UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Arcturus Ventures, Inc.
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(Exact name of Small Business Issuer in its charter)
Nevada 6770 22-3721801
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(State or other (Primary standard (IRS Employer
jurisdiction of industrial classification identification
incorporation or code number) number)
organization)
77 Memorial Highway Atlantic Highlands, NJ 07716 (732) 872-2727
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(Address and telephone number of principal executive offices
77 Memorial Highway Atlantic Highlands, NJ 07716
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(Address of principal place of business or intended principal place of business)
Matthew Troster, 77 Memorial Highway Atlantic Highlands, NJ 07716 (732) 872-2727
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(Name, address and telephone number of agent for service
Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.
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, please 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 registration statement for the same
offering.
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
<TABLE>
<CAPTION>
Calculation of Registration Fee
Title of Each
Class of Amount Price per Maximum
Securities Being Being Share/ Aggregate Registration
Registered(1) Registered Unit Price Fee(1)
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<S> <C> <C> <C> <C>
Units: 40,000 See following constituent securities:
Shares 400,000 $ .10 $ 40,000 $ 8.00
"A" Warrants 1,000,000 $ -0- $ -0- $ -0-
"B" Warrants 1,000,000 $ -0- $ -0- $ -0-
Shares to be issued
upon exercise
of "A" Warrants 1,000,000 $ .25 $ 250,000 $ 50.00
Shares to be issued
upon exercise
of "B" Warrants 1,000,000 $ .50 $ 500,000 $ 100.00
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Total Fee $ 158.00
</TABLE>
(1) Each Unit consists of 10 shares of Common Stock, 25 "A" Warrants and 25"B"
Warrants. This computation of fees was based upon Sections 6(b)(3), 6(b)(5)
and Rule 457(g)(1) of the Securities Act of 1933 (the "Act").
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Cross Reference Sheet Showing Location in Prospectus of Information Required by
Items of Form SB-2
<TABLE>
<CAPTION>
Form SB-2 Item Number of Caption Location or Heading in Prospectus
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<C> <S>
Forepart of Registration Statement and
Outside Front Cover of Prospectus Front Page of Prospectus
1. Inside Front and Outside
Back Cover Pages of Prospectus Inside Front Cover Page and
Outside Back Cover Page of
Prospectus
2. Summary Information and Risk Factors Prospectus Summary; Summary
Financial Information; and Rule
419 and the Regulation of Blank
Check Companies
3. Use of Proceeds Use of Proceeds.
4. Determination of Offering Price Underwriting n/a
5. Dilution Dilution
6. Selling Security Holders n/a
7. Plan of Distribution Plan of Distribution
8. Legal Proceedings Litigation and Legal Proceedings
9. Directors, Executive Officers,
Promoters and Control Persons Management
10. Security Ownership of Certain Beneficial Owners Management; Principal
Shareholders
12. Description of Securities Description of our Capital
Structure
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Form SB-2 Item Number of Caption Location or Heading in Prospectus
-------------------------------- ---------------------------------
13. Interests of Named Experts and Counsel n/a
14. Disclosure of Commission Position of
Indemnification For Securities Act Indemnification
15. Organization within Last Five Years The Company; Organization and
Certain Transactions
16. Description of Business The Company; Plan of Operation
17. Management's Discussion and Analysis
or Plan of Operation
Plan of Operation
18. Description of Property Property of the Company
19. Certain Relationships and Related Transactions Organization and Certain
Transactions
20. Market for Equity and Related Stockholder Matters Capitalization, Lack of Market for
our Common Stock
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements with Accountants n/a
</TABLE>
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PROSPECTUS September 4, 2000
ARCTURUS VENTURES, INC.
77 Memorial Parkway
Atlantic Highlands, New Jersey 07716
We are a recently organized Nevada corporation formed for the purpose of
acquiring or merging with an unspecified operating business. As such, we are a
"blank check" company. We are offering to sell 40,000 Units of our securities at
an offering price of $ 1.00 per Unit. We are giving you this Prospectus so that
you can decide whether to invest. This Prospectus includes:
o a description of "blank check" companies and the regulation of them
o a description of your rights as an investor in a "blank check" company
o a description of the risks of an investment
o a description of our Company
o a description of our Management
o a description of our Capital Structure and the Units being offered
o a description of our business plan
Please read this Prospectus in its entirety, before making any decision to
invest. Then, if you have questions or would like additional information, call
our President, Matthew Troster, at (732) 872-2727.
This is an offering by our officers and directors, without an underwriter. It is
a "best efforts", "mini-maxi" offering. Best efforts simply means that we will
try to sell as many Units as possible, but we have received no commitments to
buy any Units. "Mini-maxi" means that we must sell a minimum of 24,000 Units in
order to close this offering, but we can sell up to a total of 40,000 Units.
Unless all of the Units are sold earlier or we decide to terminate this offering
sooner, this offering will end on January 31, 2001. However, at our discretion,
we may extend the offering for an additional ninety (90) days, to April 30,
2001. We have arbitrarily set the offering price. It does not bear any necessary
relationship to our assets, book value, net worth, earnings, results of
operations or other established investment or valuation criteria. An investment
involves substantial risk (see "Risk Factors" on page 7) and immediate,
substantial dilution (see "Dilution" on page 12).
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
RULE 419 AND THE REGULATION OF BLANK CHECK COMPANIES
The Securities and Exchange Commission ("SEC") has adopted Rule 419 to provide
investors in "blank check" companies with certain protections. A "blank check"
company is one:
o which is in the development stage;
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o which has an undesignated business;
o which has as its business plan the intent to merge or acquire an
unidentified company; and
o which is issuing "penny stock".
We are a "blank check" company and this offering is regulated by Rule 419. The
requirements of Rule 419 can be divided into three parts:
1. The initial offering;
2. The value of the company being acquired; and
3. Consummation of the merger or acquisition.
The Initial Offering - The requirements of Rule 419 during the initial offering
are as follows:
1. We must establish an escrow account which meets certain requirements;
2. We must deposit the net proceeds of the offering into the escrow
account;
3. All dividends or interest on the escrowed net proceeds must be added
to the escrow account;
4. The investors in the initial offering must deposit the purchased
securities in the escrow account and may not transfer or dispose of
such escrowed securities other than by will, the laws of descent and
distribution, or pursuant to a qualified domestic relations order.
The Value of the Company Being Acquired - The requirement of Rule 419 regarding
the value of the company being acquired is that the value of the business or
assets being acquired be equal to or greater than 80% of the maximum proceeds of
the offering. For purposes of this valuation, in the context of this offering,
the term "maximum proceeds" includes not only the proceeds from the initial
offering but also the potential proceeds from the exercise of all issued "A" and
"B" Warrants.
Consummation of the Merger or Acquisition - The requirements of Rule 419
applicable to the consummation of the merger or acquisition are as follows:
1. When a significant merger or acquisition appears probable, we must
file with the SEC an amendment to this Prospectus and Registration
Statement, providing the material details about the company being
acquired, including its financial statements, and the material details
of the merger or acquisition:
2. Within five (5) business days after the SEC declares the amendment
effective, we must mail each investor a copy of the amended
Prospectus;
3. Each investor will have a period of no less than 20 business days and
no more than 45 business days to notify us, in writing, whether he
elects to remain an investor - this is known as the "reconfirmation
vote";
4. If a sufficient number of investors elect to remain as shareholders,
and approves the merger or acquisition, the merger or acquisition
transaction will be closed; and
5. The Escrow Agent releases the funds applicable to the approving
investors to us and releases the escrowed securities to those
investors, while returning the funds applicable to the disapproving
investors to them and returning their escrowed securities to us. If
you fail to reconfirm your investment, and do not respond to the
reconfirmation vote, you will be treated as having elected not to
reconfirm and you will receive back your funds, with interest.
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It is important to note that, if you invest, your invested funds and the
securities you purchase will both be held in the escrow account until the
reconfirmation vote and you will not have access to either. Furthermore, you may
not transfer or dispose of your escrowed securities until they are released from
the escrow which will not be until after the reconfirmation vote. Rule 419
permits an 18-month period for us to find an acceptable merger or acquisition
candidate. This means that your funds and your securities could be held as long
as 18 months. Accordingly, you should not invest unless you have no need for
access to the funds invested for such a period.
To comply with Rule 419's requirements applicable to the initial offering, we
have established an escrow agreement with Summit Bank, 950 Highway 36, Leonardo,
New Jersey 07737. The escrowed funds will be placed into an insured
interest-bearing account. The interest earned on the account will be added to
the escrowed funds. In the event that you reconfirm your investment, we will
receive both the initial funds which you invested and the interest earned on
those funds. In the event that you choose not to reconfirm your investment, you
will receive back both your original funds invested and the interest earned on
those funds.
You should note that there is no underwriter and no underwriting commissions or
expenses will be paid from the funds which you invest. Also, although under Rule
419 we are permitted to receive up to 10% of the proceeds, we are waiving that
10% withdrawal. Accordingly all of the funds which you invest will be placed
into the escrow account. Accordingly, in the event that you choose not to
reconfirm your investment, you will receive back your full original investment
as well as the interest earned on those funds.
To comply with Rule 419's requirements applicable to the valuation of any
company merged or acquired, that company will have to have a value equal to at
least 80% of the total of the proceeds of the initial offering (at least $24,000
and up to $40,000) plus the potential proceeds from the exercise of the Common
Stock Purchase Warrants. The potential proceeds from all of the "A" Common Stock
Purchase Warrants are $250,000 and the potential proceeds from all of the "B"
Common Stock Purchase Warrants are $500,000, or a total of $750,000. Thus, if
the maximum proceeds of $40,000 are raised, the value of the acquired company
will have to be at least $632,000, which is 80% of $790,000.
To comply with Rule 419's requirements applicable to the merger or acquisition,
we will file the required amendment, distribute it to the investors within five
(5) business days following its effectiveness, and secure the written
"reconfirmation vote" within the allowable time limits. If we do not accomplish
this within the allowed 18 months, the escrow account will be closed and all
funds, with the interest thereon, will be returned to the investors.
PROSPECTUS SUMMARY
The following is a summary of selected information contained in this Prospectus
simply in order to give you an overview of our offering. We urge you to read
this Prospectus completely; this summary is qualified in its entirety by the
more detailed information appearing elsewhere in the Prospectus and in the
Registration Statement.
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The Company Arcturus Ventures, Inc. is a Nevada
corporation organized on March 6,
2000 having its principal office at
77 Memorial Highway, Atlantic
Highlands, New Jersey 07716.
Business of the Company We were organized to acquire or
merge with an unspecified operating
company; we have no business
operations of our own. As such, we
are a "blank check" company.
Regulation of "Blank
Check" Companies We are subject to the Securities
and Exchange Commission's Rule 419,
which regulates "blank check"
companies. Rule 419 requires the
escrow of (a) all securities sold
and (b) at least 90% of the
proceeds raised; it requires that
the value of any business acquired
be equal to or exceed 80% of the
proceeds raised, including any
proceeds which may be raised from
the future exercise of warrants; it
requires the filing of a
post-effective amendment to the
Registration Statement describing
the proposed acquisition and
distribution of the prospectus as
so amended to all investors, who
then vote whether to re- confirm
their investments; and it prohibits
the sale or disposition of
securities while held in the
escrow.
Capital Structure We are authorized to issue
10,000,000 shares of Preferred
Stock, having a par value of $.001
per share; 40,000 Units, each
consisting of 10 shares of Common
Stock, 25 "A" Common Stock purchase
Warrants exercisable at $.25 per
share, and 25 "B" Common Stock
Purchase Warrants exercisable at
$.50 per share; 100,000,000 shares
of Common Stock having a par value
of $.001 per share; and the Common
Stock Purchase Warrants included in
the Units.
The Offering
Securities Offered We are offering 40,000 Units of our
securities, each Unit consisting of
10 shares of Common Stock, 25 "A"
Common Stock Purchase Warrants
exercisable at $.25 per share, and
25 "B" Common Stock Purchase
Warrants exercisable at $.50 per
share.
Offering Price The offering price for each Unit is
$1.00.
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Offering Period Unless all of the Units are sold
earlier or we decide to terminate
this offering sooner, this offering
will end on January 31, 2001.
However, at our discretion, we may
extend the offering for an
additional ninety (90) days, to
April 30, 2001.
Determination of
Offering Price
We arbitrarily determined the
offering price and it bears no
relationship to our book value, our
assets or any other customary
criterion of value.
Investor Suitability A purchase of our Units
involves very high risk and should
not be purchased by investors who
cannot afford the loss of their
entire investment.
Risk Factors The securities being
offered are speculative and involve
very high risks, including those
listed in "Risk Factors"
Dilution An investment is subject to
immediate substantial dilution of $
.0520 per share of Common Stock, or
a total of $ .52 per Unit (ten
shares).
Plan of Offering This is a "best efforts" offering
being made by our officers and
directors to residents of the
States of New Jersey, New York and
Florida. This is also a "mini-maxi"
offering; we must sell a minimum of
24,000 Units in order to close the
offering and we can sell up to
40,000 Units.
Rule 419 Escrow All of the securities sold in this
offering and all of the proceeds of
this offering will be held in
escrow until completion of the
reconfirmation vote on a proposed
merger or acquisition with a target
company. Following the vote, the
proceeds will either be released to
us or returned to the subscribers.
Escrow Agent The Escrow Agent is Summit Bank,
950 Highway 36, Leonardo, New
Jersey 07737.
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Warrant Exercise Procedure The Common Stock Purchase Warrants
may be exercised by surrendering
the Warrant Certificate with the
form of election to purchase
completed and executed, together
with payment of the exercise price,
to the Warrant Agent.
Warrant Agent The Warrant Agent is Olde Monmouth
Stock Transfer Co., Inc., 77
Memorial Highway, Atlantic
Highlands, New Jersey 07716.
Common Stock Outstanding
Prior to the Offering 538,000 shares are currently issued
and outstanding.
Common Stock to be
Outstanding After
the Offering If the minimum of 24,000 Units are
sold, there will be 778,000 shares
issued and outstanding; if the
maximum of 40,000 Units are sold,
there will be 938,000 shares issued
and outstanding.
Gross and Net Proceeds If the minimum of 24,000 Units are
sold, the gross proceeds will be
$24,000; if the maximum of 40,000
Units are sold, the gross proceeds
will be $40,000. Although we are
permitted by Rule 419 to retain 10%
of the gross proceeds, we are
waiving that power and therefore
the net proceeds will be equal to
the gross proceeds.
Use of Proceeds All proceeds from this offering
will be held in escrow, pending the
reconfirmation vote. If investors
reconfirm their investments, the
proceeds will be released to us and
used to meet any accrued
liabilities and for working
capital.
Stock Transfer Agent We have appointed Olde Monmouth
Stock Transfer Co., Inc., 77
Memorial Highway, Atlantic
Highlands, New Jersey 07716, as our
Transfer Agent.
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SUMMARY FINANCIAL INFORMATION
Following is a summary of our financial information which is qualified in its
entirety by our audited financial statements.
From March 6, 2000 (inception)
to August 31, 2000
------------------
Statement of Income Data:
Net Sales $ 0
Net Loss $ 0
Net Loss Per Share $ 0
Shares Outstanding at 8/31/00 538,000
Pro-Forma
As of After
August 31, 2000 Offering(1)
--------------- --------
Balance Sheet Data:
Working Capital $ 5,000 $45,000
Total Assets $10,000 $50,000
Long Term Debt $ 0 $ 0
Total Liabilities $ 0 $ 0
Shareholders' Equity $10,000 $50,000
(1) Assumes the sale of all 40,000 Units being offered, with all of the
proceeds being escrowed.
RISK FACTORS
A purchase of our Units is a highly speculative investment which involves
substantial risk and immediate substantial dilution. You should not purchase our
Units unless you can afford to lose your entire investment or if you may need
access to your funds within 18 months following your investment. We have noted
risk factors throughout this Prospectus, and we urge you to read this Prospectus
completely. The primary risks to which your investment is subject, and which you
should carefully consider before investing, include the following, relating to
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the escrow account, an investment in our securities, our business plan, and the
possible merger or acquisition of a target company:
Risks relating to the escrow account
1. Your funds will bear a low rate of interest - The escrow account will be an
insured bank savings account and as such it will earn a low rate of interest. It
is likely that if you disapprove any proposed merger or acquisition, or if we
fail to consummate a merger or acquisition within the allowed 18 months, and you
receive back your investment with the interest earned, you will receive a lesser
return than might have been earned on an alternative investment.
2. You will not have access to your funds or the securities purchased until
after the reconfirmation vote - Both the proceeds of this offering and the
securities purchased will be placed in the escrow account where they are
required to remain until following the reconfirmation vote. You cannot withdraw
either your invested funds or the securities purchased until that event. We are
permitted 18 months to conclude a merger or acquisition. If we are unable to do
so within that time period, you will receive back your funds. However, it is
possible that you may not have access to your funds for 18 months.
3. You may not sell the securities which you purchase while they are in the
escrow account - It is a violation of law to sell or transfer or dispose of the
securities in the escrow account, except in the event of death or a domestic
relations court order. Thus, you cannot secure indirect access to your funds in
the escrow account by selling the investment to another person.
Risks relating to an investment in our securities
1. The offering price for our Units has been arbitrarily determined - The
offering price of $1.00 per Unit (or $ .10 per share of Common Stock) has been
arbitrarily determined by us and you should not rely upon it as any indication
of the value of our securities. It does not bear any relationship to any
customary criterion of value or other established method of pricing securities.
2. There is no trading market in our securities - No trading of our securities
is permitted while they are being held in the escrow account. The securities
will only be released if and when we consummate a merger or acquisition. After
such a merger or acquisition with a target company it will be the responsibility
of the new management to seek to establish a trading market. Any trading market
which may be developed is apt to have a small volume and experience wide
fluctuations in price, not affording any great degree of liquidity.
3. Any future market for our securities may be limited by state laws - Our
securities will initially be sold only to residents of Florida, New Jersey and
New York and may be resold only in those states until a resale exemption is
available in other states. This caution applies not only to the original shares
purchased, but also to any shares obtained upon exercise of the Common Stock
Purchase Warrants.
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4. The liquidity offered by any future market for our securities may be limited
by the "penny stock rules" - The "penny stock rules" adopted by the Securities
and Exchange Commission regulate broker-dealer practices in connection with
transactions in "penny stocks". Penny Stocks generally are equity securities
with a price of less than $5.00; our Common Stock will be subject to the rules.
The disclosure requirements imposed upon broker-dealers may have the effect of
reducing the level of trading activity in the secondary market for our Common
Stock. Therefore, if you invest in our Units, you may have difficulty in selling
your investment.
5. An investment in our Units will suffer immediate and substantial dilution -
An investment of $1.00 in a Unit of our securities, which is equivalent to $ .10
per share, will suffer dilution to a book value of only $ .048 immediately upon
purchase. This $ .052 dilution is due to the fact that existing shareholders
paid $ .02 per share for their Common Stock and they will receive an increase in
the book value of their shares as a result of the investments made in this
offering. In addition, future dilution may occur from the issuance of Preferred
Stock or additional Common Stock, including the issuance of securities in any
merger or acquisition. Any target company which we are likely to acquire is
probably in need of additional capital and therefore there is a high likelihood
of the issuance of additional securities, at prices which may be more favorable
than those available in this offering.
6. This is a "best efforts" offering and we have no firm commitments to purchase
Units - We are making this offering on a best efforts basis. No commitment
exists by anyone to purchase all or any part of the Units being offered. While
we must sell a minimum of 24,000 Units in order to close this offering, we are
not certain that we will sell any specific number of Units beyond that minimum.
In the event that we sell only a limited number of Units, we will have limited
proceeds which could affect our desirability to companies which might merge with
us or be acquired by us and which could affect the size of the company which we
can attract and acquire.
7. It is probable that we will not pay dividends - Until we consummate a merger
or acquisition we will not have any business operations, will not generate any
profits and will not pay any dividends. It is likely that the size of company
which we can attract and acquire will require maximum working capital and will
intend to retain all earnings, if any, to expand operations. The future payment
of dividends will be in the discretion of the Board of Directors then in office.
8. The market price, if a market develops, may be affected by sales of our
Common Stock under Rule 144 - All 538,000 shares of our Common Stock presently
issued and outstanding are restricted as to sale and transfer. However, assuming
the applicability of Rule 144 at the time, 38,000 of such shares will become
eligible for resale on April 1, 2001. And the 500,000 share balance, being the
shares issued to our founders and covered by a "Standstill Agreement", will
become eligible for resale one year after the date on which an acquisition or
merger is effected. (See "Principal Shareholders") You should assume that the
availability of such shares in the market will have a depressive effect on the
market price of our Common Stock in any market that may develop.
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Risks relating to our Business Plan
1. We are a recently organized corporation with no operational history - We were
just organized on March 6, 2000, have not engaged in any business operations,
and our business plan is to acquire, by merger or acquisition, an operating
business. We are uncertain that we will be able to make such an acquisition and
even if we do make an acquisition it may be of another recently organized
corporation which is not yet profitable and which may be financially unstable.
2. We do not have any proposed merger or acquisition with a target company - We
have not had any discussions or negotiations with any potential target company
and we are not certain that any company will desire to merge with us or be
acquired by us.
3. We have not identified any industry, geographical area or other criteria for
the selection of a business to be acquired - We have not developed any criteria
regarding the industry, type of business, size of business, current
profitability, level of capitalization, geographical location (domestic or
international) governing the target business. Our Management has wide discretion
in making a selection, especially since we are not certain whether we will prove
attractive as a merger or acquisition vehicle for any operating business.
4. Our Management will be part time - Our officers and directors are engaged
full time in other employment and therefore will devote only a minimal amount of
time (not exceeding 10 hours per week) to our business. Management will only
spend such time as it considers necessary to conduct the affairs of the Company,
with substantially all of their time spent on seeking, analyzing, and
negotiating with potential target companies.
5. Our Management does not have specific business acquisition experience -
Although our Management has general business experience, it has limited
experience, if any, in effecting an acquisition of, or a merger with, a target
company and may not have had any experience in acquiring or operating the
business which we might acquire. Management does not intend to employ
consultants or other advisors.
6. We will be involved in intense competition in finding and negotiating with a
target company - There are numerous "blank check" companies seeking target
companies, many of which may have more capital or a more attractive
capitalization structure. Such competitors will be more attractive to target
companies seeking additional capital. Likewise, there are alternative vehicles
available to target companies, such as "shell companies" or even operating
companies seeking to diversify or change the nature of their business which may
already be trading. Such competitors will be more attractive to target companies
seeking a trading market.
Risks relating to a future merger or acquisition
1. We will only merge with, or acquire, a single company - Because of our
limited size and capital it is only practical for us to merge with, or acquire,
a single target company. This means that the value of any investment in us will
be directly related to the value of the target company.
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2. Investors will only review one merger or acquisition - Management will select
a target company and negotiate a merger with it or an acquisition of it.
Investors will not have any vote with respect to which company (assuming that
there is more than one candidate) that Management selects. Our Management has
wide discretion in making its selection. Whichever selection is made, will then
be presented to the investors for the reconfirmation vote. If an investor votes
against reconfirmation, he will receive a refund of his invested funds, with
interest. There is no provision in Rule 419 for investors to reject a proposed
merger or acquisition with a target company with Management then proposing a
second, alternative target company.
3. Any target company will likely be small, subject to all the risks of such a
company - The amended Prospectus which will be presented for the reconfirmation
vote will contain a description of the proposed target company, including the
risks of an investment in it. However, even before you invest, you should
consider the types of risks apt to be involved. It is likely that any target
company interested in merging with us or being acquired by us will be a small
business. As such, its growth will depend upon adequate working capital and
substantial financial support, which we will be unable to provide from the
proceeds of this offering. It is also likely that any target company will have
limited assets and may have a limited operating history and a lack of an
earnings history. The target company may need substantial additional capital
which will require the issuance of additional shares of our Common Stock,
further diluting our existing shareholders, including the investors in this
offering. The target company may be in an industry characterized by a high
degree of risk. If you invest, you should be adequately familiar with start-up
businesses and development stage businesses so that you will be able to evaluate
any proposed acquisition described in the amended Prospectus presented for the
reconfirmation vote.
4. We may not have the funds to complete an acquisition or merger - During the
period prior to the reconfirmation vote, we anticipate incurring costs and
expenses related to our status as a reporting company under the Securities
Exchange Act of 1934, including not only the periodic reports which will be
required, but the filing of the post-effective amendment describing the proposed
acquisition or merger. We will likely incur expenses associated with
identifying, evaluating and ultimately selecting a target company with which to
merge or acquire, and such expenses can include travel, legal and accounting
costs. Since we will not have access to the proceeds of this offering prior to
the reconfirmation vote, we have entered into an agreement with Olde Monmouth
Capital Corp. to borrow the required funds. However, the agreement provides for
use to borrow only up to the amount of the proceeds, with the loan of any excess
being in the sole discretion of Olde Monmouth Capital Corp. Should we require
funds in excess of the escrowed proceeds, and should Olde Monmouth Capital Corp.
elect not to loan the additional funds, we might have inadequate funds to
complete an acquisition or merger. In such event, you would receive back your
original investment, with interest, but would have lost the use of your funds
for up to eighteen months with no potential for a profit from an advantageous
acquisition or merger.
5. Our officers, directors and principal shareholders will have conflicts of
interest - Our officers, directors and principal shareholders may engage in
other business activities similar or dissimilar to those engaged in by us,
including the formation of other blind pool companies. Specifically, all of our
principal shareholders expect to also be principal shareholders and/or officers
and directors of other companies which may file a registration statement with
the Securities and Exchange Commission for the purpose of making an Offering of
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its securities pursuant to Rule 419. As such, we would be under common control
with those companies. If and when the registration statements are declared
effective, those companies will be competing directly with us for a potential
acquisition or merger, thereby exacerbating the competitive environment in which
we must operate. To the extent that such officers, directors and shareholders
engage in such other activities, they will have possible conflicts of interest
in diverting opportunities to other companies, entities or persons with which
they may be associated or have an interest in, rather than diverting such
opportunities to us. Such potential conflicts of interest include, among other
things, time, effort and corporate opportunity involved in their participation
in other business transactions. (See "Conflicts of Interest" page xx )
6. We will not use consultants - We will not hire outside consultants to help us
find and evaluate acquisition and merger candidates. Since our management has
little experience in finding and evaluating acquisition and merger candidates,
the necessary reliance on our management may increase our difficulties in
finding an acquisition or merger candidate.
7. Upon any acquisition or merger we will likely have a change of control - In
the event that we effect an acquisition of or a merger with a target company it
will likely be by issuing shares of our Common Stock. It is most likely that in
that event our present shareholders will no longer have control of the Company.
Although we have no present plans, understandings or arrangements with respect
to any merger or acquisition with a target company, the successful completion of
such a transaction will likely result in a change in our control. This could
result from the issuance of a large percentage of our authorized securities or
the sale by the present shareholders of all or a portion of their stock or a
combination thereof. Any change in control will likely also result in the
resignation or removal of our present officers and directors. If there is a
change in Management, there is no certainty as to the experience or
qualifications of the persons who replace present management respecting either
the operation of our activities or the operation of the business, assets or
property being acquired.
8. Tax Considerations - As a general rule, federal and state tax laws and
regulations have a significant impact upon the structuring of an acquisition of
or a merger with a target company. We will evaluate the possible tax
consequences of any prospective merger or acquisition with a target company and
will endeavor to structure the merger or acquisition with a target company so as
to achieve the most favorable tax treatment to us, the target company and the
respective shareholders. We cannot be certain that the Internal Revenue Service
(the "IRS") or appropriate state tax authorities will ultimately assent to our
tax treatment of a consummated merger or acquisition with a target company. To
the extent the IRS or state tax authorities ultimately prevail in
recharacterizing the tax treatment of a merger or acquisition with a target
company, there may be adverse tax consequences to us, our shareholders, the
target company and its shareholders.
9. Shareholders may experience future dilution - We may require additional funds
in order to meet our expenses and in order to consummate an acquisition or
merger. There is no limitation on our raising of additional funds, either
through debt or equity, and in order to obtain such funds we may be required to
offer terms which are dilutive to our existing shareholders. Furthermore, we may
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make an acquisition or merger with a target company which requires additional
funding and in order to obtain such funds it may be required to offer terms
which are dilutive to our existing shareholders.
10. An insufficient number of investors may vote to reconfirm - In order to
close an acquisition or merger with a target company, we must secure the
reconfirmation votes of shareholders representing at least 80% of the proceeds
raised. If a sufficient number of investors do not reconfirm their investments,
the acquisition or merger will not be closed and your investment will be
returned to you with applicable interest. Alternatively, up to 80% of the Units
being offered may be purchased by our officers, directors, current shareholders
and any of their affiliates and associates. Units purchased by such insiders
will be included in determining whether investors representing 80% of the
proceeds have reconfirmed. Since it is likely that such insiders will reconfirm,
it is possible that their vote could reduce or eliminate your effect on the
outcome of the required reconfirmation vote.
DILUTION
Dilution is the decrease in the book value of securities immediately following
their purchase. While in most cases dilution can be due to a number of factors,
in this offering it is due to the offering price to the public investors ($.10
per share) being greater than the existing net tangible book value per share.
Net tangible book value per share is determined by dividing our net tangible
book value (total tangible assets less total liabilities) by the number of
outstanding shares of Common Stock.
Because each Unit contains ten (10) shares of Common Stock, in this table we are
calculating the dilution on a per share basis only for those ten shares, without
reference to the Units as a whole or to the constituent warrants or their
exercise.
Public Offering Price Per Share $.10
Net Tangible Book Value Per Share,
Before Offering $.0093
Pro-forma Net Tangible Book Value Per Share
After Offering (assuming a total of 400,000 shares sold) $.0480
Increase Per Share Attributable to
Payment by Public Investors $.0387
Dilution Per Share to Public Investors $.0520
The $.052 dilution converts into $.52 as compared to the $1.00 per Unit price.
The following table sets forth the percentage of equity to be purchased by
investors in this offering compared to the percentage of equity to be owned by
the present Common Stock shareholders, and the amount paid for shares by
investors in this offering compared to the amount paid by present Common Stock
shareholders. Again, this table is based only on the ten shares included in each
Unit, without reference to the Units as a whole or to the constituent warrants
or their exercise.
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Percentage Aggregate Percentage
Shares of Total Cash of Total
Purchased Shares Consideration Consideration
--------- ------ ------------- -------------
Present
Shareholders 538,000 57.4% $ 10,000 20%
New
Investors 400,000 42.6% $ 40,000 80%
------- ----- -------- ---
TOTAL 938,000 100% $ 50,000 100%
THE COMPANY
We are a Nevada corporation incorporated on March 6, 2000 for the purpose of
acquiring or merging with an unspecified operating business. Our offices are
located at 77 Memorial Highway, Atlantic Highlands, New Jersey, 07716, where our
phone number is (732) 872-2727 and our facsimile number is (732)872-2728.
We are a "blank check company" as defined in Rule 419. Upon completion of this
offering we intend to effect the acquisition of, or a merger with, a target
company. We will not engage in any substantive commercial business immediately
following this offering. We have no plan, proposal, agreement, understanding or
arrangement to acquire or merge with any specific business or company and we
have not identified any specific business or company for investigation and
evaluation. We intend to utilize primarily equity securities (Preferred Stock or
Common Stock), debt and cash (to be derived from the proceeds of this offering)
or a combination thereof to effect an acquisition or merger. We expect that we
will have the ability to effect only a single merger or acquisition with a
target company.
Since our organization, our activities have been limited to the sale of initial
shares in connection with our organization, general corporate matters, and our
preparation of a Registration Statement and Prospectus for our initial public
offering. See "Plan of Operation." We do not intend to engage in the business of
investing, reinvesting or trading in securities as our primary business or
pursue any business which would render us an "investment company" pursuant to
the Investment Company Act.
We are in the development stage and have no operating history. No representation
is made, nor is any intended, that we will be able to carry on our activities
profitably. Our viability is dependent upon sufficient funds being realized by
us from this offering, of which there is no assurance. Proceeds of this offering
may be insufficient to enable us to attract a target company and to effectuate
an acquisition or merger. Further, we are not certain that we will have the
ability to acquire assets, businesses, or properties with any value to us.
In the event that Management determines that we are unable to conduct any
business whatsoever, Management may, subject to the requirements of Rule 419
which provides that the deposited funds will be returned on a pro-rata basis if
<PAGE>
an acquisition meeting certain prescribed criteria is not consummated within 18
months of the date of this Prospectus, in its sole discretion, seek shareholder
approval to liquidate the Company.
14
USE OF PROCEEDS
The gross proceeds of this offering will be $ 24,000 if the minimum number of
Units are sold and $ 40,000 if the maximum number of Units are sold. Because we
are waiving the 10% of the gross proceeds which we are permitted under Rule 419,
the net proceeds will also be $ 24,000 and $40,000 respectively. The proceeds
received in this offering will be promptly deposited into the escrow account
which we have established with Summit Bank (see "Rule 419 and the Regulation of
Bank Check Companies", page 2) The gross proceeds will be held in the escrow
account until the investors' reconfirmation vote. See "Rule 419 and the
Regulation of Blank Check Companies." Following the reconfirmation vote, the
funds applicable to investors who do not reconfirm their investment will be
returned to them with applicable interest. The balance of the funds, including
the interest earned on them, will be released to us and used, first, to repay
the loans, with the balance, if any, added to our working capital.
Since we will not have access to the proceeds pending the reconfirmation vote,
we have made arrangements to borrow the necessary funds to meet our expenses. We
have entered into an agreement with our founder, Olde Monmouth Capital Corp.,
Inc., to loan funds to us, as needed to meet the expenses. Under the terms of
our agreement, Olde Monmouth Capital Corp., Inc. will loan us an amount equal to
the net proceeds raised, at an interest rate equal to that earned on the
escrowed funds. (Olde Monmouth Capital Corp., Inc. may loan us funds in excess
of the proceeds escrowed, in its sole discretion.) The loan will be unsecured
and subject to repayment upon release of the proceeds following the
reconfirmation vote. To the extent that the loan is not repaid, Olde Monmouth
Capital Corp. Inc. has the option to convert the un-repaid debt to Common Stock
at a conversion price of ten cents ($ .10) per share.
During the period between the filing of the Registration Statement and the
release of the proceeds of this offering from the escrow account following the
reconfirmation vote, we anticipate having the expenses for the following items:
1. SEC and state filing fees
2. Costs of electronic filings with the SEC (EDGAR)
3. Printing costs for Prospectus
4. Costs of periodic filings (e.g., Form 10-QSB's and Form 10-KSB)
5. Costs of preparing the post-effective amendment filing for a merger or
acquisition
6. Printing costs for amended Prospectus
7. Costs of reconfirmation vote solicitation
8. Costs of seeking and analyzing merger and acquisition candidates
No portion of the proceeds of the offering will be paid to officers, directors
and/or their affiliates or associates. It is anticipated that any expenses will
be paid from the loans to be obtained from our founder, Olde Monmouth Capital
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Corp. If such working capital is insufficient, we may seek to obtain additional
financing through offerings of equity and/or debt securities or borrowings. We
are not certain that such financing will be available or if available that it
will be on terms acceptable to us. See "Risk Factors."
CAPITALIZATION
The following table sets forth our capitalization as of the date of this
Prospectus and as adjusted to reflect the sale of the minimum and maximum number
of Units sold. (None of our Preferred Stock is issued and outstanding nor are
there any current plans to designate and issue any Preferred Stock.) For further
detail, see "Description of Securities" and "Selected Financial Information."
<TABLE>
<CAPTION>
Minimum Maximum
Authorized Outstanding As Adjusted(1) As Adjusted(2)
---------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Units 40,000 0 24,000 40,000
Common Stock
$.001 par value 100,000,000 538,000 778,000 938,000
"A" Warrants 1,000,000 0 1,000,000 1,000,000
"B" Warrants 1,000,000 0 1,000,000 1,000,000
</TABLE>
(1) Assumes the sale of the minimum of the Units being offered.
(2) Assumes the sale of all of the Units being offered.
<TABLE>
<CAPTION>
As of August 31, 2000 As Adjusted As Adjusted
for Minimum for Maximum
<S> <C> <C> <C>
Shareholder's Equity
Common Stock $ 538 $ 778 $ 938
Additional Paid - In Capital $ 9,462 $43,222 $49,062
Deficit Accumulated During
the Development Stage $ 0 $ 0 $ 0
Total Shareholders' Equity $10,000 $34,000 $50,000
</TABLE>
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LACK OF MARKET FOR OUR COMMON STOCK
There is no trading market for our Common Stock. Until we complete the
acquisition or merger of a target company, the constituent securities of the
Units being sold by this Prospectus will be held in escrow and there will be no
trading market in either our Common Stock or the Common Stock Purchase Warrants.
However, upon completion of a target company acquisition or merger we intend to
seek an authorized NASD broker/dealer to act as the market maker for our Common
Stock and to have it listed for trading on the National Association of
Securities Dealers OTC Bulletin Board. We have no commitment for such a
relationship and we are not certain that we will find such a market maker or
obtain such a listing. Furthermore, even if we secure trading in our Common
Stock we cannot assure you that any trading market developed will be sustained.
You should expect any trading to be sporadic, in small volumes, and at
fluctuating prices.
PLAN OF OPERATION
Business Objective/Discretion of Management
Our business objective is to find and acquire or merge with a potential business
that, in our opinion, offers us a profitable business with growth potential. Our
Management's discretion in selecting a target company is unrestricted, and we
may acquire or merge with any business whatsoever which, in the opinion of
Management, meets that business objective. We are not limited to any industry,
business or geographical region; indeed, we may effectuate a merger or
acquisition with a target company located outside the United States. We
recognize that as a result of competition and our limited financial, managerial
and other resources, the number of suitable potential target companies which may
be available to us will be extremely limited. In making a selection, we intend
to seek long-term growth potential in the business which we acquire or with
which we merge, rather than immediate, short-term earnings.
Single Acquisition or Merger
Because of the limited funds which we will raise, realistically we can only
acquire or merge with a single company. We intend to make the acquisition or
merger in such a manner that we will not become subject to the Investment
Company Act. We will not have diversified investments, meaning that our success
will depend entirely upon that single acquisition and merger, and we cannot
offset losses against profits of another business.
Evaluation of Potential Target Companies
The analysis of potential target companies for acquisition or merger will be
undertaken by Management, no member of which is a professional business analyst.
Management is comprised of individuals of varying business experiences, and our
officers and directors will rely on their own business judgment in formulating
decisions as to the type of business that we may acquire or with which we may
merge. It is quite possible that Management will not have any business
experience or expertise in the type of business ultimately acquired. While
Management has the authority to hire consultants to assist it, at the present
time Management has no intention of doing so, but will make the analyses of
potential acquisition targets or merger partners and the selection of the target
company to be presented to investors for the reconfirmation vote.
Evaluation Criteria
In doing the analyses of potential acquisition targets or merger partners and in
making a selection of one, Management will utilize some or all of the evaluation
criteria listed below; however, this listing is not inclusive, it does not imply
that Management has expertise in evaluating such criteria, and Management may
use other criteria. These criteria are merely illustrative of the types of
factors that Management may consider in evaluating a potential acquisition or
merger. (We expect that we will acquire or merge with only a single business.)
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Among the criteria which Management may consider are:
o the target company's net worth;
o the target company's total assets;
o the target company's cash flow;
o the target company's profitability and/or profit prospects;
o costs associated with effecting the merger or acquisition with the
target company;
o equity interest in and possible management participation in the target
company;
o revenues, liabilities and financial condition of the target company;
o growth potential of the target company and the industry in which it
operates;
o experience and skill of the target company's management and
availability of additional personnel of the target company;
o capital requirements of the target company;
o competitive position of the target company;
o stage of development of the product, process or service of the target
company;
o degree of current or potential market acceptance of the product,
process or service of the target company;
o possible proprietary features and possible other protection of the
product, process or service of target company; and
o regulatory environment of the industry in which the target company
operates.
The foregoing criteria are not intended to be exhaustive; any evaluation
relating to the merits of a particular merger or acquisition will be based, to
the extent relevant, on the above factors as well as other considerations deemed
relevant by Management. No particular consideration may be given to any
particular factor.
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Evaluation Process
Although it is anticipated that locating and investigating specific business
proposals will take at least several months, the time such process will take can
by no means be predicted. However, such process cannot exceed, in any event, the
18-month time schedule set forth in Rule 419. See "Rule 419 and the Regulation
of Blank Check Companies." The time and costs required to find and evaluate
potential acquisition and merger prospects, including conducting due diligence
reviews, and then to select a target company and to structure and consummate the
acquisition of, or merger with, that target company (including negotiating
relevant agreements and preparing requisite documents for filing pursuant to
applicable securities laws and state corporate laws) cannot presently be
predicted with any degree of certainty.
We anticipate that we will make contact with business prospects primarily
through the efforts of our directors, officers and shareholders, who will meet
personally with existing management and key personnel, visit and inspect
material facilities, assets, products and services belonging to such prospects,
and undertake such further reasonable investigation as management deems
appropriate, to the extent of our limited financial resources. We anticipate
that certain target company candidates may be brought to our attention from
various unaffiliated sources, including securities broker/dealers, investment
bankers, venture capitalists, bankers, other members of the financial community,
and affiliated sources. While we do not presently anticipate engaging the
services of professional firms that specialize in business acquisitions on any
formal basis, we may engage such firms in the future, in which event we may pay
a finder's fee or other compensation.
To date, we have not selected any particular industry or any target company in
which to concentrate our merger or acquisition with a target company efforts.
See "Risk Factors."
Tax Considerations
As a general rule, Federal and state tax laws and regulations have a significant
impact upon the structuring of merger or acquisition with a target company. We
will evaluate the possible tax consequences of any prospective merger or
acquisition with a target company and will endeavor to structure the merger or
acquisition with a target company so as to achieve the most favorable tax
treatment to us, the target company and their respective shareholders. The IRS
or other appropriate state tax authorities may attempt to recharacterize the tax
treatment of a particular merger or acquisition with a target company. As a
result there may be adverse tax consequences to us, the target company and their
respective shareholders.
Form and Structure of Acquisition
Of the various methods and forms by which we may structure a transaction
acquiring another business, Management is likely to use either a stock-for stock
exchange with the shareholders of the target company, whereby the target company
becomes our wholly-owned subsidiary, or a merger of the target company into us,
where we are the survivor and the shareholders of the target company receive our
shares.
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If our securities are issued as part of an acquisition, it cannot be predicted
whether such securities will be issued in reliance upon exemptions from
registration under applicable federal or state securities laws or will be
registered for public distribution. When registration of securities is required,
substantial cost may be incurred and time delays encountered. In addition, the
issuance of additional securities and their potential sale in any trading market
which may develop in our Common Stock, of which there is no assurance, may
depress the price of our Common Stock in such markets. Additionally, such
issuance of additional securities by us would result in a decrease in the
percentage of our issued and outstanding shares of Common Stock by the
purchasers of the Units being offered by this Prospectus.
Our operations could be limited by the Investment Company Act of 1940. We will
attempt to conduct our operations and structure any acquisition so as not to
require registration under the Investment Company Act of 1940, but circumstances
presently not foreseeable may make us subject to that Act.
There are currently no limitations relating to our ability to borrow funds to
increase the amount of capital available to us to effect a merger or acquisition
with a target company or otherwise finance the operations of the target company.
The amount and nature of any borrowings by us will depend on numerous
considerations, including our capital requirements, our perceived ability to
meet debt service on such borrowings and then prevailing conditions in the
financial markets, as well as general economic conditions. We are uncertain that
debt financing, if required or otherwise sought, would be available on terms
deemed to be commercially acceptable and in our best interest. Our inability to
borrow funds for an additional infusion of capital into a target company may
have material adverse effects on our financial condition and future prospects.
To the extent that debt financing ultimately proves to be available, any
borrowings may subject us to various risks traditionally associated with
incurring indebtedness, including the risks of interest rate fluctuations and
insufficiency of cash flow to pay principal and interest. Furthermore, a target
company may have already incurred debt financing and, therefore, all the risks
inherent thereto.
Because of our small size, our investors should carefully consider the business
constraints on our ability to raise additional capital when needed. Until such
time as any enterprise, product or service which we acquire generates revenues
sufficient to cover operating costs, it is conceivable that we could find
ourselves in a situation where we need additional funds in order to continue our
operations. This need could arise at a time when we are unable to borrow funds
and/or market acceptance for the sale of additional shares of our Common Stock
does not exist.
If you invest, you are relying upon the business judgment of Management in
connection with the proper expenditure of the funds raised in this offering and
in our future operations. It is not expected that our shareholders will be
consulted with respect to the expenditure of the proceeds of this offering or in
connection with any acquisition engaged in by us, unless required by law.
Daily Operations
We expect to use attorneys and accountants as necessary, and do not anticipate a
need to engage any full-time employees so long as we are seeking and evaluating
20
<PAGE>
business opportunities. The need for employees and their availability will be
addressed in connection with the decision of whether or not to participate in a
specific business opportunity; there is no current plan to hire employees on a
full- time or part-time basis, although some portion of the borrowed working
capital may be used to pay any part-time employees hired.
Until an active business is commenced or acquired, we do not intend to have any
employees or day- to-day operations. We are unable to make any estimate as to
the future number of employees which may be necessary, if any, to work for us.
If an existing business is acquired, it is possible that its existing staff
would be hired by us. At the present time, it is the intention of Management to
meet or be in telephone contact at least once a week and more frequently, if
needed, to review business opportunities, evaluate potential Acquisition and
otherwise operate our affairs. Except for reimbursement of reasonable expenses
incurred on our behalf, Management will not be compensated for these services
rendered on our behalf.
PROPERTY OF THE COMPANY
Except for the loaned office facilities, we have no property. We maintain our
offices at 77 Memorial Highway, Atlantic Highlands, New Jersey in the offices of
our founder, Olde Monmouth Capital Corp. Pursuant to an oral agreement with Olde
Monmouth Capital Corp., which may be terminated by either party on 30 days prior
written notice, we will use these offices and the office furniture, equipment
and utilities on a rent and cost-free basis until such time as we consummate an
acquisition of, or a merger with, a target company. We are a development stage
company and currently have no employees other than our officers and directors.
While we search for a target company to acquire or with which to merge, these
premises will remain adequate. However, upon consummation of a merger or
acquisition with a target company, these premises will likely become inadequate.
MANAGEMENT
Directors and Executive Officers
NAME AGE POSITION
---- --- -------------
Matthew Troster 28 President, Director
Manuel E. Iglesias 40 Secretary, Director
E. Terry Jaramillo 54 Treasurer, Director
Our directors and officers are elected annually to serve for one year or until
their successors are duly elected and qualified.
Biographies for the directors and officers are as follows:
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Matthew Troster is our President and one of our Directors. Matt received a
Bachelor of Science degree in Economics and Finance from Fairleigh Dickinson
University in 1995. Since then, he has been a Vice President and Director of
Olde Monmouth Stock Transfer Co., Inc., a registered stock transfer agency,
where he has executive and trust responsibilities. Matt has been President and a
Director since our inception on March 6, 2000. Olde Monmouth Stock Transfer Co.,
Inc. is our transfer agent; the president of Olde Monmouth Stock Transfer Co.,
Inc. is John A. Troster, one of our founders and Matt's father.
Manuel E. Iglesias is our Secretary and one of our Directors. Manny has been the
President of Capital International SBIC, Inc., an SBA-licensed Small Business
Investment Company (SBIC), since June of 1998. From 1990 through October of
1998, he was a partner in the law firm, Merkin and Iglesias, P.A., in Miami,
Florida. During that time, he also held the position of President of Microterra,
Inc. from February of 1996 through September of 1997. In 1980, and continuing
through 1982, Manny was a Political Appointee in the Reagan Administration. From
1983 through 1987, he served a special Presidential Commission for the Reagan
Administration in the Caribbean Basin Initiative and during that period, he also
served as Chairman of the Guatemala Committee. Mr. Iglesias received a Bachelor
of Science degree in finance from Georgetown University in 1976, and in 1979, he
received his J.D. from the Chicago University of Law in Chicago, Illinois. In
1982, he received an M.B.A. in management from the University of Chicago. Manny
has been Secretary and a Director since our inception on March 6, 2000.
E. Terry Jaramillo is our Treasurer and one of our Directors. Terry was the
Director of International Corporate Finance for Capital International Holdings,
Inc. from September of 1997 to September, 1999. There, he oversaw and managed
the company's credit and financial operations. Also, since September of 1997,
has served as a General Partner and Chief Underwriter to Capital International
SBIC, LP. From June of 1994 through September of 1997, Mr. Jaramillo served as
Managing Director of AIBC Investment Services Corporation, an NASD member firm.
Terry holds a Series 7 General Securities License and was a Registered
Representative for AIBC and Capital International Securities Group, Inc. From
1989 to 1994 Terry was Senior Vice President and head of Corporate Finance for
Bankest Capital Corp. and from 1987 to 1989 he was Vice President - Domestic
Banking and Investment Banking for Pacific National Bank. From 1985 to 1987 he
was Regional Vice President for Ensign Bank, from 1983 to 1985 he was Vice
President and Area Manager for NCNB National Bank of Florida, from 1978 to 1983
he was Senior Credit Officer for Citibank/Citicorp, and from 1975 to 1978 he was
Leasing Officer for Southeast Bank, N.A. Mr. Jaramillo holds an Airline
Transport Pilot's License (F.A.A. 1971) and owned and operated his own 135
Certificate air carrier from 1969 to 1973. He also owned his own aircraft and
equipment leasing company in partnership with Kentucky Fried Chicken of Florida
from 1972 to 1975, which was sold to Southeast Bank, N.A.. He attended the
University of South Carolina from 1966 to 1967, where he majored in electrical
engineering, specializing in electronics. He then transferred to Miami-Dade
Community College where he majored in Business. Following his graduation, he
entered Florida International University as a Finance major and an Economics
minor. Mr. Jaramillo has been Treasurer and a Director since our inception on
March 6, 2000.
None of our officers or directors have been involved in any prior blank check
company offerings. There are no agreements, arrangements or understandings
between any of our officers and directors and anyone else pursuant to which
other management is to be selected for a particular office or position.
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There are no family relationships between any of our directors or officers.
Matthew Troster, our President and a Director, is the son of John Troster, a
shareholder and officer of Olde Monmouth Capital Corp., our founder. John
Troster is also the President of Olde Monmouth Stock Transfer Co., Inc., our
stock transfer agent.
We estimate that our Management will devote such time as they deem necessary to
our activities, although we do not expect them to devote more than the hours per
week to Company matters. It is anticipated that Matthew Troster will spend a
significant amount of his devoted time to the administration of our operations
including our efforts in seeking acquisition candidates and consummating a
merger or acquisition with a target company. Although presently Management does
not intent to engage outside consultants, Management has the authority to and
could, engage outside consultants and professionals on an as needed basis. As of
August 31, 2000 we have not entered into any agreement or contract with any
outside consultant or advisor; nor, do we intend to enter into any such
consulting agreements, except with our law firm.
Compensation
No officer or director presently receives a salary. It is not anticipated that
any director or officer will receive any salary, wage or other compensation or
remuneration pending consummation of a merger or acquisition with a target
company. However, directors and/or officers will receive expense reimbursement
for expenses reasonably incurred on our behalf, including in the offering of
Units.
CONFLICTS OF INTEREST
Our proposed business, of locating a suitable business to acquire or with which
to merge, raises potential conflicts of interest between us, our officers and
directors and our principal shareholder. Messrs. Iglesias and Jaramillo are
executive managers of a Small Business Investment Company ("SBIC") and as such
may be engaged for clients of the SBIC in searching for acquisitions or merger
partners. Although our officers, directors and principal shareholder are not
presently affiliated with any other blank check company, they may in the future
be so affiliated as organizers, officers, directors or shareholders. He engaged
in various other business activities including, but not limited to, the
organization of other companies or "blank check" companies. If and when a
registration statement is filed by any such other blank check company, and that
registration statement is declared effective, that company will be competing
directly with us for acquisition or merger target companies. To the extent that
more than one additional blank check company is organized, it would increase the
competitive environment in which we must operate while presenting our affected
officers, directors and shareholder with the dilemma of which blank check
company to present with any acquisition or merger opportunity.
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To resolve this dilemma, we have adopted a program, which has been orally agreed
to by our officers, directors and principal shareholder, that all merger and
acquisition opportunities of which they become aware must be offered to the
blank check companies in the order in which their public offerings were closed.
If the merger or acquisition target company rejects the earliest blank check
company for any reason, the opportunity would be offered to the next-in-time
blank check company, with the process continuing until the target company
accepts the blank check company. Likewise, if the earliest blank check company
rejects the opportunity for any reason, the opportunity would be offered to the
next-in-time blank check company, with the process continuing until a blank
check company accepts the opportunity.
DESCRIPTION OF OUR CAPITAL STRUCTURE
Our authorized capital structure consists of Preferred Stock, par value $0.001
per share; Units, each consisting of 10 shares of Common Stock, 10 "A" Common
Stock Purchase Warrants and 10 "B" Common Stock Purchase Warrants; Common Stock,
par value $0.001 per share; and Common Stock Purchase Warrants. The authorized
classes, and the amount or number of each which are authorized and outstanding
as of the date of this Prospectus are as follows:
Security Authorized Issued and outstanding
Preferred Stock 10,000,000 -0-
Units 40,000 -0-
Common Stock 100,000,000 538,000
"A" Common Stock Purchase Warrants 1,000,000 -0-
"B" Common Stock Purchase Warrants 1,000,000 -0-
The descriptions of each of these securities is as follows:
Preferred Stock The 10,000,000 shares of authorized Preferred Stock, having a
par value of $.001 per share, are undesignated as to preferences, privileges and
restrictions. As the shares are issued, the Board of Directors must establish a
"series" of the shares to be issued and designate the preferences, privileges
and restrictions applicable to that series. The Board of Directors, without any
action by our shareholders, is authorized to designate and issue shares of
Preferred Stock in such series as it deems appropriate and to establish the
rights, preferences and privileges of such shares, including dividends,
liquidation and voting rights. The rights of holders of shares of Preferred
Stock that may be issued may be superior to the rights granted to the holders of
the then outstanding shares of Common Stock. The ability of the Board of
Directors to designate and issue such undesignated shares could impede or deter
an unsolicited tender offer or takeover proposal regarding the Company and the
issuance of additional shares having preferential rights could adversely affect
the voting power and other rights of holders of Common Stock.
To date, the Board of Directors has not designated any series and there are no
present plans to designate a series.
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<PAGE>
Units. There are 40,000 Units being offered in this Offering each Unit
consisting of 10 Shares of Common Stock; 25 "A" Common Stock Purchase Warrants
and 25 "B" Common Stock Purchase Warrants. No Unit certificates will be issued;
only the constituent securities will be issued. Each of these is described
below.
Common Stock Our authorized common equity consists of One Hundred (100,000,000)
shares of a single class of Common Stock, having a par value of $0.001 per
share. There are 538,000 shares issued and outstanding. The holders of our
Common Stock (i) have general ratable rights to dividends from funds legally
available therefor, when, as and if declared by the Board of Directors; (ii) are
entitled to share ratably in all assets available for distribution to
shareholders upon liquidation, dissolution or winding up of our affairs; (iii)
do not have preemptive, subscription or conversion rights, nor are there any
redemption or sinking fund provisions applicable thereto; and (iv) are entitled
to one vote per share on all matters on which shareholders may vote at all
shareholder meetings. The Common Stock does not have cumulative voting rights,
which means that the holders of more than fifty percent of the Common Stock
voting for election of directors can elect one hundred percent of our directors
if they choose to do so.
Common Stock Purchase Warrants The Common Stock Purchase Warrants included in
the Units are as follows:
"A"Common Stock Purchase Warrants: Each "A" Common Stock Purchase Warrant
entitles the holder to purchase one share of Common Stock at an exercise price
of $.25, exercisable for a period of six months after the effective date of the
post-effective amendment describing the proposed merger with, or acquisition of,
a target company.
"B" Common Stock Purchase Warrants: Each "B" Common Stock Purchase Warrant
entitles the holder to purchase one share of Common Stock at exercise price of
$.50, exercisable for a period of twelve months after the effective date of the
post-effective amendment describing the proposed merger with, or acquisition of,
a target company.
Dividend Policy We are newly organized, have no business operations, have had no
earnings, and have not paid any dividends on our Common Stock. We do not
anticipate that any dividends will be paid in the foreseeable future. Whether or
not dividends are paid following any merger with, or acquisition of a target
company will be determined by our then Board of Directors considering the
conditions then existing, including our earnings, financial condition, capital
requirements and other factors.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our Common Stock as of August 31, 2000 and as adjusted to reflect
the sale of the Units offered hereby, by (i) each person who is known by us to
own beneficially more than 5% of our outstanding Common Stock; (ii) each of our
officers and directors; and (iii) all directors and officers as a group.
25
<PAGE>
<TABLE>
<CAPTION>
Percentage of Percentage of
Name and Address of Number of Ownership Ownership
Beneficial Owner Shares before offering(1) after offering(2)
---------- ----- ------ --------------- --------------
<S> <C> <C> <C>
Olde Monmouth Capital Corp. 500,000 92.9% 53.3%
77 Memorial Highway, Suite 101
Atlantic Highlands, NJ 07716
Law Office of Andrea Cataneo, Ltd. 35,000 6.5% 3.7%
12 S. Third Avenue
Mine Hill, New Jersey 07803
Matthew Troster 1,000 .19% .10%
77 Memorial Highway, Suite 101
Atlantic Highlands, NJ 07716
Manuel E. Iglesias 1,000 .19% .10%
12300 Old Cutler Road
Miami, Florida 33156
E. Terry Jaramillo 1,000 .19% .10%
550 Vittorio Avenue
Coral Gables, Florida
All Officers and Directors 3,000 .56% .32%
Directors as a Group (3 persons)
</TABLE>
----------------------------------------
(1) Based upon 538,000 shares issued and outstanding. (See "Organization and
Certain Transactions")
(2) Assuming the sale of all 40,000 Units (400,000 shares of Common Stock)
being offered, bringing the total number of issued and outstanding shares
to 938,000. Does not include shares of Common Stock issuable upon exercise
of the "A" Common Stock Purchase Warrants or the "B" Common Stock Purchase
Warrants.
All of the above-listed shares were issued without registration under the
Securities Act of 1933 and as such are "restricted securities" which are
restricted as to sale or other disposition. None of these shares would normally
be available for resale pursuant to Rule 144 of the Act until at least April 1,
2001. However, the founder has entered into a "Standstill Agreement" and has
agreed that the one year holding period for purposes of Rule 144 will not be
deemed to begin until the date on which an acquisition of, or a merger with, a
target company has occurred.
PLAN OF DISTRIBUTION
We are offering a minimum of 24,000 and a maximum of 40,000 Units at the
purchase price of $1.00 per Unit on a "best efforts, "mini maxi" basis. "Best
26
<PAGE>
efforts" means that we will try to sell as many Units as possible during the
offering period. "Mini-maxi" means that we must sell a minimum of 24,000 Units
in order for us to close the offering and retain the proceeds (in escrow), but
we can sell up to a total of 40,000 Units. If the minimum number of Units are
not sold during the Offering Period, the proceeds received will be promptly
returned to investors with interest. We may reallocate or reject any offers to
purchase, in whole or in part. Moreover, our directors, officers and principals
may purchase Units on the same terms and conditions as all other investors;
provided, however, that any such Units will not be included in calculating
whether the minimum number of Units have been sold and any Units so purchased
will be acquired for investment and not with an intention to resell such Units
shortly thereafter. Units purchased by our existing shareholders and their
affiliates (other than our officers and directors) will be included in
determining whether the minimum offering requirement has been satisfied.
Unless all of the Units are sold earlier or we decide to terminate this offering
sooner, this offering will end on January 31, 2001, which is the initial
offering period. However, at our discretion, we may extend the offering for an
additional ninety (90) days, to April 30, 2001, which is the extended offering
period.
The Units will be offered and sold only to residents in the states of Florida,
New Jersey and New York. All Units will be sold by our officers and directors,
who will not receive any compensation or commissions with respect to such offers
and sales.
We are conducting the Offering as a blank check offering subject to the
provisions of Rule 419. However, until the earlier to occur of (i) the sale of
at least 24,000 Units or (ii) the expiration of the Offering Period, the Escrow
Agent will maintain all proceeds in an escrow account pursuant to the
requirements of Rule 419. If at least 24,000 Units (exclusive of Units, if any,
acquired by our officers and directors), are not sold during the Offering
Period, the proceeds therefrom will be returned to the investors with interest.
At such time as at least 24,000 Units (exclusive of Units, if any, acquired by
our officers or directors) are sold during the Offering Period, the proceeds
from such sale, as well as the proceeds from the sale of up to an additional
10,000 Units will then continue to be deposited and held in the escrow account
pursuant to the provisions of Rule 419. See "Rule 419 and the Regulation of
Blank Check Companies"
All of the funds received by us with respect to the Units that may be sold will
be deposited and maintained in the escrow account with Summit Bank. Share
certificates and warrant certificates will be issued to purchasers only if at
least 24,000 Units are sold by us (no Unit certificates will be issued); after
the sale of at least 24,000 Units, all shares and warrants contained in the
Units sold will be held in escrow in accordance with the provisions of Rule 419.
Method of Subscribing
Prospective investors should make their checks payable to "Summit Bank, Escrow
Agent" and send the checks and subscription agreements to us. We will record all
investments and send the checks to Summit Bank which, as the Escrow Agent, will
hold the funds in the escrow account. Subscriptions may not be withdrawn once
made except in accordance with applicable law. We reserve the right to reject
27
<PAGE>
any subscription in whole or in part in our sole discretion for any reason
whatsoever notwithstanding tender of payment and to withdraw this Offering at
any time prior to acceptance by us of the subscriptions received.
ORGANIZATION AND CERTAIN TRANSACTIONS
We were formed under the laws of the State of Nevada on March 6, 2000. On April
1, 2000, we issued 500,000 shares of Common Stock to our founder, Olde Monmouth
Capital Corp. for a cash investment of $10,000 or $.02 per share. Also on that
date, we issued 1,000 shares of Common Stock. At the same price of $.02 per
share, to each of our officers, Matthew Troster, President, Manuel Iglesias,
Secretary, and E. Terry Jaramillo, Treasurer, to secure their management
services. Also on April 1, 2000 we issued 35,000 shares of Common Stock at the
same price to the Law Office of Andrea Cataneo, Ltd. in partial payment for that
firm's legal services.
INDEMNIFICATION
Nevada Corporation Law
Section 78.7502 of the Nevada General Corporation Law contains provisions
authorizing indemnification by the Company of directors, officers, employees or
agents against certain liabilities and expenses which they may incur as
directors, officers, employees or agents of the Company or of certain other
entities. Section 78.7502(3) provides for mandatory indemnification, including
attorney's fees, if the director, officer, employee or agent has been successful
on the merits or otherwise in defense of any action, suit or proceeding or in
defense of any claim, issue or matter therein. Section 78.751 provides that such
indemnification may include payment by the Company of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by the
person indemnified to repay such payment if he shall be ultimately found not to
be entitled to indemnification under the Section. Indemnification may be
provided even though the person to be indemnified is no longer a director,
officer, employee or agent of the Company or such other entities. Section 78.752
authorizes the Company to obtain insurance on behalf of any such director,
officer employee or agent against liabilities, whether or not the Company would
have the power to indemnify such person against such liabilities under the
provisions of the Section 78.7502.
Under Section 78.751(e) the indemnification and advancement of expenses provided
pursuant to Sections 78.7502 and 78.751 are not exclusive, and subject to
certain conditions, the Company may make other or further indemnification or
advancement of expenses of any of its directors, officers, employees or agents.
Because neither the Articles of Incorporation, as amended, or By- Laws of our
Company otherwise provide, notwithstanding the failure of the Company to provide
indemnification and despite a contrary determination by the Board of Directors
or its shareholders in a specific case, a director, officer, employee or agent
of the Company who is or was a party to a proceeding may apply to a court of
28
<PAGE>
competent jurisdiction for indemnification or advancement of expenses or both,
and the court may order indemnification and advancement of expenses, including
expenses incurred in seeking court-ordered indemnification or advancement of
expenses if it determines that the petitioner is entitled to mandatory
indemnification pursuant to Section 78.7502(3) because he has been successful on
the merits, or because the Company has the power to indemnify on a discretionary
basis pursuant to Section 78.7502 or because the court determines that the
petitioner is fairly and reasonably entitled indemnification or advancement of
expenses or both in view of all the relevant circumstances.
Articles of Incorporation and By-Laws
Our Articles of Incorporation and By-Laws empower us to indemnify current or
former directors, officers, employees or agents of the Company or persons
serving by request of the Company in such capacities in any other enterprise or
persons who have served by the request of the Company is such capacities in any
other enterprise to the full extent permitted by the laws of the State of
Nevada.
Indemnity Agreements
To induce and encourage highly experienced and capable persons to serve as
directors and officers, our Company has entered into an Indemnity Agreement with
each director and officer presently serving the Company and will provide the
same agreement to future directors and officers as well as certain agents and
employees. The Agreement provides that we shall indemnify the director and/or
officer, or other person, when he or she is a party to, or threatened to be made
a party to, a proceeding by, or in the name of, the Company. Expenses incurred
by the indemnified person in any proceeding are to be paid to the fullest extent
permitted by applicable law. The Agreement may at some time require the Company
to pay out funds which might otherwise be utilized to further the Company's
business objectives, thereby reducing our ability to carry out our projected
business plans.
SEC Position on Indemnification for Security Act Liability
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable. If a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy expressed in the Securities Act
of 1933, as amended, and will be governed by the final adjudication of such
issue.
29
<PAGE>
Officers and Directors Liability Insurance
At present, we do not maintain Officers and Directors Liability Insurance and we
have no present plans to obtain such insurance.
LITIGATION AND LEGAL PROCEEDINGS
We know of no litigation pending, threatened or contemplated, or unsatisfied
judgements against us, or any proceedings in which we are a party. We know of no
legal actions pending or threatened or judgements entered against our officers
and directors in their capacity as such.
REPORTS TO SHAREHOLDERS
As of the effective date of the Registration Statement of which this Prospectus
is a part, we became a reporting company under the Securities Exchange Act of
1934 and will be subject to the periodic reporting requirements of that Act. We
will continue to file periodic reports voluntarily in the event that our
obligation to file such reports is suspended under Section 15(d) of the
Securities Exchange Act. Our filings may be inspected and copied without charge
at the SEC, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the following regional offices: Seven World Trade Center, 13th
Floor, New York, New York 10048; and Northwest Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of our filings can be
obtained from the Public Reference Section of the SEC, Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. We
have filed the Registration Statement including this Prospectus and, will file
future documents and reports electronically through the Electronic Data
Gathering, Analysis and Retrieval System ("EDGAR") which are publicly available
through the SEC's Internet World Wide Web site (http://www.sec.gov).
We intend to furnish to our shareholders, after the close of each fiscal year,
an annual report containing audited financial statements examined and reported
upon by an independent certified public accountant relating to our operations.
In addition, we may furnish to our shareholders, from time to time, such other
reports as may be authorized by our Board of Directors. Our year-end is December
31.
COUNSEL
An opinion as to the validity of the securities offered hereby has been passed
upon for Arcturus Ventures, Inc. by the Law Office of Andrea Cataneo, Ltd.,
located at 81 Meadowbrook Road, Randolph, New Jersey 07869. As part of that
firm's compensation as legal counsel, 35,000 shares of Common Stock were issued
to it on April 1, 2000 at the price of $ .02 per share.
30
<PAGE>
EXPERTS
Michael G. Seneca, C.P.A., our independent accountant and auditor, has conducted
the audit of our financial statements for the period ended August 31, 2000. We
have included our audited financial statements for the period from our
inception, March 6, 2000, through August 31, 2000, in this filing in reliance on
the report of that firm and upon the authority of that firm as expert in
auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have not previously been required to comply with the reporting requirements
of the Securities Exchange Act. We have filed with the SEC a Registration
Statement on Form SB- 2 to register the offer and sale of the Units, the shares
of Common Stock and Common Stock Purchase Warrants constituting the Units, and
the shares of Common Stock underlying the Warrants. This Prospectus is part of
that Registration Statement, and, as permitted by the SEC's rules, does not
contain all of the information in the Registration Statement. For further
information about us and the securities offered under this Prospectus, you may
refer to the Registration Statement and to the exhibits and schedules filed as a
part of this Registration Statement. You can review the Registration Statement
and its exhibits at the public reference facility maintained by the SEC at
Judiciary Plaza, Room 1024, 450 Fifth Street, NW, Washington, D.C. 20549 and at
the regional offices of the SEC at 7 World Trade Center, Suite 1300, New York,
New York 10048 and Citicorp Center, Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The Registration Statement is also
available electronically on the World Wide Web at http://www.sec.gov
We will also be filing periodic reports electronically through the SEC's
Electronic Data Gathering, Analysis and Retrieval System ("EDGAR") which will
also be publicly available through the SEC's Internet World Wide Web site.
You may also call or write us with any questions you may have. We will be
pleased to discuss any aspect of our business plan and this offering.
31
<PAGE>
ARCTURUS VENTURES, INC.
FINANCIAL STATEMENTS
FOR THE PERIOD ENDED
AUGUST 31, 2000
F-1
<PAGE>
ARCTURUS VENTURES, INC.
TABLE OF CONTENTS
AUGUST 31, 2000
Independent Auditors Report
EXHIBITS
Financial Statements:
Balance Sheet A
Notes to Financial Statements
F-2
<PAGE>
MICHAEL G. SENECA
CERTIFIED PUBLIC ACCOUNTANT
7448 Amboy Road
Staten island, New York 10307
MEMBER: AICPA TEL: (718) 356-4400
NYSSCPA FAX: (718) 356-4500
NJSSCPA
Independent Auditors Report
To The Shareholders of Arcturus Ventures, Inc.
I have audited the accompanying balance sheet of Arcturus Ventures, Inc. as of
August 31, 2000 (from inception) for the six month period then ended. These
financial statements are the responsibility of the Company's management. My
responsibility is to express an opinion on these financial statements based on
my audit.
I conducted my audit in accordance with generally accepted auditing standards.
These standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Arcturus Ventures, Inc. as of
August 31, 2000 in conformity with generally accepted accounting principles.
Michael G. Seneca
Certified Public Accountant
September 2, 2000
F-3
<PAGE>
EXHIBIT A
ARCTURUS VENTURES, INC.
BALANCE SHEET
AUGUST 31, 2000
ASSETS
Current Assets:
CASH IN BANK $ 5,000
-------
TOTAL CURRENT ASSETS $ 5,000
OTHER ASSETS:
INTANGIBLE ASSETS $ 5,000
-------
TOTAL OTHER ASSETS $ 5,000
-------
TOTAL ASSETS $10,000
=======
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY:
Capital stock: 100,000,000 shares common
stock authorized 538,000 issued and
outstanding; 10,000,000 shares preferred
stock authorized, none outstanding 538
PAID-IN CAPITAL 9,462
------
TOTAL STOCKHOLDERS' EQUITY 10,000
------
TOTAL STOCKHOLDERS' EQUITY $ 10,000
========
The accompanying notes are an integral part of these financial statements.
See Independent Auditors Report.
F-4
<PAGE>
ARCTURUS VENTURES, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
NOTE A - ORGANIZATION
Arcturus Ventures, Inc. (the "Company") was incorporated in the state of
Nevada on March 6, 2000 with its main office located at 77 Memorial Parkway
Atlantic Highlands, New Jersey.
NOTE B - SIGNIFICANT ACCOUNTING POLICIES
PRINCIPAL BUSINESS ACTIVITY
Arcturus Ventures, Inc. was formed for the sole purpose of operating as an
acquisition company, and has elected to have a fiscal year ending the
thirty-first day of December.
INTANGIBLE ASSETS
Intangible assets consist of start up costs in connection with forming the
Company. There costs are to be amortized over a period of sixty months as
per guidelines established by generally accepted accounting principles.
F-5
<PAGE>
Part II
ITEM 24 : INDEMNIFICATION
Nevada Corporation Law
Section 78.7502 of the Nevada General Corporation Law contains provisions
authorizing indemnification by the Company of directors, officers, employees or
agents against certain liabilities and expenses which they may incur as
directors, officers, employees or agents of the Company or of certain other
entities. Section 78.7502(3) provides for mandatory indemnification, including
attorney's fees, if the director, officer, employee or agent has been successful
on the merits or otherwise in defense of any action, suit or proceeding or in
defense of any claim, issue or matter therein. Section 78.751 provides that such
indemnification may include payment by the Company of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by the
person indemnified to repay such payment if he shall be ultimately found not to
be entitled to indemnification under the Section. Indemnification may be
provided even though the person to be indemnified is no longer a director,
officer, employee or agent of the Company or such other entities. Section 78.752
authorizes the Company to obtain insurance on behalf of any such director,
officer employee or agent against liabilities, whether or not the Company would
have the power to indemnify such person against such liabilities under the
provisions of the Section 78.7502.
Under Section 78.751(e) the indemnification and advancement of expenses provided
pursuant to Sections 78.7502 and 78.751 are not exclusive, and subject to
certain conditions, the Company may make other or further indemnification or
advancement of expenses of any of its directors, officers, employees or agents.
Because neither the Articles of Incorporation, as amended, or By-Laws of our
Company otherwise provide, notwithstanding the failure of the Company to provide
indemnification and despite a contrary determination by the Board of Directors
or its shareholders in a specific case, a director, officer, employee or agent
of the Company who is or was a party to a proceeding may apply to a court of
competent jurisdiction for indemnification or advancement of expenses or both,
and the court may order indemnification and advancement of expenses, including
expenses incurred in seeking court-ordered indemnification or advancement of
expenses if it determines that the petitioner is entitled to mandatory
indemnification pursuant to Section 78.7502(3) because he has been successful on
the merits, or because the Company has the power to indemnify on a discretionary
basis pursuant to Section 78.7502 or because the court determines that the
petitioner is fairly and reasonably entitled indemnification or advancement of
expenses or both in view of all the relevant circumstances.
Articles of Incorporation and By-Laws
Our Articles of Incorporation and By-Laws empower us to indemnify current or
former directors, officers, employees or agents of the Company or persons
serving by request of the Company in such capacities in any other enterprise or
persons who have served by the request of the Company is such
1
<PAGE>
capacities in any other enterprise to the full extent permitted by the laws of
the State of Nevada.
Indemnity Agreements
To induce and encourage highly experienced and capable persons to serve as
directors and officers, our Company has entered into an Indemnity Agreement with
each director and officer presently serving the Company and will provide the
same agreement to future directors and officers as well as certain agents and
employees. The Agreement provides that we shall indemnify the director and/or
officer, or other person, when he or she is a party to, or threatened to be made
a party to, a proceeding by, or in the name of, the Company. Expenses incurred
by the indemnified person in any proceeding are to be paid to the fullest extent
permitted by applicable law. The Agreement may at some time require the Company
to pay out funds which might otherwise be utilized to further the Company's
business objectives, thereby reducing our ability to carry out our projected
business plans.
SEC Position on Indemnification for Security Act Liability
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933, as amended, and is, therefore, unenforceable. If a claim
for indemnification against such liabilities (other than the payment by the
Company of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy expressed in the Securities Act
of 1933, as amended, and will be governed by the final adjudication of such
issue.
Officers and Directors Liability Insurance
At present, we do not maintain Officers and Directors Liability Insurance and,
because of the anticipated cost of such insurance, we have no present plans to
obtain such insurance.
ITEM 25: Other Expense of Issuance and Distribution
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered are estimated as follows:
Minimum(1) Maximum(1)
EDGAR Formatting Fee 7,500(2) 7,500(2)
Escrow Fee 500 500
Blue Sky 1,600 1,600
2
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CUSIP Assignment Fee 150 150
Accounting 2,500 2,500
Printing and Engraving 750 750
SEC Registration Fee 158 158
TOTAL EXPENSES 13,158 13,158
(1) To the extent that we are required to return proceeds of up to 20% in
interest of the subscribers electing not to reconfirm their investment, we
will have up to approximately $4,800 less if the minimum number of Units
are sold and $8,000 less if the maximum number of Units are sold to apply
towards the expenses of effecting a merger or acquisition with a target
company. Such fees will likely include travel expenses associated with
evaluating and closing the merger or acquisition with a selected target
company. Olde Monmouth Capital Corp. will advance or loan money to Arcturus
Ventures, Inc. to cover such expenses, and will be reimbursed from the
proceeds of this Offering.
(2) Our out of pocket expense, except for legal fees owed, will consist of fees
associated with the Commission's EDGAR filing requirements. These expenses
are expected to be incurred if and when a post effective amendment is
filed.
ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES
We were formed under the laws of the State of Nevada on March 6, 2000. On April
1, 2000, we issued 500,000 shares of Common Stock to our founder, Olde Monmouth
Capital Corp. for a $10,000 cash investment, or $.02 per share. Also on that
date, we issued 1,000 shares of Common Stock at the same price to each of our
officers to secure their management services: Matthew Troster, President; Manuel
Iglesias, Secretary; and and E. Terry Jaramillo, Treasurer; and we issued 35,000
shares of Common Stock also at the same price to the Law Office of Andrea
Cataneo, Ltd. in partial payment for that firm's legal services. We consider
these issuance to be exempt from registration by reason of Section 4(2) of the
Securities Act.
ITEM 27: EXHIBITS
3.1 Articles of Incorporation for Arcturus Ventures, Inc.
3.2 By-Laws of Arcturus Ventures, Inc.
4.1 Warrant Agreement
4.2 "A" Warrant certificate
4.3 "B" Warrant certificate
10.1 Indemnification Agreement with Matthew Troster
10.2 Indemnification Agreement with Manuel E. Iglesias
10.3 Indemnification Agreement with E. Terry Jaramillo
10.4 Standstill Agreement
10.5 Loan Agreement with Olde Monmouth Capital Corp.
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23 Consent of Auditor
27 Financial Data Schedule
ITEM 28: UNDERTAKINGS
The registrant undertakes:
(1) To file, during any period in which offers or sales are being made,
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10 (a) (3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the Effective Date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement,
including (but not limited to) any addition or deletion of managing
underwriter;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be treated as a new
registration statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) To deposit into the Escrow Account at the closing, certificates in such
denominations and registered in such names as required by the Company to permit
prompt delivery to each purchaser upon release of such securities from the
Escrow Account in accordance with Rule 419 of Regulation C under the Securities
Act. Pursuant to Rule 419, these certificates shall be deposited into an escrow
account, not to be released until a business combination is consummated.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to any provisions contained in its Articles of
Incorporation, or By-Laws, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled
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by controlling precedent, submit to a court of appropriate jurisdiction the
question whether indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for the filing on Form SB-2 and authorized the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, the City of Atlantic Highlands, State of
New Jersey on October 17, 2000
ARCTURUS VENTURES. INC. (Registrant)
/s/ Matthew Troster
--------------------
By Matthew Troster, President
and
/s/ E. Terry Jaramillo
----------------------
E. Terry Jaramillo, CFO
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons who represent a
majority of our Board of Directors.
/s/ E. Terry Jaramillo
-----------------------
E. Terry Jaramillo, Director
/s/ Manuel E. Iglesias
-----------------------
Manuel E. Iglesias, Director
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