SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant
Preliminary Proxy Statement
Xanthic Enterprises, Inc.
8833 Sunset Blvd., Suite 200
West Hollywood, CA 90069
Tel. 310-289-4947
SEC File No. 33-17966-LA
Registrant and Filing Party
Copies to:
Law Office of Lance N. Kerr
8833 Sunset Blvd., Suite 200
West Hollywood, CA 90069
Tel: 310-289-4947
Fax: 310-289-5240
PRELIMINARY PROXY STATEMENT
SPECIAL MEETING OF STOCKHOLDERS
To Be Held January 23, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Xanthic Enterprises, Inc., a Colorado
corporation (the "Company"), to be voted at a Special Meeting of Stockholders
("Meeting") to be held January 23, 1998 and at any adjournment(s) thereof.
The Meeting will be held at 8833 Sunset Blvd, Suite 200, West Hollywood, CA
90069, on January 23, 1998, at 11:00 a.m. local time. Solicitations will be
made by mail, and expenses incurred in connection with the solicitations
will be borne by the Company. The President of the Company may also
solicit proxies personally by telephone. This Proxy Statement, the enclosed
Notice and the enclosed form of Proxy were sent on or before January 6,
1998 to all stockholders of record as of December 31, 1997.
MATTERS TO BE CONSIDERED AT THE MEETING
The Company's stockholders are being asked to consider and act upon the
following proposals which were unanimously approved and recommended by the
Board of Directors:
1. A proposal to effect a 1-for-2.5 reverse split of the issued and
outstanding shares of the Company's common stock.
2. A proposal to issue 20,000,000 shares of the Company's common stock,
calculated after a 1- for 2.5 reverse stock split, to acquire all of the
issued and outstanding shares of Norwest, S.A., a privately-held Brazil
corporation (the "Acquisition").
3. Subject to stockholder approval of Proposal 2, to elect the directors
as set forth in this Proxy Statement.
4. Subject to stockholder approval of Proposal 2, a proposal to change
the domicile of the Company to the State of Nevada and change the Company's
name to "International Wood Corporation".
5. To transact any such other business as may come before the meeting or
any Adjournment or Adjournments thereof.
The transactions to be considered at the Meeting involve a matter of
great significance to the Company's stockholders because if the Acquisition
is approved and consummated, the stockholders of Norwest, S.A. will own
approximately 89% of the Company's outstanding common stock. The exchange of
shares with the stockholders of Norwest, S.A. and the election of directors
will result in a change of control of the Company. Stockholders are urged to
carefully consider the information presented in this Proxy Statement.
RECORD DATE AND VOTING SECURITIES
The securities of the Company entitled to vote at the Meeting consist of
shares of the Company's common stock, $.0001 par value. Only stockholders of
record at the close of business on December 31, 1997, the record date for the
Meeting, will be entitled to notice of and to vote at the Meeting. On the
record date the Company had outstanding 6,484,826 shares of common stock
which were owned by approximately 1,000 stockholders of record.
Holders of record of common stock on the record date are entitled to one
vote per share exercisable in person or by proxy.
On April 2, 1992 the State of Oregon issued a final order to cease and
desist violating any provision of Oregon Securities Law. The Company has been
advised that the effect of the Oregon ruling was to invalidate the issuance
and distribution of the registered shares and warrants to residents of Oregon
until such time as said securities are registered pursuant to the provisions
of the Oregon Securities Law. According to the records of the transfer agent,
the number of shareholders with Oregon addresses is 645. According to these
records the shareholders with Oregon addresses own 108,331 common shares of
the Company. The 108,331 shares represent approximately 1.7% of the issued
and outstanding shares of the Company. Due to action by Department of
Securities of the State of Oregon those shareholders with addresses in the
State of Oregon will not be allowed to vote as the validity of their shares is
in doubt.
The presence in person or by proxy of a majority of the outstanding
shares of common stock entitled to vote is necessary to constitute a quorum.
Assuming a quorum is present, the three (3) nominees receiving the greater
number of votes cast by the holders of the common stock will be elected as
directors. There will be no cumulative voting in the election of directors.
Assuming a quorum is present, the affirmative vote of the holders of a
majority of the shares of common stock present in person or represented by
proxy is required for approval of Proposals 1 and 2. Proposal 4 requires
approval of a statutory merger with a new Nevada corporation with the name
International Wood Corporation which will have the effect of changing the
name of the Company and changing the domicile of the Company to Nevada.
Abstentions are treated as present and entitled to vote at the Meeting.
Therefore, abstentions will be counted in determining whether a quorum is
present and will have the effect of a vote against a matter. A broker
non-vote on a matter (i.e., shares held by brokers or nominees as to which
instructions have not been received from the beneficial owners or persons
entitled to vote and as to which the broker or nominee does not have
discretionary power to vote on a particular matter) is considered not
entitled to vote on that matter and, thus, will not be counted in
determining whether a quorum is present or whether a matter requiring
approval of a majority of the shares present and entitled to vote has
been approved.
All Proxies received pursuant to this solicitation will be voted at the
Meeting and at any adjournments thereof as indicated in the Proxy. If no
instructions are given, the persons named in the Proxy solicited by the Board
of Directors of the Company intend to vote for the nominees for election as
directors of the Company listed below and for Proposals 1, 2 and 4.
REVOCATION OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the President of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the meeting and voting in person.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding shares of
the Company owned beneficially as of December 31, 1997, by (i) each officer
and director of the Company, (ii) each nominee for director, (iii) all
officers and directors as a group, and (iv) each person known by the Company
beneficially to own more than 5% of the shares of the Company:
Shares Percent
Name Owned Shares
Position
- ----------- ----------- -----------
Mark Lilly 1,165,000 18.0
8833 Sunset Blvd.
Suite 200
West Hollywood, CA 90069
President/Director
Nominee for Director
Glenn DeCicco 1,106,500 17.1
100 Long Brook Way
Suite 21
Pleasant Hill, CA 94523
Secretary/Director
Brett Hudelson
147 Central 1,106,500 17.1
Ashland, OR 97520
Shareholder
John D. Lilly 263,000 4.0
8833 Sunset Blvd.
Suite 200
West Hollywood, CA 90069
Vice-Pres./Director
David G. Lilly 1,000,000 15.4
8833 Sunset Blvd.
Suite 200
West Hollywood, CA 90069
Shareholder
Elliott Sassoon* 0 0.0
Rua Modesto Tavares de Lima # 108
C.E.P. 05507-010
Sao Paulo, S.P. Brazil
Nominee for Director
Alipio Motta* 0 0.0
Rua Modesto Tavares de Lima # 108
C.E.P. 05507-010
Sao Paulo, S.P. Brazil
Nominee for Director
*Shareholder of Norwest, S.A.
The total number of shares owned by officers and directors is 2,534,500
(39.1%).
In the event the stockholders of the Company approve the proposed
reverse split and the Acquisition, the Company will have the following number
of shares outstanding:
Shares presently issued 6,484,826
Shares outstanding after reverse split 2,593,930
Common Shares issued in Acquisition 20,000,000
Total Common Shares to be issued and
outstanding at closing 22,593,930
All shares of common stock, including the shares to be issued in the
Acquisition, will be equal to each other with respect to voting, liquidation
and dividend rights. Holders of shares of common stock will be entitled to
one vote for each share they own at any stockholders' meeting. Holders of
shares of common stock are entitled to receive such dividends as may be
declared by the Board of Directors out of funds legally available therefore,
and upon liquidation are entitled to participate pro rata in a distribution
of assets available for such a distribution to stockholders.
There are no conversion, pre-emptive or other subscription rights or
privileges with respect to the present outstanding shares of common stock.
Reference is made to the Company's Certificate of Incorporation and to the
applicable statutes of the State of Colorado for a more complete description
of the rights and liabilities of holders of common stock. The common stock of
the Company does not have cumulative voting rights which means that the
holders of more than 50% of the shares voting for the election of directors
may elect all of the directors if they choose to do so. In such event, the
holders of the remaining shares aggregating less than 50% will not be able to
elect any directors.
INFORMATION ON THE COMPANY
The Company was originally formed on October 27, 1986 under the laws of
the State of Colorado. Approximately 4,500,000 shares were issued to its
founders for an aggregate consideration of $5,000. In 1988 the Company offered
and sold 330,000 shares of its common stock and warrants in a securities
offering made pursuant to Form S-18 under the Securities Act of 1933, as
amended. Since then additional shares have been sold in private placements.
The warrants have expired.
The Company was formed as a blind pool or blank check company to invest
in technologies, properties or companies which held potential for
long-term growth. During the last several years, the Company has sought out
and considered a number of proposed acquisition candidates but has never
effected an acquisition.
The Company has filed reports with the Securities and Exchange Commission
under Sections 12, 13, or 15 of the Securities Exchange Act of 1934. All
reports are current.
Subject to stockholder approval and the fulfillment of certain
conditions, the Company intends to acquire all of the issued and outstanding
shares of Norwest, S.A. as described in Proposal 2.
Financial Information About the Company
Liquidity and Capital Resources. At December 31, 1996 the Company had
assets of $0 and liabilities of $13,859. This compares to assets of $0 and
liabilities of $13,154 at December 31, 1995. At September 30, 1997 the
Company had assets of $0 and liabilities of $ 77,368. The increase in
liabilities was due to legal and adminstrative expense incurred with
respect to reporting requirements.
Results of Operation. The Company has not commenced any active
operations except for the completion of its public offering and investigation
and analysis of potential acquisitions. For the twelve months ended December
31, 1996 the Company had revenues of $0. The Company had revenues of $0 for
the twelve month period ended December 31, 1995. Total expenses for the
twelve month period ended December 31, 1996 were $705 as compared to expenses
of $1,404 for the twelve month period ended December 31, 1995.
The Company had a loss of $705 for the twelve month period ended
December 31, 1996 compared to a loss of $1,404 for the twelve month period
ended December 31, 1995.
Until such time as the Company effects an acquisition, it is unlikely
to generate any revenue and may incur expenses arising from professional
fees and costs associated with seeking acquisitions.
Market for the Company's Common Stock and Other Stockholder Information
An application to trade the Company's common stock is currently pending
with the NASD's Electronic Bulletin Board in the over-the-counter market.
There is currently no active market for the Company's common stock and there
can be no assurance that any active market will commence. The number of
holders of record of the Company's common stock was approximately 1,000 as of
December 31, 1997, as reported by the Company's transfer agent.
The Company has not paid any dividends to date and does not anticipate
paying dividends in the foreseeable future.
Current Management
Upon approval of the change of control as provided herein the current
officers and directors (with the exception of Mark A. Lilly) will resign
and new officers and directors will be nominated.
Compensation of Management
Information concerning the compensation of the executive officers of the
Company for the last three full fiscal years is provided below.
SUMMARY COMPENSATION TABLE
Annual Compensation
Other
Name Annual
and Compen-
Principal sation
Position Year Salary($) Bonus($) ($)
Mark A. Lilly 1996 0 0 0
President 1995 0 0 0
1994 0 0 0
Glenn DeCicco 1996 0 0 0
Secretary 1995 0 0 0
1994 0 0 0
John D. Lilly 1996 0 0 0
Vice-President 1995 0 0 0
1994 0 0 0
Long Term Compensation
Name Restricted Securities All Other
and Stock Underlying LTIP Compen-
Principal Awards Options/ Payouts sation
Position Year ($) SARs (#) ($) ($)
Mark A. Lilly 1996 0 0 0 0
President 1995 0 0 0 0
1994 0 0 0 0
Glenn DeCicco 1996 0 0 0 0
Secretary 1995 0 0 0 0
1994 0 0 0 0
John D. Lilly 1996 0 0 0 0
Vice-President 1995 0 0 0 0
1994 0 0 0 0
Certain Relationships
Mark A. Lilly, Glenn DeCiccco and John D. Lilly have been the officers
and directors of the Company during the past year. There are no
agreements, understandings or pending proposals between the officers and
directors of the Company and the Sellers of stock of Norwest S.A. The officers
and directors will gain some benefits from the acquisition due to their
ownership of stock of the Company. This benefit will be in proportion to
their stockholdings and will be in same proportion as for any shareholder of
the Company. By reason of the ownership in shares of the Company held by the
officers and directors said persons may be considered to have a
substantial interest in the Acquisition of Norwest S.A.
The Proposed Officers and Directors of the Company following the
acquisition are Elliott Sasson, Alipio Motta and Mark A. Lilly. With
respect to Elliott Sassoon and Alipio Motta there is no agreement,
understanding or pending proposals between said persons and the Company
other than as set forth herein.
Independent Accountants
The Company's financial statements for the last fiscal year ended December
31, 1996 were audited by the firm of Harlen & Boettger of San Diego, Calif.
The management of the Company knows of no disagreements with its accountants.
The Sellers of Norwest S.A. have supplied an audited balance sheet as of
October 31, 1997 prepared by the accounting firm of Pannell Kerr Forster of
Sao Paulo, Brazil. The management of the Company knows of no disagreements
with the accountants for Norwest S.A.
Neither firm of accountants is expected to be present at the special
meeting of the shareholders which is the subject of this proxy statement. No
decision has been made as to which firm of accountants will be engaged for
the fiscal year ended December 31, 1997.
Standing Committees and Meetings of the
Board of Directors.
There are no standing committees of the Board of Directors of the Company.
The Company held no meetings of the Board of Directors during the past year.
Accounting and Tax Matters
The Company is advised that the Acquisition of the Norwest Shares will be
treated as a purchase for accounting purposes. The Company is advised that
there is no U.S. tax effect on the exchange transaction with the Sellers of
the Norwest shares.
Additional Information and Regulatory Approvals
On December 24, 1997 the Company filed a report concerning the proposed
Acquisition of the shares of Norwest S.A. on Form 8-K with the Securities
and Exchange Commission. The Company has furnished with this proxy
statement copies of the Form 10-K for the year ended December 31, 1996 and
the Form 10-Q for the period ended September 30, 1997. All such information
is available on the internet at the Edgar Archives at http://www.sec.gov.
No regulatory approval is required for the stock exchange as set forth
in this proxy statement.
PROPOSAL 1: REVERSE STOCK SPLIT
Management of the Company believes it to be in the best interests of the
Company and the stockholders of the Company to decrease the number of shares
of the Company's stock issued and outstanding prior to closing of the
Acquisition. Management believes that a reduction in the number of shares
outstanding will aid in the possible creation of a trading market for the
Company's securities. Management recommends stockholder approval of a
proposal to effect a 1-for-2.5 reverse split of the Company's common stock.
In the event a 1-for-2.5 reverse split is effectuated, the 6,484,826 shares
now issued and outstanding will be reduced to approximately 2,593,930
shares. No fractional shares will be issued in connection with the proposed
stock split. All fractional shares will be rounded up to the nearest
whole number.
If the proposal to effect a 1-for-2.5 reverse split is approved, the
Company expects to effect the reverse split on or about January 30, 1998.
The Board of Directors recommends a vote FOR the proposal to effect a
1-for-2.5 reverse split of the issued and outstanding shares of common stock.
PROPOSAL 2: ACQUISITION OF STOCK OF NORWEST S.A
The Company proposes to acquire all of the issued and outstanding shares
of Norwest S.A., a privately-held Brazilian corporation in exchange for
shares of the Company's common stock. The Company proposes to issue
20,000,000 shares of its common stock, calculated after the proposed 1-for-
2.5 reverse split, to the stockholders of Norwest in exchange for all of the
issued and outstanding shares of Norwest Common Stock.
The current shareholders of Norwest are:
Name No. of Shares
Elliott Sassoon 120,653,620
Pre-Cortados da Amazonia Ltda 1,149,050
Maria Cristina de Oliveira Bittencourt 1,000
The 20,000,000 shares of Xanthic to be issued to these persons will be
issued in the ratio their shares bear to the total of shares issued and
outstanding.
Background and Reasons for the Transaction
The Company was formed and capitalized as a blind pool/blank check
company for the purpose of acquiring an operating company, a start-up company
or commencing its own operations in a designated business. Since the close of
its public offering, the Company's management has considered a number of
potential acquisitions and business opportunities but as of the date of this
Meeting has never effected any acquisition or made any investments. The
Company's management believes that the acquisition of Norwest will permit the
Company to be engaged in active business operations.
Norwest has not yet commenced business operations but has completed the
acquisition of assets for the purpose of commencing operations. These assets
consist of land, standing timber and logging equipment. The Company is
advised that the operations will consist of harvesting and reforestation of
trees in the Amazon area of Brazil. The principal asset of Norwest is a tract
of land consisting of approximately 45,000 acres containing a variety of
tropical hardwoods. (See "Description of Business of Norwest" attached
hereto.) Conditions to Stock Exchange Agreement
The consummation of the Acquisition transaction is subject to several
conditions which either must be fulfilled by the respective party or which
must be waived by the other party.
A summary of the material conditions is as follows:
1. The Company, Norwest and the stockholders of Norwest must have
performed any and all agreements and covenants set forth in the Stock
Exchange Agreement.
2. There shall not be any material adverse change in the financial
condition or Business of the Company or Norwest.
3. The Company must obtain stockholder approval.
4. All holders of Norwest common stock must agree to the
Acquisition.
5. The Company must effect a 1-for-2.5 reverse split.
Management of the Company believes all material conditions of both
parties will be fulfilled at the closing of the Acquisition.
Address and Capitalization of Norwest
The address of Norwest S.A. is:
Rua Modesto Tavares de Lima # 108-A
C.E.P. 05507 -010
Sau Paulo, S.P.
Brazil
The Company intends to acquire all of the shares of Norwest Common Stock
issued and outstanding at the Closing of the Acquisition. Information about
Norwest's authorized capital stock is set forth below.
Norwest has 121,803,670 shares of Common Stock issued and outstanding.
Each holder of Common Stock is entitled to one vote for each share
owned of record on all matters voted upon by Norwest stockholders, and
a majority vote is required for all actions to be taken by stockholders. In
the event of a liquidation, dissolution or winding-up of Norwest, the holders
of common stock are entitled to share equally and ratably in the assets of
Norwest, if any, remaining after the payment of all debts and liabilities of
the Company.
Holders of Norwest Common Stock are entitled to receive dividends if, as
and when declared by the Board of Directors of Norwest out of funds legally
available therefore, subject to the dividend and liquidation rights of any
preferred stock that may be issued and outstanding.
Norwest Common Stock is held beneficially by three persons as of
October 31, 1997. Norwest is a privately-held company and there is no market
for its securities. Norwest acts as its own transfer agent.
The Board of Directors of the Company and Norwest believe the reverse
acquisition to be in the best interests of their respective stockholders and
have authorized the consummation of the Acquisition subject to stockholder
approval and other matters. The Board of Directors of the Company has
approved the Stock Exchange Agreement.
The Board of Directors of the Company has not sought or obtained an
opinion from an independent financial advisor or consultant as to the
fairness of the terms of the Acquisition from a financial point of view.
Accordingly, stockholders are urged to read this Proxy Statement carefully,
consult their own advisors if they wish to do so and reach their own
conclusions as to whether the terms of the Acquisition are fair.
The terms of the Acquisition were determined through negotiations
conducted by members of the Company's Board of Directors and agents and the
Board of Directors and agents of Norwest. Relevant factors considered by the
Board of Directors include the respective financial positions and capital
structures of both companies, the projected revenues of Norwest, the
respective assets of the Company and Norwest and judgement of management
with regard to the companies as a combined operating company.
No Dissenting Stockholder Rights
Neither the Acquisition nor any other matter to be acted upon at the
Meeting create any dissenting stockholders rights under the General
Corporation Law of the State of Colorado.
Status of Federal Securities Regulations and Registration Rights
The shares of the Company's common stock to be issued upon the
effectiveness of the Acquisition to the stockholders of Norwest will not be
registered under the Securities Act of 1933, as amended, (the "Act"), in
reliance upon the exemption provided by Section 4(2) of the Act as a
transaction not involving any public offering and under applicable state
securities laws. Such non-public offering is in part based upon the
investment representations of the recipients of the shares. The shares to be
issued upon the Acquisition will be "restricted securities" within the meaning
of the Act and will not be transferrable without further compliance with the
registration requirements of the Act or establishment of an exemption from
such requirements. Neither the Company nor Norwest has received an opinion of
legal counsel with regard to the availability of such exemption and no
assurance can be given that the Securities and Exchange Commission and/or the
Securities administrators of certain states would concur that the Section 4(2)
exemption and equivalent state non-public offering/private offering exemptions
are available for the transaction.
Copy of Stock Exchange Agreement
A copy of the Stock Exchange Agreement, which contains the details of
the Acquisition and related transactions, will be provided free of charge to
any stockholder upon request by the Company's President, Mark A. Lilly at
(310) 289-4947. Copies of the Stock Exchange Agreement will be available at
the Meeting. The Stock Exchange Agreement was filed as an exhibit to the Form
8-K filed by the Company on December 24, 1997 and is available from the Edgar
Archives of the Securities and Exchange Commission. The internet connection
is http://www.sec.gov.
Lack of Opinions, Appraisals and Reports
No unaffiliated representative has been retained to act on behalf of the
Company or Norwest for the purposes of negotiating the terms of the
Acquisition or preparing a report concerning its fairness. The Company has
not solicited or obtained any appraisal, report or opinion by any outside
party regarding the Acquisition. The Board chose not to retain the services of
an investment advisor because it believes the cost of such services would be
excessive relative to the size of the transaction and for the reasons set
forth herein.
Financial Information
The Company's Financial Condition. As of December 31, 1996, the
Company had assets of $0 and liabilities of $13,859 and stockholders equity
of ($26,058) or approximately $.005 per share. Giving effect to the 1-for-2.5
reverse split, there would be 2,593,930 shares issued and outstanding with a
net tangible book value of approximately $.01 per share.
Norwest's Financial Condition. At October 31, 1997, Norwest had total
assets of R$ 121,803,670, total liabilities of R$ 0 and stockholders' equity
of R$121,803,670. Norwest's assets included land, standing timber, and
logging, transport equipment and vehicles. As of December 15, 1997 one
Brazilian Real (R$) was convertible to $ 0.8984 U.S. Dollars according to
the Federal Reserve Bank of New York. Based on this factor the value of
the Norwest assets would be about $109,428,418.
Financial Condition Following Acquisition. Assuming total costs related
to the Acquisition do not exceed $15,000, and based upon the December 31,
1996 financial statements of the Company and Norwest, the Company anticipates
that at the time of the Acquisition, there will be 22,593,930 shares of the
Company's common stock issued and outstanding with total consolidated net
assets of approximately $109,428,418 giving a net book value of approximately
$4.84 per share.
Issuance of Shares. Subsequent to the closing of the Acquisition, the
stockholders of Norwest will own a majority of the total issued and
outstanding shares of the common stock of the Company. They will have total
control over the affairs of the Company including future elections of
directors. Through their control of the Board of Directors, they will have
control over the issuance of additional shares, the distribution and timing
of dividends, and other matters. The following number of shares, calculated
after giving effect to the proposed 1-for-2.5 reverse split, will be issued to
the stockholders of Norwest when the Acquisition is closed:
XANTHIC
COMMON NORWEST, S.A. ENTERPRISES, INC.
STOCKHOLDERS COMMON STOCK COMMON STOCK
Elliott Sassoon 120,653,620 19,799,836
Pre-Cortados da
Amozonia Ltda* 1,149,950 200,000
Maria Cristina de
Oliveira Bittencourt 1,000 164
----------- ------------
TOTAL 121,803,670 20,000,000
*Beneficially owned by Alipio Motta
Board of Directors Recommendation
The Board of Directors recommends a vote FOR the proposal to approve the
Stock Exchange Agreement and the Acquisition of Norwest common stock.
PROPOSAL 3: PROPOSAL FOR THE ELECTION OF DIRECTORS
The Stock Exchange Agreement provides for the resignation of the present
officers and directors of the Company (with the exception of Mark A. Lilly).
Upon the closing of the Acquisition and the election of directors proposed by
the controlling shareholders of the Company following the Acquisition.
Subject to the approval of the Acquisition of Norwest, the Company recommends
a vote FOR the election of the below listed individuals as directors of the
Company.
It is intended that proxies in the accompanying form, duly executed and
received in time to be voted at the meeting, which do not withhold authority
to vote for directors, will be voted in favor of the election of the persons
named below to serve for a term of one year or until their successors are
elected and qualified. None of the candidates for the office of directors
(with the exception of Mark A. Lilly) proposed herein has previously
served in that capacity for the Company.
If any person nominated should refuse or be unable to serve, proxies
will be voted for such person or persons as may be designated by the nominees
to replace any of the persons unable or unwilling to serve. Management of the
Company and of the company to be acquired have no reason to believe presently
that any of the nominees will refuse or be unable to serve.
STOCKHOLDERS ARE REMINDED OF THE FACT THAT THE PROPOSAL TO ELECT
DIRECTORS IS RELATED TO THE ACQUISITION, AND STOCKHOLDERS
VOTING AGAINST THE ACQUISITION PROPOSAL SHOULD ALSO CONSIDER
VOTING AGAINST THE NOMINEES FOR ELECTION AS DIRECTORS.
The following named individuals are nominated as directors of the
Company:
Name Age
Elliott Sassoon 48
Alipio Motta 57
Mark A. Lilly 34
Mr. Sassoon and Mr. Motta reside in Brazil. Mr. Lilly is a resident of
the United States and is currently a Director of the Company. Biographical
information concerning Mr. Sassoon and Mr. Motta is set forth in the
exhibits to this proxy statement. Biographical information concerning
Mark A. Lilly is set forth in the Form 10-K of the Company for the period
ended December 31, 1996.
The Board of Directors recommends a vote FOR each of the nominees for
directors.
Proposed Officers
The proposed Board of Directors presently intends to appoint the
following named individuals as officers of the Company:
Name Position
Elliott Sassoon President
Alipio Motta Vice-President
Mark A. Lilly Secretary
Executive Compensation
No compensation has been paid to the employees of Norwest or the Company
during the past year. Future compensation for the officers and directors of
the Company following the acquisition has not yet been determined.
Future Incentive Plans
The Company will likely adopt qualified and/or unqualified incentive
compensation plans in the future, including incentive stock option plans,
pension plans, profit sharing plans or other similar types of plans.
PROPOSAL 4: PROPOSAL TO CHANGE COMPANY'S NAME AND DOMICILE
Subject to stockholder approval of Proposal 2, the Board of Directors
recommends stockholder approval of a proposal to change the Company's name to
"International Wood Corporation" and change the domicile to the State of
Nevada. The present Company would be merged into a Nevada corporation to
be named International Wood Corporation.
The change to Nevada domicile will facilitate transactions by the
Company in the future. The effect of merging into the Nevada corporation will
be to change the name of the Company to International Wood Corporation. The
Nevada corporation has the same capital structure as the existing Colorado
corporation. Following approval of this proposal the existing shareholders of
the Company will have 90 days to exchange their shares for a like number of
shares of the Nevada corporation. The Board believes that the name
International Wood Corporation will more clearly indicate the nature of the
business in which the Company plans to engage.
The Board of Directors recommends a vote FOR the proposal to change the
domicile of the corporation to the state of Nevada with the new name of
International Wood Corporation.
EXCHANGE OF STOCK CERTIFICATES
In the event the proposals set forth herein are approved by the Company's
stockholders, it will be necessary to exchange the stockholders' existing
stock certificates for stock certificates which set forth the Company's new
name and which give effect to the reverse stock split. Stockholders are
requested to mail their stock certificates to the Company's transfer
agent--Holladay Transfer Company, 4350 Camelback Rd., Suite 100F Phoenix,
AZ 85018--for transfer into new certificates. The Company will pay for the
issuance of one certificate to each stockholder if his or her certificate
is received on or before April 30, 1998. Stockholders desiring more than
one certificate will be required to pay additional charges
directly to the transfer agent.
INCORPORATION BY REFERENCE
The Registrant incorporates by reference any filings made by the Registrant
from the date of this Proxy Solicitation to January 23, 1998, the date of
the special meeting of shareholders.
OTHER MATTERS
The Board of Directors knows of no other matters to be acted upon at the
meeting. If other matters do properly come before this meeting, it is the
intention of the persons named in the enclosed Proxy to vote said Proxy in
accordance with their best judgment in such matters.
Xanthic Enterprises, Inc.
January 6, 1998
By Order of the Board of Directors
Attachments:
1. Description of Business of Norwest S.A.
2. Financial Statements - Xanthic Enterprises, Inc.,
Form 10-K for year ended December 31, 1996*
Form 10-Q for quarter ended September 30, 1997*
3. Audited Balance Sheet of Norwest S.A. as of October 31, 1997
4. Consent of Pannell Kerr Forster, Sao Paulo, Brazil
5. Pro-forma Balance Sheet of the Company following
the Acquisition
* Incorporated by Reference. Copies will be provided
to the shareholders with this Proxy Statement.
INTERNATIONAL WOOD CORPORATION
DESCRIPTION OF BUSINESS
Upon completion of the acquisition the Company will own and operate
Norwest as a wholly owned subsidiary. The Company plans to secure financing
and harvest and reforest its property located in the States of Acre and Para
in the Amazon Basin in Brazil.
BUSINESS
The Company will own through its subsidiary, Norwest S.A., approximately
45,000 acres of tropical timberland. The Company is negotiating options on
an additional 1,500,000 acres of tropical timberland in the vicinity that will
have a value in excess of $ 5,000,000,000.00. The land that will be owned by
the Company has a variety of mature tropical woods including mahogany, cedar
and teak. The Company will own equipment relating to harvesting and replanting
of timber.
HISTORY OF PREDECESSOR
The principal shareholder of the Company will be Mr. Elliott Sassoon, a
Brazilian citizen. Mr. Sassoon and his associate Mr. Alipio Motta have been
engaged in the lumber business in Brazil for the past twenty five years.
Companies with which these principals were associated ceased production in
1994 due to economic conditions of the Brazilian economy.
The economy of Brazil experienced severe disequilibrium in the early
1990's and was saddled with high inflation and a depressed economy. Brazil is
in the midst of a stabilization program originally developed by President
Fernando Cardosa when he was the Finance Minister between May of 1993 and
April of 1994. On July 1, 1994 Brazil adopted a new currency called the
"REAL".
As part of the stabilization plan the government of Brazil severely
limited credit in 1994 for both business and consumers. As of the end of 1996
the stabilization plan had the effect of stabilizing inflation and
improving the economy. Inflation, which had reached 50% per month in June of
1994 declined to monthly rates between 1 and 3 percent. While credit is
somewhat more available it still remains expensive by world standards. The
Company will access world capital markets to assure an adequate capital to
carry out operations. The Company plans to access the capital markets by
private placements of debt and equity securities. To the extent that bank
financing can be negotiated at reasonable rates such financing will be used.
THE AMAZON
Amazonia contains over five million square kilometers of trees and
vegetation making it the largest continuous expanse of tropical rain forest
in the world. Although such forests cover only 7 percent of the land surface
of the planet Earth they contain 50 percent of the plants and animals found
in the world.
Due to the unique heritage of the rain forest the Company intends to
carry out its operations in the most sensitive ecological manner and will
dedicate a portion of its net profits to research in identifying new
products of Amazonia. In harvesting the timber the Company will cut only
mature trees with an identifiable market. The Company will not engage in
clearing the land and will reforest as the timber is harvested with at least
three seedlings of the same species. The Company will establish a nursery for
this purpose so that seedlings of the many varieties of timber found will be
available as needed. Due to the favorable growing conditions of the Amazon
area this effort will insure that the timber resources of the Company will be
renewed and increased.
Local waterways and existing roads will be used for transporting logs to
sawmills. Use of the rivers and existing road structure will be economical,
convenient and will have little environmental impact.
GOVERNMENT REGULATION
During the past five years Brazil has introduced new regulations on the
harvesting of timber in the rain forest all of which will be followed by the
Company. In July of 1996 the President of Brazil issued a Presidential Decree
that suspended new logging authorizations for mahogany and virola for a
period of two years. The Decree will improve the Company's competitive
position since the authorizations already available to the Company are not
affected. The long standing Brazilian ban on export of tropical wood logs will
not affect the Company's operations as the Company will only export processed
lumber. Norwest possess the necessary authorizations from the government of
Brazil to engage in the business of harvesting and exporting tropical
hardwoods.
As the Company is resident and organized under the laws of the United
States there is no restriction of profits or capital with respect to any
aspect of the Company's business in Brazil.
Since the worldwide trade in tropical woods is largely unregulated the
Company anticipates no problem in harvesting and marketing its products.
WOOD MARKETS
There is a large and growing demand for tropical hardwoods throughout
the world. The United States is the leading importer of such woods followed
closely by the United Kingdom, Europe and Japan. Brazil lumber exports are
currently under 5% of the world total. Due to tight credit in Brazil the
Company will have little competition from other producers in Brazil.
The Company plans to store lumber in the United States at a site to be
determined. All lumber will be sold wholesale to lumber wholesalers in the
United States, Europe and Asia. The management of the Company has been
engaged in the lumber business for over twenty five years and possesses
contacts and relations with the principal lumber wholesalers in the U.S.
and elsewhere.
MANAGEMENT OF THE COMPANY
The Company will be managed by Mr. Elliott Sassoon and his associate,
Mr. Alipio Motta. Both officers of the Company have over twenty five years
experience in the lumber business in Brazil.
Elliott Sassoon, proposed President and Director. Mr. Sassoon is a
resident of Sao Paulo, Brazil. He graduated from the Lycee Francais De Paris,
France, the Instituto De Educacao Caetano De Campos, Brazil and the
University Facuidade Integrada, Colegio Moderno, Brazil. Mr. Sassoon speaks
Portuguese, French, Spanish, Italian, Hebrew, Arabic and English. From
1995-1996 Mr. Sassoon was President and CEO of Pacifico Industrial
Import-Export, Ltd. From 1992 to 1996 he also served as Vice-President for
Cooperconsult Associates Consultants. From 1980 to 1994 he served as President
of Vale Do Nilo Agro-Industries. He has served during the past twenty years
as a consultant or officer of the Para Association of Banak Exporters, the
Europe-Brazil Lumber Association, Brazilian Forest and River Department,
China-Brazil Lumber Chamber of Commerce and the Amazona Cocoa Exporters
Association.
Alipio Motta, Proposed Vice-President and Director. Mr. Motta is a
resident of Belem, Brazil. He graduated from Salvador City College, Bahia,
Brazil and the Federal University of Bahia, Brazil with degrees in political
science, and a graduate degree in business administration. Mr. Motta speaks
Portuguese, Spanish and English. From 1981 to 1987 he was a director of
Consortex Exportadores. From 1988 to the present he was President and CEO of
Construtora Motta. From 1995 to 1996 he was Director and Vice-President of
Pacifico Industrial Import-Export, Ltd. He is a member of the Acre Chamber of
Commerce and the West Amazon Lumber Exporters Association.
FINANCIAL REQUIREMENTS
The Company plans to raise capital from equity markets and financial
institutions to enable it to carry out its operations. If sufficient
financing is available the Company plans to export approximately 30,000 cubic
meters (m3) per year that will have a market value of about $ 25,000,000.00.
This amount will include timber harvested from the Company's holdings and
timber purchased on the spot market. All timber purchased will be examined by
Company inspectors for quality grading and for source. The Company will not
engage in the purchase from persons in situations where the logging has not
been authorized by the owner of the property. The present holdings of the
Company will allow harvesting at this level for a period of ten years. The
Company has expressions of interest from other landowners that will make
additional timber land available which will enable the Company to continue
its operations at this level for at least 25 years.
The harvesting cycle is dependent on climatic conditions. The harvesting
will take place from June through November (the dry season). Milling and
shipment of lumber will continue throughout the year.
The financing that the Company seeks will enable it to begin harvest and
continue with its efforts throughout the year. The Company owns the timber
and equipment necessary to harvest the timber. The financing is to be used
for working capital. The Company plans to retain a portion of its earning so
that it will be self financed after a period of five years.
NORWEST S.A.
(A DEVELOPMENT STAGE COMPANY)
REPORT OF INDEPENDENT ACCOUNTANT'S
BALANCE SHEET AS OF OCTOBER 31, 1997
REPORT OF INDEPENDENT ACCOUNTANTS
To the
Board of Directors and Stockholders of
Norwest S.A.
1 - We have audited the balance sheet of NORWEST S.A. (a Brazilian
development stage Company) as of October 31, 1997. This balance sheet is
responsibility of the management of NORWEST S.A. Our responsibility is to
express an opinion on this financial statement based on our audits.
2 - Considering the mentioned in paragraph 3, 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 balance sheet is free of material misstatement. Our audit
includes examining, on test basis, evidence supporting the accounting
principles used and significant estimates made by Management, as well as
evaluating the overall presentation.
3 - As described in note 1, all fixed assets were incorporated based on
independent experts appraisal report.
4 - In our opinion and based on the opinion of the independent appraisal
as mentioned before, the aforementioned balance sheet present fairly, in all
material respects, the financial position of NORWEST S.A. as of October 31,
1997, in conformity with Brazilian generally accepted accounting principles.
5 - As mentioned in note 2 the Company is being organized and the start
of the activities depends on legal and fiscal authorizations to be
formalized. All expenses that were incurred with the constitution and
maintenance of fixed assets were responsibility of the Company's Stockholders.
For this reason the Company decided not to present a complete financial
statement.
Sao Paulo, December 12, 1997.
/s/ Luis Alberto Nava Salazar
Pannell Kerr Forster
NORWEST S.A.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(Real = R$)
ASSETS
CURRENT ASSETS October 31, 1997
Cash 1,950
FIXED ASSETS
Land 18,000,000
Forest 102,652,720
Tractors and vehicles 820,000
Machines and
industrial equipments 254,000
Maritime equipment 75,000
-----------
121,801,720
Total assets 121,803,670
===========
LIABILITIES AND
STOCKHOLDER'S EQUITY
CURRENT LIABILITIES 0
STOCKHOLDERS' EQUITY
Common stock R$ 1.00 par
value, 121,803,670 shares
authorized, issued and
outstanding 121,803,670
-----------
Total Liabilities and
Stockholders' Equity 121,803,670
===========
NORWEST S.A.
(A DEVELOPMENT STAGE COMPANY)
EXPLANATORY NOTES TO BALANCE SHEET
AS OF OCTOBER 31, 1997
(Real =R$)
1. DESCRIPTION
The Company was constituted on December 10, 1996 in Belem (PA) Brazil
with the basic purpose to develope activities directed to forest exploration,
including industrialization, trade representation, import and export of
lumber and agricultural products.
On Extraordinary Stockholders' and Special Meeting of Stockholders' of
Preferred Stocks realized on October 10, 1997, it was approved: a)
transference of the company's headquarter to Sao Paulo (SP); b) enlargement
of social objective on commercial activities and services; c) conversion of
preferred stocks to ordinary stocks; d) increase capital with stock issued
and subscriptions of 121,802,670 ordinary stocks with nominal value of
R$ 1.00 each, paid-in assets value of R$ 1,149,000 and properties value of
R$ 120,652,720 according to independent appraisal report appointed by the
stockholders' meeting and local currency of R$ 950.
The appraisal criterion adopted were based on market value conservation
and comparison with other similars.
All documentation related to the formation of the company and its fixed
assets are in conformity with the Brazilian law.
2. OPERATIONS
The Company is being organized with implementation of several legal and
fiscal procedures in order to start its activities. Up to this date there are
no assets or liabilities operations in the name of the Company that must be
recorded in the balance sheet. Constitution expenses as well as maintenance
of fixed assets were responsibility of stockholders. For this reason it was
decided not to elaborate income statement, changes in stockholders' equity
and changes in financial position for the period ended on October 31, 1997.
3. CAPITAL
The paid in capital is represented by 121,803,670 ordinaries stocks,
with nominal value of R$ 1.00 each.
Stockholders Stocks
Elliott Sassoon 120,653,620
Pre-Cortados da
Amazonia Ltda 1,149,950
Maria Cristina de
Oliveira Bittencourt 1,000
-------------
121,803,670
=============
The by-laws determines a dividend distribution of 25% of the net
profit annually.
PANNELL KERR FORSTER - PKF
AUDITORES INDEPENDENTES
Rua Dom Jose de Barros 264 - 11th Piso
Sao Paulo, Brazil
Tel: (11) 223-3744 Fax: (11) 223-3361
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the filing of our report dated December 12, 1997 with
respect to the balance sheet and related notes as of October 31, 1997 of
Norwest S.A., a Brazilian corporation, with the United States Securities and
Exchange Commission in connection with any filing by Xanthic Enterprises,
Inc. We also consent to references to us as the accountants for Norwest S.A.
in any such filing.
PANNELL KERR FORSTER
By /s/ Luis Alberto Nava Salazar
------------------------------
Luis Alberto Nava Salazar
Sao Paulo, December 19, 1997
XANTHIC ENTERPRISES, INC.
(A Development Stage Company)
Pro Forma Balance Showing
Reverse Acquisition of
Norwest, S.A.
Prepared by Management
Unaudited
December 24, 1997
ASSETS
CURRENT ASSETS:
Cash $ 1,752
------------------
FIXED ASSETS:
Land 16,171,200
Forest 92,223,204
Tractors and vehicles 736,688
Machines and
industrial equipment 228,194
Maritime equipment 67,380
------------------
109,426,666
------------------
Total Assets: $ 109,428,418
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ $ 47,368
Shareholder loan 2,000
---------------
TOTAL CURRENT LIABILITIES 49,368
STOCKHOLDERS' EQUITY
Common stock - $.0001 par,
50,000,000 shares
authorized, 22,593,930
issued and outstanding 2,259
Paid in capital 109,466,358
Retained deficit
(89,567)
---------------
TOTAL STOCKHOLDERS' EQUITY 109,379,050
---------------
Total Liabilities and
Stockholders' Equity $ 109,428,418
===============
Net Assets per share $ 4.84.
For purpose of the above computation the values of the Norwest, S.A.
Balance Sheet as of October 31, 1997 were converted to U.S. Dollars
based on the factor of R$ 1.00 to $ .8984 based on information supplied
by the Federal Reserve Bank of New York as of December 15, 1997.
