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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 17, 2000
Registration Statement No. 333-
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AMEDORE HOMES, INC.
(Name of small business issuer as specified in its charter)
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<TABLE>
<S> <C> <C>
New York 1520 14-1608830
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer I.D. No.)
incorporation or organization) Classification Code Number)
</TABLE>
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3434 Carman Road
Schenectady, New York 12303
(518) 355-7080
(Address and telephone number of principal executive offices and principal
place of business)
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George A. Amedore, Sr. Chief Executive Officer
Amedore Homes, Inc.
3434 Carman Road
Schenectady, New York 12303
(518) 355-7080
(518) 355-5571 facsimile
(Name, address and telephone number of agents for service)
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Copies to:
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Jay M. Kaplowitz, Esq. Martin C. Licht, Esq.
GERSTEN, SAVAGE & KAPLOWITZ, LLP SILVERMAN, COLLURA & CHERNIS, P.C.
101 East 52nd Street 381 Park Avenue South
New York, New York 10022 New York, New York 10016
(212) 752-9700 (212) 779-8600
(212) 980-5192 facsimile (212) 779-8858 facsimile
Approximate date of proposed sale to the public: As soon as practicable
after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box: / /
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. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Title of Each Class of Amount Being Offering Price Per Offering Amount of
Securities Being Registered Registered Security Price(1) Registration Fee
<S> <C> <C> <C> <C>
Common Stock 1,000,000 $ 7.00 7,000,000 $1,848.00
Representative's Warrants 100,000 $ .001 100.00 0(2)
Common Stock Underlying 100,000 $ 11.55 1,155,000 304.92
Representative's Warrants(3)
Common Stock Issuable upon
exercise of Representative's
Over-Allotment Option(4) 150,000 $ 7.00 1,050,000 277.20
Total registration $2,430.12
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
(2) None pursuant to 457(g).
(3) Registration of shares issuable upon exercise of warrants to be issued
to the Representative. Includes any shares that may be issued pursuant
to the anti-dilution provisions of the Representative's Warrants.
(4) Represents shares issuable upon the exercise of the Representative's
option to cover over-allotments.
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 COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A) MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. 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.
PRELIMINARY PROSPECTUS
Subject to Completion, Dated August 17, 2000
Amedore Homes, Inc.
1,000,000 Shares of Common Stock
This is an initial public offering of 1,000,000 shares of common stock
of Amedore Homes, Inc. We anticipate that the initial public offering price will
be between $6.00 and $7.00 per share.
Prior to this offering, there has been no public market for our common
stock. We intend to file an application to have our common stock listed on the
American Stock Exchange, under the symbol "AHS."
Please see "Risk Factors" beginning on page 7 to read about factors you
should consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
Per Share Total
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Initial public offering price $ $
Underwriter's discount $ $
Proceeds before our expenses $ $
-------------------
We have granted the underwriters an option for 45 days to purchase up to
an additional 150,000 shares at the initial public offering price, less the
underwriting discount, solely to cover over- allotments. The underwriters are
offering the shares on a firm commitment basis.
It is expected that the shares will be ready for delivery on or about
________________, 2000.
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Nutmeg Securities, Ltd.
The date of this prospectus is __________, 2000
<PAGE>
TABLE OF CONTENTS
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Page
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<S> <C>
Prospectus Summary.............................................................................................. 3
Summary Financial Data.......................................................................................... 5
Risk Factors.................................................................................................... 7
We have incurred a net loss since inception and may incur net losses in the future........................... 7
The homebuilding industry is cyclical and is affected by numerous factors that could adversely
affect our results of operations.......................................................................... 7
Increases in interest rates and a decrease in the availability of financing could result in
significantly fewer sales of our homes and could affect our results of operations......................... 7
Since our operations are concentrated in the Capitol Region of New York State, any economic
downturn in this region of New York State could materially adversely affect our operations................ 7
Sales of our homes may vary from quarter to quarter which could adversely affect our stock price............ 8
We may not be able to compete successfully against current and future competitors........................... 8
Government regulation and environmental matters could adversely affect our operations....................... 8
If we experience material and/or labor shortages, our sales revenues will be adversely affected ............ 9
If we are required to cover significant warranty claims that are not covered by our contractors or
subcontractors, our cash flow and operating activities could be adversely affected......................... 9
We are controlled by our officers and directors, and as such you may have no effective voice in our
management................................................................................................. 9
We will require substantial funds to effectuate our business plan and we may be unable to
obtain additional capital ................................................................................. 9
You will incur immediate and substantial dilution and our current shareholders will benefit
disproportionately from this offering...................................................................... 9
Our management has broad discretion as to how to use the proceeds of this offering and you may
have no opportunity to approve the use of proceeds of this offering........................................ 9
The loss of services of our key personnel, or our failure to attract, assimilate and retain highly
qualified personnel in the future, could seriously harm our business............................................ 10
Special Note Regarding Forward-Looking Statements............................................................... 10
Use of Proceeds................................................................................................. 11
Dividend Policy................................................................................................. 12
Dilution ....................................................................................................... 13
Capitalization.................................................................................................. 14
Selected Financial Data......................................................................................... 15
Plan of Operations.............................................................................................. 16
Business........................................................................................................ 18
Management...................................................................................................... 25
Principal Shareholders.......................................................................................... 29
Certain Relationships And Related Party Transactions............................................................ 30
Description of Securities....................................................................................... 31
Shares Eligible for Future Sale................................................................................. 33
Plan of Distribution............................................................................................ 34
Legal Matters................................................................................................... 37
Experts......................................................................................................... 37
Where You Can Find Additional Information....................................................................... 37
Financial Statements............................................................................................ F-1
</TABLE>
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You should rely only on the information contained in this document or to which
we have referred you. We have not authorized anyone to provide you with
information that is different. This document may be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
<PAGE>
PROSPECTUS SUMMARY
The following summary highlights some of the information in this
prospectus. It may not contain all of the information that is important to you.
To understand this offering fully, you should read the entire prospectus
carefully, including the risk factors and our financial statements and the notes
accompanying the financial statements appearing elsewhere in this prospectus.
The company
We design, build, develop and market single-family homes, primarily in
suburban residential areas located in the Capitol Region of New York State, with
a focus on middle and high income communities. The Capitol Region includes
Albany, Schenectady, Saratoga and Rensselaer counties, each of which has
experienced significant population and job growth over the past several years.
We typically offer single-family homes at prices ranging from $130,000 to
$450,000, with an average sale price of $209,000, excluding customized options.
Our attached single-family homes, which include condominiums and townhouses, are
offered at prices ranging from $130,000 to $200,000, with an average sale price
of $176,000, excluding customized options. As of July 31, 2000, we had
22 houses under construction in seven separate communities. Generally, the
communities in which we build houses are located on property which was
previously developed by us or which we acquired fully improved.
Our senior management has been involved in the homebuilding industry in
the Capitol Region of New York State for over thirty years. In 1996 our senior
management joined with the management of Traditional Builders Inc., a local
builder in the Capitol Region, to form Traditional Amedore Homes, Inc. which
operated through 1999. During this three year period Traditional's revenues grew
to approximately $26 million for the year ended December 31, 1999.
Our homebuilding and community development operation is positioned to
compete with high volume builders since we offer a broader selection of homes
with more amenities and greater design flexibility than typically offered by
high volume builders. We offer the homebuyer the ability to select various
design features according to their personal preferences. Through a volume
building approach, we believe that our custom homes generally offer more value
than those offered by local, lower-volume custom builders, primarily due to
effective purchasing, construction and marketing programs. While most design
modifications and customized options are significant to the homebuyer, they
typically involve relatively minor adjustments that allow us to maintain
construction efficiencies that result in greater profitability due to increased
sales prices and margins. We believe that our ability to meet the design tastes
of prospective homebuyers at competitive prices distinguishes us from many of
our competitors. We maintain a website for prospective home purchasers at
"www.Amedorehomes.com."
Our strategy
We seek to distinguish ourselves from other production homebuilders and
to respond rapidly to changing market conditions through a business strategy
focused on the following:
o Superior design and quality;
o Product breadth;
o Highest level of service;
o Conservative land acquisition policy;
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o Cost management; and
o Expansion in new and existing markets.
Our history
We were incorporated under the laws of the State of New York in January
1979 as Amedore & Sons Builders, Inc. From 1979 to January 1996 we operated as a
home builder in the Capitol Region of New York State. From 1996 through April
1999, we did not conduct any significant activities. During this period our
senior management operated Traditional Amedore Homes, Inc. In May 1999, we
changed our name to Amedore Homes, Inc. Our principal executive offices are
located at 3434 Carman Road, Schenectady, New York 12303 and our telephone
number is (518) 355-7080. Information contained on our web pages at
"www.Amedorehomes.com" does not constitute part of this prospectus.
The offering
Common stock offered by us:........ 1,000,000 shares
Common stock to be outstanding
after the offering: ............... 5,107,692 shares
Use of proceeds.................... Land purchase and development;
advertising and marketing;
repayment of indebtedness;
acquisitions; and
working capital and general corporate
purposes.
Proposed American Stock Exchange
Symbol:.......................... AHS
Except as noted, all of the information in this prospectus assumes that
none of the following have been exercised:
o the over-allotment option granted to the representative by us to
purchase up to 150,000 additional shares;
o warrants to purchase 100,000 shares of our common stock to be
granted to the representative upon completion of this offering;
and
o options available for grant to purchase 500,000 shares of our
common stock pursuant to our 2000 stock option plan.
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SUMMARY FINANCIAL DATA
The following summary financial data and other data are qualified by
reference to, and should be read in conjunction with, our financial statements
and their related notes appearing elsewhere in this prospectus and "Plan of
Operation." The selected statement of operations data shown below for the fiscal
years ended May 31, 2000 and 1999 and the balance sheet data as of May 31, 2000
are derived from our audited financial statements included elsewhere in this
prospectus. All pro forma data below is unaudited.
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 2000 May 31, 1999
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<S> <C> <C>
Statement of Operations Data:
Total revenues $ 4,136,430 $ --
Stock-based compensation expense 2,928,280 --
Loss from operations (3,634,022) (10,004)
Net loss (3,650,204) (9,736)
Net loss per share (1.02) (0.01)
Pro forma net loss (unaudited) (1) (3,538,000) (6,426)
Pro forma net loss per share (unaudited)
(basic and diluted) (1) (0.98) $ (0.01)
Supplemental pro forma as adjusted net loss per share $ (0.71)
(unaudited) (2)
Supplemental pro forma as adjusted number of common
shares outstanding (unaudited) (3) 5,107,692
</TABLE>
<TABLE>
<CAPTION>
Year Ended
May 31, 2000
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Balance Sheet Data: Supplemental
Pro forma
Actual Pro forma as adjusted
------ --------- -----------
(Unaudited)(1) (Unaudited)(4)
<S> <C> <C> <C>
Cash and cash equivalents $ 521,882 $ 521,882 $ 5,038,147
Total current assets 2,663,324 2,663,324 7,179,589
Working capital (253,275) (299,475) 5,742,990
Total assets (deficit) 2,853,528 3,011,832 7,256,127
Total long-term (excluding current portion) and
related party debt 6,413 6,413 6,413
Total liabilities 2,923,012 2,969,212 1,443,012
Stockholders' (deficiency) equity $ (69,484) $ 42,620 $ 5,813,115
</TABLE>
(1) The pro forma net loss reflects Amedore Homes, Inc.'s status as a C
corporation rather than as an S corporation for Federal income tax
purposes and interest expense on related party debt. See Note 1 to
"Notes to Financial Statements."
(2) Supplemental pro forma net loss per common share is based on
supplemental pro forma net loss divided by the supplemental pro forma
number of common shares outstanding (see (3) below).
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(3) Supplemental pro forma number of common shares outstanding represents
the number of shares of Amedore Homes, Inc.'s common stock which will be
outstanding upon the consummation of the initial public offering.
(4) Reflects the receipt of the net proceeds from the sale of 1,000,000
shares of common stock offered hereby at an assumed initial public
offering price of $6.50, and the application thereof. Also includes the
conversion of $700,000 of debt, owed to George Amedore, Sr., our Chief
Executive Officer, into 107,692 shares of our common stock based on the
initial public offering price of $6.50 per share, the repayment of
$700,000 in debt owed to our Chief Executive Officer and the repayment
of an $80,000 note payable related to the purchase of land.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. In addition to
other information contained in this prospectus, you should carefully consider
the following risk factors and other information in this prospectus before
investing in our common stock.
We have incurred a net loss for the years ended May 31, 2000 and 1999 and may
incur net losses in the future.
For the years ended May 31, 2000 and 1999, we incurred net losses of
$3,650,204 and $9,736, respectively. Our net loss for the year ended May 31,
2000 relates primarily to stock-based compensation and start-up costs. Operating
losses and negative cash flow may continue in the future. We do not know if or
when we will achieve sufficient revenues in relation to expenses to become
profitable.
Our future profitability depends on generating and sustaining revenue
growth while maintaining reasonable expense levels. Slower revenue growth than
we anticipate or operating expenses that exceed our expectations would harm our
business. If we achieve profitability, we cannot be certain that we would be
able to sustain or increase profitability in the future. As of May 31, 2000 we
had a stockholders' deficiency of approximately $70,000 and a working capital
deficit of $253,275.
The homebuilding industry is cyclical and is affected by numerous factors that
could adversely affect our results of operations.
The homebuilding industry is cyclical and affected by changes in general
and local economic conditions including employment levels, demographic
considerations, availability of financing, interest rate levels, consumer
confidence and housing demand. The risks inherent to homebuilders in purchasing
and developing land increase as consumer demand for housing decreases. Because
of the long-term financial commitment involved in purchasing a home, general
economic uncertainties tend to result in more caution on the part of home
buyers, which, in turn, tends to result in fewer home purchases. In addition,
homebuilders are subject to competitive overbuilding, availability and cost of
building lots, availability and cost of materials and labor, brand-name
awareness, adverse weather conditions which can cause delays in construction
schedules, cost overruns, changes in government regulations, and increases in
real estate taxes and other local government fees and the level of interest
rates.
Increases in interest rates and a decrease in the availability in financing
could result in significantly fewer sales of our homes and could affect our
results of operations.
Virtually all purchasers of our homes finance their purchases with
mortgage financing from lenders. In general, housing demand is adversely
affected by increases in interest rates, unavailability of mortgage financing,
increasing housing costs and unemployment. If mortgage interest rates increase
and the ability of prospective buyers to finance home purchases is adversely
affected, our residential real estate sales, gross margins and net income may be
adversely affected. Our homebuilding activities are also dependent upon the
availability and cost of mortgage financing for buyers of homes owned by
potential customers so those customers can sell their homes and purchase a home
from us. In addition, we believe that the availability of Federal Housing
Administration mortgage financing is an important factor in marketing many of
our homes. Any limitations or restrictions on the availability of this financing
could adversely affect our residential real estate sales. Furthermore, changes
in Federal income tax laws may affect demand for new homes.
Since our operations are concentrated in the Capitol Region of New York State,
any economic downturn in this region of New York State could materially
adversely affect our operations.
Our operations are situated in the Capitol Region of New York State.
Adverse general economic conditions in this market could have a material adverse
impact on our operations. Our performance could be significantly affected by
economic slowdowns in the Capitol Region of New York State.
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Sales of our homes may vary from quarter to quarter which could adversely affect
our stock price.
We have experienced, and expect to continue to experience, significant
variability in sales and net income. Factors that contribute to variability of
our results include:
o the timing of home closings, a substantial portion of which
historically have occurred in the last month of each quarter;
o our ability to continue to acquire additional land on favorable
terms for future developments;
o the condition of the real estate markets and economies in which
we operate;
o the cyclical nature of the homebuilding industry and changes in
prevailing interest rates;
o costs of material and labor; and
o delays in construction schedules caused by timing of inspections
and approval by regulatory agencies, including zoning approvals
and receipt of entitlements, the timing of completion of
necessary public infrastructure, the timing of utility hookups
and adverse weather conditions.
Our historical financial performance is not necessarily a meaningful
indicator of future results and, in general, our financial results will vary
from development to development, and from fiscal quarter to fiscal quarter.
We may not be able to compete successfully against current and future
competitors.
The development and sale of residential properties is highly competitive
and fragmented. We compete for residential sales on the basis of a number of
interrelated factors, including location, reputation, amenities, design, quality
and price, with numerous national, regional and local builders, including some
builders with greater financial resources. We also compete for residential sales
with individual resales of existing homes and available rental housing. If we
experience increased competition in the future there could be a material adverse
effect on our ability to successfully market our homes and expand our business.
Government regulation and environmental matters could adversely affect our
operations.
In developing a project, we must obtain the approval of numerous
governmental authorities regulating matters such as permitted land uses and
levels of density and the installation of utility services such as electricity,
water and waste disposal. Several governmental authorities have imposed fees as
a means of defraying the cost of providing certain governmental services to
developing areas. These and other restrictions could adversely affect our
development activities in the future, especially to the extent that we purchase
land not already zoned for development. We are also subject to local, state and
federal statutes and rules regulating environmental matters, protection and
preservation of archeological finds, zoning, building design and density
requirements which could result in delays, cause us to incur substantial
compliance costs and prohibit or severely restrict development in certain
environmentally or archaeologically sensitive regions or areas.
Additionally, permits and approvals will be required to complete
residential developments in progress or those projects currently being planned.
Our ability to obtain necessary approvals and permits for these projects is
often beyond our control and could restrict or prevent the development of
otherwise desirable property which could adversely affect our results of
operations.
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If we experience material and/or labor shortages, our sales revenues will be
adversely affected.
The residential construction industry in the past has, from time to
time, experienced serious material and labor shortages, including shortages in
insulation, drywall, certain carpentry work and cement supply. Delays in
construction of homes and higher costs due to these shortages and fluctuating
lumber prices could have an adverse effect upon our operations. We are also
susceptible to delays caused by strikes affecting shipping and transportation of
building materials necessary in our business. In addition, many of our
contractors are represented by labor unions or collective bargaining agreements.
We cannot assure you that the renegotiation of these agreements would not lead
to a disruption of our operations and an increase in our construction costs.
If we are required to cover significant warranty claims that are not covered by
our contractors or subcontractors, our cash flow and operating activities could
be adversely affected.
We generally provide limited warranties of at least one to six years for
workmanship and materials and for longer periods with respect to structural
components. To the extent that warranty claims are not covered by our
contractors and subcontractors we may be liable for warranty claims. If the
warranty claims exceed our reserves our results of operations and financial
condition may be adversely affected.
We are controlled by our officers and directors, and as such you may have no
effective voice in our management.
Upon the completion of this offering ,our officers and directors will
beneficially own approximately 78.1% of our issued and outstanding common stock.
Accordingly, our officers and directors will collectively control us and will be
able to exercise control over all matters requiring stockholder approval,
including the election of all directors and approval of significant corporate
transactions. If you purchase shares of our common stock, you may have no
effective voice in our management.
We will require substantial funds to effectuate our business plan and we may be
unable to obtain additional capital.
We cannot assure you that we will be able to achieve our goals without
additional capital or that we will be able to raise additional capital if
required. We cannot assure you that we will be able to achieve all of our goals
with additional capital. We expect that the proceeds of this offering plus cash
flow generated from operations will be sufficient to implement our business plan
for at least the 12 months following completion of this offering. However, we
may need to raise additional capital if our estimates of revenues, expenses
and/or capital expenditures change or prove inaccurate.
You will incur immediate and substantial dilution and our current shareholders
will benefit disproportionately from this offering.
The initial public offering price per share will exceed the net tangible
book value per share. Investors purchasing shares in this offering will suffer
immediate and substantial dilution of their investment of $5.50 per share or
84.6% of the initial public offering price. Our current shareholders acquired
their shares of common stock at a cost per share that is substantially less than
the price at which we are selling shares in this offering which will result in a
substantial increase in the value of the current shareholders holding of our
common stock.
Our management has broad discretion as to how to use the proceeds of this
offering and you may have no opportunity to approve the use of proceeds of this
offering.
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Approximately $1,510,000 or 30.1% of the net proceeds of this offering
will be applied to working capital and general corporate purposes. Accordingly,
our management will have broad discretion over the use of the proceeds. Our
stockholders may have no opportunity to approve the use of the proceeds of this
offering.
The loss of the services of our key personnel, or our failure to attract,
assimilate and retain highly qualified personnel in the future, could seriously
harm our business.
Our future success depends, in part, on the continued services of our
senior management and our ability to retain and motivate our other key
employees. The loss of the services of George A. Amedore, Sr. or George A.
Amedore, Jr. or any other key employee would have a material adverse effect on
our business, results of operations and financial condition. In July 2000, we
entered into employment agreements with each of George A. Amedore, Sr. and
George A. Amedore, Jr. for a period of five years and three years, respectively.
We do not currently have key-man life insurance on any of our executive
officers, although we intend to purchase key man life insurance on the life of
George A. Amedore, Jr. upon completion of this offering
Our future success also depends on our ability to identify, attract,
hire, train, retain and motivate highly skilled personnel. Competition for such
personnel is intense, and we cannot be certain that we will be able to
successfully attract, assimilate or retain sufficiently qualified personnel. Our
inability to do so could have a material adverse effect on our business, results
of operations and financial condition.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Information in this prospectus may contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. This information may involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance
or achievements to be materially different from future results, performance or
achievements expressed or implied by any forward-looking statements. These
factors include the risks described in "Risk Factors." Forward-looking
statements, which involve assumptions and describe our future plans strategies
and expectations, are generally identifiable by use of the words "may,"
"should," "expect," "anticipate," "estimates," "believe," "intend" or "project"
or the negative of these words or other variations on these words or comparable
terminology.
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USE OF PROCEEDS
We estimate that we will receive net proceeds of approximately
$5,210,000 from our sale of the 1,000,000 shares of common stock being offered
hereby, assuming an initial public offering price of $6.50, representing the
mid-point of the filing range. If the representative exercises its
over-allotment option in full, we will receive net proceeds of approximately
$6,058,250. Both of these figures are after deduction of estimated underwriting
discounts and commissions and after fees and expenses of $640,000, $669,250 if
the over-allotment option is exercised in full payable by us. We expect to use
the net proceeds of this offering as follows:
Approximate Percentage of
Use Amount Net Proceeds
--- ------ ------------
Land purchase and development $2,000,000 37.8%
Advertising and marketing 250,000 4.7
Repayment of indebtedness 700,000 13.2
Acquisitions 750,000 14.2
General corporate and working capital purposes 1,510,000 30.1
---------- -----
Total $5,210,000 100.0%
========== =====
We have budgeted $2,000,000 of the net proceeds for any potential
acquisitions of land and the development of any acquired land, including $80,000
for land previously purchased.
Upon completion of this offering, we intend to utilize approximately
$250,000 to implement our marketing plan, which will include radio and print
advertising.
In February 2000, George A. Amedore, Sr. loaned us $1,450,000 during
fiscal 2000, of which approximately $1,400,000 was outstanding as of May 31,
2000. Mr. Amedore has agreed to convert approximately $700,000 of this debt into
107,692 shares of our common stock based on the initial public offering price.
The remaining $700,000 will be repaid to Mr. Amedore from a portion of the
proceeds of this offering. See "Certain Relationships and Related Transactions."
We have budgeted $750,000 of the net proceeds for any potential
acquisitions, however, we currently have no commitments or agreements and are
not involved in any negotiations with respect to any such transactions.
We have dedicated approximately $1,510,000 to general corporate needs
and working capital purposes which we expect to require as a result of our
anticipated growth. These needs include added salaries, health care costs,
professional fees and other costs which will require us to use a portion of the
proceeds from this offering.
Pending application, the net proceeds will be invested principally in
short-term certificates of deposit, money market funds or short-term treasury
bonds.
We reserve the right to reallocate proceeds to different uses if, in
management's view, the needs of the business so require. In addition, a large
portion of the proceeds is allocated to discretionary purposes. Investors may
not agree with any such allocation or reallocation. In the event the
representative exercises the over-allotment option we intend to utilize such
additional proceeds for working capital.
Based on our operating plan, we believe that the net proceeds of this
offering, together with available funds on hand and cash flow from future
operations, will be sufficient to satisfy our working capital requirements for
at least twelve months following this offering. Such belief is based upon
certain assumptions, including assumptions as to our contemplated operations and
business plan and economic and industry conditions. We cannot be certain that
such resources will be sufficient for such purpose and if not we may need to
raise additional capital through the sale of equity securities. In addition,
contingencies may arise that may require us to obtain additional capital. We
cannot be certain that we will be able to obtain such capital on favorable terms
or at all.
11
<PAGE>
DIVIDEND POLICY
We have never paid or declared cash or stock dividends on our common
stock. The payment of cash dividends, if any, is at the discretion of our board
of directors and will depend upon our earnings, our capital requirements,
financial condition and other relevant factors. We intend, for the foreseeable
future, to retain any future earnings for use in our business.
12
<PAGE>
DILUTION
Our net tangible book value as of May 31, 2000 was approximately
$(183,150) or $(0.05) per share. Net tangible book value per share represents
the amount of our total tangible assets reduced by the amount of our total
liabilities and divided by the total number of shares of common stock
outstanding. Dilution in net tangible book value per share represents the
difference between the amount per share paid by purchasers of shares of common
stock in this offering and the net tangible book value per share of common stock
immediately after the completion of this offering. After giving effect to the
sale of the 1,000,000 shares of common stock offered by us at an assumed initial
public offering price of $6.50 per share, representing the mid-point of the
filing range, the conversion of $700,000 of debt, owed to our Chief Executive
Officer, to 107,692 shares of common stock at the initial public offering price
and after deducting the underwriting discount and estimated offering expenses
payable by us, our pro forma net tangible book value at May 31, 2000 would have
been approximately $5,113,115 or $1.00 per share of common stock. This
represents an immediate increase in net tangible book value of $1.05 per share
to existing stockholders and an immediate dilution of $5.50 per share to new
investors of common stock. The following table illustrates this dilution on a
per share basis:
Assumed initial public offering price............................. $6.50
Net tangible book value at May 31, 2000................... (0.05)
Increase in net tangible book value
attributable to new investors............................. 1.05
Net tangible book value after this offering....................... 1.00
-----
Dilution of net tangible book value to new investors.............. $5.50
=====
In the event that the over-allotment option is exercised in full, the
dilution to new investors would be $5.38 per share.
The following table sets forth, as of the date of this prospectus, the
number of shares of common stock purchased, the percentage of the total number
of common stock purchased, the total consideration paid, the percentage of total
consideration paid, and the average price per share paid by the investors in
this offering and our current shareholders:
<TABLE>
<CAPTION>
Shares purchased Total consideration
---------------- -------------------
Average
price
per
Number Percentage Amount Percentage share
------ ---------- ------ ---------- -----
<S> <C> <C> <C> <C> <C>
Existing stockholders 4,000,000 78.3% $ 4,000 0.1% $ 0.001
Conversion of related
party debt ........ 107,692 2.1% 700,000 9.7% $ 6.50
New investors ....... 1,000,000 19.6% 6,500,000 90.2% $ 6.50
--------- ----- ---------- -----
Total ......... 5,107,692 100.0% $7,204,000 100.0%
========= ===== ========== =====
</TABLE>
The preceding table excludes deduction of underwriting commissions,
discounts and other expenses of this offering.
13
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of May 31, 2000:
o on an actual basis; and
o on a pro forma basis to reflect the receipt of the estimated net
proceeds from the sale by us of 1,000,000 shares of common stock
at an assumed initial public offering price of $6.50 per share,
representing the mid-point of the filing range, the conversion
of $700,000 of debt, owed to our Chief Executive Officer, to
107,692 shares of common stock at the initial public offering
price and the repayment of $700,000 of debt owed to our Chief
Executive Officer.
This table should be read in conjunction with our financial statements
and the accompanying notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
Actual Supplemental
Pro-forma as
adjusted Pro-forma
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Long-term debt ................................. $ 6,413 $ 6,413 $ 6,413
Stockholders' equity:
Preferred stock, 1,000,000 authorized,
none issued and outstanding .................. -- -- --
Common stock, $.001 par value per share,
20,000,000 authorized,
4,000,000 issued and outstanding, actual;
5,107,692 issued and outstanding, pro-forma as
adjusted; 4,000,000 issued and outstanding,
pro-forma .................................. 4,000 5,108 4,000
Additional paid-in capital ..................... 3,592,250 9,473,741 --
(Accumulated deficit) Retained earnings ........ (3,665,734) (3,665,734) 38,620
----------- ----------- -----------
Total stockholders equity (deficit) ............ (69,484) 5,813,115 42,620
----------- ----------- -----------
Total capitalization ......... $ (67,071) $ 5,819,528 $ 53,033
=========== =========== ===========
</TABLE>
-----------
The preceding table excludes:
o 500,000 shares reserved for grant under our stock option plan;
o 100,000 shares issuable upon exercise of the representative's
warrants; and
o 150,000 shares issuable upon exercise of the over-allotment
option.
14
<PAGE>
SELECTED FINANCIAL DATA
The following summary financial data and other data are qualified by
reference to, and should be read in conjunction with, our financial statements
and their related notes appearing elsewhere in this prospectus and "Plan of
Operation." The selected statement of operations data shown below for the fiscal
year ended May 31, 2000 and the balance sheet data as of May 31, 2000 are
derived from our audited financial statements included elsewhere in this
prospectus. All pro forma data is unaudited.
<TABLE>
<CAPTION>
Year Ended Year Ended
May 31, 2000 May 31, 1999
------------ ------------
<S> <C> <C>
Statement of Operations Data:
Total revenues $ 4,136,430 $ --
Cost of Home Land Sales (2) 3,602,974 --
Gross Profit 533,456 --
Stock-based compensation expense 2,928,250 --
Loss from operations (3,634,022) (10,004)
Net loss (3,650,204) (9,736)
Net loss per share (1.02) (0.01)
Pro forma net loss (unaudited) (1) (3,538,000) (6,246)
Pro forma net loss per share (unaudited)
(basic and diluted) (1) $ (0.98) $ (0.01)
</TABLE>
<TABLE>
<CAPTION>
Year Ended
May 31, 2000
------------
<S> <C>
Balance Sheet Data:
Cash and cash equivalents $ 521,882
Total current assets 2,663,324
Working capital (253,275)
Total assets 2,853,528
Total long-term (excluding current portion) and related party debt 6,413
Total liabilities 2,923,012
Stockholders' (deficiency) equity $ (69,484)
</TABLE>
(1) The pro forma net loss reflects Amedore Homes, Inc.'s status as a C
corporation rather than as an S corporation for Federal income tax
purposes and interest expense on related party debt. See Note 1 to
"Notes to Financial Statements."
(2) Cost of Home and Land Sales includes $299,013 from related parties. See
Note 6 to "Notes to Financial Statements."
15
<PAGE>
PLAN OF OPERATION
The following discussion should be read in conjunction with our Financial
Statements and the accompanying notes thereto appearing elsewhere in this
prospectus.
Overview
We design, build, develop and market single-family homes, primarily in
suburban residential areas located in the Capitol Region of New York State, with
a focus on middle and high income communities. Generally, the communities in
which we build homes are located on property which was previously developed by
us or which we acquired fully improved.
We seek to maximize our return on capital and minimize risks associated
with land investment by employing a conservative land acquisition policy. We
accomplish this strategy by acquiring options to purchase lots at predetermined
prices and focusing on development sites where we expect to have less than a
three-year lot inventory. We have in the past and may in the future acquire
undeveloped land prior to obtaining all necessary governmental approvals in
order to obtain better terms or prices.
Plan of Operation
We intend to increase our marketing and selling efforts through a
multimedia advertising campaign that will include television radio and real
estate publications. We believe that our increased marketing efforts will
generate more customer traffic to our communities and help increase our sales as
well as our market share of the new home market in the Capitol Region of New
York State. Although we have experienced rising interest rates during the last
twelve months, our sales have increased on a quarter-to-quarter basis, and we
expect our sales to continue to expand, although there can be no assurance of
increased sales. We intend to increase the number of new homes we build and the
number of planned communities we develop.
We believe that the proceeds from this offering will be sufficient to
fund our current and proposed operations and we will not need to raise
additional funds for at least twelve months following the completion of this
offering.
We do not expect to purchase any significant equipment or anticipate the
hiring of a significant number of employees, although we will increase the
number of sub-contractors which we contract with in connection with our
increased production of new homes and development of planned communities.
Results of Operations for the Year Ended May 31, 2000
Total Revenues. Total revenues include the sale of our homes as well as
construction management fees. Total revenues amounted to $4,136,430 for the year
ended May 31, 2000.
Costs of Home and Land Sales. Costs of home and land sales include
construction costs and the purchase price of each lot we develop. Cost of home
and land sales totaled $3,602,974 for the year ended May 31, 2000.
Gross Profit. For the year ended May 31, 2000, we had a gross profit of
$533,456 or 12.9%. We expect our gross profit to increase as we increase the
number of homes we build as a result of increased purchasing volume discounts.
Operating Expenses. Operating expenses consist of payroll and related
expenses for executive, accounting and administrative personnel, recruiting,
professional fees, and other corporate expenses, including stock based
compensation expense and legal expense in the amounts of $2,928,250 and
$663,000, respectively. Operating expenses totaled $4,167,478 for the year ended
May 31, 2000. We do not expect operating expenses to increase significantly as
we increase our business volume, since we employ subcontractors on a job-by job
basis it is not necessary to significantly increase the size of our staff as our
business grows.
16
<PAGE>
Net loss. We incurred a net loss of $3,650,204 for the year ended
May 31, 2000, and may continue to incur net losses in the future.
Liquidity and Capital Resources
Since inception we have funded our capital requirements primarily
through loans from our stockholders as well as from cash generated from
operations and through our $500,000 line of credit with Hudson River National
Bank. The line of credit bears interest at a variable rate of prime plus 1.5%
and has a limit of $500,000. The line of credit expires on September 15, 2000
and is secured by our accounts receivable, inventory, equipment and contract
rights. As of May 31, 2000, the amount outstanding under the line of credit was
$483,337. As of May 31, 2000, we had working capital deficiency of
$253,275 and a stockholders' deficiency of $69,484. Through May 31, 2000, we
borrowed an aggregate of $1.45 million from George A. Amedore, Sr., which was
used for working capital, which does not bear interest and is payable on demand.
As full satisfaction of this debt Mr. Amedore has agreed to accept $700,000 from
the proceeds of this offering and convert approximately $700,000 of the
remaining debt into shares of our common stock at the initial public offering
price.
In February 2000, we acquired 13 lots for an aggregate purchase price of
$130,000 for which we issued a promissory note to the seller. The note is
payable on January 1, 2001 and bears interest at a rate of 8.5% per annum and
will be repaid out of the net proceeds of this offering.
For the period ended May 31, 1999, net cash used in operating activities
was $4,062 which is attributable to a net loss of $9,736 and depreciation of
$5,674.
For the period ended May 31, 2000, net cash used in operating activities
was $1,128,139 which was primarily attributable to an increase in inventory of
$2,002,069, a net loss of $3,650,204 (which includes a non-cash charge of
$2,928,250 in stock based compensation expense and $663,000 for stock issued for
legal expenses), an increase in prepaid expenses of $3,366 and an increase of
accrued expenses of $14,535, offset primarily by an increase in accounts payable
of $607,848, an increase in customer deposits of $318,106 and an increase of
receivable from related party of $16,007.
For the period ended May 31, 1999, net cash used in investing activities
was $8,300 which was solely attributable to an increase in capital expenditures.
For the period ended May 31, 2000, net cash used in investing activities
was $55,034 which was solely attributable to an increase in capital
expenditures.
For the period ended May 31, 1999, net cash used in financing activities
was $10,293, which was attributable to payments of related party debt of $11,088
and auto loans of $7,141, offset by proceeds from a line of credit of $7,936.
For the period ended May 31, 2000, net cash provided by financing
activities was $1,705,055, which was primarily attributable to proceeds from a
loan to us from our Chief Executive Officer of $1,450,000, proceeds from a line
of credit of $475,401, offset by deferred stock issuance costs of $113,666,
payment of related party debt of $62,123, payment on a land note of $40,000 and
payment on an auto loan of $4,556.
Based on our operating plan, we believe that the proceeds from this
offering will be sufficient to fund our current and proposed activities for at
least twelve months from completion of this offering. Thereafter, our continued
operations will depend on cash flow from operations and our ability to obtain
additional financing if necessary. We have no arrangements or commitments for
any future financing, and no assurance can be given that any required financing
will be available to us in the future on favorable terms, if at all. If we are
unable to generate sufficient cash flow from operations or obtain additional
financing when needed, our operations may be materially adversely affected.
17
<PAGE>
BUSINESS
We design, build, develop and market single-family homes, primarily in
suburban residential areas located in the Capitol Region of New York State, with
a focus on middle and high income communities. The Capitol Region includes
Albany, Schenectady, Saratoga and Rensselaer counties, each of which has
experienced significant population and job growth over the past several years.
We typically offer single-family homes at prices ranging from $130,000 to
$450,000, with an average sale price of $209,000, excluding customized options.
Our attached single-family homes are offered at prices ranging from $130,000 to
$200,000, with an average sale price of $176,000, excluding customized options.
As of July 31, 2000, we had twenty-two houses under construction in seven
separate communities. Generally, the communities in which we build houses are
located on property which was previously developed by us or which we acquired
fully improved.
Our senior management has been involved in the homebuilding industry in
the Capitol Region of New York State for over thirty years. In 1996 our senior
management joined with the management of Traditional Builders Inc., a local
builder in the Capitol Region, to form Traditional Amedore Homes, Inc. which
operated through 1999. During this three year period Traditional's revenues grew
to approximately $26 million for the year ended December 31, 1999.
Our homebuilding and community development operation is positioned to
compete with high volume builders since we offer a broader selection of homes
with more amenities and greater design flexibility than typically offered by
volume builders. We offer the homebuyer the ability to select various design
features according to their personal preferences. Through a volume building
approach, our custom homes generally offer more value than those offered by
local, lower-volume custom builders, primarily due to effective purchasing,
construction and marketing programs. While most design modifications and
customized options are significant to the homebuyer, they typically involve
relatively minor adjustments that allow us to maintain construction efficiencies
that result in greater profitability due to increased sales prices and margins.
We believe that our ability to meet the design tastes of prospective homebuyers
at competitive prices distinguishes us from many of our competitors.
Our strategy
We seek to distinguish ourselves from other production homebuilders and
to respond rapidly to changing market conditions through a business strategy
focused on the following:
Superior design and quality. We believe we maximize customer satisfaction by
offering homes that are built with quality materials and craftsmanship, exhibit
distinctive design features and are situated in premium locations. We believe
that we generally offer higher caliber homes in their defined price range or
category than those built by our competitors.
Product breadth. We design our new homes to appeal to a wide variety of
consumers. We target entry- level and move-up buyers, offering homes at prices
that reflect the production efficiencies of a high- volume tract builder. We
offer homes at prices ranging between $130,000 and $450,000 and ranging in size
from 1,400 square feet to 4,500 square feet. We believe this product breadth
helps to reduce exposure to variable economic cycles.
Highest level of service. We are committed to achieving the highest level of
customer satisfaction as an integral part of our competitive strategy. During
the sales process our experienced sales personnel keep customers informed of
their home's construction progress. After delivery, our customer care
departments respond to any questions or warranty matters a customer may have.
18
<PAGE>
Conservative land acquisition policy. We seek to maximize our return on capital
employed by practicing a conservative land acquisition policy that minimizes
risks associated with land investment. We accomplish this by:
o focusing on development sites where we expect to have less than
a three-year lot inventory;
o generally purchasing land subject to complete entitlement,
including zoning and utility services; and
o controlling lots on a non-recourse, rolling option basis where
we have the right, but not the obligation, to buy lots at
predetermined prices based on a takedown schedule that reflects
anticipated home closings.
We have in the past and may in the future acquire undeveloped land prior
to obtaining all necessary governmental approvals in order to obtain better
terms or prices. In addition, we intend to directly acquire, where appropriate,
quality residential properties that are in high demand for use in our
homebuilding operations and for sale to third-party homebuilders.
Cost management. We have focused on controlling costs and minimizing overhead.
We seek to reduce costs by:
o using subcontractors to carry out home construction and site
improvement on a fixed- price basis;
o obtaining favorable pricing from subcontractors through
long-term relationships and large volume jobs;
o reducing interest carry by minimizing our inventory of unsold or
speculative homes and shortening the home construction cycle;
o generally beginning construction on a home under contract only
after a satisfactory down payment and/or receipt of mortgage
approval has been received from the buyer;
o minimizing overhead by centralizing certain administrative
activities; and
o maintaining management information systems to allow the
monitoring of homebuilding production, scheduling and budgeting.
Expansion in new and existing markets. Depending on market conditions, we may
explore expansion opportunities in new or existing geographic areas where we see
an ability to exploit a competitive advantage. Expansion may take place through
strategic acquisitions of existing homebuilders, through start-up operations or
through internal growth.
Geographic markets
As of July 31, 2000, we owned lots in various stages of development with
respect to approximately six projects in the Capitol Region of New York State,
which includes Albany, Schenectady, Saratoga and Rensselaer counties. We are
currently selling homes in each of these developments. The homes for sale
currently range in size from 1,800 square feet to 3,800 square feet and are
currently priced from $150,000 to $320,000.
The following table sets forth the estimated number of homes under
construction and lots owned, under option and controlled as of July 31, 2000:
Estimated Number of Housing Units that could be Constructed on Land Controlled
as of July 31, 2000
<TABLE>
<CAPTION>
Lots Lots
County Lots under contract Lots owned under option controlled Total
------ ------------------- ---------- ------------ ---------- -----
<S> <C> <C> <C> <C> <C>
Albany 8 8 0 31 47
Schenectady 12 0 0 0 12
Saratoga 17 0 125 0 142
Total 37 8 125 31 201
</TABLE>
19
<PAGE>
Lots under contract represents parcels of land which we have agreed to
acquire which will be transferred directly from a third-party to the purchaser
of the home upon closing.
Lots owned represents parcels of land that are 100% owned by us.
Lots under option represents parcels of land upon which we have the
option to acquire in the future.
Lots controlled represents parcels of land owned by third parties,
typically companies we venture with, on which we have the exclusive right to
construct homes.
The above table includes completed model homes. Additionally, we cannot
assure you that we will actually acquire any lots under option.
Developments in process
The table below summarizes the residential developments in process as of
July 31,2000 in our geographic markets:
Number of projects Number of projects Total
County held for development in sales stage units planned
------ -------------------- ------------------ -------------
Albany 1 4 47
Schenectady 0 1 12
Saratoga 1 2 142
Total 2 7 201
The number of projects held for development includes owned projects with
houses in planning, development, construction and sales stages. The number of
projects in the sales stage includes projects where the sales office has opened,
reservations are being taken or sales contracts are being executed. The total
units planned includes units under construction, backlog and lots under option
in owned projects.
Land acquisition
Prior to acquiring land we complete extensive comparative studies and
analyses to evaluate the economic feasability of each land acquisition. We
generally follow a policy of acquiring options to purchase land for future
community developments. We attempt to acquire land with a minimum cash
investment and negotiate takedown options, thereby limiting our financial
exposure to the amounts invested in property and pre-development cost. This
policy of land acquisition may raise the price of land that the we acquire, but
significantly reduces our risk. This policy generally allows us to obtain
necessary development approvals before acquisition of the land, thereby
enhancing the value of the options and the land eventually acquired.
The options and purchase agreements that we enter into are typically
subject to numerous conditions, including, but not limited to, our ability to
obtain necessary governmental approvals for the proposed community. Generally,
the deposit on the agreement will be returned to us if all approvals are not
obtained, although pre-development cost may not be recoverable. By paying an
additional, non-refundable deposit, we have the right to extend a significant
number of options for varying periods of time. In all instances, we have the
right to cancel any of our land option agreements by forfeiture of our deposit
on the agreement. In these instances, we are generally not able to recover any
pre-development costs.
Our development activities include site planning and engineering,
obtaining environmental and other regulatory approvals, constructing roads,
sewer, water, and drainage facilities. Development activities are performed by
our staff, together with independent architects, consultants, and contractors.
20
<PAGE>
The types of land acquisitions have been in the following categories:
o Fully approved developed lots (finished);
o Approved land not developed (not finished);
o Raw land with semi approvals; and
o Raw land no approvals.
We have allocated the above categories in the following percentages:
o Finished Lots - 40%
o Approved not Finished - 40%
o Semi Approved - 15%
o No Approvals - 5%
We expect to continue to acquire similar types of land as described
above for the foreseeable future.
Sales of land and lots have not previously had a significant impact on our
financial results. However, we will maintain the flexibility to sell land and
lots to take advantage of market opportunities that may exist.
Product design
We purchase designs and architectural plans from a number of outside
architects, designers, engineers, consultants and subcontractors. While some of
the our employees are involved in various stages of the design process, we
believe that the use of third parties for the production of the final design,
engineering and construction reduces our costs and increases design innovation
and quality. We believe it is critical to coordinate the design process with our
construction and sales and marketing efforts to ensure an appropriate balance
between market responsiveness, design innovation, construction effectiveness and
quality.
We create architectural variety within our projects by offering numerous
models, floor plans, and exterior styles in an effort to enhance home values by
creating diversified neighborhood looks within our projects. We offer homebuyers
the opportunity to select numerous customized options to both the interior and
exterior of their homes.
Development and construction
We act as the general contractor for the construction of our projects.
Virtually all construction work for our projects are performed by
subcontractors. Our employees, specifically our superintendents, coordinate the
construction of each project and the activities of subcontractors and suppliers,
and subject their work to quality and cost controls and compliance with zoning
and building codes. Subcontractors typically are retained on a phase-by-phase
basis to complete construction at a fixed price. Agreements with the
subcontractors are generally entered into after competitive bidding on a project
by project basis. We have established relationships with a large number of
subcontractors and are not dependent to any material degree upon the services of
any one subcontractor and believes that, if necessary, we can generally retain
sufficient qualified subcontractors for each aspect of construction. We believe
that our method of operations enables us to readily and efficiently adapt to
changes in housing demand and to avoid fixed costs associated with retaining
construction personnel.
We typically develop our projects in several phases generally averaging
approximately fifteen to forty homes per phase. From market studies, we
determine the number of homes to be built in the first phase, the appropriate
price range for the market and other factors. The first phase of home
construction is generally small to reduce risk while we measure consumer demand.
Construction generally does not begin until some sales have occurred, except for
construction of model homes. Subsequent phases are generally not started until
50% to 75% of the homes in the previous phase have been sold. Sales prices in
21
<PAGE>
the second phase are then adjusted to reflect market demand as evidenced by
sales results in the first phase. With each subsequent phase, we continue to
accumulate market data which, along with information such as time of year, the
local labor situation and the availability of materials and supplies, enables us
to determine the pricing, timing and size of subsequent phases. Although the
time required to complete a phase varies from development to development
depending on the above factors, we typically complete construction of a phase
within 10 to 24 months for larger homes and 6 to 18 months for smaller homes.
Sales and marketing
We typically build, furnish and landscape model homes for each project
and maintain on-site sales offices, which are usually open seven days a week. We
believe that model homes play a particularly important role in the marketing
efforts of our projects. Consequently, we expend significant effort in creating
an attractive atmosphere in our model homes. Interior decorations vary among our
models and are carefully selected based upon the lifestyles of targeted buyers.
Structural changes in design from the model homes generally are not permitted,
but homebuyers may select various optional construction and design amenities.
We normally sell all of our homes through sales representatives employed
by us who work from the sales offices located either at the model homes or at
sales centers used in each subdivision. We also use cooperative brokers to sell
our homes. Our sales representatives are available to assist prospective buyers
by providing them with floor plans, price information and tours of model homes,
and to assist them with the selection of options and upgrades. Sales
representatives attend periodic meetings at which they are provided with
information regarding other products in the area, the variety of financing
programs available, construction schedules and marketing and advertising plans.
We generally open an on-site sales office before the construction of the
model home is completed. This on-site sales office is utilized as a temporary
sales center to commence the sales process to potential customers. Potential
homebuyers may reserve a home by submitting a refundable deposit (a reservation
deposit) usually ranging from $1,500 to $3,000 and executing a reservation
document. We then conduct preliminary research concerning the credit status of
the potential homebuyer in order to "pre-qualify" the homebuyer. Once the
prospective homebuyer has been "pre-qualified" and there is a strong indication
that the homebuyer will qualify for a mortgage (although final loan approval is
still pending), the homebuyer must then convert the reservation deposit to an
"earnest money deposit" and complete a purchase contract for the purchase of
their home. We attempt to keep our contract cancellation rate low by attempting
to pre-qualify prospective homebuyers and by allowing homebuyers to customize
their homes at an early point in the purchase process. When home purchase
contracts are canceled, damages are usually limited to a percentage of the
purchase price of the home and may be less pursuant to applicable law or to the
terms of the purchase contract. When home purchase contracts are canceled, we
have historically been able to identify alternate homebuyers.
We make extensive use of advertising and promotional resources,
including newspaper advertisements, realtor promotions, showcase presentations
for custom homes, newsletters, brochures, direct mail and the placement of
strategically located sign boards in the immediate areas of projects. Because we
usually offer multiple projects within a market area, we are able to utilize
local advertising that highlights all of our projects within that same market
area.
In addition, our internet website located at "www.Amedorehomes.com" has
a complete listing of all of our new developments along with pictures of homes
and details of each community being developed.
Backlog and inventory
We typically pre-sell homes prior to and during construction through
home purchase contracts requiring earnest money deposits or through reservation
documents requiring reservation deposits.
22
<PAGE>
Generally, reservation deposits are refundable, but home purchase contracts are
not cancelable unless the customer is unable to sell their existing home,
qualify for financing or under other limited circumstances. A home sale is
placed in backlog status upon execution of such a contract or reservation and
receipt of an earnest money deposit or reservation deposit and is removed when
such contracts or reservations are canceled as described above or the home
purchase escrow is closed. As of July 31, 2000, we had a backlog of $4,780,849.
Homeowner warranty
We provide homeowners with a limited warranty which we will correct for
a limited period of time deficiencies listed in the homeowner warranty manual.
The warranty does not, however, include items that are covered by manufacturer's
warranties (such as appliances and air conditioning) or items that are not
installed by our employees or contractors hired by us (such as flooring
installed by an outside contractor employed by the homeowner).
Competition
The homebuilding industry is highly competitive. In each of the markets
in which we operate, we compete in terms of location, design, quality and price
with numerous other residential builders, including large national and regional
firms, some of which have greater financial resources than us. As we enter and
until we develop a reputation in a new market area, we can expect to face even
more significant competitive pressures. In certain markets, we may from time to
time engage in redesigns of product and/or make changes in existing model homes
to make our product more competitive. Such redesigns and/or changes may cause us
to incur additional expenses and/or to write-off previous investments in such
design or model homes.
Regulation
The housing industry is subject to increasing environmental, building,
zoning and real estate sales regulations by various federal, state and local
authorities. Such regulations affect home building by specifying, among other
things, the type and quality of building materials that must be used, certain
aspects of land use and building design, as well as the manner in which we
conduct sales activities and otherwise deal with customers.
In developing a project, we must increasingly obtain the approval of
numerous government authorities which regulate such matters as land use and
level of density, the installation of utility services, such as water and waste
disposal, and the dedication of acreage for open space, parks, schools and other
community purposes. If such authorities determine that existing utility services
will not adequately support proposed development, building moratoriums may be
imposed. As a result, we devote an increasing amount of time to evaluating the
impact of governmental restrictions imposed upon a new residential development.
Furthermore, as local circumstances or applicable laws change, we may be
required to obtain additional approvals or modifications of approvals previously
obtained. Such increasing regulation has resulted in a significant increase in
time between our initial acquisition of land and the commencement and completion
of our developments.
Raw materials
All of the raw materials and most of the components used in our business
are readily available in the United States. Most are standard items carried by
major suppliers. However, a rapid increase in the number of homes started could
cause shortages in the availability of such materials, thereby leading to delays
in the delivery of homes under construction. In addition, increases in the price
of lumber and other materials have a negative impact on margins. In order to
maintain our quality standards while providing a product at good value, we have
used and will under appropriate market circumstances consider the further use of
alternative materials, such as metal studs and framing in some of our projects.
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<PAGE>
Employees
We currently employ 9 persons, consisting of 3 in management, 2
administrative staff and 4 field laborers. None of our employees are covered by
a collective bargaining agreement. We believe we have good relations with our
employees.
Properties
Our principal executive offices are located at 3434 Carman Road, Suite
110, Schenectady, New York 12303, where we currently lease approximately 2,200
square feet of office space at an annual rate of $24,480. This lease expires on
May 31, 2005. We believe that our current office space is adequate for our
current and future operating activities.
Legal Proceedings
Other than claims made in the ordinary course of our business, we are
not party to any material legal proceedings.
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<PAGE>
MANAGEMENT
The following table sets forth information about our directors,
executive officers and key personnel as of the date of this prospectus.
Name Age Position
---- --- --------
George A. Amedore, Sr. 52 Chief Executive Officer and
Chairman of the Board
George A. Amedore, Jr. 31 Executive Vice President,
Secretary and Director
George Caputo 42 Director
Joseph Zappala 65 Director
Marc B. Mazur 41 Director
George A. Amedore, Sr. has served as our Chief Executive Officer and Chairman of
our board of directors since June 1999. From January 1996 to May 1999, Mr.
Amedore served as President of Traditional Amedore Homes Inc., a home building
and land development company based in the Albany metropolitan area of New York
State. From 1979 to January 1996, Mr. Amedore served as President of Amedore &
Sons Builders, Inc. Mr. Amedore has over 30 years of experience in the home
building industry.
George A. Amedore, Jr. has served as our Executive Vice President and Secretary
since June 1999 and as a director since January 2000. Mr. Amedore's management
duties have been focused on sales management, site selection, product design,
pricing and development of advertising and marketing. From January 1996 to June
1999, Mr. Amedore was the General Manager and Vice President of Sales an
Marketing of Traditional Amedore Homes Inc., a home building and land
development company based in the Albany metropolitan area of New York State.
From March 1992 to January 1996, Mr. Amedore was employed as Vice President of
Sales and Marketing of Amedore & Sons Builders, Inc. He has been employed in the
real estate sales, development and construction business since 1987. Mr. Amedore
is a licensed New York State real estate broker. Mr. Amedore has been a member
of the board of directors of the Schenectady Homebuilders Association since
January 1999.
George Caputo has been a member of our board of directors since January 2000.
From January 2000 to present, Mr. Caputo has been the Vice President of
Corporate Builders Group, Inc., a New York City construction management and
consulting company. From 1994 to January 2000, Mr. Caputo was the Project
Manager at Vanderbilt Group, LLC, a real estate development and general
contracting company. While at Vanderbilt Group, Mr. Caputo managed numerous
projects including projects for companies such as IBM, NY Healthcare, Exco USA
and the New York City Government Department of Youth and Community Development.
Mr. Caputo has twenty years of experience in all phases of construction and
project management and has successfully completed various types of construction
projects including new residential, commercial office, restaurants, financial
trading floors and retail space.
Joseph Zappala has been a member of our board of directors since January 2000.
Since January 1995, Mr. Zappala has served as Chairman and a member of the board
of managers of CarePlus, LLC, a growing Medicaid and Child Health Plus health
maintenance organization. Mr. Zappala was on the Boards of Directors of the
International Thoroughbreds Association from June 1997 to January 1999 and Miami
Subs, Inc. from June 1995 to July 1999. Mr. Zappala was appointed by United
States President George Bush and served as the United States Ambassador to Spain
from 1989 to 1992. Mr. Zappala has been a Florida-based business executive for
over 35 years with experience in various industries, including healthcare,
banking, real estate and manufacturing.
Marc B. Mazur has been a member of our board of directors since January 2000.
Mr. Mazur is currently the Vice President-Strategic Business Development of
Careinsite Inc., an internet healthcare company that provides clinical and
administrative tools to healtcare participants. From 1997 to 1999 Mr.
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<PAGE>
Mazur acted as a consultant to companies in the healthcare and financial
services industries where he provided strategic advice, developed marketing
objectives and assisted in client development. Mr. Mazur's clients included
Goldman Sachs & Co., Franklin Health Inc. and Moon Communications Inc. In 1995
Mr. Mazur co-founded AP Healthcare LLC, where he served as President and CEO
until 1997. AP Healthcare was formed to evaluate and prevent the growth of
Aspiration Pneumonia. From 1987-1993 and from 1995-1996, Mr. Mazur was Vice
President-International Fixed Income with Goldman Sachs & Co. Mr. Mazur received
his J.D. from Villanova University, School of Law in 1984 and earned a B.A. in
Economic Political Science from Columbia University in 1981. Mr. Mazur currently
serves as a member of the board of the Columbia College Alumni Association,
NADAP (National Association on Drug Abuse Problems) and the NY State Governor's
Advisory Committee on Managed Long Term Care.
Executive compensation
Summary Compensation Table
The following table provides a summary of cash and non-cash compensation
for the year ended May 31, 2000 with respect to the following executive officer
of Amedore Homes:
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities
Other Under- All
Annual Restricted lying Other
Compen- Stock Options/ LTIP Compen-
Name And Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) (#) (#) ($) ($)
------------------ ---- --- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George A. Amedore, 2000 $156,000 0 0 0 0 0 0
Sr., Chairman and
Chief Executive
Officer
</TABLE>
Employment agreements
On July 5, 2000, we entered into a five-year employment agreement with
George A. Amedore, Sr. at an annual salary of $240,000. If we achieve the
following performance levels we will be obligated to pay Mr. Amedore the
following bonuses: (a) $25,000 if we achieve gross revenues of $12,000,000 and
$430,000 in net income for the year ended May 31, 2001, (b) $50,000 if we
achieve gross revenues of $18,500,000 and $800,000 in net income for the year
ended May 31, 2002, and (c) $75,000 if we achieve gross revenues of $22,250,000
and $1,000,000 in net income for the year ended May 31, 2003. For the remaining
term of Mr. Amedore employment agreement beyond May 31, 2003, Mr. Amedore's
bonus will be determined and paid in accordance with policies set from time to
time by our board of directors. Mr. Amedore is also entitled to an automobile
allowance of $600 per month during the term of this agreement. The agreement
also contains confidentiality provisions and a covenant not to compete with us
during the term of this agreement and for one (1) year after the termination of
this agreement. Mr. Amedore's employment may only be terminated by us for cause.
The agreement provides for severance payments to be made to Mr. Amedore in
limited circumstances upon the termination of his employment.
On July 5, 2000, we entered into a three-year employment agreement with
George A. Amedore, Jr. at an annual salary of $125,000. If we achieve the
following performance levels we will be obligated to pay Mr. Amedore the
following bonuses: (a) $25,000 if we achieve gross revenues of $12,000,000 and
$430,000 in net income for the year ended May 31, 2001, (b) $50,000 if we
achieve gross revenues of $18,500,000 and $800,000 in net income for the year
ended May 31, 2002, and (c) $75,000 if we achieve gross revenues of $22,250,000
and $1,000,000 in net income for the year ended May 31, 2003. Mr.
26
<PAGE>
Amedore is also entitled to an automobile allowance of $600 per month during the
term of this agreement. The agreement also contains confidentiality provisions
and a covenant not to compete with us during the term of this agreement and for
one (1) year after the termination of this agreement. Mr. Amedore's employment
may only be terminated by us for cause. The agreement provides for severance
payments to be made to Mr. Amedore in limited circumstances upon the termination
of his employment.
Stock Option Plan
In June 2000 , the board of directors and shareholders adopted the 2000
stock option plan. The plan will be administered by the compensation committee
or our board of directors, who will determine among other things, those
individuals who shall receive options, the time period during which the options
may be partially or fully exercised, the number of shares of common stock
issuable upon the exercise of the options and the option exercise price. The
options may be granted as either or both of the following: (a) incentive stock
options, or (b) non-qualified stock options. 500,000 shares may be issued under
this plan. To date no options have been granted under the plan.
In connection with the plan, the exercise price of each incentive stock
option may not be less than 100% of the fair market value of our common stock on
the date of grant or 110% of fair market value in the case of an employee
holding 10% or more of our outstanding common stock. The aggregate fair market
value of shares of common stock for which incentive stock options granted to any
employee are exercisable for the first time by such employee during any calendar
year, pursuant to all of our, or any related corporation's, stock option plan,
may not exceed $100,000. Non-qualified stock options may be granted at a price
determined by our compensation committee, but not at less than 85% of the fair
market value of our common stock. Stock options granted pursuant to our stock
option plan will expire not more than ten years from the date of grant.
The plan is effective for a period of ten years, expiring in 2010.
Options may be granted to officers, directors, consultants, key employees,
advisors and similar parties who provide their skills and expertise to us. The
plan is designed to enable our management to attract and retain qualified and
competent directors, employees, consultants and independent contractors. Options
granted under the plan may be exercised for up to ten years, and shall be at an
exercise price all as determined by our board. Options are non-transferable
except by the laws of descent and distribution or a change in control of us, as
defined in the plan, and are exercisable only by the participant during his or
her lifetime. Change in control includes (a) the sale of substantially all of
the assets of us and merger or consolidation with another company, or (b) a
majority of the board changes other than by election by the stockholders
pursuant to board solicitation or by vacancies filled by the board caused by
death or resignation of such person.
If a participant ceases affiliation with us by reason of death,
permanent disability or retirement at or after age 70, the option remains
exercisable for one year from such occurrence but not beyond the option's
expiration date. Other types of termination allow the participant three months
to exercise, except for termination for cause which results in immediate
termination of the option.
Any unexercised options that expire or that terminate upon an employee's
ceasing to be employed by us become available again for issuance under the plan.
The plan may be terminated or amended at any time by our board of
directors, except that the number of shares of common stock reserved for
issuance upon the exercise of options granted under the plan may not be
increased without the consent of our stockholders.
Limitations of liability and indemnification of directors and officers
Our restated certificate of incorporation and by-laws limit the
liability of directors and officers to the maximum extent permitted by New York
law. We will indemnify any person who was or is a party, or is threatened to be
made a party to, an action, suit or proceeding, whether civil, criminal,
administrative or investigative, if that person is or was a director, officer,
employee or agent of us or serves or served any other enterprise at our request.
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<PAGE>
In addition, our certificate of incorporation provides that generally a
director shall not be personally liable to us or our stockholders for monetary
damages for breach of the director's fiduciary duty. However, in accordance with
New York law, a director will not be indemnified for a breach of his duty of
loyalty, acts or omissions not in good faith or involving intentional misconduct
or a knowing violation or any transaction from which the director derived
improper personal benefit.
We intend to purchase and will maintain directors' and officers'
insurance, the amount of which has not yet been determined. This insurance will
insure directors against any liability arising out of the director's status as
our director, regardless of whether we have the power to indemnify the director
against liability under applicable law.
The underwriting agreement also contains provisions whereby we agree to
indemnify the underwriters, each officer and director of the underwriters, and
each person who controls the underwriters within the meaning of Section 15 of
the Securities Act, against any losses, liabilities, claims or damages arising
out of alleged untrue statements or alleged omissions of material facts
contained in the registration statement or prospectus.
We have been advised that the position of the Securities and Exchange
Commission that insofar as the indemnification provisions referenced above may
be invoked to disclaim liability for damages arising under the Securities Act,
these provisions are against public policy as expressed in the Securities Act
and are, therefore, unenforceable.
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<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of the date of this prospectus,
information with respect to the beneficial ownership of our common stock by:
o each of our directors;
o each executive officer named in the Executive compensation
section under "Management";
o all of our executive officers and directors as a group; and
o each person known by us who beneficially owns 5% or more of the
outstanding shares of our common stock.
Unless otherwise indicated, each of the stockholders listed below has
sole voting and investment power with respect to the shares beneficially owned.
A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this prospectus upon the
exercise of warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by such person,
but not those held by any other person, and which are exercisable within 60 days
from the date of this prospectus have been exercised. Unless otherwise
indicated, we believe that all persons named in this table have sole voting and
investment power with respect to all shares of common stock beneficially owned
by them. Common stock beneficially owned is based on 4,000,000 shares
outstanding prior to the offering and 5,107,692 shares outstanding after the
offering.
Unless otherwise indicated, the address of each person listed below is
3434 Carman Road, Schenectady, New York 12303.
<TABLE>
<CAPTION>
Number of shares beneficially owned Percentage of Ownership
Prior to the After the Prior to the After the
Name of beneficial owner offering offering offering offering
------------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
George A. Amedore Sr. 1,900,000 2,007,692(1) 47.5% 39.3%
George A. Amedore Jr. 725,000 725,000 18.1 14.2
Mark R. Amedore 725,000 725,000 18.1 14.2
George Caputo 405,000 405,000 10.1 7.9
Joseph Zappala 75,000 75,000 1.9 1.5
Marc B. Mazur 50,000 50,000 1.2 *
All executive officers and 3,880,000 3,987,692 97.0% 78.1%
directors as a group (five
persons)(1)
</TABLE>
-------------
* less than one percent
(1) Upon completion of the offering Mr. Amedore will convert approximately
$700,000 of debt to equity at the initial public offering price of our
common stock and will receive an additional 107,692 shares which is
included herein.
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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During the year ended May 31, 2000, we borrowed approximately $1,450,000
from George A. Amedore, Sr. which is payable on demand and is interest free.
Upon completion of this offering we will repay $700,000 to Mr. Amedore and he
has agreed to convert the remaining outstanding debt of approximately $700,000
into 107,692 shares of our common stock at the initial public offering price of
our common stock.
During the year ended May 31, 2000, we purchased approximately $299,000
of inventory from Traditional Amedore Homes, Inc. George A. Amedore, Sr. owns
50% of the capital stock of Traditional. In addition, we received $271,500 of
construction management fee revenue from Traditional during the year ended May
31, 2000.
As of May 31, 2000, Amedore DMI owed us approximately $16,000. Amedore
DMI is 17.5% owned by George A. Amedore, Sr.
In the future, we will present all proposed transactions between us and
our officers, directors or 5% shareholders, and affiliates, to our board of
directors for its consideration and approval. Any such transaction will require
approval by a majority of the directors and such transactions will be on terms
no less favorable than those available to disinterested third parties.
30
<PAGE>
DESCRIPTION OF SECURITIES
The following description of matters relating to our securities is
qualified by New York law and to the provisions of our certificate of
incorporation, as amended, and bylaws, and the underwriting agreement between us
and the underwriter, copies of which have been filed with the Commission as
exhibits to the registration statement of which this prospectus is a part.
General
We are authorized by our certificate of incorporation to issue an
aggregate of 20,000,000 shares of common stock, $.001 par value per share and
1,000,000 shares of blank check preferred stock. Immediately prior to this
offering, an aggregate of 4,000,000 shares of our common stock were issued and
outstanding. All outstanding shares of common stock are of the same class and
have equal rights and attributes. No shares of preferred stock are outstanding.
Common stock
We are authorized to issue 20,000,000 shares of common stock, $.001 par
value per share. Each share of common stock entitles the holder thereof to one
vote on all matters submitted to a vote of the shareholders. Since the holders
of common stock do not have cumulative voting rights, holders of more than 50%
of the outstanding shares can elect all of our directors and approve significant
corporate transactions and holders of the remaining shares by themselves cannot
elect any directors. The holders of our common stock do not have preemptive,
conversion, redemption, subscription or cumulative voting rights. Holders of
common stock are entitled to receive ratably such dividends as may be declared
by our board of directors out of funds legally available therefor. In the event
of our liquidation, dissolution or winding up, holders of common stock will be
entitled to participate equally in net assets subject to the preferences that
may be applicable to any outstanding preferred stock. All outstanding shares of
common stock and common stock to be outstanding upon completion of this offering
are and will be validly authorized and duly issued, fully paid, and
non-assessable.
Preferred stock
Our certificate of incorporation authorizes the issuance of up to
1,000,000 shares of blank check preferred stock, the rights, privileges and
preferences of which may be designated by our board of directors from time to
time. Accordingly, our board of directors is empowered, without stockholder
approval, to issue preferred stock with dividend, liquidation, conversion, or
other rights that could adversely affect the rights of our stockholders. These
shares may have rights which are senior to our common stock. Preferred stock may
be issued in the future in connection with acquisitions, finances or such other
matters as our board of directors deems to be appropriate. In the event that any
such shares of preferred stock shall be issued, a certificate of designation,
setting forth the series of such preferred stock and the relative rights,
privileges and designations with respect thereto, shall be filed with the
Secretary of State of the State of New York. The effect of such preferred stock
is that our board of directors alone may authorize the issuance of preferred
stock which could have the effect of making more difficult or discouraging an
attempt to obtain control of us by means of a merger, tender offer, proxy
contest or other means.
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<PAGE>
Representative's warrants
We have granted the representative, for a total of $10.00, warrants to
purchase up to 100,000 shares of our common stock. Each warrant is exercisable
into one share of our common stock for a period of four years commencing one
year after their issuance and sale, at 165% of the initial public offering price
of our common stock. The representative is prohibited from transferring such
warrants for the first year except to partners of the underwriters or selling
group. For a period of five years from the date of the closing of our initial
public offering, we have granted the holders of the representative's warrants
certain demand and "piggyback" registration rights with respect to the common
stock issuable upon exercise of the representative's warrants. The
representative's warrants contain anti-dilution provisions providing for
automatic adjustment of the exercise price and number of shares upon the
occurrence of specific events including stock dividends, splits, mergers,
acquisitions and recapitalization.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company, 40 Wall Street, New York, New York 10005.
32
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of this offering, we will have 5,107,692 shares of
our common stock issued and outstanding. The 1,000,000 shares of common stock
offered by this prospectus will be freely tradable without restriction or
further registration under the Securities Act, except for any shares purchased
or held by our affiliates, in general, a person who has a control relationship
with us, which will be subject to the limitations of Rule 144 adopted under the
Securities Act. The remaining 4,107,692 shares of common stock are "restricted
securities" as that term is defined under Rule 144, and may not be sold unless
registered under the Securities Act or sold pursuant to an exemption. These
restricted securities were issued by us in private transactions in reliance upon
exemptions from registration under the Securities Act.
In general, under Rule 144, as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an "affiliate," as
defined under Rule 144, of ours, or persons whose shares are aggregated, who for
at least one year has beneficially owned restricted securities acquired directly
or indirectly from us or an affiliate of ours in a private transaction is
entitled to sell in brokerage transactions within any three-month period, a
number of shares that does not exceed the greater of (a) 1% of the total number
of outstanding shares of the same class, or (b) if the stock is quoted on a
national securities exchange, the average weekly trading volume in the stock
during the four calendar weeks preceding the day notice is given to the
Commission with respect to the sale. Sales under Rule 144 are also subject to
manner of sale and notice requirements and to the availability of current public
information about us. A person, or persons whose shares are aggregated, who is
not an affiliate and has not been an affiliate of ours for at least the three
months immediately preceding the sale and who has beneficially owned restricted
securities for at least two years is entitled to sell shares pursuant to Rule
144(k) without regard to any of the limitations described above.
Rule 701 under the Securities Act provides that shares of common stock
acquired on the exercise of options granted under a written compensatory plan of
ours or contract with us prior to the date of this prospectus may be resold by
persons, other than our affiliates, beginning 90 days after the date of this
prospectus, subject only to the manner of sale provisions of Rule 144 and by
affiliates under Rule 144 without compliance with its one-year minimum holding
period, subject to limitations. There are 500,000 shares of our common stock
issuable upon the exercise of options which may be granted under our stock
option plan. Except as otherwise provided above, beginning 90 days after the
date of this prospectus, the option shares, if any, would be eligible for sale
in reliance on Rule 701, subject to vesting provisions.
Each of our officers and directors and all other holders of shares of
our common stock have agreed that, they will not, without the prior written
consent of the representative of the underwriters, directly or indirectly, sell
or otherwise dispose of any shares of our common stock or securities convertible
into or exercisable for our common stock during the twelve (12) month period
commencing on the effective date of the registration statement. Upon expiration
of the lock-up period, all of the shares of common stock subject to such lock-up
agreements will be eligible for sale under Rule 144. The 4,107,692 shares will
become eligible for sale in accordance with the exemptive provisions and the
volume limitations of Rule 144 in January 2001, however, the owners of such
shares have agreed not to offer, sell or otherwise dispose of their shares for a
period of 12 months commencing on the effective date of our registration
statement without the prior approval of the representative.
33
<PAGE>
PLAN OF DISTRIBUTION
Subject to the terms and conditions of the underwriting agreement, the
form of which is filed as an exhibit to the registration statement filed with
the Commission of which this prospectus is a part, the underwriters named below
have, severally and not jointly, agreed through Nutmeg Securities Ltd., as the
representative of the underwriters, to purchase from us, and we have agreed to
sell to the underwriters, the aggregate number of shares of our common stock set
forth opposite their respective names:
Number of shares
Underwriters of common stock
------------ ---------------
Nutmeg Securities Ltd.. . . . . . . . . . . . . .
---------
Total . . . . . . . . . . . . . . . . . . . . . . 1,000,000
The underwriting agreement provides that the obligations of the several
underwriters under that agreement depend upon certain conditions, including the
absence of any material adverse change in our business and the receipt of
certificates, opinion and letters from our counsel and our independent public
accountants. The underwriters are committed to take and to pay for all of the
shares offered hereby, if any are purchased. In the event of a default by any of
the underwriters, purchase commitments of the non-defaulting underwriters may be
increased or the underwriting agreement may be terminated.
The underwriters have advised us that they propose to offer all or part
of the shares of common stock offered hereby directly to the public initially at
the price set forth on the cover page of this prospectus. They have also advised
us that they may offer shares of common stock to certain dealers at a price that
represents a concession of not more than $ per share, and that the underwriter
may allow, and these dealers may reallow, a concession of not more than $ per
share to certain other dealers. After the completion of this offering, the price
to the public and the concessions may be changed.
We have granted the underwriters an option, exercisable within 45 days
after the effective date of the registration statement of which this prospectus
is a part, to purchase up to an additional 150,000 shares of our common stock at
the same price per share as the initial 1,000,000 shares of common stock to be
purchased by the underwriters. The underwriters may exercise this option only to
cover over- allotments, if any. If the underwriters exercise this option, each
of the underwriters will have a firm commitment, subject to some conditions, to
purchase the same percentage of the additional shares of common stock as the
percentage of the initial 1,000,000 shares of common stock to be purchased by
that underwriter.
We have agreed to indemnify the underwriters and their controlling
persons against certain liabilities, including liabilities under the Securities
Act, and to contribute to payment the underwriters and their controlling persons
may be required to make.
We have agreed to pay the representative of the underwriters a
non-accountable expense allowance equal to 3% of the gross proceeds of this
offering, of which $30,000 has been paid as of the date of this prospectus. We
have also agreed to pay all expenses in connection with qualifying the
securities under the laws of those states the representative may designate,
including fees and expenses of counsel retained for such purposes by the
representative and the costs and disbursements in connection with qualifying the
offering with the National Association of Securities Dealers, Inc.
34
<PAGE>
We have agreed to issue to the representative of the underwriters, for a
total of $10.00, warrants to purchase an aggregate of 100,000 shares of common
stock exercisable for a period of four years commencing one year after the
effective date of the registration statement of which this prospectus is a part,
at a price equal to 165% of the initial public offering price of the shares of
common stock. The representative's warrants contain anti-dilution provisions
providing for automatic adjustments of the exercise price and number of shares
issuable on exercise price and number of shares issuable on exercise of the
representative's warrants upon the occurrence of some events, including stock
dividends, stock splits, mergers, acquisitions and recapitalizations.
The representative's warrants contain certain demand and piggyback
registration rights relating to the 100,000 shares of common stock issuable
thereunder. For the life of the representative's warrants, the representative
will have the opportunity to profit from a rise in the market price for voting,
dividend or other stockholder rights with respect to those warrants. The holders
of shares of common stock issued upon exercise of those warrants will have the
voting, dividend, and other stockholder rights of holder of shares of common
stock. The representative's warrants are restricted from sale, transfer,
assignment or hypothecation for the one year period from the date of this
prospectus, except to officers or partners of the underwriters and members of
the selling group and/or their officers or partners.
We have also granted to the representative of the underwriters the
right, for a period of 2 years from the closing of this offering, to appoint an
observer to our board of directors to attend meetings of our board of directors.
The observer will have all rights of a board member, except the right to vote
and may attend any or all meetings of the board of directors. The
representative's observer will be entitled to receive reimbursement for all
reasonable and accountable out-of-pocket expenses incurred in attending board
meetings, at the same rate given to directors, and to the extent any fees are
paid to independent directors for attending meetings, such attendance fees.
We and our principal shareholders have agreed to grant the
representative a right of first refusal with respect to the sale of at least
$5,000,000 of our securities within 12 months.
We and our officers, directors and present shareholders have agreed
that, for a period of twelve months after the completion of this offering,
without the prior written consent of the representative of the underwriters,
none of us will sell or otherwise dispose of any of our respective equity
securities or securities convertible into our equity securities, except for the
sale of shares to the underwriters under the terms of the underwriting
agreement.
The representative of the underwriters has informed us that the
underwriters do not expect any sales of the shares of common stock offered by
this prospectus to be made to discretionary accounts controlled by the
underwriters.
Prior to this offering, there has been no established market in the
United States or elsewhere for our common stock. Consequently, the initial
public offering price has been determined by negotiation between us and the
representative of the underwriters and does not necessarily bear any
relationship to our asset value, net worth or other established criteria of
value. The factors considered in these negotiations, in addition to prevailing
market conditions, included the history of and prospects for the industry in
which we compete, an assessment of our management, our prospects, our capital
structure and other factors as were deemed relevant.
The representative, on behalf of the underwriters, may engage in (a)
over-allotment, (b) stabilizing transactions, (c) syndicate covering
transactions and (d) penalty bids. Over-allotment involves syndicate sales in
excess of this offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the shares of common stock
being offered so long as the stabilizing bids do not exceed a specified maximum.
35
<PAGE>
Syndicate covering transactions involve purchases of the shares of
common stock in the open market after the distribution has been completed in
order to cover syndicate short positions. Penalty bids permit the representative
to reclaim a selling concession from a syndicate member when the shares of
common stock originally sold by the syndicate member are purchased in a
syndicate covering transaction to cover syndicate short positions.
Stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the shares of common stock to be higher than it
would otherwise be in the absence of such transactions. These transactions may
be effected on Amex or otherwise and, if commenced, may be discontinued at any
time. The transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M, pursuant to which the persons may bid
for or purchase our common stock for the purpose of stabilizing their respective
market prices. Neither we nor the underwriters make any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the securities offered by this
prospectus.
In connection with this offering, certain underwriters and selling group
members and their respective affiliates may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock offered in
this prospectus. These actions include purchasing common stock to cover some or
all of a short position of common stock maintained by the representative and the
imposition of penalty bids.
36
<PAGE>
LEGAL MATTERS
The legality of the common stock offered by this prospectus and certain
legal matters in connection with the offering will be passed upon for us by
Gersten, Savage & Kaplowitz, LLP, New York, New York. Gersten, Savage &
Kaplowitz, LLP owns 120,000 shares of our common stock. Certain legal matters
will be passed upon for the underwriters by Silverman, Collura & Chernis, P.C.,
New York, New York.
EXPERTS
The financial statements as of May 31, 2000, and for each of the two
years in the period ended May 31, 2000, included in this prospectus and the
related financial statement schedules included elsewhere in the registration
statement have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports appearing herein and elsewhere in the registration
statement, and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form SB-2, including exhibits, under the Securities Act with
respect to the common stock to be sold in this offering. This prospectus does
not contain all of the information set forth in this registration statement. For
further information about us and the shares of common stock to be sold in the
offering, please refer to the registration statement. For additional
information, please refer to the exhibits that have been filed with our
registration statement on Form SB-2.
You may read and copy all or any portion of the registration statement
or any other information that we file at the Securities and Exchange
Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C.
20549. You can request copies of these documents upon payment of a duplicating
fee, by writing to the Securities and Exchange Commission. Please call the
Securities and Exchange Commission at 1-800-SEC-0330 for further information
about the public reference rooms. Our Securities and Exchange Commission
filings, including the registration statement, will also be available on the
Securities and Exchange Commission's website (http://www.sec.gov).
As a result of the offering, we will become subject to the information
and reporting requirements of the Securities and Exchange Act of 1934, as
amended, and, in accordance with these requirements, will file periodic reports,
proxy statements and other information with the Securities and Exchange
Commission.
We intend to provide to our stockholders annual reports containing
financial statements audited by our independent auditors and to make available
quarterly reports containing unaudited financial data for the first three
quarters of each fiscal year.
37
<PAGE>
Page
INDEPENDENT AUDITORS' REPORT F-1
FINANCIAL STATEMENTS AS OF AND FOR THE YEARS ENDED
MAY 31, 2000 AND 1999:
Balance Sheet as of May 31, 2000 F-2
Statements of Operations for the Years Ended May 31, 2000 and 1999 F-3
Statements of Stockholders' Deficiency for the Years Ended May 31,
2000 and 1999 F-4
Statements of Cash Flows for the Years Ended May 31, 2000 and 1999 F-5
Notes to Financial Statements F-6-11
<PAGE>
INDEPENDENT AUDITORS' REPORT
Amedore Homes, Inc.
Schenectady, New York
We have audited the accompanying balance sheet of Amedore Homes, Inc. (the
"Company") as of May 31, 2000 and the related statements of operations,
stockholders' deficiency and cash flows for the years ended May 31, 2000 and
1999. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at May 31, 2000 and the results
of its operations and its cash flows for the years ended May 31, 2000 and 1999
in conformity with accounting principles generally accepted in the United States
of America.
/s/ Deloitte & Touche LLP
June 29, 2000 (August 15, 2000 with respect
to the extension on the line of credit as disclosed
in Note 9)
<PAGE>
AMEDORE HOMES, INC.
<TABLE>
<CAPTION>
BALANCE SHEET
------------------------------------------------------------------------------------------------
Unaudited
Pro Forma
May 31,
May 31, 2000
2000 (Note 1)
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 521,882 $ 521,882
Receivable - related party (Note 6) 16,007 16,007
Inventory (Notes 1 and 2) 2,122,069 2,122,069
Prepaid expenses 3,366 3,366
----------- -----------
Total current assets 2,663,324 2,663,324
PROPERTY AND EQUIPMENT- Net (Note 1) 76,538 76,538
DEFERRED TAX ASSET -- 158,304
DEFERRED STOCK ISSUANCE COSTS 113,666 113,666
----------- -----------
TOTAL ASSETS $ 2,853,528 $ 3,011,832
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
CURRENT LIABILITIES:
Accounts payable $ 607,848 $ 607,848
Customer deposits 318,106 318,106
Accrued expenses 16,641 16,641
Related party debt (Note 6) 1,405,262 1,405,262
Current portion of long-term debt (Note 3) 568,742 614,942
----------- -----------
Total current liabilities 2,916,599 2,962,799
LONG-TERM DEBT, NET OF CURRENT PORTION (Notes 3 and 5) 6,413 6,413
----------- -----------
Total liabilities 2,923,012 2,969,212
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)
STOCKHOLDERS' (DEFICIENCY) EQUITY (Note 4)
Common stock, $.001 par value, 20,000,0000 shares authorized,
4,000,000 shares issued and outstanding 4,000 4,000
Additional paid-in capital 3,592,250 --
(Accumulated deficit) Retained earnings (3,665,734) 38,620
----------- -----------
Total stockholders' (deficiency) equity (69,484) 42,620
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY $ 2,853,528 $ 3,011,832
=========== ===========
</TABLE>
See notes to financial statements.
F-2
<PAGE>
AMEDORE HOMES, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
YEARS ENDED MAY 31, 2000 AND 1999
----------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
REVENUES:
Home and land sales (Note 1) $ 3,864,930 $ --
Construction management fee revenue - Related parties
(Notes 1 and 6) 271,500 --
Total revenues 4,136,430 --
----------- -----------
COST OF HOME AND LAND SALES (including $299,013 from
related parties) (Note 6) 3,602,974 --
----------- -----------
GROSS PROFIT 533,456 --
----------- -----------
OPERATING EXPENSES:
Salaries, wages and benefits 3,127,735 --
Other operating expenses 1,039,743 10,004
----------- -----------
Total operating expenses 4,167,478 10,004
----------- -----------
LOSS FROM OPERATIONS (3,634,022) (10,004)
----------- -----------
OTHER (EXPENSE) INCOME:
Interest (expense) income, net (21,624) 268
Miscellaneous income 5,542 --
----------- -----------
Total other (expense) income (16,082) 268
----------- -----------
LOSS BEFORE PROVISION FOR
STATE INCOME TAXES (3,650,104) (9,736)
PROVISION FOR STATE INCOME TAXES 100 --
----------- -----------
NET LOSS $(3,650,204) $ (9,736)
=========== ===========
NET LOSS PER SHARE - BASIC AND DILUTED $ (1.02) $ (0.01)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 3,606,439 1,000,000
=========== ===========
Unaudited pro forma data (Note 1)
Pro forma loss before provision for income taxes and interest
expense on related party debt $(3,650,104) $ (9,736)
Pro forma interest expense on related party debt (46,200) --
----------- -----------
Pro forma loss before income taxes $(3,696,304) $ (9,736)
Pro forma income tax benefit 158,304 3,310
----------- -----------
Pro forma net loss $(3,538,000) $ (6,426)
=========== ===========
Pro forma net loss per common share - basic and diluted $ (0.98) $ (0.01)
=========== ===========
Pro forma weighted average common shares outstanding -
basic and diluted 3,606,439 1,000,000
=========== ===========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
AMEDORE HOMES, INC.
<TABLE>
<CAPTION>
STATEMENTS OF STOCKHOLDERS' DEFICIENCY
YEARS ENDED MAY 31, 2000 AND 1999
--------------------------------------------------------------------------------------------------------------------------
Common Stock Additional Total
--------------------------- Paid - in Accumulated Stockholders'
Shares Amount Capital Deficit Deficiency
<S> <C> <C> <C> <C> <C>
BALANCE AT JUNE 1, 1998 1,000,000 $ 1,000 $ 4,000 $ (5,794) $ (794)
Net Loss -- -- -- (9,736) (9,736)
----------- ----------- ----------- ----------- -----------
BALANCE AT MAY 31, 1999 1,000,000 1,000 4,000 (15,530) (10,530)
Issuance of 2,350,000 shares (Note 4) 2,350,000 2,350 (2,350) -- --
Issuance of 120,000 shares in
exchange for legal services (Note 4) 120,000 120 662,880 -- 663,000
Issuance of 530,000 shares
to employees and directors (Note 4) 530,000 530 2,927,720 -- 2,928,250
Net Loss -- -- -- (3,650,204) (3,650,204)
----------- ----------- ----------- ----------- -----------
BALANCE AT MAY 31, 2000 4,000,000 $ 4,000 $ 3,592,250 $(3,665,734) $ (69,484)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
AMEDORE HOMES, INC.
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
YEARS ENDED MAY 31, 2000 AND 1999
------------------------------------------------------------------------------------------------
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,650,204) $ (9,736)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 11,768 5,674
Stock issued for legal services 663,000 --
Stock-based compensation 2,928,250 --
Changes in assets and liabilities:
Receivable - related party (16,007) --
Inventory (2,002,069) --
Prepaid expenses and other assets (3,366) --
Accounts payable - trade 607,848 --
Customer deposits 318,106 --
Accrued expenses 14,535
----------- -----------
Net cash used in operating activities (1,128,139) (4,062)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -
Capital expenditures (55,034) (8,300)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party debt 1,450,000 --
Payments on related party debt (62,123) (11,088)
Net borrowings from line of credit 475,401 7,936
Payments on land note (40,000) --
Payments on auto loan (4,556) (7,141)
Deferred stock issuance costs (113,666)
----------- -----------
Net cash provided by (used in) financing activities 1,705,055 (10,293)
----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS 521,882 (22,655)
CASH AND CASH EQUIVALENTS:
Beginning of year -- 22,655
----------- -----------
End of year $ 521,882 $ --
=========== ===========
CASH PAID FOR:
Interest (Including capitalized interest of $9,270
and $0 in 2000 and 1999, respectively.) $ 46,632 $ 908
=========== ===========
Income taxes $ 100 $ 325
=========== ===========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING, INVESTING, AND FINANCING
ACTIVITIES: During the year ended May 31, 2000, the Company issued a note for
the purchase of land inventory and a vehicle for $130,000 and $16,376,
respectively.
See notes to financial statements.
F-5
<PAGE>
AMEDORE HOMES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED MAY 31, 2000 AND 1999
--------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business - Amedore Homes, Inc. (the "Company"), a New
York subchapter S corporation, is primarily engaged in the development,
construction and sale of single-family attached and detached homes, in
the Albany, New York metropolitan area.
Prior to June 1, 1999, the Company was essentially dormant as
management's efforts were focused on the business operations and
ultimate wind down of an affiliated entity, Traditional Amedore Homes,
Inc. ("Traditional"). Traditional was also primarily engaged in the
development, construction and sale of single-family attached and
detached homes, in the Albany, New York metropolitan area. On June 1,
1999, the Company resumed business operations.
The Company's fiscal year ends on May 31.
Cash and Cash Equivalents - All highly liquid debt securities with an
original maturity of 90 days or less are considered to be cash
equivalents.
Inventory - Inventory is stated at the lower of cost or fair value less
cost to sell. Inventory includes all direct costs of construction, land
and land development, including interest, real estate taxes and other
carrying costs incurred during the development period. Inventory of land
and accumulated development costs consists of the costs incurred less
amounts charged to cost of sales based upon an allocation of the
projected total cost of each project.
Inventory is evaluated for impairment whenever events or changes in
circumstances indicate that the carrying value may not be recoverable.
If there is an indication of impairment, management prepares an estimate
of future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual
disposition. If these cash flows are less than the carrying amount of
the asset, an impairment loss is recognized to write down the asset to
its estimated fair value. Preparation of estimated expected future cash
flows is inherently subjective and is based on management's best
estimate of assumptions concerning expected future conditions. No
impairment has been recognized in 2000 or 1999.
Interest attributable to construction and land development is
capitalized and added to the cost of those properties as long as the
properties are being actively developed. During 2000 and 1999, the
Company incurred and capitalized interest costs of $25,008 and $0,
respectively, of which $9,270 was included in inventory at May 31, 2000.
Capitalized interest charged to cost of sales during 2000 and 1999 was
$15,738 and $0, respectively.
Start-up costs, construction overhead and selling expenses are expensed
as incurred.
Property and Equipment - Property and equipment are stated at cost less
accumulated depreciation. Depreciation is computed by the straight-line
method over the related asset's estimated useful lives of 3 to 5 years.
Accumulated depreciation at May 31, 2000 was $32,303 and depreciation
expense for 2000 and 1999 was $11,768 and $5,674, respectively.
F-6
<PAGE>
Fair Value of Financial Instruments - Statement of Financial Accounting
Standards ("SFAS") No. 107, Disclosures about Fair Value of Financial
Instruments, requires the disclosure of fair value information for
certain assets and liabilities, whether or not recorded in the balance
sheet, for which it is practicable to estimate that value. The Company
has the following financial instruments: cash and cash equivalents,
receivable - related party, accounts payable, accrued liabilities,
related party debt and long-term debt. The Company considers the
carrying amount of these items, excluding long term debt, to approximate
their fair values because of the short period of time between the
origination of such instruments and their expected realization. See Note
3 for fair value disclosures of long-term debt.
Home and Land Sales - Sales of residential units are recognized upon
transfer of title, which occurs at closing, using the full accrual
method. Land and land development costs (including estimated costs to
complete) are allocated to units and to land sold based on relative
sales values. Payments received from customers prior to closing are
recorded as deposits.
Construction Management Fee Revenue - Related Parties - In connection
with the wind down of Traditional, the Company managed a portion of
Traditional's uncompleted sales contracts. In return for this service,
the Company received a construction management fee from Traditional for
each home constructed. This revenue relates exclusively to the fiscal
year ended May 31, 2000. At May 31, 2000, no homes were under
construction management on behalf of Traditional nor does the Company
anticipate any construction management services to be performed for
Traditional in the future.
Income Taxes - The Company has elected for federal income tax purposes
to be taxed as a subchapter S corporation. This election provides for
the net income (loss) of the Company to be reported on the personal
income tax return of the individual stockholders and, accordingly, no
provision (benefit) has been made for federal income taxes in the
accompanying financial statements. However, the Company is subject to
certain New York state taxes.
Use of Estimates - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America, requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements, and the reported amount of revenue and expenses during the
reporting period. Project costs represent significant estimates. Actual
results could differ from those estimates.
Future Adoption of Accounting Guidance - In June 1998 the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities. This statement requires
that an entity recognize all derivatives as either assets or liabilities
in the Statement of Financial Position and measure those instruments at
fair value. The accounting for changes in the fair value of a derivative
(that is, gains and losses) depends on the intended use of the
derivative and its resulting designation. The Company is in the process
of evaluating the effect this new standard will have on the Company's
financial statements. The Company is required to adopt FAS 133, as
amended by FAS 137 and FAS 138, beginning on May 1, 2001.
Pro Forma Data (Unaudited) - Upon completion of the initial public
offering ("IPO"), the Company's S corporation status will terminate and
it will be subject to federal and state income taxes. The pro forma
effect of this change has been reflected in the balance sheet and
statement of operations.
F-7
<PAGE>
In addition, pro forma data reported also assumes that the Company has,
upon completion of the IPO, distributed to owners the accumulated
deficit, and subsequently charged that deficit against the capital of
the corporation. The amount of this charge has been reduced by a pro
forma permanent difference attributable to the NOL carryforward and
stock compensation expense. Furthermore, the Company has also disclosed
the pro forma effect of interest expense on the related party debt,
utilizing an estimated 10% interest rate.
The pro forma income tax benefit was calculated assuming an effective
tax rate of (39.94%) for both years.
Pro forma weighted average shares outstanding are equal to audited
weighted average shares outstanding for both basic and diluted.
2. INVENTORY
Inventory at May 31, 2000 consisted of the following:
Construction in progress and model homes $1,104,445
Land and accumulated development costs 1,008,354
Capitalized interest 9,270
----------
Total $2,122,069
==========
3. LONG-TERM DEBT
Long-term debt at May 31, 2000 consisted of the following:
Line of credit $ 483,337
Note payable - land 80,000
Auto loan 11,818
----------
Total 575,155
Less current portion 568,742
----------
Long-term debt $ 6,413
==========
On July 15, 1999, the Company entered into a $500,000 line of credit
with a bank of which the Company had $16,663 available for borrowings at
May 31, 2000. The line of credit expired on June 1, 2000 (see Note 9
concerning extension of line of credit), and is secured by the Company's
accounts receivable, inventory, equipment, and contract rights.
Borrowings against the line of credit bear interest at a variable rate
of prime plus 1.5%, or 11% at May 31, 2000.
On February 1, 2000, the Company entered into a $130,000 note in
connection with the purchase of land inventory. As of May 31, 2000, the
note had an outstanding balance of $80,000. The note bears an interest
rate of 8.5%. The note is due in installments of $10,000 as each of the
thirteen lots from which the note relates are sold. On February 1, 2001,
any remaining unpaid balance of the note and accrued interest are due.
The fair value of the note approximates its fair value because of the
short time period between the origination of the note and its expected
realization.
F-8
<PAGE>
The auto loan bears interest at a rate of 8.75%, requires monthly
payments of $519 and is scheduled to mature in June 2002. This loan is
secured by the vehicle from which it originated. The fair value of the
auto loan approximates its carrying value based on the terms of similar
available borrowing agreements.
At May 31, 2000, aggregate maturities of long-term debt are as follows:
Fiscal year ending May 31:
2001 $568,742
2002 6,413
--------
Total $575,155
========
4. STOCKHOLDERS' DEFICIENCY
On May 5, 2000, the Company effected a 100,000-for-1 stock split with a
change in par value to $0.001 per share. All share amounts disclosed
have been adjusted to reflect the stock split.
On June 18, 1999, the Company issued 2,350,000 additional shares of
common stock to its Chief Executive Officer. At the time of issuance,
the Chief Executive Officer was the sole shareholder and accordingly, no
compensation expense has been recorded in the Company's financial
statements as this transaction had no impact on shareholder dilution.
On January 7, 2000, the Company issued 120,000 shares of common stock to
their attorneys in exchange for legal services. In connection with this
transaction, the Company recorded legal expenses of $663,000.
On January 7, 2000, the Company issued 530,000 shares of common stock to
employees and directors. In connection with this transaction, the
Company recorded compensation expense of $2,928,250.
On May 5, 2000 the Company's board of directors also authorized
1,000,000 shares of blank check preferred stock of which no shares were
issued or outstanding at May 31, 2000.
5. INCOME TAXES
During 2000, the provision for income taxes was composed exclusively of
current state minimum taxes. The Company had no deferred income tax
asset and liability at May 31, 2000.
F-9
<PAGE>
A reconciliation of the anticipated income tax (benefit) computed by
applying the statutory Federal income tax rate to loss before income
taxes recorded in the Statements of Operations is as follows:
Deferred income tax at May 31, 2000 consisted of the following:
2000 1999
Anticipated income tax (benefit) (34%) $(1,241,035) $ (3,310)
Increase (decrease) resulting from:
State income taxes 100 --
Nondeductible stock compensation and
legal expenses 1,106,309 --
Exempt S corporation loss 134,726 3,310
----------- -----------
Total $ 100 $ --
=========== ===========
6. RELATED PARTY TRANSACTIONS
At May 31, 2000, the Company had a loan due to stockholder in the amount
of $1,405,262. This loan accrues interest at 0% and is due on demand.
During the year ended May 31, 2000, the Company purchased $299,213 of
inventory at cost from Traditional. During the year ended May 31, 2000,
cost of sales relating to Traditional was $299,213. The Company also
received $271,500 of construction management fee revenue from
Traditional during the year ended May 31, 2000 (Note 1). Both of these
related party transactions were related to the wind down of Traditional
and, as such, the Company does not anticipate any future transactions
with Traditional.
At May 31, 2000, the Company had a receivable of $16,007 from Amedore
DMI, Inc. ("Amedore DMI"). Amedore DMI is primarily engaged in the
development, construction and sale of commercial property in the Albany,
New York metropolitan area. Amedore DMI is 17.5% owned by the majority
shareholder and Chief Executive Officer of the Company.
7. LEASES
The Company leases its office facilities on a month-to-month basis. The
monthly payment for office facilities was $2,040 at May 31, 2000.
The Company also leases certain vehicles under operating leases expiring
at various dates through 2003. At May 31, 2000, future minimum lease
payments under non-cancelable operating leases are as follows:
Fiscal year ending May 31:
2001 $ 9,178
2002 7,689
2003 3,588
----------
$ 20,455
==========
F-10
<PAGE>
Rental expense charged to operations totaled $14,183 and $ 0 during the
years ended May 31, 2000 and 1999, respectively.
8. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company acquires rights under
option agreements to purchase land for future development. The
agreements generally are contingent upon municipality approvals and
executed sales contracts. As of May 31, 2000, the Company had rights,
under such agreements, to purchase 166 developed lots, within nine
separate developments, with an aggregate contract price of $4,403,292.
Additionally, at May 31, 2000, the Company was contingently liable to a
bank for $24,480 for two outstanding letters of credit securing
performance of certain contractual obligations.
9. SUBSEQUENT EVENTS
The Company plans to offer approximately 1,000,000 shares of common
stock in a proposed initial public offering in fiscal year 2001. The
initial public offering is currently estimated to be between $6 and $7
per share. The Company had deferred stock issuance costs of $113,666 as
of May 31, 2000. Such costs will be netted against the proceeds of the
initial public offering.
In June 2000, the board of directors and shareholders adopted the 2000
Stock Option Plan (the "Plan") and reserved 500,000 shares for issuance
under the Plan. Incentive and/or non-qualified stock options may be
granted.
On August 15, 2000 the Company received an extension on the line of
credit. The line remains available in good standing until September 15,
2000.
******
F-11
<PAGE>
You may rely only on the information contained in this prospectus. We have not
authorized anyone to provide any information or to make any representations
other than those contained in this prospectus, and, if given or made, such
information or representation must not be relied upon as having been authorized
by Amedore Homes, Inc. This prospectus does not constitute an offer or
solicitation to any person in any jurisdiction where such offer or solicitation
would be unlawful. Neither delivery of this prospectus nor any sale of the
shares of common stock hereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of Amedore Homes, Inc.
since the date hereof.
Amedore Homes, Inc.
--------------
1,000,000 Shares of Common Stock
--------------
August __, 2000
--------------
Nutmeg Securities, Ltd.
Until , 2000 (25 days after the date of this prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
Section 722 of the New York Business Corporation Law, among other
things, and subject to certain conditions, authorizes us to indemnify our
officers and directors against certain liabilities and expenses incurred by such
persons in connection with claims made by reason of their being such an officer
or director. Our restated certificate of incorporation and by-laws of the
Company provide for indemnification of our officers and directors to the fullest
extent authorized by law. Following the offering, we intend to procure officer's
and director's liability insurance.
Reference is made to the Underwriting Agreement, the proposed form of
which is filed as Exhibit 1.1, pursuant to which the underwriter agrees to
indemnify our directors and certain officers and certain other persons against
certain civil liabilities.
Item 25. Other Expenses of Issuance and Distribution
The following is a statement of the estimated expenses to be paid by us in
connection with the issuance and distribution of the securities being
registered:
SEC Registration Fee $ 2,430.12
NASD Filing Fee.......................................... 1,305.00
American Stock Exchange Listing Fees..................... 27,500.00
Printing and Engraving Expenses *........................ 75,000.00
Legal Fees and Expenses *................................ 150,000.00
Accounting Fees and Expenses *........................... 150,000.00
Blue Sky Fees and Expenses *............................. 15,000.00
Transfer Agent and Registrar Fees and Expenses........... 2,500.00
Nonaccountable expense allowance......................... 210,000.00
Miscellaneous............................................ 6,264.88
Total.................................................... $640,000.00
* estimate
Item 26. Recent Sales of Unregistered Securities
During the past three years, we have sold unregistered securities as
described below. Unless otherwise indicated, there was no underwriters involved
in the transactions and there was no underwriting discounts or commissions paid
in connection therewith, except as disclosed below. Unless otherwise indicated,
the issuances of these securities were considered to be exempt from registration
under Section 4(2) of the Securities Act of 1933, as amended, and the
regulations promulgated thereunder. The purchasers of the securities in such
transaction represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the certificates for the
securities issued in such transaction. The purchasers of the securities in the
transactions had adequate access to information about us. In May 2000, we
effected a 100,000 for 1 forward split of our common stock. All figures below
reflect the forward split of our common stock.
In June 1999, we issued 2,350,000 shares of our common stock to George
A. Amedore, Sr.
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<PAGE>
In January 2000, we issued 405,000 shares of our common stock to George
Caputo in connection with his joining our company as a director.
In January 2000, we issued 75,000 shares of our common stock to Joseph
Zappala, in connection with his joining our company as a director.
In January 2000, we issued 50,000 shares of our common stock to Marc
Mazur, in connection with his joining our company as a director.
In January 2000, we issued 120,000 shares of our common stock to
Gersten, Savage & Kaplowitz, LLP, in exchange for legal services rendered to us.
Upon completion of this offering we will issue approximately 107,692
shares of our common stock to George A. Amedore, Sr. in connection with the
conversion of approximately $700,000 in debt.
Item 27. Exhibits
**1.1 Form of Underwriting Agreement
**1.2 Form of Representative's Warrant Agreement
**1.3 Form of Representative's Warrants (included in the form of
Representative's Warrant Agreement
*3.1 Bylaws of Registrant
*3.2 Restated Certificate of Incorporation dated July 18, 2000
*5.1 Opinion of Gersten, Savage & Kaplowitz, LLP
*10.1 2000 Stock Option Plan
*10.2 Employment Agreement between the Company and George A. Amedore,
Sr.
*10.3 Employment Agreement between the Company George A. Amedore, Jr.
*10.4 Lease agreement dated June 1, 2000 between the Company and
Condor Development Corp.
*10.5 Promissory note dated February 29, 2000 between the Company and
George A. Amedore,Sr.
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Gersten, Savage & Kaplowitz, LLP (incorporated into
Exhibit 5.1)
*24.1 Power of Attorney (included on the signature page to this
Registration Statement)
*27 Financial Data Schedule
-----------
* Filed herewith.
** To be filed by amendment.
Item 28. Undertakings
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the issuer pursuant
to any charter provision, by-law contract arrangements statute, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the issuer will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned issuer hereby undertakes:
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<PAGE>
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3)
of the Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the Offering of such
securities at that time shall be deemed to be the initial bona fide Offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Offering.
(4) For determining any liability under the 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 issuer under Rule 424(b)(1), or (4) or 497(h), under the
Act as part of this registration statement as of the time the Commission
declared it effective.
(5) For determining any liability under the Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement at that time as the initial bona fide Offering of those
securities.
(6) To provide to the underwriter at the closing specified in the
underwriting agreements, certificates in such denominations and registered in
such names as required by the underwriter to permit prompt delivery to each
purchaser.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Act, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirement for
filing on Form SB-2 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York on August 17, 2000.
AMEDORE HOMES, INC.
By: /s/ George A. Amedore, Sr.
------------------------------------
Name: George A. Amedore, Sr.
Title: Chief Executive Officer
Pursuant to the requirements of the Act, this Registration Statement has
been signed by the following persons in the capacities and on the dates
indicated.
We, the undersigned officers and directors of Amedore Homes, Inc. hereby
severally constitute and appoint George A. Amedore, Sr., our true and lawful
attorney-in-fact and agent with full power of substitution for us and in our
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and all documents
relating thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing necessary or advisable to be done in and
about the premises, as fully to all intents and purposes as he might or could do
in person, hereby ratifying and confirming all that said attorney-in-fact and
agent or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Signature Title Date
--------- ----- ----
/s/ George A. Amedore, Sr. Chairman of the Board and Chief August 17, 2000
------------------------- Executive Officer
George A. Amedore, Sr.
/s/ George A. Amedore, Jr. Executive Vice President, August 17, 2000
------------------------- Secretary and Director
George A. Amedore, Jr. (Principal Financial Officer and
Principal Accounting Officer)
/s/ George Caputo Director August 17, 2000
-------------------------
George Caputo
/s/ Director August __, 2000
-------------------------
Joseph Zappala
/s/ Director August __, 2000
-------------------------
Marc B. Mazur
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<PAGE>
EXHIBIT INDEX
**1.1 Form of Underwriting Agreement
**1.2 Form of Representative's Warrant Agreement
**1.3 Form of Representative's Warrants (included in the form of
Representative's Warrant Agreement
*3.1 Bylaws of Registrant
*3.2 Restated Certificate of Incorporation dated July 18, 2000
*5.1 Opinion of Gersten, Savage & Kaplowitz, LLP
*10.1 2000 Stock Option Plan
*10.2 Employment Agreement between the Company and George A. Amedore,
Sr.
*10.3 Employment Agreement between the Company George A. Amedore, Jr.
*10.4 Lease agreement dated June 1, 2000 between the Company and
Condor Development Corp.
*10.5 Promissory note dated February 29, 2000 between the Company and
George A. Amedore,Sr.
*23.1 Consent of Deloitte & Touche LLP
*23.2 Consent of Gersten, Savage & Kaplowitz, LLP (incorporated into
Exhibit 5.1)
*24.1 Power of Attorney (included on the signature page to this
Registration Statement)
*27 Financial Data Schedule
-----------
* Filed herewith.
** To be filed by amendment.
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