UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LORELEI CORPORATION
(Name of small business issuer in its charter)
Delaware 6770 13-405-8469
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
63 Wall Street, Suite 1801, New York, NY 10005, (212) 344-1600
(Address and telephone number of principal executive offices)
63 Wall Street, Suite 1801, New York, NY 10005, (212) 344-1600
(Address of Principal place of business or intended principal
place of business)
Schonfeld & Weinstein, LLP, 63 Wall Street, Suite 1801, New York, NY 10005
(212) 344-1600
(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public: as soon as practicable after
the effective date of this Registration Statement and Prospectus.
Schonfeld & Weinstein, L.L.P.
63 Wall Street, Suite 1801
New York, NY 10005
(212) 344-1600
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount Proposed Proposed Amount of
Securities Being(1) Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Share(2) Price(2)
Shares of Common Stock 70,000 $0.50 $35,000 $9.24
TOTAL 70,000 $35,000 $9.24
(1) Estimated for purposes of computing the registration fee pursuant to
Rule 457.
Cross Reference Sheet
Showing the Location In Prospectus of
Information Required by Items of Form SB-2
Part I. Information Required in Prospectus
Item
No. Required Item Location or Caption
1. Front of Registration Statement Front of Registration
and Outside Front Cover of Statement and outside
Prospectus front cover of Prospectus
2. Inside Front and Outside Back Inside Front Cover Page
Cover Pages of Prospectus of Prospectus and Outside
Front cover Page of
Prospectus
3. Summary Information and Risk Prospectus Summary;
Factors High Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Prospectus Summary-
Price Determination of Offering
Price; High Risk Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Plan of Distribution
9. Legal Proceedings Litigation
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management of Common Stock
(continued)
Part I Information Required in Prospectus Caption in Prospectus
12. Description of Securities Description of Securities
13. Interest of Named Experts and Legal Opinions; Experts
Counsel
14. Disclosure of Commission Position Statement as to
on Indemnification for Securities Indemnification
Act Liabilities
15. Organization Within Last Management, Certain
Five Years Transactions
16. Description of Business Proposed Business,
Remuneration
17. Management's Discussion and Proposed Business -
and Analysis or Plan of Plan of Operation
Operation
18. Description of Property Proposed Business
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Stock and Prospectus Summary,
Related Stockholder Matters Market for Registrant's
Common Stock and Related
Stockholders Matters;
Shares Eligible for Future
Sale.
21. Executive Compensation Remuneration
22. Financial Statements Financial Statements
23. Changes in and Disagreements Not Applicable
with Accountants on Accounting
and Financial Disclosure
PROSPECTUS
LORELEI CORPORATION
(A Delaware Corporation)
70,000 Shares of Common Stock Offered at $0.50 per Share
Lorelei Corporation ("Lorelei") offers for sale 70,000 shares of common
stock, $.001 par value per share at a purchase price of $0.50 per share. The
shares shall be sold exclusively by Lorelei on a "best-efforts, all or none
basis" for a period of ninety (90) days (which may be extended an additional
ninety (90) days). This offering shall be conducted directly by Lorelei
without the use of a professional underwriter or securities dealer. Lorelei's
offering is being made in compliance with Rule 419 of Regulation C. Rule 419
states that the offering proceeds and the securities to be issued to
purchasers will be placed in an escrow account until the offering has been
reconfirmed by Lorelei's shareholders and a business combination consummated
in accordance with the provisions of such Rule. As per Rule 3a51-1(d) under
the Securities Exchange Act of 1934, the securities being offered hereto
constitute "penny stock," and as such, certain sales restrictions apply to
these securities. Up to 20% of the offering may be purchased by officers,
directors, current shareholders of Lorelei, and any of their affiliates or
associates.
Price to Proceeds to
the Public Lorelei(2)
Per Share $ 0.50 $ 0.50
TOTAL (1) $35,000.00 $35,000.00
(1) These shares are offered by Lorelei on a "best-efforts, all or none
basis".
(2) Before deducting offering expenses which include: Blue Sky fees, legal
fees, accounting fees, printing fees, filing fees, estimated at $23,000.
Lorelei is conducting a blank check offering subject to the
Commission's Rule 419 of Regulation C. The offering proceeds, which will be
$35,000.00, and the securities purchased by investors must be deposited into
an escrow account. While held in the escrow account, the deposited securities
may not be traded or transferred. Except for an amount up to 10% of the
deposited funds, $3,500, otherwise releasable under the Rule, the deposited
funds and the deposited securities may not be released until an acquisition is
made which meets the criteria specified in Rule 419, and a sufficient number
of investors reconfirm their investment in accordance with Rule 419's
procedures. Rule 419 states that a new prospectus, which describes an
acquisition candidate and its business and includes audited financial
statements, will be delivered to all investors. Lorelei must return the pro
rata portion of the deposited funds to any investor who does not elect to
remain an investor. Unless a sufficient number of investors elect to remain
so, all investors will be entitled to the return of their pro rata portion of
the deposited funds and none of the deposited securities will be issued to
investors. In the event an acquisition is not consummated within 18 months of
the effective date, the deposited funds will be returned on a pro rata basis
to all investors. Consider carefully the risk factors beginning on page 10 in
this prospectus.
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary
is a criminal offense.
Lorelei Corporation
63 Wall Street
Suite 1801
New York, NY 10005
The date of this Prospectus is .
Dealer Prospectus Delivery Obligation
Until ________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY 8
Lorelei 8
The Offering 8
Offering in Compliance with Rule 419 8
High Risk Factors 9
Determination of Offering Price 9
Use of Proceeds 9
SUMMARY FINANCIAL INFORMATION 10
HIGH RISK FACTORS 10
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION 18
UNDER RULE 419
Deposit of Offering Proceeds and Securities 18
Prescribed Acquisition Criteria 19
Post-Effective Amendment 19
Reconfirmation Offering 19
Release of Deposited Securities and
Deposited Funds 20
DILUTION 21
USE OF PROCEEDS 22
CAPITALIZATION 23
PROPOSED BUSINESS 24
History and Organization 24
Plan of Operation 24
Evaluation of Business Combination 25
Business combinations 28
Regulation 28
Employees 28
Facilities 28
Year 2000 Issues 28
MANAGEMENT 30
Biography 30
Other Blank Check Companies 31
Conflicts of Interest 31
Remuneration 31
Management Involvement 31
STATEMENT AS TO INDEMNIFICATION 31
MARKET FOR LORELEI'S COMMON STOCK 32
CERTAIN TRANSACTIONS 32
PRINCIPAL STOCKHOLDERS 33
DESCRIPTION OF SECURITIES 35
Common Stock 35
Future Financing 36
Reports to Stockholders 36
Dividends 36
Transfer Agent 36
PLAN OF DISTRIBUTION 36
EXPIRATION DATE 36
LITIGATION 38
LEGAL OPINIONS 38
EXPERTS 38
FURTHER INFORMATION 38
FINANCIAL STATEMENTS 39
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
prospectus and is qualified in its entirety by the more detailed information
and financial statements (including notes thereto) appearing elsewhere in the
prospectus and in the Registration Statement. Investors should carefully
consider the information set forth in this prospectus under the heading "High
Risk Factors".
Lorelei Corporation
Lorelei Corporation was organized under the laws of the State of Delaware on
April 23, 1999. Lorelei was organized as a vehicle to acquire or merge with a
target business or company in a business combination. Management believes
that Lorelei's characteristics as an enterprise with liquid assets, nominal
liabilities, and flexibility in structuring will make Lorelei an attractive
combination candidate. None of Lorelei's officers, directors, promoters,
their affiliates or associates have had any preliminary contact or discussions
and there are no present plans, proposals, arrangements or understandings with
any representative of the owners of any business regarding the possibility of
an acquisition or merger transaction. Lorelei does not intend to engage in
the business of investing, reinvesting or trading in securities as its primary
business or pursue any business which would render Lorelei an "investment
company" as defined by the Investment Company Act of 1940.
Since organization of Lorelei, its activities have been limited to
the sale of initial shares in connection with its organization and its
preparation in producing a registration statement and prospectus for its
initial public offering. Lorelei will not engage in any substantive
commercial business following the offering. Lorelei maintains its offices at
the offices of Schonfeld & Weinstein, L.L.P., at 63 Wall Street, Suite 1801,
New York, New York. Lorelei's phone number is 212-344-1600.
The Offering
Securities offered..................70,000 shares of common stock, $.001
par value, being offered at $0.50 per
share.
Common Stock outstanding
prior to the offering...............200,000 shares.*
Common Stock to be
outstanding after the offering......270,000 shares.*
*On November 12, 1999, Lorelei granted Ms. Jo-Ann Vidaver an option to buy
10,000 shares at $.10 per share; the option grant shall expire on November 12,
2002.
Offering Conducted in Compliance with Rule 419
Lorelei is a blank check company and consequently this offering is
being conducted in compliance with the Commission's Rule 419. The securities
purchased by investors and the funds received in the offering will be
deposited and held in the Rule 419 escrow account until an acquisition meeting
specific criteria is completed. Lorelei must update the registration
statement with a post-effective amendment, and Lorelei shareholders will have
the opportunity to reconfirm their investments in Lorelei. Those shareholders
who do not reconfirm their investments will be refunded their investments on a
pro-rata basis. Lorelei has 18 months from its effective date to consummate a
business combination.
High Risk Factors
Investments in the securities of Lorelei are highly speculative,
involve a high degree of risk, and should be purchased only by persons who
can afford to lose their entire investment.
Determination of Offering Price
Lorelei has arbitrarily determined the offering price of $0.50 per share for
the shares offered. The price bears no relation to Lorelei's assets, book
value, or any other customary investment criteria, including Lorelei's prior
operating history.
Use of Proceeds
Of the $35,000 offering proceeds deposited into the Rule 419 escrow account,
10% ($3,500) may be released to Lorelei prior to the shareholder
reconfirmation offering. Management intends to request release of these funds
from the Rule 419 escrow account. Lorelei will receive the remainder of the
deposited funds in the event a business combination is consummated.
SUMMARY FINANCIAL INFORMATION
The following is a summary of Lorelei's consolidated financial information and
is qualified in its entirety by the audited financial statements appearing in
this prospectus.
From Inception
(April 23, 1998)through
September 30, 1999
Statement of Income Data:
Net Sales $ -0-
Net Loss $ (3,773)
Net Loss Per Share $ (.0189)
Shares Outstanding at 9/30/99 200,000
Pro-Forma
As of September 30, 1999
September 30, 1999 After Offering (1)
Balance Sheet Data
Working Capital $ 1,227 $ 4,727
Total Assets $20,000 $40,000
Long Term Debt $ -0- $ -0-
Total Liabilities $ 3,773 $ 3,773
Shareholders' Equity $16,227 $36,227
(1) $31,500 of this amount will be restricted pursuant to Rule 419. Upon the
sale of all the shares in this offering, Lorelei will receive deposited
funds of approximately $35,000, all of which must be deposited in the Rule 419
escrow account. $3,500 may be used by Lorelei as capital in order to seek a
business combination. Lorelei's management intends to request release of
these funds from escrow.
HIGH RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE AN
EXTREMELY HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT.
1. Anticipated change in control and management. Upon the successful
completion of a business combination, Lorelei anticipates that it will have to
issue to the target company authorized but unissued common stock in Lorelei
which when issued will comprise a majority of the then issued and outstanding
shares of common stock of Lorelei. Therefore, Lorelei anticipates that upon
the consummation of a business combination there will be a change of control
in Lorelei which will most likely result in the resignation or removal of
Lorelei's present officers and directors. If there is a change in management,
no assurance can be given as to the experience or qualification of such
persons either in the operation of Lorelei's activities or in the operation of
the business, assets or property being acquired.
2. We have no operations to date and may not become profitable. Lorelei
was incorporated in the State of Delaware on April 23, 1999 and has had no
operations to date. Lorelei was formed to serve as a vehicle to effect a
business combination. There is no assurance Lorelei's intended acquisition or
merger activities will be successful or result in revenue or profit to
Lorelei. Since Lorelei has not yet attempted to seek a business
combination, and due to Lorelei's lack of experience, there is only a
limited basis upon which to evaluate Lorelei's prospectus for achieving
its intended business objectives. Lorelei faces all risks that are
associated with any new business. Any investment in Lorelei should be
considered an extremely high risk investment. As of the date of this
prospectus, Lorelei has not entered into or negotiated any arrangements
for a business combination with a target business.
3. We may not have sufficient funds to find a business combination.
Rule 419 states that 90% of the net proceeds of this offering, must be held in
escrow pending the consummation of a business combination which transaction
must occur within eighteen (18) months of the effective date of this offering.
Rule 419 permits 10% of the net proceeds to be disbursed to Lorelei from the
Rule 419 escrow account prior to the consummation of a business combination.
Lorelei intends to request release of this money. If Lorelei does not request
release of these funds, Lorelei will receive these funds in the event a
business combination is consummated in accordance with Rule 419.
4. Investors will have no access to their funds while held in escrow.
Lorelei is offering for sale 70,000 shares, at $0.50 per share. The maximum
offering period is six months. There is no commitment by any other person to
purchase all or any portion of the shares offered and consequently, there is
no assurance that all 70,000 shares will be sold during the offering period.
Investors have no right to the return or the use of their funds and cannot
earn interest thereon until conclusion of the offering which may continue for
a period of up to six months after the effective date. Even upon the sale of
the 70,000 shares, the investors funds (reduced to reflect payments for
expense amounts, if any, otherwise released as permitted by Rule 419) may
remain in the escrow account, which is non-interest bearing, and the investors
will have no right to the return of or the use of their funds for a period of
18 months from the effective date.
Investors will be offered return of their pro rata portion of the funds
held in escrow only in connection with the reconfirmation offering required
to be conducted upon execution of an agreement to acquire a target business
which represents 80% of the maximum offering proceeds. If Lorelei is
unable to locate a target business meeting the above acquisition criteria,
investors will have to wait 18 months from the effective date before a pro-
rata portion of their funds is returned without interest thereon.
5. There may be an insufficient number of investors to reconfirm their
investments. A business combination with a target business cannot be
consummated unless, in connection with the reconfirmation offering required by
Rule 419, Lorelei can successfully convince a sufficient number of investors
representing 80% of the maximum offering proceeds to elect to reconfirm their
investments. If, after completion of the reconfirmation offering, a
sufficient number of investors do not reconfirm their investment, the business
combination will not be consummated. In such event, none of the deposited
securities held in escrow will be issued and the deposited funds will be
returned to investors on a pro-rata basis.
6. Lorelei has extremely limited capitalization. As of September 30, 1999,
Lorelei had assets of $16,227 and $3,773 of liabilities. There was $5,000
available in Lorelei's treasury as of September 30, 1999. Upon the sale of
all the shares in this offering, Lorelei will receive net proceeds of
approximately $35,000, all of which must be deposited in the Rule 419 escrow
account. $3,500 may be used by Lorelei as capital in order to seek a business
combination. Lorelei's management intends to request release of these funds
from escrow. If Lorelei does not request release of these funds, Lorelei will
receive the funds in the event a business combination is consummated in
accordance with Rule 419. The costs of conducting Lorelei's business
activities will be paid by the money in Lorelei's treasury. Assuming suitable
prospects are identified, if ever, Lorelei may be unable to complete an
acquisition or merger due to a lack of sufficient funds. Therefore, Lorelei
may require additional financing in the future in order to consummate a
business combination. Such financing may consist of the issuance of debt or
equity securities. Lorelei cannot give any assurances that such funds will be
available, if needed, or whether they will be available on terms acceptable to
Lorelei. It is unlikely that Lorelei will need additional funds, but it may
occur if a target company insists Lorelei obtain additional capital. Such
financing will not occur without shareholder approval. Lorelei will not
borrow funds from its officers, directors or current shareholders. If Lorelei
does not consummate an acquisition or purchase within 18 months of the
effective date, Lorelei must return all the funds, minus certain deductions,
back to the investors.
7. Escrowed securities may not be transferred, which render invalid any
contracts for sale to be satisfied by delivery of these securities. No
transfer or other disposition of the deposited securities shall be permitted
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, or Title 7 of the Employee Retirement Income Security Act, or the
underlying rules. Rule 15g-8 states that it is unlawful for any person to
sell the securities (or any interest in or related to the securities) held in
the Rule 419 escrow account other than pursuant to a qualified domestic
relations order (i.e., divorce proceedings). Therefore, any and all contracts
for sale to be satisfied by delivery of the deposited securities (e.g.
contracts for sale on a when as, and if issued basis) and sales of derivative
securities to be settled by delivery of the securities are prohibited. It is
further prohibited to sell any interest in the deposited securities (or any
derivative securities) whether or not physical delivery is required.
8. We have not specified a particular industry in which to search for a
target business. To date, Lorelei has not selected any particular industry in
which to concentrate its business combination efforts. As a result, the search
for a merger candidate may take several months. Additionally, the industry of
a potential target business may have its own risks which are currently
unascertained by Lorelei.
9. We will be competing with many other entities. In relation to its
competitors, Lorelei is and will continue to be an insignificant participant
in the business of seeking business combinations. A large number of
established and well-financed entities, including venture capital firms, have
recently increased their merger and acquisition activities. Nearly all such
entities have significantly greater financial resources, technical expertise
and managerial capabilities than Lorelei and, consequently, Lorelei will be at
a competitive disadvantage in identifying suitable merger or acquisition
candidates and successfully consummating a proposed merger or acquisition.
Also, Lorelei will be competing with a large number of other small, blank
check companies.
10. Lorelei's officers and directors may have conflicts of interests.
Lorelei's directors and officers are or may become, in their individual
capacities, officers, directors, controlling shareholders and/or partners of
other entities engaged in a variety of businesses. Each officer and director
of Lorelei is engaged in business activities outside of Lorelei and the amount
of time they will devote to Lorelei's business will only be about five (5) to
twenty (20) hours each month. There exists potential conflicts of interest
including, among other things, time effort and business combinations with
other such entities. Conflict with other blank check companies with which
members of management may become affiliated in the future may arise in the
pursuit of business combinations. Lorelei's officers and directors are not
currently involved in other blank check companies. Lorelei's officers and
directors may be involved as officers and directors of other blank check
companies in the future. A potential conflict of interest may result if and
when any officer of Lorelei becomes an officer or director of another company,
especially another blank check company. There is presently no requirement
contained in Lorelei's Articles of Incorporation, Bylaws or minutes which
requires that officers and directors of Lorelei disclose to Lorelei any target
businesses which come to their attention. The officers and directors do,
however, have a fiduciary duty of loyalty to Lorelei to disclose to Lorelei
any target businesses which come to their attention in their capacity as an
officer and/or director of Lorelei or otherwise. Included in this duty would
be target businesses which the person learns about through his involvement as
an officer and director of another company. Lorelei will not purchase the
assets of any company which is beneficially owned by any officer, director,
promoter or affiliate or associate of Lorelei. Management plans on examining
a target business's financial statements (including balance sheets, statements
of cash flow, stockholders' equity, etc.) its assets and liabilities and its
projections for future growth. This information will also be considered by
the shareholders who, based on this information, will determine, as part of
the Rule 419 reconfirmation offering, whether a merger with such a target
business is beneficial to Lorelei.
11. There may be disadvantages to investing in a blank check offering.
In making an investment in Lorelei, investors should recognize that they may
be doing so under terms which may ultimately be less favorable than making an
investment directly in a company with a specific business. Investors in this
offering may not be afforded an opportunity to specifically approve or consent
to any particular stock buy-out transaction. Lorelei's business may involve
the acquisition of or merger with a company which does not need substantial
additional capital but which desires to establish a public trading market for
its shares. A company which seeks Lorelei's participation in attempting to
consolidate its operations through a merger, reorganization, asset
acquisition, or some other form of combination may desire to do so to avoid
what they may deem to be adverse consequences of themselves undertaking a
public offering. Factors considered may include time delays, significant
expense, loss of voting control and the inability or unwillingness to comply
with various federal and state laws enacted for the protection of investors.
12. Lorelei has engaged in no market research, nor has it identified a
merger candidate. Lorelei has neither conducted nor have others made
available to it results of market research concerning the feasibility of a
business combination with a target business. Therefore, management has no
assurances that market demand exists for an acquisition or merger as
contemplated by Lorelei. Management has not identified any particular
industry or specific business within an industry for evaluation by Lorelei.
There is no assurance Lorelei will be able to form a business combination with
a target business on terms favorable to Lorelei.
13. Lorelei's success is dependent on its management. Lorelei's
officers and director have only limited experience in the business activities
in which Lorelei intends to engage. Management believes it has sufficient
experience to implement Lorelei's plan, although there is no assurance that
additional managerial assistance will not be required. As Lorelei has not yet
begun its search for a target business, its officers and directors have not
yet done any work for Lorelei. None of Lorelei's officers and directors are
professional business analysts. Success of Lorelei depends on the active
participation of its officers. These officers have not entered into
employment agreements with Lorelei and they are not expected to do so in the
foreseeable future. Lorelei has not obtained key man life insurance on any of
its officers or directors.
14. We have no current contemplated business combinations. As of the
date of this prospectus, none of Lorelei's officers, directors, promoters,
their affiliates or associates have had any preliminary contact or discussions
and there are no present plans, proposals, arrangements or understandings with
any representatives of the owners of any target business regarding the
possibility of a business combination.
15. Lorelei will most likely only be able to engage in a single business
combination. In the event Lorelei is successful in
identifying and evaluating a suitable business combination, Lorelei will
in all likelihood, be required to issue its common stock in an acquisition or
merger transaction. Inasmuch as Lorelei's capitalization is limited and
the issuance of additional common stock will result in a dilution of interest
for present and prospective shareholders, it is unlikely Lorelei will be
capable of negotiating more than one acquisition or merger. Consequently,
Lorelei's lack of diversification may subject Lorelei to economic
fluctuation within a particular industry in which a target company conducts
business.
16. Lorelei will be subject to regulation under the Securities Act of
1933 and the Securities Exchange Act of 1934, and possibly the Investment
Company Act of 1940. The regulatory scope of the Investment Company Act of
1940,was enacted principally for the purpose of regulatory vehicles for pooled
investments in securities, extends generally to companies primarily in the
business of investing, reinvesting, owning, holding or trading securities.
The Investment Company Act may, however, also be deemed to be applicable to a
Company which does not intend to be characterized as an Investment Company but
which, nevertheless, engages in activities which may be deemed to be within
the definition of the scope of certain provisions of the Investment Company
Act. Lorelei believes that its principle activities will not subject it to
regulation under the Investment Company Act. Nevertheless, there can be no
assurances that Lorelei will not be deemed to be an Investment Company. The
funds may be invested primarily in certificates of deposit, interest bearing
savings accounts or government securities. In the event Lorelei is deemed to
be an Investment Company, Lorelei may be subject to certain restrictions
relating to Lorelei's activities, including restrictions on the nature of its
investments and the issuance of securities. Lorelei has obtained no formal
determination from the Securities and Exchange Commission as to the status of
Lorelei under the Investment Company Act of 1940.
17. In the course of any acquisition or merger Lorelei may undertake, a
substantial amount of attention will be focused upon federal and state tax
consequences to both Lorelei and the target company. Presently, under the
provisions of federal and various state tax laws, a qualified reorganization
between business entities will generally result in tax-free treatment to the
parties to the reorganization. While Lorelei expects to undertake any merger
or acquisition so as to minimize federal and state tax consequences to both
Lorelei and the target company, there is no assurance that such business
combination will meet the statutory requirements of a re-organization 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 a substantial
adverse effect on Lorelei.
18. Lorelei was only recently organized, has no earnings, and has paid
no dividends to date. Since Lorelei was formed as a blank check company with
its only intended business being the search for an appropriate business
combination, Lorelei does not anticipate having any earnings until such time
that a business combination is effected. However, there are no assurances
that upon the consummation of a business combination, Lorelei will have
earnings or issue dividends. Therefore, it is not expected that cash
dividends will be paid, if at all, to stockholders until after a business
combination is effected.
19. The 200,000 shares of Lorelei's common stock presently issued and
outstanding as of the date hereof are "restricted securities" as that term is
defined under the Securities Act, and in the future may be sold in compliance
with Rule 144 of the Securities Act, or pursuant to a Registration Statement
filed under the Securities Act. Rule 144 provides, in essence, that a person
holding restricted securities for a period of one (1) year may sell those
securities in unsolicited brokerage transactions or in transactions with a
market maker, in an amount equal to one (1%) percent of Lorelei's outstanding
common stock every three (3) months. Sales of unrestricted shares by
affiliates of Lorelei are also subject to the same limitation upon the number
of shares that may be sold in any three (3) month period. If all the shares
offered herein are sold, the holders of the restricted shares may each sell
2,000 shares during any three (3) month period after May 30, 2000.
Additionally, Rule 144 requires that an issuer of securities make available
adequate current public information with respect to the issuer. Such
information is deemed available if the issuer satisfies the reporting
requirements of sections 13 or 15(d) of the Securities and Exchange Act of
1934 and of Rule 15c2-11. Rule 144(k) also permits the termination of certain
restrictions on sales of restricted securities by persons who were not
affiliates of Lorelei at the time of the sale and have not been affiliates in
the preceding three (3) months. Such persons must satisfy a two (2) year
holding period. There is no limitation on such sales and there is no
requirement regarding adequate current public information. Investors should
be aware that sales under Rule 144 or 144(k), or pursuant to a registration
statement filed under the Act, might have a depressive effect on the market
price of Lorelei's securities in any market which may develop for such shares.
20. The initial offering price of $0.50 per share has been arbitrarily
determined by Lorelei, and bears no relationship whatsoever to Lorelei's
assets, earnings, book value or any other objective standard of value. Among
the factors considered by Lorelei were the lack of operating history of
Lorelei, the proceeds to be raised by the offering, the amount of capital to
be contributed by the public in proportion to the amount of stock to be
retained by present stockholders, the relative requirements of Lorelei, and
the current market conditions in the over-the-counter market.
21. Investors should note that the present shareholders of Lorelei, will
own 74.07% of Lorelei after the offering is completed and would therefore have
continuing control of Lorelei. In addition, Jo-Ann Vidaver, President, on
November 12, 1999, was granted an option to purchase 10,000 shares by Lorelei,
and Patricia Francill, Secretary, owns 25,000 shares, comprising 12.5% before
the offering and 9.26% after the offering. Thus, Management of Lorelei
beneficially owns 25,000 shares, which comprise 12.5% of Lorelei before the
offering and 9.26% after the offering.
Assuming the sale of all the shares offered, the shares of common stock
purchased by the public will represent 25.93% of Lorelei's outstanding
common stock after the completion of this offering. Therefore, the present
stockholders for Lorelei and its management will own a 74.07% interest in the
corporation and will continue to be able to elect all of Lorelei's
directors, appoint its officers, and control Lorelei's affairs and
operations. Lorelei's Articles of Incorporation do not provide for
cumulative voting. There are no arrangements, agreements or understandings
between non-management shareholders and management under which non-management
shareholders may directly or indirectly participate in or influence the
management of Lorelei's affairs or to exercise their voting rights to
continue to elect the current directors. Non-management shareholders will
exercise their voting rights to continue to elect the current directors to
Lorelei's board.
22. As of September 30, 1999, the net tangible book value of Lorelei's
common stock was approximately $0.006 share, substantially less than the $0.50
per share to be paid by the public investors. In the event all the shares are
sold, public investors will sustain an immediate dilution of approximately
$0.366 per share in the book value of public investors' holdings.
23. Lorelei's officers, directors, current shareholders and any of their
affiliates or associates may purchase a portion of the shares offered in this
offering. The aggregate number of shares which may be purchased by such
persons shall not exceed 20% of the number of shares sold in this offering.
Such purchases may be made in order to close the "all or nothing" offering.
Shares purchased by Lorelei's officers, directors and principal shareholders
will be acquired for investment purposes and not with a view towards
distribution.
24. Lorelei will use its best efforts to ensure that sales of shares
will only occur in those states in which such sales would not be a violation
of any of said states laws. Lorelei will notify the transfer agent to aid in
such compliance. Lorelei's securities may be sold in New York State and the
District of Columbia only, and may be resold by investors in New York and the
District of Columbia only.
25. Lorelei is not prohibited from consummating a business combination
through a leveraged transaction. However, investors should be aware that such
a transaction could result in Lorelei's assets being mortgaged and possibly
foreclosed. The use of leverage to consummate a business combination may
reduce the ability of Lorelei to incur additional debt, make other
acquisitions or declare dividends. Such leverage may also subject Lorelei's
operations to strict financial controls and significant interest
expense.
26. Broker-dealer practices in connection with transactions in "penny
stocks" are regulated by certain penny stock rules adopted by the Securities
and Exchange Commission. Penny stocks generally 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, provided that current
price and volume information with respect to transactions in such securities
is provided by the exchange or system). The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document prepared by
the Commission 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 such rules the broker-dealer must make
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 disclosure 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. If Lorelei's common stock becomes subject
to the penny stock rules, investors in this offering may find it more
difficult to sell their shares.
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
Deposit of Offering Proceeds and Securities
Rule 419 requires that offering proceeds after deduction for
underwriting commissions, underwriting expenses and dealer allowances, if
any, and the securities purchased by investors in this offering, be deposited
into an escrow or trust account governed by an agreement which contains
certain terms and provisions specified by the Rule. Under Rule 419, the
deposited funds and deposited securities will be released to Lorelei and to
the investors, respectively, only after Lorelei has met the following three
basic conditions. First, Lorelei must execute an agreement(s) for an
acquisition(s) meeting certain prescribed criteria. Second, Lorelei must
file a post-effective amendment to the Registration Statement, which includes
the terms of a reconfirmation offer that must contain conditions prescribed
by the rules. The post-effective amendment must also contain information
regarding the acquisition candidate(s) and its business(es), including
audited financial statements. Third, Lorelei must conduct the
reconfirmation offer and satisfy all of the prescribed conditions, including
the condition that a certain minimum number of investors must elect to
remain investors. After Lorelei submits a signed representation to the
escrow agent that the requirements of Rule 419 have been met and after the
acquisition(s) is consummated, the escrow agent can release the deposited
funds and deposited securities.
Accordingly, Lorelei has entered into an escrow agreement with Chase Manhattan
Bank, 1121 Madison Ave., New York, New York, as escrow agent, which provides
that:
(1) The proceeds are to be deposited into the Rule 419 escrow account
maintained by the escrow agent promptly upon receipt. Rule 419 permits 10% of
the deposited funds to be released to Lorelei prior to the reconfirmation
offering. The deposited funds and any dividends or interest thereon, if any,
are to be held for the sole benefit of the investors and can only be invested
in bank deposits, or in money market mutual funds.
(2) All securities issued in connection with the offering and any other
securities issued with respect to such securities, including securities
issued with respect to stock splits, stock dividends or similar rights are to
be deposited directly into the escrow account promptly upon issuance. The
identity of the investors are to be included on the stock certificates or
other documents evidencing the deposited securities. The deposited
securities held in the escrow account are to remain as issued, and are to be
held for the sole benefit of the investors who retain the voting rights, if
any, with respect to the deposited securities held in their names. The
deposited securities held in the escrow account may not be transferred,
disposed of nor any interest created other than by will or the laws
of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986 or Title 1 of the
Employee Retirement Income Security Act.
(3) Warrants, convertible securities or other derivative securities
relating to deposited securities held in the escrow account may be exercised
or converted in accordance with their terms; provided that, however, the
securities received upon exercise or conversion together with any cash or
other consideration paid in connection with the exercise or conversion are to
be promptly deposited into the escrow account.
Prescribed Acquisition Criteria
Rule 419 requires that before the deposited funds and the deposited
securities can be released, Lorelei must first execute an agreement to
acquire an acquisition candidate(s) meeting certain specified criteria. The
agreement(s) must provide for the acquisition(s) of a business(es) or assets
for which the fair value of the business represents at least 80% of the
maximum offering proceeds. The agreement(s) must include, as a condition
precedent to their consummation, a requirement that the number of investors
representing 80% of the maximum offering proceeds must elect to reconfirm
their investment. For purposes of the offering, the fair value of the
business(es) or assets to be acquired must be at least $28,000 (80% of
$35,000).
Post-Effective Amendment
Once the agreement(s) governing the acquisition(s) of a business(es)
meeting the above criteria has been executed, Rule 419 requires Lorelei
to update the registration statement with a post-effective amendment. The
post-effective amendment must contain information about the proposed
acquisition candidate(s) and its business(es), including audited financial
statements, the results of this offering and the use of the funds disbursed
from the escrow account. The post-effective amendment must also include the
terms of the reconfirmation offer mandated by Rule 419. The reconfirmation
offer must include certain prescribed conditions which must be satisfied
before the deposited funds and deposited securities can be released from
escrow.
Reconfirmation Offering
The reconfirmation offer must commence after the effective date of the
post-effective amendment. Rule 419 states that the terms of the
reconfirmation offer must include the following conditions:
(1) The prospectus contained in the post-effective amendment will be
sent to each investor whose securities are held in the Escrow Account within
5 business days after the effective date of the post-effective amendment.
(2) Each investor will have no fewer than 20 and no more than 45
business days from the effective date of the post-effective amendment to
notify Lorelei in writing that the investor elects to remain an investor.
(3) If Lorelei does not receive written notification from any
investor within 20 business days following the effective date, the pro rata
portion of the deposited funds (and any related interest or dividends) held
in the escrow account on such investor's behalf will be returned to the
investor within 5 business days by first class mail or other equally prompt
means.
(4) The acquisition(s) will be consummated only if a minimum number of
investors representing 80% of the maximum offering proceeds equaling $28,000
elect to reconfirm their investment.
(5) If a consummated acquisition (s) has not occurred by
(18 months from the date of this prospectus), the deposited funds held in the
Escrow Account shall be returned to all investors on a pro rata basis within 5
business days by first class mail or other equally prompt means.
Release of Deposited Securities and Deposited Funds
The deposited funds and deposited securities may be released to Lorelei
and the investors, respectively, after:
(1) The Escrow Agent has received a signed representation from Lorelei
and any other evidence acceptable by the Escrow Agent that:
(a) Lorelei has executed an agreement for the acquisition(s)
of a target business(es) for which the fair market value of the business
represents at least 80% of the maximum offering proceeds and has filed the
required post-effective amendment;
(b) The post-effective amendment has been declared effective, that
the mandated reconfirmation offer having the conditions prescribed by Rule
419 has been completed and that Lorelei has satisfied all of the
prescribed conditions of the reconfirmation offer.
(2) The acquisition(s) of the business(es) with the fair value of at
least 80% of the maximum proceeds.
DILUTION
The net tangible book value of Lorelei as of September 30, 1999 was $1,227
with the net tangible book value per share being $0.006. Net tangible book
value is the net tangible assets of Lorelei (total assets less total
liabilities and intangible assets). For purposes of this computation, the
deferred offering costs are treated as an intangible asset. The public
offering price per share is $0.50. The pro-forma net tangible book value
after the offering will be $36,227, with the pro-forma net tangible book value
per share after the offering being $0.134. The shares purchased by investors
in this offering will be diluted by $0.366 per share, or 73%. As of September
30, 1999, there were still 200,000 shares of Lorelei's common stock
outstanding.
Dilution represents the difference between the public offering price and the
net pro-forma tangible book value per share immediately after the completion
of the public offering. The following table illustrates this dilution to be
experienced by investors in the offering:
Public offering price per share $ 0.50
Net tangible book value per share before offering $ 0.006
Pro-forma net tangible book value per share after offering $ 0.134
Pro-forma increase per share attributable to shares
offered hereby $ 0.128
Pro-forma dilution to public investors $ 0.366
Money Net tangible
received for book value per
# shares shares before share before
before offering offering offering
200,000 $ 20,000 $0.006
- -----------------------------------------------------------------------------
Pro-forma
Total Net tangible
Total Amount of Book Value
# of Shares Money Received Per Share
After Offering For Shares After Offering
270,000 $ 55,000 $0.134
- -----------------------------------------------------------------------------
Pro-forma Pro-forma Increase
Net Tangible Net tangible Per Share
Book Value Per Book Value Attributed
Share After Shares Before To Shares
Offering Offering Offered
$0.134 $0.006 $0.128
- -----------------------------------------------------------------------------
Pro-forma
Net tangible
Book Value Per Pro-forma
Public Offering Share After Dilution to
Price Per Share Offering Public Investors
$ 0.50 $0.134 $0.366
As of the date of this prospectus, the following table sets forth the
percentage of equity to be purchased by public investors in this offering
compared to the percentage of equity to be owned by the present stockholders,
and the comparative amounts paid for the shares by the public investors as
compared to the total consideration paid by the present stockholders of
Lorelei.
Approx. % Approx. %
Public Shares Total Shares Total Total
Stockholder Purchased Outstanding Consideration Consideration
New Investors 70,000 25.93% $35,000 63.6%
Existing
Shareholders(1) 200,000 74.07% $20,000 36.4%
(1) 200,000 shares of common stock were sold prior to this offering at $.10
per share. These shares are not being registered.
USE OF PROCEEDS
The gross proceeds of this offering will be $35,000. According to Rule
419, after all of the shares are sold, 10% of the deposited funds ($3,500) may
be released from escrow to Lorelei. Lorelei intends to request release of
this 10%. In the event that Lorelei does not request release of these funds,
the funds shall remain in escrow as part of the offering proceeds.
Upon the consummation of a business combination, all escrowed offering proceed
will be released to Lorelei. Lorelei shall transfer these proceeds to the
merged entity, which will have full discretion as to the use of such proceeds.
Approximate
Approximate Percentage
Amount Total
Escrowed funds pending
business combination (1)(2) $31,500 90%
(1) Does not include the estimated $23,000 of offering expenses. The
expenses of the offering will be paid by money in Lorelei's treasury.
(2) Assumes release of 10% of the deposited funds.
While Lorelei presently anticipates that it will be able to locate
and consummate a business combination, which adheres to the criteria
discussed under "Investors' Rights and Substantive Protection Under Rule 419",
if Lorelei determines that a business combination requires additional funds,
it may seek such additional financing through loans, issuance of additional
securities or through other financing arrangements. No such financial
arrangements presently exist, and no assurances can be given that such
additional financing will be available or, if available, whether such
additional financing will be on terms acceptable to Lorelei. Persons
purchasing shares in this offering will not, unless required by law,
participate in the determination of whether to obtain additional financing or
as to the terms of such financing. Because of Lorelei's limited
resources, it is likely that Lorelei will become involved in only one
business combination.
CAPITALIZATION
The following table sets forth the capitalization of Lorelei as of September
30, 1999, and pro-forma as adjusted to give effect to the sale of 70,000
shares offered by Lorelei.
September 30, 1999
____________________________
Pro-forma
Actual As Adjusted
Long-term debt $ -0- $ -0-
Stockholders' equity:
Common stock, $.001 par value;
authorized 20,000,000 shares,
issued and outstanding
200,000 shares and 270,000
shares, pro-forma as adjusted $ 200 $ 270
Additional paid-in capital $19,800 $39,730
Deficit accumulated during
the development period $(3,773) $(3,773)
Total stockholders' equity $16,227 $36,227
Total capitalization $16,227 $36,227
PROPOSED BUSINESS
History and Organization
Lorelei was organized under the laws of the State of Delaware on
April 23, 1999. Since inception, the primary activity of Lorelei has
been directed to organizational efforts and obtaining initial financing.
Lorelei was formed as a vehicle to pursue a business combination. Lorelei has
not engaged in any preliminary efforts intended to identify possible business
combination and has neither conducted negotiations concerning, nor entered
into a letter of intent concerning any such target
business.
Lorelei's initial public offering will comprise 70,000 shares of
common stock at a purchase price of $0.50 per share.
Lorelei is filing this registration statement in order to effect a
public offering for its securities.
Plan of Operation
Lorelei was organized for the purposes of creating a corporate
vehicle to seek, investigate and, if such investigation warrants, engaging in
business combinations presented to it by persons or firms who or which desire
to employ Lorelei's funds in their business or to seek the perceived
advantages of publicly-held corporation. Lorelei's principal business
objective will be to seek long-term growth potential in a business
combination venture rather than to seek immediate, short-term earnings.
Lorelei will not restrict its search to any specific business, industry or
geographical location, and Lorelei may engage in a business
combination.
Lorelei does not currently engage in any business activities which
provide any cash flow. The costs of identifying, investigating, and
analyzing business combinations will be paid with money in Lorelei's
treasury. Persons purchasing shares in this offering and other shareholders
will most likely not have the opportunity to participate in any of these
decisions. Lorelei's proposed business is sometimes referred to as a
"blank check" company because investors will entrust their investment monies
to Lorelei's management before they have a chance to analyze any ultimate
use to which their money may be put. Although substantially all of the
deposited funds of this offering are intended to be utilized generally to
effect a business combination, such proceeds are not otherwise being
designated for any specific purposes. Pursuant to Rule 419, prospective
investors who invest in Lorelei will have an opportunity to evaluate the
specific merits or risks of only the business combination management decides
to enter into. Cost overruns will be borne equally by all current
shareholders of Lorelei. Such cost overruns will not be charged to Lorelei,
but will be funded through current shareholders' voluntary contribution of
capital. This is based on an oral agreement between current shareholders and
Lorelei.
Lorelei may seek a business combination in the form of firms which
have recently commenced operations, are developing companies in need of
additional funds for expansion into new products or markets, are seeking to
develop a new product or service, or are established businesses which may be
experiencing financial or operating difficulties and are in need of additional
capital. A business combination may involve the acquisition of, or merger
with, a company which does not need substantial additional capital but which
desires to establish a public trading market for its shares, while avoiding
what it may deem to be adverse consequences of undertaking a public offering
itself, such as time delays, significant expense, loss of voting control and
compliance with various Federal and State securities laws.
Lorelei will not acquire a target business unless the fair value of
the target business represents 80% of the maximum offering proceeds to
determine the fair market value of a target business, Lorelei's management
will examine the audited financial statements (including balance sheets and
statements of cash flow and stockholders' equity) of any candidate, focusing
attention on a potential target business's assets, liabilities, sales and net
worth. In addition, management of Lorelei will participate in a personal
inspection of any potential target business. If Lorelei determines that the
financial statements of a proposed Target business does not clearly indicate
that the fair market value of the target business represents 80% of Lorelei's
maximum offering proceeds, Lorelei will cease negotiations with such target
business and, begin looking for another potential merger candidate.
Management believes that the probable desire on the part of the owners of
target businesses to assume voting control over Lorelei (to avoid tax
consequences or to have complete authority to manage the business) will almost
assure that Lorelei will combine with just one target business. Management
also anticipates that upon consummation of a business combination, there will
be a change in control in Lorelei which will most likely result in the
resignation or removal of Lorelei's present officers and directors.
None of Lorelei's officers or directors have had any preliminary
contact or discussions with any representative of any other entity regarding
a business combination. Accordingly, any target business that is selected may
be a financially unstable company or an entity in its early stage of
development or growth (including entities without established records of
sales or earnings), Lorelei will become subjected to numerous risks
inherent in the business and operations of financially unstable and early
stage or potential emerging growth companies. In addition, Lorelei may
affect a business combination with an entity in an industry characterized by
a high level of risk, and although management will endeavor to evaluate the
risks inherent in a particular industry or target business, there can be no
assurance that Lorelei will properly ascertain or assess all significant
risks.
Lorelei anticipates that the selection of a business combination will be
complex and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries, and shortages of
available capital, management believes that there are numerous firms seeking
even the limited additional capital which Lorelei will have and/or the
benefits of a publicly traded corporation. Such perceived benefits of a
publicly traded corporation may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for the
principals of a business, creating a means for providing incentive stock
options or similar benefits to key employees, providing liquidity (subject to
restrictions of applicable statutes) for all shareholders, and other
factors. Potentially available business combinations 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.
Management believes Lorelei can satisfy its cash requirement for at least
eighteen (18) months without having to raise additional capital.
Evaluation of Business Combinations
The analysis of business combinations will be undertaken by or under the
supervision of the officers and directors of Lorelei, none of whom is a
professional business analyst. Management intends to concentrate on
identifying preliminary prospective business combinations which may be brought
to its attention through present associations. In analyzing prospective
business combinations, management will consider such
matters as the available technical, financial, and managerial resources;
working capital and other financial requirements; history of operation, if
any; prospects for the future; 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 Lorelei; the potential for
growth or expansion; the potential for profit; the perceived public
recognition or acceptance or products, services, or trades; name
identification; and other relevant factors. Officers and directors of Lorelei
will meet personally with management and key personnel of the firm sponsoring
the business opportunity as part of their investigation. To the extent
possible, Lorelei intends to utilize written reports and personal
investigation to evaluate the above factors.
Since Lorelei will be subject to Section 13 or 15 (d) of the
Securities Exchange Act of 1934, it will be required to furnish certain
information about significant acquisitions, including audited financial
statements for Lorelei(s) acquired, covering one, two or three years
depending upon the relative size of the acquisition. Consequently,
acquisition prospects that do not have or are unable to obtain the required
audited statements may not be appropriate for acquisition so long as the
reporting requirements of the Exchange Act are applicable. In the event
Lorelei's obligation to file periodic reports is suspended under Section
15(d), Lorelei intends on voluntarily filing such reports.
It may be anticipated that any business combination will present certain
risks. Many of these risks cannot be adequately identified prior to
selection, and investors must therefore depend on the ability of
management to identify and evaluate such risks. In the case of some of the
potential combinations available to Lorelei, it may be anticipated that
the promoters have been unable to develop a going concern or that
such business is in its development stage in that it has not generated
significant revenues from its principal business activity prior to Lorelei's
merger or acquisition, and there is a risk, even after the consummation of
such business combinations and the related expenditure of Lorelei's funds,
that the combined enterprises will still be unable to become a going concern
or advance beyond the development stage. Many of the combinations may involve
new and untested products, processes, or market strategies which may not
succeed. Such risks will be assumed by Lorelei and, therefore, its
shareholders.
Business Combinations
In implementing a structure for a particular business acquisition, Lorelei may
become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also purchase stock or assets of an existing business.
Investors should note that any merger or acquisition effected by Lorelei
can be expected to have a significant dilutive effect on the
percentage of shares held by Lorelei's then-shareholders, including
purchasers in this offering. On the consummation of a business combination,
the target business will have significantly more assets than Lorelei;
therefore, management plans to offer a controlling interest in Lorelei to
the target business. While the actual terms of a transaction to which Lorelei
may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the acquisition in a
so-called "tax-free" reorganization under Sections 368(a)(1) or 351 of the
Internal Revenue Code of 1954. 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 Lorelei, including investors in this offering, would retain
less than 20% of the issued and outstanding shares of the surviving entity,
which would be likely to result in significant dilution in the equity of such
shareholders. Management of Lorelei may choose to avail Lorelei of these
provisions. In addition, a majority of all of Lorelei's directors and
officers may, as part of the terms of the acquisition transaction, resign as
directors and officers.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance on exemptions from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of this transaction, Lorelei may agree to register
such securities either at the time the transaction is consummated, under
certain conditions, or at specified times thereafter. The issuance of
substantial additional securities and their potential sale into any trading
market which may develop in Lorelei's common stock may have a depressive
effect on such market.
If at any time prior to the completion of this offering Lorelei
enters negotiations with a possible merger candidate and such a transaction
becomes probable, then this offering will be suspended so that an amendment
can be filed which will include financial statements (including balance
sheets and statements of cash flow and stockholders' equity) of the proposed
target.
Lorelei may acquire a business in which Lorelei's promoters, management or
their affiliates own a beneficial interest. In such event, such transactions
may be considered a related party transaction not at arms-length. No related
party transaction is presently contemplated. If in the event a related party
transaction is contemplated sometime in the future, Lorelei intends to seek
shareholder approval through a vote of shareholders. However, shareholders
objecting to any such related party transaction will be able only to request
the return of the pro-rata portion of their invested funds held in escrow in
connection with the reconfirmation offering to be conducted in accordance with
Rule 419 upon execution of the acquisition agreement.
Lorelei has adopted a policy that it will not pay a finder's fee to
any member of management for locating a merger or acquisition candidate. No
member of management intends to or may seek and negotiate for the payment of
finder's fees. In the event there is a finder's fee, it will be paid at the
direction of the successor management after a change in management control
resulting from a business combination. Lorelei's policy regarding finder's
fees is based on a written agreement among management. Management is unaware
of any circumstances under which such policy through their own
initiative may be changed.
Management does not intend to advertise or promote Lorelei. Instead, Lorelei's
management will actively search for potential target businesses. In the event
management decides to advertise (in the form of an ad in a legal publication)
to attract a target business, the cost of such advertising will be assumed by
management.
No Assurances of a Public Market
Rule 419 states that all securities purchased in an offering by a blank check
company, as well as securities issued in connection with an offering to
underwriters, promoters or others as compensation or otherwise, must be placed
in the Rule 419 escrow account. These securities will not be released from
escrow until the consummation of a merger or acquisition as provided for in
Rule 419. There is no present market for the common stock of Lorelei and
there is no likelihood of any active and liquid public trading market
developing following the release of securities from the Rule 419 account.
Thus, shareholders may find it difficult to sell their shares. To date,
neither Lorelei nor anyone acting on its behalf has taken any affirmative
steps to request or encourage any broker dealer to act as a market maker for
Lorelei's common stock. Further, there have been no discussions or
understandings, preliminary or otherwise, between Lorelei or anyone acting on
its behalf and any market maker regarding the participation of any such market
maker in the future trading market, if any, for Lorelei's common stock.
Present management of Lorelei has no intention of seeking a market maker for
Lorelei's common stock at any time prior to the reconfirmation offer to be
conducted prior to the consummation of a business combination. The officers of
Lorelei after the consummation of a business combination may employ
consultants or advisors to obtain such market makers. Management
expects that discussions in this area will ultimately be initiated by the
management of Lorelei in control of the entity after a business combination is
reconfirmed by the stockholders. There is no likelihood of any active and
liquid trading market for Lorelei's common stock developing.
Upon the consummation of a business combination, Lorelei anticipates that
there will be a change in Lorelei's management, which management may
decide to change the policies as to the use of proceeds as stated in this
prospectus. Lorelei's present management anticipates that the deposited funds
will be used by the post-merger management at its sole discretion. No
compensation will be paid or due or owing to any officer or director until
after a business combination is consummated. Such policy is based upon an
oral agreement among management. Management is unaware of any circumstances
under which such policy through their own initiative may be changed. Lorelei
is not presently considering any outside individual for a consulting position;
however, Lorelei cannot rule out the need for outside consultants in the
future. No decisions have been made as to payment of these consultants.
Present management of Lorelei will not make any loans of the $3,500
available from the deposited funds of this offering, nor will present
management borrow funds and use either Lorelei's working capital or deposited
funds as security for such. This policy is based upon an oral agreement among
management. Management is unaware of any circumstances under which such
policy through their own initiative may be changed. Upon consummation of a
business combination, management of the merged entity will have full
discretion as to the use of all offering proceeds.
The proceeds received in this offering will be put into the Rule 419 escrow
account pending consummation of a business combination and reconfirmation by
investors. Such deposited funds will be in an insured depository institution
account in either a certificate of deposit or interest bearing savings account
as placed by Chase Manhattan Bank.
Regulation
The Investment Company Act defines an "investment company" as an issuer
which is or holds itself out as being engaged primarily in the business of
investing, reinvesting or trading of securities. While Lorelei does not
intend to engage in such activities, Lorelei could become subject to
regulations under the Investment Company Act in the event Lorelei obtains
or continues to hold a minority interest in a number of enterprises. Lorelei
could be expected to incur significant registration and compliance
costs if required to register under the Investment Company Act. Accordingly,
management will continue to review Lorelei's activities from time to time
with a view toward reducing the likelihood Lorelei could be classified as
an "Investment Company."
Employees
Lorelei presently has no employees. Each officer and director of
Lorelei is engaged in business activities outside of Lorelei, and the
amount of time they will devote to Lorelei's business will only be
between five (5) and twenty (20) hours per person per week. Upon completion
of the public offering, it is anticipated that the President and the other
officers and directors of Lorelei will devote the time necessary each
month to the affairs of Lorelei until a successful business opportunity
has been acquired.
Facilities
Lorelei is presently using the offices of Schonfeld & Weinstein, L.L.P. New
York, New York, at no cost as its office. Such arrangement is expected to
continue after completion of this offering only until a business combination
is consummated, although there is currently no such agreement between Lorelei
and Joel Schonfeld or Andrea I. Weinstein, the principals of Schonfeld &
Weinstein, L.L.P. Lorelei at present owns no equipment, and does not intend
to own any upon completion of this offering.
Year 2000 Issues
Since Lorelei currently has no operations, it does not anticipate
incurring significant expense with regard to Year 2000 issues.
MANAGEMENT
The officers and directors of Lorelei, and further information
concerning them are as follows:
Name Age Position
Jo-Ann Vidaver (1) 44 President, Director
49 Poplar Avenue
Oradell, New Jersey 07469
Patricia Francill(1) 47 Secretary, Director
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich (1) 63 Director
202 Augusta Court
Roslyn, New York 11576
____________________
(1) May be deemed "Promoters" of Lorelei, as that term is defined under
the Securities Act of 1933.
Biography
Jo-Ann Vidaver, President and a director of Lorelei, was a circulation manager
for New York City Magazine from 1976-1978 and for Games Magazine in 1978. Ms.
Vidaver was an assistant to the vice-president of special projects for
Columbia Artists Management from 1981-1983 and was a traffic supervisor at RKO
Radio Networks from 1984-1985. She served WNCN Radio as systems manager from
1978-1981, and from 1986-1993 and has been serving as a consultant to WQXR
Radio, a unit of the New York Times, since 1994. In addditon, Ms. Vidaver has
managed Auntie Knits, Inc., since 1997. Ms. Vidaver is a graduate of Queens
College, City University of New York. Ms. Vidaver has been President and a
director of Lorelei since November 1999.
Patricia Francill, Secretary and a director of Lorelei, has been Treasurer and
a director of Centurion Telecommunications Corp. since 1997. Prior to that,
Ms. Francill was President of Centurion Broadcasting Systems Inc. from March
1994 until November 1997. She was also a Credit Manager for the Department of
Medicine, Ohio State University from 1981-1985 and served as Lead Kindergarten
Latchkey Teacher from 1986-1994, in the Grandview Heights School District Ms.
Francill has been Secretary and a director of Lorelei since April 1999.
Jules Reich, Director, has been an active member of the real estate and
finance industry since 1962. Since 1972, Mr. Reich has served as President of
Live Right Realty Inc., a management company that manages commercial, rental
and co-op properties throughout the New York area. In 1979, Mr. Reich formed
Somerset Investors Corporation, a finance company that has been active in
making real estate loans for acquisition and refinance, as well as various
types of business loans. Since 1993, Mr. Reich's efforts have been
concentrated on the purchase of non-performing underlying mortgages on co-op
buildings and blocs of condo and co-op units and the restructuring of the debt
of co-op corporations in exchange for the original sponsor's unsold share
units on which the sponsors defaulted. As a result, Mr. Reich has acquired
properties in Nassau and Suffolk County, Westchester County and Kings and
Queens County in New York City. Mr. Reich has been a director of Lorelei since
April 1999.
Other Blank Check Companies
Competing searches for target business among blank check affiliates may
present conflicts of interest. Currently, Lorelei is not affiliated with any
other prior blank check companies.
Lorelei may not acquire, be acquired by or merged with any affiliated blank
check companies or join with such companies in acquiring a business.
Conflicts of Interest
No member of management is currently affiliated or associated with any
blank check company. Management does not currently intend to promote blank
check entities other than Lorelei. However, management may become
involved with the promotion of other blank check companies in the future. A
potential conflict of interest may occur in the event of such involvement.
Management intends to present each business combination candidate to the
shareholders for their approval.
While no member of management is currently affiliated or associated with any
blank check company, certain principal stockholders of Lorelei and one member
of management have been involved with other blank check companies.
Remuneration
No officer or director of Lorelei has received any cash remuneration
since Lorelei's inception, and none is to receive or accrue any remuneration
or reimbursements of expenses from Lorelei upon completion of this offering.
No remuneration of any nature has been paid for or on account of services
rendered by a director in such capacity. None of the officers and directors
intends to devote more than 20 hours a month of his time in Lorelei's affairs.
The legal fee to be paid to Schonfeld & Weinstein, L.L.P., counsel for
the corporation, is fifteen thousand dollars ($15,000), all of which has been
paid to Schonfeld & Weinstein, L.L.P. prior to this offering.
Management Involvement
All of management has been involved in Lorelei's affairs. Lorelei has
conducted no business as of yet, and aside from the search for shareholders
associated with Lorelei's formation, management has done no work with or for
Lorelei. All of management will speak to business associates and
acquaintances and will search the New York Times, the Wall Street Journal and
other business publications for target businesses. After the closing of this
offering, all of management intends to search for, consider and negotiate with
a target business. Management has not divided these duties among its members.
No member of management has any distinct influence over the others in
connection with their participation in Lorelei's affairs.
STATEMENT AS TO INDEMNIFICATION
Section 145 of the Delaware General Corporation Law provides for
indemnification of the officers, directors, employees and agents of
registrants by Lorelei. Complete disclosure of this statute is provided
in Part II hereof. This information can be examined as described in "Further
Information".
Under Article VII of Lorelei's bylaws, Lorelei will indemnify and hold
harmless to the fullest extent authorized by the Delaware General
Corporation Law, any director, officer, agent or employee of Lorelei,
against all expense, liability and loss reasonably incurred or suffering by
such person in connection with Lorelei.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against the public policy as expressed in the Securities
Act and is therefore, unenforceable.
MARKET FOR LORELEI'S COMMON STOCK
Prior to the date hereof, there has been no trading market for Lorelei's
Common Stock. Pursuant to the requirements of Rule 15g-8 of the Exchange Act,
a trading market will not develop prior to or after the effectiveness of this
prospectus or while the common stock under this offering is maintained in
escrow. The common stock under this offering will remain in escrow until
Lorelei's consummation of a business combination pursuant to the requirements
of Rule 419. There are currently five (5) holders of Lorelei's outstanding
common stock. The outstanding common stock was sold in reliance upon an
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended. All purchasers were sophisticated investors. Current
shareholders will own 74.07% of the outstanding shares upon completion of the
offering and, as a result, there is no likelihood of an active public trading
market, as that term is commonly understood, developing for the shares. There
can be no assurance that a trading market will develop upon the consummation
of a business combination and the subsequent release of the common stock and
other escrowed shares from escrow. To date, neither Lorelei nor anyone acting
on its behalf has taken any affirmative steps to retain or encourage any
broker dealer to act as a market maker for Lorelei's common stock. Further,
there have been no discussions or understandings, preliminary or otherwise,
between Lorelei or anyone acting on its behalf and any market maker regarding
the participation of any such market maker in the future trading market, if
any, for Lorelei's common stock. Present management does not anticipate that
any such negotiations, discussions or understandings shall take place prior to
the execution of an acquisition agreement. Management expects that
discussions in this area will ultimately be initiated by the party or parties
controlling the entity or assets which Lorelei may acquire. Such party or
parties may employ consultants or advisors to obtain such market maker but
present management of Lorelei has no intention of doing so at the present
time.
The only outstanding options or warrants to purchase, or securities
convertible into, common equity of Lorelei is the option granted to Jo-Ann
Vidaver to purchase 10,000 shares of Lorelei's common stock at $.10 per share
on November 12, 1999; the option grant shall expire on November 12, 2002. The
200,000 shares of Lorelei's common stock currently outstanding are "restricted
securities" as that term is defined in the Securities Act of 1933. Pursuant
to Rule 144 of the Securities Act, if all the shares being offered hereto are
sold, the holders of the restricted securities may each sell 2,000 shares
during any three (3) month period after May 2000. Lorelei is offering 70,000
shares of its common stock at $0.50 per share. Dilution to the public
investors after the public offering shall be approximately $0.366 per share.
Schonfeld & Weinstein, L.L.P.'s legal fees will total $15,000, all of
which has been paid by Lorelei for legal services rendered. The $15,000
paid to Schonfeld & Weinstein, L.L.P. from Lorelei's treasury was part of
the $20,000 in proceeds raised in the sale of common stock in the April 1999
private placement.
CERTAIN TRANSACTIONS
Lorelei was incorporated in the State of Delaware on April 23, 1999. Between
April 30, 1999 and May 30, 1999 Lorelei issued 200,000 shares to five (5)
shareholders at $.10 per share, for a total of $20,000. On November 12, 1999,
Lorelei entered into an agreement with Jo-Ann Vidaver, whereby Lorelei granted
Ms. Vidaver the option to purchase 10,000 shares of common stock, $.001 par
value, at $.10 per share; the option grant shall expire on November 12, 2002.
The current breakdown of share ownership by shareholders may be found in the
section on Principal Stockholders.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Lorelei's common stock as of the date of this prospectus,
and as adjusted to reflect the sale of the shares offered hereby, by (i) each
person who is known by Lorelei to own beneficially more than 5% of Lorelei's
outstanding common stock; (ii) each of Lorelei's officers and directors; and
(iii) all directors and officers of Lorelei as a group. None of the current
shareholders have received or will receive any extra or special benefits that
were not shared equally (pro-rata) by all holders of shares of Lorelei's
stock.
Name/Address Shares of Percent of Percent of
Beneficial Common Stock Class Owned Class Owned
Owner Beneficially Owned Before Offering After
Offering
Jo-Ann Vidaver (1)(2) 0 0% 0%
49 Poplar Avenue
Oradell, NJ 07469
Patricia Francill (1) 25,000 12.5% 9.26%
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich (1) 50,000 25% 18.55%
202 Augusta Court
Roslyn, New York 11576
Iris Lai 50,000 25% 18.55%
c/o Arimoto, Ogasawara &
Mo Co.
703, 276 Fifth Avenue
New York, NY 10001
Victor Weinstein(3) 25,000 12.5% 9.26%
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P.(3) 50,000 25% 18.55%
63 Wall Street
Suite 1801
New York, NY 10005
Total Officers
and Directors (3 Persons) 75,000 37.5% 27.78%
Total 200,000 100% 74.07%
___________________________
(1) May be deemed "Promoters" of Lorelei, as that term is defined
under the Securities Act of 1933.
(2) Ms. Vidaver was granted an option to purchase 10,000 shares of common
stock at $.10 per share on November 12, 1999 by Lorelei.
(3) Mr. Weinstein is the father of Andrea I. Weinstein, a principal of
Schonfeld & Weinstein, L.L.P. Schonfeld & Weinstein, L.L.P. is a stockholder
of Lorelei and special counsel to the company.
Prior Blank Check Companies
Certain of Lorelei's principal stockholders have been involved with other
blank check companies in the past. Schonfeld & Weinstein, L.L.P., the
two principals of which are Joel Schonfeld and Andrea Weinstein, is a
shareholder of The Arielle Corp., a blank check company whose initial public
offering was declared effective by the Securities and Exchange Commission on
April 5, 1999. Pursuant to The Arielle Corp.'s offering 100,000 shares of
common stock were offered at $.35 per share. Pursuant to Rule 419, these
shares, and the offering proceeds, are currently held in escrow pending a
merger or acquisition.
Joel Schonfeld and Andrea Weinstein were shareholders of First Sunrise, Inc.,
a blank check company whose initial public offering was declared effective by
the Securities and Exchange Commission on June 9, 1998. Pursuant to First
Sunrise, Inc.'s offering, 100,000 shares of common stock were offered at $.50
per share. On December 8, 1999 FSI merged into Platinum Executive Search,
Inc., a company involved in executive search and placement. Management of FSI
resigned immediately upon effectiveness of the merger.
Both Joel Schonfeld and Andrea Weinstein were shareholders of Transpacific
International Group Corp., a blank check company, whose initial public
offering was declared effective by the Securities and Exchange Commission on
August 12, 1996. Pursuant to that initial public offering, the company
offered 3,000 shares of common stock at $6.00 per share. On February
12, 1998, Transpacific International Group Corp. merged with Coffee Holding
Co., Inc., a coffee wholesaler, distributor and roaster. Pursuant to the
merger with Coffee Holding Co., Inc., shares of Transpacific International
Group Corp. were split ten for one (10:1), after which Transpacific issued
3,000,000 shares to Coffee Holding Co., Inc. in exchange for all of the issued
and outstanding shares of Coffee Holding Co., Inc. Management of Transpacific
International Group Corp. resigned immediately upon effectiveness of the
merger.
Joel Schonfeld and Andrea Weinstein were shareholders of The Brian H.
Corp., a blank check company. In its initial public offering, declared
effective by the Securities and Exchange Commission on October 23, 1995, The
Brian H. Corp. offered 12,500 shares of common stock at $4.00 per share. The
shares and offering proceeds were held in escrow while the company searched
for business combinations. The eighteen-month period proscribed by Rule 419,
expired without The Brian H. Corp. finding a business combination. As a
result, all offering proceeds (less 10%) were returned to investors, and the
shares were returned to the company.
Joel Schonfeld and Andrea Weinstein were shareholders of Joshua J., Ltd., a
blank check company. In its initial public offering, declared effective by
the Securities and Exchange Commission on January 12, 1995, Joshua J., Ltd.
offered 10,000 shares of common stock at $5.00 per share. The shares and
offering proceeds were held in escrow while the company searched for business
combinations. The eighteen-month period proscribed by Rule 419, expired
without Joshua J., Ltd. finding a business combination. As a result, all
offering proceeds (less 10%) were returned to investors, and the shares were
returned to the company.
Joel Schonfeld was a shareholder of Metamorphic Corporation, a blank
check company. In its initial public offering, declared effective by the
Securities and Exchange Commission on October 12, 1994, Metamorphic
Corporation offered 10,000 units at $7.00 per unit. The units and offering
proceeds were held in escrow while the company searched for business
combinations. The eighteen month period proscribed by Rule 419, expired
without Metamorphic Corporation finding a business combination. As a result,
all offering proceeds (less 10%) were returned to investors, and the shares
were returned to the company.
Mr. Schonfeld, Ms. Weinstein and Jo-Ann Vidaver were shareholders of Jackson
Holding Co., a blank check company, which merged into China Energy
ResourcesCorporation on June 19, 1996, at which point Ms. Vidaver resigned as
Secretary and director. The Securities and Exchange Commission declared
Jackson Holding Corp.'s initial public offering effective on December 21,
1994. In its initial public offering, Jackson Holding Corp. offered for sale
10,000 shares of common stock at $5.00 per share. All shares offered were
sold; $50,000 was raised. Pursuant to the merger with China Energy Resources
Corporation, all of the issued and outstanding shares of Jackson Holding Corp.
common stock were exchanged for a total of 110,000 shares of China Energy
Resources Corporation common stock. China Energy Resources Corporation is
currently an operating company, with publicly trading shares. Mr. Schonfeld,
Ms. Weinstein nor Ms. Vidaver has had any subsequent involvement with that
company.
Mr. Schonfeld was a shareholder of Mandi of Essex, Ltd., a blank check
company. The initial public offering of Mandi of Essex, Ltd. was declared
effective by the S.E.C. on July 25, 1991. 5,000 units were offered at $5.00
per unit, each unit consisting of one share of common stock and twenty (20)
class A redeemable common stock purchase warrants. Each class A warrant could
be redeemed for one (1) share of common stock and one class B redeemable
common stock purchase warrant. Each class B warrants entitled the holder to
purchase one (1) share of common stock. $25,000 was raised in the initial
public offering. On April 27, 1994, Mandi of Essex, Ltd. acquired CityScape
Financial Corp., pursuant to which, all of the outstanding common stock of
CityScape was acquired by Mandi in exchange for 4,140,000 shares of Mandi
common stock. CityScape Financial Corp. is currently an operating company,
with publicly trading shares. Mr. Schonfeld has not been involved with Mandi
of Essex/CityScape Financial Corp. since the acquisition.
Patricia Francill, Secretary and a director of Lorelei, served as
Secretary/Treasurer and director of Taylor Equities Inc., a blank check
company, from January 26, 1990 to January 15, 1992 which successfully
completed a merger re-organization with The Freight Connection Inc., at which
point Ms. Francill resigned. The Freight Connection Inc. is an operating
company with publicly traded shares.
Each of the aforementioned companies was formed to raise money for potential
business combinations.
DESCRIPTION OF SECURITIES
Common Stock
Lorelei is authorized to issue twenty million (20,000,000) shares of
common stock, $.001 par value per share, of which 200,000 shares were issued
and outstanding as of the date of this prospectus. Each outstanding share of
common stock is entitled to one vote, either in person or by proxy, on all
matters that may be voted upon by the owners thereof at meetings of the
stockholders.
The holders of common stock (i) have equal ratable rights to dividends
from funds legally available therefore, when, as and if declared by the Board
of Directors of Lorelei; (ii) are entitled to share ratably in all of the
assets of Lorelei available for distribution to holders of common stock
upon liquidation, dissolution or winding up of the affairs of Lorelei;
(iii) do not have preemptive, subscription or conversion rights, or redemption
or sinking fund provisions applicable thereto; and (iv) are entitled to one
non-cumulative vote per share on all matters on which stockholders may vote at
all meetings of stockholders.
All shares of common stock that are the subject of this offering, when
issued, will be fully paid for and non-assessable, with no personal liability
attaching to the ownership thereof. The holders of shares of common stock of
Lorelei do not have cumulative voting rights, which means that the holders of
more than 50% of such outstanding shares voting for the election of directors
can elect all of the directors of Lorelei if they so choose and, in such
event, the holders of the remaining shares will not be able to elect any of
Lorelei's directors. At the completion of this offering, the present officers
and directors and present shareholders will beneficially own 74.07% of the
then outstanding shares. Accordingly, after completion of this offering, the
present shareholders of Lorelei will be in a position to control all of the
affairs of Lorelei.
Future Financing
In the event the proceeds of this offering are not sufficient to enable
Lorelei to successfully find a business combination Lorelei may seek
additional financing. At this time Lorelei believes that the proceeds of
this offering will be sufficient for such purpose and therefore does not
expect to issue any additional securities before the consummation of a
business combination. However, Lorelei may issue additional securities,
incur debt or procure other types of financing if needed. Lorelei has
not entered into any agreements, plans or proposals for such financing and as
of present has no plans to do so. Lorelei will not use the deposited
funds as collateral or security for any loan or debt incurred. Further, the
deposited funds will not be used to pay back any loan or debts incurred by
Lorelei. If Lorelei does require additional financing, there is no
guarantee that such financing will be available to it or if available that
such financing will be on terms acceptable to Lorelei.
Reports to Stockholders
Lorelei intends to furnish its stockholders with annual reports
containing audited financial statements as soon as practicable at the end of
each fiscal year.
Dividends
Lorelei was only recently organized, has no earnings, and has paid
no dividends to date. Since Lorelei was formed as a blank check company
with its only intended business being the search for an appropriate business
combination, Lorelei does not anticipate having any earnings until such
time that a business combination is reconfirmed by the stockholders.
However, there are no assurances that upon the consummation of a business
combination, Lorelei will have earnings or issue dividends. Therefore,
it is not expected that cash dividends will be paid to stockholders until
after a business combination is reconfirmed.
Transfer Agent
Lorelei has appointed Transfer Online, Inc. as the Transfer Agent
for Lorelei.
PLAN OF DISTRIBUTION
Lorelei hereby offers the right to subscribe for 70,000 shares at $0.50
per share. Lorelei proposes to offer the shares directly on a "best efforts,
all or none basis", and no compensation is to be paid to any person in
connection with the offer and sale of the shares. Lorelei's officers and
directors, Jo-Ann Vidaver, Patricia Francill and Jules Reich, shall distribute
prospectuses related to this Offering. Lorelei estimates approximately 100 to
200 prospectuses shall be distributed in such a manner. Ms. Vidaver, Ms.
Francill and Mr. Reich intend to distribute prospectus to acquaintances,
friends and business associates. Vidaver, Francill and Reich shall conduct
the offering. Although Vidaver, Francill and Reich are "associated persons" of
Lorelei as that term is defined in Rule 3a4-1 under the Securities Exchange
Act of 1934, they are deemed not to be brokers for the following reasons: (1)
the officers and directors are not subject to a statutory disqualifications as
that terms is defined in Section 3(a)(39) of the Exchange Act at the time of
his/her participation in the sale of Lorelei's securities; (2) they will not
be compensated in connection with their participation in the sale of Lorelei's
securities by the payment of commission or other remuneration based either
directly or indirectly on transactions in securities; (3) none of them are an
associated person of a broker or dealers at the time of his/her participation
in the sale of Lorelei's securities; and (4) each associated person shall
restrict his/her participation to the following activities:
(a) preparing any written communication or delivering such
communication through the mails or other means that does not involve oral
solicitation by the associated person of a potential purchaser;
(b) responding to inquiries of a potential purchasers in a
communication initiated by the potential purchasers, provided however, that
the content of such responses are limited to information contained in a
registration statement filed under the Securities Act of 1933 or other
offering document; or
(c) performing ministerial and clerical work involved in effecting
any transaction.
As of the date of this Prospectus, no broker has been retained by Lorelei
in connection with the sale of securities being offered hereby. In the event
a broker who may be deemed an Underwriter is retained by Lorelei, an
amendment to Lorelei's Registration Statement will be filed with the
Securities and Exchange Commission.
Neither Lorelei nor anyone acting on its behalf including Lorelei's
shareholders, officers, directors, promoters, affiliates or associates will
approach a market maker or take any steps to request or encourage a market in
these securities either prior or subsequent to an acquisition of any business
opportunity. There have been no preliminary discussions or understandings
between Lorelei (or anyone acting on its behalf) and any market maker
regarding the participation of any such market maker in the future trading
market (if any) for Lorelei's securities, nor does Lorelei have any
plans to engage in such discussions. Lorelei does not intend to use
consultants to obtain market makes. No member of management, promoter or
anyone acting at their direction will recommend, encourage or advise
investors to open brokerage accounts with any broker-dealer that is obtained
to make a market in the shares subsequent to the acquisition of any business
opportunity. Lorelei's investors shall make their own decisions
regarding whether to hold or sell their shares. Lorelei shall not
exercise any influence over investors' decisions.
Method of Subscribing
Persons may subscribe by filling in and signing the subscription agreement
and delivering it, prior to the expiration date (as defined below), to
Lorelei. The subscription price of $0.50 per share must be paid in cash or
by check, bank draft or postal express money order payable in United States
dollars to the order of Lorelei. This offering is being made on a "best
efforts, all or none basis." Thus, unless all 70,000 shares are sold, none
will be sold.
Lorelei's officers, directors, current shareholders and any of their
affiliates or associates may purchase a portion of the shares offered in this
offering. The aggregate number of shares which may be purchased by such
persons shall not exceed 20% of the number of shares sold in this offering.
Such purchases may be made in order to close the "all or nothing" offering.
shares purchased by Lorelei's officers, directors and principal
shareholders will be acquired for investment purposes and not with a view
towards distribution.
EXPIRATION DATE
This offering will expire 90 days from the date of this prospectus (or
180 days from the date of this prospectus if extended by Lorelei.)
LITIGATION
Lorelei is not presently a party to any litigation, nor to the
knowledge of management is any litigation threatened against Lorelei
which may materially affect Lorelei.
LEGAL OPINIONS
Schonfeld & Weinstein, L.L.P., 63 Wall Street, Suite 1801, New York, New
York 10005, special counsel to Lorelei, has rendered an opinion that the
shares are validly issued.
EXPERTS
The balance sheet of Lorelei as of September 30, 1999 and the related
statements of operations, changes in stockholders' equity and cash flows for
the initial period from April 23, 1999 (date of incorporation) through
September 30, 1999 included in this Prospectus and incorporated by reference
in the Registration Statement, have been audited by Ahearn, Jasco, + Company,
P.A., independent auditors, as stated in their report appearing herein and
incorporated by reference in the Registration Statement, and are included and
incorporated by reference in reliance upon the reports of such firm given
upon their authority as experts in accounting and auditing.
FURTHER INFORMATION
Lorelei has filed with the Securities and Exchange Commission, a Registration
Statement on Form SB-2 with respect to this the securities offered by this
prospectus. This prospectus omits certain information contained in the
Registration Statement as permitted by the Rules and Regulations of the
Commission. Reports and other information filed by Lorelei may be inspected
and copied at the public reference facilities of the Commission in Washington,
D.C. Copies of such material can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549 at prescribed rate, or at
the Commission's web site at www.sec.gov. Statements contained in this
prospectus as to the contents of any contract or other document referred to
are not complete and where such contract or other document is an exhibit to
the Registration Statement, each such statement is deemed qualified and
amplified in all respects by the provisions of the exhibit.
LORELEI CORPORATION
(A development stage company)
INDEX TO FINANCIAL STATEMENTS
Page
REPORT OF INDEPENDENT AUDITORS F-2
FINANCIAL STATEMENTS
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7 through F-9
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
Lorelei Corporation
We have audited the accompanying balance sheet of Lorelei Corporation (the
"Company"), a development stage company, as of September 30, 1999, and the
related statement of operations, changes in stockholders' equity, and cash flows
for the period April 23, 1999 (date of incorporation) through September 30,
1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Lorelei Corporation as of
September 30, 1999, and the results of its operations and its cash flows for
the period April 23, 1999 (date of incorporation) through September 30, 1999
in conformity with generally accepted accounting principles.
/s/ Ahearn, Jasco + Company, P.A.
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
December 1, 1999
LORELEI CORPORATION
(A development stage company)
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
CURRENT ASSET-Cash and cash equivalents $5,000
DEFERRED OFFERING COSTS $15,000
TOTAL $20,000
LIABILITIES AND STOCKHOLDERS' EQUITY
ACCRUED EXPENSES $3,773
STOCKHOLDERS'EQUITY:
Common stock, $.001 par value; 200
20,000,000 shares authorized;
200,000 shares issued and outstanding
Additional Paid in Capital 19,800
Defecit accumulated during the
development stage (3,773)
STOCKHOLDERS' EQUITY NET 16,227
TOTAL $20,000
See notes to financial statements.
LORELEI CORPORATION
(A development stage company)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM APRIL 23, 1999 (date of incorporation)
THROUGH SEPTEMBER 30, 1999
REVENUE $ -
GENERAL AND ADMINISTRATIVE EXPENSES 3,773
LOSS BEFORE INCOME TAX PROVISION (3,773)
PROVISION FOR INCOME TAXES -
NET LOSS $ 3,773
PER SHARE AMOUNTS:
Net loss per common share outstanding,
basic and diluted $(0.0189)
TOTAL COMMON SHARES OUTSTANDING
AS OF SEPTEMBER 30, 1999 200,000
See notes to financial statements.
LORELEI CORPORATION
(A development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD APRIL 23, 1999 (date of incorporation)
THROUGH SEPTEMBER 30, 1999
Deficit
Accumulated
Common Additional during the
Stock Paid-in Development
Capital Stage Total
STOCKHOLDERS' EQUITY, $ - $ - $ - $ -
(April 23, 1999)
Sale of 200,000 shares
of common stock 200 19,800 - 20,000
Net loss for the inital
period ended
September 30, 1999 - - (3,773) (3,773)
STOCKHOLDERS' EQUITY,
September 30, 1999 $ 200 $ 19,800 $ (3,773) $ 16,227
See notes to financial statements.
LORELEI CORPORATION
(A development stage company)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM APRIL 23, 1999 (date of incorporation)
THROUGH SEPTEMBER 30, 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (3,773)
Item not affecting cash flow from operations:
Accrued expenses 3,773
NET CASH PROVIDED BY OPERATING ACTIVITIES -
CASH FLOWS FROM INVESTING ACTIVITY:
Deferred offering costs incurred (15,000)
CASH FLOWS FROM FINANCING ACTIVITY:
Sales of common stock 20,000
CASH BALANCE AS OF SEPTEMBER 30, 1999 $ 5,000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -
Cash paid for income taxes $ -
See notes to financial statements.
LORELEI CORPORATION
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 23, 1999 (date of incorporation)
THROUGH SEPTEMBER 30, 1999
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Lorelei Corporation, a development stage company, was organized in Delaware
on April 23, 1999 as a "blank check" company that plans to look for a
suitable business to merge with or acquire. Operations since incorporation
have consisted primarily of obtaining the first capital contributions by the
insiders and coordination activities regarding the SEC registration of the
company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred Offering Costs
Deferred offering costs, which are being incurred in anticipation of the
Company filing a Rule 419 registration statement, are being deferred until
the registration is complete.
Income Taxes
The Company accounts for income taxes in accordance with the Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes." SFAS
No. 109 requires the recognition of deferred tax liabilities and assets at
currently enacted tax rates for the expected future tax consequences of
events that have been included in the financial statements or tax returns. A
valuation allowance is recognized to reduce the net deferred tax asset to an
amount that is more likely than not to be realized. The tax provision
presented on the accompanying statement of operations is zero since the
deferred tax asset generated from the net operating loss is offset in its
entirety by a valuation allowance. State minimum taxes are expensed as
incurred.
Cash and Cash Equivalents
Cash and cash equivalents, if any, include all highly liquid debt instruments
with an original maturity of three months or less at the date of purchase.
Fair Value of Financial Instruments
Cash, accounts payable and other current liabilities are recorded in the
financial statements at cost, which approximates fair market value because of
the short-term maturity of those instruments.
NOTE 3 - STOCKHOLDER'S EQUITY
The company was duly organized under the laws of the State of Delaware. The
Company has authorized 20,000,000 shares of common stock at $.001 par value.
As of September 30, 1999, the Company has raised $20,000 through the sale of
200,000 shares of its common stock pursuant to subscription agreements.
LORELEI CORPORATION
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 23, 1999 (date of incorporation)
THROUGH SEPTEMBER 30, 1999
NOTE 4 - RULE 419 REQUIREMENTS
Rule 419 requires that offering proceeds after deduction for underwriting
commissions, underwriting expenses and deal allowances issued be deposited
into an escrow or trust account (the "Deposited Funds" and "Deposited
Securities", respectively) governed by an agreement which contains certain
terms and provisions specified by the Rule. Under Rule 419, the Deposited
Funds and Deposited Securities will be released to the company and to the
investors, respectively, only after the company has met the following three
basic conditions. First, the company must execute an agreement(s) for an
acquisition(s) meeting certain prescribed criteria. Second, the company must
file a post-effective amendment to the registration statement that includes
the terms of a reconfirmation offer that must contain conditions prescribed
by the rules. The post-effective amendment must also contain information
regarding the acquisition candidate(s) and its business(es), including audited
financial statements. The agreement(s) must include, as a condition
precedent to their consummation, a requirement that the number of investors
representing 80% of the maximum proceeds must elect to reconfirm their
investments. Third, the company must conduct the reconfirmation offer and
satisfy all of the prescribed conditions, including the condition that
investors representing 80% of the Deposited Funds must elect to remain
investors. The post-effective amendment must also include the terms of the
reconfirmation offer mandated by Rule 419. The reconfirmation offer must
include certain prescribed conditions that must be satisfied before the
Deposited Funds and Deposited Securities can be released from escrow. After
the company submits a signed representation to the escrow agent that the
requirements of Rule 419 have been met and after the acquisition(s) is
consummated, the escrow agent can release the Deposited Funds and Deposited
Securities. Investors who do not reconfirm their investments will receive
the return of a pro-rata portion thereof; and in the event investors
representing less than 80% of the Deposited Funds reconfirm their investments,
the Deposited Funds will be returned to the investors on a pro-rata basis.
NOTE 5 - LOSS PER COMMON SHARE
Net loss per common share outstanding, as shown on the statement of
operations, is based on the number of common shares outstanding at the
balance sheet date. Weighted average shares outstanding was not computed
since it would not be meaningful in the circumstances, as all shares issued
during the period from incorporation through September 30, 1999 were for
initial capital and were issued to a limited number of individuals.
Therefore, the total shares outstanding at the end of the period was deemed
to be the most relevant number of shares to use for purposes of this disclosure.
For future periods, the Company will utilize the treasury stock method for
computing earnings per share, and will compute a weighted average number of
shares outstanding once additional shares of stock are issued to new
shareholders. Under the treasury stock method, the dilutive effect of
outstanding stock options and other convertible securities for determining
primary earnings per share is computed using the average market price during
the fiscal period. Whereas the dilutive effect of outstanding stock options and
convertible securities for determining fully diluted earnings per share is
computed using the market price as of the end of the fiscal period, if greater
than the average market price.
LORELEI CORPORATION
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIOD APRIL 23, 1999 (date of incorporation) THROUGH SEPTEMBER 30,
1999
NOTE 6 - RELATED PARTY TRANSACTIONS
Transactions with Shareholders
During 1999, the company advanced $15,000 to the law firm of Schonfeld &
Weinstein, LLP, who is also a shareholder of the company, for legal fees to
complete its SEC registration. These fees were recorded as deferred offering
costs (see Note 2).
Office Facilities
Office space and minimal administrative support is provided by a shareholder of
the Company at no charge.
NOTE 7 SUBSEQUENT EVENT
On November 12, 1999, the President of the Company was granted an option to
purchase 10,000 shares of the Company's common stock for $0.10 per share. The
option expires on November 12, 2002, and is immediately exercisable by the
officer.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers
The Delaware General Corporation Law, as amended, provides for the
indemnification of Lorelei's, directors and corporate employees
and agents under certain circumstances as follows:
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS;
INSURANCE. - (a) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to
the extent that the Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstance of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in subsections
(a) and (b) of this section. Such determination shall be made (1) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum
is not obtainable, or, even if obtainable a quorum of disinterested directors
so directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses incurred by an officer or director in defending any civil,
criminal, administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in this
section. Such expenses including attorneys' fees incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the board
of directors deems appropriate.
(f) The indemnification and advancement expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under this section.
(h) For purposes of this Section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
including absorbed in a consolidation of merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this section
with respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to an employee benefit plan;
and references to "serving at the request of the corporation" shall include
any service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee,
or agent with respect to an employee benefit plan, its participants, or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such person.
Article VII of Lorelei's By-laws provides for the indemnification of Lorelei's
officers, directors, and corporate employees and agents under
certain circumstances as follows:
Article VII provides that Lorelei will hold harmless and will indemnify all
officers, directors, employees and agents of Lorelei against all expense,
liability and loss reasonably incurred or suffered by such person in its
connection as such with Lorelei. Lorelei shall indemnify any such person
seeking indemnification in connection with a proceeding initiated by such
person (except against Lorelei) only if such proceeding was
authorized by Lorelei's Board of Directors.
If a claim under the above paragraph is not paid in full by Lorelei within 30
days after a written claim has been received by Lorelei, the claimant may at
anytime thereafter bring suit against Lorelei to recover the unpaid amount of
the claim. If the claimant is successful, it is entitled to be paid the
expense of prosecuting such claim, as well.
Notwithstanding any limitations in other sections of the By-laws, Lorelei
will, to the fullest extend permitted by Section 145 of the General
Corporation Law of Delaware, indemnify any and all persons whom it has the
power to indemnify against any and all of the expense, liabilities and loss,
and this indemnification shall not be deemed exclusive of any other rights to
which the indemnities may be entitled under any By-law, agreement, or
otherwise, both as to action in his/her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such persons.
Lorelei may, at its own expense, maintain insurance to protect itself and
any director, officer, employee or agent of Lorelei against any such
expense, liability or loss, whether or not Lorelei would have the power to
indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Item 25. Expenses of Issuance and Distribution
The other expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are estimated as
follows:
Securities and Exchange Commission
Registration Fee $9.24
Legal Fees $15,000.00
Accounting Fees $3,500.00
Printing and Engraving $1,500.00
Blue Sky Qualification Fees
and Expenses $985.00
Miscellaneous$ 1,005.76
Transfer Agent Fee$ 1,000.00
TOTAL $23,000.00
Item 26. Recent Sales of Unregistered Securities
Lorelei issued 200,000 shares between April 23, 1999 and May 30,
1999, to its initial stockholders for $20,000.
Name/Address Shares of Price Paid
Beneficial Common Stock
Owner Beneficially Owned(2)
Jo-Ann Vidaver (1)(3) -0- $0
49 Poplar Avenue
Oradell, NJ 07469
Patricia Francill (1) 25,000 $2,500
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich (1) 50,000 $5,000
202 Augusta Court
Roslyn, NY 11576
Iris Lai 50,000 $5,000
c/o Arimoto, Ogasawara &
Mo Co.
703, 276 Fifth Avenue
New York, NY 10001
Victor Weinstein 25,000 $2,500
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P. 50,000 $5,000
63 Wall Street
Suite 1801
New York, NY 10005
___________________________
(1) May be deemed "Promoters" of Lorelei, as that term is defined
under the Securities Act of 1933.
(2) These shares were sold under the exemption of Section 4(2) of the
Securities Act of 1933.
(3) On November 12, 1999, Lorelei granted Ms. Vidaver an option to
purchase 10,000 shares at $.10 per share.
Neither Lorelei nor any person acting on its behalf offered or sold the
securities by means of any form of general solicitation or general
advertising.
Each purchaser represented in writing that he/she acquired the securities for
his own account. A legend was placed on the certificates stating that the
securities have not been registered under the Act and setting forth the
restrictions on their transferability and sale. Each purchaser signed a
written agreement that the securities will not be sold without registration
under the Act or exemption therefrom.
Item 27. EXHIBITS
3.1 Certificate of Incorporation.
3.2 By-Laws.
4.1 Specimen Certificate of Common Stock.
4.6 Form of Escrow Agreement.
5.0 Opinion of Counsel.
24.0 Accountant's Consent to Use Opinion.
24.1 Counsel's Consent to Use Opinion.
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 Lorelei 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 Certificate 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 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 of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of New York, State of New York, on January 3, 2000.
Lorelei Corporation
BY: Jo-Ann Vidaver
Jo-Ann Vidaver, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
Jo-Ann Vidaver
Dated January 3, 2000
Jo-Ann Vidaver
President, Director
Patricia Francill
Dated January 3, 2000
Patricia Francill
Vice President,
Secretary, Director
Jules Reich
Jules Reich Dated January 3, 2000
Director
<PAGE>
CERTIFICATE OF INCORPORATION
OF
LORELEI CORPORATION
FIRST: The name of this corporation shall be:
LORELEI CORPORATION
SECOND: Its registered office in the State of Delaware is
located at 1013 Centre Road, in the City of Wilmington, County of New Castle
and its registered agent at such address is CORPORATION SERVICE COMPANY.
THIRD: The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is:
Twenty Million (20,000,000) shares at a par value of One Mill
($.001) per share amounting to Twenty Thousand Dollars ($20,000.00).
FIFTH: The name and address of the incorporator is as
follows:
Joel Schonfeld
63 Wall Street, Suite 1801
New York, New York 10005
SIXTH: The Board of Directors shall have the power to adopt,
amend or repel the by-laws.
SEVENTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law,
(i) for breach of the director=s duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit. No
amendment to or repeal of this Article Seventh shall apply to or have any
effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this certificate of
incorporation this ninth day of February, A.D., 1999.
/s/ Joel Schonfeld
Joel Schonfeld
Incorporator
<PAGE>
BY- LAWS
of
LORELEI CORPORATION
ARTICLE I - OFFICES
SECTION I. REGISTERED OFFICE. Its registered office in the State of Delaware
is located at 1013 Centre Road, in the City of Wilmington, County of New
Castle and its registered agent at such address is CORPORATION SERVICE
COMPANY.
SECTION 2. OTHER OFFICES. The corporation may have other offices either
within or without the State of Delaware, at such place or places as the Board
of Directors may from time to time appoint or the business of the corporation
may require.
Error! Main Document Only.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION I. ANNUAL MEETINGS. Annual meetings of stockholders for the election of
directors and for such other business as may be stated in the notice of the
meeting, shall be held at such place, either within or without the State of
Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting. In the event the
Board of Directors fails to so determine the time, date and place of meeting,
the annual meeting of stockholders shall be held at the registered office of the
corporation in New York, on the first Monday in January.
If the date of the annual meeting shall fall upon a legal holiday,
the meeting shall be held on the next succeeding business day. At each annual
meeting, the stockholders entitled to vote shall elect a Board of Directors and
may transact such other corporate business as shall be stated in the notice of
the meeting.
SECTION 2. OTHER MEETINGS. Meetings of stockholders for any purpose other than
the election of directors may be held at such time and place, within or without
the State of Delaware, as shall be stated in the notice of the meeting.
SECTION 3. VOTING. Each stockholder entitled to vote in accordance with the
terms and provisions of the Certificate of Incorporation and these By-Laws shall
be entitled to one vote, in person or by proxy, for each share of stock entitled
to vote held by such stockholder, but no proxy shall be voted after three years
from its date unless such proxy provides for a longer period. Upon the demand of
any stockholder, the vote for directors and upon any question before the meeting
shall be by ballot. All elections for directors shall be decided by plurality
vote; all other questions shall be decided by majority vote except as otherwise
provided by the Certificate of Incorporation or the laws of the State of
Delaware.
SECTION 4. STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the corporation shall at least 10 days before each meeting of stockholders
prepare a complete alphabetical addressed list of the stockholders entitled to
vote at the ensuing election, with the number of shares held by each. Said list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The list shall be
available for inspection at the meeting.
SECTION 5. QUORUM. Except as otherwise required by law, by the Certificate of
Incorporation or by these By-Laws, the presence, in person or by proxy, of
stockholders holding a majority of the stock of the corporation entitled to vote
shall constitute a quorum at all meetings of the stockholders. In case a quorum
shall not be present at any meeting, a majority in interest of the stockholders
entitled to vote thereat, present in person or by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted which
might have been transacted at the meeting as originally noticed; but only those
stockholders entitled to vote at the meeting as originally noticed shall be
entitled to vote at any adjournment or adjournments thereof.
SECTION 6. SPECIAL MEETINGS. Special meetings of the stockholders, for any
purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. Written notice, stating the place, date and time
of the meeting, and the general nature of the business to be considered, shall
be given to each stockholder entitled to vote thereat at his address as it
appears on the records of the corporation, not less than ten nor more than fifty
days before the date of the meeting.
SECTION 8. BUSINESS TRANSACTED. No business other than that stated in the
notice shall be transacted at any meeting without the unanimous consent of all
the stockholders entitled to vote thereat.
SECTION 9. ACTION WITHOUT MEETING. Except as otherwise provided by the
Certificate of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the statutes or the Certificate of Incorporation or
of these By-Laws, the meeting and vote of stockholders may be dispensed with, if
all the stockholders who would have been entitled by vote upon the action is
such meeting were held, shall consent in writing to such corporate action being
taken.
ARTICLE III - DIRECTORS
SECTION I. NUMBER AND TERM. The number of directors shall be not less than
three. The directors shall be elected at the annual meeting of the stockholders
and each director shall be elected to serve until his successor shall be elected
and shall qualify. The number of directors may not be less than three except
that where all the shares of the corporation are owned beneficially and of
record by either one or two stockholders, the number of directors may be less
than three but not less than the number of stockholders.
SECTION 2. RESIGNATIONS. Any director, member of a committee or other officer
may resign at any time. Such resignation shall be made in writing, and shall
take effect at the time specified therein, and if no time be specified, at the
time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. If the office of any director, member of a committee or
other officer becomes vacant, the remaining directors in office, though less
than a quorum by a majority vote, may appoint any qualified person to fill such
vacancy, who shall hold office for the unexpired term and until his successor
shall be duly chosen.
SECTION 4. REMOVAL. Any director or directors may be removed either for or
without cause at any time by the affirmative vote of the holders of a majority
of all the shares of stock outstanding and entitled to vote, at a special
meeting of the stockholders called for the purpose and the vacancies thus
created may be filled, at the meeting held for the purpose of removal, by the
affirmative vote of a majority in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. The number of directors may be increased by
amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
SECTION 6. COMPENSATION. Directors shall not receive any stated salary for
their services as directors or as members of committees, but by resolution of
the board a fixed fee and expenses of attendance may be allowed for attendance
at each meeting. Nothing herein contained shall be construed to preclude any
from serving the corporation in any other capacity as an officer, agent or
otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. Any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken with out a meeting, if prior to such action a written consent thereto is
signed by all members of the board, or of such committee as the case may be, and
such written consent is filed with the minutes of proceedings of the board or
committee.
ARTICLE IV - OFFICERS
SECTION I. OFFICERS. The officers of the corporation shall consist of a
President, a Treasurer, and a Secretary, and shall be elected by the Board of
Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, one or
more Vice-Presidents and such Assistant Secretaries and Assistant Treasurers as
it may deem proper. None of the officers of the corporation need be directors.
The officers shall be elected at the first meeting of the Board of Directors
after each annual meeting. More than two offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such
officers and agents as it may deem advisable, who shall hold their offices for
such terms and shall exercise such power and perform such duties as shall be
determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors if one be elected,
shall preside at all meetings of the Board of Directors and he shall have and
perform such other duties as from time to time may be assigned to him by the
Board of Directors.
SECTION 4. PRESIDENT. The President shall be the chief executive officer of the
corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall
preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages, and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. Each Vice-President shall have such powers and shall
perform such duties as shall be assigned to him by the directors.
SECTION 6. TREASURER. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the corporation. He shall deposit all moneys
and other valuables in the name and to the credit of the corporation in such
depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as may be ordered by
the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. The Secretary shall give, or cause to be given, notice of
all meetings of stockholders and directors, and all other notices required by
law or by these By-Laws, and in case of his absence or refusal or neglect so to
do, any such notice may be given by any person thereunto directed by the
President, or by the directors, or stockholders, upon whose requisition the
meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of directors in a book to be
kept for that purpose. He shall keep in safe custody the seal of the
corporation, and when authorized by the Board of Directors, affix the same to
any instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES. Assistant Treasurers
and Assistant Secretaries, if any, shall be elected and shall have such powers
and shall perform such duties as shall be assigned to them, respectively, by the
directors.
ARTICLE V CAPITAL STOCK
SECTION I. CERTIFICATES OF STOCK. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the chairman or vice-chairman of the board of directors, or the
president or a vice-president and the treasurer or an assistant treasurer, or
the secretary of the corporation, certifying the number of shares owned by him
in the corporation. If the corporation shall be authorized to issue more than
one class of stock or more than one series of any class, the designations,
preferences and relative participating, optional or other special rights of each
class of stock or. series thereof and the qualifications, limitations, or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class of series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law of Delaware, in
lieu of the foregoingrequirements, there may be set forth on the face or back of
the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights. Where a certificate is countersigned (1) by a
transfer agent other than the corporation or its employee, or (2) by a registrar
other than the corporation or its employee, the signatures of such officers may
be facsimiles.
SECTION 2. LOST CERTIFICATES. New certificates of stock may be issued in the
place of any certificate therefore issued by the corporation, alleged to have
been lost or destroyed, and the directors may, in their discretion, require the
owner of the lost or destroyed certificate or his legal representatives, to give
the corporation a bond, in such sum as they may direct, not exceeding double the
value of the stock, indemnify the corporation against it on account of the
alleged loss of any such new certificate. Stock of the corporation shall be
transferable only upon its books by the holders thereof in person or by their
duly authorized attorneys or legal representatives, and upon such transfer the
old certificates shall be surrendered to the corporation by the delivery thereof
to the person in charge of the stock and transfer books and ledgers, or to such
other persons as the directors may designate, by who they shall be canceled, and
new certificates shall thereupon be issued. A record shall be made of each
transfer and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the -day of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
SECTION 5. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
ARTICLE VI - CLOSE CORPORATIONS: MANAGEMENT BY SHAREHOLDERS
If the certificate of incorporation of the corporation states that the business
and affairs of the corporation shall be managed by the shareholders of the
corporation rather than by a board of directors, then, whenever the context so
requires the shareholders of the corporation shall be deemed the directors of
the corporation for purposes of applying any provision of these by-laws.
ARTICLE VII - MISCELLANEOUS
SECTION I. SEAL. The corporate seal shall be circular in form and shall contain
the name of the corporation, the year of its creation and the words A CORPORATE
SEAL DELAWARE.@ Said seal may be used by causing it or a facsimile thereof to be
impressed or affixed or otherwise reproduced.
SECTION 2. FISCAL YEAR. The fiscal year of the corporation shall be determined
by resolution of the Board of Directors.
SECTION 3. CHECKS. All checks, drafts, or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be signed by the officer or officers, agent or agents of the
corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 4. INDEMNITY. The corporation shall indemnify its directors,
officers and employees to the fullest extent allowed by law, provided,
however, that it shall be within the discretion of the Board of Directors
whether to advance any funds in advance of disposition of any action, suit or
proceeding, and provided further that nothing in this section 7.4 shall be
deemed to obviate the necessity of the Board of Directors to make any
determination that indemnification of the director, officer or employee is
proper under the circumstances because he has met the applicable standard of
conduct set forth in subsections (a) and (b) of Section 145 of the Delaware
General Corporation Law.
SECTION 5. NOTICE AND WAIVER OF NOTICE. Whenever any notice is required by
these By-Laws to be given, personal notice is not meant unless expressly stated,
and any notice so required shall be deemed to be sufficient if given by
depositing the same in the United States mail, postage prepaid, addressed to the
person entitled thereto at his address as it appears on the records of the
corporation, and such notice shall be deemed to have been given on the day of
such mailing. Stockholders not entitled to vote shall not be entitled to
receive notice of any meetings except as otherwise provided by statute.
Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these By-Laws, a waiver thereof in writing signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed proper notice.
ARTICLE VIII - AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made at any annual
meeting of the stockholders or at any special meeting thereof if notice thereof
is contained in the notice of such special meeting by the affirmative vote of a
majority of the stock issued and outstanding or entitled to vote thereat, or by
the regular meeting of the Board of Directors, at any regular meeting of the
Board of Directors, or at any special meeting of the Board of Directors, if
notice thereof is contained in the notice of such special meeting.
<PAGE>
SAMPLE STOCK CERTIFICATE
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
LORELEI CORPORATION
AUTHORIZED CAPITAL STOCK 20,000,000 COMMON SHARES $.001
THIS CERTIFIES THAT is the owner of fully paid
and non-assessable Shares of the Capital Stock of the above named Corporation
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon surrender of this Certificate properly
endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate
to be signed by its duly authorized officers and its Corporate Seal to be
hereunto affixed this day of A.D. 200
___________________ ___________________
Secretary President
<PAGE>
ESCROW AGREEMENT (PUBLIC OFFERING)
AGREEMENT made this day of , 1999 by and among the
Issuer whose name and address appears on the Information Sheet (as defined
herein) attached to this Agreement, and Chase Manhattan Bank, 35 East 72nd
Street, New York, New York (the "Escrow Agent").
W I T N E S S E T H :
WHEREAS, the Issuer has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Registration
Statement") covering a proposed public offering of its securities
(collectively, the "Securities", and individually, a "Share") as described on
the Information Sheet; and
WHEREAS, the Issuer proposes to offer the Securities, as agent for
the Issuer, for sale to the public on a "best efforts, all or none basis" at
the price per Share all as set forth on the Information Sheet; and
WHEREAS, the Issuer proposes to establish an escrow account with the
Escrow Agent in connection with such public offering and the Escrow Agent is
willing to establish such escrow account on the terms and subject to the
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Information Sheet. Each capitalized term not otherwise
defined in this Agreement shall have the meaning set forth for such term on
the Information Sheet which is attached to this Agreement and is incorporated
by reference herein and made a part hereof (the "Information Sheet").
2. Establishment of Escrow Account.
2.1 The parties hereto shall establish a non- interest-bearing
escrow account at the office of the Escrow Agent, and bearing the
designation, set forth on the Information Sheet (the "Escrow Account").
2.2 On or before the date of the initial deposit in the Escrow
Account pursuant to this Agreement, the Issuer shall notify the Escrow Agent
in writing of the effective date of the Registration Statement (the
"Effective Date") and the Escrow Agent shall not be required to accept any
amount for deposit in the Escrow Account prior to its receipt of such
notification.
2.3 The Offering Period, which shall be deemed to commence on the
Effective Date, shall consist of the number of calendar days or business days
set forth on the Information Sheet. The Offering Period shall be extended by an
Extension Period only if the Escrow Agent shall have received written notice
thereof at least five (5) business days prior to the expiration of the Offering
Period. The Extension Period, which shall be deemed to commence on the next
calendar day following the expiration of the Offering Period, shall consist of
the number of the calendar days or business days set forth on the Information
Sheet. The last day of the Offering Period, or the last day of the Extension
Period (if the Escrow Agent has received written notice thereof as hereinabove
provided), is referred to herein as the "Termination Date." After the
Termination Date, the Issuer shall not deposit, and the Escrow Agent shall not
accept, any additional amounts representing payments by prospective purchasers.
3. Deposits in the Escrow Account.
3.1 Upon receipt, the Issuer shall promptly deposit all monies
received from investors to the Escrow Agent. All of these deposited proceeds
(the "Deposited Proceeds") shall be in the form of checks or money orders.
All checks or money orders deposited into the Escrow Account shall be made
payable to "Lorelei Corporation and Chase Manhattan Bank, as Escrow Agent."
Any check or money order payable other than to the Escrow Agent as required
hereby shall be returned to the prospective purchaser, or if the Escrow Agent
has insufficient information to do so, then to the Issuer (together with any
Subscription Information, as defined below, or other documents delivered
therewith) by noon of the next business day following receipt of such check
by the Escrow Agent, and such check shall be deemed not to have been delivered
to the Escrow Agent pursuant to the terms of this Agreement. The Deposited
Proceeds and interest or dividends thereon, if any, shall be held for the sole
benefit of the purchasers of the securities.
3.2 The Deposited Proceeds shall be invested in either
(a) an obligation that constitutes a "deposit" as that term is
defined in Section (3)(1) of the Federal Deposit Insurance Act;
(b) securities of any open-end investment company registered
under the Investment Company Act of 1940 that holds itself out as a money
market fund meeting the conditions of paragraphs (c)(2), (c) (3), and (c)(4)
of Rule 2a-7 under the Investment Company Act; or
(c) securities that are direct obligations of, or obligations
guaranteed as to principal or interest by, the United States.
3.3 Simultaneously with each deposit into the Escrow Account, the
Issuer shall inform the Escrow Agent by confirmation slip or other writing of
the name and address of the prospective purchaser, the number of Securities
subscribed for by such purchaser, and the aggregate dollar amount of such
subscription (collectively, the "Subscription Information").
3.4 The Escrow Agent shall not be required to accept for deposit
into the Escrow Account checks which are not accompanied by the appropriate
Subscription Information. Checks and money orders representing payments by
prospective purchasers shall not be deemed deposited in the Escrow Account
until the Escrow Agent has received in writing the Subscription Information
required with respect to such payments.
3.5 The Escrow Agent shall not be required to accept any amounts
representing payments by prospective purchasers, whether by check or money
order, except during the Escrow Agent's regular banking hours. Any check,
money order or cash not received prior to 1:00 P.M. shall be deposited the
following business day.
3.6 Interest or dividends earned on the Deposited Proceeds, if
any, shall be held in the Escrow Account until the Deposited Proceeds are
released in accordance with the provisions of Section 4 of the Escrow
Agreement. If the Deposited Proceeds are released to a purchaser of the
securities, the purchaser shall receive interest or dividends earned, if any,
on such Deposited Proceeds up to the date of release. If the Deposited Proceeds
held in the Escrow Account are released to the Company, any interest or
dividends earned on such funds up to the date of release may be released to the
Company.
3.7 The Issuer shall deposit the Securities directly into the
Escrow Account promptly upon issuance (the "Deposited Securities"). The
identity of the purchaser of the Securities shall be included on the Common
Stock and Warrant certificates.
3.8 The Deposited Securities shall be held for the sole benefit of
the purchasers. No transfer or other disposition of Securities held in the
Escrow Account or any interest related to such Securities shall be permitted
other than by will or the laws of descent and distribution, or pursuant to a
qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or
the rules thereunder.
3.9 The Escrow Agent shall refund any portion of the Deposited
Proceeds prior to disbursement of the Deposited Proceeds in accordance with
Section 4 hereof upon instructions in writing signed by the Issuer.
4. Disbursement from the Escrow Account.
4.1 The Deposited Proceeds may be released to the Company and the
Securities delivered to the purchaser or other registered holder only at the
same time as or after:
(a) the Escrow Agent has received a signed representation
from the Company, together with an opinion of counsel that the following events
have already occurred and the following requirements have already been met:
(1) Upon execution of an agreement(s) for the
acquisition(s) of a business(es) or assets that will constitute the business
(or a line of business) of the Company and for which the fair value of the
business(es) or net assets to be acquired represents at least 80 percent of
the maximum offering proceeds, including proceeds received or to be received
upon the exercise or conversion of the Securities offered, but excluding
amounts payable to non-affiliates for underwriting commissions, underwriting
expenses, and dealer allowances, if any, the Company filed a post-effective
amendment that:
(i) Discloses the information specified by the SB-2 registration
statement form and Industry Guides, including financial statements of the
Company and the company or business with which it plans to merge or acquire
(the "Target Company"), and pro forma financial information required by the
SB-2 and applicable rules and regulations;
(ii) Discloses the results of the initial offering, including but not
limited to:
(A) The gross offering proceeds received to date, specifying the
amounts paid for underwriter commissions, underwriting expenses and dealer
allowances, if any, amounts disbursed to the Company, and amounts remaining
in the Escrow Account; and
(B) The specific amount, use and application of funds disbursed to
the Company to date, including, but not limited to, the amounts paid to
officers, directors, promoters, controlling shareholders or affiliates,
either directly or indirectly specifying the amounts and purposes of such
payments; and
(iii) Discloses the terms of the offering as described pursuant to
Section 4 of this Escrow Agreement.
(2) The terms of the offering provided, and the Company
satisfied, the following conditions:
(i) Within five business days after the effective date of the
post-effective amendment(s), the Company shall send by first class mail or
other equally prompt means, to each purchaser of securities held in escrow, a
copy of the prospectus contained in the post-effective amendment and any
amendment or supplement thereto;
(ii) Each purchaser shall have no fewer than 20 business days and no
more than 45 business days from the effective date of the post-effective
amendment to notify the Company in writing that the purchaser elects to remain
an investor. If the Company has not received such written notification by the
45th business day following the effective date of the post-effective amendment,
funds and interest or dividends, if any, held in the Escrow Account shall be
sent by first class mail or other equally prompt means to the purchaser within
five business days;
(iii) The acquisition(s) meeting the criteria set forth in paragraph (a)
(1) of this Section 4 will be consummated if a sufficient number of
purchasers confirm their investments; and
(iv) If a consummated acquisition(s) meeting the requirements of this
section has not occurred by a date 18 months after the Effective Date, the
Deposited Funds shall be returned by first class mail or equally prompt means
to the purchaser within five business days following that date.
(b) Funds held in the Escrow Account may be released to the Company and
securities may be delivered to the purchaser or other registered holder
identified on the deposited securities only at the same time as or after
consummation of an acquisition(s) meeting the requirements set forth in
Section 4.1(a)(1)(iii) of this Escrow Agreement.
4.2 In the event that at the close of regular banking hours on the
Termination Date less than all of the Shares have been sold, the Escrow Agent
shall promptly refund to each prospective purchaser the amount of payment
received from such purchaser held in Escrow without interest thereon or
deduction therefrom, and the Escrow Agent shall notify the Issuer of its
distribution of the Deposited Proceeds.
4.3 In the event that at any time up to the close of banking hours
on the Termination Date all of the Shares have been sold, the Escrow Agent shall
notify the Issuer of such fact in writing within a reasonable time thereafter.
The Escrow Agent shall hold the Deposited Proceeds until the events described in
Section 4.1 of this Escrow Agreement take place.
4.4 Upon disbursement of the Deposited Proceeds pursuant to the
terms of this Section 4, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. It is
expressly agreed and understood that in no event shall the aggregate amount
of payments made by the Escrow Agent exceed the amount of the Deposited
Proceeds.
5. Rights, Duties and Responsibilities of Escrow Agent.
It is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature, and that:
5.1 The Escrow Agent shall not be responsible for the performance
by the Issuer of its obligations under this Agreement.
5.2 The Escrow Agent shall not be required to accept from the
Issuer any Subscription Information pertaining to prospective purchasers
unless such Subscription Information is accompanied by checks or money orders
representing the payment of money, nor shall the Escrow Agent be required to
keep records of any information with respect to payments deposited by the
Issuer except as to the amount of such payments; however, the Escrow Agent
shall notify the Issuer within a reasonable time of any discrepancy between
the amount delivered to the Escrow Agent therewith. Such amount need not be
accepted for deposit in the Escrow Account until such discrepancy has been
resolved.
5.3 The Escrow Agent shall be under no duty or responsibility to
enforce collection of any check delivered to it hereunder. The Escrow Agent,
within a reasonable time, shall return to the Issuer any check received which
is dishonored, together with the Subscription Information, if any, which
accompanied such check.
5.4 The Escrow Agent shall be entitled to rely upon the accuracy,
act in reliance upon the contents, and assume the genuineness of any notice,
instruction, certificate, signature instrument or other document which is
given to the Escrow Agent pursuant to this Agreement without the necessity of
the Escrow Agent verifying the truth or accuracy thereof. The Escrow Agent
shall not be obligated to make any inquiry as to the authority, capacity,
existence or identity of any person purporting to give any such notice or
instructions or to execute any such certificate, instrument or other
document. The Escrow Agent must, however, determine for itself whether the
conditions permitting the release of the funds in the Escrow Account have
been
met.
5.5 In the event that the Escrow Agent shall be uncertain as to
its duties or rights hereunder or shall receive instructions with respect to the
Escrow Account or the Deposited Proceeds which, in its sole determination, are
in conflict either with other instructions received by it or with any provision
of this Agreement, the Escrow Agent, at its sole option, may deposit the
Deposited Proceeds (and any other amounts that thereafter become part of the
Deposited Proceeds) with the registry of a court of competent jurisdiction in
a proceeding to which all parties in interest are joined. Upon the deposit by
the Escrow Agent of the Deposited Proceeds with the registry of any court, the
Escrow Agent shall be relieved of all further obligations and released from all
liability hereunder.
5.6 The Escrow Agent shall not be liable for any action taken or
omitted hereunder, or for the misconduct of any employee, agent or attorney
appointed by it, except in the case of willful misconduct. The Escrow Agent
shall be entitled to consult with counsel of its own choosing and shall not
be liable for any action taken, suffered or omitted by it in accordance with the
advice of such counsel.
5.7 The Escrow Agent shall have no responsibility at any time to
ascertain whether or not any security interest exists in the Deposited
Proceeds or any part thereof or to file any financing statement under the
Uniform Commercial Code with respect to the Deposited Proceeds or any part
thereof.
5.8 The Escrow Agent shall determine whether or not the Offering
has been successful, and if it determines that less than all of the
Securities being offered have been sold, thus rendering the Offering
unsuccessful, the Escrow Agent shall return the proceeds of the Offering to the
investors on a pro-rata basis.
6. Amendment; Resignation. This Agreement may be altered or
amended only with the written consent of the Issuer and the Escrow Agent.
The Escrow Agent may resign for any reason upon seven (7) business days written
notice to the Issuer. Should the Escrow Agent resign as herein provided, it
shall not be required to accept any deposit, make any disbursement or otherwise
dispose of the Deposited Proceeds, but its only duty shall be to hold the
Deposited Proceeds for a period of not more than ten (10) business days
following the effective date of such resignation, at which time (a) if a
successor escrow agent shall have been appointed and written notice thereof
(including the name and address of such successor escrow agent) shall have been
given to the resigning Escrow Agent by the Issuer and such successor escrow
agent, the resigning Escrow Agent shall pay over to the successor escrow agent
the Deposited Proceeds, less any portion thereof previously paid out in
accordance with this Agreement, or (b) if the resigning Escrow Agent shall not
have received written notice signed by the Issuer and a successor escrow agent,
then the resigning Escrow Agent shall promptly refund the amount in the
Deposited Proceeds to each prospective purchaser without interest thereon or
deduction therefrom, and the resigning Escrow Agent shall notify the Issuer in
writing of its liquidation and distribution of the Deposited Proceeds;
whereupon, in either case, the Escrow Agent shall be relieved of all further
obligations and released from all liability under this Agreement. Without
limiting the provisions of Section 8 hereof, the resigning Escrow Agent shall be
entitled to be reimbursed by the Issuer for any expenses incurred in connection
with its resignation, transfer of the Deposited Proceeds to a successor Escrow
Agent or distribution of the Deposited Proceeds pursuant to this Section 6.
7. Representations and Warranties. The Issuer hereby
represents and warrants to the Escrow Agent that:
7.1 No party other than the parties hereto and the prospective
purchasers have, or shall have any lien, claim or security interest in the
Deposited Proceeds or any part thereof.
7.2 No financing statement under the Uniform Commercial Code is on
file in any jurisdiction claiming a security interest in or describing
(whether specifically or generally) the Deposited Proceeds or any part
thereof.
7.3 The Subscription Information submitted with each deposit
shall, at the time of submission and at the time of the disbursement of the
Deposited Proceeds, be deemed a representation and warranty that such deposit
represents a bona fide sale to the purchaser described therein of the amount of
Securities set forth in such Subscription Information.
7.4 All of the information contained in the Information Sheet is,
as of the date hereof and will be, at the time of any disbursement of the
Deposited Proceeds, true and correct.
8. Fees and Expenses. The Escrow Agent shall be entitled to
the Escrow Agent Fee set forth in the Information Sheet, payable upon execution
of this Agreement. In addition, the Issuer agrees to reimburse the Escrow Agent
for any reasonable expenses incurred in connection with this Agreement,
including, but not limited to, reasonable counsel fees, but not including the
review of this Agreement.
9. Indemnification and Contribution.
9.1 The Issuer (referred to as the "Indemnitor") agrees to
indemnify the Escrow Agent and its officers, directors, employees, agents and
shareholders (jointly and severally the "Indemnitees") against, and hold them
harmless of and from, any and all loss, liability, cost, damage and expense,
including, without limitation, reasonable counsel fees, which the Indemnitees
may suffer or incur by reason of any action, claim or proceeding brought
against the Indemnitees arising out of or relating in any way to this
Agreement or any transaction to which this Agreement relates, unless such
action, claim or proceeding is the result of the willful misconduct of the
Indemnitees.
9.2 If the indemnification provided for in this Section 9 is
applicable, but for any reasons held to be unavailable, the Indemnitor shall
contribute such amounts as are just and equitable to pay, or to reimburse the
Indemnitees for, the aggregate of any and all losses, liabilities, costs,
damages and expenses, including counsel fees, actually incurred by the
Indemnitees as a result of or in connection with, and any amount paid in
settlement of any action, claim or proceeding arising out of or relating in
any way to any actions or omissions of the Indemnitor.
9.3 Any Indemnitee which proposes to assert the right to be
indemnified under this Section 9, promptly after receipt of notice of
commencement of any action, suit or proceeding against such Indemnitee in
respect of which a claim is to be made against the Indemnitor under this
Section 9, will notify the Indemnitor of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served, but the omission so
to notify the Indemnitor of any such action, suit or proceeding shall not
relieve the Indemnitor from any liability which they may have to any Indemnitee
otherwise than under this Section 9. In case any such action, suit or
proceeding shall be brought against any Indemnitee and it shall notify the
Indemnitor of the commencement thereof, the Indemnitor shall be entitled to
participate in and, to the extent that they shall wish, to assume the defense
thereof, with counsel satisfactory to such Indemnitee. The Indemnitee shall
have the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such Indemnitee unless
(i)the employment of counsel by such Indemnitee has been authorized by the
Indemnitor, (ii) the Indemnitee shall have concluded reasonably that there may
be a conflict of interest among the Indemnitor and the Indemnitee in the
conduct of the defense of such action (in which case the Indemnitor shall not
have the right to direct the defense of such action on behalf of the Indemnitee)
or (iii) the Indemnitor in fact shall not have employed counsel to assume the
defense of such action, in each of which cases the fees and expenses of counsel
shall be borne by the Indemnitor.
9.4 The Indemnitor agrees to provide the Indemnitees with copies
of all registration statements pre- and post-effective amendments to such
registration statements including exhibits, whether filed with the SEC prior
to or subsequent to the disbursement of the Deposited Proceeds.
9.5 The provisions of this Section 9 shall survive any termination
of this Agreement, whether by disbursement of the Deposited Proceeds,
resignation of the Escrow Agent or otherwise.
10. Governing Law and Assignment. This Agreement shall be
construed in accordance with and governed by the laws of the State of New
York and shall be binding upon the parties hereto and their respective
successors and assigns; provided, however, that any assignment or transfer by
any party of its rights under this Agreement or with respect to the Deposited
Proceeds shall be void as against the Escrow Agent unless:
(a) written notice thereof shall be given to the Escrow Agent; and
(b) the Escrow Agent shall have consented in writing to such
assignment or transfer.
11. Notices. All notices required to be given in connection with
this Agreement shall be sent by registered or certified mail, return receipt
requested, or by hand delivery with receipt acknowledged, or by the Express Mail
service offered by the United States Post Office, and addressed, if to the
Issue, at its address set forth on the Information Sheet, and if to the Escrow
Agent, Chase Manhattan Bank, Attention: Trust Department.
12. Severability. If any provision of this Agreement or the
application thereof to any person or circumstance shall be determined to be
unpaid or unenforceable, the remaining provisions of this Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
13. Closing. The closing shall take place within 90 days of the
Effective Date unless an additional 90 days is approved by the Company, but in
no instance later than 180 days after the Effective Date.
14. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular, or plural as
the context may require.
15. Captions. All captions are for convenience only and shall
not limit or define the term thereof.
16. Execution in Several Counterparts. This Agreement may be
executed in several counterparts or by separate instruments and all of such
counterparts and instruments shall constitute one agreement, binding on all
of the parties herein.
17. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings (written or oral)
of the parties in connection herewith.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the day and year first above written.
THE ISSUER: LORELEI CORPORATION
By:
ESCROW AGENT: THE CHASE MANHATTAN BANK
By:
THE CHASE MANHATTAN BANK
ESCROW AGREEMENT INFORMATION SHEET
1. The Company
Lorelei Corporation
63 Wall Street, Suite 1801
New York, New York 10005
State of incorporation or organization: Delaware
2. The Underwriter
Self-Underwriting
3. Description of the Securities to be offered:
Shares of Common Stock.
4. Type of Offering
Registration Statement filed on form SB-2
Offering Statement filed pursuant to Regulation C of the General Rules and
Regulations under the Securities Act of 1933.
5. Offering Amount: $ 35,000
6. Plan of Distribution of the Securities
Offering Period: 90 (calendar days)
Extension Period: 90 (calendar days)
Collection Period, if any: -0- (calendar days)
7. The Escrow Account
Title of the Escrow Account: THE LORELEI CORPORATION ESCROW ACCOUNT.
8. Escrow Account Fee
Amount due on execution of the Escrow Agreement: $
Fee for each check disbursed pursuant to the terms of the
Escrow Agreement (unsuccessful offering): $
Fee for each subscriber in excess of the first fifty subscribers:
$
Fee for each check returned pursuant to the terms of the Escrow Agreement:
$
All other fees will be negotiated on the basis of service
requirements.
<PAGE>
January 3, 2000
Securities and Exchange Commission
Washington, D.C.
Re: Lorelei Corporation
To Whom It May Concern:
Lorelei Corporation (Lorelei) is a corporation duly incorporated and
validly existing and in good standing under the laws of the state of
Delaware. Lorelei has full corporate powers to own its property and
conduct its business, as such business is described in the prospectus. Lorelei
is qualified to do business as a foreign corporation in good standing
in every jurisdiction in which the ownership of property and the conduct of
business requires such qualification.
This opinion is given in connection with the registration with the Securities
and Exchange Commission of seventy thousand (70,000) shares of common
stock at a price of $0.50 per share, for sale in Lorelei's proposed public
offering.
We have acted as counsel to Lorelei in connection with the preparation of
the Registration Statement on Form SB-2, pursuant to which such shares are
being registered and, in so acting, we have examined the originals and copies
of the corporate instruments, certificates and other documents of Lorelei
and interviewed representatives of Lorelei to the extent we deemed it necessary
in order to form the basis for the opinion hereafter set forth. In
such examination we have assumed the genuineness of all signatures and
authenticity of all documents submitted to me as certified or photostatic
copies. As to all questions of fact material to this opinion which have not
been independently established, we have relied upon statements or certificates
of officers or representatives of Lorelei.
All of the 70,000 shares being registered are now authorized but unissued
shares.
Based upon the foregoing, we are of the opinion that the 70,000 shares of
common stock of Lorelei being registered for sale by Lorelei, when
issued and sold pursuant to this Registration Statement will be legally
issued, fully paid and non-assessable and there will be no personal liability
to the owners thereof.
The undersigned hereby consents to the use of this opinion in connection with
such Registration Statement and its inclusion as an exhibit accompanying such
Registration Statement.
Very truly yours,
SCHONFELD & WEINSTEIN, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
<PAGE>
Dated January 3, 2000
Lorelei Corporation
63 Wall Street, Suite 1801
New York, New York 10005
To The Board of Directors of Lorelei Corporation:
We consent to the use in this Registration Statement of Lorelei Corporation on
Form SB-2 of our Report of Independent Auditors dated December 1, 1999
appearing in the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
AHEARN, JASCO + COMPANY, P.A.
________________________________
AHEARN, JASCO + COMPANY, P.A.
Certified Public Accountants
Pompano Beach, Florida
January 3, 2000
<PAGE>
To The Board of Directors of
Lorelei Corporation:
Re: Lorelei Corporation
SCHONFELD & WEINSTEIN, L.L.P. does hereby consent to the use of our opinion
dated January 3, 2000 to Lorelei Corporation to be used and filed in connection
with the SB-2 Registration Statement and Prospectus, as filed with the
Securities and Exchange Commission.
Schonfeld & Weinstein, L.L.P.
SCHONFELD & WEINSTEIN, L.L.P.
Dated: January 3, 2000
