or
parties to this escrow agreement, or any purchaser in the offering, to which
the escrow holder is named as a party, (except any cause of action thereof
which is against escrow holder for a breach of fiduciary duty or gross
negligence in handling the funds and/or securities in the escrow account),
the company agrees to indemnify and hold harmless the escrow holder from any
and all costs, expenses and reasonable attorney=s fees which it may expend
or incur in said suit, the amount the amount thereof to be fixed by a court
of competent jurisdiction.
B) Escrow serves only as an escrow holder in connection with this agreement
and cannot give legal advice to any party hereto.
C) Escrow is not to be held accountable or liable for the sufficiency or
correctness as to form, manner of execution, or validity of any instrument
deposited into the escrow account, not as to the identity, authority or
rights of any person executing same. Escrow=s duties hereunder shall be
limited to the proper handling of such money and the proper safekeeping of
such instruments, or other documents received by escrow, and for the
disposition of same in accordance with this agreement, and the provisions of
Rule 419.
D) In the event of any dispute between the company and the purchaser(s), the
escrow and the purchaser(s), and/or the escrow and the company, escrow shall
be entitled to interplead any funds and/or documents held by it with a court
of competent jurisdiction, and/or shall be entitled to contact the
Securities and Exchange Commission with respect to its rights and duties as
escrow agent under this agreement.
7. Miscellaneous provisions.
A) This agreement shall be construed in accordance with the laws of the
State of California.
B) This agreement shall be binding upon and shall inure to the benefit of
the parties hereto, their beneficiaries, heirs, representatives, assigns,
and all other successors in interest.
C) Each of the parties shall execute any and all documents required to be
executed and perform all acts required to be performed in order to
effectuate the terms of this agreement.
D) This agreement contains all of the agreements and understandings of the
parties hereto with respect to the matters referred to herein, and no prior
agreement or understanding pertaining to any such matters shall be effective
for any purpose.
E) Each of the parties hereto has agreed to the use of the particular
language of the provisions of this Agreement, and any question of doubtful
interpretation shall not be resolved by any rule of interpretation against
the party who causes the uncertainty to exist or against the draftsman.
F) This agreement may not be superseded, amended or added to except by an
agreement in writing, signed by the parties hereto, or their respective
successors-in-interest.
G) Any waiver of any provision of this agreement shall not be deemed a
waiver of such provision as to any prior or subsequent breach of the same
provision or any other breach of any other provision of this agreement.
H) If any provision of this agreement is held, by a court of competent
jurisdiction, to be invalid, or unenforceable, said provisions shall be
deemed deleted, and neither such provision, its severance or deletion shall
affect the validity of the remaining provisions of this agreement, which
shall, nevertheless, continue in full force and effect.
I) The parties may execute this agreement in two or more counterparts, each
of which shall be signed by all of the parties; and each such counterpart
shall be deemed an original instrument as against any party who has signed it.
J) The parties shall use their reasonable best efforts to obtain the consent
of all necessary persons and agencies to the transfer of shares provided for
in this agreement.
IN WITNESS WHEREOF, the parties have executed this agreement as of the day
and year first above written.
ESCROW
By______________________________
Name:__________________________
Title:_________________________
COMPANY
By______________________________
President
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