<PAGE>
File No. 333-28809
As filed with the Securities and Exchange Commission on August 13, 1997.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 3
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
JW CHARLES FINANCIAL SERVICES, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
FLORIDA 6211 58-1545984
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
980 NORTH FEDERAL HIGHWAY, SUITE 210
BOCA RATON, FLORIDA 33432
(561) 338-2600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF ISSUER'S PRINCIPAL EXECUTIVE OFFICES)
JOEL E. MARKS
VICE CHAIRMAN AND CHIEF FINANCIAL OFFICER
JW CHARLES FINANCIAL SERVICES, INC.
1117 PERIMETER CENTER WEST, SUITE 500E, ATLANTA, GEORGIA 30338
(770) 399-8805
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
W. RANDY EADDY, ESQUIRE
KILPATRICK STOCKTON LLP
1100 PEACHTREE STREET, ATLANTA, GEORGIA 30309-4530
TELEPHONE: (404) 815-6500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$.001 per share.......... 404,515 shares (1) Not Applicable $2,581,013(2) $783(2)
</TABLE>
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(1) Represents the maximum number of shares of the Common Stock of JW Charles
Financial Services, Inc. ("JWCFS") issuable upon the consummation of the
exchange offer for the outstanding shares (the "AGRO Shares") of The
Americas Growth Fund, Inc. ("AGRO") based upon .431 as the Exchange Ratio
(as defined) and the number of AGRO Shares on May 13, 1997, according to
AGRO's Quarterly Report on Form 10-QSB for the period ended March 31,
1997, excluding the AGRO Shares owned by JWCFS.
(2) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c) and (f) (1). Calculated on the basis of $2.75 per
share, the last reported sales price of the Common Stock of AGRO
(constituting the securities to be received by the Registrant in the
transaction) reported on The Nasdaq Stock Market prior toJune 9, 1997.
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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<PAGE>
DATED AUGUST 13, 1997, SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
Offer for all (but not less than 51%) of the outstanding Shares of Common Stock
of
The Americas Growth Fund, Inc.
on the basis of .431 Share of Common Stock of
JW Charles Financial Services, Inc.
for each Share of Common Stock of
The Americas Growth Fund, Inc.
by
JW CHARLES FINANCIAL SERVICES, INC.
JW Charles Financial Services, Inc. ("JWCFS" or the "Company") hereby offers,
upon the terms and subject to the conditions set forth herein and in the
related Letter of Transmittal (collectively, the "Exchange Offer"), to exchange
shares of common stock, par value $.001 per share, of JWCFS ("JWCFS Shares")
for all (but not less than 51%) of the outstanding shares of common stock, par
value $.01 per share ("AGRO Shares"), of The Americas Growth Fund, Inc.
("AGRO"). Each AGRO Share validly tendered on or prior to the Expiration Date
(as defined below) and not properly withdrawn will be entitled to receive that
number of JWCFS Shares equal to the Exchange Ratio of .431, which was
determined by dividing (a) $8.69 (the average of the last reported sales prices
of JWCFS Shares on the American Stock Exchange for the ten trading days
immediately preceding the initial filing of the Registration Statement of which
this Prospectus forms a part) into (b) $3.74 (the net asset value per share of
AGRO as of March 31, 1997 according to the AGRO Quarterly Report on Form 10-QSB
for the period ended March 31, 1997 (the "AGRO Form 10-QSB")). Because the
Exchange Ratio will not change for fluctuations in the market price of the
JWCFS Shares, such fluctuations may adversely affect the extent to which the
JWCFS Shares to be received by tendering AGRO shareholders represent a premium
for the AGRO Shares on the date the Exchange Offer is consummated. For purposes
of determining whether or not the minimum of 51% of the AGRO Shares has been
obtained, JWCFS shall include the 326,550 AGRO Shares (approximately 25.8% of
the outstanding) already owned by JWCFS as of the date of this Prospectus.
Accordingly, in order to reach the minimum of 51%, at least 318,651 AGRO Shares
must be properly tendered and not withdrawn. An aggregate of 137,339 JWCFS
Shares would be exchanged for such 318,651 AGRO Shares. JWCFS will accept all
properly tendered AGRO Shares if the above minimum is reached. If all AGRO
Shares were properly tendered and not withdrawn, an aggregate of 404,515 JWCFS
Shares would be issued in exchange therefor.
The JWCFS Shares are traded on the American Stock Exchange ("AMEX") and the
AGRO Shares are traded on The Nasdaq Stock Market ("NASDAQ"). On June 6, 1997,
the last full trading day before the initial filing of the Registration
Statement with respect to the Exchange Offer, the last reported sale price per
JWCFS Share on the AMEX was $8.50 and the last reported sale price per AGRO
Share on NASDAQ was $2.75.
SEE "RISK FACTORS" BEGINNING ON PAGE 23 FOR A DISCUSSION OF CERTAIN MATTERS
THAT SHOULD BE CONSIDERED BY AGRO SHAREHOLDERS WITH RESPECT TO THE EXCHANGE
OFFER.
----------
THIS EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, ATLANTA
TIME, ON SEPTEMBER 22, 1997, UNLESS THE EXCHANGE OFFER IS EXTENDED. SHARES THAT
ARE TENDERED PURSUANT TO THE EXCHANGE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR
TO THE EXPIRATION OF THE EXCHANGE OFFER.
----------
THE SECURITIES TO WHICH THIS PROSPECTUS RELATES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------
The date of this Prospectus is August , 1997
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
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(cover page continued)
Following the consummation of the Exchange Offer, JWCFS intends to seek to
cause AGRO to take one or more of the following possible actions: the removal
or delisting of the AGRO Shares from NASDAQ; the termination of AGRO's status
as a business development company ("BDC") under the Investment Company Act of
1940, as amended (the "1940 Act"); and the merger of AGRO with a wholly owned
subsidiary of JWCFS or a dissolution and liquidation of AGRO. If such a merger
is effected, shareholders of AGRO (other than such shareholders who properly
exercise their dissenters' rights under Maryland law) would receive JWCFS
Shares on the same basis as in the Exchange Offer. Any such merger is referred
to herein as the "Consolidation Merger" and, together with the Exchange Offer,
the "Transaction". However, JWCFS' success in causing AGRO to take any of the
foregoing actions, to the extent such actions cannot be satisfied without the
action of the AGRO Board of Directors (the "AGRO Board"), will depend, among
other things, on the determination of the incumbent AGRO Board to cooperate
with JWCFS and, in the absence of such cooperation, JWCFS' ability to elect
individuals to serve as directors of AGRO who support such actions. Given the
classification of the AGRO Board into three classes, the prohibition under
AGRO's Bylaws against removing directors other than for cause, and the
reservation of the authority to increase the number of directors solely to the
AGRO Board, it is possible that JWCFS' election of its nominees to a majority
of the seats on the AGRO Board, in the absence of the cooperation of the
incumbent AGRO Board in this regard, could be delayed. See "THE EXCHANGE
OFFER--Control of the AGRO Board". In connection with the Consolidation
Merger, if it is effected, and in accordance with the Maryland General
Corporation Law, an AGRO shareholder may, by following the procedures set
forth therein, demand that JWCFS pay such shareholder the fair value of his or
her AGRO Shares in cash. See "THE EXCHANGE OFFER--Effects of the Exchange
Offer and the Consolidation Merger--Dissenters' Rights".
Questions and requests for assistance or additional copies of this
Prospectus and the Letter of Transmittal may be directed to the Information
Agent, whose address and telephone numbers are set forth on the back cover of
this Prospectus.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. THIS PROSPECTUS AND THE EXCHANGE OFFER MADE HEREBY DO NOT CONSTITUTE A
SOLICITATION OF ANY PROXIES. ANY SUCH SOLICITATIONS, IF MADE, WILL BE MADE
ONLY PURSUANT TO SEPARATE PROXY SOLICITATION MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED (THE "EXCHANGE ACT").
2
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IMPORTANT
Any AGRO shareholder desiring to tender shares should either (1) complete
and sign the Letter of Transmittal (or facsimile thereof) in accordance with
its instructions and either (a) deliver the Letter of Transmittal and the
certificate(s) for such shares, and all other required documents, to the
Exchange Agent, or deliver such shares pursuant to the procedures for book-
entry transfer set forth herein, or (b) otherwise comply with the guaranteed
delivery procedures set forth below, or (2) request such shareholder's broker,
dealer, commercial bank, trust company, or other nominee to effect the
transaction for such shareholder. An AGRO shareholder having shares registered
in the name of a broker, dealer, commercial bank, trust company, or other
nominee must contact such person if such shareholder desires to tender such
shares.
Any AGRO shareholder who desires to tender shares and cannot deliver such
shares and all other required documents to the Exchange Agent by the
expiration of the Exchange Offer must tender such shares pursuant to the
guaranteed delivery procedure set forth under "THE EXCHANGE OFFER--Procedure
for Tendering AGRO Shares".
In accordance with various state securities laws applicable to the Exchange
Offer that require the Exchange Offer to be made to the public by a licensed
broker or dealer, the Exchange Offer hereby is made to AGRO shareholders
residing in each such state by JWCharles/CSG on behalf of JWCFS. The use of
"JWCharles/CSG" herein is a stylized reference to JWCharles Securities, Inc.,
JWCharles Clearing Corp., and/or Corporate Securities Group, Inc., each of
which is a registered broker-dealer and wholly-owned subsidiary of JWCFS, in
their respective individual capacities and not as a joint entity. The
principal office for each of these companies is the same as for JWCFS: 980
North Federal Highway, Suite 310, Boca Raton, Florida 33432.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE THAT ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE
INTO THE INFORMATION INCORPORATED HEREIN) ARE AVAILABLE WITHOUT CHARGE, UPON
ORAL OR WRITTEN REQUEST BY ANY PERSON RECEIVING THIS PROSPECTUS, FROM JOEL E.
MARKS, SECRETARY, JW CHARLES FINANCIAL SERVICES, INC., 980 NORTH FEDERAL
HIGHWAY, SUITE 310, BOCA RATON, FLORIDA 33432, (561) 338-2600. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE NOT LATER
THAN FIVE (5) BUSINESS DAYS BEFORE THE EXPIRATION OF THE EXCHANGE OFFER.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY JWCFS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A
SOLICITATION TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE
ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF AGRO SHARES IN ANY JURISDICTION IN
WHICH THE MAKING OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE
LAWS OF SUCH JURISDICTION. HOWEVER, JWCFS MAY, IN ITS SOLE DISCRETION, TAKE
SUCH ACTION AS IT MAY DEEM NECESSARY TO MAKE THE OFFER IN ANY SUCH
JURISDICTION AND EXTEND THE OFFER TO HOLDERS OF SHARES IN SUCH JURISDICTION.
NEITHER THE DELIVERY OR THIS OFFER IN ANY SUCH JURISDICTION. NEITHER THE
DELIVERY OR THIS PROSPECTUS NOR ANY EXCHANGE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF JWCFS OR AGRO SINCE THE DATE AS OF WHICH INFORMATION IS FURNISHED
OR THE DATE HEREOF.
3
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TABLE OF CONTENTS
AVAILABLE INFORMATION..................................................... 5
Incorporation of Documents by Reference................................. 5
AGRO Information........................................................ 6
SUMMARY--GENERAL.......................................................... 7
SUMMARY--THE EXCHANGE OFFER............................................... 11
SUMMARY HISTORICAL FINANCIAL DATA......................................... 18
SUMMARY PRO FORMA FINANCIAL DATA--UNAUDITED............................... 19
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA............................ 22
RISK FACTORS.............................................................. 23
MARKETS FOR THE JWCFS AND AGRO SHARES..................................... 28
Comparative Market Prices............................................... 28
Information About the Market for the AGRO Shares........................ 29
THE EXCHANGE OFFER........................................................ 31
Background.............................................................. 31
Purpose of the Exchange Offer; the Consolidation Merger................. 34
Determination of the Exchange Ratio..................................... 35
Terms of the Exchange Offer............................................. 36
Procedure for Tendering AGRO Shares..................................... 37
Exchange of AGRO Shares................................................. 39
Withdrawal Rights....................................................... 40
Extension of Tender Period; Termination; Amendment...................... 41
Certain Conditions of the Exchange Offer................................ 42
Control of the AGRO Board............................................... 43
Material Federal Income Tax Consequences................................ 44
Effects of the Exchange Offer and the Consolidation Merger.............. 45
Fees and Expenses....................................................... 47
Source of Funds......................................................... 48
Regulatory Approvals.................................................... 48
Miscellaneous........................................................... 48
INFORMATION ABOUT AGRO.................................................... 48
INFORMATION ABOUT JWCFS................................................... 49
CERTAIN RELATIONSHIPS AND TRANSACTIONS.................................... 49
DESCRIPTION OF CAPITAL STOCK OF JWCFS..................................... 49
DESCRIPTION OF CAPITAL STOCK OF AGRO...................................... 51
COMPARISON OF RIGHTS OF HOLDERS OF JWCFS SHARES AND HOLDERS
OF AGRO SHARES.......................................................... 52
LEGAL MATTERS............................................................. 56
EXPERTS................................................................... 56
SCHEDULE A (Certain Information about Directors and Officers of JWCFS).... 57
PRO FORMA FINANCIAL INFORMATION--UNAUDITED................................ 59
ANNEX I--Excerpts from AGRO's Annual Report on Form 10-KSB40
for the Fiscal Year Ended December 31, 1996............................ A-1
ANNEX II--Excerpts from AGRO's Quarterly Report on Form 10-QSB
for the Quarter Ended March 31, 1997................................... B-1
4
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AVAILABLE INFORMATION
JWCFS has filed a Registration Statement on Form S-4, Commission File No.
333-28809 (the "Registration Statement"), with the Securities and Exchange
Commission (the "Commission") covering the JWCFS Shares to be issued in
connection with the Exchange Offer and the Consolidation Merger, if there is
one, and, not later than the date of commencement of the Exchange Offer, will
file a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
the Commission in connection with the Exchange Offer. As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement and the Schedule 14D-1.
For such information, reference is made to the Registration Statement, the
Schedule 14D-1, and the exhibits thereto.
Pursuant to Rules 14d-9 and 14e-2 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), AGRO will be required to file with the
Commission within ten business days after the commencement of the Exchange
Offer a statement on Schedule 14D-9 furnishing certain information with
respect to its position concerning the Exchange Offer. Such Schedule and any
amendments thereto should be available for inspection and copying as set forth
below (except that such Schedule and any amendments thereto will not be
available at the regional offices of the Commission).
Each of JWCFS and AGRO is subject to the informational requirements of the
Exchange Act and in accordance therewith files reports and other information
with the Commission. The Registration Statement, as well as reports, proxy
statements, and other information filed by JWCFS or AGRO with the Commission
pursuant to the information requirements of the Exchange Act or the 1940 Act,
as applicable, may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the Commission: New York
Regional Office, 7 World Trade Center, 13th Floor, New York, New York 10048;
and Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60606. Copies of such material also can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. JWCFS Shares and AGRO Shares are listed or
quoted for trading on the AMEX and NASDAQ, respectively, and such reports,
proxy statements, and other information concerning JWCFS and AGRO may be
inspected at the offices of the AMEX and NASDAQ, respectively, 86 Trinity
Place, New York, New York 10006 and 1735 K Street, N.W., Washington, D.C.
20006. The Commission maintains an Internet web site that contains reports,
proxy and information statements, and other information regarding issuers such
as JWCFS and AGRO that file electronically with the Commission. The address of
that site is http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant to the
Exchange Act are hereby incorporated by reference in this Prospectus:
(a) Annual Report on Form 10-K of JWCFS for the fiscal year ended December
31, 1996;
(b) Quarterly Report on Form 10-QSB of JWCFS for the quarter ended March 31,
1997; and
(c) Proxy Statement dated April 30, 1997, for the Annual Meeting of
Shareholders of JWCFS to be held on June 10, 1997.
5
<PAGE>
All documents filed by JWCFS pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date hereof and before the date on which the
Transaction is completed shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing thereof. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
AGRO INFORMATION
Pursuant to Rule 409 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), and Rule 12b-21 promulgated under the Exchange
Act, JWCFS has requested that AGRO and its independent public accountants
provide to JWCFS certain information required for complete disclosure
concerning the business, operations, financial condition, and management of
AGRO. JWCFS will provide, in a subsequently prepared amendment or supplement
hereto, any and all information that it receives from AGRO prior to the
expiration of the Exchange Offer and that JWCFS deems to be material,
reliable, and appropriate.
In the meantime, JWCFS has included information concerning AGRO (including
the excerpts from AGRO's Annual Report on Form 10-KSB40 for the year ended
December 31, 1996, and Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997, included elsewhere herein as Annex I and Annex II,
respectively) insofar as it is known or reasonably available to JWCFS.
However, JWCFS is not affiliated with AGRO, and to date JWCFS has not been
provided access to AGRO's books and records. Although JWCFS has no knowledge
that would indicate that statements relating to AGRO contained in this
Prospectus in reliance upon publicly available information are inaccurate or
incomplete, JWCFS was not involved in the preparation of such information and
statements and, for the foregoing reasons, is not in a position to verify any
such information or statements.
6
<PAGE>
SUMMARY--GENERAL
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus. Capitalized terms used and
not otherwise defined in this Summary have the meanings ascribed to them
elsewhere in this Prospectus.
As used herein the terms "JWCFS" and the "Company" refer to JWCharles
Financial Services, Inc., and the term "AGRO" refers to The Americas Growth
Fund, Inc. and, in each case unless the context otherwise requires, their
respective subsidiaries.
JWCFS
JWCFS is a diversified financial services holding company whose subsidiaries
engage primarily in securities brokerage, investment banking, and clearing and
execution of securities transactions. The foundation of JWCFS' business lies in
providing traditional securities brokerage services to retail, corporate, and
institutional clients. Today, these services are provided through the Company's
three principal operating subsidiaries: JWCharles Securities, Inc. ("JWCS"),
Corporate Securities Group, Inc. ("CSG"), and JWCharles Clearing Corp.
("JWCC"). All three subsidiaries provide quality investment products and
services, including stocks, municipal and corporate bonds, unit investment
trusts, certificates of deposit, domestic and international mutual funds,
initial and secondary public offerings, life and long-term care insurance,
fixed and variable annuities, equity research, corporate finance, money market
funds, individual and corporate retirement plans, and cash management accounts.
JWCharles Securities, Inc. is a New York Stock Exchange member firm with
branch offices in South Florida, Georgia, and New York. JWCS' branches
typically are owned and managed by the Company. JWCS' brokers are "full-
service" oriented and receive compensation packages competitive with most
regional and national wire-house brokerage firms. Corporate Securities Group,
Inc. is a general securities broker dealer, which offers its products and
services to a variety of clients through a national network of independently
owned offices. CSG offices offer a full array of investment products and
services, and can vary in size from one investment professional to many.
JWCharles Clearing Corp. is a New York Stock Exchange member firm that provides
clearing services on a fully disclosed basis for a variety of correspondents
who are engaged in the securities brokerage business but who lack the back
office or other support capabilities to process and clear securities
transactions for their clients. Correspondents include broker dealers, banks,
and other financial institutions. JWCharles Securities, Inc. and Corporate
Securities Group, Inc. clear trades through JWCC as well as through an outside
clearing arrangement with Bear Stearns Securities Corp.
From time to time, the term "JWCharles/CSG" is used herein as a stylized
reference to refer, as appropriate, to any or all of JWCharles Securities,
Inc., JWCharles Clearing Corp., and Corporate Securities Group, Inc., in their
respective individual capacities and not as a joint entity. The principal
office for each of these companies is the same as for JWCFS.
JWCFS has been a public company since 1984, and its common stock is traded on
The American Stock Exchange under the symbol "JWC". JWCFS is a Florida
corporation with its principal executive offices at 980 North Federal Highway,
Suite 210, Boca Raton, Florida 33432, (561) 338-2600.
AGRO
The following information concerning AGRO, except as otherwise indicated, is
derived from AGRO's Annual Report on Form 10-KSB40 for the year ended December
31, 1996 and the AGRO Form 10-QSB for the quarter ended March 31, 1997.
7
<PAGE>
AGRO was organized in 1994 as a non-diversified, closed-end investment
management company that elected to be regulated as a special type of investment
company known as a business development company (a "BDC") under the Investment
Company Act of 1940, as amended (the "1940 Act"). AGRO's investment objective
has been to achieve long-term capital appreciation of assets by investing in
equity and debt securities of emerging and established companies ("portfolio
companies"). As stated at the time of AGRO's August 1994 initial public
offering of AGRO Shares, AGRO's plans were to invest primarily in United
States-based portfolio companies that are "strategically linked" to the
Caribbean and Latin America. Since the completion of its initial public
offering, from which it derived approximately $5.15 million of net proceeds,
AGRO has made investments in a total of six portfolio companies, utilizing an
aggregate of $1,285,100 to do so. As of March 31, 1997, AGRO had investments
(for a total of $728,400) in three portfolio companies reflected on its
financial statements as having realizable value, and had approximately
$4,000,000 in cash or cash equivalents and other liquid assets that were not
invested in portfolio companies.
AGRO is a Maryland corporation with its principal executive offices located
at 701 Brickell Avenue, Suite 2000, Miami, Florida 33131, (305) 374-0282.
BACKGROUND; PURPOSE OF THE EXCHANGE OFFER
JWCFS acquired its current ownership of AGRO Shares as a result of
JWCharles/CSG's participation as the principal market maker for the AGRO Shares
and the absence of higher competing bids from other purchasers in the normal
course of trading on NASDAQ. JWCharles/CSG discontinued all activities as a
market maker for AGRO Shares on June 6, 1997 (the "Market Making Suspension"),
after JWCFS determined that it would file the registration statement and make a
related public announcement of its proposal to make the Exchange Offer (the
"Public Announcement"). (As discussed below, JWCFS had been engaged in an
analysis for several months of whether or not to pursue a transaction such as
the Exchange Offer, and on March 25, 1997 the Board of Directors of JWCFS
("JWCFS Board") had unanimously granted permission to management to proceed
with the preparation of a draft of the Registration Statement and the
completion of the strategic analysis that would be necessary to implement such
a transaction. JWCFS did not cause JWCharles/CSG to discontinue market making
until June 6, 1997 because until that date the JWCFS Board had not finally
determined that it would be prudent and feasible to conduct the Exchange Offer.
However, JWCharles/CSG's trading personnel were specifically not informed of
and did not know about JWCFS' consideration of such a possible transaction, so
that JWCharles/CSG's market making activities continued during this period in
the ordinary course without being influenced by any such consideration.) As a
market maker prior to the Market Making Suspension, JWCharles/CSG had purchased
such offered AGRO Shares for its own account to be held unless and until
interested purchasers made offers to buy at acceptable prices. As of the Market
Making Suspension date, there had been no significant, regularly recurring
demand from third parties with respect to AGRO Shares.
In September 1996, JWCFS' management began to review with the JWCFS Board of
Directors (the "JWCFS Board"): (i) the trading profile for AGRO Shares and
JWCharles/CSG's increased ownership of AGRO Shares as a result; (ii) the
negative spread between AGRO's net asset value ("NAV") per share and the
trading prices of AGRO Shares; and (iii) the low level of investment in
portfolio companies by AGRO. Management began to consider whether JWCFS should
explore a different role with respect to AGRO in order to improve AGRO's
prospects for enhancing value for all its shareholders, many of whom were also
clients or customers of JWCharles/CSG who had purchased AGRO Shares in the
August 1994 initial public offering that had been underwritten for AGRO by
JWCharles/CSG. Among other things, management reviewed with the JWCFS Board the
potential benefits and costs of an approach that would enable JWCFS to take an
active roll in the governance or management of AGRO. The JWCFS Board permitted
management to continue the review process and instructed JWCFS' Chairman and
Vice Chairman (who thereafter proceeded to function in the manner of an
informal committee of the JWCFS Board to assess the AGRO situation, the
"Assessment Task Force") to keep the Board informed with respect to the
situation. The JWCFS Board did not formally designate and constitute an
official committee of the Board.
After a series of internal discussions and analysis over several months,
JWCFS' Chairman and Vice Chairman determined, in March 1997, to recommend that
JWCFS take the next steps to proceed with a potential
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<PAGE>
transaction that has become this Exchange Offer. At a meeting on March 25,
1997, the JWCFS Board unanimously granted permission to management to proceed
with the preparation of a draft of the Registration Statement and the
completion of the strategic analysis that would be necessary to implement the
recommendation. On June 6, 1997, the Assessment Task Force presented the JWCFS
Board with a proposal for an acquisition of control of AGRO, including the
Registration Statement necessary for the Exchange Offer, a recommendation for
suspension of all market making for AGRO Shares, and a recommendation for an
interim repurchase plan for JWCFS Shares during the period between the Public
Announcement and the commencement of the Exchange Offer. On that date, the full
JWCFS Board approved the terms and conditions of the Exchange Offer as set
forth herein. See "THE EXCHANGE OFFER--Background".
From time to time following the September 1996 review with the JWCFS Board,
JWCFS' Chairman and Vice Chairman had discussions with AGRO's President
concerning AGRO's operations and prospects, including any plans by AGRO to
increase its level of portfolio investments and otherwise to enhance
shareholder value. Such discussions continued in 1997 until March 1997, when
the Assessment Task Force decided to recommend to the JWCFS Board that JWCFS
undertake a transaction that has become this Exchange Offer. Because
JW Charles/CSG had been the underwriter for AGRO's initial public offering in
1994 and was the principal market maker for the AGRO Shares, JWCFS' senior
management had had frequent and routine communications since 1994 with AGRO's
President (who is AGRO's sole full-time executive officer) concerning AGRO's
progress and prospects. The above discussions during 1996 and 1997 were
consistent with that historical pattern. None of the discussions with AGRO's
President included any proposal or plan of JWCFS for a possible acquisition of
control of AGRO, or any other matter for submission to the AGRO Board.
Following the JWCFS Board's decision on March 25, 1997 to permit management
to take the next steps necessary for a possible exchange offer, JWCFS did not
have any discussions with AGRO concerning such a proposal or any other possible
action by JWCFS, prior to the Public Announcement. JWCFS did continue to
contact AGRO to request more convenient access to certain information
concerning AGRO's public disclosures and AGRO's stock trading and beneficial
stock ownership positions. JWCFS had determined that it did not wish to involve
AGRO or the AGRO Board in any formal or informal consideration of JWCFS'
proposal, but instead it desired, if it were ultimately to proceed to undertake
a transaction, to pursue the matter directly with AGRO's shareholders.
In connection with filing the Registration Statement, JWCFS has offered to be
available to the AGRO Board for such discussions about the Exchange Offer as
the AGRO Board may wish to have. JWCFS has not undertaken, and will not
undertake, to obtain an approval or recommendation by the AGRO Board of the
Exchange Offer. The AGRO Board has the option under Rule 14d-9 of the Exchange
Act to take a position that does not recommend or oppose the Exchange Offer,
but rather leaves the decision of whether to tender their AGRO Shares in the
Exchange Offer to each AGRO shareholder and such shareholder's personal
financial or other advisors.
The purpose of the Exchange Offer is to obtain control of AGRO by acquiring
enough AGRO Shares to bring JWCFS' total to at least 51%, and thereafter to
permit JWCFS to implement a strategy to acquire the entire equity interest in
AGRO. Following the consummation of the Exchange Offer, in the absence of the
cooperation of the incumbent AGRO Board in causing AGRO to take the actions
that may be sought by JWCFS, including the Consolidation Merger, JWCFS may seek
to have elected to the AGRO Board that number of its nominees (who may be
officers or directors or otherwise affiliated with JWCFS) that, following such
election, will constitute at least a majority of the AGRO Board (the "JWCFS
Nominees"). In this regard, JWCFS may seek to, among other things, secure an
increase in the number of members of the AGRO Board or the resignations of such
number of incumbent AGRO directors, as is necessary in either event, to enable
the JWCFS Nominees to be elected to the AGRO Board as described above. As soon
as practicable following such election of the JWCFS Nominees to the AGRO Board,
JWCFS intends to seek to effect the Consolidation Merger.
There is currently no understanding or arrangement between JWCFS and AGRO as
to the election of any JWCFS Nominees to the AGRO Board. There is no assurance
that JWCFS will be successful in its effort to elect the JWCFS Nominees to the
AGRO Board as described above. The AGRO Board is classified into three classes
and AGRO's Bylaws prohibit the removal of AGRO directors other than for cause,
which removal
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<PAGE>
requires the affirmative vote of the holders of 75% of the AGRO Shares. In
addition, only the AGRO Board may increase the number of AGRO directors. As a
result, in the absence of cooperation by the incumbent AGRO Board, if JWCFS is
unsuccessful in its efforts to elect the JWCFS Nominees to the AGRO Board as
described above, and if it is unable to remove the incumbent AGRO directors for
cause, the actions described herein could be effected only after JWCFS is able
to elect at least a majority of directors of AGRO's at annual or special
meetings of the AGRO shareholders.
SPECIAL EFFECTS AND RISKS
In addition to the other information in this Prospectus, certain factors
should be considered by AGRO shareholders in evaluating whether to accept the
Exchange Offer and thereby to make an investment in JWCFS Shares. Among other
things, an investment in JWCFS Shares involves significant risks. See "RISK
FACTORS".
AGRO shareholders should be aware that, if the Exchange Offer is consummated
(which will mean that JWCFS has obtained ownership of at least 51% of the AGRO
Shares), JWCFS expects that it ultimately will be able to effect transactions
that result in one or more of the actions referred to on page 2 of this
Prospectus and discussed in detail in "THE EXCHANGE OFFER". The period of time
necessary to do so will depend on the percentage of AGRO Shares JWCFS owns
immediately following the Exchange Offer and the reactions or positions taken
by the current members of the AGRO Board. It is JWCFS' intention to proceed as
promptly as practicable to take those actions, which include the delisting of
the AGRO Shares from NASDAQ; the termination of AGRO's status as a BDC under
the 1940 Act; and the Consolidation Merger.
The delisting of AGRO Shares from NASDAQ would mean that any AGRO shareholder
who does not accept the Exchange Offer would have no established public trading
market into which he or she may subsequently seek to dispose of his or her AGRO
Shares. If the Consolidation Merger is effected, JWCFS intends to offer as
consideration to the remaining AGRO shareholders the same number of JWCFS
Shares being offered in the Exchange Offer based on the Exchange Ratio of .431.
However, in connection with the Consolidation Merger, such AGRO shareholders
would be entitled to exercise dissenters' rights under Maryland law, which
would enable them to demand payment in cash for the fair value of their AGRO
Shares, as determined at the time of the Consolidation Merger. It is not
possible to predict what the fair value of AGRO Shares would be at such future
time, especially since the precise time that JWCFS would be able to proceed
with a Consolidation Merger depends upon some factors that are beyond its
control, such as the position of the current members of the AGRO Board.
The termination of AGRO's status as a BDC would be coupled with the
abandonment of its current business plan for investment in portfolio companies
that are strategically linked to the Caribbean and Latin America. JWCFS would
seek to cause AGRO to apply its assets and resources to short-term, liquid
investments, until such time that JWCFS could effect a Consolidation Merger.
JWCFS believes that such application would be more beneficial than the
operating results that AGRO has been able to achieve since it implemented its
business plan following the 1994 initial public offering. Since the completion
of its initial public offering, from which it derived approximately $5.15
million of net proceeds, AGRO has made investments in a total of six portfolio
companies, utilizing an aggregate of $1,285,100 to do so. As of March 31, 1997,
AGRO had investments (for a total of $728,400) in three portfolio companies
reflected on its financial statements as having realizable value, and had
approximately $4,000,000 in cash or cash equivalents and other liquid assets
that were not invested in portfolio companies.
JWCFS believes that its proposal for the application of AGRO's assets and
resources as a subsidiary of JWCFS following the Exchange Offer would result in
an enhancement of value for the holders of JWCFS Shares, which would include
former AGRO shareholders who accept the Exchange Offer. However, there is no
assurance that such enhancement will be the result because, among other things,
as a subsidiary of JWCFS, AGRO would be subject to most (if not all) of the
risks associated with the business of JWCFS. In addition, all holders of JWCFS
Shares, including the former AGRO shareholders who accept the Exchange Offer
(or who subsequently receive JWCFS Shares in the Consolidation Merger, when and
if it is effected) would be subject to those risks as a result of their
investment in JWCFS Shares. For a detailed discussion of risks associated with
the business of JWCFS and an investment in JWCFS Shares, see "RISK FACTORS".
Also, any protections available to AGRO shareholders pursuant to the 1940 Act
will not be available to such persons as holders of JWCFS Shares.
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<PAGE>
SUMMARY--THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER....
JWCFS is offering to exchange JWCFS Shares
for AGRO Shares on the basis of .431 JWCFS
Share for each AGRO Share exchanged pursuant
to the Exchange Offer. To be eligible to
receive JWCFS Shares pursuant to the Exchange
Offer, a holder of AGRO Shares must validly
tender for exchange and not withdraw AGRO
Shares on or before the expiration date.
JWCFS will accept all such tenders, subject
to the condition that JWCFS receives enough
AGRO Shares to own at least 51% of the AGRO
Shares. If all of the AGRO Shares, excluding
AGRO Shares owned by JWCFS, are exchanged
pursuant to the Exchange Offer, a maximum of
938,550 AGRO Shares will be exchanged for a
maximum of 404,515 shares of JWCFS Common
Stock (based on the number of AGRO Shares
outstanding according to AGRO's Quarterly
Report on Form 10-QSB for the period ended
March 31, 1997). See "THE EXCHANGE OFFER--
Terms of the Exchange Offer".
EXPIRATION DATE................
12:00 midnight, Atlanta time, on September
22, 1997, unless extended, in which case the
term "Expiration Date" shall mean the last
date and time to which the Exchange Offer is
extended. See "The EXCHANGE OFFER--Extension
of Tender Period; Termination; Amendment".
CONDITIONS OF THE EXCHANGE
OFFER.......................... The Exchange Offer is subject to certain
conditions, including the condition that
JWCFS receives valid tenders for a sufficient
number of AGRO shares to equal, when added to
AGRO shares already owned by JWCFS, 51% of
the outstanding AGRO Shares. As of the date
of this Prospectus, JWCFS owned 326,550 AGRO
Shares, or approximately 25.8% of the shares
outstanding, and must receive valid tenders
(which are not properly withdrawn) of at
least 318,651 AGRO Shares to satisfy the 51%
minimum condition. All of the conditions to
the Exchange Offer may be waived in whole or
in part in the reasonable discretion of
JWCFS, except that JWCFS will not waive the
51% minimum condition. See "THE EXCHANGE
OFFER--Certain Conditions of the Exchange
Offer".
AMENDMENT AND TERMINATION...... The Exchange Offer may be amended or
terminated by JWCFS at any time. Any
extension, termination, or amendment of the
Exchange Offer will be followed as promptly
as practicable by a public announcement
thereof. Without limiting the manner in which
JWCFS may choose to
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<PAGE>
make any public announcement, JWCFS will have
no obligation (except as otherwise required
by applicable law) to publish, advertise, or
otherwise communicate any such public
announcement other than by making a release
to the Dow Jones News Service, subject to
JWCFS' obligations under Rule 14d-4(c) under
the Exchange Act (relating to JWCFS'
obligation to disseminate public
announcements concerning material changes in
the Prospectus), if such rule is applicable.
If the Exchange Offer is extended, JWCFS will
make an appropriate public announcement of
such extension no later than 9:00 a.m.,
Atlanta time, on the next business day after
the previously scheduled Expiration Date. The
Company will report its waiver of any
material condition or amendment of any
material term in a Current Report on Form 8-K
(or other report) of the Company filed under
the Securities Exchange Act of 1934, as
amended, the contents of which will be
incorporated by reference into the
Registration Statement of which this
Prospectus forms a part. In the event of a
fundamental change in the information set
forth in this Prospectus, the Company will
amend the Registration Statement of which
this Prospectus forms a part and recirculate
this Prospectus. See "THE EXCHANGE OFFER--
Certain Conditions of the Exchange Offer; --
Extension of Tender Period; Termination;
Amendment".
PROCEDURE FOR TENDERING........ Holders of AGRO Shares desiring to accept the
Exchange Offer must complete and sign the
Letter of Transmittal in accordance with
instructions contained therein, and forward
or hand deliver it, together with any other
required documents, to the Exchange Agent,
either with the certificates for the AGRO
Shares to be tendered or delivery of such
shares pursuant to the procedures for book-
entry transfer, or in compliance with the
specified procedures for guaranteed delivery
of AGRO Shares. See "THE EXCHANGE OFFER--
Procedure for Tendering AGRO Shares".
WITHDRAWAL RIGHTS.............. Subject to the conditions set forth herein,
tenders of AGRO Shares may be withdrawn at
any time on or before the Expiration Date,
and, unless theretofore accepted for
exchange, after , 1997. See
"THE EXCHANGE OFFER--Withdrawal Rights".
NO FRACTIONAL SHARES........... No fractional JWCFS Shares will be
distributed. Holders of AGRO Shares who would
otherwise be entitled to receive a fractional
JWCFS Share will be paid cash in lieu of such
fraction. See "THE EXCHANGE OFFER--Terms of
the Exchange Offer".
DELIVERY OF JWCFS SHARES....... JWCFS will deliver JWCFS Shares and cash in
lieu of fractional shares as soon as possible
after acceptance of AGRO Shares for Exchange.
See "THE EXCHANGE OFFER--Exchange of AGRO
Shares".
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<PAGE>
EXCHANGE AGENT................. American Stock Transfer & Trust Company
INFORMATION AGENT.............. American Stock Transfer & Trust Company
MATERIAL FEDERAL INCOME TAX
CONSEQUENCES...................
If the Consolidation Merger is effected, the
Exchange Offer and the Consolidation Merger
together will constitute a tax-free exchange;
and no income, gain, or loss will be
recognized by AGRO shareholders upon the
receipt of JWCFS Shares in exchange for their
AGRO Shares.
However, the exchange of AGRO Shares for
JWCFS Shares pursuant to the Exchange Offer,
if the Consolidation Merger is not effected
reasonably promptly (within 30 to 60 days)
following the consummation of the Exchange
Offer, will be a taxable transaction for
federal income tax purposes and may also be
taxable under applicable state and local law.
AGRO shareholders should be aware that,
depending upon their particular facts and
circumstances, including their basis in AGRO
Shares and tax status, the value of the
after-tax proceeds that they receive in the
Exchange Offer if the Consolidation Merger is
not effected promptly following the
consummation of the Exchange Offer may be
substantially reduced by virtue of their tax
obligations.
Each AGRO shareholder is urged to, and
should, consult such shareholder's own tax
advisor with respect to the specific tax
consequences of the Exchange Offer and the
Consolidation Merger to such shareholder.
Subject to such recommendation, for a
discussion of certain federal income tax
consequences to holders of AGRO Shares,
including those who receive cash in lieu of
fractional shares in the Exchange Offer, see
"THE EXCHANGE OFFER--Material Federal Income
Tax Consequences". Such discussion is based
on the opinion of Kilpatrick Stockton LLP.
EFFECTS OF THE EXCHANGE OFFER.. The maximum number of JWCFS Shares that might
be issued pursuant to the Transaction in
exchange for all AGRO Shares, would represent
approximately 10.86% of the JWCFS Shares
outstanding immediately following such
issuance (assuming no other intervening
issuances or repurchases of JWCFS Shares
after the date of this Prospectus), former
shareholders of AGRO (other than JWCFS) will
own all such JWCFS Shares. In connection with
the Consolidation Merger, if it is effected,
AGRO shareholders who choose to object to the
transaction will have the right to demand
payment in cash of the fair value of their
AGRO Shares as provided under Maryland law.
See "THE EXCHANGE OFFER--Effects of the
Exchange Offer and the Consolidation Merger--
Dissenters' Rights." In such latter case, the
total number of JWCFS Shares issued in the
Transaction would be reduced.
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<PAGE>
The AGRO Shares are traded on NASDAQ.
Depending on the number of AGRO Shares
acquired pursuant to the Exchange Offer, or
other developments as a result of the
Exchange Offer, the AGRO Shares may no longer
be eligible for designation to be traded on
NASDAQ; and, whether or not they remain so
eligible, JWCFS currently intends to seek to
cause AGRO to remove the AGRO Shares from
trading on NASDAQ if the Exchange Offer is
consummated. See "THE EXCHANGE OFFER--Effects
of the Exchange Offer and the Consolidation
Merger".
Moreover, as discussed above under "SUMMARY--
GENERAL--Special Effects and Risks", AGRO
shareholders who accept the Exchange Offer
will become subject to the significant risks
associated with the business of JWCFS and an
investment in JWCFS Shares, and they would no
longer hold shares in a company that is
subject to the provisions of the 1940 Act.
THE CONSOLIDATION MERGER....... If, following the Exchange Offer, JWCFS owns
90% or more of the outstanding AGRO Shares,
JWCFS intends to seek promptly to cause the
merger of AGRO with a wholly-owned subsidiary
of JWCFS without further action by the AGRO
or JWCFS shareholders (a so-called "short-
form" merger) under applicable Maryland and
Florida law. JWCFS currently intends that, if
such short-form or other merger is effected,
any then remaining shareholders of AGRO
(other than shareholders who properly
exercise their dissenters' rights under
Maryland law) would receive JWCFS Shares on
the same basis as in the Exchange Offer. As
of the date hereof, JWCFS believes there are
1,265,100 AGRO Shares outstanding. Based on
JWCFS' present ownership of 326,550 AGRO
Shares, an aggregate of 812,040 AGRO Shares
must be validly tendered and not withdrawn on
or before the Expiration Date for JWCFS to
own 1,138,590 AGRO Shares, constituting the
90% of the outstanding AGRO Shares that JWCFS
must own to effect a short-form merger as
described
above.
If, following the Exchange Offer, JWCFS owns
at least 51% of the AGRO Shares (but less
than 90%), it may still seek to effect the
Consolidation Merger, and it presently
intends to do so.
Although JWCFS intends to seek to have AGRO
effectuate the Consolidation Merger if JWCFS
obtains the requisite ownership of AGRO
Shares, its plans are subject to
reconsideration and revision in light of
market and other conditions prevailing after
the Exchange Offer and other factors,
including the actions taken or not taken by
the current AGRO Board. Accordingly, no
assurances can be given with
14
<PAGE>
respect to (i) whether the Consolidation
Merger will be undertaken or consummated, or
(ii) any of the terms or conditions of the
Consolidation Merger. See "THE EXCHANGE
OFFER--Purpose of the Exchange Offer; the
Consolidation Merger".
DISSENTERS' RIGHTS............. In connection with the Consolidation Merger,
if there is one, an AGRO shareholder may
object and demand that JWCFS pay such
shareholder the fair value of his or her AGRO
shares in cash in accordance with Title 3,
Subtitle 2 of the Maryland General
Corporation Law ("MGCL"). If the
Consolidation Merger cannot be effected
without a vote of the AGRO shareholders under
Maryland law, an AGRO shareholder must file
with JWCFS a written objection to the
Consolidation Merger either at or prior to
the shareholder meeting at which the
Consolidation Merger will be considered. If a
vote of the AGRO shareholders is not required
under Maryland law in connection with the
Consolidation Merger, JWCFS will notify the
AGRO shareholders of the proposed
Consolidation Merger within 30 days prior to
the filing of the Articles of Merger for the
Consolidation Merger, and an AGRO shareholder
must submit a written objection to the
transaction within 30 days after such notice
is given. Promptly following the
effectiveness of the Articles of Merger,
JWCFS will notify each objecting shareholder
of the date on which the Articles of Merger
were filed and within 20 days of such notice
an objecting shareholder must make a written
demand for payment of the fair value of his
or her shares. For a more detailed
description, see "THE EXCHANGE OFFER--Effects
of the Exchange Offer--Dissenter's Rights".
DETERMINATION OF THE EXCHANGE The JWCFS Board has determined the Exchange
RATIO.......................... Ratio based on: the net asset value ("NAV")
of AGRO; the condition of the public market
for the AGRO Shares on NASDAQ; the fact that
tendering holders of AGRO Shares, as new
holders of JWCFS Shares, would continue to
participate in the business of AGRO (if it
were to be continued) as a part of the
business of JWCFS; the perception of JWCFS'
management regarding AGRO's business
prospects; the perceived benefits to JWCFS of
obtaining a substantially increased ownership
of AGRO, including the potential ability to
effect the Consolidation Merger, to terminate
AGRO's status as a BDC, to cause a
dissolution and liquidation of AGRO, or to
take other possible actions that the
ownership of 51% or more of the AGRO Shares
could permit JWCFS to control; and
expectations concerning the level of premium
that likely would be attractive to the
holders of AGRO Shares not held by JWCFS. See
"THE EXCHANGE OFFER--Determination of the
Exchange Ratio".
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<PAGE>
JWCFS has not obtained a fairness opinion or
other analysis from an outside party
concerning the fairness or reasonableness of
the terms of the Exchange Offer from the
perspective of AGRO shareholders, as a
financial matter.
THE JWCFS BOARD IS NOT MAKING A
RECOMMENDATION TO THE HOLDERS OF AGRO SHARES
AS TO WHETHER OR NOT TO ACCEPT THE EXCHANGE
OFFER. EACH AGRO SHAREHOLDER SHOULD MAKE HIS
OR HER OWN DETERMINATION BASED ON HIS OR HER
OWN INVESTMENT OBJECTIVES, CIRCUMSTANCES, AND
ALTERNATIVES, FOLLOWING CAREFUL CONSIDERATION
OF THE INFORMATION CONTAINED IN THIS
PROSPECTUS.
MARKET PRICE................... JWCFS Shares are traded on the AMEX and AGRO
Shares are traded on NASDAQ. On ,
1997, the last full trading day for which
sales were made or quotations were available
at the time of printing of this Prospectus,
the last reported sales prices were $ per
JWCFS Share and $ per AGRO Share, and the
final bids (the prices that dealers stood
ready to pay to investors seeking to sell
their shares) were $ and $ ,
respectively.
For information relating to market prices of
JWCFS Shares and AGRO Shares during the
current fiscal year and the past two fiscal
years, see "MARKETS FOR THE JWCFS AND AGRO
SHARES". SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT QUOTATIONS FOR JWCFS SHARES AND AGRO
SHARES.
ACCOUNTING TREATMENT........... The Exchange Offer and the Consolidation
Merger, if the latter is consummated, will be
accounted for by JWCFS using the purchase
method of accounting under generally accepted
accounting principles. In accordance with the
purchase method of accounting, the
consolidated financial statements of JWCFS
will reflect the effects of the Exchange
Offer and the Consolidation Merger only from
and after the closing date for each. The
minority interest amount reflected in JWCFS'
consolidated financial statements applicable
to AGRO will be reduced by the percentage of
minority owned shares acquired, and JWCFS'
share of AGRO's net income (losses) will be
increased to the extent of the minority
interest acquired.
REGULATORY APPROVALS........... JWCFS is not aware of any federal or state
regulatory agencies whose approval is
required for the transactions contemplated
hereby to be effected.
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<PAGE>
COMPARISON OF RIGHTS OF Pursuant to the Exchange Offer, AGRO
SHAREHOLDERS................... shareholders who elect to receive JWCFS
Shares in exchange for AGRO Shares will
become shareholders of JWCFS. Following the
consummation of the Exchange Offer, the
rights of former AGRO shareholders who become
shareholders of JWCFS will be governed by
Florida law (including the Florida Business
Corporation Act), the Restated Articles of
Incorporation of JWCFS, and the Bylaws of
JWCFS, as amended. Such rights will differ
with respect to, among other things, holding
annual and special meetings of the
shareholders, electing and removing
directors, the classification of the board of
directors, amending the articles of
incorporation and bylaws, voting rights for
mergers, indemnifying and limiting the
liability of officers and directors, granting
appraisal rights to shareholders, and
entering into business combinations. With
respect to these and possibly other matters,
the rights of holders of JWCFS Shares may be
viewed as being less attractive than the
rights of holders of AGRO Shares. AGRO
shareholders should consider carefully the
discussion of these matters in "COMPARISON OF
RIGHTS OF HOLDERS OF JWCFS SHARES AND HOLDERS
OF AGRO SHARES".
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<PAGE>
SUMMARY HISTORICAL FINANCIAL DATA
The following tables present summary historical financial information for
JWCFS and AGRO, which is derived from the separate historical financial
statements of JWCFS and AGRO. The historical financial information as of
December 31, 1996, 1995, 1994, 1993, and 1992 (in the case of AGRO, December
31, 1996, 1995, and 1994 only), and for the respective years then ended, has
been derived from audited financial statements of JWCFS and AGRO, respectively.
The financial statements of JWCFS as of December 31, 1996 and 1995, and for
each of the years in the three-year period ended December 31, 1996, are
incorporated by reference elsewhere in this Prospectus, the 1996 and 1995
financial statements for AGRO are included elsewhere in Annex I and Annex II
hereto and AGRO's 1994 financial statements are not included herein. Historical
financial information as of March 31, 1997, and for the three-month periods
then ended, is derived in part from unaudited financial statements incorporated
by reference (or included in Annex II) elsewhere in this Prospectus. In each
case, the following summary financial information should be read along with
such financial statements and related notes.
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31
-------------------- ------------------------------------------
1997 1996 1996 1995 1994 1993 1992
--------- --------- -------- -------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
JWCFS--HISTORICAL DATA:
Results of Operations
for Period:
Revenues............... $ 22,132 $ 21,011 $ 91,020 $ 80,041 $60,471 $50,066 $39,723
Income Before Income
Taxes and
Cumulative Effect of
Change in
Accounting Principle.. 1,585 1,406 8,232 6,287 5,243 4,944 3,228
Net Income............. 1,012 862 6,025 3,810 3,300 3,772 3,135
Net Income Per Common
Share................. 0.29 0.14 1.27 .63 .56 .62 .47
Average Common Shares
Outstanding........... 3,505 6,079 4,745 6,025 5,908 5,941 6,159
Dividends Per Common
Share................. 0 0 0 0 0 0 0
Financial Condition at
end of Period:
Total Assets........... 122,561 121,157 127,331 115,214 82,218 77,564 50,030
Total Liabilities...... 106,177 103,724 111,959 98,643 69,459 67,454 42,897
Stockholders' Equity
Per Share............. 4.94 1.73 4.76 1.63 2.18 1.73 1.07
<CAPTION>
THREE MONTHS ENDED YEAR ENDED
MARCH 31 DECEMBER 31
-------------------- --------------------------
1997 1996 1996 1995 1994
--------- --------- -------- -------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AGRO--HISTORICAL DATA:
Results of Operations
for Period:
Revenues............... $ 35 $ 59 $ 194 $ 327 $ 72
Expenses............... 170 113 516 296 71
Net Income (loss)...... (134) (42) (315) 25 1
Net Income (loss) Per
Common Share.......... (.11) (0.03) (0.25) 0.02 NIL
Average Common Shares
Outstanding........... 1,265 1,265 1,265 1,265 723
Dividends Per Common
Share................. 0 0 0 0 0
Financial Condition at
end of Period:
Total Assets........... 4,778 5,162 4,939 5,213 5,175
Total Liabilities...... 47 24 74 33 20
Net Asset Value Per
Share................. 3.74 4.06 3.85 4.09 4.07
</TABLE>
18
<PAGE>
SUMMARY PRO FORMA FINANCIAL DATA--UNAUDITED
The following tables set forth for the periods and the dates indicated
selected unaudited pro forma financial information of JWCFS. The unaudited pro
forma financial information is based on the historical results of operations
and financial condition of JWCFS and AGRO. This information should be read in
conjunction with the Pro Forma Condensed Financial Statements that are included
elsewhere herein and the historical financial statements of JWCFS incorporated
by reference in this Prospectus. The pro forma data give effect to the Exchange
Offer and to the Consolidation Merger, in the latter case resulting in AGRO
being a wholly owned subsidiary of JWCFS, and in each case accounted for as a
purchase and based upon a conversion of an outstanding AGRO Share into .431
JWCFS Share.
The unaudited pro forma financial information presented is for informational
purposes only and is not necessarily indicative of results of operations or
financial position that would have been reported had the Exchange Offer or the
Consolidation Merger, as the case may be, been completed at the beginning of
the respective periods or as of the dates for which such unaudited pro forma
information is presented. Neither is such information indicative of future
results of operations or financial position.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-------------------------------------------
AS ADJUSTED AS ADJUSTED FOR
FOR EXCHANGE EXCHANGE OFFER
JWCFS OFFER AND CONSOLIDATION
AS REPORTED ONLY(1) MERGER(2)
----------- ------------ -----------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Commissions........................ $11,538,000 $11,538,000 $11,538,000
Market making and principal trans-
actions, net...................... 4,646,000 4,610,500 4,610,500
Interest........................... 2,334,000 2,383,500 2,383,500
Clearing Fees...................... 1,808,000 1,808,000 1,808,000
Other.............................. 1,806,000 1,827,200 1,827,200
----------- ----------- -----------
22,132,000 22,167,200 22,167,200
----------- ----------- -----------
Expenses:
Commission and clearing costs...... 11,558,000 11,558,000 11,558,000
Employee compensation and benefits. 4,155,000 4,179,800 4,179,800
Selling, general and administra-
tive.............................. 3,849,000 3,993,700 3,993,700
Interest........................... 985,000 985,000 985,000
----------- ----------- -----------
20,547,000 20,716,500 20,716,500
----------- ----------- -----------
Income before income taxes and mi-
nority interest.................... 1,585,000 1,450,700 1,450,700
Provision for income taxes.......... 573,000 573,000 573,000
----------- ----------- -----------
Income before minority interest..... 1,012,000 877,700 877,700
Minority interest................... -- (65,807) --
----------- ----------- -----------
Net income.......................... $ 1,012,000 $ 943,507 $ 877,700
=========== =========== ===========
Net income per common share......... $ 0.29 $ 0.26 $ 0.22
=========== =========== ===========
Weighted average shares outstanding. 3,505,000 3,642,339 3,909,515
=========== =========== ===========
</TABLE>
- --------
(1) Assumes the Exchange Offer results in JWCFS' ownership of an aggregate of
645,201 AGRO Shares (or 51% of the outstanding), which is the minimum
required for JWCFS to accept tendered shares and consummate the Exchange
Offer.
(2) Assumes ownership by JWCFS of 100% of the AGRO Shares.
19
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-------------------------------------------
AS ADJUSTED AS ADJUSTED FOR
FOR EXCHANGE EXCHANGE OFFER
JWCFS OFFER AND CONSOLIDATION
AS REPORTED ONLY(1) MERGER(2)
----------- ------------ -----------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Commissions........................ $42,945,000 $42,945,000 $42,945,000
Market making and principal trans.. 24,315,000 24,262,100 24,262,100
Interest........................... 9,625,000 9,871,500 9,871,500
Clearing Fees...................... 11,463,000 11,463,000 11,463,000
Other.............................. 2,672,000 2,672,000 2,672,000
----------- ----------- -----------
91,020,000 91,213,600 91,213,600
----------- ----------- -----------
Expenses:
Commission and clearing costs...... 47,229,000 47,229,000 47,229,000
Employee compensation and benefits. 14,911,000 15,007,100 15,007,100
Selling, general and administra-
tive.............................. 16,760,000 17,179,800 17,179,800
Interest........................... 3,888,000 3,888,000 3,888,000
----------- ----------- -----------
82,788,000 83,303,900 83,303,900
----------- ----------- -----------
Income before income taxes and mi-
nority interest.................... 8,232,000 7,909,700 7,909,700
Provision for income taxes.......... 2,207,000 2,199,400 2,199,400
----------- ----------- -----------
Income before minority interest..... 6,025,000 5,710,300 5,710,300
Minority interest................... -- (154,203) --
----------- ----------- -----------
Net income.......................... $ 6,025,000 $ 5,864,503 $ 5,710,300
=========== =========== ===========
Net income per common share......... $ 1.27 $ 1.20 $ 1.11
=========== =========== ===========
Weighted average shares outstanding. 4,744,882 4,882,221 5,149,397
=========== =========== ===========
</TABLE>
- --------
(1) Assumes the Exchange Offer results in JWCFS' ownership of an aggregate of
645,201 AGRO Shares (or 51% of the outstanding), which is the minimum
required for JWCFS to accept tendered shares and consummate the Exchange
Offer.
(2) Assumes ownership by JWCFS of 100% of the AGRO Shares.
20
<PAGE>
<TABLE>
<CAPTION>
MARCH 31, 1997
--------------------------------------------
AS ADJUSTED AS ADJUSTED FOR
FOR EXCHANGE EXCHANGE OFFER AND
JWCFS OFFER CONSOLIDATION
AS REPORTED ONLY(1) MERGER(2)
------------ ------------ ------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
ASSETS:
Cash and cash equivalents......... $ 9,471,000 $ 9,233,600 $ 9,119,600
Commissions and other receivables. 2,733,000 2,765,200 2,765,200
Receivables from customers........ 95,458,000 95,458,000 95,458,000
Receivables from brokers and deal-
ers.............................. 2,493,000 2,493,000 2,493,000
Securities owned, at market value. 6,398,000 10,204,972 10,204,972
Furniture, equipment and leasehold
improvements, net................ 1,442,000 1,442,000 1,442,000
Deferred tax interest............. 1,735,000 1,741,000 1,741,000
Other, net........................ 2,831,000 2,755,900 2,822,706
------------ ------------ ------------
$122,561,000 $126,093,672 $126,046,478
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQ-
UITY:
Short-term borrowings from banks.. $ 31,870,000 $ 31,870,000 $ 31,870,000
Accounts payable, accrued liabili-
ties and other liabilities....... 8,764,000 8,811,100 8,811,100
Payable to customers.............. 25,809,000 25,809,000 25,809,000
Payable to brokers and dealers.... 29,767,000 29,767,000 29,767,000
Securities sold, not yet pur-
chased, at market value.......... 1,018,000 1,018,000 1,018,000
Notes payable to affiliate........ 8,375,000 8,375,000 8,375,000
Income taxes payable.............. 574,000 574,000 574,000
Minority interest................. -- 2,318,190 --
------------ ------------ ------------
106,177,000 108,542,290 106,224,100
------------ ------------ ------------
Commitments and contingencies..... -- -- --
------------ ------------ ------------
Stockholders' equity:
Preferred stock.................. -- -- --
Common stock..................... 3,000 3,137 3,404
Additional paid-in capital....... 821,000 1,988,245 4,258,974
Retained earnings................ 15,560,000 15,560,000 15,560,000
------------ ------------ ------------
16,384,000 17,551,382 19,822,378
------------ ------------ ------------
$122,561,000 $126,093,672 $126,046,478
============ ============ ============
</TABLE>
- --------
(1) Assumes the Exchange Offer results in JWCFS' ownership of an aggregate of
645,201 AGRO Shares (or 51% of the outstanding), which is the minimum
required for JWCFS to accept tendered shares and consummate the Exchange
Offer.
(2) Assumes ownership by JWCFS of 100% of the AGRO Shares.
21
<PAGE>
COMPARISON OF CERTAIN UNAUDITED PER SHARE DATA
The following tables show comparative historical per share data for JWCFS and
AGRO, combined pro forma per share data for JWCFS, and equivalent pro forma per
share data for AGRO. The pro forma data give effect to the Exchange Offer only
(with an assumption that it results in JWCFS' ownership of only 51% of the
outstanding AGRO Shares) and to the Consolidation Merger, in the latter case
resulting in AGRO being a wholly owned subsidiary of JWCFS, and in each case
based upon the conversion of an AGRO Share into .431 JWCFS Share. The
information presented should be read in conjunction with the historical
financial statements and notes thereto, and the pro forma condensed financial
information, including the notes thereto, which are incorporated by reference
or included elsewhere in this Prospectus. These pro forma data are presented
for comparative purposes only and are not necessarily indicative of the
combined financial position or results of operations in the future or of what
the combined financial position or results of operations would have been had
the Exchange Offer or the Consolidation Merger, as the case may be, been
consummated during the periods or as of the date for which the pro forma data
are presented.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
------------------------------------
PRO FORMA
-------------------------
EXCHANGE CONSOLIDATION
HISTORICAL OFFER ONLY MERGER
---------- ---------- -------------
<S> <C> <C> <C>
JWCFS
Book value per share..................... $4.94 $5.08(2) $5.32(2)
Net income per share..................... 0.29 0.26(2) 0.22(2)
AGRO
Net assets per share..................... 3.74 2.19(1) 2.29(1)
Net income (loss) per share.............. (0.11) 0.11(1) 0.10(1)
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------------
PRO FORMA
-------------------------
EXCHANGE CONSOLIDATION
HISTORICAL OFFER ONLY MERGER
---------- ---------- -------------
<S> <C> <C> <C>
JWCFS
Book value per share..................... $4.76 $4.91(2) $5.17(2)
Net income per share..................... 1.27 1.20(2) 1.11(2)
AGRO
Net assets per share..................... 3.85 2.12(1) 2.23(1)
Net income (loss) per share.............. (0.25) 0.52(1) 0.48(1)
</TABLE>
- --------
(1) Amounts are calculated by multiplying JWCFS's pro forma combined amounts by
the Exchange Ratio of .431.
(2) Amounts are calculated by dividing pro forma stockholders' equity or net
income by the sum of total outstanding shares of JWCFS common stock plus
new shares to be issued in the Exchange Offer or the Consolidation Merger,
as the case may be.
22
<PAGE>
RISK FACTORS
This Prospectus contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those discussed in
the forward-looking statements as a result of certain factors, including those
set forth below and elsewhere in this Prospectus. The following factors should
be considered carefully in addition to the other information contained in this
Prospectus before deciding to tender AGRO Shares in exchange for shares of
JWCFS Common Stock.
RISKS ASSOCIATED WITH FIXED EXCHANGE RATIO
In addition to other risks discussed below concerning the ownership of JWCFS
Shares, AGRO shareholders who tender their AGRO Shares for JWCFS Shares in
this Exchange Offer will also experience a significant additional risk because
the Exchange Ratio has been fixed based on an average of the last reported
sales prices of the JWCFS Shares during the ten trading days immediately
preceding the June 9, 1997 Public Announcement. Because the Exchange Ratio
will not change for fluctuations in the market price of JWCFS Shares after the
date of the Public Announcement, such fluctuations may adversely affect the
extent to which the JWCFS Shares received by tendering AGRO shareholders
represent a premium for the AGRO Shares on the date the Exchange Offer is
consummated. See "THE EXCHANGE OFFER--Determination of the Exchange Ratio".
VOLATILE NATURE OF THE SECURITIES BUSINESS
The securities business is, by its nature, subject to significant risks,
particularly in volatile or illiquid markets, including the risk of trading
losses, losses resulting from the ownership or underwriting of securities,
counterparty failure to meet commitments, customer fraud, employee fraud,
issuer fraud, errors and misconduct, failures in connection with the
processing of securities transactions, and litigation. The Company's principal
business activities -- retail securities brokerage, investment banking, and
clearing and execution services -- are highly competitive and subject to
various risks, volatile trading markets, and fluctuations in the volume of
market activity. The securities business is directly affected by many factors,
including economic and political conditions, broad trends in business and
finance, legislation and regulation affecting the business and financial
communities, currency values, inflation, market conditions, the availability
and cost of short-term or long-term funding and capital, the credit capacity
or perceived creditworthiness of the securities industry in the marketplace,
and the level and volatility of interest rates. These and other factors can
contribute to lower price levels for securities and illiquid markets.
Lower price levels of securities may result in (i) reduced volumes of
securities transactions, with a consequent reduction in commission revenues,
(ii) losses from declines in the market value of securities held in trading,
investment, and underwriting positions, and (iii) reduced management fees
calculated as a percentage of assets managed. In periods of low volume, levels
of profitability are further adversely affected because certain expenses
remain relatively fixed. Sudden sharp declines in market values of securities
and the failure of issuers and counterparties to perform their obligations can
result in illiquid markets, which, in turn, may result in the Company having
difficulty selling securities, hedging its securities positions and investing
funds under its management. Such negative market conditions, if prolonged, may
also lower the Company's revenues from investment banking and other
activities.
As a result of the varied risks associated with the securities business,
which are beyond the Company's control, the Company's commissions and other
revenues could be adversely affected. A reduction in revenues or a loss
resulting from the underwriting or ownership of securities could have a
material adverse effect on the Company's results of operations and financial
condition. In addition, as a result of such risks, the Company's revenues and
operating results may be subject to significant fluctuations from quarter to
quarter and from year to year.
SIGNIFICANT COMPETITION
All aspects of the Company's business are highly competitive. JWCFS competes
directly with national and regional full service broker-dealers and, to a
lesser extent, with discount brokers, dealers, investment banking
23
<PAGE>
firms, investment advisors, and certain commercial banks. The financial
services industry has become considerably more concentrated as numerous
securities firms have either eased operations or have been acquired by or
merged into other firms. Such mergers and acquisitions have increased
competition from these firms, many of which have significantly greater equity
capital and financial and other resources than JWCFS. With respect to retail
brokerage activities, certain of the regional firms with which the Company
competes have operated in certain markets longer than has the Company and have
established long-standing client relationships. In addition, JWCFS expects
competition from commercial banks to increase as a result of recent and
anticipated legislative and regulatory initiatives in the United States to
remove or relieve certain restrictions on commercial banks relating to the
sale of securities. The Company also competes with others in the financial
services industry with respect to the recruiting of new employees and the
retention of current employees. See "--Dependence on Key Personnel."
The Company expects to face increasing competition from companies offering
electronic brokerage services, which is a rapidly developing industry. These
competitors may have lower costs or provide fewer services, and may offer
certain customers more attractive pricing or other terms, than the Company
offers. The Company also anticipates competition from underwriters who attempt
to effect public offerings for emerging growth companies through new means of
distribution, including transactions effected using electronic media such as
the Internet. In addition, disintermediation may occur as issuers attempt to
sell their securities directly to purchasers, including sales using electronic
media such as the Internet. To the extent that issuers and purchasers of
securities transact business without the assistance of financial
intermediaries such as JWCFS, the Company's operating results could be
adversely affected.
DEPENDENCE ON KEY PERSONNEL
Most aspects of the Company's business are dependent on highly skilled
individuals. The Company devotes considerable resources to recruiting,
training, and compensating such individuals. In addition, one component of the
Company's strategy is to increase market penetration by recruiting experienced
investment consultants. There can be no assurance that such recruiting efforts
will be successful or, if successful, that they will enhance the Company's
business, results of operations, or financial condition.
From time to time, individuals employed by the Company may choose to leave
the Company at any time to pursue other opportunities. JWCFS has experienced
losses of research, investment banking, and sales and trading professionals,
including recent losses of research analysts. The level of competition for key
personnel remains intense. There can be no assurance that losses of key
personnel due to such competition or otherwise will not occur in the future.
The loss of an investment banking, research, or sales and trading
professional, particularly a senior professional with a broad range of
contacts in an industry, could materially and adversely affect the Company's
operating results.
The Company depends on many key employees, and in particular on its two
senior executive officers -- Marshal T. Leeds, its Chairman and Chief
Executive Officer, and Joel E. Marks, its Vice Chairman and Chief Financial
Officer. The loss of any key employee could materially and adversely affect
the Company. While JWCFS generally does not have employment agreements with
its employees, it attempts to retain its employees with incentives such as
long-term deferred compensation plans, the issuance of stock subject to
continued employment, and the grant of options to buy stock that vest over a
number of years of employment. These incentives, however, may be insufficient
in light of the [INCREASING] competition for experienced professionals in the
securities industry, particularly if the Company's stock price were to decline
or fail to appreciate sufficiently to be a competitive source of a portion of
professional compensation.
DEPENDENCE ON OUTSIDE SOURCES OF FINANCING
JWCFS, like others in the securities industry, relies on external sources to
finance a significant portion of its day-to-day operations, principally
customer margin account balances and certain transactions. The principal
sources of the Company's cash and liquidity are commissions and collateralized
bank loans. Liquidity
24
<PAGE>
management includes the monitoring of assets available to hypothecate or
pledge against short-term borrowings. JWCFS maintains working capital credit
lines with banks aggregating approximately $5.0 million, $1.0 million of which
had been drawn down as of June 30, 1997. Availability of financing to the
Company can vary depending on market conditions, the volume of certain trading
activities, credit ratings, credit capacity, and the overall availability of
credit to the financial services industry. There can be no assurance that
adequate financing to support the Company's business will be available in the
future on terms attractive to the Company, or at all.
NET CAPITAL REQUIREMENTS; HOLDING COMPANY STRUCTURE
The Commission, the New York Stock Exchange, Inc. (the "NYSE"), the National
Association of Securities Dealers, Inc. (the "NASD"), and various other
regulatory bodies in the United States have rules with respect to net capital
requirements that affect the Company. These rules have the effect of requiring
that at least a substantial portion of a broker-dealer's assets be kept in
cash or highly liquid investments. Compliance with the net capital
requirements by JWCFS' broker-dealer subsidiaries could limit operations that
require intensive use of capital, such as underwriting or trading activities.
These rules could also restrict the ability of the Company to withdraw capital
from these subsidiaries, even in circumstances where these subsidiaries have
more than the minimum amount of required capital, which, in turn, could limit
the ability of the Company to pay dividends, implement its strategies, pay
interest on and repay the principal of its debt, and redeem or repurchase
shares of outstanding capital stock. In addition, a change in such rules, or
the imposition of new rules, affecting the scope, coverage, calculation or
amount of such net capital requirements, or a significant operating loss or
any unusually large charge against net capital, could have similar adverse
effects.
DEPENDENCE ON SYSTEMS
The Company's business is highly dependent on communications and information
systems. Any failure or interruption of the Company's systems could cause
delays in the Company's securities trading activities and an inability to
execute client transactions, which could have a material adverse effect on the
Company's operating results. There can be no assurance that the Company will
not suffer any such systems failure or interruption, whether caused by an
earthquake, fire, other natural disaster, power or telecommunications failure,
act of God, act of war, or otherwise, or that the Company's back-up procedures
and capabilities in the event of any such failure or interruption will be
adequate.
RISK OF REDUCED REVENUES DUE TO DECLINE IN TRADING OF GROWTH COMPANY
SECURITIES
The Company's revenues from brokerage transactions are generally
substantially lower when the level of public offering and trading activities
of securities of emerging growth companies declines. JWCFS derives a
significant portion of its revenues from brokerage transactions related to the
securities of growth companies. In the past, revenues from such brokerage
transactions have declined when underwriting activities in these industry
sectors declined, the volume of trading on NASDAQ declined, or industry
sectors or individual companies reported results below investors'
expectations.
RISKS ASSOCIATED WITH FEDERAL AND STATE FOREIGN REGULATION
The securities industry and the business of the Company are subject to
extensive regulation by the Commission, state securities regulators, and other
governmental regulatory authorities. The business of the Company also is
regulated by industry self-regulatory organizations ("SROs"), including the
NASD, the NYSE, the AMEX, and other exchanges. Compliance with many of the
regulations applicable to the Company involves a number of risks, particularly
in areas where applicable regulations may be subject to varying
interpretation. In the event of non-compliance by JWCFS with an applicable
regulation, governmental regulators and SROs may institute administrative or
judicial proceedings that may result in censure, fine, civil penalties
(including treble damages in the case of insider trading violations), the
issuance of cease-and-desist orders, the deregistration or suspension of the
non-compliant broker-dealer, the suspension or disqualification of the broker-
dealer's officers
25
<PAGE>
or employees, or other adverse consequences. The imposition of any such
penalties or orders on JWCFS could have a material adverse effect on the
Company's operating results and financial condition.
The regulatory environment is also subject to change. The Company may be
adversely affected as a result of new or revised legislation or regulations
imposed by the SEC, other federal or state governmental regulatory
authorities, or SROs. The Company also may be adversely affected by changes in
the interpretation or enforcement of existing laws and rules by these
governmental authorities and SROs.
RISK OF LOSSES FROM UNDERWRITING AND TRADING
The Company's underwriting, securities trading, and market-making activities
are conducted by the Company as principal and subject the Company's capital to
significant risks, including market, credit, counterparty, and liquidity
risks. These activities often involve the purchase, sale, or short sale of
securities as principal in markets that may be characterized by relative
illiquidity or that may be particularly susceptible to rapid fluctuations in
liquidity. The Company from time to time has large position concentrations in
securities of, or commitments to, a single issuer, or issuers engaged in a
specific industry, particularly as a result of the Company's underwriting
activities. The Company tends to concentrate its trading positions and
underwriting activities in a more limited number of industry sectors and
portfolio companies than many other investment banks, which might result in
higher trading losses than would occur if the Company's positions and
activities were less concentrated. In addition, the trend in all major capital
markets, for competitive and other reasons, toward larger commitments on the
part of lead underwriters means that, from time to time, an underwriter
(including a co-manager) may retain significant position concentrations in
individual securities.
RISK OF LOSSES FROM LITIGATION AND POTENTIAL LIABILITY UNDER SECURITIES LAWS
Many aspects of the Company's business involve substantial risks of
liability. An underwriter is exposed to substantial liability under federal
and state securities laws, other federal and state laws, and court decisions,
including decisions with respect to underwriters' liability and limitations on
indemnification of underwriters by issuers. For example, a firm that acts as
an underwriter may be held liable for material misstatements or omissions of
fact in a prospectus used in connection with the securities being offered or
for statements made by its securities analysts or other personnel.
Heightened Risk of Losses Due to Increasing Frequency of Securities
Litigation. In recent years, there has been an increasing incidence of
litigation involving the securities industry, including class actions that
seeks substantial damages. The Company's underwriting activities usually
involve offerings of the securities of emerging and mid-size growth companies,
which often involved a higher degree of risk and are more volatile than the
securities of more established companies. In comparison with more established
companies, such emerging and mid-size growth companies are also more likely to
be the subject of securities class actions, to carry directors and officers
liability insurance policies with lower limits, or no such insurance, and to
become insolvent. Each of these factors increases the likelihood that an
underwriter of an emerging or mid-size growth company's securities will be
required to contribute to any adverse judgment or settlement of a securities
lawsuit.
Frequent Claims Against Underwriters. The plaintiffs' attorneys in
securities class action lawsuits frequently name as defendants the managing
underwriters of a public offering. JWCFS has not been a named defendant in any
class action lawsuit relating to public offerings in which it served as a
managing underwriter. Plaintiffs' attorneys also name as defendants investment
banks that provide advisory services in corporate finance transactions. JWCFS
is not a defendant in any such lawsuit. The Company anticipates, however, that
securities class action lawsuits naming JWCFS as a defendant may be filed from
time to time in the future, particularly if the Company increases its level of
activity in such transactions. In such lawsuits, all members of the
underwriting syndicate typically are included as members of a defendant class
or are required by law, or pursuant to the terms of the underwriting
agreement, to bear a portion of any expenses or losses (including amounts paid
in settlement of the litigation) incurred by the underwriters as a group in
connection with the litigation, to the extent not covered by the
indemnification obligation of the issuer of the securities underwritten. If
the Company were to
26
<PAGE>
become a party to such lawsuits, the Company's assets would be subject to
risks. If the plaintiffs in any suits against the Company were to successfully
prosecute their claims, or if the Company were to settle such suits by making
significant payments to the plaintiffs, the Company's operating results and
financial condition could be materially and adversely affected. As is common
in the securities industry, the Company does not carry insurance that would
cover any such payments. In addition, the Company's charter documents allow
indemnification of the Company's officers, directors, and agents to the
maximum extent permitted under Florida law. The Company may be the subject of
indemnification assertions under these charter documents by officers,
directors, or agents of the Company who are or may become defendants in
litigation.
In addition, the laws relating to securities class actions are currently in
a state of flux. The eventual impact of the Private Securities Litigation
Reform Act of 1995 on securities class action litigation is not known.
Diversion of Management Attention. In addition to these financial costs and
risks, the defense of litigation can, to a certain extent, divert the efforts
and attention of the Company's management and staff. The amount of time that
management and other employees may be required to devote in connection with
the defense of litigation could be substantial and might materially divert
their attention from other responsibilities within the Company. Securities
class action litigation in particular is highly complex and can extend for a
protracted period of time, thereby consuming substantial time and effort of
the Company's management and substantially increasing the cost of such
litigation.
Risks Associated with Other Disputes. In the normal course of business, the
Company is a defendant in various civil actions and arbitrations arising out
of its activities as a broker-dealer in securities, as an underwriter, as an
employer, and as a result of other business activities. The Company has in the
past made significant payments in connection with the resolution of disputed
claims, and there can be no assurance that significant payments in connection
with the resolution of disputed claims will not occur in the future.
Risks Associated with Schedule 13 Filing involving AGRO. As discussed under
"THE EXCHANGE OFFER--Background", JWCFS filed a Schedule 13D with the
Commission on March 11, 1997 to report certain matters concerning its
ownership of AGRO Shares and its undertaking of analyses with respect to how
to proceed with regard to that ownership and the activities of JW Charles/CSG
as a market maker for the AGRO Shares. In connection with JWCFS' filing of the
Registration Statement, the staff of the Commission has questioned whether
JWCFS was required to file an amendment to its Schedule 13D to report JW
Charles/CSG's acquisition of additional AGRO Shares prior to the Public
Announcement or to report a change in its plans with respect to AGRO, or
whether JWCFS should have caused JW Charles/CSG to cease market making for
AGRO Shares prior to the June 6, 1997 Market Making Suspension. JWCFS does not
believe that it was required to take (or should have taken) any such action in
these particular circumstances, and it has informed the Commission of its
belief. It is possible, however, that the Commission or its staff may disagree
with JWCFS and that it (or other possible parties, such as AGRO or
shareholders of AGRO) may seek to cause JWCFS to rescind the trades with
respect to some or all of the AGRO Shares that were acquired by JW Charles/CSG
after some date between March 11, 1997 and June 6, 1997 to permit the sellers
of those AGRO Shares to reacquire those shares for the consideration they
received in the original trade or, depending on the circumstances, for the
number of JWCFS Shares they could have received in this Exchange Offer if they
had continued to own the AGRO Shares and made a decision to tender in the
Exchange Offer. JW Charles/CSG purchased a total of 48,500 AGRO Shares during
that time period, for which it paid an aggregate of approximately $129,840,
net of commissions, to the sellers. If JW Charles/CSG were required to offer
to rescind all such trades on the above basis, and all the sellers accepted
the offer, JWCFS would receive the approximately $129,840 net cash
consideration paid to the sellers and the sellers would receive the 48,500
AGRO Shares they sold or, if the Exchange Offer has been consummated, the
sellers would be permitted to receive JWCFS Shares instead. In such latter
event, an aggregate of 20,904 JWCFS Shares would be issued if all the sellers
chose to receive only JWCFS Shares. JWCFS does not believe that such a
rescission should be required, or that, if it were to be required, it would
have any material effect on JWCFS' results of operations, financial condition,
prospects, or plans. The Commission or other possible parties (such as AGRO or
AGRO shareholders) might seek to take other action or pursue other remedies
based on a disagreement with JWCFS' position concerning its Schedule 13D
filing obligations or its acquisition of AGRO Shares. While JWCFS believes
that its positions would be upheld if challenged, there can be no assurance
with respect to that matter.
27
<PAGE>
RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH
Over the past several years, JWCFS has experienced significant growth in its
business activities and the number of its employees. This growth has required
and will continue to require increased investments in management personnel,
financial and management systems and controls, and facilities, which, in the
absence of continued revenue growth, would cause the Company's operating
margins to decline from current levels. In addition, as is common in the
securities industry, the Company is and will continue to be highly dependent
on the effective and reliable operation of its communications and information
systems. JWCFS believes that its current and anticipated future growth will
require implementation of new and enhanced communications and information
systems and training of its personnel to operate such systems. Any difficulty
or significant delay in the implementation or operation of existing or new
systems or the training of personnel could adversely affect the Company's
ability to manage growth.
MARKETS FOR THE JWCFS AND AGRO SHARES
COMPARATIVE MARKET PRICES
JWCFS Shares are traded on the AMEX (symbol: JWC), and AGRO Shares are
traded on NASDAQ (symbol: AGRO). (Prior to May 8, 1997, JWCFS Shares were
traded on NASDAQ under the symbol "KORP".) The following tables set forth the
high and low sales prices per JWCFS Share and AGRO Share for each period
indicated. They also set forth the high bid and low asked prices quoted by
dealers for the JWCFS Shares and the AGRO Shares. The high bid at any given
time is the highest price that a dealer is at that time offering to pay to an
investor who wishes to sell his or her shares, and the low asked at any given
time is the lowest price at which a dealer is at that time offering to sell
shares to an investor who wishes to buy them. For shares with wide bid-asked
spreads, the high bid and low asked prices provide additional information
concerning market prices; because sales prices are reported for transactions
between a dealer and an investor, the reported sales price will be relatively
high if the reported transaction is a sale by a dealer, and relatively low if
it is a purchase by a dealer. However, the bid-asked prices provide no
assurance that the specified prices are available for transactions involving
more than one round lot (100 shares).
Neither JWCFS nor AGRO has paid a cash dividend with respect to its shares.
The fiscal year for each company ends on December 31 of each year. On June 6,
1997, the last full trading day before the initial filing of the Registration
Statement with respect to the Exchange Offer, the last reported sale price per
JWCFS Share was $8.50, and such price per AGRO Share was $2.75.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT QUOTATIONS FOR JWCFS SHARES AND
AGRO SHARES.
JWCFS SHARES(1)
<TABLE>
<CAPTION>
SALES PRICE
------------
HIGH LOW HIGH BID LOW ASKED
------ ----- -------- ---------
<S> <C> <C> <C> <C>
FISCAL YEAR
1995
First Quarter.................................. $ 3.42 $2.42 $ 3.08 $2.67
Second Quarter................................. 2.75 2.17 2.58 2.42
Third Quarter.................................. 2.75 2.17 2.42 2.42
Fourth Quarter................................. 3.17 2.42 2.83 2.67
1996
First Quarter.................................. $ 3.33 $2.75 $ 3.17 $2.92
Second Quarter................................. 5.08 3.08 4.67 3.33
Third Quarter.................................. 5.00 3.17 4.50 3.67
Fourth Quarter................................. 7.67 3.83 7.17 4.33
1997
First Quarter.................................. $12.50 $7.17 $12.25 $8.00
Second Quarter................................. 10.13 6.00 NA NA
Third Quarter (through August 13, 1997).......... -- -- NA NA
Date: August 13, 1997............................ NA NA
</TABLE>
28
<PAGE>
AGRO SHARES(1)
<TABLE>
<CAPTION>
SALES PRICE
-----------
HIGH LOW HIGH BID LOW ASKED
----- ----- -------- ---------
<S> <C> <C> <C> <C>
FISCAL YEAR
1995
First Quarter..................................... $4.50 $2.00 $4.13 $2.50
Second Quarter.................................... 2.63 2.00 2.25 2.50
Third Quarter..................................... 2.63 2.00 2.00 2.50
Fourth Quarter.................................... 3.00 2.00 2.75 2.63
1996
First Quarter..................................... $3.00 $2.50 $2.63 $3.00
Second Quarter.................................... 2.75 2.25 2.56 2.75
Third Quarter..................................... 3.00 2.00 2.63 2.50
Fourth Quarter.................................... 2.88 2.50 2.88 2.75
1997
First Quarter..................................... $3.00 $2.69 $2.88 $2.81
Second Quarter.................................... 3.38 2.69 3.38 2.88
Third Quarter (through August 13, 1997)...........
Date: August 13, 1997...............................
</TABLE>
- --------
(1) Sources: The Nasdaq Stock Market, Inc. and The American Stock Exchange,
Inc., as applicable.
INFORMATION ABOUT THE MARKET FOR THE AGRO SHARES
Of the 938,550 outstanding AGRO Shares not owned by JWCFS as of the date of
this Prospectus, an aggregate of approximately 36,750 are believed to be held
by one institutional investor; an aggregate of approximately 200,000 are
believed to be held by a group of investors whom JWCFS believes have acted (or
may be acting) in concert with respect to their ownership of AGRO Shares or
otherwise concerning AGRO; and the remaining approximately 701,800 shares are
believed to be held by approximately 940 other beneficial owners. The market
for the publicly held AGRO Shares has historically been characterized by
sporadic, low-volume trading, as indicated in the following table, up to the
date JWCFS publicly announced its proposal to conduct the Exchange Offer. The
following trading data are based on volumes as reported by market makers, and
thus a reported transaction may represent only one side of the buy-sell cycle,
with subsequent offsetting transactions also being reported as separate
trading volume. Accordingly, the number of shares actually bought and sold by
investors may be significantly less than reflected by such volumes below.
<TABLE>
<CAPTION>
AGGREGATE REPORTED AVERAGE DAILY
TRADING VOLUME(1) REPORTED TRADING VOLUME(1)
PERIOD ------------------ --------------------------
<S> <C> <C>
1996:
January......................... 106,951 4,861
February........................ 76,935 3,847
March........................... 90,255 4,298
April........................... 113,445 5,402
May............................. 169,860 7,721
June............................ 120,435 6,022
July............................ 84,476 3,840
August.......................... 133,614 6,073
September....................... 62,300 3,115
October......................... 101,750 4,424
November........................ 100,000 5,000
December........................ 289,825 13,801
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
AGGREGATE REPORTED AVERAGE DAILY
TRADING VOLUME(1) REPORTED TRADING VOLUME(1)
PERIOD ------------------ --------------------------
1997:
<S> <C> <C>
January........................ 135,885 6,177
February....................... 30,500 1,605
March.......................... 43,050 2,153
April.......................... 50,100 2,277
May............................ 23,700 1,129
June........................... 242,670 11,556
June 1 through 6 (before Public
Announcement)................. 4,000 800
June 9 through 30 (after Public
Announcement)................. 238,670 14,917
July 49,500 2,250
August (through August 13) -- --
</TABLE>
- --------
(1) Source: The Nasdaq Stock Market, Inc.
JWCharles/CSG had been the principal market maker for AGRO Shares from 1994
until June 6, 1997, when JWCFS caused the suspension of all such market making
activities (the "Market Making Suspension") in contemplation of its filing of
the Registration Statement and public announcement of its intention to conduct
the Exchange Offer, which occurred on June 9, 1997 (the "Public
Announcement"). As of June 6, 1997, there were six other market makers for
AGRO Shares; however, these market makers (along with all others since
January 1, 1996) collectively accounted for approximately 30% of the aggregate
volume of all reported trades in AGRO Shares from January 1, 1996 through June
6, 1997, with JWCharles/CSG accounting for the entire remainder of
approximately 70%. JWCFS may cause JWCharles/CSG not to resume such market
making activity following the termination of the Exchange Offer, whether or
not the Exchange Offer is successfully consummated. If the Exchange Offer is
consummated, JWCFS would not permit JWCharles/CSG to be a market maker for
AGRO Shares. Such a result in either case could significantly and adversely
affect the quotation and trading of AGRO Shares on NASDAQ, whether or not
JWCFS otherwise decides to seek to terminate such trading if the Exchange
Offer is consummated.
The above information is provided to furnish a context that may be useful to
AGRO shareholders in assessing whether or not an effective public trading
market for AGRO Shares is likely to exist following the Exchange Offer, which
may be an important consideration in deciding whether or not to accept the
Exchange Offer. JWCFS can not predict whether or not such a public trading
market will exist. Regardless of the results of the Exchange Offer, other
market makers may decide to become more active with respect to the trading of
AGRO Shares, which could be beneficial to AGRO shareholders who decide not to
accept the Exchange Offer. Based on the above historical information
concerning the trading of AGRO Shares prior to the Public Announcement, and
JWCFS' current intention not to resume market making for AGRO Shares whether
or not the Exchange Offer is successfully consummated, JWCFS does not believe
that such an effective trading market is likely to exist. If the Exchange
Offer is successfully consummated (which means that JWCFS will then own at
least 51% of the AGRO Shares), JWCFS believes it is unlikely that such a
trading market would exist for any AGRO Shares that remained outstanding and
not owned by it.
30
<PAGE>
THE EXCHANGE OFFER
BACKGROUND
JWCharles/CSG had been the principal market maker for the trading of AGRO
Shares on NASDAQ since it served as underwriter for AGRO's initial public
offering (the "IPO") in August 1994. The IPO was a firm commitment
underwriting that was closed on August 19, 1994. In connection with the IPO,
JWCFS received from AGRO underwriting discounts and commissions and a non-
accountable expense allowance totalling approximately $822,250. Many
purchasers of AGRO Shares in the IPO, and many current holders of such shares,
are clients or customers of JWCFS' financial services business, and JWCFS has
been concerned about the quality of their respective investment experiences as
purchasers of AGRO Shares. As a result, JWCFS caused JWCharles/CSG to continue
its market making activity with respect to AGRO Shares until the June 6, 1997
Market Making Suspension, even though the low level of activity by other
market makers, and the sporadic and limited demand for AGRO Shares by
purchasers, had led to JWCFS' ownership of an increasing amount of AGRO
Shares. That increase occurred because, to assure the maintenance of a trading
market for AGRO Shares in such an environment, JWCharles/CSG had to purchase
and hold AGRO Shares due to the unavailability of a sufficient number of
interested purchasers making acceptable offers to buy AGRO Shares. As a result
of these factors, JWCharles/CSG's ownership of AGRO Shares began to increase
steadily during 1996, and by December 1996 had risen to 13%.
Beginning in September 1996, JWCFS' management had begun to review with the
JWCFS Board of Directors (the "JWCFS Board") (i) the trading profile for AGRO
Shares and JWCharles/CSG's increased ownership of AGRO Shares as a result;
(ii) the negative spread between AGRO's net asset value ("NAV") per share and
the trading prices of AGRO Shares; and (iii) the low level of investment in
portfolio companies by AGRO. Management began to consider whether JWCFS should
explore a different role with respect to AGRO in order to improve AGRO's
prospects for enhancing value for all its shareholders, many of whom were also
clients or customers of JWCharles/CSG who had purchased AGRO Shares in the
IPO, in order to improve the trading profile for AGRO Shares. Among other
things, management also reviewed with the JWCFS Board the potential benefits
and costs of an approach that would result in a substantial increase by JWCFS
in its ownership of AGRO Shares, if the trading profile for the AGRO Shares
could not be improved so as to reduce the pressures being placed on
JWCharles/CSG's market making activities. The JWCFS Board permitted management
to continue the review process and instructed JWCFS' Chairman and Vice
Chairman (who thereafter proceeded to function in the manner of an informal
committee of the JWCFS Board to assess the AGRO situation, the "Assessment
Task Force") to keep the Board informed with respect to the situation. The
JWCFS Board did not formally designate and constitute these persons as an
official committee of the Board.
During this period, AGRO entered into negotiations with respect to a
proposed merger with Advanced Electronic Support Products, Inc. ("AESP"). AGRO
initially considered engaging JWCFS to serve as its financial advisor for
certain of those negotiations, but did not do so. In November 1996, AGRO and
AESP mutually agreed to terminate their negotiations upon encountering
regulatory and other difficulties to its consummation. Following the aborted
transaction with AESP, certain holders of AGRO Shares filed a lawsuit against
AGRO, JWCFS, and other parties complaining, among other things, that the
transaction should have been consummated (and would have been but for certain
terms thereof that were alleged to inappropriately benefit certain affiliates
of AGRO). The lawsuit, styled Kevin King, Herbert Hill as general partner of
Double H Investment Co. and Bargelt Investments, Bonnie C. Hayes and Ronald
Hayes, derivatively as shareholders of and on behalf of The Americas Growth
Fund, Inc., a Maryland corporation, vs. Leonard J. Sokolow, J. Antonio
Villamil, Neil R. Winter, Sanford B. Cohen, Martin C. Engelmann, JW Charles
Securities, Inc. and The Americas Growth Fund, Inc., was filed in the Circuit
Court for the Fifteenth Judicial Circuit in and for Palm Beach County,
Florida, Case No. CL 96-010118, and has been removed by the defendants to the
United States District Court for the Southern District of Florida, Miami
Division. It is being vigorously contested by JWCFS and the other defendants.
The plaintiffs (and persons whom JWCFS believes may be acting in concert with
them) are believed to own over 15% of the outstanding AGRO Shares. The plans
and intentions of these persons with respect to AGRO could not be ascertained
fully, and JWCFS had to consider whether possible actions they might take
could adversely affect AGRO, and therefore JWCFS because of its ownership of
AGRO Shares in JWCharles/CSG's trading account as a market maker.
31
<PAGE>
Those developments caused JWCFS' management additional concern about the
continuation of JWCFS' unusual position with respect to the ownership of AGRO
Shares. However, because JWCFS had acquired its AGRO Shares as a result of
JWCharles/CSG's market making business (and not for purposes of long-term
investment or to obtain control or exercise influence over AGRO or the
management of its business and affairs), JWCFS continued during this period to
function with respect to AGRO in its normal and customary manner in light of
that business activity. JWCFS did not, as might a typical investor who had
acquired such position for purposes of investment or control, take an
extraordinary action (or proceed at any accelerated pace) to develop or
implement any particular plan with respect to AGRO.
Through a series of internal discussions and analysis over several months,
the Assessment Task Force explored the feasibility and desirability of
affirmatively seeking to increase JWCFS' ownership of AGRO Shares in order to
be able to exercise some influence over the management of AGRO's business, if
it were subsequently determined to be in its interests to do so. These
explorations led JWCFS on March 11, 1997 to file a Schedule 13D to report
JWCharles/CSG's ownership of AGRO Shares, which then totalled approximately
20.7%, in order to disclose more conspicuously its ownership of AGRO Shares
and that it was not comfortable with that ownership position and the market
conditions that had led to it. JWCFS had acquired its entire position of AGRO
Shares as a result of JWCharles/CSG's market making activities in the ordinary
course of its business and had been reporting that ownership on Schedule 13G,
consistent with its customary practice with respect to ownership of securities
for which JWCharles/CSG's serves as a market maker. However, because of the
unusually high ownership percentage that had developed in the case of AGRO
Shares, and the above explorations by its management, JWCFS determined that an
elective filing on Schedule 13D would better ensure that AGRO, its
shareholders, and the public generally were aware of the situation while JWCFS
conducted its analysis of what, if anything, to do in response.
Later in March 1997, JWCFS' Chairman and Vice Chairman determined to
recommend that JWCFS take the next steps to proceed with a possible
transaction that has become this Exchange Offer. At a meeting on March 25,
1997, the JWCFS Board unanimously granted permission to management to proceed
with the preparation of a draft of the Registration Statement and the
completion of the strategic analysis that would be necessary to implement the
recommendation. On June 6, 1997, the Assessment Task Force presented the JWCFS
Board with a proposal for an acquisition of control of AGRO, including the
Registration Statement necessary for the Exchange Offer, a recommendation for
suspension of all market making for AGRO Shares by JWCharles/CSG, and a
recommendation for an interim repurchase plan for JWCFS Shares during the
period between the Public Announcement and the commencement of the Exchange
Offer. On that date, the full JWCFS Board approved the terms and conditions of
the Exchange Offer as set forth herein. See "THE EXCHANGE OFFER--Background".
In connection with JWCFS' filing of the Registration Statement, the staff of
the Commission has questioned whether JWCFS was required to file an amendment
to its Schedule 13D to report JW Charles/CSG's acquisition of additional AGRO
Shares prior to the Public Announcement or to report a change in its plans
with respect to AGRO, or whether JWCFS should have caused JW Charles/CSG to
cease market making for AGRO Shares prior to the June 6, 1997 Market Making
Suspension. JWCFS does not believe that it was required to take (or should
have taken) any such action in these particular circumstances, and it has
informed the Commission of its belief. It is possible, however, that the
Commission or its staff may disagree with JWCFS and that it (or other possible
parties, such as AGRO or shareholders of AGRO) may seek to cause JWCFS to
rescind the trades with respect to some or all of the AGRO Shares that were
acquired by JW Charles/CSG after some date between March 11, 1997 and June 6,
1997 to permit the sellers of those AGRO Shares to reacquire those shares for
the consideration they received in the original trade or, depending on the
circumstances, for the number of JWCFS Shares they could have received in this
Exchange Offer if they had continued to own the AGRO Shares and made a
decision to tender in the Exchange Offer. JW Charles/CSG purchased a total of
48,500 AGRO Shares during that time period, for which it paid an aggregate of
approximately $129,840, net of commissions, to the sellers. If JW Charles/CSG
were required to offer to rescind all such trades on the above basis, and all
the sellers accepted the offer, JWCFS would receive the approximately $129,840
net cash consideration paid to the sellers and the sellers
32
<PAGE>
would receive the 48,500 AGRO Shares they sold or, if the Exchange Offer has
been consummated, the sellers would be permitted to receive JWCFS Shares
instead. In such latter event, an aggregate of 20,904 JWCFS Shares would be
issued if all the sellers chose to receive only JWCFS Shares. JWCFS does not
believe that such a rescission should be required, or that, if it were to be
required, it would have any material effect on JWCFS' results of operations,
financial condition, prospects, or plans. The Commission or other possible
parties (such as AGRO or AGRO shareholders) might seek to take other action or
pursue other remedies based on a disagreement with JWCFS' position concerning
its Schedule 13D filing obligations or its acquisition of AGRO Shares. While
JWCFS believes that its positions would be upheld if challenged, there can be
no assurance with respect to that matter.
From time to time during 1996, JWCFS' Chairman and Vice Chairman had
discussions with AGRO's President concerning AGRO's operations and prospects,
including any plans by AGRO to increase its level of portfolio investments and
otherwise to enhance shareholder value. Such discussions continued in 1997
until March 1997, when the Assessment Task Force decided to recommend to the
JWCFS Board that JWCFS undertake a possible transaction that has become this
Exchange Offer. Because JWCharles/CSG had been the underwriter for the IPO in
1994 and was the principal market maker for the AGRO Shares, JWCFS' senior
management had had frequent and routine communications with AGRO's President
(who is AGRO's sole full-time executive officer) concerning AGRO's progress
and prospects since the time of the IPO. The above discussions during 1996 and
1997 were consistent with that historical pattern.
Because of the above circumstances that gave rise to its unusual position
with respect to AGRO and its ownership of AGRO Shares, JWCFS did not engage in
any negotiations, meetings, or other contacts with the AGRO Board or AGRO's
management concerning JWCFS's exploration of a possible transaction that could
result in JWCFS's acquisition of control of AGRO or acquisition of AGRO Shares
other than pursuant to JWCharles/CSG's customary market making activities.
JWCharles/CSG's trading personnel (all of whom were specifically not informed
of, and did not know about, such explorations) continued to have their routine
contacts with AGRO in the ordinary course of JWCharles/CSG's market making
activities. JWCFS' Chairman and Vice Chairman, notwithstanding the analysis
they were privately conducting in order to keep the JWCFS Board informed,
continued to have frequent conversations with AGRO's President. Because of the
routine nature and frequent occurrence of such conversations, specific dates
are impossible to reconstruct precisely, but such conversations involving
either or both of the Chairman and Vice Chairman of JWCFS and AGRO's President
probably took place on average once every two weeks or so, until March 25,
1997. None of the discussions with AGRO's President included any proposal or
plan of JWCFS for a possible acquisition of control of AGRO, or any other
matter for submission to the AGRO Board. After that date, JWCFS' management
continued to contact AGRO only to request more convenient access to certain
information concerning AGRO's public disclosures and AGRO's stock trading and
beneficial stock ownership positions.
JWCFS believes that AGRO has not been successful in implementing its plan of
business, which is evidenced in significant part by the fact that, as of March
31, 1997, AGRO reported that it had approximately $4 million of the $5.1
million of net proceeds from its IPO uninvested in portfolio companies. AGRO
has made investments in only six portfolio companies since the IPO in August
1994. In addition, AGRO's reported NAV as of March 31, 1997, was $3.74 per
share, of which $3.15 per share was in cash or other liquid assets. Yet, AGRO
Shares are trading below their NAV, and have done so consistently since March
1995.
In ultimately deciding to approve the Exchange Offer [which decision is not
irrevocably made unless and until the Registration Statement is declared
effective so that the Exchange Offer can be commenced], the JWCFS Board
concluded: (i) that the trading profile for AGRO Shares was not likely to
change in the foreseeable future such that JWCFS could substantially reduce
its ownership of AGRO Shares without incurring a significant loss; (ii) that
the negative spread between AGRO's NAV per share and the trading prices of
AGRO Shares was not likely to be eliminated in the foreseeable future, which
would mean that JWCFS would not be able to realize the inherent value of the
AGRO Shares, even if it were able to find purchasers for the shares; (iii)
that other holders of AGRO Shares who had purchased the shares in the IPO may
be in similar situations and that many such holders were (and continue to be)
clients or customers of JWCFS; (iv) that AGRO had not been successful in
33
<PAGE>
implementing its plan of business as a BDC, and that JWCFS did not have
sufficient confidence that AGRO would be able to do so in the foreseeable
future, in significant part because expected business opportunities in Cuba
had not developed (and do not appear likely to develop in the foreseeable
future) as a result of changes following the IPO in the trends for
normalization of political and diplomatic relationships with Cuba; and (v)
that JWCFS could apply the assets and resources of AGRO as a part of JWCFS'
business with a higher likelihood of enhancing value for all former AGRO
shareholders. The JWCFS Board considered each of these factors to be favorable
with respect to approving the Exchange Offer.
The JWCFS Board also considered: (vi) whether the Exchange Offer would be
successful if commenced, in light of JWCFS' desire only to use its shares of
stock in the transaction; (vii) the apparent existence of a "group" of AGRO
shareholders who owned potentially as much as 20% of the AGRO shares, and
whether that "group" or some other person would institute a competing bid that
would defeat JWCFS' offer or force it to increase the Exchange Ratio; (viii)
whether the expense of implementing the Exchange Offer and a possible
Consolidation Merger would be too great to make it beneficial to JWCFS; (ix)
whether a possible Consolidation Merger can be effected at all within a time
period that is practical for JWCFS, in light of the anti-takeover provisions
in AGRO's charter and potential regulatory complexities; (x) whether the
requisite regulatory procedures, including filing the Registration Statement,
would unduly complicate the implementation of the Exchange Offer; (xi)
whether, as is implicit in consideration (vi) above, the JWCFS Shares would
constitute an attractive consideration to the AGRO shareholders, in light of
the risks associated with the business of JWCFS and an investment in JWCFS
Shares; and (xii) whether, following the Public Announcement, persons might
seek to engage in arbitrage with respect to JWCFS Shares or AGRO Shares. Each
of these considerations involved some unfavorable aspects, which the
Assessment Task Force and the JWCFS Board had to weigh carefully over several
months in deciding whether to proceed with and ultimately approve the Exchange
Offer.
The decision to base the Exchange Ratio on AGRO's NAV per share as of AGRO's
most recent 10-QSB (for the quarter ended March 31, 1997) and the trading
prices of the JWCFS Shares before the Public Announcement is directly
attributable to the weighing of the above factors and considerations. As
referred to elsewhere herein, JWCFS also determined that it should not pursue
a negotiated transaction with AGRO. It did so because such a transaction could
potentially be opposed by a competing bidder as involving a conflict of
interests due to JWCharles/CSG's historical relationships with AGRO as the
underwriter for its IPO and as the principal market maker for the AGRO Shares.
JWCFS determined that, in order to avoid the expenses and potential delays of
having to fight such a challenge, it would be prudent to develop its proposal
solely on its own and present that proposal directly to the AGRO shareholders,
without regard to the position the AGRO Board might decide to take.
In connection with filing the Registration Statement, JWCFS has offered to
be available to the AGRO Board for such discussions about the Exchange Offer
as the AGRO Board may wish to have. JWCFS has not undertaken, and will not
undertake, to obtain an approval or recommendation by the AGRO Board of the
Exchange Offer. The AGRO Board has the option under Rule 14d-9 of the Exchange
Act to take a position that does not recommend or oppose the Exchange Offer,
but rather leaves the decision of whether to tender their AGRO Shares in the
Exchange Offer to each AGRO shareholder and such shareholder's personal
financial or other advisors.
PURPOSE OF THE EXCHANGE OFFER; THE CONSOLIDATION MERGER
As the largest shareholder of AGRO, JWCFS desires to realize for itself and
all other AGRO shareholders the net asset value of their holdings in AGRO.
JWCFS believes that AGRO's prospects for future success as an independently
operated BDC may not be good and that it might be able to enhance its value
for shareholders by terminating its status as a BDC, coupled with its
abandonment of its current business plan for investment in portfolio companies
that are strategically linked to the Caribbean and Latin America. Such a
termination, however, requires the approval of AGRO shareholders who own at
least a majority of the outstanding AGRO Shares, and may require the approval
of AGRO shareholders who own 75% of the outstanding AGRO Shares, depending
upon the definitive interpretation of certain ambiguous provisions in AGRO's
governing documents
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and the implications of certain public statements previously made by AGRO. In
the prospectus for its IPO, AGRO refers to a requirement for approval by
holders of 75% of the AGRO Shares in order to terminate AGRO's BDC status.
Such a requirement is not stated in AGRO's articles of incorporation or
bylaws, and JWCFS does not believe that such a requirement is appropriately
inferred from either such document or otherwise compelled under Maryland law.
JWCFS has not obtained a definitive interpretation or legal opinion on that
matter, and will not do so unless the issue becomes directly relevant to
JWCFS' plans following the Exchange Offer as a result of the percentage of
AGRO Shares it then owns.
The Exchange Offer is being made for the purpose of acquiring at least 51%
of the outstanding AGRO Shares and thereby obtaining the ability to control
certain governance matters for AGRO, including to elect, in time, all the
members of its Board of Directors. Upon completion of the Exchange Offer, if
JWCFS holds the requisite number of AGRO Shares, and assuming the cooperation
of the incumbent JWCFS Board or the election of the JWCFS Nominees to a
majority of the AGRO Board (of which there is no assurance), JWCFS could cause
the termination of AGRO's election to be treated as a BDC under the 1940 Act;
and, if JWCFS holds at least 90% of such shares, JWCFS could cause the
Consolidation Merger of AGRO with a subsidiary of JWCFS without seeking a vote
of AGRO's shareholders (a so-called "short-form" merger), in which event the
remaining AGRO shareholders (other than JWCFS and any shareholders who
exercise their dissenters' rights under Maryland law) would receive for each
AGRO Share the same number of JWCFS Shares as paid in this Exchange Offer.
JWCFS will consider all such alternatives, and possibly others that may become
available to it, at the appropriate time. However, as stated elsewhere herein,
JWCFS currently intends to proceed with a Consolidation Merger if it
consummates the Exchange Offer (which means that it would then own at least
51% of the AGRO Shares).
If, following the Exchange Offer, JWCFS' ownership of AGRO Shares is less
than 100%, the principal factors in JWCFS' determination of whether to seek to
consummate the Consolidation Merger will include the following:
. If such ownership is less than the 90% required for a short-form merger,
JWCFS will assess the administrative and regulatory complexities and
expense of pursuing a merger that requires the vote of AGRO shareholders.
. If AGRO were wholly owned by JWCFS, decisions regarding AGRO's operations
could be made without possible limitations arising out of the existence
of a minority shareholder interest. If JWCFS does not own all of the AGRO
Shares, AGRO would be required by law to be managed by the AGRO Board in
the best interests of all AGRO shareholders, rather than just JWCFS and
its shareholders. Moreover, as the majority shareholder, JWCFS might have
certain legal duties to the minority shareholders of AGRO that could
restrict JWCFS' flexibility in dealing with its assets and its operations
in the manner JWCFS' management believes to be in the best interest of
JWCFS' shareholders, which would then include the former AGRO
shareholders who tendered their shares in this Exchange Offer.
. As a 100% owned subsidiary, AGRO would no longer incur separate
accounting, possible SEC reporting, shareholder reporting, annual
meeting, and independent board expenses. JWCFS estimates that elimination
of these expenses would result in savings of approximately $100,000 per
year.
. AGRO's status as a separate company could result in disproportionate
attention, by analysts and other members of the investment community, to
AGRO's role within the JWCFS organization, and could detract from JWCFS'
ability to communicate the role and capabilities of its various
subsidiaries in the context of JWCFS' overall business strategies.
. Conversion of the residual AGRO minority shareholder interest into
additional outstanding JWCFS shares would increase JWCFS' market
capitalization and public float, which could enhance the overall trading
market for JWCFS Shares.
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The exact timing and details of any merger or other action concerning AGRO
necessarily will depend upon a variety of factors, including the number of
AGRO Shares acquired by JWCFS in the Exchange Offer. It should be noted that,
as a result of information hereafter obtained by JWCFS, changes in general
economic or market conditions or in the business of AGRO, or other factors,
such action might not be effected. JWCFS expressly reserves the right not to
effect a subsequent merger or take any other of the possible actions.
Except for the Transaction and except as otherwise described in this
Prospectus, including the current intention stated above concerning the
Consolidation Merger, JWCFS does not have any present plans or proposals that
relate to or would result in an extraordinary corporate transaction, such as a
merger, reorganization, liquidation, relocation of any operations of JWCFS, or
the sale or transfer of a material amount of assets involving JWCFS or any of
its subsidiaries, or any changes in JWCFS' capitalization or any other change
in JWCFS' corporate structure or business or the composition of its
management. However, JWCFS may, in the future, propose or develop additional
or new plans or proposals, or may propose the acquisition or disposition of
assets or other changes in JWCFS' business, corporate structure,
capitalization, management, or dividend policy.
DETERMINATION OF THE EXCHANGE RATIO
The JWCFS Board determined the Exchange Ratio based on the reported NAV of
AGRO at March 31, 1997 (without any discount thereto in respect of the
illiquidity of any AGRO portfolio investment) and the average of the last
reported sales prices of JWCFS Shares on the AMEX for the ten (10) trading
days immediately preceding the June 9, 1997 Public Announcement date. The
Exchange Ratio represents (i) a premium of 33.2% based on the relative last
reported sales prices of JWCFS Shares and AGRO Shares on June 6, 1997, the
last such trading date, (ii) a premium of 36.2% based on the relative average
closing sales prices during the ten (10) trading days preceding such date, and
(iii) a premium of % based on the relative final closing sales prices on
, 1997, the last trading date immediately preceding the formal
commencement of this Exchange Offer.
Based on relative closing bid quotations reported, such premiums are 31.3%,
33.8%, and %, respectively. Bid prices are the prices at which dealers stand
ready to purchase at least one round lot from investors seeking to sell their
shares, and JWCFS believes that, for shares (such as those of AGRO) with wide
bid-asked spreads, the bids provide a more accurate measure of sales prices
obtainable by individual investors seeking to sell a small number of shares.
The JWCFS Board concluded that the Exchange Ratio and resulting premium were
reasonable and appropriate, from its perspective, in light of: AGRO's NAV; the
condition of the public market for the AGRO Shares on NASDAQ; the fact that
tendering holders of AGRO Shares, as new holders of JWCFS Shares, would
continue to participate in the business of AGRO (if it were to be continued)
as a part of the business of JWCFS; the perception of JWCFS' management
regarding AGRO's business prospects; the perceived benefits to JWCFS of
obtaining a substantially increased ownership of AGRO, including the potential
ability to effect the Consolidation Merger, to terminate AGRO's status as a
BDC, to cause a dissolution and liquidation of AGRO, or to take other possible
actions that the ownership of 51% or more of the AGRO Shares could permit
JWCFS to control; and expectations concerning the level of premium that likely
would be attractive to the holders of AGRO Shares not held by JWCFS. However,
because the Exchange Ratio will not change for possible fluctuations in the
market price of the JWCFS Shares following public awareness of the Exchange
Offer, such fluctuations may adversely affect the amount of any such premium
on the date the Exchange Offer is consummated. The JWCFS Board, in connection
with authorizing the Exchange Offer, authorized JWCFS, to the extent
permissible under applicable rules and regulations of the Commission, to
engage in open market repurchases of JWCFS Shares between the Public
Announcement date and the commencement of the Exchange Offer, if it believed
that any such market price fluctuations would make such repurchases in the
best interests of JWCFS' shareholders as a whole. JWCFS did not repurchase any
of its shares during that period.
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JWCFS has not obtained a fairness opinion or other analysis from an outside
party concerning the fairness or reasonableness of the terms of the Exchange
Offer from the perspective of AGRO shareholders, as a financial matter.
THE JWCFS BOARD IS NOT MAKING A RECOMMENDATION TO THE HOLDERS OF AGRO SHARES
AS TO WHETHER OR NOT TO ACCEPT THE EXCHANGE OFFER. EACH AGRO SHAREHOLDER
SHOULD MAKE HIS OR HER OWN DETERMINATION BASED ON HIS OR HER OWN INVESTMENT
OBJECTIVES, CIRCUMSTANCES, AND ALTERNATIVES, FOLLOWING CAREFUL CONSIDERATION
OF THE INFORMATION CONTAINED IN THIS PROSPECTUS.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, JWCFS
hereby offers to exchange JWCFS Shares for all (but at least a minimum of 51%)
of the outstanding AGRO Shares, at a rate of .431 JWCFS Share for each AGRO
Share, provided that such AGRO Shares are validly tendered by the Expiration
Date and not withdrawn as provided in "THE EXCHANGE OFFER--Withdrawal Rights".
The term "Expiration Date" means 12:00 midnight, Atlanta time, on September
22, 1997, unless JWCFS extends the period of time for which the Exchange offer
is open, in which event the term "Expiration Date" shall mean the latest time
and date on which the Exchange Offer as extended by JWCFS expires.
Upon the terms and subject to the conditions of the Exchange Offer, JWCFS
will exchange all AGRO Shares for JWCFS Shares. Tendering shareholders will
not be obligated to pay any charges or expenses of the Exchange Agent or any
brokerage commissions. Except as set forth in the Letter of Transmittal, any
transfer taxes on the exchanged AGRO Shares pursuant to the Exchange Offer
will be paid by or on behalf of JWCFS unless such payment would jeopardize the
tax-free nature of the Transaction for federal income tax purposes. Currently,
JWCFS is not aware of any transfer taxes whose payment by JWCFS would have
such a result.
No fractional JWCFS Shares will be distributed. Holders of AGRO Shares who
would otherwise be entitled to receive a fractional JWCFS Share will be paid
cash in lieu thereof based on the last reported sales price of JWCFS Shares on
the Expiration Date.
The Exchange Offer is subject to certain conditions set forth in "THE
EXCHANGE OFFER--Certain Conditions of the Exchange Offer", including the
condition that JWCFS receives valid tenders (that are not subsequently
withdrawn) for a sufficient number of AGRO Shares to equal, when added to AGRO
Shares already owned by JWCFS, at least 51% of the outstanding AGRO Shares. As
of the date of this Prospectus, JWCFS owned 326,550 AGRO Shares, or
approximately 25.8% of the shares outstanding.
If any condition of the Exchange Offer is not satisfied, JWCFS may (i)
terminate the Exchange Offer and return all tendered AGRO Shares to tendering
shareholders, (ii) extend the Exchange Offer and, subject to withdrawal rights
as set forth in "THE EXCHANGE OFFER--Withdrawal Rights", retain all such AGRO
Shares until the expiration of the Exchange Offer as so extended, (iii) waive
such condition and, subject to any requirement to extend the period during
which the Exchange Offer is open, exchange all AGRO Shares validly tendered
for exchange by the Expiration Date and not withdrawn, or (iv) delay
acceptance for exchange of, or exchange for, any AGRO Shares until
satisfaction or waiver of such condition to the Exchange Offer, even though
the Exchange Offer has expired. JWCFS' right to delay acceptance for exchange
of, or exchange for, AGRO Shares tendered for exchange pursuant to the
Exchange Offer is subject to applicable law, including, to the extent
applicable, Rule 14e-1(c) promulgated under the Exchange Act, which requires
that JWCFS pay the consideration offered or return the AGRO Shares deposited
by or on behalf of the AGRO shareholders promptly
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after the termination or withdrawal of the Exchange Offer. For a description
of JWCFS' right to extend the period during which the Exchange Offer is open
and to amend, delay, or terminate the Exchange Offer, see "THE EXCHANGE
OFFER--Extension of Tender Period; Termination; Amendment".
Requests will be made to AGRO for use of an AGRO shareholders list and
security position listings for purposes of communicating with AGRO
shareholders and disseminating the Exchange Offer to holders of the AGRO
Shares. This Prospectus and the related Letter of Transmittal will be mailed
to record holders of AGRO Shares and will be furnished to brokers, banks, and
similar persons whose names, or the names of whose nominees, appear on the
AGRO shareholders list or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of AGRO Shares by JWCFS following receipt of such list or
listings from AGRO.
PROCEDURE FOR TENDERING AGRO SHARES
To tender AGRO Shares pursuant to the Exchange Offer, either: (a) a properly
completed and duly executed Letter of Transmittal (or manually executed
facsimile thereof), together with any required signature guarantee or an
Agent's Message (as defined below) in connection with a book-entry transfer,
and any other required documents, must be received by the Exchange Agent at
its address set forth on the back cover of this Prospectus and either (i)
certificates for the AGRO Shares tendered must be received by the Exchange
Agent at its address, or (ii) such AGRO Shares must be delivered pursuant to
the procedures for book-entry transfer described below (and a confirmation of
such delivery received by the Exchange Agent, such confirmation being referred
to as a "Book-Entry Confirmation"), in each case by the Expiration Date; or
(b) the guaranteed delivery procedure described below must be complied with.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility (as defined below) to, and received by, the Exchange Agent,
that forms a part of a Book-Entry Facility and states that such Book-Entry
Transfer Confirmation has received an express acknowledgment from the
participant in such Book-Entry Transfer Facility tendering the AGRO Shares
that such participant has received and agreed to be bound by the terms of the
Letter of Transmittal and that JWCFS may enforce such agreement against such
participant.
The Exchange Agent will establish accounts with respect to the AGRO Shares
at The Depositary Trust Company and Philadelphia Depository Trust Company
(each a "Book-Entry Transfer Facility") for purposes of the Exchange Offer
within two business days after the date of this Prospectus, and any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make book-entry delivery of AGRO Shares by causing such Book-
Entry Transfer Facility to transfer such AGRO Shares into the Exchange Agent's
account in accordance with the procedures of such Book-Entry Transfer
Facility. However, although delivery of AGRO Shares may be effected through
book-entry transfer, the Letter of Transmittal (or manually executed facsimile
thereof) with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other required documents must,
in any case, be received by the Exchange Agent at its address set forth on the
back cover of this Prospectus by the Expiration Date, or the guaranteed
delivery procedure described below must be complied with. Delivery of the
Letter of Transmittal and any other required documents to a Book-Entry
Transfer Facility does not constitute delivery to the Exchange Agent.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a financial institution (including most
banks, savings and loan associations and brokerage houses) which is a
participant in the Securities Transfer Agent Medallion Program, the New York
Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). Signatures on a Letter of
Transmittal need not be guaranteed if (a) the Letter of Transmittal is signed
by the registered holder of the AGRO Shares (including any participant in one
of the Book-Entry Transfer Facilities whose name appears in a security
position listing as the owner of the AGRO shares) tendered therewith and such
holder has not completed the instruction entitled "Special Exchange
Instructions" on the Letter of Transmittal, or (b) such AGRO Shares are
tendered for the account of an Eligible Institution. If the certificates for
AGRO Shares are registered in the name of a person other than the signer of
the Letter of Transmittal, or if certificates for unexchanged AGRO shares are
to be issued to a person other than the registered holder, the certificates
must be
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accompanied by appropriate stock powers, in either case signed exactly as the
name of the registered owner or owners appears on the certificates, with the
signatures on the certificates or stock powers guaranteed as set forth above.
If a shareholder desires to tender AGRO Shares pursuant to the Exchange
Offer and cannot deliver such AGRO Shares and all other required documents to
the Exchange Agent by the Expiration Date, or such shareholder cannot complete
the procedure for book-entry transfer on a timely basis, such AGRO Shares may
nevertheless be tendered if all of the following conditions for guaranteed
delivery are met:
(a) such tender is made by or through an Eligible Institution;
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by JWCFS is received by the Exchange
Agent (as provided below) by the Expiration Date; and
(c) the certificates for such AGRO Shares (or a confirmation of a book-
entry transfer of such AGRO Shares into the Exchange Agent's account at one
of the Book Entry Transfer Facilities), in proper form for transfer
together with a properly completed and duly executed Letter of Transmittal
(or manually executed facsimile thereof or an agent's message in connection
with a book-entry transfer) and any other documents required by the Letter
of Transmittal, are received by the Exchange Agent within five AMEX trading
days after the date of execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mailed to the Exchange Agent and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice.
In all cases, exchanges of AGRO Shares tendered and accepted for exchange
pursuant to the Offer will be made only after timely receipt by the Exchange
Agent of certificates for AGRO Shares (or timely confirmation of a Book-Entry
Transfer Facility as described above), properly completed and duly executed
Letter(s) of Transmittal (or facsimile(s) thereof), or an Agent's Message in
connection with a book-entry transfer, and any other required documents.
Accordingly, tendering AGRO Shareholders may be paid at different times
depending upon when certificates for AGRO Shares or confirmations of book-
entry transfers of such AGRO Shares are actually received by the Exchange
Agent.
By executing a Letter of Transmittal as set forth above, the tendering AGRO
shareholder irrevocably appoints designees of JWCFS as such shareholder's
attorneys-in-fact and proxies, each with full power of substitution, to the
full extent of such shareholder's rights with respect to the AGRO Shares
tendered by such shareholder and accepted for exchange by JWCFS and with
respect to any and all other AGRO Shares and other securities issued or
issuable in respect of the AGRO Shares on or after , 1997. Such
appointment is effective, and voting rights will be affected, when and only to
the extent that JWCFS deposits the shares of JWCFS Common Stock for AGRO
Shares tendered by such shareholder with the Exchange Agent. All such proxies
shall be considered coupled with an interest in the tendered AGRO Shares and
therefore shall not be revocable. Upon the effectiveness of such appointment,
all prior proxies given by such shareholder will be revoked, and no subsequent
proxies may be given (and, if given, will not be deemed effective). JWCFS'
designees will, with respect to the AGRO Shares for which the appointment is
effective, be empowered, among other things, to exercise all voting and other
rights of such shareholder as they, in their sole discretion, deem proper at
any annual, special or adjourned meeting of AGRO shareholders, by written
consent in lieu of any such meeting or otherwise. JWCFS reserves the right to
require that, in order for AGRO Shares to be deemed validly tendered,
immediately upon JWCFS' exchange of such AGRO Shares, JWCFS must be able to
exercise full voting rights with respect to such AGRO Shares.
THE METHOD OF DELIVERY OF AGRO SHARES AND ALL OTHER REQUIRED DOCUMENTS IS AT
THE OPTION AND RISK OF THE TENDERING SHAREHOLDER AND DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF
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CERTIFICATES FOR AGRO SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED AND SUFFICIENT TIME TO
ENSURE TIMELY RECEIPT SHOULD BE ALLOWED. To avoid backup federal income tax
withholding with respect to JWCFS Shares and cash in lieu of fractional shares
received by a shareholder pursuant to the Exchange Offer, the shareholder must
provide the Exchange Agent with his correct taxpayer identification number and
certify whether he is subject to backup federal income tax withholding by
completing the Substitute Form W-9 included in the Letter of Transmittal.
The tender of AGRO Shares pursuant to any one of the procedures described
above will constitute an agreement between the tendering shareholder and JWCFS
upon the terms and subject to the conditions of the Exchange Offer.
All questions as to the form of documents and the validity, eligibility
(including time of receipt), and acceptance for exchange of any tender of AGRO
Shares will be determined by JWCFS, in its sole discretion, which
determination will be final and binding. JWCFS reserves the absolute right to
reject any or all tenders of AGRO Shares determined by it not to be in proper
form, and to refuse any acceptance for exchange of AGRO Shares that may, in
the opinion of JWCFS' counsel, be unlawful. JWCFS also reserves the absolute
right to waive any defect or irregularity in any tender of AGRO Shares. No
tender of AGRO Shares will be deemed to have been validly made until all
defects and irregularities in the tender of any AGRO Shares have been cured.
None of JWCFS, the Exchange Agent, the Information Agent, or any other person
will be under any duty to give notification of any defect or irregularity in
tenders, or incur any liability for failure to give any such notification.
EXCHANGE OF AGRO SHARES
Upon the terms and subject to the conditions of the Exchange Offer, JWCFS
will accept for exchange, and will transfer JWCFS Shares in exchange for, AGRO
Shares validly tendered and not withdrawn by the Expiration Date as promptly
as practicable after the later of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions set forth in "THE EXCHANGE OFFER--
Certain Conditions of the Exchange Offer". In addition, JWCFS reserves the
right, in its sole discretion subject to Rule 14e-1(c) promulgated under the
Exchange Act, to delay the acceptance for exchange, or delay exchange, of any
AGRO Shares in order to comply with any applicable law. For a description of
JWCFS' right to terminate the Exchange Offer and not accept for exchange of,
or exchange for, any AGRO Shares, or to delay acceptance for exchange of, or
exchange for, any AGRO Shares, see "THE EXCHANGE OFFER--Extension of Tender
Period; Termination; Amendment".
For purposes of the Exchange Offer, JWCFS shall be deemed to have accepted
for exchange and exchanged AGRO Shares tendered for exchange when, as, and if
JWCFS gives oral or written notice to the Exchange Agent of its acceptance of
the tenders of such AGRO Shares for exchange. Exchange of AGRO Shares accepted
for exchange pursuant to the Exchange Offer will be made by deposit of
tendered AGRO Shares with the Exchange Agent, which will act as agent for the
tendering shareholders for the purpose of receiving JWCFS Shares from JWCFS
and transmitting such JWCFS Shares to tendering shareholders. In all cases,
the exchange of JWCFS Shares for AGRO Shares accepted for exchange pursuant to
the Exchange Offer will be made only after timely receipt by the Exchange
Agent of certificates for such AGRO Shares (or of a confirmation of a book-
entry transfer of such AGRO Shares into the Exchange Agent's account at one of
the Book-Entry Transfer Facilities), a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), and any other required
documents. For a description of the procedure for tendering AGRO Shares
pursuant to the Exchange Offer, see "THE EXCHANGE OFFER--Procedures for
Tendering AGRO Shares". Accordingly, exchanges of JWCFS Shares for AGRO Shares
may be made to tendering shareholders at different times if delivery of the
AGRO Shares and other required documents occur at different times. Under no
circumstances will interest be paid by JWCFS pursuant to the Exchange Offer,
regardless of any delay in making such exchange.
If certain events occur, JWCFS may not be obligated to exchange JWCFS Shares
for AGRO Shares pursuant to the Exchange Offer. See "THE EXCHANGE OFFER--
Certain Conditions of the Exchange Offer".
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JWCFS will exchange the same number of JWCFS Shares for each AGRO Share
accepted for exchange pursuant to the Exchange Offer.
If any tendered AGRO Shares are not exchanged pursuant to the Exchange Offer
for any reason, or if certificates are submitted for more AGRO Shares than are
tendered, certificates for such unexchanged or untendered AGRO Shares will be
returned (or, in the case of AGRO Shares tendered by book-entry transfer, such
AGRO Shares will be credited to an account maintained at one of the Book-Entry
Transfer Facilities), without expense to the tendering shareholder, as
promptly as practicable following the expiration or termination of the
Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of AGRO Shares made pursuant to the Exchange Offer are irrevocable,
except that AGRO Shares tendered pursuant to the Exchange Offer may be
withdrawn at any time before the Expiration Date and, unless theretofore
accepted for exchange and exchanged pursuant to the Exchange Offer, may also
be withdrawn at any time after 1997. If JWCFS extends the period during
which the Exchange Offer is open, is delayed in its acceptance of AGRO Shares
for exchange, or is unable to accept AGRO Shares for exchange pursuant to the
Exchange Offer for any reason, then, without prejudice to JWCFS' rights under
the Exchange Offer, the Exchange Agent may, on behalf of JWCFS, retain all
AGRO Shares tendered, and such AGRO Shares may not be withdrawn except as
otherwise provided in this section.
To be effective, a written, telegraphic, telex, or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at one of
its addresses set forth on the back cover of this Prospectus, and must specify
the name of the person who tendered the AGRO Shares to be withdrawn and the
number of AGRO Shares to be withdrawn, and the name of the registered holder
if different from that of the person who tendered such AGRO Shares. The
signature on the notice of withdrawal must be guaranteed by an Eligible
Institution (unless such AGRO Shares have been tendered for the account of any
Eligible Institution). If AGRO Shares have been tendered pursuant to the
procedures for book-entry tender as set forth under "--Procedure for Tendering
AGRO Shares", any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be created with the withdrawn
AGRO Shares and must otherwise comply with such Book-Entry Transfer Facilities
procedures. If certificates have been delivered or otherwise identified to the
Exchange Agent, the name of the registered holder and the serial numbers shown
on the particular certificates evidencing the AGRO Shares to be withdrawn must
also be furnished to the Exchange Agent as aforesaid prior to the physical
release of such certificates. Withdrawals may not be rescinded, and AGRO
Shares withdrawn will thereafter be deemed not validly tendered for purposes
of the Exchange Offer. However, withdrawn AGRO Shares may be retendered by
again following one of the procedures described in "THE EXCHANGE OFFER--
Procedure for Tendering AGRO Shares" before the Expiration Date.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by JWCFS, in its sole discretion,
which determination will be final and binding. None of JWCFS, the Exchange
Agent, the Information Agent, or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal,
or incur any liability for failure to give any such notification.
EXTENSION OF TENDER PERIOD; TERMINATION; AMENDMENT
JWCFS reserves the right (but will not be obligated), at any time or from
time to time, in its sole discretion and regardless of whether or not any of
the conditions specified in "THE EXCHANGE OFFER--Certain Conditions of the
Exchange Offer" have been satisfied, to (i) extend the period during which the
Exchange Offer is open by giving oral or written notice of such extension to
the Exchange Agent and by making public announcement of such extension, or
(ii) amend the Exchange Offer in any respect by making a public announcement
of such amendment. There can be no assurance that JWCFS will exercise its
right to extend or amend the Exchange Offer.
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If JWCFS materially changes the terms of the Exchange Offer (other than a
change in price or percentage of securities sought) or the information
concerning the Exchange Offer, or waives a material condition of the Exchange
Offer, JWCFS will extend the Exchange Offer for a period sufficient to allow
shareholders to consider the amended terms of the Exchange Offer. Certain
rules promulgated under the Exchange Act provide that the minimum period
during which an offer must remain open following material changes in the terms
of the offer or information concerning the offer (other than a change in price
or a change in percentage of securities sought) will depend on the facts and
circumstances, including the relative materiality of such terms or
information. If (i) JWCFS increases or decreases the consideration offered for
AGRO Shares pursuant to the Exchange Offer, or JWCFS decreases the number of
AGRO Shares eligible for exchange, and (ii) the Exchange Offer is scheduled to
expire at any time earlier than the expiration of a period ending on the tenth
business day from and including the date that notice of such increase or
decrease is first published, sent, or given, then the Exchange Offer will be
extended until the expiration of such period of ten business days. The term
"business day" means any day other than a Saturday, Sunday, or federal holiday
and consists of the time period from 12:01 a.m. through 12:00 midnight,
Atlanta time.
JWCFS also reserves the right, in its reasonable discretion, if any
condition specified in "THE EXCHANGE OFFER--Certain Conditions of the Exchange
Offer" has not been satisfied and so long as AGRO Shares have not theretofore
been accepted for exchange, to delay (except as otherwise required by
applicable law) acceptance for exchange of, or exchange for, any AGRO Shares,
or to terminate the Exchange Offer and not accept for exchange of, or exchange
for, any AGRO Shares.
If JWCFS extends the period of time during which the Exchange Offer is open,
is delayed in accepting for exchange, or exchanging for, any AGRO Shares, or
is unable to accept for exchange of, or exchange for, any AGRO Shares pursuant
to the Exchange Offer for any reason, then, without prejudice to JWCFS' rights
under the Exchange Offer, the Exchange Agent may, on behalf of JWCFS, retain
all AGRO Shares tendered, and such AGRO Shares may not be withdrawn except as
otherwise provided in "THE EXCHANGE OFFER--Withdrawal Rights". The reservation
by JWCFS of the right to delay acceptance for exchange of, or exchange for,
any AGRO Shares is subject to the requirements of Rule 14e-1(c) under the
Exchange Act, which requires that JWCFS pay the consideration offered or
return the AGRO Shares deposited by or on behalf of shareholders promptly
after the termination or withdrawal of the Exchange Offer.
Any extension, termination, or amendment of the Exchange Offer will be
followed as promptly as practicable by a public announcement thereof. Without
limiting the manner in which JWCFS may choose to make any public announcement,
JWCFS will have no obligation (except as otherwise required by applicable law)
to publish, advertise, or otherwise communicate any such public announcement
other than by making a release to the Dow Jones News Service, subject to
JWCFS' obligations under Rule 14d-4(c) under the Exchange Act (relating to
JWCFS' obligation to disseminate public announcements concerning material
changes in the Prospectus), if such rule is applicable. If the Exchange Offer
is extended, JWCFS will make an appropriate public announcement of such
extension no later than 9:00 a.m., Atlanta time, on the next business day
after the previously scheduled Expiration Date.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer and without
prejudice to JWCFS' other rights under the Exchange Offer, JWCFS shall not be
required to accept for exchange of, or exchange for, any AGRO Shares, and may
terminate the Exchange Offer as provided in "THE EXCHANGE OFFER--Extension of
Tender Period; Termination; Amendment", if before the expiration of the
Exchange Offer, any of the following conditions exists:
(a) there shall be threatened, instituted, or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, before any court
or governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, to delay, or otherwise directly or indirectly
to restrain or prohibit (A) the making of the Exchange
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Offer or any other material element of the Transaction or (B) the
acceptance for exchange of, or exchange for, some of or all of the AGRO
Shares by JWCFS, (ii) seeking to obtain material damages directly or
indirectly relating to the transactions contemplated by the Exchange Offer
(including the other elements of the Transaction), (iii) seeking any
material diminution in the benefits expected to be derived by JWCFS or any
of its affiliates as a result of the transactions contemplated by the
Exchange Offer (or any other elements of the Transaction), or (iv) that
otherwise, in the judgment of JWCFS, has or may have material adverse
significance with respect to either the value of JWCFS or any of its
subsidiaries or affiliates or the value of the AGRO Shares to JWCFS;
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order, or decree proposed, enacted, enforced, promulgated,
issued, or deemed applicable to the Exchange Offer or any transaction
contemplated by the Exchange Offer (including the other elements of the
Transaction) by any court, government, or governmental authority or agency,
domestic or foreign, that might, in the judgment of JWCFS, directly or
indirectly, result in any of the consequences referred to in clauses (i)
through (iv) of paragraph (a) above;
(c) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the counter market, (ii) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) any material adverse change (or development or threatened
development involving a prospective material adverse change) in United
States or any other currency exchange rates, or a suspension of or a
limitation on the markets therefor, (iv) the commencement of a war, armed
hostilities, or other international or national calamity directly or
indirectly involving the United States, (v) any limitation (whether or not
mandatory) by any governmental authority or agency on, or any other event
that, in the judgment of JWCFS, might adversely affect, the extension of
credit by banks or other financial institutions, or (vi) in the case of any
of the foregoing existing at the time of the commencement of the Exchange
Offer, a material acceleration or worsening thereof;
(d) any material adverse change (i) shall have occurred or been
threatened (or any development shall have occurred or been threatened
involving a prospective material adverse change) in the business, financial
condition, results of operations, or prospects of AGRO, or (ii) shall have
occurred in the net asset value of AGRO or in the United States securities,
financial, or commodities markets, or JWCFS shall have become aware of any
facts that, in judgment of JWCFS, have or may have material adverse
significance with respect to the value of AGRO Shares to JWCFS;
(e) a tender or exchange offer for some or all of the AGRO Shares shall
have been publicly proposed to be made or shall have been made by another
person, or it shall have been publicly disclosed or JWCFS shall have
otherwise learned that (i) any person or "group" (as defined in Section
13(d)(3) of the Exchange Act) other than JWCFS and its affiliates shall
have acquired or proposed to acquire beneficial ownership of more than 5%
of any class or series of capital stock of AGRO (including AGRO Shares),
through the acquisition of stock, the formation of a group, or otherwise,
or shall have been granted any option, right, or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 5% of any class or
series of capital stock of AGRO (including AGRO Shares) other than
acquisitions for bona fide arbitrage purposes only and other than as
disclosed in a Schedule 13D or 13-G on file with the Commission on June 6,
1997, (ii) any such person or group that, before June 6, 1997, had filed
such a Schedule with the Commission shall have acquired or proposed to
acquire beneficial ownership of additional shares of any class or series of
capital stock of AGRO (including AGRO Shares), through the acquisition of
stock, the formation of a group, or otherwise, constituting 1% or more of
any such class or series, or shall have been granted any option, right, or
warrant, conditional or otherwise, to acquire beneficial ownership of
additional shares of any class or series of capital stock of AGRO
(including AGRO Shares) constituting 1% or more of any such class or
series, (iii) any person or group (other than JWCFS and its affiliates)
shall have made a proposal with respect to a tender or exchange offer or a
merger, consolidation, or other business combination with or involving
AGRO, or (iv) any person shall have filed a Notification and Report Form
under the Hart-
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Scott-Rodino Act or made a public announcement or non-public approach
reflecting an intent to acquire AGRO or any assets or securities of AGRO;
or
(f) the JWCFS Shares to be issued to the AGRO shareholders in the
Exchange Offer shall not have been authorized for listing on the AMEX,
subject to official notice of issuance.
The foregoing conditions are for the sole benefit of JWCFS and may be
asserted by JWCFS regardless of the circumstances (including any action or
omission by JWCFS) giving rise to any such condition or may (except in the
case of the condition specified in clause (i) of the preceding subparagraph
(e)) be waived by JWCFS in whole at any time and in part from time to time.
The determination as to whether any condition has been satisfied shall be in
the reasonable judgment of JWCFS and will be final and binding on all parties.
The failure by JWCFS at any time to exercise its rights under any of the
foregoing conditions shall not be deemed a waiver of any such right. The
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right that may
be asserted at any time and from time to time. Any determination by JWCFS
concerning the events described in this section will be final and binding upon
all parties.
In addition, JWCFS will not accept for exchange any AGRO Shares tendered,
and no JWCFS Shares will be transferred in exchange for any such AGRO Shares,
at any time at which there is in effect a stop order issued by the Commission
with respect to the Registration Statement under which the JWCFS Shares are to
be transferred.
CONTROL OF THE AGRO BOARD
Following the consummation of the Exchange Offer, and in the absence of the
cooperation of the incumbent AGRO Board in causing AGRO to take certain
actions that may be sought by JWCFS, JWCFS may, at the next or subsequent
annual or special meetings of AGRO shareholders, nominate individuals to serve
as directors of AGRO who (subject to fiduciary duties) support the
Consolidation Merger or other actions that may be considered by JWCFS for
AGRO.
The AGRO Bylaws provide for the classification of the AGRO Board into three
classes, each with a term of three years and with only one class of directors
standing for election in any year. Under the AGRO Articles of Incorporation
and AGRO Bylaws, the AGRO Board can increase the number of directors at any
time up to a maximum of 12. In addition, a director may resign at any time.
Under the AGRO Bylaws, when a vacancy occurs in the AGRO Board (other than a
vacancy resulting from the removal of a director by the shareholders for
cause), a majority of the remaining directors, even if less than a quorum, may
fill the vacancy until the successor or successors are elected at a meeting of
AGRO shareholders. Directors may be removed from office only for "cause" by a
vote of at least 75% of the AGRO Shares and, in the event of any such removal,
resulting vacancies may be filled by the shareholders. The AGRO Bylaws do not
provide for cumulative voting on the election of directors.
Under the AGRO Bylaws, holders of 25% of the outstanding AGRO Shares may
call a special meeting of shareholders. If, following the consummation of the
Exchange Offer, JWCFS owns at least 75% of the AGRO Shares, and if it could
establish "cause" for the removal of the AGRO directors, it could convene a
special meeting of AGRO shareholders to remove the incumbent AGRO directors
and elect their successors.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax consequences
of the Exchange Offer and the Consolidation Merger to holders of AGRO Shares,
but does not purport to be a complete analysis of all of the potential tax
effects of the Transaction. The discussion is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury regulations, Internal Revenue
Service ("IRS") rulings, and judicial decisions now in effect, all of which
are subject to change at any time by legislative, judicial, or administrative
action, and
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any such change may be applied retroactively. No information is provided
herein with respect to foreign, state, or local tax laws or estate and gift
tax considerations. This information is directed to AGRO shareholders who hold
their AGRO Shares as "capital assets" within the meaning of Section 1221 of
the Code. JWCFS does not intend to request a ruling from the IRS with respect
to the Exchange Offer or the Consolidation Merger. The following discussion of
certain federal income tax consequences relevant to the Exchange Offer and the
Consolidation Merger constitutes the opinion of Kilpatrick Stockton LLP, tax
counsel to JWCFS ("Tax Counsel"), subject to the qualifications stated herein.
Such opinion, however, has no binding effect on the IRS or the courts.
In the opinion of Tax Counsel, if both the Exchange Offer and the
Consolidation Merger are effected within a reasonably prompt period of time of
each other (for example, if the Consolidation Merger is effected within 30 to
60 days after the consummation of the Exchange Offer), the transaction will be
treated as a single integrated transaction. In that case, the Exchange Offer
and the Consolidation Merger will constitute a tax-free exchange under Section
368 of the Code. In such event, (i) no income, gain, or loss will be
recognized by AGRO shareholders upon the receipt of JWCFS Shares in exchange
for their AGRO Shares, (ii) no income, gain, or loss will be recognized by
JWCFS or AGRO pursuant to the Exchange Offer or the Consolidation Merger,
(iii) the tax basis of the JWCFS Shares received by AGRO shareholders will be
equal to their basis in AGRO Shares immediately before consummation of the
Exchange Offer or Consolidation Merger, (iv) the holding period of the JWCFS
Shares received by each AGRO shareholder will include the period for which
such shareholder has held the AGRO Shares surrendered in exchange therefor,
and (v) the payment of cash in lieu of fractional share interests in JWCFS
will be treated for federal income tax purposes as if the fractional shares
were issued as part of the Exchange Offer or the Consolidation Merger, as
applicable, and then were redeemed by JWCFS. The cash payments will be treated
as having been received as distributions in full payment in exchange for the
shares redeemed as provided in Section 302(a) of the Code.
If the Consolidation Merger is not effected (or is not effected within a
reasonably prompt period of time following the Exchange Offer, so that they
are not treated as a single integrated transaction), the Exchange Offer will
not qualify as a tax-free reorganization. As a result, (i) AGRO shareholders
will recognize gain or loss upon the receipt of JWCFS Shares in exchange for
their AGRO Shares, (ii) the tax basis of the JWCFS Shares received will be
equal to the fair market value of those shares, and (iii) the holding period
for the JWCFS Shares received will begin on the date of consummation of the
Exchange Offer. Any gain or loss recognized by an AGRO shareholder will be a
capital gain or loss if the AGRO shareholder held the AGRO Shares as a capital
asset.
The maximum federal income tax rate applicable to an individual's capital
gains with respect to assets held for greater than one year is currently 28%;
pursuant to recently enacted legislation, the maximum federal income tax rate
applicable to an individual's gains with respect to capital assets held for
more than eighteen months is 20%. Only $3,000 of an individual's capital
losses are currently deductible in any one year against ordinary income. A
corporation's capital gains are taxable currently at the same rate as the
corporation's ordinary income, and a corporation's capital losses are
deductible only to the extent of its capital gains.
Certain AGRO shareholders may be subject to backup withholding at a rate of
31% on payments of cash in lieu of fractional share interests in JWCFS. In
order to avoid such backup withholding, each AGRO shareholder must provide the
Exchange Agent with such AGRO shareholder's correct taxpayer identification
number and certify that such shareholder is not subject to such backup
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal.
EFFECTS OF THE EXCHANGE OFFER AND THE CONSOLIDATION MERGER
Market for AGRO Shares; NASDAQ Trading. The exchange of AGRO Shares pursuant
to the Exchange Offer will reduce the number of AGRO Shares that might
otherwise trade publicly and is likely to reduce the number of holders of AGRO
Shares, which could adversely affect the liquidity and market value of the
remaining AGRO Shares held by shareholders other than JWCFS. JWCFS cannot
predict whether the reduction in the number of AGRO Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
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market price or marketability of the AGRO Shares. However, JW Charles/CSG has
been the principal market maker for AGRO Shares on NASDAQ since its trading
commenced in August 1994 and until the Market Making Suspension date, and
JWCFS may cause JW Charles/CSG permanently to cease all market making activity
for AGRO Shares. That alone would likely affect trading in a significantly
adverse manner.
According to NASDAQ's published guidelines, in order for the AGRO Shares to
continue to be traded on the NASDAQ, AGRO must meet the following criteria: at
least two registered and active market makers; at least $2 million of total
assets, and $1 million of capital and surplus; either a $1.00 minimum bid
price per share or a $1 million market value of public float and $2 million in
capital and surplus; at least 100,000 publicly held shares, with a market
value of at least $200,000; and at least 300 holders of AGRO Shares.
On November 6, 1996, the Board of Directors of The Nasdaq Stock Market, Inc.
approved and submitted for comments proposed changes that would make the
guidelines for continued eligibility for NASDAQ more stringent than the above
current guidelines. As proposed, these new guidelines would require: at least
two registered and active market makers; either $2 million of net tangible
assets (i.e., total assets less total liabilities and goodwill), or net income
of $500,000 in two of the last three years, or a market capitalization of at
least $35,000,000; a $1.00 minimum bid price per share; a $1 million market
value of public float; at least 500,000 publicly held shares, with a market
value of at least $1,000,000; and at least 300 holders of AGRO Shares.
If, upon the completion of the Exchange Offer, the AGRO Shares no longer
meet the requirements for designation for trading on NASDAQ and such
designation is revoked, or if JWCharles/CSG does not resume its market making
activities, and such designation is revoked, the market for AGRO Shares could
be adversely affected. Even if the AGRO Shares remain eligible for designation
for trading on NASDAQ after the Exchange Offer (and if the Consolidation
Merger is not immediately consummated), the extent of the public market for
AGRO Shares and availability of price quotations would depend upon such
factors as the number of holders and the aggregate market value of the
publicly held AGRO Shares at such time; the interest in maintaining a market
in the AGRO Shares on the part of securities firms; the possible termination
of registration of the AGRO Shares under the Exchange Act; and other factors
beyond the control of AGRO. If the Consolidation Merger is consummated, the
AGRO Shares would no longer meet the requirements for designation for trading
on NASDAQ, and there would no longer be a public market for such shares.
Registration Under the Exchange Act. The AGRO Shares currently are
registered under the Exchange Act. Such registration may be terminated upon
application of AGRO to the Commission if there are less than 300 holders of
record. Termination of the registration of the AGRO Shares under the Exchange
Act would substantially reduce the information required to be furnished by
AGRO to holders of AGRO Shares and to the Commission, and would make certain
of the provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b), the requirement of furnishing a proxy or
information statement in connection with shareholder action (and the related
requirement of an annual report to shareholders), and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions no
longer applicable to the AGRO Shares. Furthermore, "affiliates" of AGRO would
no longer be able to sell such securities pursuant to Rule 144 promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). Moreover,
if registration of the AGRO Shares under the Exchange Act were terminated, the
AGRO Shares would no longer be eligible for trading on NASDAQ. JWCFS may cause
AGRO to terminate registration of the AGRO Shares if the requirements for such
termination are met as a result of the Exchange Offer. If the Consolidation
Merger is consummated, registration of the AGRO Shares would automatically be
terminated.
Dissenters' Rights. Following the consummation of the Exchange Offer, in
connection with any Consolidation Merger and in accordance with Title 3,
Subtitle 2 of the Maryland General Corporation Law ("MGCL"), an AGRO
shareholder may, by following the procedures summarized below, demand that
JWCFS pay the shareholder the fair value of his or her AGRO Shares in cash. If
in connection with any Consolidation Merger, a vote of AGRO shareholders is
required to be taken (because such merger cannot be effected without such a
vote under the MGCL), an AGRO shareholder wishing to demand payment of the
fair value of his AGRO Shares must submit a written notice to the Secretary of
AGRO at or prior to such vote stating that such
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shareholder objects to the proposed merger. The shareholder must then not vote
his shares in favor of the merger. Merely voting against any Consolidation
Merger or not voting in favor of any Consolidation Merger will not constitute
notice of objection or dissent and will not entitle a shareholder to payment
in cash of the value of his shares.
If in connection with any Consolidation Merger, no vote of AGRO shareholders
is required to be taken (because JWC or its wholly owned subsidiary owns 90%
or more of the AGRO Shares and is proposing to merge AGRO into the owner of
such shares under the MGCL without such a vote), JWCFS will notify each record
holder of AGRO Shares of any proposed merger at least 30 days prior to the
filing of the Articles of Merger. An AGRO shareholder wishing to demand
payment of the fair value of any part or all of his or her shares of AGRO must
submit a written notice to the Secretary of AGRO within 30 days after notice
of any Consolidation Merger is given, stating that such shareholder objects to
the proposed Consolidation Merger.
Promptly following the effectiveness of any Consolidation Merger, JWCFS, as
the successor to AGRO, will notify in writing each AGRO shareholder who filed
a notice of objection to the Consolidation Merger of the date on which the
Articles of Merger were accepted for recording. Within 20 days of the date on
which the Articles were accepted for recording, an objecting shareholder must
make a written demand for payment of the fair value of his or her stock,
stating the number and class of shares for which payment is demanded. The
notice of objection should be sent to JWCFS, 980 North Federal Highway, Suite
310, Boca Raton, Florida 33432, Attention: Corporate Secretary.
AGRO's notice of the date on which the Articles of Merger were accepted may
contain an offer of payment and certain financial disclosures. If an objecting
shareholder who has followed all of the procedural steps required to demand
payment of fair value has not received payment for his or her shares, he or
she may, or JWCFS may, within 50 days of the acceptance of the Articles of
Merger, petition the court of equity in the appropriate county for appraisal
of the fair value of his or her AGRO Shares as of the date of the
Consolidation Merger, without including any appreciation or depreciation
resulting directly or indirectly from the Consolidation Merger or its
proposal. Any shareholder who filed a notice of objection, but fails to file a
written demand for payment of the fair value in a timely manner, will be bound
by the terms of the transaction and will not be entitled to receive payment in
cash as a holder of dissenting shares. A shareholder has no right to receive
any dividends or other distributions on such shares (or the JWCFS Shares into
which such dissenting shares would be converted), after close of business on
the date the Consolidation Merger is approved, and has no other rights,
including voting rights, with respect to such shares, except the payment of
fair value. The rights of a shareholder who demands payment will be restored
if the demand for payment is withdrawn, a petition of appraisal is not filed
within the time required, a court determines that the shareholder is not
entitled to relief, or the Consolidation Merger is abandoned or rescinded.
If the court finds that the objecting shareholder is entitled to an
appraisal of his or her stock, the court shall appoint three disinterested
appraisers to determine the fair value of the stock. Within 60 days after
appointment (or such longer period as the court may direct), the appraisers
shall file with the court and mail to each dissenting shareholder their report
stating their conclusion as to the fair value of the stock. Within 15 days
after the filing of the report, any party may object to the report and request
a rehearing. The court, upon motion of any party, will enter an order either
confirming, modifying, or rejecting the report and, if confirmed or modified,
enter judgment directing the time within which payment must be made. If the
report is rejected, the court may determine the fair value or remit the
proceeding to the same or other appraisers. Any judgment entered pursuant to a
court proceeding will include interest from the date of the shareholders'
approval of the Consolidation Merger, unless the court finds that the
shareholder's refusal to accept a written offer to purchase the shares was
arbitrary, vexatious, or not in good faith.
In general, the expenses of the appraisal proceedings will be the
responsibility of JWCFS. However, all or any part of such expenses may be
assessed against any dissenting shareholder to whom an offer to pay for such
shareholder's shares was made by JWCFS, if the court finds the failure to
accept such offer was arbitrary, vexatious, or not in good faith.
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FEES AND EXPENSES
Soliciting Dealers. JWCFS may choose to engage and to pay to any "qualified
broker or dealer" (as defined below), and any commercial bank or trust company
having an office, branch, or agency in the United States, each of which is
referred to herein as a "Soliciting Dealer", a solicitation fee of $.15 for
each AGRO share solicited that is properly tendered and accepted for exchange
and exchanged pursuant to the Exchange Offer; provided, however, that the
maximum aggregate fee payable to all Soliciting Dealers with respect to any
single beneficial owner shall be $500, and provided further that no Soliciting
Dealer fees will be paid with respect to any AGRO Shares tendered for the
account of anyone who became the beneficial owner of such shares after June 6,
1997. In the event of such engagement, the name and address of each such
Soliciting Dealer will be set forth in the Letter of Transmittal. If the names
of more than one Soliciting Dealer appear on Letters of Transmittal for any
beneficial owner, JWCFS will pay the applicable proportionate fee to each such
Soliciting Dealer in proportion to the number of shares solicited by each. No
fee will be paid for AGRO Shares purchased from a Soliciting Dealer tendering
for its own account. In connection with the payment of such fees, JWCFS
reserves the right to conduct such investigation as it deems necessary to
determine whether AGRO Shares tendered separately are owned by the same
beneficial owner, whether any beneficial owner became such after June 4, 1997,
and whether shares tendered by a Soliciting Dealer were tendered for such
Soliciting Dealer's own account. A "qualified broker or dealer" is a broker or
dealer that is a member of a registered national securities exchange in the
United States or the NASD, and any foreign broker or dealer not eligible for
NASD membership who agrees to conform to the NASD's Rules of Fair Practice in
making solicitations within the United States to the same extent as though it
were a member thereof. No Soliciting Dealer shall be the agent of JWCFS, the
Information Agent, or the Exchange Agent.
Information and Exchange Agent. JWCFS has retained American Stock Transfer &
Trust Company to act as both the Information Agent and the Exchange Agent in
connection with the Exchange Offer. The Information Agent may contact holders
of AGRO Shares by mail, telephone, telex, telegraph and personal interviews,
and may request brokers, dealers, and other nominee shareholders to forward
materials relating to the Exchange Offer to beneficial owners. The Information
and Exchange Agent will receive reasonable and customary compensation for its
services, will be reimbursed for certain reasonable out-of-pocket expenses,
and will be indemnified against certain liabilities in connection therewith,
including certain liabilities under the federal securities laws. The
Information and Exchange Agent has not been retained to make solicitations or
recommendations in its role as such.
Others. Brokers, dealers, commercial banks, and trust companies will, upon
request, be reimbursed by JWCFS for reasonable and necessary costs and
expenses incurred by them in forwarding materials to their customers.
It is estimated that the expenses incurred by JWCFS in connection with the
Exchange Offer and the Consolidation Merger will be approximately as set forth
below:
<TABLE>
<CAPTION>
EXCHANGE OFFER AND
EXCHANGE OFFER ONLY CONSOLIDATION MERGER
------------------- --------------------
<S> <C> <C>
Soliciting Dealer fees.............. $ 48,000 $141,000
Legal fees and expenses............. 90,000 100,000
Accounting fees and expenses........ 35,000 35,000
Information and Exchange Agent fees
and expenses....................... 25,000 35,000
Filing fees......................... 783 783
Printing and mailing expenses....... 50,000 50,000
Miscellaneous....................... 9,217 10,217
-------- --------
$258,000 $372,000
======== ========
</TABLE>
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SOURCE OF FUNDS
The funds for fees and expenses related to the Transaction will be derived
from JWCFS' working capital.
REGULATORY APPROVALS
Based upon an examination of publicly available information filed by AGRO
with the Commission and other publicly available information with respect to
AGRO, JWCFS is not aware of any license or regulatory permit that appears to
be material to the business of AGRO and that is likely to be adversely
affected by JWCFS' acquisition of AGRO Shares pursuant to the Exchange Offer,
or of any approval or other action by any state, federal, or foreign
government or governmental agency that would be required before the
acquisition of AGRO Shares pursuant to the Exchange Offer. JWCFS presently
intends to take such actions with respect to any approvals as will enable it
to acquire AGRO Shares as expeditiously as possible. In this regard, JWCFS
expressly reserves the right to challenge the validity and applicability of
any state, foreign, or other statutes or regulations purporting to require
approval of the commencement or consummation of the Exchange Offer or the
Consolidation Merger.
There can be no assurance that any license, permit, approval, or other
action, if needed, would be obtained or, if so obtained, when, or that adverse
consequences might not result to AGRO or to its business in the event of
adverse regulatory action or inaction.
MISCELLANEOUS
JWCFS is not aware of any jurisdiction where the making of the Exchange
Offer or the acceptance thereof would not comply with applicable law. If JWCFS
becomes aware of any jurisdiction where the making of the Exchange Offer or
acceptance thereof would not comply with applicable law, JWCFS will make a
good faith effort to comply with such law. If, after such good faith effort,
JWCFS cannot comply, the Exchange Offer will not be made to, nor will tenders
be accepted from or on behalf of, holders of AGRO Shares in such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of JWCFS not contained in this Prospectus or in the
Letter of Transmittal and, if given or made, such information or
representation must not be relied upon as having been authorized.
INFORMATION ABOUT AGRO
Excerpts from AGRO's Annual Report on Form 10-KSB40 for the fiscal year
ended December 31, 1996, and Form 10-QSB for the quarter ended March 31, 1997,
have been reproduced by JWCFS and included as Annex I and Annex II,
respectively, for delivery with this Prospectus. The description of AGRO in
such reports is thereby made a part hereof.
INFORMATION ABOUT JWCFS
The description of JWCFS and its business set forth in its Annual Report on
Form 10-K for the fiscal year ended December 31, 1996 and in subsequent
reports filed by JWCFS with the Commission pursuant to the Exchange Act is
incorporated herein by reference. See "INCORPORATION OF DOCUMENTS BY
REFERENCE".
JWCFS is subject to the informational filing requirements of the Exchange
Act and, in accordance therewith, is obligated to file reports and other
information with the Commission relating to its business, financial statements
and other matters. Information as of particular dates concerning JWCFS'
directors and executive officers, their remuneration, options granted to them,
the principal holders of JWCFS' securities, and any material interests of such
persons in transactions with JWCFS is required to be disclosed in proxy
statements distributed to JWCFS' shareholders and filed with the Commission.
Such reports, proxy statements, and other information are available for
inspection and may be copied as described in "AVAILABLE INFORMATION".
CERTAIN RELATIONSHIPS AND TRANSACTIONS
As discussed in detail elsewhere in this Prospectus, JWCharles/CSG served as
the underwriter for AGRO's IPO in August 1994. In connection with the IPO,
JWCFS received from AGRO underwriting discounts and commissions and an
unaccountable expense allowance totalling approximately $822,250.
JWCharles/CSG began
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<PAGE>
to serve as a market maker for the AGRO Shares in connection with the IPO and
continued to serve as a market maker until the Market Making Suspension on
June 6, 1997. See "THE EXCHANGE OFFER--Background".
During the 60 days preceding the Public Announcement on June 9, 1997, JWCFS,
acting through JWCharles/CSG in its capacity as a market maker for the AGRO
Shares until the Market Making Suspension on June 6, 1997, engaged in 19
transactions involving its purchase or sale of AGRO Shares. All of such
transactions were purchases, for an aggregate of 33,450 shares, at prices
ranging from $2.63 to $2.88 resulting in an increase in JWCFS' ownership of
AGRO Shares during that 60-day period of 33,450 shares at an average price of
$2.82 per share. No AGRO Shares were acquired by JWCFS during that period (or
at any prior time) other than in its capacity as a market maker, or for any
purpose other than performing in that capacity. No AGRO Shares have been
acquired by JWCFS in any capacity since the Market Making Suspension date.
Except as described above and in "THE EXCHANGE OFFER--Background; and --
Purpose of the Exchange Offer; the Consolidation Merger", (a) neither JWCFS
nor, to the best of JWCFS' knowledge, any of JWCFS' directors and executive
officers has any contract, arrangement, understanding, or relationship with
any other person with respect to any securities of AGRO, and (b) there have
not been any contracts, negotiations, or transactions between (i) JWCFS or any
of JWCFS' directors, officers, or affiliates, on the one hand, and (ii) AGRO
or any of its directors, officers, or affiliates, on the other hand, that are
required to be disclosed pursuant to the rules and regulations of the
Commission. None of JWCFS and its directors and executive officers has
effected any transaction in AGRO Shares during the 60 days preceding the
commencement of the Exchange Offer, except as described in the above-
referenced sections of this Prospectus.
DESCRIPTION OF CAPITAL STOCK OF JWCFS
The authorized capital stock of JWCFS consists of 9,056,000 shares of common
stock, $.001 par value per share (which are the JWCFS Shares), and 5,000,000
shares of preferred stock, $.001 par value per share, having such rights and
privileges as the JWCFS Board may from time to time determine. As of the date
of this Prospectus, there were 3,319,021 JWCFS Shares and no shares of
preferred stock issued and outstanding.
The following summary of JWCFS capital stock does not purport to be complete
and is qualified in its entirety by reference to the Restated Articles of
Incorporation, as amended, and Bylaws, as amended, of JWCFS that are included
as exhibits to the Registration Statement of which this Prospectus forms a
part, and the applicable provisions of the Florida Business Corporation Act.
JWCFS SHARES
Holders of JWCFS Shares are entitled to one vote per share on any issue
submitted to a vote of the shareholders and do not have cumulative voting
rights in the election of directors. Accordingly, the holders of a majority of
the outstanding JWCFS Shares voting n the election of directors can elect all
of the directors then standing for election, if they choose to do so. All
JWCFS Shares are entitled to share equally in such dividends as the JWCFS
Board may, in its discretion, declare out of sources legally available
therefor. Upon dissolution, liquidation, or winding up of the JWCFS, holders
are entitled to receive on a ratable basis, after payment or provision for
payment of all debts and liabilities of JWCFS and any preferential amount due
with respect to outstanding shares of preferred stock, all assets of JWCFS
available for distribution, in cash or in kind. Holders of JWCFS Shares do not
have preemptive or other subscription rights, conversion or redemption rights,
or any rights to share in any sinking fund. All currently outstanding JWCFS
Shares are, and the shares offered hereby (when issued in exchange for AGRO
Shares in the manner contemplated by this Prospectus) will be, fully paid and
nonassessable.
PREFERRED STOCK
Pursuant to the JWCFS' Restated Articles of Incorporation, the JWCFS Board
from time to time, may authorize the issuance of shares of preferred stock in
one or more series, may establish the number of shares to
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<PAGE>
be included in any such series, and may fix the designations, powers,
preferences, and rights (including voting rights) of the shares of each such
series and any qualifications, limitations, or restrictions thereon. No
shareholder authorization is required for the issuance of shares of preferred
stock unless imposed by then applicable law. Shares of preferred stock may be
issued for any general corporate purposes, including acquisitions. The JWCFS
Board could issue a series of preferred stock with rights more favorable with
regard to dividends and liquidation than the rights of holders of JWCFS
Shares. Such a series of preferred stock also could be used for the purposes
of preventing a hostile takeover of JWCFS that is considered to be desirable
by the holders of JWCFS Shares, could otherwise adversely affect the voting
power of the holders of JWCFS Shares, and could serve to perpetuate the
directors' control of JWCFS under certain circumstances. No transaction is now
contemplated that would result in the issuance of any such shares of preferred
stock.
LIMITATIONS ON LIABILITY OF OFFICERS AND DIRECTORS
JWCFS' Restated Articles of Incorporation provide for indemnification of
directors to the fullest extent permitted by Florida law and, to the extent
permitted by such law, eliminate, or limit the personal liability of directors
to JWCFS and its shareholders for monetary damages for certain breaches of
fiduciary duty and the duty of care. Such indemnification may be available for
liabilities arising in connection with the Exchange Offer. Insofar as
indemnification for liabilities under the Securities Act may be permitted to
directors, officers, or persons controlling JWCFS pursuant to the foregoing
provisions, JWCFS has been informed that, in the opinion of the Commission,
such indemnification is against public policy as expressed in the Securities
Act and is therefore unenforceable. Pursuant to its Bylaws, JWCFS may
indemnify its officers, employees, agents, and other persons to the fullest
extent permitted by Florida law.
MISCELLANEOUS
JWCFS Shares are traded on the AMEX. American Stock Transfer & Trust Company
is the registrar and transfer agent for JWCFS Shares. The issuance of JWCFS
Shares in connection with the Transaction will result in dilution of the
voting power and relative equity interests of the current holders of JWCFS
Shares.
51
<PAGE>
DESCRIPTION OF CAPITAL STOCK OF AGRO
AGRO is authorized to issue 10,000,000 shares of Common Stock, par value
$.01 per share (which are the AGRO Shares), and 2,000,000 shares of preferred
stock, par value $.01 per share. As of the date of this Prospectus, JWCFS
believes there are 1,265,100 AGRO Shares and no shares of preferred stock
outstanding.
The following summary of AGRO capital stock does not purport to be complete
and is qualified in its entirety by reference to the Articles of Incorporation
and Bylaws, each as amended, of AGRO and the applicable provisions of the
Maryland General Corporation Law (the "MGCL").
AGRO SHARES
The holders of AGRO Shares are entitled to one vote per share on all matters
submitted for action by the shareholders. There is no provision for cumulative
voting rights with respect to the election of directors. Accordingly, the
holders of more than 50% of the AGRO Shares can, if they choose to do so,
elect all of the directors. In such event, the holders of the remaining shares
will not be able to elect any directors. The holders of AGRO Shares are
entitled to receive dividends when, as and if declared by the AGRO Board out
of funds legally available therefor. In the event of the liquidation,
dissolution, or winding up of AGRO, the holders of AGRO Shares are entitled to
share ratably in all assets remaining available for distribution to them after
payment of liabilities and after provision has been made for each stock, if
any, having preference over the AGRO Shares. Holders of AGRO Shares, as such,
have no conversion, preemptive or other subscription rights, and there are no
redemption provisions applicable to the AGRO Shares.
PREFERRED STOCK
AGRO is authorized to issue preferred stock with such designations, rights,
and preferences as may be determined from time to time by the AGRO Board.
Accordingly, the AGRO Board is empowered, subject to the applicable provisions
of the 1940 Act, without shareholder approval, to issue preferred stock with
dividend, liquidation, conversion, voting, or other rights that could
adversely affect the voting power or other rights of the holders of AGRO
Shares. In the event of issuance, the preferred stock could be utilized, under
certain circumstances, as a method of discouraging, delaying, or preventing an
acquisition or a change in control of AGRO.
DIVIDENDS
AGRO has never paid any dividends on the AGRO Shares. AGRO has stated that
its primary investment objective is long-term capital appreciation, rather
than current income, and that it expects to retain net investment income, if
any, for working capital and investment needs and does not expect to declare
or pay any dividends. The timing and payment of other cash distributions, if
any, is entirely in the discretion of the AGRO Board of Directors. To JWCFS'
knowledge, AGRO has not adopted any policies with respect to in-kind
distributions.
ANTI-TAKEOVER PROVISIONS
AGRO's Articles of Incorporation and Bylaws, each as amended, contain
certain provisions (commonly referred to as "anti-takeover" provisions) that
may have the effect of limiting the ability of other entities or persons to
acquire control of AGRO, to cause it to engage in certain transactions or to
modify its structure.
The AGRO Board is divided into three classes, each with a term of three
years, with only one class of directors standing for election in any year.
Such classification may prevent replacement of a majority of the directors for
up to a two-year period. Directors may be removed from office only for cause
by vote of at least 75% of the shares of capital stock entitled to vote, are
required to authorize AGRO's conversion from a closed-end to an open-end
investment company, and are required to authorize any of the following
transactions: (i) merger, consolidation, or share exchange of AGRO with or
into any other company; (ii) dissolution or liquidation
52
<PAGE>
of AGRO; (iii) sale, lease, exchange, mortgage, pledge, transfer, or
disposition of all or substantially all of the assets of AGRO other than in
the ordinary course of business; or (iv) sale, lease, or exchange with AGRO,
in exchange for securities of AGRO, any assets, including cash of any entity
or person (having an aggregate fair market value of more than $1,000,000).
Additionally, an amendment to AGRO's Articles of Incorporation that makes any
class of capital stock a "redeemable security" (as defined in Section 2(a)(32)
of the 1940 Act) requires (i) the approval, adoption, or authorization of 70%
of the total number of directors fixed in accordance with the Bylaws of AGRO,
including a majority of those directors who are not "interested persons" (as
defined in Section 2(a)(19) of the 1940 Act), (ii) the affirmative vote of at
least 75% of the aggregate number of votes of capital stock entitled to vote
on the matter and (iii) the affirmative vote of at least 75% of the aggregate
number of votes entitled to be cast thereon by the holders of any class of
preferred stock of AGRO, voting as a separate class. The affirmative vote of
at least 75% of the shares of capital stock entitled to vote on the matter
will be required to amend the Articles of Incorporation to change or remove
any of the foregoing provisions.
The percentage votes required under these provisions that are greater than
the minimum requirements under Maryland law or the 1940 Act will make more
difficult a change in AGRO's business or management and may have the effect of
depriving stockholders of any opportunity to sell shares at a premium over
prevailing market prices by discouraging a third party from seeking to obtain
control of AGRO in a tender offer or other acquisition.
The MGCL imposes conditions and restrictions on certain "business
combinations" (including among other transactions, a merger, consolidation,
share exchange, or, in certain circumstances, an asset transfer or issuance of
equity securities or the provision of financial assistance or tax advantage)
between a Maryland corporation and any person who beneficially owns at least
10% of the corporation's stock (an "Interested Stockholder"). Unless approved
in advance by the board of directors, or otherwise exempted by the statue,
such a business combination is prohibited for a period of five years after the
most recent date on which the Interested Stockholder became an Interested
Stockholder. After such five-year period, a business combination with an
Interested Stockholder must be: (a) recommended by the corporation's board of
directors; and (b) approved by the affirmative vote of at least (i) 80% of the
corporation's outstanding shares entitled to vote and (ii) two-thirds of the
outstanding shares entitled to vote which are not held by the Interested
Stockholder with whom the business combination is to be effected, unless,
among other things, the corporation's common shareholders receive a "fair
price" (as defined in the statute) for their shares and the consideration is
received in cash or in the same form as previously paid by the Interested
Shareholders for his shares. These provisions of Maryland law do not apply,
however, to a business combination of an investment company registered under
the 1940 Act. As a result, as long as AGRO is registered under the 1940 Act,
Maryland's business combination statute will not apply to the Consolidation
Merger.
COMPARISON OF RIGHTS OF HOLDERS OF JWCFS SHARES
AND HOLDERS OF AGRO SHARES
Pursuant to the Exchange Offer, AGRO shareholders who elect to receive JWCFS
Shares in exchange for AGRO Shares will become shareholders of JWCFS. The
rights of AGRO shareholders are currently governed by Maryland law (including
the MGCL), the AGRO Articles of Incorporation, as amended (the "AGRO
Articles"), and the AGRO Bylaws. Following the consummation of the Exchange
Offer, the rights of AGRO shareholders who become holders of JWCFS Shares will
be governed by Florida law (including the Florida Business Corporation Act)
(the "FBCA"), the Restated Articles of Incorporation of JWCFS (the "JWCFS
Articles"), and the Bylaws of JWCFS, as amended (the "JWCFS Bylaws"). Such
rights will differ in certain respects. The following is a summary of certain
similarities and the material differences between the rights of holders of
JWCFS Shares and AGRO Shares.
The following summary does not purport to be a complete statement of the
rights of the AGRO shareholders under Maryland law, the AGRO Articles, and the
AGRO Bylaws as compared with the rights of JWCFS shareholders under Florida
law, the JWCFS Articles, and the JWCFS Bylaws, or a complete description of
the
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specific provisions referred to herein. This summary is qualified in its
entirety by reference to such governing laws and corporate instruments.
Annual Meeting. Under the MGCL, all corporations are required to hold an
annual meeting, except that, if the bylaws so provide, a corporation need not
hold an annual meeting in a year in which the election of directors is not
required by the 1940 Act. The AGRO Bylaws provide that the AGRO annual meeting
of shareholders is to be set by the AGRO Board in compliance with the MGCL and
the 1940 Act.
Under the FBCA, corporations are required to hold an annual meeting for the
election of directors and the transaction of any proper business, but the
failure to do so does not affect the validity of any corporate action. The
JWCFS Bylaws do not alter this provision.
Special Meetings of Shareholders. The MGCL provides that a special meeting
of the shareholders of a corporation may be called by the president, the board
of directors, or anyone else specified in the charter or bylaws of the
corporation, and that the secretary of a corporation must call a special
meeting on written request of the shareholders entitled to cast 25% of all
votes entitled to be cast at the meeting (unless a different percentage is
specified in the corporation's charter or bylaws). The AGRO Bylaws provide
that a special shareholder meeting may be called by the president or a
majority of the Board of Directors, and shall be called upon the written
request of the holders of 25% of the outstanding capital stock entitled to
vote at such meeting.
The FBCA provides that a special meeting of the shareholders of a
corporation may be called by the board of directors, or anyone else specified
in the articles of incorporation or the bylaws of a corporation, and that the
secretary of a corporation must call a special meeting on written request by
not less than 10%, unless a greater percentage not to exceed 50% is required
in its articles, of the shareholders entitled to vote on any issue proposed to
be considered at the meeting. The JWCFS Bylaws specify that special
shareholder meetings may be called by the president or the board of directors
or upon written request by a majority of the stockholders entitled to vote at
such meeting.
Number of Directors. Under the MGCL, except under certain circumstances,
each corporation must have at least three directors at all times. The MGCL
further provides that, subject to the foregoing, a corporation shall have the
number of directors provided in its charter until changed by the bylaws, and
that the bylaws may change the number of directors and may authorize the board
of directors to change the number of directors within a range set by the
charter or bylaws. The AGRO Articles provide that the number of directors
shall be one until further action by the AGRO Board and that the board may
increase or decrease the number of directors fixed by the AGRO Articles or the
AGRO Bylaws up to 12 but not less than two. The AGRO Bylaws provide that the
AGRO Board can increase or decrease the number of directors of AGRO from time
to time up to a maximum of 12. Under the AGRO Articles and the AGRO Bylaws, no
decrease in the number of directors may cause the removal or shorten the term
of any incumbent director.
Under the FBCA, a board of directors must consist of one or more
individuals, with the number specified in or fixed in accordance with the
articles of incorporation or the bylaws. The JWCFS Articles provide that the
number of directors shall initially be two, and that the number of directors
may be increased or diminished by the Bylaws, but shall never be less than
one.
Classification of Board of Directors. Under the MGCL, directors may be
divided into classes and, if directors are divided into classes, the term of
office of each class shall be as provided in the bylaws subject to certain
limitations as provided in the MGCL. The AGRO Articles provide that the AGRO
Bylaws may divide the AGRO directors into classes subject to certain
limitations as provided therein. The AGRO Bylaws provide for the
classification of the AGRO directors into three classes, each with a term of
three years with one class of directors standing for election every year.
Under the FBCA, directors may be divided into classes if so provided in a
corporation's articles or bylaws. Neither the JWCFS Articles nor the JWCFS
Bylaws include such a provision.
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Cumulative Voting. The MGCL allows but does not require cumulative voting
for the election of directors. Neither the AGRO Articles nor the AGRO Bylaws
provide for cumulative voting.
Similarly, the FBCA allows but does not require cumulative voting for the
election of directors, and neither the JWCFS Articles nor the JWCFS Bylaws
provide for cumulative voting.
Removal of Directors; Filling Vacancies. The MGCL provides that, unless the
charter provides otherwise, the shareholders of a corporation may remove a
director with or without cause by the affirmative vote of a majority of the
votes entitled to be cast in the election of directors. The AGRO Articles
provide that directors may be removed only for cause by the affirmative vote
of 75% of such votes. Under the MGCL and the AGRO Bylaws, a vacancy on the
AGRO Board resulting from a removal of a director may be filled by the
shareholders. Under the MGCL and the AGRO Bylaws, except as otherwise
provided, a vacancy resulting from any cause except an increase in the number
of directors is filled by a majority of the remaining directors, and a vacancy
resulting from an increase in the number of directors is filed by a majority
of the entire board of directors. A director elected by the AGRO Board to fill
a vacancy serves until the next annual meeting of shareholders at which time
the shareholders elect directors to fill any vacancies occurring since the
preceding annual meeting.
The FBCA provides that, unless the articles of incorporation provide
otherwise, the shareholders of a corporation may remove a director with or
without cause by the affirmative vote of a majority of the votes cast at a
meeting for such purpose. The JWCFS Articles are silent on this issue, and the
JWCFS Bylaws mirror the provision in the FBCA. The FBCA provides that a
vacancy on a board of directors may be filled by the affirmative vote of a
majority of the remaining directors or the shareholders, unless the articles
of incorporation provide otherwise. The JWCFS Articles do not address this
issue, but the JWCFS Bylaws provide that a vacancy on the JWCFS Board may be
filled by the affirmative vote of a majority of the remaining directors.
Amendment of Articles. Under the MGCL, a charter may be amended by the
affirmative vote of two-thirds of all the votes entitled to be cast on the
matter, unless otherwise provided in the charter. Under the AGRO Articles, the
provisions thereof may be amended by a majority of such votes, except that
certain provisions thereof, including provisions requiring 75% of such votes
for certain corporate transactions (the conversion of AGRO to an "open-end
company" under the 1940 Act, a merger, consolidation or share exchange by
AGRO, the sale of all or substantially all of AGRO's assets, the dissolution
or liquidation of AGRO, or the issuance of securities of AGRO under certain
circumstances) may be amended only upon the approval of 75% of the outstanding
capital stock entitled to vote thereon unless any such transaction is approved
by 70% of the entire AGRO Board (in which event such transaction need be
approved by a majority of such votes).
Under the FBCA, the articles of incorporation of a corporation may be
amended by the affirmative vote of a majority of all the votes entitled to be
cast on the matter, unless a greater vote is required in such articles. The
JWCFS Articles do not alter this provision.
Amendment of Bylaws. The MGCL provides that the power to adopt, alter, or
repeal bylaws is vested in the shareholders, except to the extent that a
corporation's articles of incorporation or bylaws vest such power in the board
of directors. The AGRO Bylaws confer such power on the AGRO Board. The AGRO
Articles provide that the AGRO Board shall have the exclusive authority to
adopt, alter or repeal the Bylaws, except as otherwise provided in the AGRO
Bylaws or the 1940 Act.
The FBCA provides that a corporation's board of directors may amend or
repeal its bylaws, except to the extent that a corporation's articles of
incorporation reserve such power in the shareholders. The JWCFS Articles
provide that the power to alter, amend, or repeal the JWCFS Bylaws is vested
in the board of directors, but that the Board may not alter, amend, or repeal
any bylaw adopted by JWCFS' shareholders if the shareholders so provide. The
JWCFS Bylaws provide that they may be amended by a majority vote of the
shareholders or the board of directors.
Certain Voting Rights for Mergers. Under the MGCL, any merger, share
exchange, consolidation, or sale of substantially all of the assets of a
corporation requires the approval of two-thirds of the outstanding shares
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entitled to vote thereon (unless the articles of incorporation require a
different percentage). The AGRO Articles require that 75% of such shares must
approve such a transaction, unless 70% of the Board of Directors approves the
transaction, in which event a majority of such shares can approve such a
transaction.
Under the FBCA, any merger, share exchange, or sale of substantially all of
the assets of a corporation requires the approval of a majority of the
outstanding shares entitled to vote thereon (unless the articles of
incorporation, the FBCA, or the board of directors as a condition of its
submission of the proposal requires a greater vote or a vote by classes). The
JWCFS Articles do not alter this provision.
Limitation of Liability. The AGRO Articles provide that no director shall be
liable to the corporation except to the extent that such exemption from
liability is prohibited by law, including the 1940 Act. Maryland law permits
such a limitation generally, except to the extent there was an improper
benefit or profit received by the officer or director, or that a final
adjudication or judgment against the officer or director was based on a
finding that the action of such person was a result of active and deliberate
dishonesty and that such action was material to the result.
The FBCA limits the liability of directors to the corporation unless the
director breached or failed to perform his duties as a director and such
breach or failure constituted (i) a violation of the criminal law, (ii) a
transaction from which the director received an improper personal benefit,
(iii) an unlawful distribution, (iv) willful misconduct in a proceeding by or
in the right of the corporation or a shareholder, or (v) recklessness or bad
faith in a proceeding by or in the right of someone other than the corporation
or a shareholder. Neither the JWCFS Articles nor the JWCFS Bylaws address this
issue.
Appraisal Rights. Under the MGCL, a shareholder may petition a court of
equity for appraisal to determine the fair value of the shareholder's stock
under certain circumstances by following the procedure set forth therein. For
a discussion of such rights, see "THE EXCHANGE OFFER--Effects of the Exchange
Offer and the Consolidation Merger--Dissenters Rights."
Under the FBCA any shareholder of a corporation, with certain limitations,
has the right to dissent from, and obtain payment of the fair value of the
shareholder's shares in the event of, a merger, a share exchange, the sale or
exchange of substantially all of the assets, a control-share acquisition, or,
under certain circumstances, an amendment of the articles of incorporation.
However, unless otherwise provided by its articles of incorporation, such
dissenters' rights are not available to the shareholders of a corporation
whose shares are registered on a national securities exchange, designated as a
national market security, or held of record by greater than 2,000
shareholders. The JWCFS Articles do not alter this provision.
Indemnification. Under the MGCL, a corporation can indemnify any director
made party to a proceeding by reason of his or her service as a director,
subject to certain limitations provided therein. The AGRO Articles provide
that AGRO's officers and directors are to be indemnified by AGRO to the
fullest extent permitted by the MGCL, including the advancement of expenses in
defending a proceeding. The AGRO Bylaws specify that the advancement of
expenses may only be carried out if the party seeking indemnification provides
security, if AGRO is insured against losses arising from the advancement, or
if either a disinterested majority of a quorum of directors or independent
legal counsel issues a written opinion determining that there is reason to
believe that the party seeking indemnification will ultimately be entitled to
it.
Under the FBCA, a corporation can indemnify any person made party to a
proceeding by reason of his service as a director, officer, employee, or agent
of the corporation subject to certain limitations provided therein. The JWCFS
Articles provide that JWCFS' officers and directors are to be indemnified by
JWCFS to the fullest extent permitted by the FBCA.
Business Combinations. Certain provisions of the MGCL limit "business
combinations" (including mergers, consolidations, share exchanges, and, in
certain circumstances, asset transfers and issuances of equity securities)
between a Maryland corporation and any person who beneficially owns 10% or
more of the
56
<PAGE>
corporation's stock. These provisions of Maryland law do not apply, however,
to business combinations involving an investment company registered under the
1940 Act, such as AGRO.
Under the FBCA, certain "affiliated transactions" (including mergers,
consolidations, share exchanges, and, in certain circumstances, asset
transfers, loans, and issuance of equity securities) between a Florida
corporation and any person who beneficially owns 10% or more of the
corporation's stock (an "Interested Shareholder") must be approved by the
affirmative vote of at least two-thirds of the outstanding shares entitled to
vote that are not held by the Interested Shareholder with whom the affiliated
transaction is to be effected, unless, among other things, the transaction was
approved by a majority of the disinterested directors, or the corporation's
common shareholders receive a minimum price (as defined in the statute) for
their shares and the consideration is received in cash or in the same form as
previously paid by the Interested Shareholder for its shares. Neither the
JWCFS Articles nor the JWCFS Bylaws alter this provision.
LEGAL MATTERS
The validity of the securities offered hereby has been passed upon for JWCFS
by Kilpatrick Stockton LLP, Atlanta, Georgia. That firm has also furnished the
tax opinion upon which the discussion in "THE EXCHANGE OFFER--Material Federal
Income Tax Consequences" is based.
EXPERTS
The financial statements of JWCFS as of December 31, 1995 and 1996, and for
each of the two years ended December 31, 1996, included in JWCFS' Annual
Report on Form 10-K for 1996, incorporated by reference herein and elsewhere
in the Registration Statement, have been incorporated by reference herein and
elsewhere in the Registration Statement in reliance upon the report of Price
Waterhouse LLP, independent auditors, which report is also incorporated by
reference herein, and upon the authority of such firm as experts in accounting
and auditing.
The consolidated financial statements of JWCFS included in the JWCFS Annual
Report (Form 10-K) for the year ended December 31, 1994, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of AGRO at December 31, 1996 and 1995, and for each
of the two years in the period ended December 31, 1996, appearing in this
Prospectus and Registration Statement have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon appearing elsewhere
herein, and are included in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
57
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS OF JWCHARLES FINANCIAL SERVICES, INC.
The name, business address, present principal occupation or employment and
five-year employment history of each of the directors and executive officers
of JWCFS are set forth below. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with JWCFS. Each
director and executive officer listed is a citizen of the United States.
<TABLE>
<CAPTION>
NAME AND BUSINESS ADDRESS POSITION WITH JWCFS
------------------------- -------------------
<S> <C>
Marshall T. Leeds....................... President, Chief Executive Officer and
980 North Federal Highway Chairman of the Board
Boca Raton, Florida 33432
Joel E. Marks........................... Vice Chairman, Chief Financial Officer,
1117 Perimeter Center West Secretary and Director
Suite 500-E
Atlanta, GA 30338
Wm. Dennis Ferguson..................... Executive Vice President and Director
980 North Federal Highway
Boca Raton, Florida 33432
Gregg S. Glaser......................... Executive Vice President, Treasurer and
980 North Federal Highway Director
Boca Raton, Florida 33432
Stephen W. Cropper...................... Director
111 W. 50th Street
New York, NY 10020
John R. Faiella......................... Director
111 W. 50th Street
New York, NY 10020
Joseph R. Robilotto..................... Director
111 W. 50th Street
New York, NY 10020
Michael B. Weinberg..................... Director
111 W. 50th Street
New York, NY 10020
</TABLE>
MARSHALL T. LEEDS, a co-founder of the Company in 1983, also serves as
President and Chief Executive Officer of Corporate Securities Group, Inc.
("CSG"), JW Charles Clearing Corp. ("JWC Clearing"), JW Charles Securities,
Inc. ("JWC Securities") and DMG Securities, Inc., four of the Company's
wholly-owned subsidiaries, and has served in such positions for at least the
past five years. Mr. Leeds is a past Chairman of Regional Investment Bankers
Association, Inc., ("RIBA"), the country's largest association of independent
broker-dealers involved in the underwriting of debt and equity securities, and
he currently serves on the Independent Contractor Firm Committee of the
Securities Industries Association.
JOEL E. MARKS, the other co-founder of the Company, has been Vice Chairman
of the Company since 1994 and Chief Financial Officer since the inception of
the Company. Mr. Marks has also served as the Senior Managing Director of
Investment Banking and as Executive Vice President of each of the Company's
wholly-owned subsidiaries since 1994. Mr. Marks is a Certified Public
Accountant, and prior to 1983, he was employed in various capacities in both
the audit and tax departments of the international accounting and consulting
firm of
58
<PAGE>
Deloitte & Touch LLP. From 1987 to 1994, he served, on a part time basis, as
Senior Vice President and Chief Financial Officer of Automobile Protection
Corporation--APCO, an unaffiliated public corporation. Mr. Marks currently
serves as the Chairman of RIBA.
WM. DENNIS FERGUSON serves as Executive Vice President of each of the
Company's wholly-owned subsidiaries and has served in such positions since
1990. From July 21, 1990 to October 31, 1990, Mr. Ferguson served as acting
President and Chief Executive Officer of a predecessor company that was
acquired by the Company on November 1, 1990. From 1981 to 1990, he held
various executive positions with that predecessor company. Mr. Ferguson
received a Bachelor of Science degree from Florida Southern College and
attended Florida Atlantic University Graduate School. From 1978 to 1980, Mr.
Ferguson was Area Vice President and Office Manager for the investment banking
firm of Dean Witter Reynolds.
GREGG S. GLASER serves as Executive Vice President and Treasurer of each of
the Company's wholly-owned subsidiaries and has served in such positions since
1990. Mr. Glaser is a Certified Public Accountant with a Bachelor of Science
degree from the University of Florida. From 1981 to 1986, when he joined a
predecessor company that was acquired in 1990, Mr. Glaser was a senior auditor
with the Fort Lauderdale office of the international accounting and consulting
firm of Price Waterhouse LLP.
STEPHEN W. CROPPER is a director and officer of Gilman Securities
Corporation and Gilman CMG, Inc. ("GCMG"), both subsidiaries of Gilman
Investment Company, a holding company which through its principal subsidiary,
Gilman Paper Company, is engaged in the manufacture and sale of paper and
lumber products. Mr. Cropper also serves as Assistant General Counsel of
Gilman Paper Company. Mr. Cropper has served in all of the foregoing positions
for at least the past five years.
JOHN R. FAIELLA is a director and President of Gilman Securities Corporation
and GCMG, as well as Treasurer of Gilman Investment Company and Gilman Paper
Company; he has served in such positions for at least the past five years.
JOSEPH P. ROBILOTTO is an officer of Gilman Securities Corporation and is
Vice President of Gilman Paper Company; he has served in such positions for at
least the past five years.
MICHAEL B. WEINBERG is both an attorney-in-law engaged in the private
practice of law (for at least the past five years) and is a Certified Public
Accountant. Mr. Weinberg currently serves as Tax Counsel to Gilman Paper
Company.
59
<PAGE>
PRO FORMA FINANCIAL INFORMATION--UNAUDITED
JWCFS
PRO FORMA CONDENSED
BALANCE SHEET--UNAUDITED
The following unaudited Pro Forma Condensed Balance Sheet for JWCFS has been
prepared based upon the historical financial condition of JWCFS and AGRO. The
pro forma financial data give effect to (i) the Exchange Offer, assuming that
51% of the outstanding AGRO Shares held by shareholders, including shares
presently owned by JWCFS, are tendered and accepted by JWCFS in the Exchange
Offer, and (ii) the Consolidation Merger, resulting in AGRO being a 100% owned
subsidiary of JWCFS, in each case accounted for as a purchase and based upon
the conversion of each AGRO Share into .431 JWCFS Share. The pro forma
financial data assume that the Exchange Offer or the Consolidation Merger, as
the case may be, occurred effective March 31, 1997.
The unaudited Pro Forma Condensed Balance Sheet should be read in
conjunction with the accompanying pro forma notes and the separate historical
financial statements and related notes thereto of JWCFS and AGRO for the
fiscal year ended December 31, 1996, and for the quarter ended March 31, 1997,
which are incorporated by reference or included elsewhere herein.
The pro forma financial condition is not necessarily indicative of the
financial condition that would actually have resulted if the Exchange Offer or
Consolidation Merger had occurred at the date indicated or that may be
attained in the future.
60
<PAGE>
JWCFS PRO FORMA CONDENSED BALANCE SHEET--UNAUDITED
AT MARCH 31, 1997
<TABLE>
<CAPTION>
AS REPORTED ADJUSTMENTS PRO FORMA
----------------------- ---------------------------- --------------------------
EXCHANGE CONSOLIDATION EXCHANGE CONSOLIDATION
JWCFS AGRO OFFER MERGER OFFER MERGER
------------ ---------- ---------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash
equivalents............ $ 9,471,000 $ 20,600 (258,000)(a) (372,000)(a) $ 9,233,600 $ 9,119,600
Commissions and other
receivables............ 2,733,000 32,200 -- -- 2,765,200 2,765,200
Receivables from
customers.............. 95,458,000 -- -- -- 95,458,000 95,458,000
Receivables from brokers
and dealers............ 2,493,000 -- -- -- 2,493,000 2,493,000
Securities owned, at
market value........... 6,398,000 4,697,300 2,315,710 (a) 4,700,706 (a) 10,204,972 10,204,972
(890,328)(a) (890,328)(a)
(2,315,710)(b) (4,700,706)(b)
Furniture, equipment and
leasehold improvements,
net.................... 1,442,000 16,100 (16,100)(b) (16,100)(b) 1,442,000 1,442,000
Deferred tax asset...... 1,735,000 6,000 -- -- 1,741,000 1,741,000
Other, net.............. 2,831,000 5,900 (81,000)(b) (14,194)(b) 2,755,900 2,822,706
------------ ---------- ---------- ----------- ------------ ------------
$122,561,000 $4,778,100 (1,245,428) (1,292,622) $126,093,672 $126,046,478
============ ========== ========== =========== ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Short-term borrowings
from banks............. $ 31,870,000 -- -- -- $ 31,870,000 $ 31,870,000
Accounts payable,
accrued liabilities and
other liabilities...... 8,764,000 47,100 -- -- 8,811,100 8,811,100
Payable to customers.... 25,809,000 -- -- -- 25,809,000 25,809,000
Payable to brokers and
dealers................ 29,767,000 -- -- -- 29,767,000 29,767,000
Securities sold, not yet
purchased, at market
value.................. 1,018,000 -- -- -- 1,018,000 1,018,000
Notes payable to
affiliate.............. 8,375,000 -- -- -- 8,375,000 8,375,000
Income taxes payable.... 574,000 -- -- -- 574,000 574,000
Minority interest in
AGRO................... -- -- 2,318,190 (b) -- 2,318,190 --
------------ ---------- ---------- ----------- ------------ ------------
106,177,000 47,100 2,318,190 -- 108,542,290 106,224,100
------------ ---------- ---------- ----------- ------------ ------------
Stockholders' equity:
Preferred stock........ -- -- -- -- -- --
Common stock........... 3,000 12,700 (12,700)(b) (12,700)(b) 3,137 3,404
137 (a) 404 (a)
Additional paid-in
capital............... 821,000 5,141,300 1,167,245 (a) 3,437,974 (a) 1,988,245 4,258,974
(5,141,300)(b) (5,141,300)(b)
Retained earnings...... 15,560,000 (423,000) 423,000 (b) 423,000 (b) 15,560,000 15,560,000
------------ ---------- ---------- ----------- ------------ ------------
16,384,000 4,731,000 (3,563,618) (1,292,622) 17,551,382 19,822,378
------------ ---------- ---------- ----------- ------------ ------------
$122,561,000 $4,778,100 (1,245,428) (1,292,622) $126,093,672 $126,046,478
============ ========== ========== =========== ============ ============
</TABLE>
See accompanying notes to unaudited Pro Forma Condensed Balance Sheet.
61
<PAGE>
NOTES TO JWCFS PRO FORMA CONDENSED BALANCE SHEET--UNAUDITED
(MARCH 31, 1997)
(a) To record the issuance of JWCFS common stock and related direct costs of
the proposed tender offer used to acquire the applicable number of AGRO
shares as follows:
<TABLE>
<CAPTION>
EXCHANGE OFFER CONSOLIDATION MERGER
-------------- --------------------
<S> <C> <C>
Number of JWCFS shares issued in tender. 137,339 404,515
Per share value......................... $ 8.50 $ 8.50
---------- ----------
Value of shares issued.................. 1,167,382 3,438,378
Cost of existing shares of AGRO owned by
JWCFS.................................. 890,328 890,328
Tender offer direct costs (see page 48) 258,000 372,000
---------- ----------
$2,315,710 $4,700,706
========== ==========
<CAPTION>
INCREASE INCREASE
(DECREASE) (DECREASE)
-------------- --------------------
<S> <C> <C>
Cash.................................... (258,000) (372,000)
Securities owned, at market value....... 2,315,710 4,700,706
Securities owned, at market value....... (890,328) (890,328)
Common Stock............................ 137 404
Additional paid-in capital.............. 1,167,245 3,437,974
</TABLE>
(b) To eliminate JWCFS's investment in AGRO against the related AGRO
Stockholder's equity accounts, charge the excess of the net value of
assets acquired over their purchase price to furniture, fixtures and
leasehold improvements and other assets, net, and in the case of the
Exchange Offer, record the 49% minority interest in AGRO.
<TABLE>
<CAPTION>
INCREASE INCREASE
(DECREASE) (DECREASE)
---------- ----------
<S> <C> <C>
Securities owned, at market value................... (2,315,710) (4,700,706)
Furniture, equipment and leasehold improvements,
net................................................ (16,100) (16,100)
Other, net.......................................... (81,000) (14,194)
Common stock........................................ (12,700) (12,700)
Additional paid-in capital.......................... (5,141,300) (5,141,300)
Retained earnings................................... 423,000 423,000
Minority interest................................... 2,318,190 --
</TABLE>
62
<PAGE>
JWCFS
PRO FORMA CONDENSED STATEMENTS OF INCOME--UNAUDITED
The following unaudited Pro Forma Condensed Statements of Income for JWCFS
have been prepared based upon the historical results of operations of both
JWCFS and AGRO for each of the periods presented. The Pro Forma Condensed
Statements of Income assume the Exchange Offer or the Consolidation Merger, as
the case may be, occurred effective January 1, 1996 for the Pro Forma
Condensed Statement of Income for the three months ended March 31, 1997, and
January 1, 1996 for the Pro Forma Condensed Statement of Income for the year
ended December 31, 1996. The pro forma data give effect to (i) the Exchange
Offer assuming that 51% of the outstanding AGRO Shares held by shareholders,
including shares presently owned by JWCFS, are tendered and accepted by JWCFS
in the Exchange Offer, and (ii) the Consolidation Merger, resulting in AGRO
becoming a 100% owned subsidiary of JWCFS, in each case accounted for as a
purchase and based upon the conversion each of AGRO Shares into .431 JWCFS
Share.
The unaudited Pro Forma Condensed Statements of Income should be read in
conjunction with the accompanying pro forma notes and the separate historical
financial statements and related notes thereto of JWCFS and AGRO for the
fiscal year ended December 31, 1996, and for the quarter ended March 31, 1997,
which are incorporated by reference or included elsewhere herein.
The pro forma results are not necessarily indicative of the results that
would actually have been attained if the Exchange Offer or the Consolidation
Merger had been consummated at the beginning of the periods indicated or that
may be attained in the future, nor are the pro forma results for the interim
period shown necessarily indicative of results to be expected for the entire
1997 fiscal year.
63
<PAGE>
JWCFS PRO FORMA CONDENSED STATEMENT OF INCOME--UNAUDITED
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
AS REPORTED ADJUSTMENTS PRO FORMA
--------------------- --------------------------- --------------------------
EXCHANGE CONSOLIDATION EXCHANGE CONSOLIDATION
JWCFS AGRO OFFER MERGER OFFER MERGER
----------- --------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Commissions............. $42,945,000 $ -- $ -- $ -- $42,945,000 $42,945,000
Market making and
principal transactions,
net.................... 24,315,000 (52,900) -- -- 24,262,100 24,262,100
Interest................ 9,625,000 246,500 -- -- 9,871,500 9,871,500
Clearing Fees........... 11,463,000 -- -- -- 11,463,000 11,463,000
Other................... 2,672,000 -- -- -- 2,672,000 2,672,000
----------- --------- --------- ------- ----------- -----------
91,020,000 193,600 -- -- 91,213,600 91,213,600
----------- --------- --------- ------- ----------- -----------
Expenses:
Commission and clearing
costs.................. 47,229,000 -- -- -- 47,229,000 47,229,000
Employee compensation
and benefits........... 14,911,000 96,100 -- -- 15,007,100 15,007,100
Selling, general and
administrative......... 16,760,000 419,800 -- -- 17,179,800 17,179,800
Interest................ 3,888,000 -- -- -- 3,888,000 3,888,000
----------- --------- --------- ------- ----------- -----------
82,788,000 515,900 -- -- 83,303,900 83,303,900
----------- --------- --------- ------- ----------- -----------
Income (loss) before
income taxes and
minority interest...... 8,232,000 (322,300) -- -- 7,909,700 7,909,700
Provision (benefit) for
income taxes........... 2,207,000 (7,600) -- -- 2,199,400 2,199,400
----------- --------- --------- ------- ----------- -----------
Income (loss) before
minority interest...... 6,025,000 (314,700) -- -- 5,710,300 5,710,300
Minority interest....... -- -- (154,203)(a) -- (154,203) --
----------- --------- --------- ------- ----------- -----------
Net income (loss)....... $ 6,025,000 $(314,700) $ 154,203 $ -- $ 5,864,503 $ 5,710,300
=========== ========= ========= ======= =========== ===========
Net income (loss) per
common share........... $ 1.27 $ (0.25) $ -- $ -- $ 1.20 $ 1.11
=========== ========= ========= ======= =========== ===========
Weighted average shares
outstanding............ 4,744,882 1,265,100 137,339 404,515 4,882,221 5,149,397
=========== ========= ========= ======= =========== ===========
</TABLE>
See accompanying note to unaudited Pro Forma Condensed Statements of Income.
64
<PAGE>
NOTES TO PRO FORMA CONDENSED STATEMENT OF INCOME-UNAUDITED
YEAR ENDED DECEMBER 31, 1996
(a) Adjustment represents minority interest in loss of AGRO.
65
<PAGE>
JWCFS PRO FORMA CONDENSED STATEMENT OF INCOME--UNAUDITED
THREE MONTHS ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
AS REPORTED ADJUSTMENTS PRO FORMA
---------------------- -------------------------- --------------------------
EXCHANGE CONSOLIDATION EXCHANGE CONSOLIDATION
JWCFS AGRO OFFER MERGER OFFER MERGER
----------- ---------- -------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Commissions $11,538,000 $ -- $ -- $ -- $11,538,000 $11,538,000
Market making and
principal transactions,
net.................... 4,646,000 (35,500) -- -- 4,610,500 4,610,500
Interest................ 2,334,000 49,500 -- -- 2,383,500 2,383,500
Clearing Fees........... 1,808,000 -- -- -- 1,808,000 1,808,000
Other................... 1,806,000 21,200 -- -- 1,827,200 1,827,200
----------- ---------- ------- ------- ----------- -----------
22,132,000 35,200 -- -- 22,167,200 22,167,200
----------- ---------- ------- ------- ----------- -----------
Expenses:...............
Commission and clearing
costs.................. 11,558,000 -- -- -- 11,558,000 11,558,000
Employee compensation
and benefits........... 4,155,000 24,800 -- -- 4,179,800 4,179,800
Selling, general and
administrative......... 3,849,000 144,700 -- -- 3,993,700 3,993,700
Interest................ 985,000 -- -- -- 985,000 985,000
----------- ---------- ------- ------- ----------- -----------
20,547,000 169,500 -- -- 20,716,500 20,716,500
----------- ---------- ------- ------- ----------- -----------
Income (loss) before
income taxes and
minority interest...... 1,585,000 (134,300) -- -- 1,450,700 1,450,700
Provision (benefit) for
income taxes........... 573,000 -- -- -- 573,000 573,000
----------- ---------- ------- ------- ----------- -----------
Income (loss) before
minority interest...... 1,012,000 (134,300) -- -- 877,700 877,700
Minority interest....... -- -- (65,807)(a) -- (65,807) --
----------- ---------- ------- ------- ----------- -----------
Net income (loss)....... $ 1,012,000 $ (134,300) $65,807 $ -- $ 943,507 $ 877,700
=========== ========== ======= ======= =========== ===========
Net income (loss) per
common share........... $ 0.29 $ (0.11) $ -- $ -- $ 0.26 $ 0.22
=========== ========== ======= ======= =========== ===========
Weighted average shares
outstanding............ 3,505,000 1,265,100 137,339 404,515 3,642,339 3,909,515
=========== ========== ======= ======= =========== ===========
</TABLE>
See accompanying note to unaudited Pro Forma Condensed Statements of Income.
66
<PAGE>
NOTES TO PRO FORMA CONDENSED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1997--UNAUDITED
(a) Adjustment represents minority interest in loss of AGRO.
67
<PAGE>
ANNEX I
The following pages that comprise this Annex I are excerpts taken verbatim
from AGRO's Annual Report on Form 10-KSB40 for the fiscal year ended December
31, 1996, as filed by AGRO with the Commission. They are included for the
convenience of AGRO shareholders, but such inclusion does not imply that JWCFS
has investigated the accuracy of such information or has confirmed the same
with AGRO. As discussed above under "AGRO INFORMATION", AGRO is subject to the
informational requirements of the Exchange Act and files other reports with
the Commission that are publicly available to AGRO shareholders.
A-1
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
The Americas Growth Fund, Inc., (the "Company") is a non-diversified,
closed-end management investment company that has elected to be treated as a
business development company ("BDC") under the Investment Company Act of 1940
(the "1940 Act"). The Company's primary investment objective is to achieve
long-term capital appreciation of its assets, rather than current income, by
investing in equity and debt securities of and providing managerial assistance
to, emerging and established companies that management believes offer
significant potential opportunities for growth (individually, "portfolio
company", collectively, "portfolio companies"). The Company plans to continue
to invest primarily in United States-based portfolio companies "strategically-
linked" to the Caribbean and Latin America. The Company considers companies to
be strategically-linked to the Caribbean and Latin America if they derive
substantial revenue (at least 50%) from operations or transactions in the
Caribbean and Latin America or, if in the Company's view, they are positioned
to do so. The Company considers "Caribbean and Latin American" countries to be
Argentina, Aruba, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador,
Guatemala, Haiti, Honduras, Jamaica, Mexico, Netherlands Antilles, Nicaragua,
Panama, Paraguay, Peru, the Commonwealth of Puerto Rico, Trinidad and Tobago,
Uruguay and Venezuela. The Company seeks to identify such companies that it
believes will benefit from economic and political developments in these
regions. United States law currently prohibits investment in Cuba. Consistent
with current United States law, and, as may be permitted by changes in United
States law, the Company plans to invest in United States-based companies
strategically-linked to Cuba.
The Company considers "emerging companies" to be those companies in the
early stages of development with little or no operating history, revenue or
profits, which the Company anticipates will increase revenue and become
profitable. The Company considers "established companies" to be those with an
existing revenue and profit base. To a lesser extent, certain of the emerging
and established companies in which the Company invests may be in "turnaround"
or other restructuring situations.
The Company's investment objective is intended to provide investors with the
opportunity to participate in investments which are generally not available to
the public and which typically require substantial financial commitment. The
Company believes, although there can be no assurance, that a favorable
risk/reward ratio currently is available to investors who provide capital and,
to a certain extent, managerial assistance, to companies requiring immediate
funding at a time when a public offering of securities is not practicable or
just prior to a public offering of securities. The Company believes that such
investments often produce a relatively high rate of return over a short period
of time due to the increased risk associated with these investments and that
there are a sufficient number of potential investment opportunities available
to the Company to enable it to achieve its investment objective.
The Company has placed and intends to place its emphasis on private
investments in restricted securities for which the Company is granted
registration rights and/or rights to participate in the sale of securities of
a portfolio company by other stockholders. Such investments may be private
investments in capital stock of privately-held companies that the Company
anticipates will engage in a public offering within one to three years after
the investment; private investments in capital stock of publicly-held
companies; or bridge loans which are convertible into common stock or
preferred stock of the issuer or issued together with equity participations
such as common stock, preferred stock or warrants to purchase such stock or a
combination thereof, or both, for privately-held companies which the Company
anticipates will complete a public offering, other financing or a merger or
acquisition transaction (other than a leveraged buy-out) within one to three
years from the date of investment. Although there can be no assurance, the
Company believes that such investments can result in significant capital
appreciation upon liquidation of the investment.
The Company intends to a lesser extent to invest in marketable securities of
companies whose securities are traded in the over-the-counter market, which
have a total market capitalization, at the time of investment by the Company,
of less than $100 million ("Small-Cap Companies"), and which the Company's
management believes
A-2
<PAGE>
have significant potential for price appreciation. Investments in such Small-
Cap Companies may be made in the form of common stock, preferred stock and
securities convertible into or exchangeable for common stock or preferred
stock of the Small-Cap Companies.
The Company has experienced difficulty in locating quality portfolio
companies meeting the Company's investment objectives. In the opinion of the
management of the Company, the lack of such investment opportunities is
attributable to two primary causes. First, investments in a single private
issuer limited to 15% of the Company's net assets (approximately $730,000)
involves, in the opinion of the Company's management, a high degree of risk
due to: (i) the fact that the relative small size of the investment may not
resolve the capital needs of such portfolio company; and (ii) small emerging
portfolio companies usually lack professional management, audited financial
statements or adequate management information systems. The second cause
relates to the worsening of the economic and political relationship between
the United States and Cuba since the Company's initial public offering in
August 1994 as a result of, among things, the November 1994 U.S. congressional
election, the downing by the Cuban military of two "Brothers to the Rescue"
airplanes and Congressional consideration in passage of the Helms-Burton Act
(formerly known as the Cuban Liberty and Democratic Solidarity Act). As a
result, there continues to be few, if any, U.S. portfolio companies having
suitable growth opportunities with respect to Cuba in which the Company may
invest. The Company does not anticipate an improvement in the situation in the
foreseeable future.
Nevertheless, since the Company's proposed merger with Advanced Electronic
Support Products, Inc. ("AESP") was terminated in the fall of 1996, the
Company has reviewed several investment opportunities which present an
acceptable degree of risk to the Company. Moreover, the Company invested in
two companies since the termination of the AESP merger. See "Present Portfolio
- -Venture Capital Investments." Although management of the Company is
encouraged by the quality of the investment opportunities which have been
reviewed since the termination of the AESP merger, there can be no assurance
that the Company will be able to negotiate and complete transactions with
potential portfolio companies which meet the Company's investment objectives.
The Company has no fixed policy concerning the types of businesses or
industry groups in which it may invest or as to the amount of funds that it
will invest in any one issuer; however, the Company currently intends to limit
its investment in marketable securities of any single Small-Cap Company to 5%
of its net assets, at the time of investment, and to limit its investment in
any single private issuer to 15% of its net assets, at the time of investment.
The foregoing is not a fundamental policy of the Company and may be changed at
any time without stockholder approval.
The Company makes its investments primarily as a result of the
recommendations of investment bankers and other professionals known to members
of the Company's management through their business dealings and professional
relationships. Leonard J. Sokolow, the Company's President and Portfolio
Manager, has principal responsibility for selecting investments for the
Company and will analyze and act upon such recommendations. The Company has
one employee, who is an officer.
Following its initial investment in a particular portfolio company, the
Company has made and may in the future make additional debt and equity
investments in the same portfolio company ("Additional Investments") in order
to protect or enhance its initial investment. The Company may, together with
other investors, including management and its affiliates, make direct or
Additional Investments in a number of other situations, including attempts to
salvage insolvent or bankrupt companies, the acquisitions of divisions of
companies, the acquisition of privately-held companies, or the acquisition of
companies in order to spin-off portions of their operations or assets into
independent entities.
PRESENT PORTFOLIO--VENTURE CAPITAL INVESTMENTS
Set forth below is certain information concerning the Company's present
principal investments in portfolio companies, only one of which is currently a
publicly-held company. Information concerning the publicly-held company has
been derived from filings by the company with the Securities and Exchange
Commission (the
A-3
<PAGE>
"Commission"). The information below concerning the privately-held companies
has been obtained from those portfolio companies. The Company's principal
investment in portfolio companies constituted, as of December 31, 1996, 10% of
the Company's total portfolio investments. Following the additional investment
in TAG in January 1997, as described below, the Company's principal investment
in portfolio companies constituted 15% of the Company's total portfolio
investments.
Although the Company has not independently verified for purposes of this
Form 10-KSB, the information set forth in the documents filed by the portfolio
companies with the Commission, or otherwise obtained information from the
portfolio companies, to the Company's knowledge, the information provided
below concerning such portfolio companies is accurate.
Reports, proxy statements and other information concerning the publicly-held
companies described below may be inspected at certain of the Commission's
offices or otherwise obtained from the Commission upon payment of prescribed
fees.
GLOBALINK, INC. ("GLOBALINK"). In December 1996, the Company invested
$500,000 in Globalink, a public company traded on the American Stock
Exchange, and received 14,953 shares of 8% convertible preferred stock in
Globalink. Each share of preferred stock is convertible into 10 shares of
Globalink common stock. Globalink's common stock is traded on the American
Stock Exchange under the symbol "GNK." The Company also received a Warrant
to purchase 149,530 shares of common stock of Globalink at $4.18 per
share. Globalink has agreed to register the common stock issuable upon
conversion of the preferred stock and the common stock underlying the
warrants. Globalink designs, develops, markets and supports translation
software products and services. Globalink markets bi-directional software
for creating draft translations between English and Spanish, French,
German and Italian and it is just releasing Portuguese translation
products.
Globalink has incurred significant losses since its inception in 1988. Its
accumulated deficit as of September 30, 1996 was approximately $8.6
million. Globalink reported net losses for its fiscal year ended December
31, 1995 of approximately $1.1 million. For the nine-month period ended
September 30, 1996, Globalink reported net income of $22,731. There can be
no assurance that Globalink will be profitable in the future.
The market for software is characterized by rapid change and improvement
in computer hardware and software technology. Globalink's success will
depend in part upon its ability to enhance its current products, to
introduce new products which address technological and market
developments, and satisfy the increasingly sophisticated needs of
customers. There can be no assurance that Globalink will be successful in
developing and marketing, on a timely basis, fully functional product
enhancements or new products that respond to the technological advances by
others, or that its new products will be accepted by customers.
Due to the nature of Globalink's business, sales to a few customers,
primarily software distributors, have accounted for a significant
percentage of Globalink's sales. During the nine months ended September
30, 1996, three customers accounted for 38% of total sales. No assurance
can be given that such customers will continue to purchase products from
Globalink. Accounts receivable at September 30, 1996 include approximately
$6.5 million in amounts due from five customers. Any failure or
significant delay of any such customers to pay their respective accounts
to Globalink would have a material adverse affect on Globalink and its
financial condition.
For the nine months ended September 30, 1996, Globalink had sales returns
and allowances of approximately $3.1 million, or approximately 22.2% of
product sales for the period. No assurance can be given that Globalink
will be able to reduce such percentage of returns and allowances or, that
such percentages will not increase for future periods.
A-4
<PAGE>
THE AMERICAS GROUP, INC. ("TAG"). In January 1997 the Company invested
$250,000 in TAG, an unaffiliated company, pursuant to a private placement
under Rule 504 of the Securities Act of 1933. In exchange for such
investment the Company received 125,000 shares of TAG common stock. In
addition, the Company also received 5,000 shares of common stock in
consideration of Leonard J. Sokolow, the Company's Chairman, serving on
TAG's Board of Advisors. TAG is a corporate consulting, financial advisory
and merchant banking firm focusing its activities in South America,
Central America and the Caribbean.
TAG was formed in January 1996 and began limited operations in March 1996.
Because there are many potential entrants to the field, it is extremely
difficult to assess which companies are likely to offer competitive
services in the future. TAG expects competition to persist, intensify and
increase in the future. Many of TAG's current and potential competitors
have longer operating histories, greater name recognition and greater
financial, technical and marketing resources than TAG. Such competitors
may be able to undertake more extensive marketing campaigns, adopt more
aggressive pricing policies and make more attractive offers to businesses.
There can be no assurance that TAG will be able to compete effectively
with current or future competitors or that the competitive pressures faced
by TAG will not have a material adverse effect on TAG's business,
financial condition or operating results. Furthermore, although the common
stock of TAG acquired by the Company is freely transferable, a public
market for such securities has not developed. Consequently, the Company
may not be able to readily liquidate its investment.
THE AMERICAS GROWTH PARTNERS, INC. ("AGP"). In 1995 the Company for an
initial investment of $22,608 acquired an 80% ownership interest in AGP, a
publishing and consulting company. The only book which AGP published is
titled "Business Opportunities in a Free Cuba," the rights to which AGP
acquired. This investment has been written off and AGP has discontinued
sales of such book.
GOLF RESERVATIONS OF AMERICA, INC. ("GOLF"). In January 1995 the Company
invested $150,000 in Golf and was issued a $150,000 note and was granted
warrants to purchase 60,000 shares of Golf common stock at $2.60 per
share. Golf, a private company, had a system to make advance golf
reservations through a centralized reservations network of participating
golf courses, hotels, resorts and other lodging properties, and provided
ancillary travel services, all of which were accessible by calling a
single, toll-free phone number, 1-800-TEE TIME. The $150,000 note was
repaid in March 1995. Also in March 1995, the Company invested an
additional $50,000 and was issued a $50,000 note due the earlier of April
1, 1996 or the closing of a firm commitment underwritten public offering
and was granted additional warrants to acquire 20,000 shares of common
stock at $2.60 per share. The common stock underlying the 80,000 warrants
have certain registration rights. Such $50,000 note is in default and the
Company has been advised that Golf has filed for Chapter 11 bankruptcy.
This investment has been written down to $0.
COMPETITION
The Company encounters competition in its efforts to locate attractive
opportunities for the investment of its capital from other entities and
individuals having similar investment objectives. The primary competition for
desirable investments comes from investment companies, investment partnerships
and wealthy individuals. Some of the competing entities and individuals have
investment managers or advisors with significantly greater experience,
resources and managerial capabilities than the Company and are therefore in a
better position than the Company to obtain access to attractive investments.
To the extent that the Company can compete for such investments it may only be
able to do so on less favorable terms that those obtained by larger more
established investors.
ITEM 2. DESCRIPTION OF PROPERTY
The Company maintains its principal executive office in Miami, Florida, for
which it pays only for administrative services and no rent.
ITEM 3. LEGAL PROCEEDINGS
On November 26, 1996, a purported derivative stockholders' suit alleging
breach of fiduciary duty under the Investment Company Act of 1940 was filed in
the Circuit Court for the Fifteenth Judicial Circuit in Palm
A-5
<PAGE>
Beach County, Florida against, among others, the Company and its board of
directors. The suit was filed by Kevin King, Herbert Hill, a general partner
of Double H Investment Co. and Bargelt Investments, Bonnie Cool Hayes and
Ronald Hayes, who purportedly own an aggregate of approximately 10% of the
Company's outstanding shares of common stock. The plaintiffs seek certain
equitable relief, including enjoining the directors from acting in their
capacities as directors of the Company and from making any investments or
expenditures, except for payment of regular expenses and salaries, and an
unspecified amount of damages in connection with, among other things, the
previously announced proposed merger between the Company and Advanced
Electronic Support Products, Inc. ("AESP"), which proposed merger was
terminated by mutual agreement of the Company and AESP on November 8, 1996.
The Company has removed such suit to the United States District Court,
Southern District of Florida, Miami Division. The defendants believe that the
suit is completely without merit and are vigorously contesting the plaintiffs'
claims. The Company and the other defendants have filed several motions to
dismiss this suit. Based upon information currently available, the management
of the Company does not believe that the ultimate resolution of this
litigation will have a material adverse impact on the financial position or
results of operations of the Company.
Pursuant to the Company's Articles of Incorporation, Bylaws and applicable
federal and state law, the board of directors has sought indemnification
regarding this suit and the Company has agreed to indemnify the board of
directors in connection therewith. As part of such indemnification, the
Company has agreed to advance legal fees and expenses incurred by the board of
directors in defending such suit. Each board member has affirmed in writing
his good faith belief that the standard of conduct necessary for
indemnification by the Company has been met and each board member has made a
written undertaking to repay any such advance if it should be ultimately
determined that the standard of conduct has not been met. The Company is not
currently engaged in any other pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company did not submit any matters to a vote of its stockholders during
the fourth quarter 1996.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock has been quoted on the NASDAQ Small Cap Market
since August 22, 1994 under the symbol "AGRO". The following table sets forth,
for the periods indicated, the range of high and low bid quotations as
reported by NASDAQ. Such quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and do not necessarily represent
actual transactions. There presently is a limited public market for the Common
Stock.
<TABLE>
<CAPTION>
PRICE PER SHARE
-------------------
HIGH LOW
-------- -------
<S> <C> <C>
The period from inception (June 3,
1994) through December 31, 1994:
Third Quarter (commencing August
22, 1994)........................$. 5 $ 4 7/8
Fourth Quarter................... 5 4 1/8
Fiscal year ended December 31,
1995:
First Quarter.................... 4 1/2 2
Second Quarter................... 2 3/4 2
Third Quarter.................... 2 5/8 2
Fourth Quarter................... 2 5/8 2
Fiscal year ended December 31,
1996 First Quarter.............. 2 7/8 2 1/2
Second Quarter................... 2 3/4 2 7/16
Third Quarter.................... 2 5/8 2 1/4
Fourth Quarter................... 2 7/8 2 1/2
Fiscal year ending December 31,
1997 First Quarter
(through March 21, 1997).......... 3 2 11/16
</TABLE>
A-6
<PAGE>
As of March 21, 1997, there were approximately 110 registered holders of the
Company's Common Stock with 1,265,100 shares of Common Stock outstanding. In
addition, the Company believes that there are more than 945 beneficial owners
of Common Stock whose shares are held in "street" name as of such date. On
March 21, 1997, the closing bid and ask price of the Common Stock were $2 3/4
and $2 13/16, respectively.
The Company has never paid and does not currently intend to pay cash
dividends. In addition, the Company has never made, nor adopted any policies
with respect to, in-kind distributions, and has no present intention of
adopting any such policies or of making any such distributions. Furthermore,
there may also be substantial legal and contractual restrictions affecting the
timing of any such distributions by the Company or any such resales by
stockholders of distributed securities.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996 ("FISCAL 1996") COMPARED TO THE YEAR ENDED
DECEMBER 31, 1995 ("FISCAL 1995")
As a result of operations, net assets decreased approximately $314,700
(approximately 6.5% of net assets) during Fiscal 1996 compared with an
increase in net assets of approximately $25,100 during the Fiscal 1995. The
net decrease in net assets resulting from operations for Fiscal 1996 primarily
resulted from a net investment loss of $266,100, a realized loss of $21,400
primarily resulting from the write-off of the Company's note receivable from
AGP and unrealized depreciation on investments of $29,600 as a result of the
decline in market value of the Company's note receivable from Golf as of
December 31, 1996. These results compare with a net increase in net assets
resulting from operations in Fiscal 1995 which occurred primarily from
realized gains on sales of investments of $44,700 which was offset by
unrealized depreciation on investments of $13,300 as a result in the decline
in the market value of the Company's investment in AGP as of December 31,
1995.
The Company recognized investment income (which consisted of interest
income) of approximately $246,500 for Fiscal 1996 compared with investment
income (which consisted entirely of interest income) of approximately $288,100
for Fiscal 1995.
Expenses aggregated approximately $515,900 during Fiscal 1996 which included
salaries, consulting fees, legal fees, accounting fees, consulting fees, rent
and administrative expenses as compared with expenses of $296,000 during
Fiscal 1995 for salaries, consulting fees, legal fees, accounting fees, rent
and administrative expenses. Professional fees increased $192,100 and
consulting fees increased $16,900. With respect to the increase in
professional fees, approximately $110,000 was as a result of the proposed
merger transaction which the Company terminated in November 1996 and
approximately $65,000 was as a result of the purported shareholders derivative
suit filed in November 1996. See "Legal Proceedings."
LIQUIDITY AND CAPITAL RESOURCES
At of December 31, 1996, the Company had cash and cash equivalents of
approximately $415,900 and U.S. Treasury Bills of approximately $3,973,100 as
compared to approximately $601,800 in cash and cash equivalents and
approximately $4,424,800 in Treasury Bills at December 31, 1995. The decrease
in capital resources for Fiscal 1996 of approximately $637,600 was primarily
due to an operating and investment loss of $266,100 as compared to the
decrease in capital resources of $30,000 in Fiscal 1995 primarily due to a
loan of $22,600 to AGP and the purchase of $9,600 in fixed assets. Also, in
the fourth quarter of 1996, the Company invested $500,000 in Globalink. In
January of 1997, the Company invested $250,000 in TAG. As of December 31,
1996, the Company had liabilities of approximately $73,800 compared with
liabilities of $33,200 as of December 31, 1995.
As of March 21, 1997, the Company has incurred expenses of approximately
$112,600 relating to the purported shareholders derivative suit. See "Legal
Proceedings." The Company expects to incur significant additional costs in
connection with the litigation and its agreement to advance legal fees and
expenses incurred by the Board of Directors in defending such suit.
A-7
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
See the financial statements included herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company has not had any changes in or disagreements with its independent
accountants.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following is a list of the executive officers and directors of the
Company. All directors of the Company are serving a current term of office
which continues until the next annual meeting of stockholders, and all
officers are serving a current term of office which continues until the next
annual meeting of directors:
<TABLE>
<CAPTION>
YEAR OF
NAME AND AGE OF DIRECTOR ELECTION POSITION
- ------------------------ -------- --------
<S> <C> <C>
Leonard J. Sokolow*...................... 1994 President and Chairman of the
40 Board, Portfolio Manager
Hon. J. Antonio Villamil*................ 1994 Vice-Chairman
49 International Strategy,
Secretary and Director
Sanford B. Cohen......................... 1994 Director
40
Martin C. Engelmann...................... 1994 Director
55
Neil R. Winter........................... 1995 Director
43
</TABLE>
- --------
* Indicates "interested person" of the Company within the meaning of the 1940
Act.
LEONARD J. SOKOLOW has been Chairman of the Board, President, Chief
Financial Officer and Portfolio Manager of the Company since inception. Since
August 1993, Mr. Sokolow has been President and Chief Executive Officer of
Genesis Partners, Inc. a privately-held corporation which provides domestic
and international investment banking and financial advisory services. Since
September 1996, Mr. Sokolow has been President of Union Atlantic LC a
privately-held company which provides domestic and international merchant
banking and financial advisory services. From May 1988 to July 1993, Mr.
Sokolow was employed by Windmere Corporation, a public corporation engaged in
the manufacture and distribution of personal care products and small household
appliances, most recently as its Executive Vice President-Operations,
Administration and Finance and General Counsel. Since September 1992, Mr.
Sokolow has been a director of The Box Worldwide, Inc. (formerly Video Jukebox
Network, Inc.), a public company in the entertainment industry. Since March
1990, Mr. Sokolow has served as a director of Catalina Lighting, Inc., a
public company engaged in the import and distribution of commercial and
residential electrical lighting. Since April of 1995 Mr. Sokolow has been a
director of Ezcony Interamerica, Inc. a distributor of electronic products and
CD Rom programing to Latin America. Mr. Sokolow received a B.A. degree with
majors in Economics and Accounting from The University of Florida in 1977, a
J.D. degree from The University of Florida School of Law in 1980 and an L.L.M.
(Taxation) degree from The New York University Graduate School of Law in 1982.
Mr. Sokolow is a Certified Public Accountant.
A-8
<PAGE>
HON. J. ANTONIO VILLAMIL has been Vice Chairman-International Strategy,
Secretary and a director of the Company since inception. Since January 1993,
Mr. Villamil has been President and Chief Executive Officer of the Washington
Economics Group, Inc., an economic, financial, and government relations
adviser. From April 1989 to January 1993, Mr. Villamil served as Chief
Economist of the United States Department of Commerce, and most recently as
Under Secretary for Economic Affairs. From January 1981 to April 1989, Mr.
Villamil was employed by Southeast Bank, N.A., most recently as Senior Vice
President and Chief Economist, Corporate Planning and Economics Department,
Office of the Chairman of the Board. From 1978 to 1981, Mr. Villamil was
employed by Crocker National Bank, most recently as its Vice President and
Economist, Economics Department. Mr. Villamil received a B.S. degree in
Economics in 1968 and a Master of Arts in Economics in 1971 from Louisiana
State University.
SANFORD B. COHEN has been a director of the Company since inception. In
1985, Mr. Cohen co-founded Prescott Valley Broadcasting Co., Inc., owner of
KIHX-FM and KQNA-AM radio stations in Prescott Valley, Arizona, and has been
its President since its inception. From 1982 to 1984, Mr. Cohen was Vice
President of National Phonecasting Co., a joint venture with Gannett
Broadcasting Corp., a private company engaged in telephone broadcasting of
financial information. Mr. Cohen received his B.A. degree in Economics in 1979
from Michigan State University.
MARTIN C. ENGELMANN has been a director of the Company since inception. In
1984, Mr. Engelmann co-founded Dale-Mar Associates, Inc., a management
consulting firm specializing in companies in the health care industry with
distribution in the Caribbean, and has been its President since its inception.
Since November 1988, Mr. Engelmann has been a director of Miller Industries,
Inc., a public company engaged in manufacturing and marketing of glass doors
and windows. Mr. Engelmann received a B.S. degree in Business Administration
from The University of Florida in 1963.
NEIL R. WINTER has been a director of the Company since February, 1995.
Since March 1997 Mr. Winter has been the Chief Financial Officer of Seregenti
Eyewear, Inc. From June 1985 through March 1997, Mr. Winter was a shareholder
in the CPA firm of Winter, Scheifley & Associates, P.C. He received a Bachelor
of Science degree from Boston University in 1974 and is licensed as a
Certified Public Accountant in the states of Colorado and Florida. Mr. Winter
is also a member of the Colorado Society of Certified Public Accounts and the
American Institute of Certified Public Accountants.
The Board of Directors is classified into three classes, each with a term of
three years, with only one class of directors standing for election by the
stockholders in any year. Officers are elected to serve, subject to the
discretion of the Board of Directors, until their successors are appointed.
Messrs. Cohen and Engelmann serve as Class I directors, Messrs. Villamil and
Winter serve as Class II directors and Mr. Sokolow serves as a Class III
directors. The terms of the, Class II, Class III and Class I directors will
expire on the dates of the 1997, 1998 and 1999 annual stockholders meeting,
respectively, or until the next applicable stockholders meeting.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for the period January 1, 1995
through December 31, 1996 of the respective compensation earned by the Chief
Executive Officer of the Company and the other executive officer who earned in
excess of $100,000 (of which there were none), (the "Named Executive") in all
capacities in which he served.
A-9
<PAGE>
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
BONUS
NAME AND PRINCIPAL POSITION YEAR SALARY PLAN
- --------------------------- ---- ------- ------
<S> <C> <C> <C>
Leonard J. Sokolow, Chairman of the Board President, Chief
Executive Officer & Portfolio Manager..................... 1995 $91,500 $2,700
1996 $96,100 $ 0
</TABLE>
Mr. Sokolow is employed as the Company's Chairman of the Board, President
and Portfolio Manager, pursuant to an employment agreement (the "Employment
Agreement") with the Company, dated August 30, 1994. The term of the
Employment Agreement was for an initial three year term, which is
automatically extended one additional year on each anniversary of the
Employment Agreement beginning in August 30, 1996 unless the Board of
Directors provides Mr. Sokolow with one year prior notice that the term shall
not be extended. The Employment Agreement currently terminates on August 30,
1999, unless extended in accordance with its terms. Under the Employment
Agreement, Mr. Sokolow received a salary of $96,100 in 1996, which amount
increases annually by the percentage increase in the consumer price index. The
Employment Agreement provides for the reimbursement of health insurance
premiums, automobile expenses not to exceed $500 per month and travel expenses
related to the Company's business. Mr. Sokolow's employment may be terminated
by the Company with or without cause. If the Employment Agreement is
terminated for any reason other that cause (as defined in the Employment
Agreement), Mr. Sokolow will be entitled to receive up to 10% of the income
attributable to investments made by the Company during his employment with the
Company.
The Company has implemented an employee profit sharing plan (the "Plan")
which provides for payment of a performance fee in an amount equal to 20% of
net income after taxes in each fiscal year, computed from the end of the last
fiscal year in respect of which performance fees were paid ("Plan Income").
Such performance fee shall be payable regardless of the amount of net income.
Pursuant to the Employment Agreement, Mr. Sokolow will receive 10% of Plan
Income, if any; provided, however, that the amount so distributable to Mr.
Sokolow pursuant to such employment agreement in any given year shall not
exceed 50% of all amounts eligible to be distributed under the Plan.
Directors, other than Mr. Sokolow, will receive an annual fee of $2,500 for
serving on the Board of Directors plus $250 and out-of-pocket expenses for
each meeting attended.
Other than the Plan, the Company does not have any stock option, annuity,
retirement, pension, deferred or incentive compensation plan or arrangement
under which any executive officers or directors are entitled to benefits, nor
does the Company have any long-term incentive plan pursuant to which
performance units or other forms of compensation are paid.
In September 1995 the Company entered into a month to month consulting
agreement with the Washington Economics Group, Inc. ("WEG"), of which Hon. J.
Antonio Villamil, Vice Chairman--International Strategy and a director of the
Company, is President and Chief Executive Officer. Pursuant to the consulting
agreement, WEG was to receive a monthly retainer of $3,000 in exchange for
providing up to 20 hours of consulting services per month. As of December 31,
1996, the Company elected not to renew such consulting agreement. In its
capacity as a consultant, WEG consulted with the Portfolio Manager in
analyzing investments, assisting management in investor relations and, as
requested, preparing formal presentations to the Board of Directors on market
developments in Latin America and the Caribbean.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 12, 1997, the beneficial
ownership of the Common Stock of the Company of (i) each person who is known
by the Company to beneficially own more than 5% of the Common Stock of the
Company, (ii) each director (including the Named Executive) of the Company,
and (iii) all directors and executive officers of the Company as a group
(based upon information furnished by such persons). Under
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<PAGE>
the rules of the Commission, a person is deemed to be a beneficial owner of a
security if he has or shares the power to vote or direct the voting of such
security or the power to dispose or direct the disposition of such security.
Accordingly, more than one person may be deemed to be a beneficial owner of
the same securities. A person is also deemed to be a beneficial owner of any
securities of which that person has the right to acquire beneficial ownership
within 60 days.
<TABLE>
<CAPTION>
NUMBER OF SHARES
BENEFICIALLY PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNED (2) OF CLASS
- ---------------------------------------- ---------------- ----------
<S> <C> <C>
Leonard J. Sokolow................................. 100 *
Hon. J. Antonio Villamil........................... 0 *
Neil R. Winter..................................... 0 *
Sanford B. Cohen................................... 0 *
Martin C. Engelmann................................ 0 *
Kevin C.King(3).................................... 88,600 7%
JW Charles Clearing Corp. (4)...................... 262,000 21%
All directors and executive officers as a group (5
persons).......................................... 100 *
</TABLE>
- --------
* Less than 1%
(1) The business address for purposes hereof of all of the Company's directors
and executive officers is in care of the Company.
(2) Unless otherwise noted, the Company believes that all persons in the table
have sole voting and disposition power with respect to all shares of
Common Stock beneficially owned by them.
(3) The address of such person is 10200 Old Katy Road, Suite 300, Houston,
Texas 77043.
(4) The address of such person is 980 N. Federal Highway, Suite 310, Boca
Raton, Florida 33432.
The information contained in the preceding table and the footnotes thereto
is derived in part from Statements on Schedule 13D filed with the Securities
and Exchange Commission. The Company expresses no opinion as to the
completeness or accuracy of the information contained in such documents or as
to such reporting persons' compliance with The Securities Exchange Act of 1934
and the rules and regulations promulgated thereunder.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In September 1995 the Company entered into a month to month consulting
agreement with the Washington Economics Group, Inc. ("WEG"), of which Hon. J.
Antonio Villamil, Vice Chairman--International Strategy and a director of the
Company, is President and Chief Executive Officer. Pursuant to the consulting
agreement, WEG received a monthly retainer of $3,000 in exchange for providing
up to 20 hours of consulting services per month. This agreement was terminated
as of December 31, 1996. In its capacity as a consultant, WEG consulted with
the Portfolio Manager in analyzing investments, assisted management in
investor relations and, as requested, prepared a formal presentations to the
Board of Directors on market developments and economic conditions in Latin
America and the Caribbean. See "Executive Compensation".
A-11
<PAGE>
FORM 10-KSB
THE AMERICAS GROWTH FUND, INC.
LIST OF FINANCIAL STATEMENTS
The following financial statements of The Americas Growth Fund, Inc. are
included in Item 7:
Report of Independent Certified Public Accountants
Balance Sheets - December 31, 1996 and 1995
Statements of Operations--Years ended December 31, 1996 and 1995
Statements of Changes in Net Assets--Years ended December 31, 1996 and 1995
Statements of Cash Flows--Years ended December 1996 and 1995
Notes to Financial Statements
A-F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders The Americas Growth Fund, Inc.
We have audited the accompanying balance sheets of The Americas Growth Fund,
Inc. as of December 31, 1996 and 1995 and the related statements of
operations, changes in net assets and cash flows for each of the two years in
the period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with 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. Our
procedures included observation of securities held by the Company or
confirmation of other securities owned by correspondence with the custodian
and broker as of December 31, 1996 and 1995. 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 The Americas Growth Fund,
Inc. at December 31, 1996 and 1995, the results of its operations, the changes
in its net assets and its cash flows for each of the two years in the period
ended December 31, 1996, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Jacksonville, Florida
March 7, 1997
A-F-2
<PAGE>
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Assets:
Investments at market or
fair value:
Investments in U.S. Trea-
sury Bills.............. $3,973,100 $4,424,800
Investment in preferred
stock................... 480,000 --
Investment in warrant.... 20,000 --
Investments in notes re-
ceivable................ -- 150,700
---------- ----------
Total investments (amor-
tized cost of
$4,525,300 and
$4,597,400
for 1996 and 1995, re-
spectively)............ 4,473,100 4,575,500
Cash and cash equiva-
lents................... 415,900 601,800
Prepaid expenses......... 1,200 8,000
Income tax refund receiv-
able.................... 21,000 --
Deferred tax asset....... 6,000 4,400
Furniture and equipment,
net..................... 16,600 16,700
Organizational costs,
net..................... 4,200 5,700
Deposits................. 1,100 1,100
---------- ----------
4,939,100 5,213,200
---------- ----------
Liabilities:
Accounts payable......... 67,500 15,000
Accrued directors fees... 3,600 4,600
Accrued profit sharing
liability............... -- 2,700
Income taxes payable..... -- 7,700
Deferred tax liability... 2,700 3,200
---------- ----------
73,800 33,200
---------- ----------
$4,865,300 $5,180,000
========== ==========
Net assets:
Preferred stock, $.01 par
value, 2,000,000 shares
authorized,
no shares issued........ $ -- $ --
Common stock, $.01 par
value, 10,000,000 shares
authorized,
1,265,100 shares issued
and outstanding......... 12,700 12,700
Capital in excess of par. 5,141,300 5,141,300
Undistributed operating
income (loss) and in-
vestment gains (losses):
Accumulated operating
(losses) income........ (266,400) (300)
Realized gains on in-
vestments.............. 23,300 44,700
Unrealized depreciation
of investments......... (45,600) (18,400)
---------- ----------
(288,700) 26,000
---------- ----------
Net assets applicable to
outstanding common shares
(equivalent to $3.85 and
$4.09 per share for 1996
and 1995, respectively,
based on outstanding com-
mon shares of 1,265,100)...$4,865,300 $5,180,000
========== ==========
</TABLE>
Read the accompanying notes.
A-F-3
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Interest income......................................... $ 246,500 $ 288,100
---------- ---------
Expenses:
Consulting fees to affiliate........................... 30,000 36,000
Consulting fees........................................ 22,900 --
Salaries............................................... 96,100 99,700
Professional fees...................................... 254,900 62,800
Board of Directors fees................................ 14,000 13,400
Rent................................................... 500 16,400
Other.................................................. 97,500 67,700
---------- ---------
515,900 296,000
---------- ---------
Investment loss before income tax benefit............... (269,400) (7,900)
Less income tax benefit................................. (3,300) (1,600)
---------- ---------
Net investment loss..................................... (266,100) (6,300)
---------- ---------
Realized (loss) gain on investments..................... (23,300) 55,800
Less income tax (benefit) expense applicable to realized
(loss) gain on investments............................. (1,900) 11,100
---------- ---------
(21,400) 44,700
---------- ---------
Unrealized depreciation of investments.................. (29,600) (16,600)
Less income tax benefit applicable to unrealized depre-
ciation of investments................................. (2,400) (3,300)
---------- ---------
(27,200) (13,300)
---------- ---------
Net (decrease) increase in net assets resulting from op-
erations............................................... $ (314,700) $ 25,100
========== =========
Per-share amounts:
Net investment loss.................................... $ (0.21) $ (0.01)
Net realized (losses) gains on investments............. (0.02) 0.04
Net unrealized losses on investments................... (0.02) (0.01)
---------- ---------
$ (0.25) $ 0.02
========== =========
Weighted average number of shares used in per-share com-
putations.............................................. 1,265,100 1,265,100
========== =========
</TABLE>
A-F-4
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net investment loss.................................... $ (266,100) $ (6,300)
Net realized (losses) gains on investments............. (21,400) 44,700
Net increase in unrealized depreciation of investments. (27,200) (13,300)
---------- ----------
Net (decrease) increase in net assets resulting from
operations............................................ (314,700) 25,100
Net assets at beginning of period...................... 5,180,000 5,154,900
---------- ----------
Net assets at end of period (includes undistributed net
investment loss of ($266,400) and ($300) at December
31, 1996 and 1995, respectively)...................... $4,865,300 $5,180,000
========== ==========
</TABLE>
Read the accompanying notes.
A-F-5
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Sources of cash:
Interest............................................. $ 31,600 $ 34,300
----------- ----------
Uses of cash:
Payroll.............................................. 96,100 105,900
Consulting fees to affiliates........................ 30,000 36,000
Consulting fees...................................... 22,900 --
Operating expenses................................... 307,700 153,900
Income taxes......................................... 23,700 --
----------- ----------
480,400 295,800
----------- ----------
Cash (used-in) operating activities................ (448,800) (261,500)
----------- ----------
Cash flows from investing activities:
Sources of cash:
Proceeds from sale of U.S. Treasury Bills............ 12,498,900 9,000,000
Proceeds from notes receivable....................... 100,000 100,000
Proceeds from sale of common stock................... -- 242,800
----------- ----------
12,598,900 9,342,800
----------- ----------
Uses of cash:
Purchase of furniture and equipment.................. 1,500 9,600
Purchase of U.S. Treasury Bills...................... 11,834,500 9,239,500
Purchase of preferred stock.......................... 480,000 --
Purchase of warrant.................................. 20,000 --
Purchase of common stock............................. -- 87,700
Purchase of notes receivable:
Related party....................................... -- 22,600
Other............................................... -- 250,000
----------- ----------
12,336,000 9,609,400
----------- ----------
Cash provided by (used-in) investing activities.... 262,900 (266,600)
----------- ----------
(Decrease) in cash and cash equivalents................ (185,900) (528,100)
Cash and cash equivalents at beginning of period....... 601,800 1,129,900
----------- ----------
Cash and cash equivalents at end of period............. $ 415,900 $ 601,800
=========== ==========
</TABLE>
Read the accompanying notes.
A-F-6
<PAGE>
THE AMERICAS GROWTH FUND, INC. STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Reconciliation of net (decrease) increase in net assets
resulting from operations to cash used-in operating
activities:
Net (decrease) increase in net assets resulting from op-
erations............................................... $(314,700) $ 25,100
--------- ---------
Adjustments to reconcile net (decrease) increase in net
assets resulting from operations to cash (used-in)
operating activities:
Accretion of discount on U.S. Treasury Bills............ (215,700) (251,900)
Realized loss (gain) on investments..................... 23,300 (55,800)
Amortization and depreciation........................... 3,100 2,500
Unrealized depreciation of investments.................. 29,600 16,600
Deferred income tax benefits............................ (2,100) (1,400)
Changes in assets and liabilities:
Income tax refund...................................... (21,000) --
Prepaid expenses....................................... 6,800 (7,200)
Interest receivable.................................... 800 (700)
Accounts payable....................................... 52,500 7,700
Accrued payroll taxes.................................. -- (8,900)
Accrued profit sharing liability....................... (2,700) 2,700
Accrued directors fees................................. (1,000) 2,100
Income taxes payable................................... (7,700) 7,700
--------- ---------
Total adjustments..................................... (134,100) (286,600)
--------- ---------
Cash (used-in) operating activities..................... $(448,800) $(261,500)
</TABLE>
Read the accompanying notes.
A-F-7
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1. ORGANIZATION AND NATURE OF OPERATIONS:
The Americas Growth Fund, Inc. (the "Company") was incorporated under the
laws of the State of Maryland on June 3, 1994. The Company is a non-
diversified, closed-end management investment company and has filed with the
Securities and Exchange Commission ("SEC") a notification of election to be
treated as a "business development company" as that term is defined in the
Investment Company Act of 1940, as amended.
The Company's primary investment objective is to achieve long-term capital
appreciation of its assets, rather than current income, by investing in equity
and debt securities of and providing managerial assistance to, emerging and
established companies that management believes offer significant potential
opportunities for growth (individually, "portfolio company", collectively,
"portfolio companies"). The Company plans to invest primarily in United States
based portfolio companies "strategically-linked" to the Caribbean and Latin
America. The Company considers companies to be strategically-linked to the
Caribbean and Latin America if they derive substantial revenue (at least 50%)
from operations or transactions in the Caribbean and Latin America or, if in
the Company's view, they are positioned to do so. The Company considers
"Caribbean and Latin American" countries to be Argentina, Aruba, the Bahamas,
Barbados, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba,
Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica,
Mexico, Netherlands Antilles, Nicaragua, Panama, Paraguay, Peru, the
Commonwealth of Puerto Rico, Trinidad and Tobago, Uruguay and Venezuela.
During 1996 and 1995, due to difficulties in locating quality portfolio
companies meeting the Company's investment objectives, the Company's assets
were primarily invested in U.S. Treasury bills. There can be no assurance that
the Company will be able to negotiate and complete transactions with potential
portfolio companies which meet the Company's investment objectives.
The Company considers "emerging companies" to be those companies in the
early stages of development with little or no operating history, and minimal
revenue or profits, which the Company anticipates will increase revenue and
become profitable. The Company considers "established companies" to be those
with an existing revenue and profit base. To a lesser extent, certain of the
emerging and established companies in which the Company invests may be in
"turnaround" or other restructuring situations.
The Company has placed and intends to place its emphasis on private
investments in restricted securities for which the Company is granted
registration rights and/or rights to participate in the sale of securities of
a portfolio company by other stockholders.
Such investments may be private investments in capital stock of privately-
held companies that the Company anticipates will engage in a public offering
within one to three years after the investment; private investments in capital
stock of publicly-held companies; or bridge loans which are convertible into
common stock or preferred stock of the issuer or issued together with equity
participations such as common stock, preferred stock or warrants to purchase
such stock or a combination thereof, or both, for privately-held companies
which the Company anticipates will complete a public offering, other financing
or a merger or acquisition transaction (other than a leveraged buy-out) within
one to three years from the date of investment.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
Investments in unrestricted securities that are traded in the over-the-
counter market are generally valued at the closing bid price on the last day
of the year. U.S. Treasury bills are valued at market value. Restricted
securities are valued at fair value as determined by the Board of Directors.
Because of the inherent uncertainty of valuation, those estimated values may
differ significantly from the values that would have been used had a ready
market for the securities existed, and the differences could be material.
A-F-8
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
FURNITURE AND EQUIPMENT:
Furniture and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets.
ORGANIZATIONAL COSTS:
Organizational costs are stated net of accumulated amortization of $3,300
and $1,800 at December 31, 1996 and 1995, respectively, and are being
amortized using the straight-line method over five years.
INCOME TAXES:
The Company is not entitled to the special treatment available to regulated
investment companies and is taxed as a regular corporation for federal and
state income tax purposes. The aggregate cost of securities at December 31,
1996 and 1995 for federal income tax purposes and financial reporting purposes
was the same. The aggregate gross unrealized depreciation for all securities
held at December 31, 1996 and 1995 is $52,200 and $22,600, respectively.
PER SHARE AMOUNTS:
Per share amounts are computed by dividing the net investment (loss) and net
realized and unrealized gains (losses) on investments by the weighted average
number of shares outstanding throughout the year.
3. CONCENTRATION OF CREDIT RISK:
Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents. During the
year the Company had deposits with financial institutions which were not
covered by the Federal Deposit Insurance Corporation. Management regularly
monitors their balances and attempts to keep this potential risk to a minimum
by maintaining their accounts with financial institutions they believe are of
good quality.
A-F-9
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
4. INVESTMENTS:
Investments include the following at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
VALUE VALUE
PRINCIPAL TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
AMOUNT NAME OF ISSUER 1996 1995
---------- --------------------------------------- ------------ ------------
<C> <S> <C> <C>
U.S. Treasury bills (81.7% and 85.4% of
net assets at December 31, 1996 and
1995, respectively)
U.S. Treasury bill, $500,000 face val-
$ 471,030 ue, matures January 11, 1996 $ -- $ 499,300
$1,415,780 U.S. Treasury bill, $1,500,000 face
value, matures February 8, 1996 -- 1,492,000
U.S. Treasury bill, $2,000,000 face
$1,949,545 value, matures June 6, 1996 -- 1,955,600
U.S. Treasury bill, $500,000 face val-
$476,030 ue, matures November 14, 1996 -- 477,900
U.S. Treasury bill, $2,000,000 face
$1,976,055 value, matures February 6, 1997 1,989,700 --
U.S. Treasury bill, $500,000 face val-
$494,065 ue, matures February 13, 1997 496,900 --
U.S. Treasury bill, $500,000 face val-
$1,482,807 ue, matures March 6, 1997 1,486,500 --
------------ ------------
Total U.S. Treasury bills $ 3,973,100 $ 4,424,800
============ ============
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND NAME OF DECEMBER 31, DECEMBER 31,
1996 1995 ISSUER 1996 1995
------------ ------------ -------------------------- ------------ ------------
<C> <C> <S> <C> <C>
Common stocks (0.0% of net
assets at December 31,
1996 and 1995)
Majority owned (restrict-
ed): Americas Growth
-- 80 Partners, Inc. -- --
======== ========
8% Convertible, redeemable
preferred stocks (9.9%
and 0.0% of net assets at December 31, 1996 and 1995,
respectively) (restrict-
ed):
14,953 -- Globalink, Inc. $480,000 $ --
======== ========
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
WARRANTS WARRANTS VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND NAME DECEMBER 31, DECEMBER 31,
1996 1995 OF ISSUER 1996 1995
------------ ------------ ---------------------- ------------ ------------
<C> <C> <S> <C> <C>
Common stock warrants
(0.4% and 0.0% of net
assets at December
31, 1996 and 1995,
respectively)
Golf Reservations of
America, Inc.
2 2 Class A -- --
2 2 Class B -- --
======= =======
Restricted: Globalink,
1 -- Inc. $20,000 $ --
======= =======
</TABLE>
A-F-10
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
4. INVESTMENTS (CONTINUED):
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT VALUE VALUE
OF NOTES TYPE OF ISSUE AND DECEMBER 31, DECEMBER 31,
DECEMBER 31, 1996 NAME OF ISSUER 1996 1995
----------------- ------------------------------- ------------ ------------
<C> <S> <C> <C>
Notes (2.9%
net assets at December 31,
1995)
$ 50,000 Golf Reservations of America,
Inc. $ -- $ 50,000
$ -- Approved Financial Corporation
(including accrued interest of
$700 at December 31, 1995) -- 100,700
------------ ------------
$ -- $ 150,700
============ ============
</TABLE>
In December 1996, the Company purchased in a private placement for an
aggregate consideration of $500,000, 14,953 shares of Globalink, Inc.
(Globalink), 8% convertible, redeemable preferred stock and a warrant
entitling the holder to purchase 149,530 shares of Globalink common stock at
$4.18 per share through December 20, 2001. Globalink has the right to redeem
the preferred stock at the original purchase price plus accrued dividends upon
the occurrence of certain events. Each share of preferred stock is convertible
into ten shares of Globalink common stock at the original purchase price of
the preferred stock, subject to adjustment should certain events occur. On
January 1, 2002, any outstanding shares of the preferred stock will be
automatically converted into common stock at the lesser of the original
purchase price or the average bid price for the ten trading days ending five
business days prior to the automatic conversion date. Globalink has agreed to
register the common stock issuable upon conversion of the preferred stock and
upon the exercise of the warrants. As of December 31, 1996, the Board of
Directors has valued the preferred stock and the warrant at $480,000 and
$20,000, respectively.
In November 1994, the Company purchased in a private placement for an
aggregate consideration of $100,000, 50,000 shares of Greg Manning Auctions,
Inc. ("Manning") restricted common stock and a warrant entitling the holder to
purchase 50,000 shares of Manning restricted common stock at $2.25 per share
through November 3, 1995. Subsequently, the number of common shares obtainable
upon exercise was increased to 56,500 and the exercise price was decreased to
$1.55. The Company received certain registration rights with respect to the
common stock and the common stock underlying the warrant. The Company
exercised the warrant and purchased the common stock on November 1, 1995. On
November 16, 1995 the Company sold the common stock of Greg Manning Auctions,
Inc. for $141,200 which resulted in a realized gain of approximately $53,500.
The Company agreed to loan up to $200,000 to Golf Reservations of America,
Inc. ("Golf") pursuant to two 10% promissory notes in January and March, 1995.
As of December 31, 1996 and 1995, the outstanding balance was $50,000. The
note is in default as of December 31, 1996 and the Board of Directors has
valued the note at $0 as of that date. In connection with the notes, the
Company received warrants to purchase an aggregate 110,906 shares of Golf's
common stock at an exercise price of $1.88 per share. As of December 31, 1996
and 1995, the Board of Directors has valued the warrants at $0.
On July 6, 1995, the Company entered in to a joint venture agreement with
Approved Financial Corporation (Approved) to market commercial loans to
businesses that derive, or are in a position to derive, a substantial portion
of their revenue from the Caribbean or Latin America. The loans were to be
secured by qualified first or second mortgages. On August 1, 1995, the Company
provided Approved with a $200,000 credit facility bearing interest at prime.
On July 24, 1996, the outstanding credit facility was repaid in full and the
joint venture was terminated.
During 1995, the Company advanced funds to Americas Growth Partners, Inc.
(AGP) aggregating $22,608 pursuant to a 10% promissory note. In addition, the
Company received 80 shares of AGP common stock, representing an 80% interest,
in connection with the promissory note. AGP is a publishing and consulting
business which began operations in January 1995. The Board of Directors deemed
the note receivable to be uncollectible and the Company recognized a realized
loss on the outstanding balance during 1996. The Board of Directors has valued
the common stock at $0 as of December 31, 1996. AGP's operating results for
1996 and 1995 were not significant.
A-F-11
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
5. CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF COST AND COST AND
SHARES SHARES VALUE VALUE
DECEMBER 31, DECEMBER 31, TYPE OF ISSUE AND NAME DECEMBER 31, DECEMBER 31,
1996 1995 OF ISSUER 1996 1995
------------ ------------ ---------------------- ------------ ------------
<C> <C> <S> <C> <C>
Money market fund,
415,000 600,600 Cortland Trust, Inc. $415,000 $600,600
Checking account with
-- -- bank 900 1,200
-------- --------
Total cash and cash
equivalents (8.5%
and 11.6% of net
assets at December
31, 1996 and 1995,
respectively) $415,900 $601,800
======== ========
</TABLE>
6. FURNITURE AND EQUIPMENT:
Furniture and equipment are comprised of the following at December 31, 1996
and 1995:
<TABLE>
<CAPTION>
1996 1995
------- -------
<S> <C> <C>
Furniture and fixtures...................................... $ 1,500 $ 1,500
Computer equipment.......................................... 17,900 16,400
------- -------
19,400 17,900
Less accumulated depreciation............................... (2,800) (1,200)
------- -------
$16,600 $16,700
======= =======
</TABLE>
7. INCOME TAXES:
Significant components of the provision for income taxes attributable to
continuing operations in 1996 and 1995 are as follows:
Current:
<TABLE>
<S> <C> <C>
Federal..................................................... $ -- $5,800
State....................................................... -- 1,900
-------- ------
-- 7,700
-------- ------
Deferred:
Federal (benefit)........................................... (46,500) (1,100)
State (benefit)............................................. (15,800) (400)
-------- ------
(62,300) (1,500)
Increase in valuation allowance............................. 54,700 --
-------- ------
(7,600) (1,500)
-------- ------
Provision for income taxes (benefit)........................ $ (7,600) $6,200
======== ======
</TABLE>
The provision for income taxes at the Company's effective tax rate differed
from the provision for income taxes at the statutory rate (15%) as follows:
<TABLE>
<CAPTION>
1996 1995
-------- ------
<S> <C> <C>
Computed tax expense (benefit) at the expected statutory
rate....................................................... $(48,300) $4,700
State tax, net of federal effect............................ (16,200) 1,200
Valuation allowance......................................... 54,700 --
Other....................................................... 2,200 300
-------- ------
$ (7,600) $6,200
======== ======
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
A-F-12
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
7. INCOME TAXES (CONTINUED):
The significant components of deferred tax assets and liabilities on the
balance sheet at December 31, 1996 and 1995 are:
<TABLE>
<S> <C> <C>
Deferred tax assets:
Unrealized depreciation of investments.......................... $9,300 $4,300
Section 179 expense carryover................................... -- 100
Net operating loss.............................................. 51,400 --
------ ------
60,700 4,400
Valuation allowance............................................ 54,700 --
------ ------
6,000 4,400
Deferred tax liability:
Depreciation................................................... 2,700 3,200
------ ------
Net deferred tax asset.......................................... $3,300 $1,200
====== ======
</TABLE>
The Company generated net federal operating losses in the amount of
approximately $288,700 of which approximately $40,800 has been carried back to
prior years resulting in a net operating loss carryforward of approximately
$247,900 which will expire in the year 2011.
A-F-13
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
8. RELATED PARTY TRANSACTIONS:
The Company entered into one year renewable consulting agreements with an
entity of which a director of the Company was Chairman and President. The
agreement was terminated as of December, 1996. During 1996 and 1995, the
Company paid $30,000 and $36,000, respectively, related to the agreement.
The Company leased its office space pursuant to a noncancelable operating
lease which expired in September, 1995. Commencing in October 1995, the
Company is provided with free office space by a law firm with which the
Chairman is "of counsel". Rent expense for the periods ended December 31, 1996
and 1995 amounted to approximately $0 and $16,400, respectively. In addition,
the Company paid the law firm legal fees of approximately $102,100 in 1996.
The Company entered into an employment agreement with the president of the
Company. The agreement is for three years expiring in July, 1997. Compensation
is $90,000 per year with cost of living increases each year. The Company paid
the president $96,100 and $91,500 pursuant to this agreement during 1996 and
1995, respectively.
9. PROFIT SHARING PLAN:
The Company provides an employee profit sharing plan (the Plan) which
provides for a performance fee equal to twenty percent (20%) of net income. As
of December 31, 1996 and 1995, approximately $0 and $2,700 respectively, was
accrued in connection with the Plan.
10. MERGER ACTIVITY:
On November 25, 1995, the Company entered into a non-binding letter of
intent to merge with Tallard Technologies B.V. (Tallard), a privately-held
company. The contemplated merger with Tallard was terminated prior to June 30,
1996.
On June 15, 1996, the Company entered into an Agreement and Plan of Merger
with Advanced Electronic Support Products, Inc. (AESP), a privately held
company engaged in the manufacturing and international distribution of
computer connectivity and networking products. Prior to December 31, 1996 the
contemplated merger with Advanced Electronics Support Products, Inc. was
terminated. The Company incurred approximately $136,700 of legal costs
associated with the merger. These costs have been charged to current
operations.
11. CONTINGENCY:
On November 26, 1996, a derivative stockholders' suit alleging breach of
fiduciary duty under the Investment Company Act of 1940 was filed against the
Company and its board of directors. The plaintiffs seek a permanent injunction
pursuant to Section 36(a) of the Investment Company Act of 1940 to enjoin the
Company's board of directors from making any investments or expenditures,
except for payment of regular expenses and salaries and from acting in their
fiduciary capacities as directors and officers of the Company. The plaintiffs
also seek an unspecified amount of damages. Based on information currently
available, the management of the Company does not believe that the ultimate
resolution of this litigation will have a material adverse impact on the
financial position or results of operations of the Company.
A-F-14
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1996 AND 1995
12. SUBSEQUENT EVENTS:
In January, 1997, the Company invested $250,000 in The Americas Group, Inc.
(TAG), an unaffiliated company, pursuant to a private placement under Rule 504
of Regulation D of the Securities Act of 1933. The Company received 125,000
shares of TAG common stock. In addition, the Company also received 5,000
shares of common stock in consideration of the Company's chairman serving on
TAG's board of advisors.
A-F-15
<PAGE>
ANNEX II
The following pages that comprise this Annex II are excerpts taken verbatim
from AGRO's Quarterly Report on Form 10-QSB for the quarter ended March 31,
1997, as filed by AGRO with the Commission. They are included for the
convenience of AGRO shareholders, but such inclusion does not imply that JWCFS
has investigated the accuracy of such information or has confirmed the same
with AGRO. As discussed above under "AGRO INFORMATION", AGRO is subject to the
informational requirements of the Exchange Act and files other reports with
the Commission that are publicly available to AGRO shareholders.
B-1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE AMERICAS GROWTH FUND, INC.
BALANCE SHEETS
MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Assets:
Investments at market or fair value:
Investment in U.S. Treasury Bills..................... $3,968,900 $4,429,500
Investment in warrant................................. 1,100 --
Investment in notes receivable........................ -- 150,700
Investment in preferred stock......................... 467,300 --
Investment in common stock............................ 260,000 --
---------- ----------
Total investments (amortized cost of $4,785,100 and
$4,494,600 for 1997 and 1996, respectively)......... 4,697,300 4,580,200
Cash and cash equivalents............................. 20,600 527,800
Dividends receivable.................................. 11,200 --
Income tax refund receivable.......................... 21,000 --
Prepaid expenses...................................... 1,000 14,300
Deferred tax asset.................................... 6,000 17,000
Furniture and equipment, net.......................... 16,100 16,300
Organizational costs, net............................. 3,800 5,300
Deposits.............................................. 1,100 1,100
---------- ----------
4,778,100 5,162,000
Liabilities:
Accounts payable...................................... 41,800 13,200
Accrued directors fees................................ 2,600 4,900
Accrued profit sharing liability...................... -- 2,700
Deferred tax liability................................ 2,700 2,800
---------- ----------
47,100 23,600
---------- ----------
$4,731,000 $5,138,400
========== ==========
Net assets:
Preferred stock, $.01 par value, 2,000,000 shares au-
thorized, no shares issued........................... $ -- $ --
---------- ----------
Common stock, $.01 par value, 10,000,000 shares autho-
rized, 1,265,100 shares issued and outstanding....... 12,700 12,700
Capital in excess of par.............................. 5,141,300 5,141,300
Undistributed operating income (loss) and investment
gains (losses):
Accumulated operating (losses) income................. (365,200) (37,400)
Realized gains on investments......................... 25,500 43,500
Unrealized (depreciation) of investments.............. (83,300) (21,700)
---------- ----------
Net assets applicable to outstanding common shares
(equivalent to $3.74 and $4.06 per share for 1997 and
1996, respectively, based on outstanding common
shares of 1,265,100)................................. $4,731,000 $5,138,400
========== ==========
</TABLE>
Read the accompanying notes.
B-2
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Revenues:
Interest............................................... $ 49,500 $ 65,100
Dividend............................................... 11,200 --
Other.................................................. 10,000 --
---------- ---------
70,700 65,100
---------- ---------
Expenses:
Consulting fees to affiliate........................... -- 9,000
Salaries............................................... 24,800 23,600
Professional fees...................................... 122,700 47,600
Board of Directors fees................................ 3,500 3,800
Other.................................................. 18,500 29,300
---------- ---------
169,500 113,300
---------- ---------
Investment loss before income tax benefit.............. (98,800) (48,200)
Less income tax benefit................................ -- 11,100
---------- ---------
Net investment loss.................................... (98,800) (37,100)
---------- ---------
Realized gain (loss) from sales of investments......... 2,200 (1,500)
Less income tax benefit applicable to realized loss on
investments........................................... -- 300
---------- ---------
2,200 (1,200)
Unrealized depreciation of investments................. (37,700) (4,400)
Less income tax benefit applicable to unrealized depre-
ciation of investments................................ -- 1,100
---------- ---------
(37,700) (3,300)
---------- ---------
Net decrease in net assets resulting from operations... $ (134,300) $ (41,600)
========== =========
Per-share amounts:......................................
Net investment loss.................................... $ (0.08) $ (0.03)
---------- ---------
Net realized gains (losses) on investments............. -- --
Net unrealized gains (losses) on investments........... (0.03) --
$ (0.11) $ (0.03)
---------- ---------
Weighted average number of shares used in per-share
computations.......................................... 1,265,100 1,265,100
========== =========
</TABLE>
Read the accompanying notes
B-3
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Net investment loss..................................... $ (98,800) $ (37,100)
Net realized gain (losses) on investments............... 2,200 (1,200)
Net increase in unrealized depreciation of investments.. (37,700) (3,300)
---------- ---------
Net decrease in net assets resulting from operations.... (134,300) (41,600)
Net assets at beginning of period....................... 4,865,300 5,180,000
---------- ---------
Net assets at end of period (includes undistributed net
investment loss of ($365,200) and ($37,400) at March
31, 1997 and 1996, respectively)....................... $4,731,000 5,138,400
========== =========
</TABLE>
Read the accompanying notes.
B-4
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Sources of cash:
Interest............................................... $ 2,100 $ 8,300
---------- ----------
Uses of cash:
Payroll................................................ 24,600 23,600
Consulting fees to affiliate........................... -- 9,000
Operating expenses..................................... 170,500 95,900
---------- ----------
195,100 128,500
---------- ----------
Cash (used in) operating activities.................... (193,000) (120,200)
---------- ----------
Cash flows from investing activities:
Source of cash:
Proceeds from sale of U.S. Treasury Bills.............. 4,000,000 2,000,000
---------- ----------
Uses of cash:
Purchase of common stock............................... 250,000 --
Purchase of U.S. Treasury Bills........................ 3,952,300 1,953,800
---------- ----------
4,202,300 1,953,800
---------- ----------
Cash provided by (used in) investing activities........ (202,300) 46,200
---------- ----------
(Decrease) in cash and cash equivalents................. (395,300) (74,000)
Cash and cash equivalents at beginning of period........ 415,900 601,800
---------- ----------
Cash and cash equivalents at end of period.............. $ 20,600 $ 527,800
========== ==========
</TABLE>
Read the accompanying notes.
B-5
<PAGE>
THE AMERICAS GROWTH FUND, INC.
STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Reconciliation of net decrease in net assets resulting
from operations to cash used in operating activities:...
Net decrease in net assets resulting from operations..... $(134,300) $ (41,600)
--------- ---------
Adjustments to reconcile net (decrease) increase in net
assets resulting from operations to cash used in
operating activities:...................................
Accretion of discount on U.S. Treasury Bills............. (47,400) (56,800)
Realized loss (gain) from sale of investments............ (2,200) 1,500
Amortization and depreciation............................ 900 800
Unrealized depreciation of investments................... 37,700 4,400
Deferred income tax benefits............................. -- (13,000)
Changes in assets and liabilities:.......................
Investments.............................................. (10,000) --
Dividend receivable...................................... (11,200) --
Prepaid expenses......................................... 200 7,600
Accounts payable......................................... (25,700) (1,800)
Accrued directors fees................................... (1,000) 300
Income taxes payable..................................... -- (21,600)
--------- ---------
Total adjustments....................................... (58,700) (78,600)
--------- ---------
$(193,000) $(120,200)
========= =========
Cash (used in) operating activities......................
Schedule of non-cash investing activities:
Acquisition of common stock.............................. $ 10,000
Less amount received in exchange for consulting.......... (10,000)
---------
$ --
=========
</TABLE>
Read the accompanying notes.
B-6
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
1. ORGANIZATION AND NATURE OF OPERATIONS:
The Americas Growth Fund, Inc. (the "Company") was incorporated under the
laws of the State of Maryland on June 3, 1994. The Company is a non-
diversified, closed-end management investment company and has filed with the
Securities and Exchange Commission ("SEC") a notification of election to be
treated as a "business development company" as that term is defined in the
Investment Company Act of 1940, as amended.
The Company's primary investment objective is to achieve long-term capital
appreciation of its assets, rather than current income, by investing in equity
and debt securities of and providing managerial assistance to, emerging and
established companies that management believes offer significant potential
opportunities for growth (individually, "portfolio company", collectively,
"portfolio companies"). The Company has and plans to continue to invest
primarily in United States based portfolio companies "strategically-linked" to
the Caribbean and Latin America. The Company considers companies to be
strategically-linked to the Caribbean and Latin America if they derive
substantial revenue (at least 50%) from operations or transactions in the
Caribbean and Latin America or, if in the Company's view, they are positioned
to do so. The Company considers "Caribbean and Latin American" countries to be
Argentina, Aruba, the Bahamas, Barbados, Belize, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador,
Guatemala, Haiti, Honduras, Jamaica, Mexico, Netherlands Antilles, Nicaragua,
Panama, Paraguay, Peru, the Commonwealth of Puerto Rico, Trinidad and Tobago,
Uruguay and Venezuela. During 1997 and 1996 due to difficulties in locating
quality portfolio companies meeting the Company's investment objectives, the
Company's assets were primarily invested in U.S. Treasury bills. There can be
no assurance that the Company will be able to negotiate and complete
transactions with potential portfolio companies which meet the Company's
investment objectives.
The Company considers "emerging companies" to be those companies in the
early stages of development with little or no operating history, and minimal
revenue or profits, which the Company anticipates will increase revenues and
become profitable. The Company considers "established companies" to be those
with an existing revenue and profit base. To a lesser extent, certain of the
emerging and established companies in which the Company invests may be in
"turnaround" or other restructuring situations.
The Company has placed and intends to place its emphasis on private
investments in restricted securities for which the Company is granted
registration rights and/or rights to participate in the sale of securities of
a portfolio company by other stockholders.
Such investments may be private investments in capital stock of privately-
held companies that the Company anticipates will engage in a public offering
within one to three years after the investment; private investments in capital
stock of publicly-held companies; or bridge loans which are convertible into
common stock or preferred stock of the issuer or issued together with equity
participations such as common stock, preferred stock or warrants to purchase
such stock or a combination thereof, or both, for privately-held companies
which the Company anticipates will complete a public offering, other financing
or a merger or acquisition transaction (other than a leveraged buy-out) within
one to three years from the date of investment.
2. SIGNIFICANT ACCOUNTING POLICIES:
SECURITIES VALUATION:
Investments in unrestricted securities that are traded in the over-the-
counter market are generally valued at the closing bid price on the last day
of the period. U.S. Treasury bills are valued at market value. Restricted
securities and securities of non-public companies are valued at fair value as
determined by the Board of Directors. Because of the inherent uncertainty of
such valuations, the estimated values may differ significantly from the values
that would have been used had a ready market for the securities existed, and
the differences could be material.
B-7
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
USE OF ESTIMATES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS:
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
FURNITURE AND EQUIPMENT:
Furniture and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated
useful lives of the related assets.
ORGANIZATIONAL COSTS:
Organizational costs are stated net of accumulated amortization of $3,700
and $2,200 at March 31, 1997 and 1996, respectively, and are being amortized
using the straight-line method over five years.
INCOME TAXES:
The Company is not entitled to the special treatment available to regulated
investment companies and is taxed as a regular corporation for federal and
state income tax purposes. The aggregate cost of securities at March 31, 1997
and 1996 for federal income tax purposes and financial reporting purposes was
the same. The aggregate gross unrealized depreciation for all securities held
at March 31, 1997 and 1996 is $37,700 and $4,400, respectively.
PER SHARE AMOUNTS:
Per share amounts are computed by dividing the net investment income (loss)
and net realized and unrealized gains (losses) on investments by the weighted
average number of shares outstanding throughout the year.
3. CONCENTRATION OF CREDIT RISK:
Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash and cash equivalents. During the
year the Company had deposits with financial institutions which were not
covered by the Federal Deposit Insurance Corporation. Management regularly
monitors their balances and attempts to keep this potential risk to a minimum
by maintaining their accounts with financial institutions they believe are of
good quality.
B-8
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
4. INVESTMENTS:
Investments include the following at March 31, 1997 and 1996:
<TABLE>
<CAPTION>
VALUE VALUE
PRINCIPAL TYPE OF ISSUE AND MARCH 31, MARCH 31,
AMOUNT NAME OF ISSUER 1997 1996
---------- ------------------------------------------------------------------ ---------- ----------
<S> <C> <C> <C>
U.S. Treasury bills (83.9% and 86.2%
of net assets at March 31, 1997 and 1996, respectively)
$1,949,545 U.S. Treasury bill, $2,000,000 face value, matures June 6, 1996 -- $1,980,700
$487,890 U.S. Treasury bill, $500,000 face value, matures July 11, 1996 -- 492,700
$1,465,940 U.S. Treasury bill, $1,500,000 face value, matures August 8, 1996 -- 1,472,300
$476,030 U.S. Treasury bill, $500,000 face value, matures November 14, 1996 -- 483,800
$1,976,325 U.S. Treasury bill, $2,000,000 face value, matures May 8, 1997 1,987,700 --
$494,102 U.S. Treasury bill, $500,000 face value, matures May 15, 1997 496,400 --
$1,481,892 U.S. Treasury bill, $1,500,000 face value, matures June 5, 1997 1,484,800 --
---------- ----------
Total U.S. Treasury bills $3,968,900 $4,429,500
========== ==========
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES VALUE VALUE
MARCH 31, MARCH 31, MARCH MARCH 31,
1997 1996 TYPE OF ISSUE AND NAME OF ISSUER 31, 1997 1996
--------- --------- ------------------------------------- -------- ---------
<C> <C> <S> <C> <C>
Common stocks (5.5% and
0.0% of net assets at
March 31, 1997 and 1996, respective-
ly:
The Americas Group, Inc. (unrestrict-
130,000 -- ed) $260,000 $ --
Majority owned (restricted): Americas
-- 80 Growth Partners, Inc. -- --
-------- -----
$260,000 $ --
======== =====
8% Convertible, redeemable
preferred stocks (9.9%
and 0.0% of net assets at
March 31, 1997 and 1996, respective-
ly) (restricted):
14,953 -- Globalink $467,300 $ --
======== =====
Common stock warrants: (0.0% of net assets at
March 31, 1997 and 1996, respective-
ly)
Restricted: Greg Manning Auctions,
1 Inc. $ -- $ --
1 -- Globalink $ 1,100 $ --
Golf Reservations of America, Inc.
2 2 Class A $ -- $ --
2 2 Class B $ -- $ --
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
OF NOTES VALUE MARCH
MARCH 31, MARCH 31, 31,
1997 TYPE OF ISSUE AND NAME OF ISSUER 1997 1996
- --------- ---------------------------------------------------------------------------- --------- --------
<S> <C> <C> <C>
Notes (0.0% and 2.9% of net assets at March 31, 1997 and 1996, respectively)
$ -- Golf Reservations of America, Inc. $ -- $ 50,000
$ -- Approved Financial Corporation (including accrued interest of $700) -- 100,700
------ --------
$ -- $150,700
====== ========
</TABLE>
B-9
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
4. INVESTMENTS (CONTINUED):
In January, 1997, the Company invested $250,000 in The Americas Group, Inc.
(TAG), an unaffiliated company, pursuant to a private placement under Rule 504
of Regulation D of the Securities Act of 1933. The Company received 125,000
shares of TAG common stock. In addition, the Company also received 5,000
shares of common stock in consideration of the Company's chairman serving on
TAG's board of advisors.
In December 1996, the Company purchased in a private placement for an
aggregate consideration of $500,000, 14,953 shares of Globalink, Inc.
(Globalink), 8% convertible, redeemable preferred stock and a warrant
entitling the holder to purchase 149,530 shares of Globalink common stock at
$4.18 per share through December 20, 2001. Globalink has the right to redeem
the preferred stock at the original purchase price plus accrued dividends upon
the occurrence of certain events. Each share of preferred stock is convertible
into ten shares of Globalink common stock at the original purchase price of
the preferred stock, subject to adjustment should certain events occur. On
January 1, 2002, any outstanding shares of the preferred stock will be
automatically converted into common stock at the lesser of the original
purchase price or the average bid price for the ten trading days ending five
business days prior to the automatic conversion date. Globalink has agreed to
register the common stock issuable upon conversion of the preferred stock and
upon the exercise of the warrants. As of March 31, 1997, the Board of
Directors has valued the preferred stock and the warrant at $467,300 and
$1,100, respectively.
The Company agreed to loan up to $200,000 to Golf Reservations of America,
Inc. ("Golf") pursuant to two 10% promissory notes in January and March, 1995.
As of December 31, 1996 and 1995, the outstanding balance was $50,000. The
note is in default as of March 31, 1997 and the Board of Directors has valued
the note at $0 as of that date. In connection with the notes, the Company
received warrants to purchase an aggregate 110,906 shares of Golf's common
stock at an exercise price of $1.88 per share. As of March 31, 1997 and 1996,
the Board of Directors has valued the warrants at $0.
On July 6, 1995, the Company entered into a joint venture agreement with
Approved Financial Corporation (Approved) to market commercial loans to
businesses that derive, or are in a position to derive, a substantial portion
of their revenue from the Caribbean and Latin America. The loans were to be
secured by qualified first or second mortgages. On August 1, 1995, the Company
provided Approved with a $200,000 credit facility bearing interest at prime.
On July 24, 1996, the outstanding credit facility was repaid in full and the
joint venture was terminated.
During 1995, the Company advanced funds to Americas Growth Partners, Inc.
(AGP) aggregating $22,608 pursuant to a 10% promissory note. In addition, the
Company received 80 shares of AGP common stock, representing an 80% interest,
in connection with the promissory note. AGP is a publishing and consulting
business which began operations in January, 1995 and currently as ceased
operations. The Board of Directors deemed the note receivable to be
uncollectible and the Company recognized a realized loss on the outstanding
balance during 1996. The Board of Directors has valued the common stock at $0
as of March 31, 1997. AGP's operating results for 1997 and 1996 were not
significant.
B-10
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
5. CASH AND CASH EQUIVALENTS:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES VALUE VALUE
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 TYPE OF ISSUE AND NAME OF ISSUER 1997 1996
--------- --------- ---------------------------------- --------- ---------
<C> <C> <S> <C> <C>
Money market fund,
19,600 516,600 Cortland Trust, Inc. $19,600 $516,600
-- -- Checking account with bank 1,000 11,200
------- --------
Total cash and cash equiva-
lents (0.04 % and 10.3% of net
assets at March 31, 1997 and
1996, respectively) $20,600 $527,800
======= ========
</TABLE>
6. FURNITURE AND EQUIPMENT:
Furniture and equipment are comprised of the following at March 31, 1997 and
1996:
<TABLE>
<CAPTION>
1997 1996
------- -------
<S> <C> <C>
Furniture and fixtures $ 1,500 $ 1,500
Computer equipment 17,900 16,400
------- -------
19,400 17,900
Less accumulated depreciation (3,300) (1,600)
------- -------
$16,100 $16,300
======= =======
7. INCOME TAXES:
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The deferred tax
liability is the result of unrealized appreciation (depreciation) on
investments and the use of accelerated depreciation methods for income tax
purposes.
The significant components of deferred tax assets and liabilities on the
balance sheet at March 31, 1997 and 1996 are:
Deferred tax assets:
Net operating loss $75,900 $15,400
Unrealized depreciation of investments 17,300 1,600
------- -------
93,200 17,000
Less valuation allowance 87,200 --
------- -------
6,000 17,000
Deferred tax liability:
Depreciation 2,700 2,800
------- -------
Net deferred tax asset $ 3,300 $14,200
======= =======
</TABLE>
B-11
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
7. INCOME TAXES (CONTINUED):
Significant components of the provision for income taxes (benefits)
attributable to continuing operations in 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Current:
Federal $ -- $ --
State -- --
======== ========
Deferred:
Federal (benefit) (26,200) (11,700)
State (benefit) (6,300) (800)
-------- --------
(32,500) (12,500)
Increase in valuation allowance 32,500 --
-------- --------
Provision for income tax benefits $ -- $(12,500)
======== ========
</TABLE>
The provision for income taxes at the Company's effective tax rate differed
from the provision for income taxes at the statutory rate (15%) as follows:
<TABLE>
<S> <C> <C>
Computed tax expense (benefit) at the expected statutory
rate $(20,500) $ (8,100)
State tax, net of federal effect (6,800) (2,700)
Valuation allowance 32,500 --
Other (5,200) (1,700)
-------- --------
$ -- $(12,500)
======== ========
</TABLE>
The Company generated net federal operating losses in the amount of
approximately $288,700 of which approximately $40,800 has been carried back to
prior years resulting in a net operating loss carryforward of approximately
$247,900 which will expire in the year 2011.
8. RELATED PARTY TRANSACTIONS:
The Company has entered into one year renewable consulting agreements with
an entity of which a director of the Company was Chairman and President. The
agreement terminated in July, 1996. The Company paid $9,000 during the period
ended March 31, 1996.
The Company leased its office space pursuant to a noncancelable operating
lease which expired in September, 1995. Commencing in October 1995, the
Company is provided with free office space by a law firm with which the
Chairman is "of counsel". The Company paid and accrued the law firm legal fees
of approximately $20,300 and $17,900 in the three months ended March 31, 1997
and 1996, respectively.
On August 10, 1994, the Company entered into an Employment Agreement with
it's President who also serves as the Company's Chairman of the Board and
Portfolio Manager. The term of the Employment Agreement was for an initial
three year term, which is automatically extended one additional year on each
anniversary of the Employment Agreement beginning in August 30, 1996 unless
the Board of Directors provides Mr. Sokolow with one year prior notice that
the term shall not be extended. The Employment Agreement currently terminates
on August 30, 1999, unless extended in accordance with its terms. Under the
Employment Agreement, Mr. Sokolow received a salary of $96,100 in 1996, which
amount increases annually by the percentage increase in the consumer price
index. The Company paid the president $24,800 and $23,600 pursuant to this
agreement for the three months ended March 31, 1997 and 1996, respectively.
B-12
<PAGE>
THE AMERICAS GROWTH FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1997 AND 1996
(UNAUDITED)
9. PROFIT SHARING PLAN:
The Company provides an employee profit sharing plan (the Plan) which
provides for a performance fee equal to twenty percent (20%) of net income. As
of March 31, 1997 and 1996, there was no accrual in connection with the Plan.
10. MERGER ACTIVITY:
On November 21, 1995, the Company entered into a non-binding letter of
intent with Tallard Technologies B.V. (Tallard), a privately-held company. The
contemplated merger with Tallard was terminated prior to June 30, 1996.
On June 15, 1996, the Company entered into an Agreement and Plan of Merger
with Advanced Electronic Support Products, Inc. (AESP), a privately held
company engaged in the manufacturing and international distribution of
computer connectivity and networking products. Prior to December 31, 1996, the
contemplated merger with Advanced Electronics Support Products, Inc. was
terminated. The Company incurred approximately $136,700 of legal and other
costs associated with the merger. These costs have been charged to current
operations.
11. CONTINGENCY:
On November 26, 1996, a derivative stockholders' suit alleging breach of
fiduciary duty under the Investment Company Act of 1940 was filed against the
Company and its board of directors. The plaintiffs seek a permanent injunction
pursuant to Section 36(a) of the Investment Company Act of 1940 to enjoin the
Company's board of directors from making any investments or expenditures,
except for payment of regular expenses and salaries and from acting in their
fiduciary capacities as directors and officers of the Company. The plaintiffs
also seek an unspecified amount of damages. Based on information currently
available, the management of the Company does not believe that the ultimate
resolution of this litigation will have a material adverse impact on the
financial position or results of operations of the Company.
B-13
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
LIQUIDITY RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31,
1996
As a result of operations, net assets decreased approximately $134,300 (or
approximately 2.8% of net assets) during the quarter ended March 31, 1997. For
the comparable period in 1996, net assets decreased approximately $41,600
during the quarter. The net decrease in net assets resulting from operations
for the quarter ended March 31, 1997 primarily resulted from a net investment
loss of approximately $98,800 and an increase in unrealized depreciation of
investments of approximately $37,700 less a realized gain from sales of
investments of approximately $2,200. These results compare with a net decrease
in net assets resulting from operations for the quarter ended March 31, 1996
which occurred primarily from a net investment loss of $37,100, an increase in
unrealized depreciation of investments of $3,300 and a realized loss from
sales of investments of approximately $1,200.
The Company recognized investment income of approximately $70,700 (which
consisted of interest income of $49,500, dividend income of $11,200 and other
income of $10,000) for the quarter ended March 31, 1997 as compared to $65,100
in investment income (which consisted of entirely interest income) for the
quarter ended March 31, 1996. The lower interest investment income resulted
primarily from a lesser amount of capital invested in Treasury Bills.
Expenses aggregated approximately $169,500 during the quarter ended March
31, 1997 which included salaries, accounting fees, consulting fees, legal
fees, rent and administrative expenses as compared with expenses of $113,300
for the quarter ended March 31, 1996. Professional fees increased to $122,700
as compared to 47,600 for the comparable quarter in 1996. With respect to the
increase in professional fees for the quarter ending March 31, 1997,
approximately $88,200 was as a result of the purported shareholders derivative
suit filed in November 1996. See "Legal Proceedings."
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had cash and cash equivalents of
approximately $20,600 and US Treasury Bills of approximately $3,968,900 as
compared to approximately $527,800 in cash and cash equivalents and
approximately $4,429,500 in Treasury Bills at March 31, 1996. The decrease in
capital resources for the three months ended March 31, 1997 was primarily due
to an investment of $250,000 in The Americas Group, Inc. and a net investment
loss of approximately $98,800 as compared to the decrease in capital resources
for the quarter ending March 31, 1996 primarily due to a net investment loss
of approximately $37,100. As of March 31, 1997, the Company had liabilities of
approximately $47,100 compared with liabilities of $23,600 as of March 31,
1996.
From November 1996 to March 31, 1997, the Company has incurred expenses
(consisting primarily of legal fees and associated litigation expenses) of
approximately $153,200 relating to the purported shareholders derivative suit.
See "Legal Proceedings." The Company expects to incur significant additional
costs in connection with the litigation and its agreement to advance legal
fees and expenses incurred by the Board of Directors in defending such suit.
B-14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On November 26, 1996, a purported derivative stockholders' suit alleging
breach of fiduciary duty under the Investment Company Act of 1940 was filed in
the Circuit Court for the Fifteenth Judicial Circuit in Palm Beach Country,
Florida against, among others, the Company and its board of directors. The
suit was filed by Kevin King, Herbert Hill, a general partner of Double H
Investment Co. and Bargelt Investments, Bonnie Cool Hayes and Ronald Hayes,
who purportedly own an aggregate of approximately 10% of the Company's
outstanding shares of common stock. The plaintiffs seek certain equitable
relief, including enjoining the directors from acting in their capacities as
directors of the Company and from making any investments or expenditures,
except for payment of regular expenses and salaries, and an unspecified amount
of damages in connection with, among other things, the previously announced
proposed merger between the Company and Advanced Electronic Support Products,
Inc. ("AESP"), which proposed merger was terminated by mutual agreement of the
Company and AESP on November 8, 1996. The Company has removed such suit to the
United States District Court, Southern District of Florida, Miami Division.
The defendants believe that the suit is completely without merit and are
vigorously contesting the plaintiffs' claims. The Company and the other
defendants have filed several motions to dismiss this suit. Based upon
information currently available, the management of the Company does not
believe that the ultimate resolution of this litigation will have a material
adverse impact on the financial position or results of operations of the
Company.
Pursuant to the Company's Articles of Incorporation, Bylaws and applicable
federal and state law, the board of directors has sought indemnification
regarding this suit and the Company has agreed to indemnify the board of
directors in connection therewith. As part of such indemnification, the
Company has agreed to advance legal fees and expenses incurred by the board of
directors in defending such suit. Each board member has affirmed in writing
his good faith belief that the standard of conduct necessary for
indemnification by the Company has been met and each board member has made a
written undertaking to repay any such advance if it should be ultimately
determined that the standard of conduct has not been met. The Company is not
currently engaged in any other pending legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.2 Amendment to By-Laws, dated July 9, 1996.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
None
B-15
<PAGE>
Facsimile copies of the manually executed Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for AGRO Shares, and any
other required documents should be sent by each shareholder of AGRO or such
shareholder's broker-dealer, commercial bank, trust company, or other nominee
to the Exchange Agent as follows:
EXCHANGE AGENT:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Mail: By Facsimile By Hand or Overnight
Transmission: Courier:
40 Wall Street
46th Floor (718) 921-8334 40 Wall Street
New York, New York 46th Floor
10005 New York, New York
10005
For Information call: (800) 937-5449 (toll free)
(212) 936-5100 (collect)
Any questions or requests for assistance or additional copies of the
Prospectus and the Letter of Transmittal may be directed to either the
Information Agent or JWCFS at their respective telephone numbers and locations
listed below. You also may contact your broker, dealer, commercial bank, trust
company, or other nominee for assistance concerning the Exchange Offer.
THE INFORMATION AGENT:
AMERICAN STOCK TRANSFER & TRUST COMPANY
40 Wall Street
46th Floor
New York, New York 10005
For Information call: (800) 937-5449 (toll free)
(212) 936-5100 (collect)
JWCFS:
Joel E. Marks
JW Charles Financial Services, Inc.
980 North Federal Highway
Suite 310
Boca Raton, Florida 33432
For information call: (561) 338-2600
[Back cover page]
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Florida Business Corporation Act (the "FBCA") authorizes corporations to
limit or eliminate the personal liability of directors to corporations and
their shareholders for monetary damages for breaches of certain of the
directors' fiduciary duties. In general, the duty of care requires that a
director exercise his judgment in good faith on an informed basis, and in a
manner he reasonably believes to be in the best interests of the corporation.
Absent the limitations now authorized by the FBCA, directors are accountable
to corporations and their shareholders for monetary damages only for conduct
constituting gross negligence in the exercise of their duty of care. Although
the statute does not change the directors' duty of care, it enables
corporations to limit available relief to equitable remedies such as
injunction or rescission.
The Registrant's Restated Articles of Incorporation (the "Registrant's
Articles") provide for indemnification of directors to the fullest extent
permitted by Florida law and, to the extent permitted by such law, eliminate,
or limit the personal liability of directors to the Registrant and its
shareholders for monetary damages for certain breaches of fiduciary duty and
the duty of care. Specifically, a director of the Registrant will not be
personally liable to the Registrant or its shareholders for monetary damages
for breach of such fiduciary duty as a director, except for liability for (i)
a violation of the criminal law, (ii) a transaction from which the director
received an improper personal benefit, (iii) an unlawful distribution, (iv)
willful misconduct in a proceeding by or in the right of the corporation or a
shareholder, or (v) recklessness or bad faith in a proceeding by or in the
right of someone other than the corporation or a shareholder.
The inclusion of this provision in the Registrant's Articles may have the
effect of reducing the likelihood of derivative litigation against directors
and may discourage or deter shareholders or management from bringing a lawsuit
against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have benefited the Registrant and its
shareholders.
The Registrant's directors and officers are insured against losses arising
from any claim against them as such for wrongful acts or omissions, subject to
certain limitations.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) The following exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
3(a) Restated Articles of Incorporation of JWCFS (incorporated by reference
to Exhibit 3 to JWCFS' Current Report on Form 8-K dated November 1,
1990).
3(b) Articles of Amendment to Restated Articles of Incorporation of JWCFS
(incorporated by reference to Exibit 3(b) to JWCFS' Annual Report on
Form 10-K for the fiscal year ended December 31, 1993).
3(c) Articles of Amendment to Restated Articles of Incorporation of JWCFS
(incorporated by reference to Exibit 3(c) to JWCFS' Annual Report on
Form 10-K for the fiscal year ended December 31, 1994).
3(d) By-Laws (incorporated by reference to Exhibit D to Amendment No. 1 to
JWCFS' Registration Statement of Form S-18 (File Number 2-897713-A)
filed with the Commission on May 2, 1984).
4(a) Article III-- Capitalization of JWCFS' Articles of Incorporation (See
Exhibit Number 3(b) above).
**5 Opinion of Kilpatrick Stockton LLP
**8 Opinion of Kilpatrick Stockton LLP
**23(a) Consent of Price Waterhouse LLP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
**23(b) Consent of Ernst & Young, LLP (accountants for JWCFS)
**23(c) Consent of Kilpatrick Stockton LLP (included in Exhibit 5)
**23(d) Consent of Ernst & Young, LLP (accountants for AGRO)
**24 Power of Attorney
**99(a) Form of letter of Transmittal for AGRO shareholders
**99(b) Form of letter to Securities Dealers, Commercial Banks, Trust
Companies and other Nominees.
**99(c) Form of letter to clients of Securities Dealers, Commercial Banks,
Trust Companies and other Nominees
**99(d) Form of Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 and Instructions Thereto
**99(e) Form of Notice of Guaranteed Delivery
**99(f) Form of Summary Advertisement
</TABLE>
- --------
** Previously filed
ITEM 22. UNDERTAKINGS.
THE UNDERSIGNED HEREBY UNDERTAKES:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1993;
(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;
(b) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) 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.
(d) If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by Rule 3-19 of Regulation S-X at the start of any delayed offering
or throughout a continuous offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent
or given, the latest annual report to security holders that is
II-2
<PAGE>
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered to each person to whom the prospectus is
sent or given, the latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim financial information.
The undersigned Registrant hereby undertakes: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this Registration Statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), such reoffering
prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other Items of
the applicable form.
The Registrant undertakes that every prospectus (i) that is filed pursuant
to paragraph (a)(iii) immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed
as part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
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 the foregoing provisions, 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 Securities
Act of 1933 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
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Atlanta,
State of Georgia, on August 13, 1997.
JW CHARLES FINANCIAL SERVICES, INC.
/s/ Joel E. Marks
By: _________________________________
Joel E. Marks
Vice Chairman and Chief Financial
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 13th day of August, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* President, Chief Executive
_________________________________ Officer and Chairman of the
MARSHALL T. LEEDS Board (Principal Executive
Officer)
/s/ Joel E. Marks Vice Chairman, Chief
_________________________________ Financial Officer and
JOEL E. MARKS Secretary (Principal
Financial and Accounting
Officer)
* Director
_________________________________
WM. DENNIS FERGUSON
* Director
_________________________________
GREGG S. GLASER
* Director
_________________________________
STEPHEN W. CROPPER
* Director
_________________________________
JOHN R. FAIELLA
* Director
_________________________________
JOSEPH P. ROBILOTTO
* Director
_________________________________
MICHAEL B. WEINBERG
</TABLE>
/s/ Joel E. Marks
*By:_________________________
JOEL E. MARKS
ATTORNEY-IN-FACT
II-4
