SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) MAY 23, 2000
NOXSO CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 000-17454 54-1118334
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
19 MAPLE LANE, RHINEBECK, NEW YORK 12572
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (914)266-4858
2414 LYTLE ROAD BETHEL PARK, PA 15102
(Former name or former address, if changed since last report)
Exhibit index on consecutive page 18 Consecutive page 1 of ___
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT
Pursuant to the Company's Second Amended Plan of Reorganization (the
"Plan") of Noxso Corporation (the "Company") on May 23, 2000, all
outstanding shares of the Company were cancelled and 900,000 shares of
common stock were issued to an investor group consisting of Robert M.
Long (360,000 shares), an officer, director and shareholder of the
Company prior to the sale of the corporate entity, Robert Platek
(450,000 shares), and Spencer Levy (90,000 shares). Pursuant to the
terms of the Plan an additional 100,000 shares have been issued,
pro-rata, to the Company's unsecured creditors with allowed claims,
except for the Department of Energy, which elected not to receive
shares. As of June 5, 2000, the Company had a total of 93 shareholders
of record.
Messrs. Long, Platek and Levy paid an aggregate of $50,000 cash, on a
pro-rata basis, under the terms of the Plan for the right to acquire
control of the Company and 90% of the outstanding shares of common
stock.
In connection with the change of control, all of the Company's officers
and directors, with the exception of Mr. Long, were replaced on May 25,
2000. On May 25, 2000, the investor group elected Mr. Long, an officer,
director and shareholder of the Company prior to the change of control,
as a director and President of the Company. Additionally, James Platek
was elected as a director and Treasurer of the Company, and Spencer
Levy was elected as a director and Secretary of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Company's Second Amended Plan of Reorganization, as of
May 23, 2000, the Company has no material assets. As such, the Company
can be defined as a "shell" company, whose sole purpose at this time is
to locate and consummate a merger or acquisition with a private entity.
The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described
below under "Plan of Operation."
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the Securities
Act of 1933, as amended (the "Securities Act"), and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), management
believes the Company will not be subject to regulation under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"), insofar as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages in
business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act. In such event,
the Company would be required to register as an investment company and
could be expected to incur significant registration and compliance
costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company
under the Investment Company Act and, consequently, a violation of such
Act could subject the Company to material adverse consequences.
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INVESTMENT ADVISERS ACT OF 1940
Under Section 202(a)(11) of the Investment Advisers Act of 1940, as
amended, an "investment adviser" means any person who, for
compensation, engages in the business of advising others, either
directly or through publications or writings, as to the value of
securities or as to the advisability of investing in, purchasing, or
selling securities, or who, for compensation and as part of a regular
business, issues or promulgates analyses or reports concerning
securities. The Company shall only seek to locate a suitable merger of
acquisition candidate, and does not intend to engage in the business of
advising others in investment matters for a fee or otherwise.
FORWARD LOOKING STATEMENTS
Pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 (the "PSLRA"), the Company cautions
readers regarding forward looking statements found in the following
discussion and elsewhere in this report and in any other statement made
by, or on the behalf of the Company, whether or not in future filings
with the Securities and Exchange Commission. Forward looking statements
are statements not based on historical information and which relate to
future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which
are beyond the Company's control and many of which, with respect to
future business decisions, are subject to change. These uncertainties
and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward
looking statements made by or on behalf of the Company. The Company
disclaims any obligation to update forward looking statements. Readers
should also understand that under Section 27A(b)(2)(D) of the
Securities Act, and Section 21E(b)(2)(D) of the Securities Exchange
Act, the "safe harbor" provisions of the PSLRA do not apply to
statements made in connection with an initial public offering.
PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in a business that generates revenues, in exchange for
its securities. The Company has not identified a particular acquisition
target and has not entered into any negotiations regarding such an
acquisition. Management intends to contact investment bankers,
corporate financial analysts, attorneys and other investment industry
professionals through various media. As of the date of this report,
none of the Company's officers, directors, promoters or affiliates have
engaged in any preliminary contact or discussions with any
representative of any other company regarding the possibility of an
acquisition or merger between the Company and such other company.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing the manner in which the transaction
is structured, the Company's Board of Directors expects that it will
provide the Company's shareholders with complete disclosure
documentation concerning a potential business opportunity and the
structure of the proposed business combination prior to consummation.
Such disclosure is expected to be in the form of a proxy, information
statement, or report.
While such disclosure may include audited financial statements of such
a target entity, there is no assurance that such audited financial
statements will be available. The Board of Directors does
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intend to obtain certain assurances of value of the target entity's
assets prior to consummating such a transaction, with further
assurances that audited financial statements would be provided within
sixty days after closing. Closing documents will include
representations that the value of the assets conveyed to or otherwise
so transferred will not materially differ from the representations
included in such closing documents, or the transaction will be
voidable.
Due to the Company's intent to remain a shell company until a merger or
acquisition candidate is identified, it is anticipated that its cash
requirements will be minimal, and that all necessary capital, to the
extent required, will be provided by the directors or officers. The
Company does not anticipate that it will have to raise capital or
acquire any plant or significant equipment in the next twelve months,
unless a merger or acquisition target is identified.
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities
presented to it by persons or firms who or which desire to seek the
perceived advantages of an Exchange Act registered corporation. The
Company will not restrict its search to any specific business,
industry, or geographical location and the Company may participate in a
business venture of virtually any kind or nature. This discussion of
the proposed business is purposefully general and is not meant to be
restrictive of the Company's virtually unlimited discretion to search
for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential
business venture because the Company has nominal assets and limited
financial resources. This lack of diversification should be considered
a substantial risk to shareholders of the Company because it will not
permit the Company to offset potential losses from one venture against
gains from another.
The Company may seek a business opportunity with entities that have
recently commenced operations, or that wish to utilize the public
marketplace in order to raise additional capital in order to expand
into new products or markets, to develop a new product or service, or
for other corporate purposes. The Company may acquire assets and
establish wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
Management anticipates that the selection of a business opportunity in
which to participate will be complex and extremely risky. Due to
general economic conditions, rapid technological advances being made in
some industries and shortages of available capital, management believes
that there are numerous firms seeking the perceived benefits of a
publicly registered corporation. Such perceived benefits may include,
among other things, facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, and
providing liquidity (subject to restrictions of applicable statutes)
for all shareholders. Potentially, available business opportunities may
occur in many different industries and at various stages of
development, all of which will make the task of comparative
investigation and analysis of such business opportunities extremely
difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash
or other assets. However, management believes the Company will be able
to offer owners of acquisition candidates the opportunity to acquire a
controlling ownership interest in a publicly registered company without
incurring the cost and time required to conduct an initial public
offering. The owners of the business opportunities will,
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however, incur significant legal and accounting costs in connection
with acquisition of a business opportunity, including the costs of
preparing annual (Form 10-K or 10-KSB), quarterly (Form 10-Q or 10-QSB)
and current reports (Form 8-K), agreements and related documents. The
Exchange Act specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within
the numerous filings required under the Securities Exchange Act.
Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which
would support the perceived benefits of a merger or acquisition
transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company,
none of whom is a professional business analyst. Management intends to
concentrate on identifying preliminary prospective business
opportunities which may be brought to its attention through present
associations of the Company's officers and directors, or by the
Company's shareholders. In analyzing prospective business
opportunities, management will consider such matters as the available
technical, financial and managerial resources; working capital and
other financial requirements; history of operations, if any; prospects
for the future; nature of present and expected competition; the quality
and experience of management services which may be available and the
depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable
but which then may be anticipated to impact the proposed activities of
the Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition of acceptance of products,
services, or trades; name identification; and other relevant factors.
Officers and directors of the Company expect to meet personally with
management and key personnel of the business opportunity as part of
their "due diligence" investigation. To the extent possible, the
Company intends to utilize written reports and personal investigations
to evaluate the above factors. The Company will not acquire or merge
with any company that cannot provide audited financial statements
within a reasonable period of time after closing of the proposed
transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, shall rely upon their own
efforts and, to a much lesser extent, the efforts of the Company's
shareholders, in accomplishing the business purposes of the Company. It
is not anticipated that any outside consultants or advisors, except for
the Company's legal counsel and accountants, will be utilized by the
Company to effectuate its business purposes. However, if the Company
does retain such an outside consultant or advisor, any cash fee earned
by such party will be paid by the prospective merger/acquisition
candidate, as the Company has no cash assets with which to pay such
obligation. As of the date of this report, the Company does not have
any contracts or agreements with any outside consultants and none are
contemplated.
Management will not restrict the Company's search for any specific kind
of firms, but may acquire a venture that is in its preliminary or
development stage or is already operating. It is impossible to predict
at this time the status of any business in which the Company may become
engaged, in that such business may need to seek additional capital, may
desire to have its shares publicly traded, or may seek other perceived
advantages which the Company may offer. Furthermore, management does
not intend to seek capital to finance the operation of any acquired
business opportunity until such time as the Company has successfully
consummated a merger or acquisition.
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It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan. Because the Company has no capital
with which to pay these anticipated expenses, present management of the
Company will pay these charges with their personal funds, as interest
free loans to the Company. If additional funding is necessary,
management and/or shareholders will continue to provide capital or
arrange for outside funding. However, the only opportunity which
management has to have these loans repaid will be from a prospective
merger or acquisition candidate. Management's agreements with the
Company contain no negative covenants that would impede or prevent
consummation of a proposed transaction. There is no assurance, however,
that management will continue to provide capital indefinitely if a
merger candidate cannot be found. If a merger candidate cannot be found
in a reasonable period of time, management may be required reconsider
its business strategy, which could result in the dissolution of the
Company.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization,
joint venture, or licensing agreement with another corporation or
entity. The Company may also acquire stock or assets of an existing
business. On the consummation of a transaction, it is probable that the
present management and shareholders of the Company will no longer be in
control of the Company. In addition, the Company's directors may, as
part of the terms of the acquisition transaction, resign and be
replaced by new directors without a vote of the Company's shareholders
or may sell their stock in the Company. Any and all such sales will
only be made in compliance with the securities laws of the United
States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon an exemption from registration under
applicable federal and state securities laws. In some circumstances,
however, as a negotiated element of its transaction, the Company may
agree to register all or a part of such securities immediately after
the transaction is consummated or at specified times thereafter. If
such registration occurs, of which there can be no assurance, it will
be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no
longer considered a "shell" company. Until a merger or acquisition is
consummated, the Company will not attempt to register any additional
securities. The issuance of substantial additional securities and their
potential sale into any trading market which may develop in the
Company's securities may have a depressive effect on the value of the
Company's securities in the future, if such a market develops, of which
there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the
business transaction will find it desirable to avoid the creation of a
taxable event and thereby structure the acquisition in a so-called
"tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code (the "Code"). In order to obtain tax-free
treatment under the Code, it may be necessary for the owners of the
acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company would
retain 20% or less of the issued and outstanding shares of the
surviving entity, which would result in significant dilution in the
equity of such shareholders.
As part of the Company's "due diligence" investigation, officers and
directors of the Company may meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information provided,
check references of
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management and key personnel, and take other reasonable investigative
measures to the extent of the Company's limited financial resources and
management expertise. The manner in which the Company participates in
an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the
management of the opportunity and the relative negotiation strength of
the Company and such other management.
With respect to any merger or acquisition negotiations with a target
company management is expected to focus on the percentage of the
Company which the target company shareholders would acquire in exchange
for all of their shareholdings in the target company. Depending upon,
among other things, the target company's assets and liabilities, the
Company's shareholders will in all likelihood hold a substantially
lesser percentage ownership interest in the Company following any
merger or acquisition. The percentage ownership may be subject to
significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by
the Company can be expected to have a significant dilutive effect on
the percentage of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although
the terms of such agreements cannot be predicted, generally such
agreements will require some specific representations and warranties by
all of the parties, will specify certain events of default, will detail
the terms of closing and the conditions that must be satisfied by each
of the parties prior to and after such closing, will outline the manner
of bearing costs, including costs associated with the Company's
attorneys and accountants, will set forth remedies on default and will
include miscellaneous other terms.
As stated previously, the Company will not acquire or merge with any
entity that cannot provide independent audited financial statements
within a reasonable period of time after closing of the proposed
transaction. The Company is subject to the reporting requirements of
the Securities Exchange Act. Included in these requirements is the
affirmative duty of the Company to file independent audited financial
statements as part of its Form 8-K to be filed with the Securities and
Exchange Commission upon consummation of a merger or acquisition, as
well as the Company's audited financial statements included in its
annual report on Form 10-K (or 10-KSB, as applicable). If such audited
financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the
requirements of the Exchange Act, or if the audited financial
statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing
documents will provide that the proposed transaction will be voidable
at the discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision
providing for the acquisition entity to reimburse the Company for all
costs associated with the proposed transaction.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are
many established venture capital and financial concerns which have
significantly greater financial and personnel resources and technical
expertise than the Company. In view of the Company's combined extremely
limited financial resources and limited management availability, the
Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
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RISK FACTORS
The Company's business is subject to numerous risk factors, including
the following:
BANKRUPTCY, NO REVENUE AND MINIMAL ASSETS. The Company, as a result of
the bankruptcy proceedings, has no operations or revenues. The Company
has no significant assets or financial resources. The Company will, in
all likelihood, sustain operating expenses without corresponding
revenues, at least until the consummation of a business combination.
This may result in the Company incurring a net operating loss that will
increase continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity and
consummate such a business combination. In addition, since the Company
has previously filed bankruptcy other companies may be adverse to
entering into a business combination with the Company because of
regulatory or disclosure requirements which may limit the actions of
such company and/or the negative perception which may exist about a
post-bankruptcy company.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of the
Company's proposed plan of operation will depend to a great extent on
the operations, financial condition and management of the identified
business opportunity. While management intends to seek a business
combination with an entity having an established operating history,
there can be no assurance the Company will be successful in locating
any candidates meeting such criteria. In the event the Company
completes a business combination, the success of its operations may be
dependent upon management of the successor firm or venture partner firm
and numerous other factors beyond the Company's control.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures
with and acquisitions of small private and public entities. A large
number of established and well-financed entities, including venture
capital firms, are active in mergers and acquisitions of companies that
may be desirable target candidates for the Company. Nearly all such
entities have significantly greater financial resources, technical
expertise and managerial capabilities than the Company and,
consequently, the Company will be at a competitive disadvantage in
identifying possible business opportunities and successfully completing
a business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small
public companies.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION. The Company
has no arrangement, agreement or understanding with respect to engaging
in a merger with, joint venture with or acquisition of, a private or
public entity. There can be no assurance that the Company will be
successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management has
not identified any particular industry or specific business within an
industry for evaluation by the Company. There is no assurance
management will be able to negotiate a business combination on terms
favorable to the Company.
NO STANDARDS FOR BUSINESS COMBINATION. The Company has not established
a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which the Company will
require a target business opportunity to have achieved. Accordingly,
the Company
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may enter into a business combination with a business opportunity
having no significant operating history, losses, limited or no
potential for earnings, limited assets, negative net worth or other
characteristics that are indicative of development stage companies.
CONTROL BY INVESTOR GROUP. The investor group, which consists of Mr.
Long, Robert Platek and Spencer Levy, will, in the aggregate,
beneficially own approximately 90% of the shares of the Company's
outstanding capital stock. As a result, these stockholders possess the
ability, among other things, to elect a majority of the Company's Board
of Directors and approve significant corporate transactions. Such share
ownership and control may also have the effect of delaying or
preventing a change in control of the Company, impeding a merger,
consolidation, takeover or other business combination involving the
Company or discourage a potential acquirer from making a tender offer
or otherwise attempting to obtain control of the Company, thereby
having a material and adverse effect on the value of the Company's
stock. In addition, investors may have difficulty obtaining the
necessary stockholder vote required for corporate actions contrary to
the wishes of the management.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While seeking
a business combination, management anticipates devoting up to 15 hours
per month to the business of the Company. The Company has not entered
into employment agreements with any of its officers and is not expected
to do so in the foreseeable future. The Company has not obtained key
man life insurance on any of its officers or directors. Notwithstanding
the combined limited experience and time commitment of management, loss
of the services of any of these individuals would adversely affect
development of the Company's business and its likelihood of continuing
operations.
CONFLICTS OF INTEREST - GENERAL. Officers and directors of the Company
may participate in business ventures which could be deemed to compete
directly with the Company. Additional conflicts of interest and
non-arm's length transactions may also arise in the event the Company's
officers or directors are involved in the management of any firm with
which the Company transacts business.
REPORTING REQUIREMENTS MAY DELAY OR PRECLUDE ACQUISITION. Sections 13
and 15(d) of the Securities Exchange Act require reporting companies to
provide certain information about significant acquisitions, including
audited financial statements for the company acquired, covering one,
two, or three years, depending on the relative size of the acquisition.
The time and additional costs that may be incurred by some target
entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition
by the Company. Acquisition prospects that do not have or are unable to
obtain the required audited statements may be inappropriate for
acquisition so long as the reporting requirements of the Exchange Act
are applicable.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, results of
market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company does
not have, and does not plan to establish, a marketing organization.
Even in the event demand is identified for a merger or acquisition
contemplated by the Company, there is no assurance the Company will be
successful in completing any such business combination.
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LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with a business opportunity. Consequently, the
Company's activities may be limited to those engaged in by business
opportunities which the Company merges with or acquires. The Company's
inability to diversify its activities into a number of areas may
subject the Company to economic fluctuations within a particular
business or industry and therefore increase the risks associated with
the Company's operations.
GOVERNMENT REGULATION. Although the Company will be subject to the
reporting requirements under the Exchange Act, management believes the
Company will not be subject to regulation under the Investment Company
Act, insofar as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages in
business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act. In such event,
the Company would be required to register as an investment company and
could be expected to incur significant registration and compliance
costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company
under the Investment Company Act and, consequently, violation of such
Act could subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's common stock will, in all
likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination may
require management of the Company to sell or transfer all or a portion
of the Company's common stock held by them, or resign as members of the
Board of Directors of the Company. The resulting change in control of
the Company could result in removal of one or more present officers and
directors of the Company and a corresponding reduction in or
elimination of their participation in the future affairs of the
Company.
REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING A BUSINESS
COMBINATION. The Company's primary plan of operation is based upon a
business combination with a private concern which, in all likelihood,
would result in the Company issuing securities to shareholders of any
such private company. The issuance of previously authorized and
unissued common stock of the Company would result in a reduction in the
percentage of shares owned by present and prospective shareholders of
the Company and may result in a change in control or management of the
Company.
ABSENCE OF TRADING MARKET. There currently is no trading market for the
Company's stock and there is no assurance that a trading market will
develop.
"PENNY" STOCK REGULATION OF BROKER-DEALER SALES OF COMPANY SECURITIES.
The SEC has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks". Generally, penny stocks
are equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or
quoted on the NASDAQ system). If the Company's shares are traded for
less than $5 per share, as they currently are, the shares will be
subject to the SEC's penny stock rules unless (1) the Company's net
tangible assets exceed $5,000,000 during the Company's first three
years of continuous operations or $2,000,000 after the Company's first
three years of continuous operations; or (2) the Company has had
average revenue of at least $6,000,000 for the last three years. The
penny stock rules require a broker-dealer, prior
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to a transaction in a penny stock not otherwise exempt from the rules,
to deliver a standardized risk disclosure document prescribed by the
SEC that provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the
penny stock, the compensation of the broker-dealer and its salesperson
in the transaction and monthly account statements showing the market
value of each penny stock held in the customer's account. In addition,
the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
agreement to the transaction. These requirements may have the effect of
reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules. As long as the
Company's common stock is subject to the penny stock rules, the holders
of the common stock may find it difficult to sell the common stock of
the Company.
TAXATION. Federal and state tax consequences will, in all likelihood,
be major considerations in any business combination the Company may
undertake. Currently, such transactions may be structured so as to
result in tax-free treatment to both companies, pursuant to various
federal and state tax provisions. The Company intends to structure any
business combination so as to minimize the federal and state tax
consequences to both the Company and the target entity; however, there
can be no assurance that such business combination will meet the
statutory requirements of a tax-free reorganization or that the parties
will obtain the intended tax-free treatment upon a transfer of stock or
assets. A non-qualifying reorganization could result in the imposition
of both federal and state taxes which may have an adverse effect on
both parties to the transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Management believes that any potential business
opportunity must provide audited financial statements for review for
the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility
of a business combination with the Company, rather than incur the
expenses associated with preparing audited financial statements.
EMPLOYEES
The Company has no full time employees. The Company's officers and
directors have agreed to allocate a portion of their time to the
activities of the Company, without compensation. These officers and
directors anticipate that the business plan of the Company can be
implemented by their devoting an aggregate of 45 hours per month to the
business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by such
officers and directors. The Company does not expect any significant
changes in the number of employees prior to the consummation of a
business combination.
The Company's officers and directors may become involved with other
companies who have a business purpose similar to that of the Company.
As a result, potential conflicts of interest may arise in the future.
If such a conflict does arise and an officer or director of the Company
is presented with business opportunities under circumstances where
there may be a doubt as to whether the opportunity should belong to the
Company or another "shell" company they are affiliated with, they will
disclose the opportunity to all such companies.
11
<PAGE>
DESCRIPTION OF PROPERTY
The Company has no properties and at this time has no agreements to
acquire any properties. The Company intends to attempt to acquire
assets or a business in exchange for its securities.
The Company operates from its offices at 19 Maple Lane, Rhinebeck, New
York 12572. Space is provided to the Company on a rent free basis by
Mr. Long, an officer, director and principal shareholder of the
Company, and it is anticipated that this arrangement will remain until
such time as the Company successfully consummates a merger or
acquisition. Management believes that this space will meet the
Company's needs for the foreseeable future.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of June 5, 2000, with
respect to the beneficial ownership of the Company's common stock by
each person known by the Company to be the beneficial owner of more
than five percent of the outstanding common stock and by directors and
officers of the Company, both individually and as a group:
<TABLE>
<CAPTION>
BENEFICIAL OWNERS SHARES OWNED BENEFICIALLY PERCENT OF CLASS(1)
<S> <C> <C>
Robert Long 360,000 36%
19 Maple Lane
Rhinebeck, New York 12572
Robert Platek(2) 450,000 45%
5 Halls Lane
Rye, New York 10580
Spencer Levy 90,000 9%
11 Waverly Place #6H
New York, New York 10003
James Platek(2) -0- 0%
335 Garden Street, Apt. #4
Hoboken, New Jersey 07030
All officers and directors, as a 450,000 45%
group (3 persons)
------------------
<FN>
(1) Percentages are based on 1,000,000 shares of common stock outstanding as of June 5, 2000.
(2) Robert Platek and James Platek are brothers.
</FN>
</TABLE>
12
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The officers and directors of the Company are:
NAME AGE TITLE(S)
---- --- --------
Robert Long 41 President since May 2000
Director since November 1988
Secretary from March 1993 to
May 2000.
James Platek 32 Treasurer since May 2000
Director since May 2000
Spencer Levy 43 Secretary since May 2000
Director since May 2000
The directors of the Company are elected by the shareholders and the
officers are appointed annually by the Board of Directors. Vacancies in
the Board of Directors are filled by the Board of Directors. Directors
of the Company receive no compensation for their service as directors.
Set forth below are brief descriptions of the recent employment and
business experience of the Company's officers and directors.
James Platek is the brother of Robert Platek, a controlling shareholder
of the Company. There are no other family relationships between any
executive officer and director of the Company.
ROBERT M. LONG, PRESIDENT AND DIRECTOR. Mr. Long holds a bachelors
degree in Economics from the University of the South (Sewanee,
Tennessee), and a Masters of Business Administration from The College
of William and Mary (Williamsburg, Virginia). Mr. Long has been
self-employed as a financial consultant throughout his career, which
has included providing financial consulting services to early stage
companies. Since 1997, Mr. Long has been the president and sole
shareholder of LongView Partners, Inc., an investment banking company.
Through LongView Partners, Inc. Mr. Long provides clients with
investment banking services, including assistance with financing and
investor relations. From 1983 to 1996, Mr. Long was a self-employed
financial consultant, providing investment banking services. Mr. Long
has been a director of the Company since November 1988 and served as
Secretary from March 1993 until May 25, 2000. Mr. Long was an officer
and director of the Company at the time the Company filed bankruptcy.
Mr. Long is the Chairman of the Board of Directors of Regent Group,
Inc., a public company listed on the OTC-Bulletin Board.
JAMES PLATEK, TREASURER AND DIRECTOR. Mr. Platek holds a bachelors
degree in History from Rutgers University. Since 1998, Mr. Platek has
been a self-employed financial consultant and private investor. From
1997 to 1998, Mr. Platek was a retail broker for Morgan Stanley Dean
Witter, New York, New York. From 1995 to 1998, Mr. Platek was the
Director of Marketing for Plymouth Partners, New York, New York. Mr.
Platek was responsible for marketing, analysis and fund raising.
Plymouth Partners is a private company which assists companies with
funding and marketing. Mr. Platek is the Vice President of
Institutional Marketing of Regent Group, Inc.
13
<PAGE>
SPENCER LEVY, SECRETARY, DIRECTOR. Mr. Levy holds a bachelors degree in
Liberal Arts from New York University, and a Masters Degree in
Anthropology from the University of Chicago. Since 1996, Mr. Levy has
been a employee/consultant for LongView Partners, Inc. Mr. Levy
performs investment banking services for LongView Partners, Inc.,
including assisting clients with financing and investor relations. From
1993 to 1995, Mr. Levy was an Associate for Glaser Capital Management,
Inc., New York, New York, where he was responsible for providing
investor relations and bookkeeping services. Glaser Capital Management,
Inc. provides investor relations to its clientele. Mr. Levy is the Vice
President of Editorial Content of Regent Group, Inc.
PRIOR "SHELL" COMPANY EXPERIENCE
With the exception of Mr. Long and Mr. Levy, none of the Company's
officers and/or directors has had any direct experience in identifying
emerging companies for investment and/or business combinations.
CONFLICTS OF INTEREST
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are
potential inherent conflicts of interest in their acting as officers
and directors of the Company. Insofar as the officers and directors are
engaged in other business activities, management anticipates they will
devote only a minor amount of time to the Company's affairs.
The officers and directors of the Company are now and may in the future
become shareholders, officers or directors of other companies which may
be formed for the purpose of engaging in business activities similar to
those conducted by the Company. Accordingly, additional direct
conflicts of interest may arise in the future with respect to such
individuals acting on behalf of the Company or other entities.
Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the
performance of their duties or otherwise. The Company does not
currently have a right of first refusal pertaining to opportunities
that come to management's attention insofar as such opportunities may
relate to the Company's proposed business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties or
in any other manner, will be considered opportunities of, and be made
available to the Company and the companies that they are affiliated
with on an equal basis. A breach of this requirement will be a breach
of the fiduciary duties of the officer or director. If the Company or
the companies in which the officers and directors are affiliated with
both desire to take advantage of an opportunity, then said officers and
directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take
advantage of opportunities if the Company should decline to do so.
Except as set forth above, the Company has not adopted any other
conflict of interest policy with respect to such transactions.
As of June 5, 2000, the Company does not have any standing audit,
nominating, or compensation committees of the Board of Directors.
14
<PAGE>
During the fiscal year ended June 30, 1999, the Board of Directors held
meetings on September 22, 1998 and August 3, 1998. Mr. Toedtman, a
director at the time of the meetings, was the only director not present
at those meetings. No meetings of the then existing compensation
committee were held during the fiscal year ended June 30, 1999.
EXECUTIVE COMPENSATION
None of the Company's officers and/or directors receives any
compensation for services rendered to the Company, nor has any received
such compensation in the past. They all have agreed to act without
compensation until authorized by the Board of Directors, which is not
expected to occur until after consummation of a merger or acquisition;
however, the officers and directors are reimbursed for expenses
incurred on behalf of the Company, including travel expenses. As of the
date of this report, the Company has no funds available to pay
directors. Further, none of the directors are accruing any compensation
pursuant to any agreement with the Company.
It is possible that after the Company successfully consummates a merger
or acquisition with another entity that entity may desire to employ or
retain one or a number of members of the Company's management for the
purposes of providing services to the surviving entity or otherwise
provide other compensation to such persons. Each member of management
has agreed to disclose to the Company's Board of Directors any
discussions concerning possible compensation to be paid to them by any
entity which proposes to undertake a transaction with the Company and
further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is
offered compensation in any form from any prospective merger or
acquisition candidate, the proposed transaction cannot be approved by
the Company's Board of Directors due to the inability of the Board to
affirmatively approve such a transaction. Specifically, under section
13.1-691 of the Virginia Stock Corporation Act, a transaction in which
a director has a director or indirect personal interest is not voidable
by a corporation if:
1. The material facts are disclosed to the board of
directors and a majority of the disinterested
directors (which must be more than one director)
approve the transaction;
2. The material facts are disclosed to the share-
holders and a majority of the shareholders
approve the transaction; however, the shares of
interested directors are not counted in
determining whether to approve the transaction;
or
3. The transaction is fair to the corporation.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the
event the Company consummates a transaction with any entity referred by
associates of management, it is possible that such an associate will be
compensated for their referral in the form of a finder's fee. It is
anticipated that this fee will be either in the form of restricted
common stock issued by the Company as part of the terms of the proposed
transaction, or will be in the form of cash consideration. However, if
such compensation is in the form of cash, such payment will be tendered
by the acquisition or merger candidate, because the Company has
insufficient cash available. The amount of such finder's fee cannot be
determined as of the date of this report, but is expected to be
comparable to consideration normally paid in like transactions. No
15
<PAGE>
member of management of the Company will receive any finder's fee,
either directly or indirectly, as a result of their respective efforts
to implement the Company's business plan.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company for
the benefit of its employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as disclosed below, none of the present directors, officers
or principal shareholders of the Company, nor any family member of the
foregoing, nor, to the best of the information and belief of the
present management of the Company, any of the former directors, senior
officers or principal shareholders of the Company, nor any family
member of such former directors, officers or principal shareholders,
has or has had any material interest, director or indirect, in any
transaction, within the two years prior to the date of this report, or
in any proposed transaction which has materially affected or will
materially affect the Company. Management believes the following
transactions are as fair to the Company and similar to terms which
could be obtained from unrelated third parties.
1. Pursuant to the Plan, on May 23, 2000, all outstanding shares
of the Company were cancelled and 900,000 shares of common
stock were issued to an investor group consisting of Robert M.
Long (360,000 shares), an officer, director and shareholder of
the Company prior to the sale of the corporate entity, Robert
Platek (450,000 shares), a beneficial shareholder of the
Company prior to the sale, and Spencer Levy (90,000 shares).
Messrs. Long, Platek and Levy paid an aggregate of $50,000 for
control of the Company, on a pro-rata basis.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
GENERAL
On February 6, 1997, Olin Corporation, FRU-CON Construction Company and
Industrial Rubber & Safety Products, Inc. filed an involuntary petition
in bankruptcy against the Company in the United States Bankruptcy Court
in the Eastern District of Tennessee (the "Bankruptcy Court"). On June
4, 1997, the Company (i) consented to the jurisdiction of the
Bankruptcy Court and was adjudicated bankrupt and (ii) converted the
bankruptcy to a proceeding under Chapter 11 of the Bankruptcy Code
(case no. 97-19709). The Company operated as a debtor-in-possession in
the proceeding until the entity was sold to the investor group on May
23, 2000.
CONFIRMATION OF SECOND AMENDED PLAN OF REORGANIZATION
On December 9, 1999, the United States Bankruptcy Court for the Eastern
District of Tennessee (the "Bankruptcy Court") entered its Order
confirming the Plan. The Plan became effective on May 23, 2000 with the
closing of the sale of the entity to the investor group.
16
<PAGE>
Pursuant to the Plan, the principal elements of the Plan were (1) to
sell the Company's assets, and (2) sell the corporate entity, both of
which were accomplished on or before May 23, 2000.
Pursuant to the Company's Second Amended Plan of Reorganization, as of
May 23, 2000, the Company has no material assets. As such, the Company
can be defined as a "shell" company, whose sole purpose at this time is
to locate and consummate a merger or acquisition with a private entity.
The Board of Directors of the Company has elected to commence
implementation of the Company's principal business purpose, described
above. See "Item 2. Acquisition or Disposition of Assets."
Prior to the change of control, there were 15,383,468 shares of common
stock issued and outstanding. Subsequent to the change of control and
pursuant to the Plan, there are 1,000,000 shares of common stock issued
and outstanding.
Immediately prior to confirmation of the Plan, the Company had assets
totaling approximately $314,863 and liabilities totaling approximately
$3,868,078.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Effective May 25, 2000, the Company dismissed Arthur Andersen,
LLP, Pittsburgh, Pennsylvania, as its independent accountants, and
engaged Daniel J. Baier, CPA, P.C. as the Company's new independent
accountant. This dismissal was unrelated to Arthur Andersen LLP's
competence, practices and procedures.
Prior to the engagement of Daniel J. Baier, CPA, P.C., Robert Long, an
officer, director and controlling shareholder of the Company consulted
with such firm about its engagement and requested Daniel J. Baier, CPA,
P.C. to begin its audit work in preparation for the change of control.
Neither Mr. Long nor the Company consulted Daniel J. Baier, CPA, P.C.
regarding any of the matters identified in Item 304(a)(2) of Regulation
S-B.
The dismissal of Arthur Andersen, LLP and the retention of Daniel J.
Baier, CPA, P.C. were approved by the Company's Board of Directors.
The Company has been the subject of bankruptcy proceedings since
February 1997, and as of December 31, 1999, audited financial
statements for the fiscal years ending June 30, 1998 and 1999 had not
been prepared. Daniel J. Baier, CPA, P.C. has been engaged by the
Company to prepare audited statements for the fiscal years ended June
30, 1998 and 1999.
Arthur Andersen, LLP audited the Company's financial statements for the
years ended June 30, 1996 and 1997. Arthur Andersen, LLP's report for
such periods did not contained an adverse opinion or a disclaimer of
opinion, nor was the report qualified or modified as to uncertainty,
audit scope or accounting principles except for i) the Company's
ability to continue as a going concern, and ii) the Company's election
not to adopt the recognition provisions of Statement of Financial
Accounting Standard No. 123 "Accounting for Stock-Based Compensation"
and the Company's failure to comply with the related disclosure
requirements of such statement. During the period from July 1, 1997 to
March 31, 2000, and the years ended June 30, 1996 and 1997, there were
no disagreements with Arthur Andersen, LLP on any matter of accounting
principles or practices, financial statement disclosure, or
17
<PAGE>
auditing scope procedure, which disagreements, if not resolved to the
satisfaction of Arthur Andersen, LLP, would have caused such firm to
make reference to the subject matter of the disagreements in connection
with its reports on the Company's financial statements. In addition,
there were no such events as described under Item 304 of Regulation S-B
during the fiscal years ended June 30, 1996 and 1997 and the subsequent
interim periods through March 31, 2000.
Arthur Andersen, LLP has informed the Company that it will provide the
SEC a letter containing its position with the foregoing statements
regarding the Company's change in certifying accountant.
ITEM 5. OTHER EVENTS
Not Applicable.
ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS
Not Applicable.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired: Not applicable
(b) Pro forma financial information: Not applicable.
(c) Exhibits:
<TABLE>
<CAPTION>
REGULATION CONSECUTIVE
S-K NUMBER DOCUMENT PAGE NUMBER
<S> <C> <C> <C>
2.1 Form of Second Amended Plan of Reorganization 20
16 Letter from Arthur Andersen, LLP re: change in
certifying accountants 54
</TABLE>
ITEM 8. CHANGE IN FISCAL YEAR
Not applicable.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NOXSO CORPORATION
June 29, 2000 By: /S/ ROBERT M. LONG
------- -------------------------------------
Robert Long, President
19
