<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended: September 30,
1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934 For the transition period from _______ to _____________.
Commission file number 33-12613-NY
CELESTIAL VENTURES CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 22-2814206
------------------------------- ---------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
382 Route 59, Section 310, Monsey, New York 10952
-------------------------------------------------
(Address of principal executive offices)
(914) 369-0132
--------------
(Issuer's telephone number, including area code)
---------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer has: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. X Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding for each of the issuer's classes
of common equity, as of the latest practicable date:
Number of shares of Common Stock outstanding as of September 30, 1997:
2,706,534
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Celestial Ventures Corporation and Subsidiaries
Condensed Consolidated Balance Sheet
September 30,
1997
-------------
Assets:
Current Assets
Cash $ 403,345
Accounts Receivable --
Due From Polymer Dynamics 3,611,756
Prepaid Expenses and Sundry Receivables --
---------
Total Current Assets 4,015,101
Total Assets $4,015,101
=========
See Accompanying Notes to Condensed Consolidated Financial Statements
1
<PAGE>
CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
September 30,
1997
-------------
Liabilities
Current Liabilities
Accounts Payable $ --
Current portion of long term debt --
Loan payable - shareholder --
Accrued Expenses 2,500
Notes Payable --
-----------
Total Current Liabilities 2,500
-----------
Long-Term Liabilities
Notes Payable --
Loan Payable Officer --
Long term debt --
Net liabilities of discontinued operations 170,000
-----------
Total Long-Term Liabilities 170,000
Total Liabilities 172,500
Shareholders' Equity
Shareholders' Equity:
Preferred Stock 259
Common Stock 2,707
Additional Paid-In-Capital 9,392,548
Accumulated Deficit (5,416,364)
Net Income (Loss) (136,549)
-----------
Total Shareholders' Equity 3,842,601
Total Liabilities and Shareholders' Equity $ 4,015,101
===========
See Accompanying Notes to Condensed Consolidated Financial Statements
2
<PAGE>
CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
September 30, September 30,
1997 1996
Revenues
Sales $ -- $205,192
-------- --------
Cost of Sales -- 53,612
-------- --------
Gross Profit -- 151,580
Operating Expenses
General and Administrative Expenses 148,305 193,872
------- -------
Net (Loss) Before Other Income (Deductions) (148,305) (42,292)
-------- -------
Other Income (Deductions)
Interest Expense -- --
Interest Income 11,756 --
Forgiveness of Debt -- --
-------- --
Total Other Income (Deductions) 11,756
Discontinued operations
(Loss) from operations of discontinued
subsidiaries - net of taxes -- --
-------- -----
Net (Loss) $(136,549) $(42,292)
========= =======
Net (Loss) Per Share $(.05) $(.04)
===== =====
See Accompanying Notes to Condensed Consolidated Financial Statements
3
<PAGE>
CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities
Net (Loss) (136,549) (42,292)
--------- --------
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation -- 4,349
Amortization -- 16,667
Interest on redeemable common stock -- --
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable (3,606,756) (65,020)
Inventory -- 1,845
Prepaid expenses -- (62,461)
Other -- (7,731)
Increase (decrease) in:
Accounts payable -- (9,853)
Accrued expenses and sundry liabilities (13,854) 45,975
-------- ------
Total adjustment 3,620,610) (76,229)
Net cash used in operating activities (3,757,159) (118,521)
----------- -----------
Cash Flows From Investing Activities:
Purchase of property & equipment -- (2,150)
Deficit of acquired company -- --
Purchase of assets from Re-Prod Inc -- --
------ --
Net cash used in investing activities -- (2,150)
Cash Flows From Financing Activities:
Proceeds from loans - net -- 135,447
Financial of purchase of Re-Prod Inc assets:
Note Payable -- --
Redeemable common stock -- --
Redemption of preferred stock -- --
Issuance of common stock 4,154,069 --
Payments of shareholders' loans -- (18,000)
------------- -------
Net cash provided by financial activities 4,154,069 117,447
--------- -------
Net increase (decrease) in cash 396,910 (3,224)
Cash beginning of period 6,435 11,950
----- ------
Cash end of period $403,345 $8,726
======= ======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements
4
<PAGE>
CELESTIAL VENTURES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
Celestial Ventures Corporation was organized under
the laws of the State of Nevada on January 28, 1987.
Effective June 30, 1995, the Company changed its year
end from October 31 to June 30.
NOTE A: Material Subsequent Events and Contingencies
On August 21, 1997, the Company formally announced
that it had entered into a letter of intent to merge
with a high performance materials company which fits
the Company's parameters for an acquisition candidate.
On October 30, 1997, the Company worked towards
securing the acquisition as well as providing future
operating revenue for the Company by completing an
overseas private placement of common stock pursuant to
the exemptions afforded by Regulation S. Celestial has
received $4,059,000 from investors in connection with
the transaction, whereby a total of 1,353,000 common
shares, par value $0.001, were issued for a purchase
price of $3.00 per share. Of those amounts received
from the offering, $3,600,000 has been remitted to the
enterprise with which the Company intends to merge in
exchange for promissory notes totaling $3,600,000 due
December 30, 1997, bearing interest at an annualized
rate of seven percent (7%). The Company expects
significant growth in revenues and shareholder
earnings as a result of this potential acquisition and
the related transactions.
NOTE B: Significant Accounting Policies
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance
with generally accepted accounting principles for
interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the
information and footnotes required by generally
accepted accounting principles for complete financial
statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the three-month period
ended September 30, 1997 is not necessarily indicative
of the results that may be expected for the year ended
June 30, 1998. For further information, refer to the
consolidated financial statements and footnotes
thereto included in the Registrant Company and
Subsidiaries' annual report on Form 10-K for the year
ended June 30, 1997.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The consolidated balance sheet as of September 30, 1997 and the consolidated
statement of operations for the three-months ended September 30, 1997 and 1996
have been derived from the unaudited financial records of the Company. These
financial statements reflect all adjustments, consisting only of normal
recurring items, which in the opinion of management are necessary to fairly
state the Company's financial position and results of operations for the period
presented.
Effect of Inflation
- -------------------
The impact of inflation on the Company's financial condition and results of
operations has not been significant.
Management's Plan of Operation
- ------------------------------
The Company's financial condition at September 30, 1997 compared to September
30, 1996 changed dramatically. These changes occurred as a result of the sale of
the Company's Direct Mail subsidiary in November 1996. Management believes that
the sale of the operating subsidiary has had a positive effect on the Company as
it has positioned the Company to seek out new acquisition candidates as it has
done in the past.
During the last two fiscal years, the Company has made an effort to dispose of
all operating subsidiaries as well as to remove all non-de minimis liabilities
from the Company's financials in order to attract a single, large, profitable,
private company with which to potentially merge. On August 21, 1997, the Company
formally announced that it had entered into a letter of intent to merge with a
high performance materials company which fits the Company's parameters for an
acquisition candidate.
On October 30, 1997, the Company worked towards securing the acquisition as well
as providing future operating revenue for the Company by completing an overseas
private placement of common stock pursuant to the exemptions afforded by
Regulation S. Celestial has received $4,059,000 from investors in connection
with the transaction, whereby a total of 1,353,000 common shares, par value
$0.001, were issued for a purchase price of $3.00 per share. Of those amounts
received from the offering, $3,600,000 has been remitted to the enterprise with
which the Company intends to merge in exchange for promissory notes totaling
$3,600,000 due December 30, 1997, bearing interest at an annualized rate of
seven percent (7%). The Company expects significant growth in revenues and
shareholder earnings as a result of this potential acquisition and the related
transactions.
6
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Celestial Ventures Corporation vs. Re-Prod, Inc. et. al., Case No. 96 Civ.
1274, United States District Court for the Southern District of New York.
The Company filed on February 21, 1996 a complaint against Re-Prod, Inc. and its
stockholder Jacob Lahav in United States District Court for the Southern
District of New York, White Plains, New York Case Number 96 civ. 1274, which
sought a modification of the purchase price of the assets of Re-Prod, Inc. The
Company contends that certain assets, including accounts receivable, which the
Company purchased from Re-Prod, Inc. did not exist at the time of the
acquisition. As a result the Company suspended payments under a $250,000 payable
to Re-Prod, Inc. and did not honor other terms of the acquisition.
On August 29, 1995 the Company purchased, as of July 1, 1995, all of the issued
and outstanding common stock of Success Direct, Inc., a mail order business
products company ("Success"). Mr. Irwin Schneidmill, who owned 41.5% of Success,
became the President and Chief Executive Officer of the Company on August 1,
1995. Simultaneously with the acquisition of Success, Success assigned to the
Company its agreement to purchase certain business assets from Re-Prod, Inc.,
including the name Remarkable Products, and the Company consummated the
transaction with Re-Prod, Inc. The assets purchased from Re-Prod, Inc.
are related to the direct mail industry.
In connection with the acquisition of the certain assets of Re-Prod, Inc., Mr.
Schneidmill and Mr. John Formicola, a stockholder of the Company, had personally
guaranteed the payment by the Company of a $250,000 promissory note payable to
Re-Prod, Inc., which represents part of the consideration paid by the Company to
acquire the assets of Re-Prod, Inc. This note bares interest at 9% per annum and
is to be paid monthly by the Company in varying amounts by applying the income
received from renting its mailing list on a monthly basis. On November 20, 1995,
the Company contends the principal amount remaining under the note was
$210,127.53.
As part of the consideration for the acquisition, Re-Prod, Inc., also received
750,000 shares of the restricted common stock of the Company. The Agreement
provided that Mr. Schneidmill would personally guarantee 375,000 of such 750,000
shares payment of any difference between $393,750 ($1.05 per share) and the fair
market value of the shares on January 1, 1996. The value of the common stock at
February 1, 1996 was approximately $78,750. The Company and Mr. Schneidmill and
Formicola personally, have also executed a "Put Option Agreement", whereby
Re-Prod, Inc. can put these 375,000 shares to the Company as of January 1, 1996
and demand payment of $393,750. Such demand was made on January 31, 1996.
Furthermore, Mr. Schneidmill and Mr. Formicola guaranteed payment of the
difference between $412,500 and the market value of the remaining 375,000 shares
(25,000 shares, adjusted to reflect a 1 for 15 share reverse stock split,
effective May 3, 1996) of the Company's common stock held by Re-Prod, Inc. on
July 1, 1996. The shares having a guaranteed value at July 1, 1996 are subject
to an identical Put Option Agreement.
The Company, together with Mr. Schneidmill and Mr. Formicola have contended
that the assets purchased from Re-Prod, Inc. were not as represented in the
purchase agreement, and are seeking
7
<PAGE>
a renegotiation of the consideration paid for those assets, including a
renegotiation of their personal guarantees. The Company has agreed to
indemnify Mr. Schneidmill and Mr. Formicola against any liability resulting
form these guarantees.
On March 14, 1996, Re-Prod, Inc. and Jacob Lahav filed a counter claim against
the Company alleging specific performance on the $250,000 promissory note, fraud
and conversion, breach of contract and securities fraud and against Mr. Irwin
Schneidmill and John Formicola for the enforcement of certain financial
guarantees as well as for common law fraud, securities fraud and fraud and
conversion. The total dollar amount claimed, approximately $1,050,000, exclusive
of interest equals the amount of the original purchase price of Re-prod, Inc.
The Company and Mr. Schneidmill are vigorously defending these claims against
them and is pursuing its claims against Re-Prod, Inc. and Mr. Lahav.
On November 12, 1996, parties entered into, and the District Court approved by
order, a Stipulation of Settlement ("Settlement") of all claims and counter
claims. As a condition to entering into the Settlement, prior to its execution,
the Company paid to Re-Prod, Inc. the $6,039.55 balance of an escrow account to
be provided for in the purchase agreement. Under the Settlement, the Company
agreed to pay to Re-Prod, Inc. a balance of the purchase price of $400,000, of
which all has been paid. The Company must make additional payments to Re-Prod,
Inc. on September 1, 1997 of $300,000 plus that amount equal to one half of the
excess (if any) of the closing value of Re-Prod, Inc.'s shares of the Company's
common stock (based upon the mean between the bid/asked price) on September 1,
1997 over $300,000 (payable upon the tender of Re-Prod, Inc.'s certificates).
(As a result of its May 1996 1 for 15 stock split, the Company issued to
Re-Prod, Inc., certificates for 50,000 new shares in exchange for its existing
certificate for 750,000 pre-split shares of common stock.) Under the Settlement,
the counter claim against Mr. Formicola was dismissed, and Mr. John L. Patten, a
stockholder of the Company, was named as an additional guarantor. Mr.
Schneidmill and Mr. Patten have unconditionally guaranteed the prompt and full
payment and performance of all of the Company's obligation under the Settlement.
Mr. Patten has since agreed to assume the obligation and hold the Company
harmless against the payment due to Re-Prod, Inc. on September 1, 1997 of
$300,000 plus that amount equal to one half of the excess (if any) of the
closing value of the 50,000 shares of the Company's common stock as described
above. In consideration of this as well as other assumptions of various
liabilities of the Company as well as for other services rendered to the
Company, the Company issued 93,316 shares of common stock to Mr. Patten in June,
1997. See the Company's Report on Form 10-KSB for the period ended June 30,
1997.
Under the purchase agreement, the Company granted Re-Prod, Inc. a security
interest in certain of the Company's assets. The Settlement provides that
Re-Prod, Inc. will subordinate its security interest to that of any third party
which lends the Company funds to repay its obligations to Re-Prod, Inc. under
the Settlement. Except as provided above, the rights and obligations of the
parties under the purchase agreement remain unchanged until fully performed.
Mr. Patten has paid the final installment do to Re-Prod, Inc. in full
satisfaction by the Company of its obligations under the Settlement and the
Asset Purchase Agreement. Re-Prod, Inc.'s counterclaim, therefore, will
be dismissed with prejudice and the Company and Messers. Formicola,
Patten and Schneidmill will be released from all claims under the Re-Prod, Inc.
counterclaim.
8
<PAGE>
Johnson vs. Central Valve Services, Inc., et. al., No. 96-42066, In the
District Court of Harris County, Texas, 80th Judicial District.
The Plaintiffs' First Amended Original Petition was served upon Celestial (one
of many defendants) on April 23, 1997. The Plaintiffs allege that they were
injured as a result of certain misrepresentations made by Tony Heuermann (a
Texas investment manager unconnected to Celestial) which induced the Plaintiffs
into investing monies into Celestial and its wholly owned subsidiary, Central
Valve Services, Inc. ("Central"). The alleged investment includes payment for
25,343 (prior to the 1 for 15 reverse split) shares of Celestial common stock as
well as numerous promissory notes issued by Central in which Bob Sudderth
(former President of Celestial) also signed on behalf of the Company as
Guarantor. The Plaintiffs claim that these notes are in default and the shares
are trading below the promised value. Accordingly, the Plaintiffs now seek
damages from Celestial (as well as Central, Sudderth and Heuermann) to recoup
those monies lost as a result of these alleged false representations and
violations of Texas Deceptive Trade Practices Act in the amount of $62,092 plus
interest, costs and punitive damages.
Celestial has not yet appeared in the matter. The other parties to the
litigation have agreed to address this matter in non-binding mediation. Should
the parties fail to resolve this matter at that time, the court has
preliminarily scheduled a hearing for November 12, 1997.
Although Celestial has not yet appeared in the matter, John L. Patten, a
stockholder of the Company, pursuant to an agreement dated August 25, 1997, has
agreed to indemnify Celestial and hold it harmless for any costs incurred by the
Company or for any potential award or settlement that might arise in the future.
Mr. Patten has demonstrated to the Company's satisfaction his financial ability
to assume such obligation. In consideration of this as well as other assumptions
of various liabilities of the Company as well as for other services rendered to
the Company, the Company issued 93,316 shares of common stock to Mr. Patten in
June, 1997. See the Company's Report on Form 10-KSB for the period ended June
30, 1997.
ITEM 2. CHANGES IN SECURITIES.
On August 21, 1997, the Company formally announced that it had entered into a
letter of intent to merge with a high performance materials company which fits
the Company's parameters for an acquisition candidate. On October 30, 1997, the
Company worked towards securing the acquisition as well as providing future
operating revenue for the Company by completing an overseas private placement of
common stock pursuant to the exemptions afforded by Regulation S. Celestial has
received $4,059,000 from investors in connection with the transaction, whereby a
total of 1,353,000 common shares, par value $0.001, were issued for a purchase
price of $3.00 per share. Of those amounts received from the offering,
$3,600,000 has been remitted to the enterprise with which the Company intends to
merge in exchange for promissory notes totaling $3,600,000 due December 30,
1997, bearing interest at an annualized rate of seven percent (7%). The Company
expects significant growth in revenues and shareholder earnings as a result of
this potential acquisition and the related transactions.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
9
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no matters submitted to a vote of security holders for the
period covered by this Report.
ITEM 5. OTHER INFORMATION.
On August 21, 1997, the Company formally announced that it had entered into a
letter of intent to merge with a high performance materials company which fits
the Company's parameters for an acquisition candidate. In working towards
securing the acquisition as well as providing future operating revenue for the
Company, on October 30, 1997 the Company accepted subscription proceeds for the
purchase of 1,353,000 shares of the Company's common stock, par value $0.001, at
a price of $3.00 per share, aggregating gross proceeds to the Company of
$4,059,000. Such private sales were authorized to be made under either Rule 902
of Regulation S ("Regulation S") and/or Section 4(2) of the Act.
Of those amounts received from the offering, $3,600,000 has been remitted to the
enterprise with which the Company intends to merge in exchange for promissory
notes totaling $3,600,000 due December 30, 1997, bearing interest at an
annualized rate of seven percent (7%). The Company expects significant growth in
revenues and shareholder earnings as a result of this potential acquisition and
the related transactions.
Although the buyers were introduced to the securities by Pennsylvania Merchant
Group, Ltd., no underwriting discounts or commissions have been paid by the
Company to any underwriter. Based upon its review of documentation certified by
each buyer, the Company determined that each of the buyers to date was (i)
sophisticated (based upon net worth and investment experience), (ii) an
institutional investor, and/or (iii) not a U.S. Person (as defined in
Regulation S).
When used in this Quarterly Report on Form 10-QSB, the words "estimate",
"project", "intend", "expect" and similar expressions are intended to identify
forward-looking statements regarding events and financial trends which may
affect the Company's future operating results and financial position. Such
statements are subject to risks and uncertainties that could cause the Company's
actual results and financial position to differ materially. Such factors are
described in detail elsewhere. Readers are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to publicly release the result of any revisions
to these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
10
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-B).
Exhibit
Numbers Description
------- -----------
* 3(a) - Certificate of Incorporation of the Company
* 3(b) - Bylaws of the Company
** 4(a) - Form of Common Stock Certificate
*** 10(a) - Employment Agreement between Irwin Schneidmill and the
Company dated March 1, 1996.
*** 10(b) - Indemnity Agreement between the Company and Irwin
Schneidmill and John Formicola, indemnifying them against
liabilities arising from the acquisition of assets of
Re-Prod, Inc.
*** 10(c) - Stock Option Certificate and Agreement between the Company
and Irwin Schneidmill dated September 15, 1995.
**** 10(d) - Assumption Agreement between John Patten and the Company for
the R. M. Engineering note and the Dynamic subordinated note.
**** 10(e) - Indemnification Agreement between John Patten and the Company
for the Johnson vs. Central Valve Services, Inc., et al.,
litigation.
----------------------------------------
10(f) - Form of Common Stock Purchase Agreement and Investor
Confirmation Letter for the Overseas Private Placement
Pursuant to Regulation S.
(b) Reports on Form 8-K - The Registrant did not file any reports on Form
8-K during the last quarter of the fiscal period ended September 30,
1997.
* Incorporated by reference to the Company's Registration Statement on
Form S-8 dated September 18, 1995.
** Incorporated by reference to the Company's Report on Form 8-K dated
August 31, 1995.
*** Incorporated by reference to the Company's Report on Form 10-KSB for
the period ended June 30, 1995.
**** Incorporated by reference to the Company's Report on Form 10-KSB for
the period ended June 30, 1997.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
CELESTIAL VENTURES CORPORATION
By:/s/IRWIN SCHNEIDMILL
-----------------------------
Irwin Schneidmill
President, Chief Executive, and
Financial Officer and a Director
Dated: November 12, 1997
12
<PAGE>
CELESTIAL VENTURES CORPORATION
REGULATION S
COMMON STOCK PURCHASE AGREEMENT
AUGUST 4, 1997
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATION S) WITHOUT REGISTRATION
UNDER THE SECURITIES ACT, AND AS REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH
TRANSFER, UNLESS AN EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW
IS AVAILABLE.
Number 22 of 36
13
<PAGE>
THE SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED ("SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES LAWS ("BLUE SKY LAWS"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES OR TO U.S. PERSONS (AS DEFINED IN REGULATION S) WITHOUT REGISTRATION
UNDER THE SECURITIES ACT, AND AS REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH
TRANSFER, UNLESS AN EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW
IS AVAILABLE.
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT is made effective for reference
purposes only as of August 4, 1997, by and between CELESTIAL VENTURES
CORPORATION, a Nevada corporation (the "Corporation") and the investor whose
name and signature appears on the signature page to this Agreement (the
"Investor").
RECITAL
The Investor desires to purchase from the Corporation, and the
Corporation desires to sell to the Investor, certain common stock shares of the
Corporation, on the terms and conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties contained in this Agreement, the parties hereby
agree as follows:
1. PURCHASE AND SALE OF SHARES.
a. SALE AND ISSUANCE OF SHARES. Subject to the terms and
conditions of this Agreement, the undersigned Investor agrees to purchase at the
Closing (as defined below) and the Corporation agrees to sell and issue to the
Investor at the Closing, that number of common stock shares (the "Shares") set
forth under Schedule 1 at the price set forth under Schedule 1 (the "Purchase
Price"). All monetary references in this Agreement are to United States of
America dollars.
b. PAYMENT AND DELIVERY. The Investor shall purchase the
Shares by making payment to CELESTIAL VENTURES CORPORATION in cash by check or
wire transfer of funds of the Purchase Price delivered to the Corporation on, or
before, the date set forth on Schedule 1 attached to the signature page hereto
(the "Closing").
2. DELIVERY OF SHARES. Upon the Investor's delivery of the Purchase
Price in full and a fully executed and completed original of this Agreement to
the Corporation, and after the Corporation determines that all applicable
securities laws have been satisfied, the Corporation will deliver to the
Investor at the address indicated on Schedule 1 within five (5) business days
after the Closing a share certificate for the Shares dated as of the Closing. As
of
14
<PAGE>
the Closing, the Investor shall be deemed the owner of the Shares. Investor
shall provide the Corporation with instructions for registration and delivery of
the Shares as set forth on Schedule 1. Any instructions for registration of the
Shares in a name other than that of the Investor shall require such registered
owner to affirm Investor's warranties and representations set forth herein.
3. CORPORATION'S REPRESENTATIONS, WARRANTIES AND COVENANTS. The
Corporation hereby represents, warrants and covenants to the Investor as
follows:
a. CORPORATE ORGANIZATION AND STANDING. The Corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Corporation has the requisite corporate power to
carry on its business as presently conducted, and as proposed or contemplated to
be conducted in the future, and to enter into and carry out the provisions of
this Agreement and the transactions contemplated hereby. The Corporation is duly
qualified to do business in the jurisdictions where it is currently doing
business.
b. AUTHORIZATION. All corporate action on the part of the
Corporation, its directors and shareholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Corporation and the
performance of all of the Corporation's obligations hereunder has been taken.
This Agreement, when executed and delivered by the Corporation, shall constitute
a valid and binding obligation of the Corporation, enforceable in accordance
with its terms, except as may be limited by principles of public policy, and
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or other equitable remedies. The Shares, when issued in
compliance with the provisions of this Agreement, will be validly issued, fully
paid and nonassessable. The Corporation is, and at all times during the offer
and sale of the Shares, will be a "reporting issuer" as that term is defined
under Regulation S.
c. NO BREACH. The issue and sale of the Shares by the
Corporation does not and will not conflict with and does not and will not result
in a breach of any of the terms of the Corporation's incorporating documents or
any agreement or instrument to which the Corporation is a party. The
consummation of the transactions or performance of the obligations contemplated
by this Agreement will not result in a breach of any term of, or constitute a
default under, any statute, indenture, mortgage, or other agreement or
instrument or any order, writ, judgment or decree to which the Corporation or
any of its subsidiaries is or are a party or by which any of them is or are
bound.
d. NO PREEMPTIVE RIGHTS. There are no preemptive rights
of any shareholder of the Corporation with respect to the Shares.
e. AUTHORIZED SHARES. The Corporation has sufficient
authorized and unissued shares of its common stock to provide for the issuance
and delivery of the Shares as provided under this Agreement.
f. COMPLIANCE WITH REGULATION S. The Corporation represents
and warrants that it has complied, and covenants that until the end of the
applicable Regulation S
15
<PAGE>
restricted period it will comply with all of the requirements of Rule 903(a),
(b) and (c)(3) of Regulation S applicable to the Corporation with respect to the
offer and sale of the Shares, including but not limited to the requirement not
to engage in any "directed selling efforts" (as defined in Regulation S) in the
United States with respect to the Shares.
4. INVESTOR REPRESENTATIONS AND WARRANTIES. The Investor represents
and warrants to the Corporation that:
a. ACCOUNT/REGULATION S. The Investor is acquiring the Shares
for investment for its own account, and not with a view to, or for resale in
connection with, any distribution thereof, and it has no present intention of
selling or distributing any of the Shares. The Investor understands that the
Shares have not been registered under the Securities Act of 1933, as amended
(the "Securities Act") by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment as expressed herein. The Investor understands
that the Corporation is relying on the rules and regulations governing offers
and sales made outside the United States to non-"U.S. Persons" pursuant to
Regulation S under the Securities Act.
b. ACCESS TO DATA. The Investor has had an opportunity to
discuss the Corporation's business, management and financial affairs with its
management and to obtain any additional information which the Investor has
deemed necessary or appropriate for deciding whether or not to purchase the
Shares, including an opportunity to receive, review and understand the
disclosures and information regarding the Corporation's financial statements,
capitalization and other business information as set forth in Corporation's
filings with the Securities and Exchange Commission through March 31, 1997, all
incorporated herein by reference, together with all exhibits referenced therein.
The Investor acknowledges that no other representations or warranties, oral or
written, have been made by the Corporation or any agent thereof except as set
forth in this Agreement.
c. NO FAIRNESS DETERMINATION. The Investor is aware that no
federal, state or other agency has made any finding or determination as to the
fairness of the investment, nor made any recommendation or endorsement of the
Shares.
d. KNOWLEDGE AND EXPERIENCE. The Investor has such knowledge
and experience in financial and business matters, including investments in other
start-up companies, that it is capable of evaluating the merits and risks of the
investment in the Shares, and it is able to bear the economic risk of such
investment. Further, the individual executing this Agreement has such knowledge
and experience in financial and business matters that he is capable of utilizing
the information made available to him in connection with the offering of the
Shares, of evaluating the merits and risks of an investment in the Shares and of
making an informed investment decision with respect to the Shares, including
assessment of the Risk Factors set forth below.
e. LIMITED PUBLIC MARKET. The Investor is aware that there is
currently a very limited "over-the-counter" public market for the Corporation's
registered securities and that the Corporation became a "reporting issuer" under
the Securities Exchange Act of 1934, as amended, on or about 1987. There is no
guarantee that a more established public market will
16
<PAGE>
develop at any time in the future. The Investor understands that the Shares are
all unregistered and may not presently be sold in even this limited public
market. The Investor understands that the Shares cannot be readily sold or
liquidated in case of an emergency or other financial need. The Investor has
sufficient liquid assets available so that the purchase and holding of the
Shares will not cause it undue financial difficulties.
f. INVESTMENT EXPERIENCE. The Investor is an "accredited
investor" as that term is defined in Regulation D promulgated by the Securities
and Exchange Commission. The term "Accredited Investor" under Regulation D
refers to:
(i) A person or entity who is a director or
executive officer of the Corporation;
(ii) Any bank as defined in Section 3(a)(2) of the
Securities Act, or any savings and loan association or other institution as
defined in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; any broker or dealer registered pursuant to
Section 15 of the Exchange Act; insurance company as defined in Section 2(13) of
the Securities Act; investment company registered under the Investment Company
Act of 1940; or a business development Corporation as defined in Section
2(a)(48) of that Act; Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has total
assets in excess of $5,000,000; employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision is
made by a plan fiduciary, as defined in Section 3(21) of such Act, which is
either a bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in excess
of $5,000,000 or, if a self-directed plan, with investment decision made solely
by persons that are accredited investors;
(iii) Any private business development company as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940;
(iv) Any organization described in Section 501(c)(3)
of the Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Shares offered, with total assets in excess of $5,000,000;
(v) Any natural person whose individual net worth, or
joint net worth with that person's spouse, at the time of his purchase exceeds
$1,000,000;
(vi) Any natural person who had an individual income
in excess of $200,000 during each of the previous two years or joint income
with that person's spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the current year;
(vii) Any trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Shares
offered, whose purchase is directed by a person who
17
<PAGE>
has such knowledge and experience in financial and business matters that he is
capable of evaluating the merits and risks of the prospective investment; or
(viii) Any entity in which all of the equity owners
are accredited investors.
As used in this Section 4(f), the term "net worth" means the excess of total
assets over total liabilities. For the purpose of determining a person's net
worth, the principal residence owned by an individual should be valued at fair
market value, including the cost of improvements, net of current encumbrances.
As used in this Section 4(f), "income" means actual economic income, which may
differ from adjusted gross income for income tax purposes. Accordingly, the
undersigned should consider whether it should add any or all of the following
items to its adjusted gross income for income tax purposes in order to reflect
more accurately its actual economic income: Any amounts attributable to
tax-exempt income received, losses claimed as a limited partner in any limited
partnership, deductions claimed for depletion, contributions to an IRA or Keogh
retirement plan, and alimony payments.
18
<PAGE>
5. RESTRICTIONS ON TRANSFER RE: REGULATION S.
a. NOT A "U.S. PERSON." The Investor hereby certifies that (i)
it is not a "U.S. Person" as defined under Rule 902, Section (o) of Regulation S
promulgated under the Securities Act (a copy of which is attached hereto as
Schedule 2) and is not acquiring the Shares for the account or benefit of any
U.S. Person, and (ii) it is acquiring the Shares in an "offshore transaction" as
defined under Section (i) of such Rule 902 (a copy of which is attached hereto
as Schedule 3). The Investor acknowledges that offers respecting the sale of
Common Stock directed to it by the Company were received outside of the U.S. and
that the Investor did not engage in or direct any unsolicited offers to buy
Shares of Common Stock of the Company into the U.S.
b. TRANSFER RESTRICTIONS. The Investor shall not attempt to
have registered any transfer of the Shares not made in accordance with the
provisions of Regulation S and the Corporation shall be required during the
Regulation S restricted period to refuse to register any transfer of the Shares
that is not made in accordance with the provisions of Regulation S, unless such
refusal is prohibited by foreign law. The Investor agrees that the Shares
acquired by the Investor pursuant to this Agreement shall not be voluntarily
sold, transferred or otherwise disposed of for a minimum period of FORTY (40)
CALENDAR DAYS from the Closing Date. In addition to any other restrictions on
transfer set forth in this Agreement, the Investor agrees to transfer the Shares
only (i) in accordance with the provisions of Regulation S, pursuant to
registration under the Securities Act, or pursuant to an available exemption
from registration, and (ii) in accordance with any applicable state securities
laws. Unless so registered or exempt therefrom, such transfer restrictions shall
include but not be limited to and the Investor warrants and represents the
following:
(i) The Investor shall not sell the Shares publicly
or privately, or through any short sale, or other hedging transaction to any
U.S. Person, whether directly or indirectly, or for the account or benefit of
any such U.S. Person for the restricted period mandated by Regulation S after
the purchase of the Shares unless registered or exempt from registration;
(ii) Any other offer or sale of the Shares shall be
made only if (A) during the restricted period any subsequent purchaser certifies
in writing that it is not a U.S. Person and is not acquiring the Shares for the
account or benefit of any U.S. Person, or (B) after the restricted period the
Shares are purchased in a transaction that did not require registration under
the Securities Act and applicable Blue Sky laws; and
(iii) Any transferee of the Shares who acquires the
Shares during the Regulation S restricted period shall agree in writing to
resell the Shares only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act, or pursuant to an available
exemption from registration.
(iv) The Investor understands that any disposition
of the Shares in violation of this Agreement shall be null and void. No
transfer of the Shares shall be made by the Corporation's registrar or transfer
agent upon the Corporation's stock transfer books or
19
<PAGE>
records unless there has been compliance with the terms of this Agreement. The
Corporation shall issue stop transfer instructions to its registrar or transfer
agent to the effect that the certificate(s) evidencing the Shares may not be
transferred for a period of FORTY (40) CALENDAR DAYS after the Closing Date. The
Investor agrees that any disposition of the Shares in the U.S. shall be in
conformity with Regulation S pursuant to an opinion of counsel for the holder of
such Shares, that such Shares are exempt from registration under the 1933 Act
and such opinion shall be acceptable to the Corporation.
(v) The Investor is purchasing the Shares for its
own account and not on behalf of any U.S. persons; the sale has not been
pre-arranged with a purchaser in the United States; and all offers and resales
of the securities shall only be made in compliance with the provisions of
Regulation S.
c. RESTRICTIONS ON RESALES IN THE UNITED STATES. The Investor
understands and acknowledges that the Securities Act prohibits resales of
securities in the United States except pursuant to an effective registration
statement or an exemption from registration for which the Shares and the
Investor holding such Shares qualifies. The Investor understands and
acknowledges the requirements for qualifying for an exemption from registration
afforded by Section 4 of the Securities Act and that there can be no assurance
that the Investor will be able to qualify for such an exemption from
registration.
6. RESTRICTIVE LEGENDS. Each certificate evidencing the Shares which
the Investor may purchase hereunder and any other securities issued upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event (unless no longer required in the opinion of the counsel for the
Corporation) shall be imprinted with legends substantially in the following
form:
THESE SECURITIES MAY NOT BE OFFERED OR SOLD TO ANY U.S. PERSON AS DEFINED BY
RULE 902(o) OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT OF 1933 FOR A
PERIOD OF 41 DAYS COMMENCING ON THE DATE THEY ARE ISSUED AND, THEREAFTER, ONLY
IF SUCH SECURITIES ARE REGISTERED UNDER THE 1933 ACT OR AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
The Corporation shall be entitled to enter stop transfer
notices on its transfer books with respect to the Shares during the Regulation S
restricted period.
7. RELIANCE. The Investor is aware that the Corporation is relying on
the accuracy of the above representations to establish compliance with Federal
and State securities laws. If any such warranties or representations are not
true and accurate in any respect as of the Closing, Investor shall so notify the
Corporation in writing immediately and shall be cause for rescission by the
Corporation at its sole election. The Investor shall indemnify the Corporation
and its affiliates, legal counsel and agents against all losses, claims, costs,
expenses and damages or liabilities, including reasonable attorneys' fees, which
such parties may suffer or incur caused or in connection with or arising out of,
directly or indirectly, from their reliance on such warranties and
representations.
20
<PAGE>
8. DUE DILIGENCE. The Investor, or its agents, have had a full
opportunity to conduct its due diligence of the Corporation, in connection with
this Agreement to its complete satisfaction. The Investor is familiar with the
Corporation, its financial condition, business and prospects, has been provided
with such information concerning the Corporation financial and other affairs as
the Investor deems necessary to enter into and perform this Agreement, has had
sufficient opportunity to ask questions and receive answers to verify the
accuracy of such information, and is not in any way relying upon any
information, representation or warranty (without implying that the supplying of
any such information or the making of any such representation or warranty has
occurred) that the Corporation or its officers, directors, employees, agents and
attorneys have provided, or have failed to provide, to the Investor in entering
into or performing this Agreement.
9. MISCELLANEOUS.
a. SURVIVAL. The representations, warranties, covenants and
agreements made herein shall survive the closing of the transactions
contemplated hereby.
b. SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors and administrators of
the parties hereto.
c. ENTIRE AGREEMENT. This Agreement and the Exhibits and
Schedules attached hereto constitute the entire agreement and understanding
between the parties with respect to the subject matters herein, and supersede
and replace any prior agreements and understandings, whether oral or written
between and among them with respect to such matters. The provisions of this
Agreement may be waived, altered, amended or repealed, in whole or in part, only
upon the written consent of the Corporation and the Investor.
d. TITLES AND SUBTITLES. The titles of the Sections and
subsections of this Agreement are for the convenience of reference only and are
not to be considered in construing this Agreement.
e. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
f. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with laws of the State of New York, applicable to
contracts between New York residents entered into and to be performed entirely
within the State of New York.
g. VENUE. Any action, arbitration, or proceeding arising
directly or indirectly from this Agreement or any other instrument or security
referenced herein shall be litigated or arbitrated, as appropriate, in the New
York, State of New York.
h. AUTHORITY. If Investor is a corporation, partnership, trust
or estate: (i) the individual executing and delivering this Agreement on behalf
of the Investor has been duly
21
<PAGE>
authorized and is duly qualified to execute and deliver this Agreement on behalf
of Investor in connection with the purchase of the Shares and (ii) the signature
of such individual is binding upon Investor.
RISK FACTORS
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
THE COMPANY INTENDS TO USE THE NET PROCEEDS FROM THE SALE OF THE COMMON STOCK
BEING OFFERED TO FINANCE POTENTIAL BUSINESS ACQUISITIONS. THERE CAN BE NO
ASSURANCE HOWEVER THAT ANY SUCH ACQUISITION WILL TAKE PLACE. FURTHERMORE, THERE
CAN BE NO ASSURANCE THAT THE COMPANY WILL SUCCESSFULLY INTEGRATE THE OPERATIONS
OF THE ACQUIRED BUSINESS WITH THOSE OF THE COMPANY, OR THAT ALL OF THE BENEFITS
EXPECTED FROM SUCH INTEGRATION WILL BE REALIZED. ALTHOUGH THE COMPANY WILL
ENDEAVOR TO EVALUATE THE RISKS INHERENT IN A PARTICULAR ACQUISITION, THERE CAN
BE NO ASSURANCE THAT THE COMPANY WILL PROPERLY ASCERTAIN OR ASSESS SUCH
SIGNIFICANT RISK FACTORS.
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
INVESTOR CELESTIAL VENTURES
CORPORATION
______________________________
(Name of Investor)
By:___________________________ By:____________________________
(Signature) Irwin Schneidmill, President
______________________________
(Print Name and Title)
SCHEDULE 1
Purchase Price Per Share: $3.00/share
Aggregate Purchase Price: $4,059,000
Total Number of Shares Offered: 1,353,000 shares
Purchase Date: October ___, 1997
Name of Registered Owner(s): ______________________________
Number of Shares: ______________________________
Address for Delivery of Shares: ______________________________
______________________________
______________________________
23
<PAGE>
SCHEDULE 2
DEFINITION OF "U.S. PERSON"
Reg. Section 230.902. As used in Regulation S, the following terms
shall have the meanings indicated:
(o) U.S. Person.
(1) "U.S. person" means:
(i) any natural person resident in the United
States;
(ii) any partnership or corporation organized or
incorporated under the laws of the United States;
(iii) any estate of which any executor or
administrator is a U.S. person;
(iv) any trust of which any trustee is a U.S.
person;
(v) any agency or branch of a foreign entity
located in the United States;
(vi) any non-discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary for the benefit or account of a U.S.
person;
(vii) any discretionary account or similar account
(other than an estate or trust) held by a dealer or
other fiduciary organized, incorporated, or (if an
individual) resident in the United States; and
(viii) any partnership or corporation if:
(A) organized or incorporated under the
laws of any foreign jurisdiction; and
(B) formed by a U.S. person principally for
the purpose of investing in securities not
registered under the Act, unless it is
organized or incorporated, and owned, by
accredited investors (as defined in Rule
501(a) under the Act (Section 230.501(a) of
this chapter)) who are not natural persons,
estates or trusts.
(2) Notwithstanding paragraph (o)(1) of this section, any
discretionary account or similar account (other than an estate
or trust) held for the benefit or account of a non-U.S. person
by a dealer or other professional fiduciary organized,
incorporated, or (if an individual) resident in the United
States shall not be deemed a "U.S. person."
(3) Notwithstanding paragraph (o)(1) of this section, any
estate of which any
<PAGE>
professional fiduciary acting as executor or administrator is
a U.S. person shall not be deemed a U.S. person if:
(i) an executor or administrator of the estate who
is not a U.S. person has sole or shared investment
discretion with respect to the assets of the estate;
and
(ii) the estate is governed by foreign law.
(4) Notwithstanding paragraph (o)(1) of this section,
any trust of which any professional fiduciary acting as
trustee is a U.S. person shall not be deemed a U.S. person if
a trustee who is not a U.S. person has sole or shared
investment discretion with respect to the trust assets, and no
beneficiary of the trust (and no settlor if the trust is
revocable) is a U.S. person.
(5) Notwithstanding paragraph (o)(1) of this section, an
employee benefit plan established and administered in
accordance with the law of a country other than the United
States and customary practices and documentation of such
country shall not be deemed a U.S. person.
(6) Notwithstanding paragraph (o)(1) of this section, any
agency or branch of a U.S. person located outside the United
States shall not be deemed a "U.S. person" if:
(i) the agency or branch operates for valid business
reasons; and
(ii) the agency or branch is engaged in the business
of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the
jurisdiction where located.
(7) The International Monetary Fund, the International Bank
for Reconstruction and Development, the Inter-American
Development Bank, the Asian Development Bank, the African
Development Bank, the United Nations, and their agencies,
affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and
pension plans shall not be deemed "U.S. persons."
<PAGE>
SCHEDULE 3
DEFINITION OF "OFFSHORE TRANSACTION"
Reg. Section 230.902. As used in Regulation S, the following terms
shall have the meanings indicated:
(i) Offshore Transaction.
(1) An offer or sale of securities is made in an "offshore
transaction" if:
(i) the offer is not made to a person in the United
States; and
(ii) either:
(A) at the time the buy order is originated,
the buyer is outside the United States, or
the seller and any person acting on its
behalf reasonably believe that the buyer is
outside the United States; or
(B) for purposes of:
(1) Section 230.903, the transaction
is executed in, on or through a
physical trading floor of an
established foreign securities
exchange that is located outside the
United States; or
(2) Section 230.904, the transaction
is executed in, on or through the
facilities of a designated offshore
securities market described in
paragraph (a) of this section, and
neither the seller nor any person
acting on its behalf knows that the
transaction has been pre-arranged
with a buyer in the United States.
(2) Notwithstanding paragraph (i)(1) of this section, offers
and sales of securities specifically targeted at identifiable
groups of U.S. citizens abroad, such as members of the U.S.
armed forces serving overseas, shall not be deemed to be made
in "offshore transactions."
(3) Notwithstanding paragraph (i)(1) of this section, offers
and sales of securities to persons excluded from the
definition of "U.S. person" pursuant to paragraph (o)(7) of
this section or persons holding accounts excluded from the
definition of "U.S. person" pursuant to paragraph (o)(2) of
this section, solely in their capacities as holders of such
accounts, shall be deemed to be made in "offshore
transactions."
<PAGE>
INVESTOR CONFIRMATION LETTER FOR A PRIVATE OFFERING PURSUANT
TO REGULATION "S"
Celestial Ventures Corporation
382 Route 59 Section 310
Monsey, New York 10952
October 30, 1997
Gentlemen,
This is to confirm to you that the _________ shares of Common Stock,
par value $.001 per share ("the Shares"), of Celestial Ventures Corporation (the
"Company") purchased by _____________________ ("Purchaser") on the date hereof
are being acquired for Purchaser's own account without a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended, and the Rules and Regulations thereunder (collectively hereinafter
called the "Act").
Purchaser hereby represents and warrants to the Company that its
present and anticipated financial position permits it to purchase the Shares and
to hold the Shares for investment purposes. Purchaser hereby acknowledges
receipt of a Regulation S Common Stock Purchase Agreement dated August 4, 1997,
and represents and warrants that it has read the Regulation S Common Stock
Purchase Agreement and all exhibits thereto. The total size of the Regulation S
offering is 1,353,000 Shares.
Purchaser further acknowledges that:
(a) it is familiar with the requirements of Regulation S and
understands that the Shares have not been registered under the
Act, purchaser hereby represents and warrants to the Company that
it will make no offers or sales of the securities during the
restricted period which are not in accordance with Regulation S or
pursuant to an exemption from the registration requirements of the
Securities Act;
(b) prior to effecting any transfer (except pursuant to a registration
statement) of the Shares to any person, it will furnish the
Company with an opinion of counsel, which opinion shall be
satisfactory to the Company and counsel, that the proposed
transfer may be effected without registration under the Act or
registration or qualification under applicable state Blue Sky
laws;
<PAGE>
(c) the certificate representing the Shares shall bear a legend
stating that the Shares evidenced by such certificates have not
been registered under the Act and may not be transferred (except
pursuant to a registration statement) except upon delivery to the
Company of an opinion of counsel, which opinion shall be
satisfactory to the Company and its counsel, that the proposed
transfer may be effected without registration under the Act or
registration or qualification under applicable state Blue Sky
laws; and
(d) the Company may enter, or may instruct its transfer agent to
enter, on its books an order stopping transfer of the Shares until
the conditions precedent to such transfer specified in paragraph
(b) above have been satisfied.
Very Truly Yours,
CELESTIAL VENTURES CORPORATION
by: ___________________________
Irwin Schneidmill, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 403,345
<SECURITIES> 0
<RECEIVABLES> 3,611,756
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,015,101
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,015,101
<CURRENT-LIABILITIES> 2,500
<BONDS> 0
0
259
<COMMON> 2,707
<OTHER-SE> 9,392,548
<TOTAL-LIABILITY-AND-EQUITY> 4,015,101
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 148,305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,756
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (136,549)
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
