U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(B) OR (G)
OF THE SECURITIES EXCHANGE ACT OF 1934
STRATEGIC ACQUISITIONS, INC.
(Name of Small Business Issuer in its Charter)
Nevada
(State or Other Jurisdiction 13-3506506
of Incorporation or Organization) IRS Employer ID Number
50 East 42nd Street, Suite 1805 10017
New York, NY
(Address of Principal Executive Offices) (Zip Code)
(212) 682-5058
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class to Name of Each Exchange on Which
be so Registered Each Class is to be Registered
Not Applicable Not Applicable
Securities to be registered under Section (g) of the Act:
Common Stock
(Title of Class)
Class A Warrants
(Title of Class)
Class B Warrants
(Title of Class)
Class C Warrants
(Title of Class)
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TABLE OF CONTENTS
Page
PART I .................................................................. 1
Item 1. Description of Business ........................................ 1
General ................................................................. 1
Investigation and Selection of Business Opportunities ................... 3
Form of Acquisition ..................................................... 6
Investment Company Act and Other Regulation ............................. 7
Competition ............................................................. 8
No Rights of Dissenting Shareholders .................................... 8
Administrative Offices .................................................. 8
Employees ............................................................... 8
Risk Factors ............................................................ 9
Item 2. Management's Discussion And Analysis Of
Operations Or Plan Of Operations ................................ 15
Plan of Operation .............................................. 15
Year 2000 Issues ........................................................ 16
Item 3. Description of Property ......................................... 16
Item 4. Security Ownership of Certain Beneficial
Owners and Management ........................................... 17
Possible Change in Control .............................................. 17
Item 5. Directors, Executive Officers, Promoters
and Control Persons ............................................. 18
Biographical Information ................................................ 18
Previous "Blank Check" or "Blind Pool" Offerings ........................ 20
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Conflicts of Interest ................................................... 22
Item 6. Executive Compensation .......................................... 23
Item 7. Certain Relationships and Related Transactions .................. 24
Item 8. Description of Securities ....................................... 25
Common Stock ............................................................ 25
Units and Redeemable Common Stock Purchase Warrants ..................... 25
Transfer Agent .......................................................... 26
Reports to Stockholders ................................................. 26
PART II ................................................................. 27
Item 1. Market Price and Dividends on the Registrant's
Common Equity and Other Shareholder Matters ..................... 27
Item 2. Legal Proceedings ............................................... 27
Item 3. Changes in and Disagreements with Accountants ................... 27
Item 4. Recent Sales of Unregistered Securities ......................... 27
Item 5. Indemnification of Directors and Officers ....................... 27
PART F/S ................................................................ 28
Cover Page ..................................................... F-1
Report Of Independent Certified Public Accountants ............. F-2
Balance Sheets, December 31, 1998 And 1997 ..................... F-3
Statements Of Operations For The Years Ended
December 31, 1998 And 1997 ..................................... F-4
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Statements Of Cash Flows For The Years Ended
December 31, 1998 And 1997 ..................................... F-5
Statements Of Stockholder's Equity,
December 31, 1998 And 1997 ..................................... F-6
Notes To Financial Statements .................................. F-7
Balance Sheet, September 30, 1999 (Unaudited) .................. F-9
Statement Of Operations, September 30, 1999 (Unaudited) ........ F-10
Statement Of Cash Flows, September 30, 1999 (Unaudited) ........ F-11
Notes To Financial Statements .................................. F-12
PART III ................................................................ 41
Item 1. Index to Exhibits ............................................... 41
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PART I
Item 1. Description of Business.
General
Strategic Acquisitions, Inc. (the "Company" or "Strategic") was
incorporated under the laws of the State of Nevada on January 27, 1989, and is
in the developmental stage. During the last two years the Company had no
revenues other than nominal interest income. As of the date hereof, the Company
has no commercial operations, has no full-time employees, and owns no real
estate.
The Company's current business plan is to seek, investigate, and, if
warranted, acquire one or more properties or businesses, and to pursue other
related activities intended to enhance shareholder value. The acquisition of a
business opportunity may be made by purchase, merger, exchange of stock, or
otherwise, and may encompass assets or a business entity, such as a corporation,
joint venture, or partnership. The Company has limited capital, and it is
unlikely that the Company will be able to take advantage of more than one such
business opportunity. The Company intends to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings.
At the present time the Company has not identified any business opportunity
that it plans to pursue, nor has the Company reached any agreement or definitive
understanding with any person concerning an acquisition. The Company is filing
this Form 10-SB in order to become a Section 12(g) registered company under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
No assurance can be given that the Company will be successful in finding or
acquiring a desirable business opportunity, given that limited funds are
available for acquisitions, or that any acquisition that occurs will be on terms
that are favorable to the Company or its stockholders.
The Company's search will be directed toward small and medium-sized
enterprises which have a desire to become public corporations and which are able
to satisfy, or anticipate in the reasonably near future being able to satisfy,
the minimum asset requirements in order to qualify shares for trading on NASDAQ
or a stock exchange (See "Investigation and Selection of Business
Opportunities"). The Company anticipates that the business opportunities
presented to it will (i) be recently organized with no operating history, or a
history of losses attributable to under-capitalization or other factors; (ii) be
experiencing financial or operating difficulties; (iii) be in need of funds to
develop a new product or service or to expand into a new market; (iv) be relying
upon an untested product or marketing concept; or (v) have a combination of the
characteristics mentioned in (i) through (iv) above. The Company intends to
concentrate its acquisition efforts on properties or businesses that it believes
to be undervalued. Given the above factors, investors should expect that any
acquisition candidate may have a history of losses or low profitability.
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The Company does not propose to restrict its search for investment
opportunities to any particular geographical area or industry, and may,
therefore, engage in essentially any business, to the extent of its limited
resources. The Company's discretion in the selection of business opportunities
is unrestricted, subject to the availability of such opportunities, economic
conditions, and other factors.
In connection with such a merger or acquisition, it is highly likely that
an amount of stock constituting control of the Company would be issued by the
Company or purchased from the current principal shareholders of the Company by
the acquiring entity or its affiliates. If stock is purchased from the current
shareholders, the transaction is very likely to result in substantial gains to
them relative to their purchase price for such stock. In the Company's judgment,
none of its officers and directors would thereby become an "underwriter" within
the meaning of the Section 2(11) of the Securities Act of 1933, as amended (the
"Act").
Depending upon the nature of the transaction, the current officers and
directors of the Company are likely to resign management positions with the
Company in connection with the Company's acquisition of a business opportunity.
See "Form of Acquisition," below, and "Risk Factors - The Company - Lack of
Continuity in Management." In the event of such resignations, the Company's
current management would not have any control over the conduct of the Company's
business following the Company's combination with a business opportunity.
It is anticipated that business opportunities will come to the Company's
attention from various sources, including its officers and directors, its other
stockholders, professional advisors such as attorneys and accountants,
securities broker-dealers, venture capitalists, members of the financial
community, and others who may present unsolicited proposals. The Company has no
plans, understandings, agreements, or commitments with any individual for such
person to act as a finder of opportunities for the Company.
The Company does not foresee that it would enter into a merger or
acquisition transaction with any business with which its officers or directors
are currently affiliated. Should the Company determine in the future, contrary
to foregoing expectations, that a transaction with an affiliate would be in the
best interests of the Company and its stockholders, the Company is in general
permitted by Nevada law to enter into such a transaction if:
1. The material facts as to the relationship or interest of the affiliate
and as to the contract or transaction are disclosed or are known to the Board of
Directors, and the Board in good faith authorizes the contract or transaction by
the affirmative vote of a majority of the disinterested directors, even though
the disinterested directors constitute less than a quorum; or
2. The material facts as to the relationship or interest of the affiliate
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or
3. The contract or transaction is fair as to the Company as of the time it
is authorized, approved or ratified, by the Board of Directors or the
stockholders.
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Investigation and Selection of Business Opportunities
To a large extent, a decision to participate in a specific business
opportunity may be made upon management's analysis of the quality of the other
company's management and personnel, the anticipated acceptability of new
products or marketing concepts, the merit of technological changes, and numerous
other factors which are difficult, if not impossible, to analyze through the
application of any objective criteria. In many instances, it is anticipated that
the historical operations of a specific business opportunity may not necessarily
be indicative of the potential for the future because of the possible need to
shift marketing approaches substantially, expand significantly, change product
emphasis, change or substantially augment management, or make other changes. The
Company will be dependent upon the owners of a business opportunity to identify
any such problems which may exist and to implement, or be primarily responsible
for the implementation of, required changes. Because the Company may participate
in a business opportunity with a newly organized firm or with a firm which is
entering a new phase of growth, it should be emphasized that the Company will
incur further risks, because management in many instances will not have proven
its abilities or effectiveness, the eventual market for such company's products
or services will likely not be established, and such company may not be
profitable when acquired.
It is anticipated that the Company will not be able to diversify, but will
essentially be limited to only one venture because of the Company's limited
financing. This lack of diversification will not permit the Company to offset
potential losses from one business opportunity against profits from another, and
should be considered an adverse factor affecting any decision to purchase the
Company's securities.
It is emphasized that management of the Company may effect transactions
having a potentially adverse impact upon the Company's shareholders pursuant to
the authority and discretion of the Company's management to complete
acquisitions without submitting any proposal to the stockholders for their
consideration. Holders of the Company's securities should not anticipate that
the Company necessarily will furnish such holders, prior to any merger or
acquisition, with financial statements, or any other documentation, concerning a
target company or its business. In some instances, however, the proposed
participation in a business opportunity may be submitted to the stockholders for
their consideration, either voluntarily by such directors, to seek the
stockholders' advice and consent, or because state law so requires.
The analysis of business opportunities will be undertaken by or under the
supervision of the Company's officers and directors, who are not professional
business analysts. See "Management." Although there are no current plans to do
so, Company management might hire an outside consultant to assist in the
investigation and selection of business opportunities, and might pay a finder's
fee. Since Company management has no current plans to use any outside
consultants or advisors to assist in the investigation and selection of business
opportunities, no policies have been adopted regarding use of such consultants
or advisors, the criteria to be used in selecting such consultants or advisors,
the services to be provided, the term of service, or regarding the total amount
of fees that may be paid. However, because of the limited resources of the
Company, it is likely that any such fee the Company agrees to pay would be paid
in stock and not in cash. In assessing a potential transaction, the Company
anticipates that it will consider, among other things, the following factors:
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1. Potential for growth and profitability, indicated by new technology,
anticipated market expansion, or new products;
2. The Company's perception of how any particular business opportunity will
be received by the investment community and by the Company's stockholders;
3. Whether, following the business combination, the financial condition of
the business opportunity would be, or would have a significant prospect in the
foreseeable future of becoming sufficient to enable the securities of the
Company to qualify for listing on an exchange or NASDAQ, so as to permit the
trading of such securities to be exempt from the requirements of Rule 15g-9. See
"Risk Factors - The Company - Regulation of Penny Stocks";
4. Capital requirements and anticipated availability of required funds, to
be provided by the Company or from operations, through the sale of additional
securities, through joint ventures or similar arrangements, or from other
sources;
5. The extent to which the business opportunity can be advanced;
6. Competitive position as compared to other companies of similar size and
experience within the industry;
7. Strength and diversity of existing management, or management prospects
that are scheduled for recruitment; and
8. The accessibility of required management expertise, personnel, raw
materials, services, professional assistance, and other required items.
In regard to the possibility that the shares of the Company would qualify
for listing on NASDAQ, the current standards include the requirements that the
issuer of the securities that are sought to be listed have net assets of at
least $4,000,000. Many, and perhaps most, of the business opportunities that
might be potential candidates for a combination with the Company would not
satisfy the NASDAQ listing criteria.
No one of the factors described above will be controlling in the selection
of a business opportunity, and management will attempt to analyze all factors
appropriate to each opportunity and make a determination based upon reasonable
investigative measures and available data. Potentially available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
Potential investors must recognize that, because of the Company's limited
capital available for investigation and management's limited experience in
business analysis, the Company may not discover or adequately evaluate adverse
facts about the opportunity to be acquired. It should be noted that the Company
has not completed a transaction in the ten years of its existence.
The Company is unable to predict when it may participate in a business
opportunity. It expects, however, that the analysis of specific proposals, if
and when any are received, and the selection of a business opportunity may take
several months or more.
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The Company has no business proposals under consideration as of the date of
this registration statement.
Prior to making a decision to participate in a business opportunity, the
Company will generally request that it be provided with written materials
regarding the business opportunity containing such items as a description of
products, services and company history; management resumes; financial
information; available projections, with related assumptions upon which they are
based; an explanation of proprietary products and services; evidence of existing
patents, trademarks, or services marks, or rights thereto; present and proposed
forms of compensation to management; a description of transactions between such
company and its affiliates during relevant periods; a description of present and
required facilities; an analysis of risks and competitive conditions; a
financial plan of operation and estimated capital requirements; audited
financial statements, or if they are not available, unaudited financial
statements, together with reasonable assurances that audited financial
statements would be able to be produced within a reasonable period of time not
to exceed 60 days following completion of a merger transaction; and other
information deemed relevant.
As part of the Company's investigation, the Company's executive officers
and directors may meet personally with management and key personnel, may visit
and inspect material facilities, obtain independent analysis or verification of
certain information provided, check references of management and key personnel,
and take other reasonable investigative measures, to the extent of the Company's
limited financial resources and management expertise.
It is possible that the range of business opportunities that might be
available for consideration by the Company could be limited by the impact of
Securities and Exchange Commission (the "Commission") regulations regarding
purchase and sale of "penny stocks." The regulations would affect, and possibly
impair, any market that might develop in the Company's securities until such
time as they qualify for listing on NASDAQ or on another exchange which would
make them exempt from applicability of the "penny stock" regulations. See "Risk
Factors - Regulation of Penny Stocks."
Company management believes that various types of potential merger or
acquisition candidates might find a business combination with the Company to be
attractive. These include acquisition candidates desiring to create a public
market for their shares in order to enhance liquidity for current shareholders,
acquisition candidates which have long-term plans for raising capital through
the public sale of securities and believe that the possible prior existence of a
public market for their securities would be beneficial, and acquisition
candidates which plan to acquire additional assets through issuance of
securities rather than for cash, and believe that the possibility of development
of a public market for their securities will be of assistance in that process.
Acquisition candidates which have a need for an immediate cash infusion are not
likely to find a potential business combination with the Company to be an
attractive alternative.
There are no loan arrangements or arrangements for any financing whatsoever
relating to any business opportunities.
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Form of Acquisition
It is impossible to predict the manner in which the Company may participate
in a business opportunity. Specific business opportunities will be reviewed as
well as the respective needs and desires of the Company and the promoters of the
opportunity and, upon the basis of that review and the relative negotiating
strength of the Company and such promoters, the legal structure or method deemed
by management to be suitable will be selected. Such structure may include, but
is not limited to leases, purchase and sale agreements, licenses, joint ventures
and other contractual arrangements. The Company may act directly or indirectly
through an interest in a partnership, corporation or other form of organization.
Implementing such structure may require the merger, consolidation or
reorganization of the Company with other corporations or forms of business
organization, and although it is likely, there can be no assurance that the
Company would be the surviving entity. In addition, the present management and
stockholders of the Company most likely will not have control of a majority of
the voting shares of the Company following a reorganization transaction. As part
of such a transaction, the Company's existing directors may resign and new
directors may be appointed without any vote by stockholders.
It is likely that the Company will acquire its participation in a business
opportunity through the issuance of common stock or other securities of the
Company. Although the terms of any such transaction cannot be predicted, it
should be noted that in certain circumstances the criteria for determining
whether or not an acquisition is a so-called "tax free" reorganization under the
Internal Revenue Code of 1986 (the "Internal Revenue Code"), depends upon the
issuance to the stockholders of the acquired company of a controlling interest
(i.e., 80% or more) of the common stock of the combined entities immediately
following the reorganization. If a transaction were structured to take advantage
of these provisions rather than other "tax free" provisions provided under the
Internal Revenue Code, the Company's current stockholders would retain in the
aggregate 20% or less of the total issued and outstanding shares. This could
result in substantial additional dilution in the equity of those who were
stockholders of the Company prior to such reorganization. Any such issuance of
additional shares might also be done simultaneously with a sale or transfer of
shares representing a controlling interest in the Company by the current
officers, directors and principal shareholders. (See "Description of Business -
General").
It is anticipated that any new securities issued in any reorganization
would be issued in reliance upon exemptions, if any are available, from
registration under applicable federal and state securities laws. In some
circumstances, however, as a negotiated element of the transaction, the Company
may agree to register such securities either at the time the transaction is
consummated, or under certain conditions or at specified times thereafter. The
issuance of substantial additional securities and their potential sale into any
trading market that might develop in the Company's securities may have a
depressive effect upon such market.
The Company will participate in a business opportunity only after the
negotiation and execution of a written agreement. Although the terms of such
agreement cannot be predicted, generally such an agreement would require
specific representations and warranties by all of the parties thereto, specify
certain events of default, detail the terms of closing and the conditions which
must be satisfied by each of the parties thereto prior to such closing, outline
the manner of
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bearing costs if the transaction is not closed, set forth remedies upon default,
and include miscellaneous other terms.
As a general matter, the Company anticipates that it, and/or its officers
and principal shareholders will enter into a letter of intent with the
management, principals or owners of a prospective business opportunity prior to
signing a binding agreement. Such a letter of intent will set forth the terms of
the proposed acquisition but will not bind any of the parties to consummate the
transaction. Execution of a letter of intent will by no means indicate that
consummation of an acquisition is probable. Neither the Company nor any of the
other parties to the letter of intent will be bound to consummate the
acquisition unless and until a definitive agreement concerning the acquisition
as described in the preceding paragraph is executed. Even after a definitive
agreement is executed, it is possible that the acquisition would not be
consummated should any party elect to exercise any right provided in the
agreement to terminate it on specified grounds.
It is anticipated that the investigation of specific business opportunities
and the negotiation, drafting and execution of relevant agreements, disclosure
documents and other instruments will require substantial management time and
attention and substantial costs for accountants, attorneys and others. If a
decision were made not to participate in a specific business opportunity, the
costs theretofore incurred in the related investigation would not be
recoverable. Moreover, because many providers of goods and services require
compensation at the time or soon after the goods and services are provided, the
inability of the Company to pay until an indeterminate future time may make it
impossible to procure goods and services.
An acquisition made by the Company may be in an industry which is regulated
or licensed by federal, state or local authorities. Compliance with such
regulations can be expected to be a time-consuming and expensive process.
Investment Company Act and Other Regulation
The Company may participate in a business opportunity by purchasing,
trading or selling the securities of such business. The Company does not,
however, intend to engage primarily in such activities. Specifically, the
Company intends to conduct its activities so as to avoid being classified as an
"investment company" under the Investment Company Act of 1940 (the "Investment
Act"), and therefore to avoid application of the costly and restrictive
registration and other provisions of the Investment Act, and the regulations
promulgated thereunder.
Section 3(a) of the Investment Act contains the definition of an
"investment company," and it excludes any entity that does not engage primarily
in the business of investing, reinvesting or trading in securities, or that does
not engage in the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than government securities or
securities of majority-owned subsidiaries") the value of which exceeds 40% of
the value of its total assets (excluding government securities, cash or cash
items). The Company intends to implement its business plan in a manner which
will result in the availability of this exception from the definition of
"investment company." Consequently, the Company's participation in a business or
opportunity through the purchase and sale of investment securities will be
limited.
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The Company's plan of business may involve changes in its capital
structure, management, control and business, especially if it consummates a
reorganization as discussed above. Each of these areas is regulated by the
Investment Company Act, in order to protect purchasers of investment company
securities. Since the Company will not register as an investment company,
stockholders will not be afforded these protections.
Competition
The Company expects to encounter substantial competition in its efforts to
locate attractive opportunities, primarily from business development companies,
venture capital partnerships and corporations, venture capital affiliates of
large industrial and financial companies, small investment companies, and
wealthy individuals. Many of these entities will have significantly greater
experience, resources and managerial capabilities than the Company and will
therefore be in a better position than the Company to obtain access to
attractive business opportunities. The Company also will possibly experience
competition from other public "Blank Check" companies, some of which may have
more funds available than does the Company.
No Rights of Dissenting Shareholders
The Company does not intend to provide its shareholders with disclosure
documentation concerning a possible target company prior to acquisition, because
the Nevada Business Corporation Act vests authority in the board of directors to
decide and approve matters involving acquisitions within certain restrictions.
If any transaction is structured as an acquisition, not a merger, with the
Company being the parent company and the acquiree being merged into a wholly
owned subsidiary, a shareholder will have no right of dissent under Nevada law.
Administrative Offices
The Company currently maintains it corporate records and a mailing address
at the office of its President, Richard S. Kaye, 50 East 42nd Street, Suite
1805, New York, NY 10017. Other than this mailing address, the Company does not
currently maintain any other office facilities, and does not anticipate the need
for maintaining office facilities at any time in the foreseeable future. The
Company pays no rent or other fees for the use of this mailing address.
Employees
The Company has no employees. Management of the Company expects to use
consultants, attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and evaluating
business opportunities. The need for employees and their availability will be
addressed in connection with the decision whether or not to acquire or
participate in specific business opportunities. Although there is no current
plan with respect to its nature or amount, remuneration may be paid to or
accrued for the benefit of, the Company's officers prior to, or in conjunction
with, the completion of a business acquisition for services actually rendered.
See "Executive Compensation" and under "Certain Relationships and Related
Transactions."
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Risk Factors
1. Officers and directors of Strategic may have certain conflicts of
interest which are adverse to the Company and may also be afforded certain
opportunities that are not extended to other Strategic shareholders.
Certain conflicts of interest may exist between Strategic and its officers
and directors. Such officers and directors have other business interests to
which they devote their attention, and may be expected to continue to do so
although management should devote time to the business of Strategic. As a
result, conflicts of interest may arise that can be resolved only through
exercise of such judgment as is consistent with fiduciary duties to Strategic.
See "Management," and "Conflicts of Interest."
It is anticipated that each of Strategic's officers and directors may
actively negotiate or otherwise consent to the purchase of a portion of his
common stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. In this process, our officers and directors may
consider their own personal pecuniary benefit rather than the best interests of
other Strategic shareholders, and the other Strategic shareholders are not
expected to be afforded the opportunity to approve or consent to any particular
stock buy-out transaction. See "Conflicts of Interest."
2. Strategic may not have sufficient funds to finance any transaction or to
exploit opportunities in any business in which Strategic decides to invest.
Strategic has very limited funds, and such funds may not be adequate to
take advantage of any available business opportunities. Even if our funds prove
to be sufficient to acquire an interest in, or complete a transaction with, a
business opportunity, we may not have enough capital to exploit the opportunity.
Our ultimate success may depend upon our ability to raise additional capital. We
have not investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until we determine a need
for additional financing. If additional capital is needed, there is no assurance
that funds will be available from any source or, if available, that they can be
obtained on terms acceptable to us. If not available, our operations will be
limited to those that can be financed with our modest capital.
3. Because the Commission considers our securities to be a "penny stock,"
there are a number of special rules that govern the trading of our securities.
In addition, many penny stocks have been the subject of fraud and abuse, which
may have a negative effect on the value of your investment in Strategic.
Our securities are subject to a Commission rule that imposes special sales
practice requirements upon broker-dealers who sell such securities to persons
other than established customers or accredited investors. For purposes of the
rule, the phrase "accredited investors" means, in general terms, institutions
with assets in excess of $5,000,000, or individuals having a net worth in excess
of $1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the
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rule may affect the ability of our shareholders to sell their securities in any
market that might develop.
Shareholders should be aware that, according to the Commission, the market
for penny stocks has suffered in recent years from patterns of fraud and abuse.
Such patterns include (i) control of the market for the security by one or a few
broker-dealers that are often related to the promoter or issuer; (ii)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (iii) "boiler room" practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (iv) excessive and undisclosed bid-ask differentials and markups
by selling broker-dealers; and (v) the wholesale dumping of the same securities
by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to Strategic's securities.
4. We may never find a business opportunity and if we find a business
opportunity, such opportunity may never make a profit.
There is no assurance that we will acquire a favorable business
opportunity. Even if we should become involved in a business opportunity, there
is no assurance that it will generate revenues or profits, or that the market
price of our common stock will be increased thereby.
5. We cannot accurately assess the risk of any future transactions and you
may lose all or part of your investment in Strategic.
We have not identified and have no commitments to enter into or acquire a
specific business opportunity and therefore can disclose the risks and hazards
of a business or opportunity that we may enter into in only a general manner,
and cannot disclose the risks and hazards of any specific business or
opportunity that we may enter into. An investor can expect a potential business
opportunity to be quite risky. Our acquisition of or participation in a business
opportunity will likely be highly illiquid and could result in a total loss to
Strategic and our stockholders if the business or opportunity proves to be
unsuccessful. See Item 1 "Description of Business."
6. We may enter into a transaction with a company that is seeking to avoid
the difficulties of effecting its own public offering.
The type of business to be acquired may be one that desires to avoid
effecting its own public offering and the accompanying expense, delays,
uncertainties, and federal and state requirements which purport to protect
investors. Because of our limited capital, it is more likely than not that any
acquisition by Strategic will involve other parties whose primary interest is
the acquisition of control of a publicly traded company. Moreover, any business
opportunity acquired may be currently unprofitable or present other negative
factors.
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7. We will not be able to perform an exhaustive investigation of any
potential strategic partners, which increases the risk that you may lose all or
part of your investment in Strategic.
Our limited funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and analysis of
a business opportunity before we commit our capital or other resources thereto.
Management decisions, therefore, will likely be made without detailed
feasibility studies, independent analysis, market surveys and the like which, if
we had more funds available to us, would be desirable. We will be particularly
dependent in making decisions upon information provided by the promoter, owner,
sponsor, or others associated with the business opportunity seeking our
participation. A significant portion of our available funds may be expended for
investigative expenses and other expenses related to preliminary aspects of
completing an acquisition transaction, whether or not any business opportunity
investigated is eventually acquired.
8. We will only be able to complete one transaction which increases the
risk that you may lose all or part of your investment in Strategic.
Because of our limited financial resources, it is unlikely that we will be
able to diversify our acquisitions or operations. Our probable inability to
diversify our activities into more than one area will subject us to economic
fluctuations within a particular business or industry and increase the risks
associated with our operations.
9. We may acquire a company that does not have audited financial statements
which may increase the risk that such information is not accurate and may
preclude Strategic's securities from being listed on NASDAQ which may have a
negative affect on the value of your investment in Strategic.
We generally will require audited financial statements from companies that
we propose to acquire. Given cases where audited financials are not available,
we will have to rely upon unaudited information received from target companies'
management that has not been verified by outside auditors. The lack of the type
of independent verification which audited financial statements would provide,
increases the risk that we, in evaluating an acquisition with such a target
company, will not have the benefit of full and accurate information about the
financial condition and recent operating history of the target company. This
risk increases the prospect that the acquisition of such a company might have a
negative impact on the value of your investment in Strategic.
Moreover, sixty days from the filing date of this registration statement,
we will be subject to the reporting provisions of the Exchange Act, and we will
be required to furnish certain information about significant acquisitions,
including audited financial statements for any business that we acquire.
Consequently, acquisition prospects that do not have, or are unable to provide
reasonable assurances that they will be able to obtain, the required audited
statements would not be considered by Strategic to be appropriate for
acquisition so long as the reporting requirements of the Exchange Act are
applicable. Should we, during the time we remain subject to the reporting
provisions of the Exchange Act, complete an acquisition of an entity for which
audited financial statements prove to be unobtainable, we would be exposed to
enforcement
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actions by the Commission and to corresponding administrative sanctions,
including permanent injunctions against us and our management. The legal and
other costs of defending a Commission enforcement action would have material,
adverse consequences for us and our business. The imposition of administrative
sanctions would subject us to further adverse consequences.
In addition, the lack of audited financial statements would prevent our
securities from becoming eligible for listing on NASDAQ, or on any existing
stock exchange and would cause the prohibition of brokers-dealers from
continuing to quote our stock on the over-the-counter bulletin board, where it
is presently quoted. Moreover, the lack of such financial statements is likely
to discourage broker-dealers from becoming or continuing to serve as market
makers in our securities. Without audited financial statements, we would almost
certainly be unable to offer securities under a registration statement pursuant
to the Securities Act of 1933, and our ability to raise capital would be
significantly limited until such financial statements were to become available.
10. We are highly dependent on our officers and directors. Their lack of
full-time attention to our business may negatively affect our ability to find
and complete a transaction, which could reduce the value of your investment in
Strategic.
We currently have only three individuals who are serving as our officers
and directors on a part-time basis. We are heavily dependent upon their skills,
talents, and abilities to implement our business plan, and may, from time to
time, find that the inability of the officers and directors to devote their
full-time attention to the business of Strategic results in a delay in progress
toward implementing our business plan. See "Management." Because you will not be
able to evaluate the merits of possible business acquisitions by Strategic, you
should critically assess the information concerning our officers and directors.
11. Our business may be negatively impacted if our officers leave.
We do not have employment agreements with our officers, and as a result,
there is no assurance they will continue to manage Strategic in the future. In
connection with acquisition of a business opportunity, it is likely the current
officers and directors of Strategic may resign subject to compliance with
Section 14(f) of the Exchange Act. A decision to resign will be based upon the
identity of the business opportunity and the nature of the transaction, and is
likely to occur without the vote or consent of the stockholders of Strategic.
12. We may incur large expenses if we were required to indemnify an officer
or director and your investment in Strategic may be negatively impacted.
Nevada statutes provide for the indemnification of directors, officers,
employees, and agents, under certain circumstances, against attorney's fees and
other expenses incurred by them in any litigation to which they become a party
arising from their association with or activities on behalf of Strategic. Our
By-Laws further provide that we will bear the expenses of such litigation for
any of our directors, officers, employees, or agents, upon such person's promise
to repay us therefor if it is ultimately determined that any such person shall
not have been entitled
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to indemnification. This indemnification policy could result in substantial
expenditures by us which we may be unable to recoup.
13. We may engage in a leveraged transaction which may increase our
exposure to larger losses, make it more difficult to make a profit and possibly
result in the loss of all or part of your investment in strategic.
There is a possibility that any acquisition of a business opportunity by
Strategic may be leveraged, i.e., we may finance the acquisition of the business
opportunity by borrowing against the assets of the business opportunity to be
acquired, or against the projected future revenues or profits of the business
opportunity. This could increase our exposure to larger losses. A business
opportunity acquired through a leveraged transaction is profitable only if it
generates enough revenues to cover the related debt and expenses. Failure to
make payments on the debt incurred to purchase the business opportunity could
result in the loss of a portion or all of the assets acquired. There is no
assurance that any business opportunity acquired through a leveraged transaction
will generate sufficient revenues to cover the related debt and expenses.
14. We may lose valuable business opportunities because we have limited
resources and may not be able to compete with other firms for such business
opportunities.
The search for potentially profitable business opportunities is intensely
competitive. We expect to be at a disadvantage when competing with many firms
that have substantially greater financial and management resources and
capabilities than Strategic. These competitive conditions will exist in any
industry in which Strategic may become interested.
15. We do not plan on paying any dividends on our common stock which may
make our common stock a less attractive investment to future potential investors
and have a negative impact on the value of your investment in Strategic.
We have not paid dividends on our common stock and we do not anticipate
paying such dividends in the foreseeable future.
16. We may sell control of Strategic to an outside investor and current
management of Strategic may be replaced. In addition, your percentage ownership
of Strategic may be greatly reduced by such a transaction and you will have less
voting control over Strategic.
We may consider an acquisition in which Strategic would issue as
consideration for the business opportunity to be acquired an amount of our
authorized but unissued common stock that would, upon issuance, represent the
great majority of Strategic's voting power and equity. The result of such an
acquisition would be that the acquired company's stockholders and management
would control Strategic, and our management could be replaced by persons unknown
at this time. Such a merger would result in a greatly reduced percentage of
ownership of Strategic by our current shareholders. In addition, our major
shareholders could sell control blocks of stock at a premium price to the
acquired company's stockholders.
17. Because certain shares of our common stock are "restricted securities"
they are subject to certain trading restrictions which may cause you to
experience delays and expenses in the sale of such securities.
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The outstanding shares of common stock held by present officers and
directors are "restricted securities" within the meaning of Rule 144 under the
Act. As restricted shares, these shares may be resold only pursuant to an
effective registration statement or under the requirements of Rule 144 or other
applicable exemptions from registration under the Act and as required under
applicable state securities laws. Rule 144 provides in essence that a person who
has held restricted securities for one year may, under certain conditions, sell
every three months, in brokerage transactions, a number of shares that does not
exceed the greater of 1.0% of a company's outstanding common stock or the
average weekly trading volume during the four calendar weeks prior to the sale.
There is no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the restricted securities have been held by the owner for a
period of two years. Under Rule 144(k), nonaffiliate shareholders who have held
their shares for a period of two years are eligible to have freely tradable
shares. A sale under Rule 144 or under any other exemption from the Act, if
available, or pursuant to subsequent registration of shares of a company's
common stock of present stockholders, may have a depressive effect upon the
price of the common stock in any market that may develop. All of the Company's
outstanding shares will be eligible for sale under Rule 144 upon the effective
date of this Registration Statement, subject to volume limitations on those
shares held by Strategic's directors and officers.
18. We will not be able to issue shares of Strategic's common stock to
residents of any state upon exercise of the Warrants unless either the shares of
Strategic's common stock issuable upon the exercise of the Warrants are
registered in that state or an exemption from registration is available.
Although certain exemptions in the Blue Sky laws of certain states might
permit the Warrants to be transferred even though the Units were not initially
registered for sale therein, we will be prevented from issuing shares of our
common stock to residents of any state upon exercise of the Warrants unless
either the shares of our common stock issuable upon the exercise of the Warrants
are registered in that state or an exemption from registration is available. We
may decide not to seek or may not be able to obtain registration for the
issuance of our shares of common stock in all of the states in which the
ultimate holders of the Warrants reside during the period when the Warrants are
exercisable. In this case, if there is no exemption from registration available,
the Warrants, as the case may be, held by purchasers will expire and have no
value. Holders of the Warrants may determine if shares of Strategic's common
stock to be issued upon exercise of the Warrants are registered in any
particular state by contacting us. (See "Description of Securities - Warrants")
19. In the event a current prospectus is not available, you will not be
able to exercise your Warrants.
During the exercise period of the Warrants, we must maintain and make
available a current prospectus. Therefore, management will likely have to
provide a new and current prospectus to all Warrant holders upon the exercise of
the Warrants. The sums received upon the exercise of the Warrants, if any, will
be reduced by the costs we will incur in preparing and printing a new
prospectus, including accounting and legal fees. Nevertheless, there can be no
assurance that we will not be prevented by financial or other considerations
from maintaining a current prospectus. In the event a current prospectus is not
available, the Warrants will not be exercisable. At present, there is no such
prospectus available.
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20. We may redeem your Warrants at any time on thirty days' prior written
notice.
We may redeem the Warrants at any time after on thirty days' prior written
notice if there is then a prospectus available to permit the sale of such
shares. Although Warrant holders will have the right to exercise their Warrants
through the date of redemption, they may be unable to do so because they lack
sufficient funds at the time of redemption, or they may simply not wish to
invest any more money in our shares of common stock at that time. Should a
Warrant holder fail to exercise such Warrants on or prior to the redemption
date, such Warrants will have no value except for the $.01 per Warrant
redemption price after the close of business on the date set for redemption.
(See "Description of Securities - Warrants")
21. There may be restrictions on your ability to resell your shares of
Strategic due to restrictions under state Blue Sky laws.
Because our securities have not been registered for resale under the blue
sky laws of any state, the holders of such shares and persons who desire to
purchase them in any trading market that might develop in the future, should be
aware that there may be significant state blue-sky law restrictions upon the
ability of investors to sell the securities and of purchasers to purchase the
securities. Some jurisdictions may not under any circumstances allow the trading
or resale of blind-pool or "blank-check" securities. Accordingly, investors
should consider the secondary market for our securities to be a limited one.
22. You may be prevented from selling your shares of Strategic.
Many states have enacted statutes or rules which restrict or prohibit the
sale of securities of "Blank Check" companies to residents so long as they
remain without specific business plans. To the extent any current shareholders
or subsequent purchaser from a shareholder may reside in a state which restricts
or prohibits resale of shares in a "Blank Check" company, warning is hereby
given that the shares may be "restricted" from resale as long as we are a shell
company.
At the date of this registration statement, we have no intention of
offering further shares in a private offering to anyone. Further, the policy of
the Board of Directors is that any future offering of shares will only be made
after an acquisition has been made and can be disclosed in appropriate 8-K
filings.
In the event of a violation of state laws regarding resale of "Blank Check"
shares we could be liable for civil and criminal penalties which would be a
substantial impairment to us.
Item 2. Management's Discussion And Analysis Of Operations Or Plan Of
Operations.
Plan of Operation
The Company remains in the development stage and has limited capital
resources and stockholder's equity. At September 30, 1999, the Company has
current assets in the form of cash and cash equivalents of $143,915, total
assets of $143,915 and total liabilities of $6,299. The cash assets may not
satisfy cash requirements for the company within the next twelve months. In the
event additional cash is required the Company may have to borrow funds from
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shareholders or other sources, or seek funds from a private placement among new
investors, none of which can be assured. The Company cannot predict to what
extent its limited capital resources will impair the consummation of a business
combination or whether it will incur further operating losses through any
business entity which the Company may eventually acquire.
During each of the last two fiscal years, the Company has engaged in no
significant operations other than organizational activities and preparation for
registration of its securities under the Exchange Act. No revenues were received
by the Company during this period other than interest income of approximately
$5,700 in each year. During the last fiscal year, the Company incurred operating
expenses of $2,588. The Company's accumulated deficit at September 30, 1999 was
$47,687. Such losses will continue unless revenues and business can be acquired
by the Company. There is no assurance that revenues or profitability will ever
be achieved by the Company.
For the current fiscal year, the Company anticipates incurring a loss as a
result of legal and accounting expenses, expenses associated with registration
under the Exchange Act, and expenses associated with locating and evaluating
acquisition candidates. The Company anticipates that until a business
combination is completed with an acquisition candidate, it will not generate
revenues other than interest income, and may continue to operate at a loss after
completing a business combination, depending upon the performance of the
acquired business.
Year 2000 Issues
Year 2000 problems result primarily from the inability of some computer
software to properly store, recall, or use data after December 31, 1999. These
problems may affect many computers and other devices that contain embedded
computer chips. The Company's operations, however, do not rely on information
technology (IT) systems. Accordingly, the Company does not believe it will be
materially affected by Year 2000 problems.
The Company relies on non-IT systems that may suffer from Year 2000
problems, including telephone systems and facsimile and other office machines.
Moreover, the Company relies on third parties that may suffer from Year 2000
problems that could affect the Company's operations, including banks and
utilities. In light of the Company's limited operations, the Company does not
believe that such non-IT systems or third-party Year 2000 problems will affect
the Company in a manner that is different or more substantial than such problems
affecting other similarly situated companies or industry generally.
Consequently, the Company does not currently intend to conduct a readiness
assessment of Year 2000 problems or to develop a detailed contingency plan with
respect to Year 2000 problems that may affect the Company.
Item 3. Description of Property.
The Company has no property. The Company does not currently maintain an
office or any other facilities. It does currently maintain a mailing address at
the office of its President, Richard S. Kaye, 50 East 42nd Street, Suite 1805,
New York 10017. The Company pays no rent for the use of this mailing address.
The Company does not believe that it will need to maintain an office at any time
in the foreseeable future in order to carry out its plan of operations described
herein.
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Item 4. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of the date of this Registration
Statement, the number of shares of common stock owned of record and beneficially
by executive officers, directors and any person who is the beneficial owner of
more than 5% of the Company's common stock. Also included are the shares held by
all executive officers and directors as a group.
MANAGEMENT AND 5% OR GREATER
SHAREHOLDERS/BENEFICIAL OWNERS NUMBER OF SHARES OWNERSHIP PERCENTAGE
Richard S. Kaye 453,333 28.33%
50 East 42nd Street, Suite 1805
New York, NY 0017
Victor E. Stewart 453,334 28.33%
269 South Irving Street
Ridgewood, NJ 07450
Deborah A. Salerno 453,333 28.33%
355 South End Ave., 22B
New York, NY 10280
All directors and executive 1,360,000 85.0%
Officers as a group (3 persons)
Each principal shareholder has sole investment power and sole voting power over
the shares owned.
Possible Change in Control
In the event of a purchase of control by other persons, or a merger, the
shareholders and management listed above will no longer own the percentages set
forth above, and shareholders may be subject to decisions by the new control
parties to which they may not assent.
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Item 5. Directors, Executive Officers, Promoters and Control Persons.
The directors and executive officers currently serving the Company are as
follows:
Name Positions Held Tenure
- ---- -------------- ------
Richard S. Kaye President and Director Annual
Deborah A. Salerno Vice President and Director Annual
Victor E. Stewart Secretary, Treasurer and Director Annual
There is no arrangement or understanding between the directors and officers
of the Company and any other person pursuant to which any director or officer
was or is to be selected as a director or officer.
All of the Company's directors hold office until the next annual
stockholders meeting or until their death, resignation, retirement, removal,
disqualification, or until their successors have been elected and qualified.
Vacancies in the existing Board of Directors are filled by a majority vote of
the remaining directors. Officers of the Company serve at the will of the Board
of Directors.
The directors and officers of the Company will devote such time to the
Company's affairs on an "as-needed" basis, but less than 20 hours per month. As
a result, the actual amount of time which they will devote to the Company's
affairs is unknown and is likely to vary substantially from month to month.
Biographical Information
Brief biographies of the Company's directors and officers are set forth
below. Each of these persons may be deemed a "promoter" of the Company as those
terms are defined in the rules and regulations promulgated under the Act.
RICHARD S. KAYE, age 67, has acted as the Company's president and director
since 1989. For more than the past five years, Mr. Kaye has managed his own
investment portfolio for his own account.
DEBORAH A. SALERNO, age 46, has acted as the Company's vice president and a
director since 1989. Ms. Salerno has also acted as the president (and owner) of
DAS Consulting, Inc., a private corporation located in New York City, providing
financial consulting services to corporations since 1988.
Ms. Salerno, who attended Pace University, has also been employed as a
trader in the over-the-counter market (Greentree Securities, October 1986
through March 1987); and as Vice President and Syndicate Manager (Yves Hentic &
Company, Inc., Jersey City, New Jersey, 1985 through 1986). She was also
involved with the risk arbitrage market from 1978 through 1985,
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and was vice president of Bodkin Securities (1980 through 1985) and Assistant
Options P&S Manager for Ivan F. Boesky, from 1978 through 1980.
Ms. Salerno has had significant experience with "shell" or "Blank Check"
companies, which experience is detailed on pages following under Previous Blank
Check Offerings.
VICTOR E. STEWART, age 49, has acted as the Company's secretary, treasurer
and director since 1989. Since 1997 Mr. Stewart has been a partner in the law
firm of Lovell & Stewart, LLP, which specializes in securities, commodities and
antitrust litigation. From 1994 until 1996 Mr. Stewart served as a director of
Deutsche Morgan Grenfell.
Mr. Stewart graduated from Yale College in 1972 (B.A. English) and from
Harvard Business School in 1975 (M.B.A.). Mr. Stewart received his J.D. from the
University of Virginia in 1979.
Mr. Stewart has had significant experience with "shell" or "blank check"
companies, which experience is detailed on the pages following under Previous
Blank Check Offerings.
None of the Company's officers and directors currently receives any
compensation for their respective services rendered to the Company. Compensation
of any officer or director is not expected to occur until the Company has
generated revenues from operations after consummation of a merger or
acquisition. Currently, no retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by the Company
for the benefit of its employees.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of the Company's management for the purposes
of providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors were
offered compensation in any form from any prospective merger or acquisition
candidate, the proposed transaction would not be approved by the Company's Board
of Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the event the
Company consummates a transaction with any entity referred by associates of
management, it is possible that such an associate will be compensated for their
referral in the form of a finder's fee. It is anticipated that this fee will be
either in the form of restricted common stock issued by the Company as part of
the terms of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of cash, such
payment will be tendered by the acquisition or merger candidate, because the
Company has insufficient cash available. The amount of such finder's fee
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cannot be determined as of the date of filing this report, but is expected to be
comparable to consideration normally paid in like transactions. No member of
management of the Company will receive any finder's fee, either directly or
indirectly, as a result of their respective efforts to implement the Company's
business plan outlined herein.
Management has been involved in several other "Blind Pool" and "Blank
Check" companies as described in the following section.
Previous "Blank Check" or "Blind Pool" Offerings
A "Blank Check" company is a company which is formed without a specified
business as its purpose.
A "Blind Pool" company is a company which has raised money through a public
or private offering for use to acquire unspecified, undesignated business or
company.
Management of the Company has been involved in prior public "Blind Pool" or
"Blank Check" offerings. As set forth below, management has been part of the
formation of many new companies which made offerings of shares without a
designated business.
DEBORAH A. SALERNO has been an officer and director of twelve blind pool
corporations, excluding the Company. Eleven of such corporations have conducted
public offerings (pursuant to effective registration statements on Form S-18, as
filed with the Commission), and of those, all have completed merger or
acquisition transactions.
The blank check companies with which Ms. Salerno has been involved have
concentrated primarily on companies with plans for expansion and/or the
introduction of new products or services; such new products or services were, in
some cases, the acquisition or merger candidate's primary business, and in other
cases, an addition to existing lines of business.
Ms. Salerno's past and present blind pool affiliations are as follows:
1. Formerly president and a director of Amsterdam Capital Corporation,
until it acquired Care Concepts, Inc. as of June 16, 1989. The registration
statement for Amsterdam Capital Corporation became effective on January 17,
1989, for 40,000 Units @ $5.50 per unit raising $220,000.
2. Formerly president of East End Investment, Inc., until it acquired The
Theme Factory, Inc. as of October, 16 1989. Ms. Salerno continued to serve as a
director of The Theme Factory, Inc. until her resignation in July 1992. The
registration statement for East End Investment, Inc. became effective on
September 8, 1989, for 10,000 Units @ $6 per unit raising $60,000.
3. Formerly president and a director of West End Ventures, Inc. until
January 26, 1990, when it acquired Future Medical Technologies. The registration
statement for West End Ventures, Inc. became effective on January 2, 1990 for
12,000 Units @ $6.00 per unit raising $72,000.
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4. Formerly president and a director of Sharon Capital Corporation until it
acquired Process Engineers Inc., as of April 5, 1990. The registration statement
for Sharon Capital Corporation became effective on February 14, 1990 for 36,000
Units @ $6.00 per unit raising $216,000.
5. Formerly president and a director of Fulton Ventures, Inc., until June
16, 1990, which acquired Triad Warranty Corporation. The registration statement
for Fulton Ventures, Inc. became effective on April 10, 1990 for 12,000 Units @
$6.00 per unit raising $72,000.
6. Formerly, president and a director of Elmwood Capital Corporation whose
registration statement was declared effective on June 27, 1990 for 12,000 Units
@ $6.00 per unit raising $72,000. Elmwood Capital Corporation acquired U.S.
Environmental Solutions, Inc., as of March 5, 1991, at which time Ms. Salerno
ceased acting as an officer or director.
7. Formerly president and a director of Carnegie Capital Corporation, whose
registration statement became effective on February 1, 1991 for 18,000 Units @
$6.00 per unit raising $108,000. During November 1991, Carnegie Capital
corporation acquired Nevada Construction supply, which later changed its name to
National Building Supply. Ms. Salerno resigned as president, upon the
acquisition but continued in her position as a director until September 29,
1992.
8. Formerly president and a director of Avalon Enterprises Inc., which had
its registration statement declared effective on March 26, 1991, for 16,000
Units @ $6.00 per unit raising a total of $96,000. It acquired Southern
Corrections Services, Inc. on June 15, 1992. The company's name was thereafter
changed to Avalon Community Services, Inc., and then to Avalon Correctional
Services, Inc. a post-effective amendment to its registration statement became
effective on November 16, 1991.
9. Formerly president and a director of South End Ventures, Inc. whose
registration statement became effective on November 15, 1991, for 12,000 Units @
$6.00 per unit raising $72,000. South End Ventures completed an acquisition of
Shore Group, Inc., a private company located, in Philadelphia, PA, during
December 1992, at which time Ms. Salerno resigned as officer and director. The
name of the company has been changed to Shore Group Incorporated.
10. Formerly president and a director of Hard Funding, Inc., which merged
with Marinex which subsequently merged with Texas Equipment Corp. A Registration
Statement was effective for 8,500 Units @ $6.00 per unit raising a total of
$51,000.
11. Former president and director of Bishop Equities, Inc. which registered
with the Commission effective March 8, 1999 which raised $60,000. Bishop
completed an acquisition of Aethlon Medical, Inc. on March 3, 1993.
Detailed information and financial data about the above companies may be
obtained, where applicable, by reviewing the registration statements on file
with the Commission together with other subsequent filings. No assurance can be
given that the Company's management will investigate or eventually engage in a
combination with, similar companies, focus on the same or similar industries, or
utilize similar criteria in the evaluation of business combination candidates.
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Ms. Salerno has also acted as president and director of OSK Capital I Corp.
(1999) and secretary and director of Park Hill Capital I Corp. (1999) and
Franklyn Resources I, Inc. (1999), all blank check companies, without specific
business plans which have filed registration statements under section 12(g) of
the Exchange Act.
VICTOR E. STEWART has been affiliated with several blank check entities
including the following: Asset Development Corporation, which merged with Joe
Franklin Productions in August 1987; The Acquisition Company, Inc., which merged
with Nightwing Group, Inc. in October 1987; Mergers Are Us, Inc., which merged
with North American Karate Conference, Inc. in September 1987; Asset Exploration
Company, Inc., which merged with K.F.O. Associates, Inc. in September 1987; and
The Value Added Company, Inc., which merged with Advanced Video Robotics Corp.
in November 1987. During 1988, Mr. Stewart served as secretary-treasurer and
director of Big Mergers, Inc., which merged with Self Insurers Services &
Underwriters, Inc. in January 1988; Bigger Mergers, Inc., which merged with
Modem Chemical Technology, Inc. in February 1988; Biggest Merger, Inc., which
merged with Sportsplex Health and Fitness, Inc. in April 1988; Creative Mergers,
Inc. which merged with Accucomp Equipment, Inc. in July 1988; Most Creative
Mergers, Inc. which merged with We Are Systems 21 Inc. and PN Computer Gaming
Systems, Inc. in July 1988; and More Creative Mergers, Inc. which merged with
ATS Money Systems, Inc. in September 1988. Most recently, Mr. Stewart served as
secretary-treasurer and director of Deals Are Us, Inc., which merged with
Equestrian Centers of America, Inc. in April 1989 and Easy Mergers, Inc., which
merged with Graystone Companies, Incorporated in July 1989.
Conflicts of Interest
The officers and directors of the Company will not devote more than a
portion of their time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with the demands
of their other business and investment activities. Such conflicts may require
that the Company attempt to employ additional personnel. There is no assurance
that the services of such persons will be available or that they can be obtained
upon terms favorable to the Company.
Certain of the officers and directors of the Company may be directors
and/or principal shareholders of other companies and, therefore, could face
conflicts of interest with respect to potential acquisitions. In addition,
officers and directors of the Company may in the future participate in business
ventures which could be deemed to compete directly with the Company. Additional
conflicts of interest and non-arms' length transactions may also arise in the
future in the event the Company's officers or directors are involved in the
management of any firm with which the Company transacts business. The Company's
Board of Directors has adopted a policy that the Company will not seek a merger
with, or acquisition of, any entity in which management serve as officers or
directors, or in which they or their family members own or hold a controlling
ownership interest. Although the Board of Directors could elect to change this
policy, the Board of Directors has no present intention to do so.
The Company's officers and directors may actively negotiate or otherwise
consent to the purchase of a portion of their common stock as a condition to, or
in connection with, a proposed merger or acquisition transaction. It is
anticipated that a substantial premium over the initial cost
22
<PAGE>
of such shares may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers and directors which is made as a condition to,
or in connection with, a proposed merger or acquisition transaction. The fact
that a substantial premium may be paid to the Company's officers and directors
to acquire their shares creates a potential conflict of interest for them in
satisfying their fiduciary duties to the Company and its other shareholders.
Even though such a sale could result in a substantial profit to them, they would
be legally required to make the decision based upon the best interests of the
Company and the Company's other shareholders, rather than their own personal
pecuniary benefit.
Item 6. Executive Compensation.
SUMMARY COMPENSATION TABLE OF EXECUTIVES
Annual Compensation Awards
<TABLE>
<CAPTION>
Securities
Name and Other Annual Underlying
Principal Salary Bonus Compensation Restricted Options/
Position Year ($) ($) ($) Stock Award(s) SARs (#)
-------- ---- --- --- --- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard S. Kaye, 1997 0 0 0 0 0
President 1998 0 0 0 0 0
1999 0 0 0 0 0
Deborah A 1997 0 0 0 0 0
Salerno, 1998 0 0 0 0 0
Vice-President 1999 0 0 0 0 0
Victor E 1997 0 0 0 0 0
Stewart, 1998 0 0 0 0 0
Secretary, 1999 0 0 0 0 0
Treasurer
</TABLE>
23
<PAGE>
Directors' Compensation
<TABLE>
<CAPTION>
Number of
Securities
Annual Retainer Meeting Consulting Underlying
Fee Fees Fees/Other Options
Name ($) ($) Fees ($) SARs(#)
---- --- --- -------- -------
<S> <C> <C> <C> <C>
A. Richard S. Kaye 0 0 0 0
B. Deborah A. Salerno 0 0 0 0
C. Victor E. Stewart 0 0 0 0
</TABLE>
Aggregated Option/SAR Grants in Last Fiscal Year and Aggregated Option/SAR
Exercises in Last Fiscal Year and FY-End Option/SAR values (None)
Long Term Incentive Plans - Awards in Last Fiscal Year (None)
No officer or director has received any other remuneration in the two-year
period prior to the filing of this registration statement. Although there is no
current plan in existence, it is possible that the Company will adopt a plan to
pay or accrue compensation to its officers and directors for services related to
seeking business opportunities and completing a merger or acquisition
transaction. See "Certain Relationships and Related Transactions." The Company
has no stock option, retirement, pension, or profit-sharing programs for the
benefit of directors, officers or other employees, but the Board of Directors
may recommend adoption of one or more such programs in the future. The Company's
officers do not have employment contracts with the Company.
Item 7. Certain Relationships and Related Transactions.
No officer, director, or affiliate of the Company has during the last two
years, or proposes to have, any direct or indirect material interest in any
asset proposed to be acquired by the Company through security holdings,
contracts, options, or otherwise.
The Company has adopted a policy under which any consulting or finder's fee
that may be paid to a third party or affiliate for consulting services to assist
management in evaluating a prospective business opportunity would be paid in
stock or in cash. Any such issuance of stock would be made on an ad hoc basis.
Accordingly, the Company is unable to predict whether or in what amount such a
stock issuance might be made.
Although there is no current plan in existence, it is possible that the
Company will adopt a plan to pay or accrue compensation to its officers and
directors for services related to seeking business opportunities and completing
a merger or acquisition transaction.
24
<PAGE>
The Company maintains a mailing address at 50 East 42nd Street, Suite 1805,
New York, NY 10017, the office of its President, Richard S. Kaye, but otherwise
does not maintain an office. As a result, it pays no rent and incurs no expenses
for maintenance of an office and does not anticipate paying rent or incurring
office expenses in the future. It is likely that the Company will establish and
maintain an office after completion of a business combination.
Item 8. Description of Securities.
Common Stock
The Company's Articles of Incorporation authorize the issuance of
50,000,000 shares of common stock, $.001 par value per share. Each record holder
of common stock is entitled to one vote for each share held on all matters
properly submitted to the stockholders for their vote. Cumulative voting for the
election of directors is not permitted by the Articles of Incorporation.
As of December 15, 1999, a total of 1,600,000 common shares were issued and
outstanding.
Holders of outstanding shares of common stock are entitled to such
dividends as may be declared from time to time by the Board of Directors out of
legally available funds, and, in the event of liquidation, dissolution or
winding up of the affairs of the Company, holders are entitled to receive,
ratably, the net assets of the Company available to stockholders after
distribution is made to the preferred stockholders, if any, who are given
preferred rights upon liquidation. Holders of outstanding shares of common stock
have no preemptive, conversion or redemptive rights. All of the issued and
outstanding shares of common stock are duly authorized, validly issued, fully
paid, and nonassessable. To the extent that additional shares of the Company's
common stock are issued, the relative interests of then existing stockholders
may be diluted.
Units and Redeemable Common Stock Purchase Warrants
An aggregate of 40,000 units have been authorized and issued to the public
and an aggregate of 4,000 units have been authorized and issued to the Company's
underwriters, Westminster Securities Corporation (each unit being referred to as
a "Unit" and collectively referred to as the "Units"). Each Unit consists of six
shares of common stock, $.001 par value per share, thirty Class A Redeemable
common stock Purchase Warrants (the "Class A Warrants"), thirty Class B
Redeemable common stock Purchase Warrants (the "Class B Warrants") and thirty
Class C Redeemable common stock Purchase Warrants (the "Class C Warrants", and
collectively with the Class A, Class B and Class C Warrants as the "Warrants").
Each common stock Purchase Warrant is detachable and may be traded separately on
the basis of one Class A Warrant evidencing the right to purchase one share of
common stock (par value $.001) at $.75 per share until April 17, 2000, one Class
B Warrant evidencing the right to purchase one share of common stock (par value
$.001) at $.875 per share until October 16, 2000, and one Class C Warrant
evidencing the right to purchase one share of common stock (par value $.001) at
$1.00 per share until October 16, 2000.
The Warrant exercise prices, the number and kind of common stock or other
securities and property to be obtained upon exercise of the Warrants are subject
to adjustments in the event
25
<PAGE>
of a stock dividend on, or a subdivision, combination or reclassification of,
the common stock, or the sale or conveyance to another corporation of the
Company as an entirety or substantially as an entirety, or upon the Company's
issuance of certain rights or warrants to all holders of its common stock to
purchase common stock at less than the market price, or upon other distributions
(other than cash dividends) to all holders of the common stock.
Fractional shares of common stock will not be issued upon exercise of the
Warrants and, in lieu thereof, a cash adjustment based on the market value of
the shares immediately prior to the date of exercise will be made.
All Warrants are callable by the Company at any time prior to their
conversation, with a notice of call in writing to the Warrant holders of record,
giving a 30-day notice of such call. The call price of the Warrants is to be
$.01 per Warrant. Any Warrants so called, and neither converted nor tendered
back to the Company by the end of the date specified in the notice of call,
shall expire on the books of the Company and cannot be exercised.
Transfer Agent
The Company's transfer agent is American Stock Transfer & Trust Company, 40
Wall Street, New York, NY 10005.
Reports to Stockholders
The Company may furnish its stockholders with an annual report for each
fiscal year containing financial statements audited by its independent certified
public accountants. In the event the Company enters into a business combination
with another company, it is the present intention of management to require any
successor company to furnish stockholders with an annual report for each fiscal
year containing financial statements audited by an independent certified public
accountant. The Company intends to comply with the periodic reporting
requirements of the Exchange Act for so long as it is subject to those
requirements, and to file unaudited quarterly reports and annual reports with
audited financial statements as required by the Exchange Act.
26
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common Equity and
Other Shareholder Matters
The Company's shares of common stock are currently traded on the Over-the
Counter Bulletin Board.
CLOSING QUARTERLY BID PRICES
Q1 Q2 Q3 Q4
-- -- -- --
1998 1/32 1/32 1/32 1/32
1999 1/16 1/32 1/8 1/8
The quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
At December 23 1999, there were 218 beneficial and record holders of the
Company's common stock.
The Board of Directors has never paid dividends and the Company does not
anticipate paying dividends at any time in the foreseeable future. Also, in the
event of the acquisition of a business by the Company, control of the Company
and its Board of Directors may pass to others and the payment of dividends would
be wholly dependent upon the decisions of such persons.
Item 2. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such
proceedings are known to be contemplated.
Item 3. Changes in and Disagreements with Accountants
None.
Item 4. Recent Sales of Unregistered Securities
None.
Item 5. Indemnification of Directors and Officers
The Company's By-Laws provide that it will indemnify any person for costs
and expenses incurred in connection with the defense of actions, suits, or
proceedings where such person acted in good faith and in a manner he reasonably
believed to be in the Company's best interest and is a party to the action by
reason of his status as an officer, director, employee or agent of the Company.
27
<PAGE>
PART F/S
STRATEGIC ACQUISITIONS, INC.
(A Development Stage Company)
Index to Financial Statements
CONTENTS
COVER PAGE .......................................................... F-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS .................. F-2
BALANCE SHEETS, DECEMBER 31, 1998 AND 1997 .......................... F-3
STATEMENTS OF OPERATIONS FOR THE YEARS
ENDED DECEMBER 31, 1998 AND 1997 .................................... F-4
STATEMENTS OF CASH FLOWS FOR THE YEARS
ENDED DECEMBER 31, 1998 AND 1997 .................................... F-5
STATEMENTS OF STOCKHOLDER'S EQUITY,
DECEMBER 31, 1998 AND 1997 .......................................... F-6
NOTES TO FINANCIAL STATEMENTS ....................................... F-7
BALANCE SHEET, SEPTEMBER 30, 1999 (Unaudited) ....................... F-9
STATEMENT OF OPERATIONS, SEPTEMBER 30, 1999 (Unaudited) ............. F-10
STATEMENT OF CASH FLOWS,
SEPTEMBER 30, 1999 (Unaudited) ...................................... F-11
NOTES TO FINANCIAL STATEMENTS ....................................... F-12
28
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors:
Strategic Acquisitions Inc.
New York, New York
We have audited the accompanying balance sheets of Strategic Acquisitions
Inc. (a Development Stage Company) as of December 31, 1998 and 1997 and the
related statements of operations, stockholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Strategic Acquisitions Inc.
as of December 31, 1998 and 1997, and the results of its operations and cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
/s/ Mayer Rispler & Company, P.C.
December 6, 1999
Brooklyn, New York
F-2
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash and Equivalents $ 143,213 $ 140,013
--------- ---------
TOTAL ASSETS $ 413,213 $ 140,013
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Stockholders' Equity
Common Stock, par value $.001; authorized 50,000,000 shares,
1,600,000 shares issued and outstanding at December
31, 1998 and 1997, respectively $ 1,600 $ 1,600
Additional Paid-In Capital 183,703 183,703
Accumulated Deficit (42,090) (45,290)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 143,213 $ 140,013
========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-3
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED
December 31,
-------------------------
1998 1997
---------- ----------
Interest Income $ 5,788 $ 5,707
---------- ----------
Expenses:
Transfer Agent Fees 2,400 2,400
State of Nevada Filing Fee 85 85
Registered Agent Fee 103 97
---------- ----------
Total Expenses 2,588 2,582
---------- ----------
NET INCOME $ 3,200 $ 3,125
========== ==========
Basic Earnings Per Common Share $ .002 $ .002
========== ==========
Weighted Average Number of Shares Outstanding 1,600,000 1,600,000
========== ==========
The accompanying notes are an integral part of this financial statement.
F-4
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
December 31,
-----------------------
1998 1997
-------- --------
Cash Flows From Operating Activities:
Net Income $ 3,200 $ 3,125
CASH - BEGINNING 140,013 136,888
-------- --------
CASH - ENDING INCOME $143,213 $140,013
======== ========
The accompanying notes are an integral part of this financial statement.
F-5
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Total
Stock-
Common Additional Accumulated Holders
Stock Paid-In Capital (Deficit) Equity
--------- --------------- --------- ---------
<S> <C> <C> <C> <C>
Issuance of common stock
on July 31, 1989 at par value
($.001 per share) for cash $ 1,360 $ 4,640 $ 6,000
Public offering - 40,000 units
(six shares per unit) @ $6.00
per unit, net of costs 240 179,063 179,303
Net Loss - Inception to
December 31, 1996 (48,415) (48,415)
--------- --------- --------- ---------
Balance - December 31, 1996 $ 1,600 $ 183,703 $ (48,415) $ 136,888
Net Income 3,125 3,125
--------- --------- --------- ---------
Balance - December 31, 1997 1,600 183,703 (45,290) 140,013
Net Income 3,200 3,200
--------- --------- --------- ---------
Balance - December 31, 1998 $ 1,600 $ 183,703 $ (42,090) $ 143,213
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of this financial statement.
F-6
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Background - Strategic Acquisitions Inc. (the Company) was organized under the
laws of the State of Nevada on January 27, 1989. Its purpose is to provide a
vehicle to acquire or merge with another entity. Since the Company does not have
any operations, it is considered a development stage company.
Cash and Equivalents - Cash and equivalents are stated at cost plus accrued
interest. The Company considers all highly liquid investments with a maturity
date of three months or less to be cash equivalents.
Concentration of Credit Risk - At December 31, 1998 and 1997, the Company
maintained all its cash in one commercial bank.
Earnings Per Share - Basic earnings per share is computed using the weighted
average number of shares outstanding during the reporting period.
NOTE 2 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 50,000,000 common shares with a par
value of $.001. On July 31, 1989, the Company issued 1,360,000 shares of its
common stock to its officers for a total consideration of $6,000.
During the fourth quarter 1989, the Company's public offering was declared
effective. In connection therewith, the Company sold 40,000 units of common
stock at $6.00 per unit. Each unit consists of six shares of Common Stock, $.001
par value, thirty Class A Warrants, thirty Class B Warrants and thirty Class C
Warrants. Each Class A Warrant entitles the holder thereof to purchase one share
of Common Stock at $0.75 per share for an exercise period of eighteen months
commencing from the effective date of this offering (the "Effective Date"). Each
Class B Warrant entitles the holder thereof to purchase one share of Common
Stock at $0.875 per share for an exercise period of two years from the Effective
Date. Each Class C Warrant entitles the holder thereof to purchase on share of
common Stock at $1.00 per share for and exercise period of two years from the
Effective Date. The Company has the right to call the Warrants at any time upon
thirty days written notice to the holders of record thereof at a call price of
$.01 per Warrant. The Company has extended the life of these Warrants and
currently the Class A Warrants expire on April 17, 2000, and the Class B and
Class C Warrants expire October 16, 2000.
F-7
<PAGE>
STRATEGIC ACQUISITIONS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
(CONTINUED)
The Company granted the underwriter of its initial public offering warrants
to purchase an aggregate of 4,000 units that are identical in all respects to
the units sold to the public pursuant to the terms of the underwriting agreement
at an exercise price of $6.42 per unit. The Company has extended the life of
these warrants and currently they expire on April 17, 2000.
NOTE 3 - COMMITMENTS AND THE MATTERS
a) The Company currently utilizes the office of its president as a mailing
address. Pursuant to an oral agreement these facilities are rent-free.
NOTE 4 - INCOME TAXES
At December 31, 1998 and 1997 the Company had available Federal net operating
loss carry-forwards of $42,090 and $45,290, respectively. The Company has
established a valuation allowance equal to 100% of the deferred tax asset that
would be created upon recording the tax effect of the net operating loss
carry-forwards, as the Company could not conclude that the deferred tax asset
would be realized.
F-8
<PAGE>
STRATEGIC ACQUISITONS INC.
(A Development Stage Company)
BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
ASSETS
Cash and Equivalents $ 143,915
---------
TOTAL ASSETS $ 143,915
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts Payable $ 6,299
Stockholders' Equity
Common Stock, par value $.001;
authorized 50,000,000 shares,
1,600,000 shares issued and
outstanding at September 30, 1999
1,600
Additional Paid-In Capital 183,703
Accumulated Deficit (47,687)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 143,915
=========
The accompanying notes are an integral part of this financial statement.
F-9
<PAGE>
STRATEGIC ACQUISITONS INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS AND
ACCUMULATED DEFICIT
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
Interest Income $ 3,824
Expenses:
Professional Fees $ 7,499
Transfer Agent Fees 1,800
State of Nevada Fee 15
Registered Agent Fee 107
-----------
Total Expenses 9,421
-----------
NET LOSS $ (5,597)
ACCUMULATED DEFICIT - BEGINNING OF YEAR (42,090)
-----------
ACCUMULATED DEFICIT - END OF YEAR (47,687)
===========
Basic Loss Per Common Share $ (.003)
===========
Weighted Average number of Shares Outstanding 1,600,000
===========
The accompanying notes are an integral part of this financial statement.
F-10
<PAGE>
STRATEGIC ACQUISITONS INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
Cash Flows From Operating Activities:
Net Loss $ (5,597)
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating
Activities:
Increase In Accounts Payable 6,299
---------
Net Cash Provided by Operating Activities $ 702
CASH - BEGINNING 143,213
---------
CASH - ENDING $ 143,915
=========
The accompanying notes are an integral part of this financial statement.
F-11
<PAGE>
STRATEGIC ACQUISITONS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(UNAUDITED)
The accompanying interim financial statements of Strategic Acquisitions
Inc. (the Company) have been prepared in conformity with generally accepted
accounting principles consistent in all material respects with those applied in
the December 31, 1998 audited financial statements. The interim financial
information is unaudited, but reflects all normal adjustments which are, in the
opinion of management, necessary to provide a fair statement of results for the
interim period presented. The interim financial statements should be read in
conjunction with the financial statements of the Company for the year December
31, 1998.
F-12
<PAGE>
PART III
Item 1. Index to Exhibits
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Warrant Agreement between Strategic Acquisitions, Inc. and American Stock
Transfer & Trust Company, dated October 16, 1989.
27.1 Financial Data Schedule
41
<PAGE>
SIGNATURES:
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
DATED: January 18, 2000
STRATEGIC ACQUISITIONS, INC.
By: /s/ Richard S. Kaye
--------------------------
Richard S. Kaye, President
Directors:
/s/ Richard S. Kaye
--------------------------
Richard S. Kaye, Director
/s/ Victor E. Stewart
--------------------------
Victor E. Stewart, Director
/s/ Deborah A. Salerno
--------------------------
Deborah Salerno, Director
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
STRATEGIC ACQUISITIONS, INC.
* * * * *
FIRST. The name of the corporation is
STRATEGIC ACQUISITIONS, INC.
SECOND. Its principal office in the State of Nevada is located at One East
First Street, Reno, Washoe County, Nevada 89501. The name and address of its
resident agent is The Corporation Trust Company of Nevada, One East First
Street, Reno, Nevada 89501.
THIRD. The nature of the business, or objects or purposes proposed to be
transacted, promoted or carried on are:
To engage in any lawful activity and to manufacture, purchase or otherwise
acquire, invest in, own, mortgage, pledge, sell, assign and transfer or
otherwise dispose of, trade, deal in and deal with goods, wares and merchandise
and personal property of every class and description.
To hold, purchase and convey real and personal estate and to mortgage or
lease any such real and personal estate with its franchises and to take the same
by devise or bequest.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities or any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage, or otherwise dispose of letters patent of the United States or any
foreign country, patent rights,
<PAGE>
licenses and privileges, inventions, improvements and processes, copyrights,
trade marks and trade names, relating to or useful in connection with any
business of this corporation.
To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of the share of the capital stock of or any bonds, securities
or evidences of the indebtedness created by any other corporation or
corporations of this state, or any other state or government, and, while owner
of such stock, bonds, securities or evidences of indebtedness, to exercise all
the rights, powers and privileges of ownership, including the right to vote, if
any.
To borrow money and contract debts when necessary for the transaction of
its business, or for the exercise of its corporate rights, privileges or
franchises, or for any other lawful purpose of its incorporation; to issue
bonds, promissory notes, bills of exchange, debentures, and other obligations
and evidences of indebtedness, payable at specified time or times, or payable
upon the happening of a specified event or events, whether secured by mortgage,
pledge or otherwise, or unsecured, for money borrowed, or in payment for
property purchased, or acquired, or for any other lawful objects.
To purchase, hold, sell and transfer shares of its own capital stock, and
use therefor its capital, capital surplus, surplus, or other property or funds;
provided it shall not use its funds or property for the purchase of its own
shares of capital stock when such use would cause any impairment of its capital;
and provided further, that shares of its own capital stock belonging to it shall
not be voted upon, directly or indirectly, nor counted as outstanding, for the
purpose of computing any stockholders' quorum or vote.
To conduct business, have one or more office, and hold, purchase, mortgage
and convey real and personal property in this state, and in any of the several
states, territories,
-2-
<PAGE>
possessions and dependencies of the United States, the District of Columbia, and
in any foreign countries.
To do all and everything necessary and proper for the accomplishment of the
objects hereinbefore enumerated or necessary or incidental to the protection and
benefit of the corporation, and, in general, to carry on any lawful business
necessary or incidental to the attainment of the objects of the corporation,
whether or not such business is similar in nature to the objects hereinbefore
set forth.
The objects and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in these articles of
incorporation, but the objects and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent objects and purposes.
FOURTH. The amount of the total authorized capital stock of the corporation
is Fifty Thousand Dollars ($50,000.00) consisting of fifty million (50,000,000)
shares of stock of the par value of One Mil ($.001) each.
FIFTH. The governing board of this corporation shall be known as directors,
and the number of directors may from time to time be increased or decreased in
such manner as shall be provided by the by-laws of this corporation.
The names and post-office addresses of the first board of directors, which
shall be three (3) in number, are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
RICHARD S. KAYE 50 East 42nd Street
Suite 1805
New York, New York 10017
-3-
<PAGE>
DEBORAH A. SALERNO 50 East 42nd Street
Suite 1805
New York, New York 10017
VICTOR E. STEWART 50 Broad Street
Suite 713
New York, New York 10004
SIXTH. The capital stock, after the amount of the subscription price, or
par value, has been paid in shall not be subject to assessment to pay the debts
of the corporation.
SEVENTH. The name and post-office address of each of the incorporators
signing the articles of incorporation are as follows:
NAME POST-OFFICE ADDRESS
---- -------------------
WARREN D. BRIGGS 1633 Broadway
New York, New York 10019
CARMELO M. GAGLIANO 1633 Broadway
New York, New York 10019
MARIE T. CARTIER 1633 Broadway
New York, New York 10019
EIGHTH. The corporation is to have perpetual existence.
NINTH. In furtherance, and not in limitation of the powers conferred by
statute, the board of directors is expressly authorized.
Subject to the by-laws, if any, adopted by the stockholders, to make, alter
or amend the by-laws of the corporation: To fix the amount to be reserved as
working capital over and above its capital stock paid in, to authorize and cause
to be executed mortgages and liens upon the real and personal property of this
corporation.
By resolution passed by a majority of the whole board, to designate one (1)
or more committees, each committee to consist of one (1) or more of the
directors of the
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corporation, which, to the extent provided in the resolution or in the by-laws
of the corporation, shall have and may exercise the powers of the board of
directors in the management of the business and affairs of the corporation, and
may authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee or committees shall have such name or names as may be
stated in the by-laws of the corporation or as may be determined from time to
time by resolution adopted by the board of directors.
When and as authorized by the affirmative vote of stockholders holding
stock entitling them to exercise at least a majority of the voting power given
at a stockholders' meeting called for that purpose, or when authorized by the
written consent of the holders of at least a majority of the voting stock issued
and outstanding, the board of directors shall have power and authority at any
meeting to sell, lease or exchange all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions as its board of directors deem expedient and for the best
interests of the corporation.
TENTH. Section 1. Pursuant to the provisions of NRS 78.751, the corporation
will indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding whether
civil, criminal, administrative or investigative except an action by or in the
right of the corporation, by reason of the fact that he was a director, officer,
employee or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit or
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with
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respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that, with respect to
any criminal action or proceeding, he had reasonable cause to believe that his
conduct was unlawful.
Section 2. The corporation will indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee of agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fee actually and reasonably
incurred by him in connection with the defense or settlement of the action or
suit if he acted in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the corporation. Indemnification
may not be made for any claim, issue or matter as to which such a person has
been adjudged by a court of competent jurisdiction, after exhaustion of all
appeals therefrom, to be liable to the corporation or for amounts paid in
settlement to the corporation, unless and only to the extent that the court in
which the action or suit was brought or other court of competent jurisdiction
determines upon application that in view of all the circumstances of the case,
the person is fairly and reasonably entitled to indemnify for such expenses as
the court will deems proper.
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Section 3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2, or in defense of any
claim, issue or matter therein, he must be indemnified by the corporation
against expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defense.
Section 4. Any indemnification under Sections 1 and 2, unless ordered by a
court or advanced pursuant to Section 5 herein, must be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by a majority vote of a quorum
consisting of directors who were not parties to the act, suit or
proceeding;
(c) If a majority vote of a quorum consisting of directors who were
not parties to the act, suit or proceeding so ordered, by independent legal
counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
act, suit or proceeding cannot be obtained, by independent legal counsel in
a written opinion.
Section 5. The expenses of officers and directors incurred in defending a
civil or criminal action, suit or proceeding must be paid by the corporation as
they are incurred and in advance of the final disposition of the action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The
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provisions of this Section do not affect any rights to advancement of expenses
to which corporate personnel other than directors or officers may be entitled
under any contact or otherwise by law.
Section 6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this Section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the certificate
or articles of incorporation or any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, for either an action in his official
capacity or an action in another capacity while holding his office, except that
indemnification, unless ordered by a court pursuant to Section 2 or for the
advancement of expenses made pursuant to Section 5, may not be made to or on
behalf of any director or office if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing violation
of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors and
administrators of such a person.
ELEVENTH. Section 1. The corporation may purchase and maintain insurance or
make other financial arrangements on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him and liability and expenses incurred by him in
his capacity as a director, officer, employee or agent, arising out of his
status as such, whether or not the corporation has the authority to indemnify
him against such liability and expenses.
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Section 2. The other financial arrangements made by the corporation
pursuant to Section 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance
(c) The securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation.
(d) The establishment of a letter of credit, guaranty or surety.
No financial arrangement made pursuant to this Section may provide
protection for a person adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable for intentional misconduct,
fraud or a knowing violation of law, except with respect to the advancement of
expenses or indemnification ordered by the court. Section 3. Any insurance or
other financial arrangement made on behalf of a person pursuant to this Section
may be provided by the corporation or any other person approved by the board of
directors, even if all or part of the other person's stock or other securities
is owned by the corporation.
Section 4. In the absence of fraud:
(a) The decision of the board of directors as to the propriety of the
terms and conductions of any insurance or other financial arrangement made
pursuant to this Section and the choice of the person to provide the
insurance or other financial arrangement is conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
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(2) Does not subject any director approving it to personal liability
for his action, even if a director approving the insurance or other
financial arrangement is a beneficiary of the insurance or other financial
arrangement.
TWELFTH. No director or officer of the corporation shall be personally
liable to the corporation or its stockholders for damages for his acts or
omissions resulting in his breach of fiduciary duty as a director or officer,
except if such acts or omissions involve: (a) intentional misconduct, fraud or a
knowing violation of the law; or (b) the payment of dividends in violation of
NRS 78.300.
THIRTEENTH. Meetings of stockholders may be held outside the State of
Nevada, if the by-laws so provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of Nevada
at such place or places as may be designated from time to time by the board of
directors or in the by-laws of the corporation.
FOURTEENTH. This corporation reserves the right to amend, alter, change or
repeal any provision contained in the articles of incorporation, in the manner
now or hereafter prescribed by statute, or by the articles of incorporation, and
all rights conferred upon stockholders herein are granted subject to this
reservation.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Nevada, do make and file these articles of incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have hereunto set our hands this 26th day of January, 1989.
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/s/ WARREN D. BRIGGS
------------------------------------
Warren D. Briggs
/s/ CARMELO M. GAGLIANO
------------------------------------
Carmelo M. Gagliano
/s/ MARIE T. CARTIER
------------------------------------
Marie T. Cartier
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STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On this 26th day of January, 1989, before me, a Notary Public, personally
appeared WARREN D. BRIGGS, CARMELO M. GAGLIANO and MARIE T. CARTIER who
severally acknowledged that they executed the above instrument.
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/s/ TIMOTHY E. CARLSON
----------------------
Timothy E. Carlson
Notary Public
EXHIBIT 3.2
STRATEGIC ACQUISITIONS, INC.
* * * * *
B Y - L A W S
* * * * *
Article I
OFFICES
Section 1. The principal office shall be in the City of Reno, County of
Washoe, State of Nevada.
Section 2. The corporation may also have offices at such other places both
within and without the State of Nevada as the board of directors may from time
to time determine or the business of the corporation may require.
Article II
MEETINGS OF STOCKHOLDERS
Section 1. All annual meetings of the stockholders shall be held in the
City of New York, State of New York. Special meetings of the stockholders may be
held at such time and place within or without the State of Nevada as shall be
stated in the notice of the meeting, or in a duly executed waiver of notice
thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1990,
shall be held on the 15th day of January, if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 10:00 A. M., at which they
shall elect by a plurality vote a board of directors, and transact such other
business as may properly be brought before the meeting.
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Section 3. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the articles of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 4. Notices of meetings shall be in writing and signed by the
president or a vice president, or the secretary, or an assistant secretary, or
by such other person or persons as the directors shall designate. Such notice
shall state the purpose or purposes for which the meeting is called and the time
when, and the place, which may be within or without this state, where it is to
be held. A copy of such notice shall be either delivered personally to or shall
be mailed, postage prepaid, to each stockholder of record entitled to vote at
such meeting not less than ten nor more than sixty days before such meeting. If
mailed, it shall be directed to a stockholder at his address as it appears upon
the records of the corporation and upon such mailing of any such notice, the
service thereof shall be complete, and the time of the notice shall begin to run
from the date upon which such notice is deposited in the mail for transmission
to such stockholder. Personal delivery of any such notice to any officer of a
corporation or association, or to any member of a partnership shall constitute
delivery of such notice to such corporation, association or partnership. In the
event of the transfer of stock after delivery or mailing of the notice of and
prior to the holding of the meeting it shall not be necessary to deliver or mail
notice of the meeting to the transferee.
Section 5. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
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Section 6. A majority of the stockholders, holding shares of stock issued
and outstanding and entitled to vote thereat, present in person or represented
by proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
articles of incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stock-holders, the stockholders entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present or represented at any meeting, the vote
of the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such meeting,
unless the question is one upon which by express provision of the statutes or of
the articles of incorporation a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 8. Except as hereinafter provided, every stockholder of record of
the corporation shall be entitled at each meeting of stockholders to one vote
for each share of stock standing in his name on the books of the corporation. At
all elections of directors each holder of stock possessing voting power shall be
entitled to as many votes as shall equal the number of his shares of stock
multiplied by the number of directors to be elected, and he may cast all of such
votes for a single director or may distribute them among the number to be voted
for or any two or more of them, as he may see fit.
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Section 9. At any meeting of the stockholders, any stockholder may be
represented and vote by a proxy or proxies appointed by an instrument in
writing. In the event that any such instrument in writing shall designate two or
more persons to act as proxies, a majority of such persons present at the
meeting, or, if only one shall be present, then that one shall have and may
exercise all of the powers conferred by such written instrument upon all of the
persons so designated unless the instrument shall otherwise provide. No such
proxy shall be valid after the expiration of six months from the date of its
execution, unless coupled with an interest, or unless the person executing it
specifies therein the length of time for which it is to continue in force, which
in no case shall exceed seven years from the date of its execution. Subject to
the above, any proxy duly executed is not revoked and continues in full force
and effect until an instrument revoking it or a duly executed proxy bearing a
later date is filed with the secretary of the corporation.
Section 10. Any action, which may be taken by the vote of the stockholders
at a meeting, may be taken without a meeting if authorized by the written
consent of stockholders holding at least a majority of the voting power, unless
the provisions of the statutes or of the articles of incorporation require a
greater proportion of voting power to authorize such action in which case such
greater proportion of written consents shall be required.
Article III
DIRECTORS
Section 1. The number of directors shall be neither more than seven nor
less than three. The number of directors is to be fixed by vote of the
shareholders. The directors shall be elected at the annual meeting of the
stockholders, and except as provided in Section 2 of this
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article, each director elected shall hold office until his successor is elected
and qualified. Directors need not be stockholders.
Section 2. Vacancies, including those caused by an increase in the number
of directors, may be filled by a majority of the remaining directors though less
than a quorum. When one or more directors shall give notice of his or their
resignation to the board, effective at a future date, the board shall have power
to fill such vacancy or vacancies to take effect when such resignation or
resignations shall become effective, each director so appointed to hold office
during the remainder of the term of office of the resigning director or
directors.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the articles of incorporation
or by these by-laws directed or required to be exercised or done by the
stockholders.
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Nevada.
MEETINGS OF THE BOARD OF DIRECTORS
Section 5. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the stockholders to fix
the time or place of such first meeting of the newly elected board of directors,
or in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter
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provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and place as shall from time to time be determined by the
board.
Section 7. Special meetings of the board of directors may be called by the
president or secretary on the written request of two directors. Written notice
of special meetings of the board of directors shall be given to each director at
least one day before the date of the meeting.
Section 8. A majority of the board of directors, at a meeting duly
assembled, shall be necessary to constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which a quorum is present shall be the act of the board of directors, except as
may be otherwise specifically provided by statute or by the articles of
incorporation. Any action required or permitted to be taken at a meeting of the
directors may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by all of the directors entitled to vote
with respect to the subject matter thereof.
COMMITTEES OF DIRECTORS
Section 9. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation, which, to the extent
provided in the resolution, shall have and may exercise the powers of the board
of directors in the management of the business and affairs of the corporation,
and may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors.
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Section 10. The committees shall keep regular minutes of their proceedings
and report the same to the board when required.
COMPENSATION OF DIRECTORS
Section 11. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be Paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Article IV
NOTICES
Section 1. Notices to directors and stockholders shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notice to
directors may also be given by telegram.
Section 2. Whenever all parties entitled to vote at any meeting, whether of
directors or stockholders, consent, either by a writing on the records of the
meeting or filed with the secretary, or by presence at such meeting and oral
consent entered on the minutes, or by taking part in the deliberations at such
meeting without objection, the doings of such meeting shall be as valid as if
had at a meeting regularly called and noticed, and at such meeting any business
may be transacted which is not excepted from the written consent or to the
consideration of which no objection for want of notice is made at the time, and
if any meeting be irregular for want of notice or of such consent, provided a
quorum was present at such meeting,
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the proceedings of said meeting may be ratified and approved and rendered
likewise valid and the irregularity or defect therein waived by a writing signed
by all parties having the right to vote at such meetings; and such consent or
approval of stockholders may be by proxy or attorney, but all such proxies and
powers of attorney must be in writing.
Section 3. Whenever any notice whatever is required to be given under the
provisions of the statutes, of the articles of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
Article V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice president, a secretary and a
treasurer. Any person may hold two or more offices.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a vice president, a secretary
and a treasurer, none of whom need be a member of the board.
Section 3. The board of directors may appoint additional vice presidents,
and assistant secretaries and assistant treasurers and such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
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Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
by death, resignation, removal or otherwise shall be filled by the board of
directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation, and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE PRESIDENT
Section 8. The vice president shall, in the absence or disability of the
president, perform the duties and exercise the powers of the president and shall
perform such other duties as the board of directors may from time to time
prescribe.
THE SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties
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for the standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be prescribed by the board
of directors or president, under whose super-vision he shall be. He shall keep
in safe custody the seal of the corporation and, when authorized by the board of
directors, affix the same to any instrument requiring it and, when so affixed,
it shall be attested by his signature or by the signature of the treasurer or an
assistant secretary.
THE TREASURER
Section 10. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 11. He shall disburse the funds of the corporation as may be
ordered by the board of directors taking proper vouchers for such disbursements,
and shall render to the president and the board of directors, at the regular
meetings of the board, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 12. If required by the board of directors, he shall give the
corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful performance of the
duties of his office and for the restoration to the corporation, in case of his
death, resignation, retirement or removal from office, of all books, papers,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the corporation.
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Article VI
CERTIFICATES OF STOCK
Section 1. Every stockholder shall be entitled to have a certificate,
signed by the president or a vice president and the treasurer or an assistant
treasurer, or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him in the corporation. When the
corporation is authorized to issue shares of more than one class or more than
one series of any class, there shall be set forth upon the face or back of the
certificate, or the certificate shall have a statement that the corporation will
furnish to any stockholders upon request and without charge, a full or summary
statement of the designations, preferences and relative, participating, optional
or other special rights of the various classes of stock or series thereof and
the qualifications, limitations or restrictions of such rights, and, if the
corporation shall be authorized to issue only special stock, such certificate
shall set forth in full or summarize the rights of the holders of such stock.
Section 2. Whenever any certificate is countersigned or otherwise
authenticated by a transfer agent or transfer clerk, and by a registrar, then a
facsimile of the signatures of the officers or agents of the corporation may be
printed or lithographed upon such certificate in lieu of the actual signatures.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the corporation, such certificate or
certificates may nevertheless be adopted by the corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates, or whose facsimile signature or signatures shall have been used
thereon, had not ceased to be the officer or officers of such corporation.
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LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost or destroyed,
upon the making of an affidavit of that fact by the person claiming the
certificate of stock to be lost or destroyed. When authorizing such issue of a
new certificate or certificates, the board of directors may, in its discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost or destroyed certificate or certificates, or his legal representative, to
advertise the same in such manner as it shall require and/or give the
corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to the certificate alleged
to have been lost or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
CLOSING OF TRANSFER BOOKS
Section 5. The directors may prescribe a period not exceeding sixty days
prior to any meeting of the stockholders during which no transfer of stock on
the books of the corporation may be made, or may fix a day not more than sixty
days prior to the holding of any such meeting as the day as of which
stock-holders entitled to notice of and to vote at such meeting shall be
determined; and only stockholders of record on such day shall be entitled to
notice or to vote at such meeting.
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REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Nevada.
Article VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the articles of incorporation, if any, may be declared by the
board of directors at any regular or special meeting pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital stock, subject to
the provisions of the articles of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserves in the
manner in which it was created.
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CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 5. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its incorporation and the words "Corporate Seal,
Nevada."
Article VIII
AMENDMENTS
Section 1. These by-laws may be altered or repealed at any regular meeting
of the stockholders or of the board of directors or at any special meeting of
the stockholders or of the board of directors if notice of such alteration or
repeal be contained in the notice of such special meeting.
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EXHIBIT 4.1
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of October 16, 1989, between Strategic
Acquisitions, Inc., a Nevada corporation (hereinafter called the "Company"), and
American Stock Transfer & Trust Company, 99 Wall Street, New York, New York
10006, as warrant agent (hereinafter called the "Warrant Agent").
WHEREAS, the Company has proposed to issue and sell to the public 40,000
Units, offering price $6.00 per unit (the "Units"), together with a 15%
over-allotment provision, each Unit consisting of six shares (the "Unit Shares")
of its authorized but unissued shares of common stock, par value $.001 (the
"Common Stock"), thirty Class A redeemable common stock purchase warrants,
thirty Class B redeemable common stock purchase warrants and thirty Class C
redeemable common stock purchase warrants (the Class A, Class B and Class C
common stock purchase warrants being referred to herein as the "Unit Warrants");
WHEREAS, each Unit Warrant is immediately detachable and may be traded
separately on the basis of one Warrant evidencing the right to purchase one
share of Common Stock;
WHEREAS, each Class A Unit Warrant entitles the holder to purchase one
share of Common Stock at the price of $.75 per share for an eighteen month
period commencing immediately from the effective date of this offering;
WHEREAS, each Class B Unit Warrant entitles the holder to purchase one
share of Common Stock at the price of $.875 per share for a two year period
commencing immediately from the effective date of this offering;
WHEREAS, each Class C Unit Warrant entitles the holder to purchase one
share of Common Stock at the price of $1.00 per share for a two year period
commencing immediately from the effective date of this offering;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of the Unit Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as Agent for the Company in accordance with the
instructions hereinafter in this Agreement set forth, and the Warrant Agent
hereby accepts such appointment.
Section 2. Section 2. Form of Warrant. The text of the Warrant and of the
form of election to purchase shares to be printed on the reverse thereof shall
be substantially as set forth respectively in Exhibits "A", "B" and "C" attached
hereto. The per share Warrant price for each class of Warrants and the number of
shares issuable upon exercise of the Unit Warrants
<PAGE>
are subject to adjustment upon the occurrence of certain events, all as
hereinafter provided. The Unit Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
President or Vice President of the Company, under its corporate seal, affixed or
facsimile, attested by the manual or facsimile signature of the present or any
future Secretary or Assistant Secretary of the Company.
The Unit Warrants shall be dated as of the date of issuance by the Warrant
Agent, either upon initial issuance or upon transfer or exchange.
Section 3. Countersignature and Registration. The Warrant Agent shall
maintain books for the transfer and registration of the Unit Warrants. Upon the
initial issuance of the Unit Warrants, the Warrant Agent shall issue and
register the Unit Warrants in the names of the respective holders thereof. The
Unit Warrants shall be countersigned manually or by facsimile by the Warrant
Agent (or by any successor to the Warrant Agent then acting as warrant agent
under this Agreement) and shall not be valid for any purpose unless so
countersigned. Unit Warrants may be so countersigned, however, by the Warrant
Agent (or by its successor as warrant agent) and be delivered by the Warrant
Agent, notwithstanding that the persons whose manual or facsimile signatures
appear thereon as proper officers of the Company shall have ceased to be such
officers at the time of such countersignature or such delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall transfer, from
time to time, any outstanding Unit Warrants upon the books to be maintained by
the Warrant Agent for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer. Upon any such
transfer, a new Unit Warrant shall be issued to the transferee and the
surrendered Unit Warrant shall be cancelled by the Warrant Agent. Unit Warrants
so cancelled shall be delivered by the Warrant Agent to the Company from time to
time upon request. Unit Warrants may be exchanged at the option of the holder
thereof, when surrendered at the office of the Warrant Agent, for another Unit
Warrant, or other Unit Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Common
Shares.
Section 5. Exercise of Warrants. Subject to the provisions of this
Agreement, each registered holder of the Unit Warrants shall have the right,
which may be exercised commencing as of 11:00 A.M. New York City time on October
16, 1989, the effective date of the offering, to purchase from the Company the
number of shares in respect of which such Unit Warrants are then exercised. The
Company shall then issue and sell such fully paid and non-assessable Common
Shares specified in such Unit Warrants at the exercise prices therein stated
(the "Warrant Price"), upon surrender to the Company at the office of the
Warrant Agent of such Unit
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Warrants, with the form of election to purchase on the reverse thereof duly
filled in and signed, and upon payment to the Company of the Warrant Price as
determined in accordance with the provisions of Section 9 and 10 of this
Agreement. Payment of such Warrant Price shall be made in cash or by certified
check or bank draft for any Common Shares issuable upon exercise of a Unit
Warrant. Subject to Section 6, upon such surrender of Unit Warrants, and payment
of the Warrant Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Unit Warrants and in such name or names as such
registered holder may designate, a certificate or certificates for the number of
full Common Shares so purchased upon the exercise of such Unit Warrants,
together with cash, as provided in Section 11 of this Agreement, in respect of
any fraction of a Common Share otherwise issuable upon such surrender. Such
certificate or certificates shall be deemed to have been issued and any person
designated to be named therein shall be deemed to have become a holder of record
of such shares as of the date of the surrender of such Unit Warrants and payment
of the Warrant Price as aforesaid; provided however, that if, on the date of
surrender of such Unit Warrants, the transfer books for such Common Shares or
other class of stock purchasable upon the exercise of such Unit Warrants shall
be closed, the certificates for such shares in respect of which such Unit
Warrants are then exercised shall not be issued until such books shall be
opened, and until such date the Company shall be under no duty to deliver any
certificate for such shares; provided further, however, that the transfer books
aforesaid, unless otherwise required by law or by applicable rule of any
national securities exchange, shall not be closed at any one time for a period
longer than 20 days. The rights of purchase represented by the Unit Warrants
shall be exercisable at the election of the registered holders, thereof, either
as an entirety or from time to time for part only of the shares specified
therein and, in the event that any Unit Warrant is exercised in respect of less
than all of the shares specified therein at any time prior to the date of
expiration of the Unit Warrant, a new Unit Warrant or Unit Warrants will be
issued to such registered holder for the remaining number of shares specified in
the Unit Warrant so surrendered, and the Warrant Agent is hereby irrevocably
authorized to countersign and to deliver the required new Unit Warrants pursuant
to the provisions of this Section and of Section 3 of this Agreement and the
Company, whenever requested by the Warrant Agent, will supply the Warrant Agent
with Unit Warrants duly executed on behalf of the Company for such purpose.
The redeemable Class A, Class B and Class C Unit Warrants are callable by
the Company at any time prior to their conversion, with a notice of call sent in
writing to the Warrant holders of record, giving a 30 day notice of such call.
The call price is $.01 per Warrant. Any Warrants, either not converted or
tendered back to the Company by the end of the date specified in the notice of
call, shall expire on the books of the company and cannot be exercised.
Section 6. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Common Shares issuable upon the
exercise of the Unit Warrants; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issue or delivery of any certificates for Common Shares in a
name other than that of the registered holder of the Unit Warrants in respect of
which such shares are issued, and in such case neither the Company nor the
Warrant Agent shall be required to issue or deliver any certificate for Common
Shares or any warrant until the person requesting the same has paid to the
Company the amount of such tax or has established to the Company's satisfaction
that such tax has been paid.
Section 7. Mutilated or Missing Warrants. In case any of the Unit Warrants
shall be mutilated, lost, stolen or destroyed, the Company may in its discretion
issue and the Warrant Agent shall countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Unit Warrant, or in lieu
of and
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<PAGE>
substitution for the Unit Warrant lost, stolen or destroyed, a new Unit Warrant
of like tenor and representing an equivalent right or interest, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction of such Unit Warrant and indemnity, if requested,
also satisfactory to them. Applicants for such substitute Unit Warrants shall
also comply with such other reasonable regulations and pay such reasonable
charges as the Company or the Warrant Agent may prescribe.
Section 8. Reservation of Common Shares. There have been reserved, and the
Company shall at all times keep reserved, out of the authorized and unissued
Common Shares, a number of shares sufficient to provide for the exercise of the
rights of purchase represented by the Unit Warrants, and the Transfer Agent for
the Common Shares and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid are hereby irrevocably authorized and directed at all times
to reserve such number of authorized and unissued shares and shall be requisite
for such purpose. The Company agrees that all Common Shares issued upon exercise
of the Unit Warrants shall be, at the time of delivery of the certificates for
such Common Shares, validly issued and outstanding, fully paid and
non-assessable and listed on any national securities exchange upon which the
other Common Shares are then listed on or prior to the date that the Unit
Warrants shall be exercisable as provided in Section 5 hereof. Furthermore, the
Company will register or otherwise qualify the Common Shares issuable upon
exercise of the Unit Warrants pursuant to the provisions of the Securities Act
of 1933; and so long as any unexpired Unit Warrants remain outstanding the
Company will file such amendments and/or supplements to any registration
statement or notification covering the issuance of such Common Shares and
supplements and keep current any prospectus or offering circular forming a part
of such registration statement or notification as may be necessary to permit it
to deliver to each person exercising a Unit Warrant, a prospectus meeting the
requirements of Section 10(a)(3) of the Securities Act of 1933 and any
regulation promulgated thereunder, together with any other pertinent regulations
of the Securities and Exchange Commission and otherwise complying with such Act
and regulations thereunder, and will deliver such a prospectus or offering
circular to each such person. The Company will keep a copy of this Agreement on
file with the Transfer Agent for the Common Shares and with every subsequent
transfer agent for any shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Unit Warrants. The
Transfer Agent is hereby irrevocably authorized to requisition from the Company
from time to time such stock certificates required to honor outstanding Unit
Warrants. The Company will supply such Transfer Agent duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash which may be paid in the exercise of the rights thereby
evidenced, and the Transfer Agent shall then cancel such rights and deliver the
cancelled Unit Warrants to the Company. Such cancelled Unit Warrants shall
constitute sufficient evidence of the number of Common Shares which have been
issued upon the exercise of such Unit Warrants. Promptly after the date of
expiration of each class of Unit Warrants, the Warrant Agent shall certify to
the Company the total aggregate amount of Unit Warrants then outstanding for
such expired class, and thereafter no Common Shares shall be issued in exchange
for such Unit Warrants which have expired.
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<PAGE>
Section 9. Unit Warrant Prices.
(a) The redeemable Class A Warrant Price at which Common Stock shall be
purchasable commencing with the effective date of this offering and continuing
for a total of eighteen months shall be $.75 per share.
(b) The redeemable Class B Warrant Price at which Common Stock shall be
purchasable commencing from the effective date of this offering and continuing
for a total of two years shall be $.875 per share.
(c) The redeemable Class C Warrant Price at which Common Stock shall be
purchasable commencing from the effective date of this offering and continuing
for a total of two years shall be $1.00 per share.
Section 10. Adjustments.Subject and pursuant to the provisions of this
Section 10, the Warrant Price and number of Common Shares subject to the Unit
Warrants shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If at any time or from time to time, the Company shall, by subdivision,
consolidation or reclassification of shares, or otherwise, change as a whole the
outstanding shares of Common Stock into a different number of class of shares,
the number and class of shares as so changed shall, for the purpose of the Unit
Warrants and the terms and conditions hereof, replace the shares outstanding
immediately prior to such change, and the price and number of shares purchasable
under the Unit Warrants immediately prior to the date on which such change shall
become effective shall be proportionately adjusted.
(b) Irrespective of any adjustment or change in the Warrant Price or number
of securities actually purchasable under the Unit Warrants of like tenor, the
Unit Warrants theretofore and thereafter issued may continue to express the
Warrant Price and the number of securities purchasable thereunder as the Warrant
Price and the number of securities purchasable were expressed on the Unit
Warrants when initially issued.
(c) If at any time while the Unit Warrants are outstanding, the Company
shall consolidate with or merge into another corporation, firm or entity, or
otherwise enter into a form of business combination, the holders of the Unit
Warrants shall thereafter be entitled upon exercise thereof to purchase, with
respect to each security purchasable thereunder immediately prior to the date on
which such consolidation, merger or other form of business combination shall
become effective, the securities or property to which a holder of one such
security would have been entitled upon such consolidation or merger, without any
change in, or payment in addition to, the Warrant Price in effect immediately
prior to such merger or consolidation, and the Company shall take such steps in
connection with such consolidation or merger as may be necessary to assure that
all the provisions of the Unit Warrants shall thereafter be applicable, as
nearly as reasonably may be in relation to any securities on property thereafter
deliverable upon the exercise of the Unit Warrants.
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<PAGE>
(d) Upon the happening of any event requiring an adjustment of the Warrant
Price hereunder, the Company shall forthwith give written notice thereof to each
registered holder of the Unit Warrants stating the adjusted Warrant Price and
the adjusted number of securities purchasable upon the exercise thereof
resulting from such event, and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The certificate
of the Company's independent public accountant shall be conclusive evidence of
the correctness of any computation made hereunder.
Section 11. Fractional Interest. The Company shall not be required to issue
fractions of Common Shares on the exercise of the Unit Warrants. If any fraction
of a Common Share would, except for the provisions of this Section, be issuable
on the exercise of any Unit Warrant (or specified portions thereof), the Company
shall purchase such fraction for an amount in cash equal to the current market
value of such fraction based upon the current market price of the Common Share
determined in the manner set forth below. For purposes of this Section 11, the
current market price on each day shall be the average of the last reported bid
and asked price, regular way, or, in case no reported sale takes place on such
day, the average of the reported closing bid and asked prices on the last day
that trading occurred, regular way, in either case on any national securities
exchange on which the Common Shares are listed or admitted to trading, or, if
the Common Shares are not listed or admitted to trading on any such exchange,
the average of the bid and asked price on such day as reported on NASDAQ, or if
such shares are not then listed on NASDAQ, as reported by National Quotation
Bureau Incorporated or any similar organization selected from time to time by
the Company for such purpose. All calculations under this Section 11 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be.
Section 12. Notice to Unit Warrant Holders.
(a) Upon any adjustment of the Warrant Price and the number of shares
issuable on exercise of a Unit Warrant, then and in each such case the Company
shall give written notice thereof to the Warrant Agent, which notice shall state
the Warrant Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon the exercise of a
Unit Warrant, setting forth in reasonable detail the method of calculation and
the facts upon which such calculation is based. The Company shall also publish
such notice once in an Authorized Newspaper. For the purposes of this agreement,
an Authorized Newspaper shall mean a newspaper customarily published on each
business day, in one or more morning editions or one or more evening editions,
or both (and whether or not it shall be published in Saturday and Sunday
editions or on holidays), printed in the English language and of general
circulation in the Borough of Manhattan, City and State of New York. Failure to
give or publish such notice, or any defect therein, shall not affect the
legality or validity of the subject adjustments.
(b) In case at any time:
(i) the Company shall pay any dividends payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends)
to the holders of its Common Stock;
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<PAGE>
(ii) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights;
(iii) there shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company
with, or sale of all or substantially all of its assets to, another
corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation, or winding up of the Company; then, in any one or more of such
cases, the Company shall give written notice to all Unit Warrant holders of
record and publish the same in the manner set forth in Section 12(a) hereof
on the date on which (A) the books of the Company shall close or a record
shall be taken for such dividend, distribution, or subscription rights, or
(B) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding up shall take place, as the case may
be. Such notice shall also specify the date as of which the holders of
Common Stock of record shall participate in such dividend, distribution, or
subscription rights, or shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, and such notice shall be
given and published at least 20 days prior to the action in question and
not less than 20 days prior to the record date or the date on which the
Company's transfer books are closed in respect thereof. Failure to give or
publish such notice, or any defect therein, shall not affect the legality
or validity of any of the matters set forth in this Section 12 inclusive.
Section 13. Disposition of Proceeds upon Exercise of the Unit Warrants.
(a) The Warrant Agent shall account promptly to the Company with respect to
the Unit Warrants exercised and shall have deposited concurrently in a special
account in a bank designated by the Company for the benefit of the Company all
moneys received by the Warrant Agent for the purchase of Common Stock through
the exercise of such Unit Warrants.
(b) The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Unit Warrants during normal business hours.
Section 14. Merger, Consolidation or Change of Name of Warrant Agent. Any
corporation or company which may succeed to the business of the Warrant Agent by
any merger, consolidation or otherwise to which the Warrant Agent shall be a
party, or any corporation or Company succeeding to the corporate trust business
of the Warrant Agent, shall be the successor to the Warrant Agent hereunder
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 16 of
this Agreement. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, any of the Unit Warrants shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the counter-signature of the original Warrant Agent and deliver
such Unit Warrants so countersigned; and in case at that time
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<PAGE>
any of the Unit Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Unit Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Unit Warrants shall have the full force provided in the Unit
Warrants and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Unit Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Unit Warrants so countersigned; and in case at that time any of the
Unit Warrants shall not have been countersigned, the Warrant Agent may
countersign such Unit Warrants either in its previous name or in its changed
name; and in all such cases such Unit Warrants shall have the full force
provided in the Warrant Agreement and in this Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of the Unit Warrants, by
their acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained herein and in the Unit
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Unit
Warrants except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Agreement to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company) and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Unit Warrant
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Unit Warrant for any action taken in reliance on
any notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Agreement except as a result of the Warrant
Agent's negligence, willful misconduct, or bad faith.
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<PAGE>
(f) The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more registered holders of the Unit Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under the Unit Warrants may be enforced by the
Warrant Agent without the possession of any of the Unit Warrants or the
production thereof at any trial or other proceeding relative thereto, and any
such action, suit or proceeding instituted by the Warrant Agent shall be brought
in its name as Warrant Agent, and any recovery of judgment shall be for the
ratable benefit of the registered holders of the Unit Warrants, as their
respective rights or interests may appear.
(g) The Warrant Agent and any stockholder, director, officer, partner or
employee of the Warrant Agent may buy, sell or deal in any of the Unit Warrants
or other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own negligence, willful misconduct or bad faith.
(i) The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct, provided reasonable care had been exercised in
the selection and continued employment thereof.
(j) Any request, direction, election, order or demand of the Company shall
be sufficiently evidenced by an instrument signed in the name of the Company by
its President or a Vice President or its Secretary or an Assistant Secretary or
its Treasurer or an Assistant Treasurer (unless other evidence in respect
thereof be herein specifically prescribed); and any resolution of the Board of
Directors may be evidenced to the Warrant Agent by a copy thereof certified by
the Secretary or Assistant Secretary of the Company.
Section 16. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and to the holders of the Unit Warrants notice by mailing such
notice to the holders at their addresses appearing on the Unit Warrant register,
of such resignation, specifying a date when such resignation shall take effect.
The Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and by like mailing of notice to the holders of the Unit Warrants. If
the Warrant Agent shall resign or be removed or shall
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otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent. If the Company shall fail to make such appointment within a
period of thirty days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent or by the registered holder of a Unit Warrant (who shall, with
such notice, submit his Unit Warrant for inspection by the Company), then the
registered holder of any Unit Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor warrant agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under the laws
of the State of New York or of the United States of America. After appointment,
the successor warrant agent shall be vested with the same powers, rights, dudes
and responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor warrant agent all cancelled Unit Warrants, records and property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Failure to file or mail any
notice provided for in this Section, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor warrant agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the appointment of
any Transfer Agent for the Common Shares or of any subsequent transfer agent for
the Common Shares or other shares of the Company's capital stock issuable upon
the exercise of the rights of purchase represented by the Unit Warrants, the
Company will file with the Warrant Agent a statement setting forth the name and
address of such Transfer Agent.
Section 18. Notices. Any notice pursuant to this Agreement to be given or
made by the Warrant Agent or by the registered holder of any Unit Warrant to or
on the Company shall be sufficiently given or made if sent by first class mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent) as follows: Strategic Acquisitions, Inc., c/o
Victor Edwin Stewart, Esq., 220 East 65th Street, Suite 6M, New York, New York
10021.
Section 19. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of the Unit Warrants in order to cure an ambiguity or to correct or
supplement any provisions contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Unit Warrants and which shall not
adversely affect the interests of the holders of the Unit Warrants.
10
<PAGE>
Section 20. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
Section 21. New York Contract. This Agreement and each Unit Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and for all purposes shall be construed in accordance with the laws of
the State of New York.
Section 22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than the Company, the Warrant
Agent and the registered holders of the Unit Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Unit Warrants.
Section 23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
STRATEGIC ACQUISTIONS, INC.
[Corporate Seal]
By: /s/ Richard S. Kaye
-----------------------
Authorized Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
/s/ American Stock Transfer & Trust Company
[Corporate Seal]
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<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1998 DEC-31-1999
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