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THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT No. 2
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LORELEI CORPORATION
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(Name of small business issuer in its charter)
DELAWARE 6770 13-405-8469
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(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
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(Address and telephone number of principal executive offices)
63 WALL STREET, SUITE 1801, NEW YORK, NY 10005, (212) 344-1600
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(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
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(Name, address, and telephone number of agent for service)
Approximate date of proposed sale to the public:
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AS SOON AS PRACTICABLE AFTER
THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AND PROSPECTUS.
Andrea I. Weinstein, Esq.
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.
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CALCULATION OF REGISTRATION FEE
Title of Each Class of Amount Proposed Proposed Amount of
Securities Being Being Maximum Maximum Registration
Registered Registered Offering Aggregate Fee
Price Per Offering
Share Price
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Shares of Common Stock 70,000 $0.50 $35,000 $9.24
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TOTAL 70,000 $35,000 $9.24
The above are estimated for purposes of computing the registration fee pursuant
to Rule 457.
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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
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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
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(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
Stockholder 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
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PROSPECTUS
LORELEI CORPORATION
(A Delaware Corporation)
70,000 shares of Common Stock Offered at $.50 per Share
Lorelei Corporation (Lorelei) offering for sale 70,000 shares of common
stock, $.001 par value per share, at a purchase price of $00.50 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. If the offering has not been
sold within the first ninety days, the offering may be extended an additional
ninety days. This offering shall be conducted directly by Lorelei without the
use of a professional underwriter or securities dealer. The securities
offered are not listed on any securities exchange or on the Nasdaq stock
market.
The securities being offered are "penny stocks", as per Rule 3a51-
1(d) under the Securities Exchange Act of 1934 and accordingly certain sales
restrictions might apply. Up to twenty percent (20%) of the offering may be
purchased by officers, directors, current shareholders of Lorelei, and any of
their affiliates or associates.
Price to the Public Proceeds to Lorelei
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Per Share $0.50 $0.50
Total $35,000.00 $35,000.00
$23,000 in offering expenses must be deducted, from the proceeds.
The expenses include: Blue Sky fees, legal fees, accounting fees, printing fees,
and filing fees.
Lorelei is making this "blank check offering" pursuant to Rule 419 of
Regulation C. The $35,000 in offering proceeds and the securities purchased by
investors must be deposited into an escrow account. Deposited securities may not
be traded or transferred while held in the escrow account. Except for a maximum
of 10%($3,500), the deposited funds and deposited securities may not be
released until an acquisition is made meeting the criteria specified in Rule
419, and a sufficient number of investors reconfirm their investment in
accordance with procedures specified by Rule 419.
Pursuant to Rule 419, a new prospectus, which describes an acquisition
candidate and its business, and includes audited financial statements, will
delivered, via first class mail, to all investors. New prospectus delivery
will continue until 90 days after the release of funds and securities from the
escrow account.
Any investors who do not reconfirm their investments following this
post effective amendment of the prospectus will be refunded their investment on
a pro rata basis. If no acquisition is consummated within 18 months of the
effective date, deposited funds will be returned on a pro rata basis with no
securities being issued.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION
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TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 9 IN THIS
PROSPECTUS.
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TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY 8
Lorelei 8
The Offering 8
Offering in Compliance with Rule 419 8
SUMMARY FINANCIAL INFORMATION 9
HIGH RISK FACTORS 9
INVESTORS' RIGHTS AND SUBSTANTIVE PROTECTION 16
UNDER RULE 419
Deposit of Offering Proceeds and Securities 17
Prescribed Acquisition Criteria 17
Post-Effective Amendment 17
Reconfirmation Offering 17
Release of Deposited Securities and
Deposited Funds 18
DILUTION 19
USE OF PROCEEDS 20
CAPITALIZATION 21
PROPOSED BUSINESS 22
History and Organization 22
Plan of Operation 22
Evaluation of Business Combination 24
Business combinations 24
Regulation 27
Employees 27
Facilities 27
MANAGEMENT 28
Biography 28
Other Blank Check Companies 28
Conflicts of Interest 29
Remuneration 29
Management Involvement 29
STATEMENT AS TO INDEMNIFICATION 30
MARKET FOR LORELEI'S COMMON STOCK 30
CERTAIN TRANSACTIONS 31
PRINCIPAL STOCKHOLDERS 31
DESCRIPTION OF SECURITIES 34
Common Stock 34
Future Financing 35
Reports to Stockholders 35
Dividends 35
Transfer Agent 35
PLAN OF DISTRIBUTION 37
EXPIRATION DATE 37
LITIGATION 37
LEGAL OPINIONS 37
EXPERTS 37
FURTHER INFORMATION 37
FINANCIAL STATEMENTS 41
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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 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.
Since Lorelei's organization, 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.
Lorelei is a blank check company and consequently this offering is being
conducted in compliance with SEC Rule 419. Securities purchased by investors and
the funds received in the offering will be deposited and held in a 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. Shareholders who do not reconfirm their investments will
receive a pro-rata refund of their investment. Lorelei has 18 months from its
effective date to consummate a business combination.
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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.
For the year ended
September 30, 2000
Statement of Income Data:
Net Sales $ -0-
Net Loss $ (3,141)
Net Loss Per Share $ (0.0157)
Shares Outstanding at 9/30/99 200,000
Pro-Forma
As of September 30, 2000
September 30, 2000 After Offering
Balance Sheet Data
Working Capital (deficit) $(1,914) $ 1,586
Total Assets $15,000 $35,000
Long Term Debt $ -0- $ -0-
Total Liabilities $ 1,914 $ 1,914
Shareholders' Equity $13,086 $33,086
$31,500 of the after offering 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 for expenses incurred in this
offering. 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.
We anticipate a change in management after a merger and can not guarantee the
qualifications or ability of new management to manage a public company.
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
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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.
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.
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. Such transaction must
occur within eighteen (18) months of the effective date of this offering. The
remaining 10% of the net proceeds may 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.
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 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 required reconfirmation offering discussed in
detail on page 18.
Any attempted business combination may fail if there are insufficient
investor reconfirmations. 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.
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Lorelei has extremely limited capitalization.
As of September 30, 2000, Lorelei had assets of $13,086 and $1,914 in
liabilities. 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. The costs of conducting Lorelei's business
activities will be paid by the money in Lorelei's treasury. Pursuant to an oral
agreement between current shareholders and Lorelei, any cost overruns will be
borne equally by all current shareholders through voluntary contributions. These
are not loans and will not be charged to Lorelei. 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.
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.
We have not specified a particular industry in which to search for a target
business and it may take several months to do so.
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 have not been ascertained
by Lorelei.
Lorelei is at a competitive disadvantage. 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
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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.
There may exist conflicts of interest on the part of Lorelei's officers and
directors.
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.
There will be no investor opportunity to approve a particular transaction.
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.
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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.
Our management has limited experience.
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.
Lorelei has 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. Lorelei will most likely
only be able to engage in a single business combination.
The value of our securities will be susceptible to fluctuations in the
economy.
In the event Lorelei is successful in identifying and evaluating a suitable
business combination, Lorelei will most likely be required to issue its common
stock in an acquisition or merger transaction. Lorelei's capitalization is
limited and such issuance of additional common stock will result in a dilution
of interest for present and prospective shareholders. Therefore 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.
Lorelei's investment activities might be restricted if Lorelei is deemed
subject to the Investment Company Act of 1940.
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.
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. It is intended for
Lorelei's funds to be invested primarily in certificates of deposit, interest
bearing savings accounts or government 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. 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.
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A merger with Lorelei has potential for tax liability for our
shareholders.
Tax consequences of any acquisition or merger involving Lorelei will be
considered with an intent to minimize such tax obligations for 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. There is no
assurance that any business combination will meet the statutory requirements of
a reorganization or that the parties will obtain the intended tax-free treatment
upon a transfer of stock or assets. A non-qualifying reorganization could result
in the imposition of both federal and state taxes which may have a substantial
adverse effect on Lorelei.
There is no certainty of earnings or issuance of dividends on our securities.
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.
Sales of lorelei's previously issued, outstanding stock may depress the
market price for stock issued in this offering.
Investors should be aware that there are 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. 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. 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.
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.
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Present shareholders will continue to control the corporation's affairs
after this new offering.
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.
Investors in this offering will sustain an immediate dilution of stock
value.
As of September 30, 2000, the net tangible book value of Lorelei's common stock
was approximately $(0.01) 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 $0.377 per share
in the book value of public investors' holdings.
Sales of this offering to Lorelei's officers, directors, current
shareholders and any of their affiliates or associates is permitted with
restrictions.
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.
Sales of this offering are to be geographically limited which may make it
dificult to sell the shares being offered.
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.
Consummation of a merger through a leveraged transaction could adversely
effect the financial stability of the company .
Lorelei is not prohibited from consummating a business combination through a
leveraged transaction in which outside financing used for the buyout is secured
by Lorelei's assets. Investors should be aware that such a transaction could
result in
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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.
Application of penny stock rules may make it difficult for investors to sell
their shares.
As Lorelei's common stock is likely to become subject to the penny stock rules,
investors in this offering may find it more difficult to sell their shares.
Penny stocks generally are equity securities with a price of less than $5.00.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. These rules include risk disclosure requirements on the part of
broker-dealers that may have the effect of reducing the level of trading
activity in the secondary market for a stock that becomes subject penny stock
rules.
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 Fleet Bank, 335
Adams Street, Brooklyn, 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
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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
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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
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.
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DILUTION
The net tangible book value (deficit) of Lorelei as of September 30, 2000 was
$(1,914) with the net tangible book value (deficit) per share being $(0.01). 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 $33,086, with the pro-forma net tangible book value per share
after the offering being $0.123. The shares purchased by investors in this
offering will be diluted by $0.377 per share, or 75%. As of September 30, 2000,
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 $(0.01)
Pro-forma net tangible book value per share after offering $0.123
Pro-forma increase per share attributable to shares offered hereby $0.124
Pro-forma dilution to public investors $0.377
Money Net tangible
received for book value per
# shares shares before share before
before offering offering offering
200,000 $ 20,000 $(0.01)
-----------------------------------------------------------------------------
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 $0.123
-----------------------------------------------------------------------------
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
$0.123 $(0.01) $0.124
-----------------------------------------------------------------------------
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Pro-forma
Net tangible
Book Value Per Pro-forma
Public Offering Share After Dilution to
Price Per Share Offering Public Investors
$ 0.50 $0.123 $0.377
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 200,000 74.07% $20,000 36.4%
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 $31,500 90%
This figure of $31,500 assumes release of 10% of the deposited funds.
There will be an estimated $23,000 in expenses related to this offering. Of
this $23,000, $15,000 has already been paid to Schonfeld & Weinstein for legal
expenses rendered on behalf of Lorelei. The remaining estimated $8,000
in expenses will come from Lorelei's treasury.
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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,
2000, and pro-forma as adjusted to give effect to the sale of 70,000 shares
offered by Lorelei.
September 30, 2000
----------------------------
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 $(6,914) $(6,914)
Total stockholders' equity $13,086 $33,086
Total capitalization $16,227 $33,086
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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
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
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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.
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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
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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
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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
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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 Fleet 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.
27
<PAGE>
MANAGEMENT
The officers and directors of Lorelei, and further information concerning
them are as follows:
Name Age Position
---- --- --------
Jo-Ann Vidaver 44 President, Director
49 Poplar Avenue
Oradell, New Jersey 07469
Patricia Francill 47 Secretary, Director
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich 63 Director
202 Augusta Court
Roslyn, New York 11576
--------------------
Jo-Ann Vidaver, Patricia Francill and Jules Reich 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
28
<PAGE>
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.
29
<PAGE>
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 this date, 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.
Lorelei is aware of a letter dated January 21, 2000 to Mr. Ken Worm, Assistant
Director OTC Compliance Unit of NASD Regulation, Inc. from Richard K. Wulff,
Chief of Office of Small Business. Lorelei does not believe that such letter is
directly applicable to the shares of Lorelei being registered in the
registration statement. However, Lorelei is aware that the 200,000 shares issued
in Lorelei's private placement offering will have to be registered pursuant to
the Securities Act of 1933 before such shares can be freely traded.
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.
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<PAGE>
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(1) Beneficially Owned Before Offering After
Offering
Jo-Ann Vidaver 0 0% 0%
49 Poplar Avenue
Oradell, NJ 07469
Patricia Francill 25,000 12.5% 9.26%
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich 50,000 25% 18.55%
202 Augusta Court
Roslyn, New York 11576
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<PAGE>
Name/Address Shares of Percent of Percent of
Beneficial Common Stock Class Owned Class Owned
Owner Beneficially Owned Before Offering After
Iris Lai 50,000 25% 18.55%
c/o Arimoto, Ogasawara &
Mo Co.
276 Fifth Avenue
New York, NY 10001
Victor Weinstein 25,000 12.5% 9.26%
280 Carol Close
Tarrytown, NY 10591
Schonfeld & Weinstein,
L.L.P. 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) Each shareholder has sole voting and investment power with respect to
his/her shares.
Jo-Ann Vidaver, Patricia Francill, and Jules Reich may be deemed "Promoters"
of Lorelei, as that term is defined under the Securities Act of 1933.
Jo-Ann Vidaver was granted an option to purchase 10,000 shares of common stock
at $.10 per share on November 12, 1999 by Lorelei. This option expires November
12, 2002.
Arimoto, Ogasawara & Mo Co. is a consulting firm with no affiliation to
management. Iris Lai is a Hong Kong citizen. Due to a personal relationship
with a principal of Arimoto, Ogasawara & Mo Co, Ms. Lai utilizes office space
from such firm when she is in the United States.
Victor 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. On October 6, 2000, the Arielle Corp merged with Method Products
Corp., a Florida Corporation, with Arielle as the surviving entity. Managment of
Arielle resigned upon effectiveness of the merger. In addition to shares
purchased by them in Arielle's private placement offering, Schonfeld &
Weinstein, L.L.P. received 156,000 shares of Arielle common stock upon
consummation of the merger with Method Products Corp.
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.In addition to shares purchased in
FSI's private placement offering, Schonfeld & Weinstein L.L.P. received 65, 114
shares of FSI common stock upon consummation of the merger with Platinum
Executive Search, Inc. Platinum Executive Search, Inc., which charged its name
to Global Sources Limited, is an operating company with publicly traded shares.
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<PAGE>
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 Resources
Corporation 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. Neither Mr. Schonfeld, Ms. Weinstein nor Ms. Vidaver has had any
subsequent involvement with that company.
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<PAGE>
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
34
<PAGE>
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 is offering 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
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<PAGE>
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
term 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.
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<PAGE>
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. However, since
this offering is only being registered in New York and the District of Columbia,
2/3 of management may not participate in this offering since they live outside
New York and the District of Columbia. 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, 2000 and 1999, and the related
statements of operations, changes in stockholders' equity, and cash flows for
the year ended September 30, 2000, and for the period 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
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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.
38
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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
-----------------------------
F-1
<PAGE>
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, 2000 and 1999, and
the related statement of operations, changes in stockholders' equity, and cash
flows for the year ended September 30, 2000, and 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 audits 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 audits provide 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, 2000 and 1999, and the results of its operations and its cash
flows for the year ended September 30, 2000, and 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
November 8, 2000
F-2
<PAGE>
<TABLE>
<CAPTION>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
SEPTEMBER 30, 2000 AND 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSETS
------
9/30/00 9/30/99
------- -------
<S> <C> <C>
CURRENT ASSET - Cash and cash equivalents $ -- $ 5,000
DEFERRED OFFERING COSTS 15,000 15,000
-------- --------
TOTAL $ 15,000 $ 20,000
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 1,914 $ 3,773
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value; 20,000,000 shares
authorized; 200,000 shares issued and outstanding 200 200
Additional paid-in capital 19,800 19,800
Deficit accumulated during the development stage (6,914) (3,773)
-------- --------
STOCKHOLDERS' EQUITY, NET 13,086 16,227
-------- --------
TOTAL $ 15,000 $ 20,000
======== ========
</TABLE>
See notes to financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2000 AND FOR THE
PERIOD FROM APRIL 23, 1999 (DATE OF INCORPORATION) THROUGH SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
From
4/23/99
Year ended to
9/30/00 9/30/99
----------- ---------
<S> <C> <C>
REVENUE $ -- $ --
GENERAL AND ADMINISTRATIVE EXPENSES 3,141 3,773
--------- ---------
LOSS BEFORE INCOME TAX PROVISION (3,141) (3,773)
PROVISION FOR INCOME TAXES -- --
--------- ---------
NET LOSS $ (3,141) $ (3,773)
========= =========
PER SHARE AMOUNTS:
Net loss per common share outstanding, basic and diluted $ (0.0157) $ (0.0189)
========= =========
TOTAL COMMON SHARES OUTSTANDING AS OF
SEPTEMBER 30, 1999, AND WEIGHTED AVERAGE
SHARES OUTSTANDING AS OF SEPTEMBER 30, 2000 200,000 200,000
========= =========
</TABLE>
See notes to financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED SEPTEMBER 30, 2000 AND FOR THE
PERIOD FROM APRIL 23, 1999 (date of incorporation) THROUGH SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Common Additional Deficit Total
Stock Paid-in Accumulated
Capital during the
Development
Stage
-------------------------------------------------
<S> <C> <C> <C> <C>
STOCKHOLDERS' EQUITY, April 23, 1999 $ -- $ -- $ -- $ --
Sale of 200,000 shares of common stock 200 19,800 -- 20,000
Net loss for the initial period ended
September 30, 1999 -- -- (3,773) (3,773)
-------- -------- -------- --------
STOCKHOLDERS' EQUITY, September 30, 1999 $ 200 $ 19,800 $ (3,773) $ 16,227
Net loss for the year ended
September 30, 2000 -- -- (3,141) (3,141)
-------- -------- -------- --------
STOCKHOLDERS' EQUITY, September 30, 2000 $ 200 $ 19,800 $ (6,914) $ 13,086
======== ======== ======== ========
</TABLE>
See notes to financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2000 AND FOR THE
PERIOD FROM APRIL 23, 1999 (DATE OF INCORPORATION) THROUGH SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
From
4/23/99
Year ended to
9/30/00 9/30/99
----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (3,141) $ (3,773)
Item not affecting cash flow from operations:
Accounts payable and accrued expenses (1,859) 3,773
-------- --------
NET CASH USED IN OPERATING ACTIVITIES (5,000) --
CASH FLOWS FROM INVESTING ACTIVITY:
Deferred offering costs incurred -- (15,000)
CASH FLOWS FROM FINANCING ACTIVITY:
Sales of common stock -- 20,000
-------- --------
NET CHANGE IN CASH BALANCES (5,000) 5,000
CASH BALANCE, beginning of the period 5,000 --
-------- --------
CASH BALANCE, end of the period $ -- $ 5,000
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ --
======== ========
Cash paid for income taxes $ -- $ --
======== ========
</TABLE>
See notes to financial statements.
F-6
<PAGE>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2000, AND FOR
THE PERIOD APRIL 23, 1999 (DATE OF INCORPORATION) THROUGH SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Lorelei Corporation (the "Company"), a development stage
enterprise, 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 issuing its common stock pursuant to a Rule 419
registration statement, are being deferred until the registration and
stock sale 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 - RELATED PARTY TRANSACTIONS
During 1999, $15,000 was paid 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. During 2000, this same shareholder advanced $186 to the
working capital of the Company to pay operating expenses; this advance is
included in accounts payable. A shareholder of the Company at no charge
provides office space and minimal administrative support.
F-7
<PAGE>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2000, AND 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
for fiscal 1999 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 September 30, 1999
was deemed to be the most relevant number of shares to use for purposes of
this disclosure. Issued shares is the same as weighted average shares for
fiscal 2000. For fiscal 2000, common stock equivalents, consisting of
10,000 common stock options, have been excluded from the loss per share
computation as their inclusion would be anti-dilutive.
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.
F-8
<PAGE>
LORELEI CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED SEPTEMBER 30, 2000, AND FOR
THE PERIOD APRIL 23, 1999 (DATE OF INCORPORATION) THROUGH SEPTEMBER 30, 1999
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
NOTE 6 - STOCKHOLDERS' EQUITY
COMMON STOCK ISSUANCES
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. During fiscal 1999, the Company raised $20,000 through
the sale of 200,000 shares of its common stock pursuant to subscription
agreements.
COMMON STOCK OPTIONS
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. The exercise price of $0.10 was deemed to be
the fair value at the date of grant.
In October 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No.
123 encourages, but does not require, companies to record compensation
plans at fair value. The Company has chosen, in accordance with the
provision of SFAS No. 123, to apply Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25) for its stock
plans. Under APB 25, if the exercise price of the Company's stock options
is less than the market price of the underlying stock on the date of
grant, the Company must recognize compensation expense. SFAS No. 123 will
be adopted for disclosure purposes only and will not impact the Company's
financial position, annual operating results, or cash flows. For
transactions with other than employees in which services were performed in
exchange for stock, the transactions, if any, are recorded on the basis of
the fair value of the services received or the fair value of the issued
equity instrument, whichever was more readily measurable.
SFAS No. 123 requires entities that account for awards for
stock-based compensation to employees in accordance with APB No. 25 to
present pro forma disclosures of net income as if compensation cost was
measured at the date of grant based on the fair value of the award. The
fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions: risk-free interest rate, 5.75%; dividend yield, none;
volatility, none; and a weighted-average expected life of three years. The
fair value of the options granted during fiscal 2000 is $200. For purposes
of pro forma disclosures, the estimated fair value of the options is a
charge to expense in the period granted, as there is no vesting period.
The Company's net loss for fiscal 2000, on a pro forma basis, would have
been increased by $200 if the options granted were accounted for following
SFAS No. 123. These pro forma amounts may not be representative of the
future effects on reported results that will result from the future
granting of stock options.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions. Because the
Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.
F-9
<PAGE>
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.
39
<PAGE>
(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.
40
<PAGE>
(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.
41
<PAGE>
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
(Sold under the exemption
of Sec.4(2)of Securities
Act of 1933)
Jo-Ann Vidaver -0- $0
49 Poplar Avenue
Oradell, NJ 07469
Patricia Francill 25,000 $2,500
1000 Urlin Avenue
Columbus, Ohio 43212
Jules Reich 50,000 $5,000
202 Augusta Court
Roslyn, NY 11576
42
<PAGE>
Iris Lai 50,000 $5,000
c/o Arimoto, Ogasawara &
Mo Co.
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
---------------------------
Jo-Ann Vidaver, Patricia Francill and Jules Reich may be deemed "Promoters" of
Lorelei, as that term is defined under the Securities Act of 1933.
On November 12, 1999, Lorelei granted Ms. Vidaver an option to purchase 10,000
shares at $.10 per share. This option expires November 12, 2002.
Arimoto, Ogasawara & Mo Co. is a consulting firm with no affiliation to
management.
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.
99.0 Subscription Agreement as filed with original registration statement on
form SB-2.**
----------
*Filed with original registration statement on Form SB-2
** Filed with Amendment No.1 to registration statement on Form SB-2.
43
<PAGE>
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.
44
<PAGE>
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 December 4, 2000.
Lorelei Corporation
BY: /S/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.
/S/JO-ANN VIDAVER
------------------ Dated December 4, 2000
Jo-Ann Vidaver
President, Director
/S/PATRICIA FRANCILL
-------------------- Dated December 4, 2000
Patricia Francill
Vice President,
Secretary, Director
/S/JULES REICH
--------------
Jules Reich Dated December 4, 2000
Director
45
