UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 29, 2008
AEGEAN EARTH AND MARINE CORPORATION
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(Exact name of registrant as specified in its charter)
Cayman Islands 000-52136 N/A
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(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
c/o Nautilus Global Partners
700 Gemini, Suite 100
Houston, TX 77027
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(Address of Principal Executive Offices/Zip Code)
(281) 488-3883
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(Registrant's telephone number, including area code)
Tiger Growth Corporation
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions (see General
Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the
Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the
Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(B))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c))
under the Exchange Act (17 CFR 240.13e-4(c))
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CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
This Current Report on Form 8-K (the "Current Report")
contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities
Act"), Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and the Private Securities
Litigation Reform Act of 1995. Forward-looking statements
reflect the current view about future events and financial
performance based on certain assumptions. They include opinions,
forecasts, projections, guidance, expectations, beliefs or other
statements that are not statements of historical fact. In some
cases, forward-looking statements can be identified by words such
as "may", "can", "will", "should", "could", "expects", "hopes",
"believes", "plans", "anticipates", "estimates", "predicts",
"projects", "potential", "intends", "approximates" or the
negative or other variation of such terms and other comparable
expressions.
Forward-looking statements in this Current Report may
include statements about:
* future financial and operating results, including projections of
revenues, income, expenditures, cash balances and other financial
items;
* capital requirements and the need for additional financing;
* acquisitions;
* our beliefs and opinions about our potential markets;
* growth, expansion and acquisition and development strategies;
* current and future economic and political conditions in
Greece and elsewhere;
* competition;
* potential increase in demand for infrastructure construction;
* current and future global economic and political conditions;
* other assumptions described in this Current Report
underlying or relating to any forward-looking statements.
The forward-looking statements in this Current Report are only
predictions. Actual results could and likely will differ
materially from these forward-looking statements for many
reasons, including the risks described under "Risk Factors" and
elsewhere in this Current Report. No guarantee about future
results, performance or achievements can be made. These forward-
looking statements are made only as of the date hereof, and we
undertake no obligation to update or revise the forward-looking
statements, whether as a result of new information, future events
or otherwise. The safe harbors for forward-looking statements
provided by the Private Securities Litigation Reform Act are
unavailable to issuers of "penny stock". Our shares may be
considered a penny stock and, as a result, the safe harbors may
not be available to us.
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Item 1.01 Entry into a Material Definitive Agreement.
Reference is made to the disclosure made under Item 2.01 of
this Current Report on Form 8-K, which is incorporated herein by
reference.
Item 2.01 Completion of Acquisition or Disposition of Assets.
On February 29, 2008, Aegean Earth & Marine Corporation
(formerly known as Tiger Growth Corporation), a Cayman Islands
corporation (the "Registrant") acquired (the "Acquisition") all
of the outstanding capital stock of Aegean Earth, S.A., a company
organized under the laws of Greece ("Aegean Earth"), from Joseph
Clancy and Konstantinos Polites, the sole stockholders of Aegean
Earth (the "Aegean Earth Shareholders") pursuant to an
Acquisition Agreement dated as of February 29, 2008 (the
"Acquisition Agreement"), by and among the Registrant, Aegean
Earth and the Aegean Earth Shareholders. Effective at the
closing of the Acquisition (the "Acquisition Closing") (i) Aegean
Earth became a wholly-owned subsidiary of the Registrant and (ii)
the Aegean Earth Shareholders became shareholders of the
Registrant. See "Description of the Acquisition Agreement."
In the Acquisition and pursuant to the Acquisition
Agreement, the Registrant issued to each of the Aegean Earth
Shareholders 250,000 (500,000 in the aggregate) ordinary shares,
$0.00064 par value per share (the "Ordinary Shares"), in exchange
for all of their capital stock in Aegean Earth. The Ordinary
Shares issued in the Acquisition were issued pursuant to the
exemptions from the registration requirements of the Securities
Act provided under Section 4(2) of the Act and Rule 506
promulgated thereunder.
Simultaneously with the Acquisition Closing, the Registrant
sold (the "Offering") in a private offering made solely to
accredited investors three thousand eight hundred and sixty five
(3,865) units (the "Units") at a purchase price of $1,500 per
Unit for aggregate gross proceeds of approximately $5,797,500.
Each Unit consisted of 500 shares of the Registrant's Series A
Convertible Preference Shares, par value $0.00064 ("Series A
Preference Shares") and 500 Ordinary Shares (1,932,500 Series A
Preference Shares and 1,932,500 Ordinary Shares in the
aggregate). The Series A Preference Shares and Ordinary Shares
sold in the Offering were issued pursuant to the exemptions from
the registration requirements of the Securities Act provided
under Section 4(2) of the Securities Act and Rule 506 promulgated
thereunder.
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FORM 10 DISCLOSURE
ITEM 2.01(F) OF FORM 8-K STATES THAT IF THE REGISTRANT WAS A
"SHELL" COMPANY IMMEDIATELY BEFORE A TRANSACTION THAT RESULTS IN
THE REGISTRANT NOT BEING DEEMED A SHELL COMPANY FOLLOWING THE
TRANSACTION, THEN THE REGISTRANT MUST DISCLOSE IN A CURRENT
REPORT ON FORM 8-K THE INFORMATION THAT WOULD BE REQUIRED IF THE
REGISTRANT WERE FILING A GENERAL FORM FOR REGISTRATION OF
SECURITIES ON FORM 10. ACCORDINGLY, THIS CURRENT REPORT ON FORM 8-
K INCLUDES SUBSTANTIALLY ALL OF THE INFORMATION THAT WOULD BE
INCLUDED IN A FORM 10.
Unless otherwise indicated or the context otherwise
requires, all references below in this Current Report on Form 8-K
to "we," "us" and the "Company" shall to refer to the post-
Acquisition combined entity of (i) the Registrant, and (ii)
Aegean Earth. All references herein to the "Registrant" shall
mean the Registrant prior to the Acquisition. All references
herein to "Aegean Earth" shall mean Aegean Earth, S.A. prior to
its acquisition by the Registrant in the Acquisition.
The Company will continue to be a "smaller reporting
company," as defined under the Exchange Act, following the
Acquisition.
The Company
General
Prior to the Acquisition, the Registrant had no material
assets and/or operations. The Registrant was organized under the
laws of the Cayman Islands on March 10, 2006, and prior to the
Acquisition Closing, the Registrant had not generated revenues
and its operations consisted solely of attempting to identify,
investigate and conduct due diligence on potential businesses for
acquisition. The Registrant filed a registration statement on
Form 10 with the Securities and Exchange Commission (the
"Commission") to register its Ordinary Shares under Section 12(g)
of the Exchange Act and it files periodic reports with the
Commission pursuant to the Exchange Act. Copies of such reports,
along with the Registrant's registration statement on Form 10 are
available on the Commission's web site. There is no trading
market for the Ordinary Shares. In July 2007, shareholders of the
Registrant approved a name change of the Registrant from "Tiger
Growth Corporation" to "Aegean Earth & Marine Corporation."
Aegean Earth was formed in July 2007, for the purpose of
engaging in construction in Greece and surrounding countries.
Upon completion of the Acquisition, Aegean Earth became a wholly-
owned subsidiary of the Registrant and the business of the
Registrant became that of Aegean Earth.
Proposed Business Plan
The focus of the Company is to participate in the
construction and development business for, among other projects,
the direct contracting or joint venturing in the construction and
development of real estate projects, roads, utility structures,
commercial buildings, and other related facilities.
The Company's business plan contemplates the Company
pursuing and completing construction projects in Greece and other
parts of Southern and Eastern Europe, either alone or by forming
joint ventures with other companies. The Company also intends to
be active in acquiring complimentary companies to increase
project opportunities and revenue. The Company is actively
pursuing construction opportunities both in the private and
public sectors throughout the Mediterranean, Middle East, and
Northern Africa regions. The Company is actively pursuing the
acquisition of one company which the Company believes will be
completed in the second or third quarter of 2008, provided,
however, that no assurance can be given that such acquisition
will be completed by then or at all.
The Company intends to take advantage of what it perceives
to be an increase in the demand for construction in the
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Mediterranean and Balkan countries. The Company has, entered
into a consulting contract with a former president of a Greek
construction company who has over 25 years of experience in the
construction industry, and has experience in performing a variety
of types of construction projects, including highways, commercial
buildings, bridges and tunnels, airports and marinas. In
addition, Mr. Clancy, the Managing Director of Aegean Earth who
became an officer of the Company following the Acquisition, has
prior experience in the negotiation and development of
construction projects in the residential, commercial, and
industrial sectors over the past 30 years.
The Company believes that there is strong opportunity in
construction in the Mediterranean and Balkan countries. In
Greece, where Aegean Earth is headquartered, a number of
governmental initiatives have been announced that the Company
believes will increase potential construction and development in
Greece. In 2007, it was announced by the European Union that a
series of infrastructure improvements have been planned,
including the development of further upgrades of highways and the
rail network, that are partially being financed by EUR24 billion
funding which has been allocated to Greece from the European
Union for the period from 2007 to 2013. The Company intends to
focus a significant portion of its efforts in obtaining contracts
and thereafter providing the construction and other services for
these projects. The Greek government has made an effort to
promote tourism, spending over $55 million in the promotion of
tourism in 2006 alone, which resulted in an increase in tourism
of over 10% in 2006 as compared to the previous year. The
Company believes that this increase in tourism will continue, and
could result in the need for additional hotels and marinas to be
built, resulting in additional opportunities for the Company. In
the surrounding states of Bulgaria and Romania, the European
Union has designated over EUR22 billion in grant money for the
purpose of structural improvements, primarily in the
environmental and infrastructure areas. The Company is actively
working with existing suppliers, managers, operators and property
owners in pursuing this lucrative area of business. The Company
has identified four (4) areas in which current market indicators
support additional marina development which includes attendant
commercial support facilities such as hotels, casinos,
restaurants and luxury shopping areas.
Proposed Acquisition
One of the Company's intended methods of growth is through
the acquisition of complimentary construction, engineering, or
development companies in Greece and elsewhere in Europe. The
Company has begun the process of identifying a number of
acquisition targets that will potentially allow it to generate
immediate revenue through existing projects.
The Company has identified and entered into a Memorandum of
Understanding (the "Memorandum") with one such potential
acquisition candidate, a Greek construction company that is
currently the subject of a bankruptcy proceeding under the laws
of Greece. The proposed acquisition and the Memorandum are both
subject to, among other conditions, the prior approval of the
Greek courts and there can be no assurances when, if ever, such
proposed acquisition will be completed. See "Proposed
Acquisition."
Employees
As of February 29, 2008, the Company had four employees, two
of which are full time.
Competition
The real estate construction, engineering and development
business in the areas that the Company contemplates doing
business in is highly competitive and the Company believes that
competition will increase substantially as more grant money from
Greece, the European Union and/or other countries becomes
available for infrastructure and development in the Mediterranean
and Balkan countries. The Company is aware of a number of larger
international construction companies along with well established
local construction and engineering firms that are currently
contemplating developments (and others that are actively engaged
in construction). Such competitors have greater financial,
personnel and other resources and more extensive experience in
the development/engineering/construction business than the
Company. See "Risk Factors."
4
Properties
The Company does not own or rent any property. The Company
utilizes office space and office equipment of its officers and
directors at no cost.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
The Registrant was formed on March 10, 2006 ("Inception")
solely for the purpose of identifying and entering into a
business combination with a privately held business or company,
domiciled and operating in an emerging market. On February 29,
2008, the Registrant completed the Acquisition of Aegean Earth
pursuant to the Acquisition Agreement. Effective at the
Acquisition Closing, (i) Aegean Earth became a wholly-owned
subsidiary of the Registrant and (ii) the Aegean Earth
Shareholders became shareholders of the Registrant.
Plan of Operation
Prior to the Acquisition, the Registrant had not engaged in
any business activities that generate revenue and its activities
prior to the Acquisition had been primarily focused upon our
formation and raising capital. Subsequent to the Acquisition,
the Registrant's business became that of Aegean Earth.
The following information relates to the Registrant prior to its
acquisition of Aegean Earth:
Period from Inception through December 31, 2006
Because we had no revenue generating business operations,
for the period from Inception to December 31, 2006, we had no
revenues during the period of Inception through December 31,
2006. Total expenses for the period from Inception to December
31, 2006 were $26,374. These expenses constituted professional
and filing fees.
Comparison of the nine months ending September 30, 2007 and 2006
Because we had no revenue generating business operations
prior to the Acquisition, we had no revenues during the nine
months ended September 30, 2007 or September 30, 2006. Total
expenses for the nine months ended September 30, 2007 were
$5,551, compared with $20,953 for the nine months ended September
30, 2006. The decrease in expenses is primarily related to non-
recurring expenses related to the formation of the Company during
2006. The expenses incurred for 2007 primarily constituted
professional and filing fees.
Liquidity and Capital Resources
As of September 30, 2007, we had current liabilities of
$5,228 to a related party and $2,169 to unrelated parties. In
November 2007, we borrowed $300,000 from Access America Fund, an
affiliate of the Company ("AAF"), , as evidenced by 6%
convertible promissory notes in the aggregate principal amount of
$300,000 (the "Bridge Notes"). We also assumed the notes issued
by Aegean Earth S.A.to AAF in the amount of approximately $90,000
in November 2007 (the "Assumed Notes". We used the proceeds of
the loan to fund the working capital requirements of Aegean Earth
prior to the Acquisition. The Bridge Notes, along with the
Assumed Notes are payable on demand by the holder thereof and are
convertible at any time and from time to time into approximately
2,500,000 Ordinary Shares.
In connection with the initial Closing of the Offering, we
received gross proceeds of $5.8 million. We expect that the
remaining net proceeds from the initial Closing of the Offering
and cash flows from operations will be sufficient to pay our
existing obligations and obligations as they arise for the next
twelve months. However, if such net proceeds are used to effect
an acquisition or for some other reason, we may require
additional capital sooner than expected. There can be no
assurance that additional capital will be available on terms
acceptable to the Company if at all.
6
Off Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future
material effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.
RISK FACTORS
The following risks and uncertainties and all other information
contained or referred to in this Current Report on Form 8-K
should be carefully analyzed and considered by persons interested
and/or contemplating an investment in any securities of the
Company prior to making any such investment. The risks and
uncertainties described below are not the only ones facing us.
Additional risks and uncertainties that we are unaware of, or
that we currently deem immaterial, also may become important
factors that affect us. If any of the following risks occur, our
business, financial condition or results of operations could be
materially and adversely affected. In that case, the value (and
the trading price of our securities, if any of such securities
ever become eligible and/or actually trade and/or are quoted) of
any of our securities could decline, and you could lose all of
your investment.
Risks Related to the Company and Our Proposed Business
The Company and its wholly owned subsidiary Aegean Earth are
development-stage, start-up companies with no operating
histories, which makes it difficult to evaluate our existing
business and business prospects and increases the risk that the
value of any investment in the Company will decline.
The Registrant was founded in 2006 and Aegean Earth was
founded in 2007. Neither the Registrant nor Aegean Earth has any
operating history. The Company is wholly dependent on the net
proceeds it received in the Offering to begin to implement its
business plan. The Company has no revenue and will not be able
to generate revenue unless and until it generates construction
projects and/or acquires entities that are received and/or
construction projects.
We may require additional capital to pursue our business plan.
The Company received approximately $5.8MM of gross proceeds
of the Offering. The Company may not be able to execute its
current business plan and fund business operations long enough to
achieve profitability without obtaining additional capital. The
Bridge Notes are due on demand. To date no demand has been made.
Moreover, if the Bridge Notes are not converted to Ordinary
Shares and the Company is required to repay the Bridge Notes,
this would reduce the funds available to the Company and
accelerate the need for additional capital. The Company intends
to utilize its current working capital to effectuate acquisitions
and bid on smaller projects until revenues are generated, however
it may need to raise additional capital to fully complete its
business plan or obtain material contracts and/or complete one or
more strategic acquisitions. There can be no assurance that
additional funds will be available when and if needed from any
source or, if available, will be available on terms that are
acceptable to the Company. The Company may be required to pursue
sources of additional capital through various means, including
joint venture projects and debt or equity financings. Future
financings through equity investments are likely to be dilutive
to existing stockholders. Also, the terms of securities the
Company may issue in future capital transactions may be more
favorable for our subsequent investors. Newly issued securities
may include preferences, superior voting rights, or be issued
with warrants or other derivative securities, which may have
additional dilutive effects. Further, the Company may incur
7
substantial costs in pursuing future capital and/or financing,
including investment banking fees, legal fees, accounting fees,
printing and distribution expenses and other costs. The
Company's ability to obtain needed financing may be impaired by
such factors as the capital markets, its Ordinary Shares are
neither quoted and/or traded and that the Company is not
profitable, which could impact the availability or cost of future
financings. If the amount of capital the Company is able to raise
from financing activities, together with its revenue from
operations, is not sufficient to satisfy its capital needs, the
Company may be required to reduce or cease operations.
An integral part of the Company's Business Plan involves
acquisitions which may or may not be completed.
The Company intends to utilize acquisitions as part of its
business strategy to enter into the construction market in Greece
and abroad. These acquisitions may include the acquisition of
operating licenses that are necessary for the Company to
participate in certain types of projects. The Company has
entered into a Memorandum of Understanding regarding the
potential acquisition by the Company of a Greek construction
company that is the subject of bankruptcy proceedings under the
laws of Greece. There can be no assurances that the Company will
complete the proposed acquisition, the terms thereof or that the
Company will be able to complete any acquisitions of other
companies. The failure by the Company to complete an acquisition
could have a material adverse effect on the Company.
Our success will be dependent upon our ability to successfully
bid on and timely complete construction projects which involves a
high degree of risk. .
The construction business is subject to substantial risks,
including, but not limited to, the ability to successfully bid
on, and be awarded favorable potential construction projects.
Further, if we are successful in bidding on construction
projects, our ability to complete such construction projects are
subject to a number of additional risks, including, but not
limited to, availability and timely receipt of zoning and other
regulatory approvals, available capital, available labor,
compliance with local laws, and the ability to obtain financing
on favorable terms. These risks could result in substantial
unanticipated delays or expenses and, under certain
circumstances, could prevent the start and/or the completion of
construction activities once undertaken, any one of which could
have a material adverse effect on the Company and its results of
operations.
The construction business is subject to a number of risks outside
of our control.
The construction industry is highly cyclical by nature and
future market conditions are uncertain. Factors beyond our
control can affect our business. Factors which could adversely
affect the construction industry, many of which will be beyond
our control, include, but are not limited to:
* the availability and cost of financing for our customers;
* unfavorable interest rates and increases in inflation;
* overbuilding or decreases in demand;
* changes in national, regional and local economic
conditions;
* cost overruns, inclement weather, and labor and material
shortages;
* the impact of present or future environmental
legislation, zoning laws and other regulations;
* availability, delays and costs associated with obtaining
permits, approvals or licenses necessary to develop property;
* increases in taxes or fees;
* local law; and
* available labor and negotiations with unions.
Although we have not commenced any construction projections to
date, if we do, we may experience shortages of building supplies
and labor, resulting mainly from circumstances beyond our
control, which could cause delays and increase costs of
completing construction projects, which may adversely affect our
operating results.
8
Our ability to successfully complete construction projects
may be affected by circumstances beyond our control, including:
* shortages or increases in prices of construction
materials;
* natural disasters in the areas in which we operate;
* work stoppages, labor disputes and shortages of
qualified trades people, such as carpenters, roofers,
electricians and plumbers;
* lack of availability of adequate utility infrastructure
and services; and
* our need to rely on local subcontractors who may not be
adequately capitalized or insured.
Any of these circumstances could give rise to delays in the
start or completion of, or increase the cost of, a construction
projects. We anticipate competing with other construction
companies for labor as well as raw materials, who may be better
financed than us. Increasing global demand for construction
materials, as well as increases in fuel and commodity prices have
resulted in significantly higher prices of most building
materials, including lumber, drywall, steel, concrete, roofing
materials, pipe and asphalt. In addition, local materials
suppliers may limit the allocation of their products to their
existing customers, which could cause us to have to obtain
materials from other suppliers, which could further increase our
costs.
Product liability litigation and claims that may arise in the
ordinary course of our proposed business may be costly and could
negatively impact our reputation, which could adversely affect
our proposed business.
Our proposed construction business is subject to
construction defect and product liability claims arising in the
ordinary course of business. These claims are ordinary in the
construction industry and can be costly. Among the claims for
which developers and builders have financial exposure are mold-
related property damage and bodily injury claims. Damages awarded
under these suits may include the costs of remediation, loss of
property and health-related bodily injury. In response to
increased litigation, insurance underwriters have attempted to
limit their risk by excluding coverage for certain claims
associated with pollution and product and workmanship defects. We
may be at risk of loss for bodily injury claims in amounts that
exceed available limits on our comprehensive general liability
policies. In addition, the costs of insuring against construction
defect and product liability claims, if applicable, are high and
the amount of coverage offered by insurance companies is also
currently limited. There can be no assurance we will be able to
obtain insurance or if obtained, that the coverage will not be
restricted and become more costly. If we are not able to obtain
adequate insurance, we may experience losses that could
negatively impact our proposed business.
We are subject to governmental regulations that may limit our
operations, increase our expenses or subject us to liability.
We may be subject to Greek (as well as those of other
countries where we do business and the EEU) laws, ordinances and
regulations concerning, among other things:
* environmental matters, including the presence of hazardous
or toxic substances;
* wetland preservation;
* health and safety;
* zoning, land use and other entitlements;
* building design, and
* density levels.
In developing any project, we may be required to obtain the
approval of numerous Greek governmental authorities (and others)
regulating matters such as:
9
* installation of utility services such as gas, electric,
water and waste disposal;
* the dedication of acreage for open space, parks and
schools;
* permitted land uses, and
* the construction design, methods and materials used.
We may also at times not be in compliance with all
regulatory requirements. If we are not in compliance with
regulatory requirements, we may be subject to penalties or we may
be forced to incur significant expenses to cure any
noncompliance. In addition, some of our land we may acquire may
not have received planning approvals or entitlements necessary
for planned or future development. Failure to obtain entitlements
necessary for development on a timely basis or to the extent
desired would adversely affect our proposed business.
Increased insurance risk could negatively affect our business
Insurance and surety companies may take actions that could
negatively affect our proposed business, including increasing
insurance premiums, requiring higher self-insured retentions and
deductibles, requiring additional collateral or covenants on
surety bonds, reducing limits, restricting coverages, imposing
exclusions, and refusing to underwrite certain risks and classes
of business. Any of these would adversely affect our ability to
obtain appropriate insurance coverage at reasonable costs which
would have a material adverse effect on our proposed business.
Need to have a certain key management personnel.
Our future success depends, to a significant degree, on our
ability to hire and keep key management. No assurances can be
given whether we will be able to employ and/or keep key
management personnel to execute our business plan. Failure to
hire and/or keep key management would adversely affect our
proposed operations.
The construction industry is highly competitive.
We believe we will be subjected to significant competition
from other entities engaged in the business of commercial and
infrastructure construction. Some of the world's most recognized
construction and engineering firms operate in Greece and the
surrounding countries. Many of these companies possess
significantly greater financial, marketing and other resources
than we do. Moreover, as (and if) additional governmental
funding becomes available and if the construction business
becomes more lucrative, other entities may elect to engage in
such business, which entities would also then compete with the
Company.
Risks related to doing business overseas.
Some of our Officers and Directors will be residents Outside of
the U.S.; Potential Unenforceability of Civil Liabilities and
Judgments
We believe some of our officers and directors will be
residents of countries other than the United States, and all of
our assets are located outside the United States. As a result,
it may not be possible for investors to effect service of process
within the United States upon such persons or enforce in the
United States against such persons judgments obtained in United
States courts, including judgments predicated upon the civil
liability provisions of United States federal securities laws or
state securities laws.
You may not be able to enforce your claims in the Cayman Islands
or Greece.
We are a Cayman Islands corporation and Aegean Earth is a
Greek company. We cannot assure you that a Cayman Islands or
Greek court would deem the enforcement of foreign judgments
requiring us to make payments outside of the Cayman Islands or
Greece to be contrary to the Cayman Islands or Greek public
policy and/or enforceable.
10
Risks Related to our Ordinary Shares
If the Company is a controlled foreign corporation, you may be
subject to certain adverse U.S. federal income tax consequences.
Under Section 951(a) of the Internal Revenue Code (the
"Code"), each "United States shareholder" of a "controlled
foreign corporation" ("CFC") must include in its gross income for
U.S. federal income tax purposes its pro rata share of the CFC's
"subpart F income," even if no income is actually distributed to
the "United States shareholder." In addition, gain on the sale of
stock in a CFC realized by a "United States shareholder" is
treated as ordinary income, potentially eligible for the reduced
tax rate applicable to certain dividends, to the extent of such
shareholder's proportionate share of the CFC's undistributed
earnings and profits accumulated during such shareholder's
holding period for the stock. Section 951(b) of the Code defines
a "United States shareholder" as any U.S. corporation, citizen,
resident or other U.S. person who owns (directly or through
certain deemed ownership rules) 10% or more of the total combined
voting power of all classes of stock of a foreign corporation. In
general, a foreign corporation is treated as a CFC only if such
"United States shareholders" collectively own more than 50% of
the total combined voting power or total value of the foreign
corporation's stock. There can be no assurance that the Company
will not become a CFC in the future. If the Company is treated
as a CFC, the Company's status as a CFC should have no adverse
effect on any shareholder of the Company that is not a "United
States shareholder."
Passive Foreign Investment Company Considerations
Special adverse U.S. federal income tax rules apply to U.S.
holders of equity interests in a non-U.S. corporation classified
as a "passive foreign investment company" ("PFIC"). These rules
apply to direct and indirect distributions received by U.S.
shareholders with respect to, and direct and indirect sales,
exchanges and other dispositions, including pledges, of shares of
stock of, a PFIC. A foreign corporation will be treated as a
PFIC for any taxable year if at least 75% of its gross income
(including a pro rata share of the gross income of any company in
which the Company is considered to own twenty five (25) percent
or more of the shares by value) for the taxable year is passive
income or at least 50% of its gross assets (including a pro rata
share of the assets of any company of which the Company is
considered to own twenty five (25) percent or more of the shares
by value) during the taxable year, based on a quarterly average
of the assets by value, produce, or are held for the production
of, passive income.
The Company believes that it will not be a PFIC for its
current taxable year and does not anticipate becoming a PFIC in
future taxable years. A foreign corporation's status as a PFIC,
however, is a factual determination that is made annually, and
thus may be subject to change. If the Company were a PFIC in any
taxable year, each U.S. holder, in the absence of an election by
such holder to treat the Company as a "qualified electing fund"
(a "QEF Election") would, upon certain distributions by the
Company or upon disposition of the Equity Shares (possibly
including a disposition by way of gift or exchange in a corporate
reorganization, or the grant of the stock as security for a loan)
at a gain, be liable to pay U.S. federal income tax at the
highest tax rate on ordinary income in effect for each period to
which the income is allocated plus interest on the tax, as if the
distribution or gain and deem recognized ratably over the U.S.
holder's holding period for the Equity Shares while the Company
was a PFIC. Additionally, the Equity Shares of a decedent U.S.
holder who failed to make a QEF Election will generally be denied
the normally available step-up of the tax basis for such Equity
Shares to fair market value at the date of death and, instead,
would have a tax basis equal to the decedent's tax basis, if
lower, in the Equity Shares. U.S. holders should consult their
tax advisers on the consequences of an investment in Equity
Shares if the Company were treated as a PFIC.
There is presently no market for our Ordinary Shares.
There is no market for our Ordinary Shares or any of our
other securities. Although we may in the future apply to have
our Ordinary Shares quoted on the Pink Sheets, the Over-The-
Counter Bulletin Board (the "OTCBB") or another trading and/or
quotation medium, there can be no assurance as to when or if our
11
Ordinary Shares will become traded and/or quoted on any trading
medium. Even if our Ordinary Shares are quoted on a trading
medium, there can be no assurance that an active trading market
will develop for such shares. If an active trading market does
not develop or continue, you will have limited liquidity and may
be forced to hold your investment in the Company for an
indefinite period of time.
If our Ordinary Shares are traded and/or quoted, we expect that
the shares will be subject to the "penny stock" rules for the
foreseeable future.
We expect that our Ordinary Shares, if traded and/or quoted,
will be subject to the Commission's "penny stock" rules. Penny
stocks generally are equity securities with a price of less than
$5.00. The penny stock rules require broker-dealers to deliver a
standardized risk disclosure document prepared by the Commission
which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer must
also provide the customer with current bid and offer quotations
for the penny stock, the compensation of the broker-dealer and
its salesperson, and monthly account statements showing the
market value of each penny stock held in the customer's account.
The bid and offer quotations, and the broker-dealer and
salesperson compensation information must be given to the
customer orally or in writing prior to completing the transaction
and must be given to the customer in writing before or with the
customer's confirmation. In addition, the penny stock rules
require that prior to a transaction, the broker and/or dealer
must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. The penny stock
rules are burdensome and may reduce purchases of any offerings
and reduce the trading activity for the common stock. As long as
the common stock is subject to the penny stock rules, the holders
of its shares may find it more difficult to sell their
securities.
The Company has never declared or paid dividends on its Ordinary
Shares and the Company does not currently anticipate paying any
cash dividends in the foreseeable future.
The Company has never declared or paid dividends on its
Ordinary Shares and the Company does not currently anticipate
paying any cash dividends in the foreseeable future. The Company
currently intends to retain future earnings, if any, to fund the
development and growth of its business. Except for the rights of
holders of the Series A Preference Shares to receive dividends,
any future determination to pay dividends on Ordinary Shares will
be at the discretion of the Company's board of directors and will
be dependent upon the Company's financial condition, operating
results, capital requirements, applicable contractual
restrictions and other such factors as the Company's board of
directors may deem relevant.
The concentration of ownership of our Ordinary Shares with
insiders and their affiliates is likely to limit the ability of
other shareholders to influence corporate matters.
Approximately 70% of our outstanding Ordinary Shares are
under the control of insiders of the Company and their
affiliates. As a result, these shareholders will have the
ability to exercise control over all matters requiring approval
by our shareholders, including, but not limited to, the election
of directors and approval of significant corporate transactions.
This concentration of ownership might also have the effect of
delaying or preventing a change in our control that might be
viewed as beneficial by other shareholders or discouraging a
potential acquirer from making an offer to shareholders to
purchase their Ordinary Shares in order to gain control of the
Company. Certain of such persons are also directors and/or
executive officers of the Company.
THE FOREGOING RISK FACTORS DO NOT PURPORT TO BE A COMPLETE
EXPLANATION OF THE RISKS INHERENT IN AN INVESTMENT IN THE
COMPANY. INVESTORS SHOULD CAREFULLY AND FULLY READ AND
UNDERSTAND ALL INFORMATION IN THIS CURRENT REPORT ON FORM 8-K AND
THE EXHIBITS ATTACHED HERETO.
12
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of
February 29, 2008 regarding the beneficial ownership of our
Ordinary Shares by (i) each person who, to our knowledge,
beneficially owns more than 5% of our Ordinary Shares; (ii) each
of our directors and "named executive officers"; and (iii) all of
our executive officers and directors as a group:
Name and address of Beneficial Owner Number of Percent
- ------------------------------------ --------- -------
Shares of Class (1)
------ ------------
Directors and Named Executive Officers(2):
Joseph Clancy (3) 250,000 5.6%
Frank DeLape (4) 5,144,005 71.6
Rizos Krikis -
Joseph Rozelle* -
David Richardson* 78,034 1.8%
All directors and named executive officers
as a group (3 persons) 5,394,005 75.1%
Other 5% or Greater Beneficial Owners
Access America Fund, L.P.(5)
1800 West Loop South
Houston, TX 77027 4,894,005 70.6%
Konstantinos Polites
Tenarou 49
PO Box 73050
Ano Glyfada, 165 62 Greece 250,000 5.6%
* Effective as of the consummation of the Acquisition, Joseph
Rozelle resigned as a director and officer of the Company and
David Richardson resigned as a director of the Company.
(1) Beneficial ownership is calculated based on an aggregate of
4,432,500 Ordinary Shares outstanding as of February 29,
2008. The number of Ordinary Shares outstanding does not
include the Ordinary Shares issuable upon conversion of the
Series A Preference Shares. The Series A Preference Shares
may not be converted to Ordinary Shares until 30 months
after the date of their issuance. See "Description of
Securities." Beneficial ownership is determined in
accordance with Rule 13d-3 of the SEC. The number of shares
beneficially owned by a person includes Ordinary Shares
issuable upon conversion of securities and subject to
options or warrants held by that person that are currently
convertible or exercisable or convertible or exercisable
within 60 days of the date of this Current Report on Form 8-
K. The Ordinary Shares issuable pursuant to those
convertible securities, options or warrants are deemed
outstanding for computing the percentage ownership of the
person holding these options and warrants but are not deemed
outstanding for the purposes of computing the percentage
ownership of any other person. The persons and entities
named in the table have sole voting and sole investment
power with respect to the shares set forth opposite the
stockholder's name, subject to community property laws,
where applicable.
(2) Unless otherwise specified, the address for the directors
and named executive officers is c/o Nautilus Global
Partners, 700 Gemini, Suite 100, Houston, TX 77027.
(3) The address for Mr. Clancy is Tenarou, 49, PO Box 73050,
Ano Glyfada, 165 62 Greece
13
(4) Includes 2,394,005 Ordinary Shares held by Access America
Fund, LLP ("AAF") and 2,500,000 Ordinary Shares issuable to
AAF upon conversion of the Bridge Notes. Such amount does
not include any Ordinary Shares issuable upon conversion of
the Series A Preference Shares owned by AAF and purchased in
the Offering as such Series A Preference Shares are not
convertible within 60 days of the date hereof. Access
America Investments LLC ("AAI") is the general manager of
AAF. Mr. DeLape is the Chairman of AAI and he is also a
control person of Benchmark Equity Group which owns 41.7% of
AAI. Accordingly, Mr. DeLape may be deemed to share
indirect beneficial ownership of the Ordinary Shares held by
AAF. Mr. DeLape, however, expressly disclaims beneficial
ownership of such Ordinary Shares. The amount of Ordinary
Shares also includes 250,000 Ordinary Shares issuable upon
the exercise of stock options, which the Company has agreed
to issue to Mr. DeLape. The exercise terms of such options
have not been determined.
(5) Consists of 2,394,005 Ordinary Shares and 2,500,000 Ordinary
Shares issuable upon conversion of the Bridge Notes.
Excludes (i) all Ordinary Shares issuable upon conversion of
the Series A Preference Shares owned by AAF and purchased in
the Offering as such Series A Preference Shares are not
convertible within 60 days of the date hereof and (ii)
250,000 Ordinary Shares issuable upon the exercise of
options which the Company has agreed to issue to Mr. DeLape.
DIRECTORS AND EXECUTIVE OFFICERS
Prior to the completion of the Acquisition, our Board of
Directors consisted of Joseph Rozelle and Mr. David Richardson.
In connection with the Acquisition Messrs. Rozelle and Richardson
resigned as directors of the Company effective as of the tenth
day following the mailing of to our stockholders of an
Information Statement on Schedule 14f-1. In addition, effective
as of the Acquisition Closing, Mr. DeLape was appointed a
director and Executive Chairman of the Company and Mr. Clancy was
appointed a director of the Company.
Effective as of the Acquisition Closing of the Acquisition,
Mr. Rozelle resigned as the Company's President and Chief
Financial Officer and Mr. Krikis was appointed as Chief Executive
Officer of the Company.
The names of our current officers and directors, as well as
certain information about them are set forth below:
Name Age Position(s)
---- --- -----------
Frank DeLape 53 Executive Chairman and Director
Joseph Clancy 67 Director
Rizos Krikis 43 Chief Financial Officer
Frank DeLape. Director and Executive Chairman - Frank DeLape is a
co-founder of the Company and was appointed a director and the
Executive Chairman of the Company on February 29, 2008. Frank
DeLape is also Chairman and CEO of Benchmark Equity Group, a
company he founded in 1994. Prior to founding Benchmark, Mr.
DeLape spent 11 years in executive management roles managing
turnarounds for various companies. In that regard, he worked on
behalf of such companies' boards of directors or the sponsoring
banks to recapitalize companies to return them to profitability
or to maximize cash repayment through orderly
liquidation. Benchmark provides private equity and debt
financings from various funds as well as a syndicate of
investors. Mr. DeLape was a founder and financier of Think New
Ideas, a NASDAQ NMS listed company, which later sold for over
$300 million. At Benchmark, Mr. DeLape has formed and been
instrumental in the growth of eighteen companies. Of these,
several have become NASDAQ listed, one listed on the American
Stock Exchange, and three were sold, creating in total over
several billion dollars in market value. From August 2001 through
October 2005, Mr. DeLape was Chairman of the Board of the
14
biotechnology company Isolagen, Inc. Over his four years as
Chairman and a major shareholder of Isolagen, Mr. DeLape oversaw
the listing of Isolagen on the American Stock Exchange, and
raising over $194 million in debt and equity financings for the
company. Mr. DeLape is a Director of Polymedix, Inc. since
November 2005 and President, CEO and a director of Influmedix,
Inc. since April 2006. Mr. DeLape is also a director of Anchor
Funding Services since January 2007 and Uni-Pixel, Inc. Both such
corporations file reports under the Exchange Act. The trading
symbol for Uni-Pixel, Inc. on the NASD Bulletin Board is "UNXL".
Since March 2006, Mr. DeLape has also served as the Executive
Chairman of Six Diamond Resorts International, a Cayman Islands
company that he co-founded that files reports under the Exchange
Act. Mr. DeLape is a controlling stockholder of Six Diamond
Resorts International and in October 2007, he was appointed a
director of Six Diamond Resorts International. Mr. DeLape is a
member of the National Association of Corporate Directors.
Joseph Clancy. Director. Mr. Clancy was appointed a director of
the Company on February 29, 2008. Prior thereto, Mr. Clancy was
a Manager of Aegean Earth since its inception in July 2007. Mr.
Clancy is an experienced professional in both private equity and
construction and development. Since June 2006, he has served as
one of the National Representatives of Access America Investments
in Greece and Cyprus. From February 2003 to May 2006, he served
as a consultant/advisor for Vibrant Capital Corporation in New
York, where he oversaw the implementation of a life settlement
acquisition program to secure a bond issued under the securities
laws of Luxembourg and also implemented two private placement
programs of investments in conjunction with that asset class.
Prior thereto, from January 2002 to February 2003 he served as a
Director in Oriri Holdings, SA, of Oslo, Norway, where he oversaw
the implementation of international marketing operations for
content for mobile phones throughout the EU market. Mr. Clancy
has also overseen the construction, master planning, and
development of numerous properties, including an 800 acre mixed
use area in Colorado. He has also served as the Chief Operating
Officer of DiaChi Corporation and Prime Financial Services Group
of London. Mr. Clancy graduated with a B.Sc. in Engineering from
the United States Naval Academy in Annapolis, Maryland. He
served as a Captain in the U.S. Marine Corps from 1963-1967 and
was decorated for valor for his service in Vietnam.
Rizos Krikis. Chief Financial Officer- Mr. Krikis was appointed
Chief Financial Officer of the Company on February 29, 2008. Mr.
Krikis has a number of years of experience in the financial
industry and has served in multiple capacities both in industry
and private equity. From 2004 to 2007, Mr. Krikis was Chief
Financial Officer of Cosmotelco Telecommunications in Greece.
Prior to Cosmotelco, Mr. Krikis was a senior manager for the
Emporiki Private Equity and Venture Capital Fund, where he was
responsible for the initial investment decision and ongoing
monitoring of the Fund's portfolio investment. Mr. Krikis also
was a consultant from the Greek Trade Commission in New York. He
graduated with both his Bachelor's and Master's degrees in
Business Administration from Baruch College in New York, and is
fluent in both English and Greek.
Stock Option Plans
The Company intends to develop a stock option plan for its
executives in the next twelve months.
15
EXECUTIVE COMPENSATION
Compensation discussion and analysis
We did not pay salaries to our former executive officers.
Following the Acquisition, we intend to compensate our executive
officers after a period of time depending upon the progress
toward achieving our business strategy. Our Board of Directors
will determine the compensation given to our executive officers.
We do not have a compensation committee nor do we have any
executive compensation program in place. In addition to base
compensation levels, our Board of Directors will also determine
whether to issue executive officers equity incentives in
consideration for services rendered and/or to award incentive
bonuses which are linked to our performance, as well as to the
individual executive officer's performance. Such awards may also
include long-term stock based compensation to certain executives
which is intended to align the performance of our executives with
our long-term business strategies.
Incentive Bonus
The Board of Directors may grant incentive bonuses to our
executive officers in its sole discretion, if the Board of
Directors believes such bonuses are in the Company's best
interest, after analyzing our current business objectives and
growth, if any, and the amount of revenue we are able to generate
each month, which revenue is a direct result of the actions and
ability of such executives.
Long-term, Stock Based Compensation
In order to attract, retain and motivate executive talent
necessary to support the Company's long-term business strategy we
may award certain executives with long-term, stock-based
compensation in the future, in the sole discretion of our Board
of Directors.
Criteria for Compensation Levels
We have not set compensation levels for our executive
officers. However, in the future, our Board of Directors,
intends to establish compensation levels for our executive
officers, and in connection therewith may consider many factors,
including, but not limited to, the individual's abilities and
performance that results in: the advancement of corporate goals
of the Company, execution of our business strategies,
contributions to positive financial results, and contributions to
the development of the management team and other employees. In
determining compensation levels, our Board of Directors may also
consider the experience level of each particular individual
and/or the compensation level of executives in similarly situated
companies in our industry.
SUMMARY COMPENSATION TABLE
We have not paid salaries to our former officers, and have
not yet determined future salaries for our executive officers.
The principals of Aegean Earth to date have been paid
compensation as consultants rather than taking a salary from
Aegean Earth.
Employment Agreements
We have not entered into employment agreements with any of
our other executive officers and/or directors as of the date of
this Current Report on Form 8-K. We have orally agreed with Mr.
Frank DeLape, our Executive Chairman, to issue to him stock
options to purchase up to 250,000 Ordinary Shares. The terms of
such options shall be determined at a future date by mutual
agreement of the Company and Mr. DeLape.
16
Compensation of Directors
We have not paid our directors compensation for serving as
one of our directors. Our Board of Directors may in the future
decide to award the members of the Board of Directors cash or
stock based consideration for their services to us, which awards,
if granted shall be in the sole determination of the Board of
Directors.
Securities Authorized for Issuance under Equity Compensation Plans
We currently do not have an equity compensation plan in
place for our executives.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Clancy, who was appointed a director of the Company
effective as of the Acquisition Closing, was a controlling
stockholder and a Manager of Aegean Earth, prior to the
Acquisition. Pursuant to the terms of the Acquisition Agreement,
Messrs. Clancy received 250,000 Ordinary Shares in exchange for
his capital stock of Aegean Earth.
AAF previously agreed to loan to the Company up to $600,000,
including the assumption of approximately $90,000 in Notes by the
Company to Aegean Earth S.A.. In November 2007, AAF loaned to
the Company $300,000, which loan is evidenced by the Bridge
Notes. The Company also assumed approximately $90,000 in notes
issued by Aegean Earth S.A. to AAF. in November 2007. The loans
were used by the Company to provide working capital to Aegean
Earth prior to the Acquisition. The Bridge Notes, along with the
Assumed Notes bear interest at the rate of 6% per annum and are
payable on demand. The Bridge Notes, along with the Assumed
Notes are convertible at any time and from time to time by the
holder into an aggregate of approximately 2,500,000 Ordinary
Shares in the aggregate. Mr. Frank DeLape, the Company's
Executive Chairman is the Chairman of AAI, , the general partner
of AAF and Joseph Rozelle, a director and Chief Financial Officer
of the Company at the time the loans were made is the Chief
Financial Officer of AAI. The control person of AAF is AAI. Mr.
DeLape may be deemed a control person of AAI.
17
DESCRIPTION OF SECURITIES
Overview
We have authorized 78,125,000 Ordinary Shares, 5,000,000
Series A Preference Shares and 15,000,000 "blank check"
preference shares $.00064 par value per share (the "Preference
----------
Shares") as of the date of this Current Report on Form 8-K. In
- ------
January 2008, we amended our Memorandum and Articles of
Association to effect a stock split to increase our authorized
share capital. As a result of the stock split, our authorized
share capital was increased from 50,000,000 Ordinary Shares and
1,000,000 Preference Shares to 78,125,000 Ordinary Shares and
20,000,000 Preference Shares. In addition, our outstanding
Ordinary Shares increased from 1,281,500 Ordinary Shares
immediately prior to the stock split to 2,000,000 Ordinary Shares
immediately after the stock split. We did not have any
Preference Shares outstanding at the time of the stock split.
Following the closing of the Acquisition and the Offering, we had
and currently have 6,932,500 Ordinary Shares issued and
outstanding and 1,932,500 Series A Preference Shares issued and
outstanding. The foregoing does not include Ordinary Shares
issuable upon exercise of outstanding options/warrants,
conversion of the Series A Preference Shares, conversion of the
Bridge Notes and/or stock options under any stock option plans
adopted by the Company in the future.
Ordinary Shares
Holders of our Ordinary Shares are entitled to one (1) vote
for each Ordinary Share held at all meetings of stockholders (and
written actions in lieu of meetings). Dividends may be declared
and paid on our Ordinary Shares from funds lawfully available
therefore as, if and when determined by our Board and subject to
any preferential rights of any then outstanding Preference
Shares. We do not intend to pay cash dividends on our Ordinary
Shares. Upon the voluntary or involuntary liquidation, sale,
merger, consolidation, dissolution or winding up of the Company,
holders of Ordinary Shares will be entitled to receive all of our
assets available for distribution to stockholders, subject to any
preferential rights of any then outstanding Preference shares.
Our Ordinary Shares are not redeemable.
Preference Shares
Our Board is authorized to issue from time to time, subject
to any limitation prescribed by law, without further stockholder
approval, up to 20 million blank check Preference Shares in one
or more series. Preference Shares will have such designations,
preferences, voting powers, qualifications and special or
relative rights or privileges as determined by our Board, which
may include, among others, dividend rights, voting rights,
redemption and sinking fund provisions, liquidation preferences,
conversion rights and preemptive rights.
Series A Preference Shares
We have designated 5 million of our Preference Shares as
Series A Preference Shares. The Series A Preference Shares shall
rank senior as to the payment of dividends and in liquidation as
to the Ordinary Shares. The Series A Preference Shares have a
stated value of $3.00 per share, which is subject to adjustment
(the "Stated Value"). The Series A Preference Shares have the
right to vote only with respect to matters relating to amendments
of any of the preferences, rights or limitations of the Series A
Preference Share or the issuance by the Company of Preference
Shares having rights equal to and/or superior to the Series A
Preference Shares.
Each Series A Preference Share may be redeemed by the
Company at its sole option at any time and from time to time
commencing six months after the date of issuance (the "Redemption
Date") at a redemption price equal to the sum of (i) the Stated
Value, and (ii) all accrued but unpaid dividends thereon.
Unredeemed Series A Preference Shares will be eligible to be
converted into Ordinary Shares (the "Conversion Shares") at the
-----------------
then applicable Conversion Ratio (as defined below) thirty months
after the date of issuance. Each Series A Preference Share will
be convertible into six (6) Ordinary Shares (the "Conversion
Ratio," with each date of conversion being referred to as the
"Conversion Date"). Upon conversion, all accrued and unpaid
18
(undeclared) dividends on the Series A Preference Shares through
the Conversion Date shall be paid in additional Ordinary Shares
as if such dividends had been paid in additional shares of Series
A Preference Shares rounded up to the nearest whole number, and
then automatically converted into additional Ordinary Shares at
the then applicable Conversion Ratio. The Conversion Ratio is
subject to adjustment in the event of stock splits, stock
dividends, combinations, reclassifications and the like and to
weighted average anti-dilution protection for sales of Ordinary
Shares at a purchase price below $0.50 per share.
Each Series A Preference Share shall accrue dividends at the
rate of six (6%) percent per annum of the Stated Value ($0.18 per
share per annum) and shall be payable on the Redemption Date.
Dividends payable will be prorated from the date each Series A
Preference Share was issued based on the number of days each such
Series A Preference Share was outstanding. Dividends on the
Series A Preference Shares shall be cumulative. No dividends or
other distributions may be paid or otherwise made with respect to
the Ordinary Shares and no Ordinary Shares may be repurchased by
the Company during any fiscal year of the Company until dividends
on the Series A Preference Shares have been declared, paid or set
apart during that fiscal year. In addition, the Company reserves
the right to declare and pay optional dividends to the holders of
Series A Preference Shares in such amounts, form (securities
and/or cash) and at such time as determined by the Company' s
Board of Directors.
The Series A Preference Shares will have a liquidation
preference over the Ordinary Shares equal to the then stated
value, plus all accrued but unpaid dividends.
The foregoing description of the Series A Preference Shares
is qualified in its entirety by the full text of the board of
directors resolution establishing and approving the designation,
preferences and rights of Series A Preference Shares attached as
Exhibit 4.1 to this Current Report on Form 8-K and incorporated
herein by reference.
Bridge Notes
In November 2007 we issued 6% Bridge Notes in the aggregate
principal amount of $300,000 $300,000. The Bridge Notes bear
interest at the rate of 6% per annum and are payable on demand.
We also assumed approximately $90,000 in notes issued to AAF by
Aegean Earth S.A. The Bridge Notes, along with the Assumed
Notes, are convertible at any time and from time to time into an
aggregate of approximately 2,500,000 Ordinary Shares by the
holder thereof.
Market Price of and Dividends on Common Equity and Related
Stockholder Matters
Market Information
Currently, there is no public market for our Ordinary Shares
or Preference Shares and neither our Ordinary Shares nor
Preference Shares are listed for trading on any exchange or
quotation service.
Holders of Ordinary Shares
As of February 29, 2008, after the closing of the
Acquisition and the Initial Closing of the Offering, there were
approximately 500 holders of record of our Ordinary Shares.
Dividends
We have neither declared nor paid any cash dividends on our
capital stock and do not anticipate paying cash dividends in the
foreseeable future. We have had no revenue or earnings. Our
current policy is that if we were to generate revenue and
earnings we would retain any earnings in order to finance our
operations. Our board of directors will determine future
declaration and payment of dividends, if any, in light of the
then-current conditions they deem relevant and in accordance with
applicable corporate law.
19
Recent Sales of Unregistered Securities.
In the Acquisition, the Company issued 500,000 Ordinary
Shares to the Aegean Earth Shareholders in exchange for their
Aegean Earth capital stock. The Ordinary Shares issued in the
Acquisition were issued pursuant to the exemption from
registration provided under Section 4(2) of the Securities Act
and Rule 506 promulgated thereunder. We made this determination
based on the representations of the persons obtaining such
securities which included, in pertinent part, that such persons
were "accredited investors" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act, and that such
persons were acquiring such securities for investment purposes
for their own respective accounts and not as nominees or agents,
and not with a view to the resale or distribution, and that each
such persons understood such securities may not be sold or
otherwise disposed of without registration under the Securities
Act or an applicable exemption therefrom.
Simultaneous with the closing of the Acquisition, the
Company sold in the Offering three thousand eight hundred and
sixty five (3,865) Units at a purchase price of $1,500 per Unit
for aggregate gross proceeds of approximately $5,797,500. Each
Unit consisted of 500 Ordinary Shares (an aggregate of 1,932,500
Series A Preference Shares and 1,932,500 Ordinary Shares). The
Series A Preference Shares and Ordinary Shares sold in the
Offering were issued pursuant to the exemption from registration
provided under Section 4(2) of the Securities Act and Rule 506
promulgated thereunder. We made this determination based on the
representations of the persons obtaining such securities which
included, in pertinent part, that such persons were "accredited
investors" within the meaning of Rule 501 of Regulation D
promulgated under the Securities Act, and that such persons were
acquiring such securities for investment purposes for their own
respective accounts and not as nominees or agents, and not with a
view to the resale or distribution, and that each such persons
understood such securities may not be sold or otherwise disposed
of without registration under the Securities Act or an applicable
exemption therefrom. No underwriting discounts or commissions
were paid with respect to the Offering.
In November 2007 we borrowed from AAF $300,000 as evidence
by the $300,000 aggregate principal amount of 6% Bridge Notes.
The Bridge Notes bear interest at the rate of 6% per annum and
are payable on demand. The Company also assumed approximately
$90,000 in Notes issued by Aegean Earth S.A. to AAI in November
2007. The Bridge Notes, along with the Assumed Notes, are
convertible into an aggregate of approximately 2,500,000 Ordinary
Shares. The Bridge Notes were issued pursuant to the exemption
from registration provided under Section 4(2) of the Securities
Act and Rule 506 promulgated thereunder. We made this
determination based on the representations of AAF which included,
in pertinent part, that it was an "accredited investor" within
the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, and that such it was acquiring such securities
for investment purposes for its own account and not as nominee or
agent, and not with a view to the resale or distribution, and
that AAF understood such securities may not be sold or otherwise
disposed of without registration under the Securities Act or an
applicable exemption therefrom. No underwriting discounts or
commissions were paid with respect to the sale of the Bridge
Notes.
In May 2006, we sold 231,500 Ordinary Shares to
approximately 460 offshore private investors in lots of 500
shares each at $0.20 per share, for aggregate consideration of
$46,300. Such shares were issued in reliance upon the exemption
from registration afforded by Regulation S of the Securities Act.
We made this determination based on the representations of the
persons obtaining such securities that such persons were non-U.S.
persons (as defined under Rule 902 section (k)(2)(i) of
Regulation S), and that the offering was made pursuant to an
offshore transaction with no directed selling efforts made in the
United States. No underwriting discounts or commissions were
paid with respect to such sales.
In April 2006, we issued 1,000,000 Ordinary Shares to
Nautilus Global Partners, LLC and 50,000 shares to Mid-Ocean
Consulting Limited, for aggregate consideration of $1,050 at a
purchase price of $.001 per share. Such shares were issued in
connection with our organization pursuant to the exemption from
registration contained in Section 4(2) of the Securities Act and
Rule 506 promulgated thereunder. We made this determination
based on the representations of the persons obtaining such
securities which included, in pertinent part, that such persons
were "accredited investors" within the meaning of Rule 501 of
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Regulation D promulgated under the Securities Act, and that such
persons were acquiring such securities for investment purposes
for their own respective accounts and not as nominees or agents,
and not with a view to the resale or distribution, and that each
such persons understood such securities may not be sold or
otherwise disposed of without registration under the Securities
Act or an applicable exemption therefrom. No underwriting
discounts or commissions were paid with respect to such sales.
In May 2007, Nautilus Global Partners, LLC sold its
1,000,000 Ordinary Shares to AAF for $100,000.
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Indemnification of Directors and Officers.
Cayman Islands law does not limit the extent to which a
company's articles of association may provide for indemnification
of officers and directors, except to the extent any such
provision may be held by the Cayman Islands courts to be contrary
to public policy, such as to provide indemnification against
civil fraud or the consequences of committing a crime. Our
memorandum and articles of association provide for
indemnification of our officers and directors for any liability
incurred in their capacities as such, except through their own
willful negligence or default.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers or
persons controlling us pursuant to the foregoing provisions, we
have been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the
Securities Act and is theretofore unenforceable.
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DESCRIPTION OF THE ACQUISITION AGREEMENT
In the Acquisition and pursuant to Acquisition Agreement,
the Company issued to the Aegean Earth Shareholders an aggregate
of 500,000 Ordinary Shares, in exchange for all of their shares
of capital stock of Aegean Earth. The Ordinary Shares of the
Company issued in the Acquisition were issued pursuant to the
exemptions from the registration requirements of the Securities
Act provided under Section 4(2) of the Securities Act and Rule
506 promulgated thereunder.
The Acquisition Agreement contained standard representations
and warranties by the parties thereto.
As a condition to and simultaneously with the Acquisition
Closing, the sold in the Offering three thousand eight hundred
and sixty five (3,865) Units at a purchase price of $1,500 per
Unit for aggregate gross proceeds of approximately $5,797,500.
Each Unit consisted 500 Series A Preference Shares and 500
Ordinary Shares (an aggregate of 1,932,500 Series A Preference
Shares and 1,932,500 Ordinary Shares).
Proposed Initial Acquisition
Pursuant to the Memorandum, the Company is proposing to
acquire the Target, a company organized under the laws of Greece
that is active mainly in the field of construction of public and
private works that operates mostly within Greece either on its
own or via joint ventures. In May 2006, the Target's creditor
banks filed a petition with the Athens Court of Appeal (the
"Court") for the placement of the Target under the procedure of
Article 46 of Law 1892/1990, the Court issued irrevocable
decision No. 4732/26.06.2006, by virtue of which the company was
relegated to the special liquidation status of Article 46 of Law
1892/1990. In September 2007, the Target filed with the Court a
work-out plan which, among other things, if and when approved by
the Court would provide for (i) a reduction in the Target's
outstanding indebtedness; and (ii) the approval of the
acquisition of up to 70% of the issued and outstanding capital
stock of the Target by the Company. No assurances can be given
when, if ever, such proposed acquisition will occur or the
eventual terms thereof.
Item 3.02 Unregistered Sale of Equity Securities.
Reference is made to the disclosure made under Item 2.01 of
this Current Report on Form 8-K, which is incorporated herein by
reference.
Item 5.01 Changes in Control of Registrant.
Reference is made to the disclosure made under Item 2.01 of
this Current Report on Form 8-K, which is incorporated herein by
reference.
Item 5.02 Departure of Directors or Principal Officers; Election
of Directors; Appointment of Principal Officers.
In connection with the closing of the Acquisition, Messrs.
Rozelle and Richardson resigned as our directors, effective as of
the tenth day following the mailing of to our stockholders of an
Information Statement on Schedule 14f-1, and Mr. Rozelle resigned
as our President and Chief Financial Officer. In addition,
effective immediately upon the closing of the Acquisition, Mr.
DeLape was appointed chairman of the board of directors, and
executive chairman, Joseph Clancy was appointed Director, and
Rizos Krikis was appointed our Chief Financial Officer.
For certain biographical and other information regarding the
newly appointed officers and directors, see the disclosure under
the heading "Directors and Executive Officers" under Item 2.01 of
this Current Report on Form 8-K, which disclosure is incorporated
herein by reference.
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Item 5.06 Change in Shell Company Status.
Reference is made to the disclosure made under Item 2.01 of this
Current Report on Form 8-K, which is incorporated herein by
reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial Statements for Aegean Earth have not been provided
with this Current Report on Form 8-K because such financial
statements are not currently available. Such financial
statements will be provided in an amendment to this Form 8-K.
(b) Pro-Forma Financial Information.
Pro forma financial information for the Company reflecting
the Acquisition have not been provided because historically, the
Company has had no material revenues.
(d) Exhibits
Exhibit No. Exhibit Description
4.1 Resolutions of the Registrant's Board of Directors
establishing and approving the terms of the Series A
Preference Shares.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, as amended, the Registrant has duly caused this report
to be signed on its behalf by the undersigned hereunto duly
authorized.
AEGEAN EARTH & MARINE CORPORATION
Date: March 6, 2008 By: /s/ Rizos P. Krikis
-----------------------------
Name: Rizos P. Krikis
-----------------------------
Title: Chief Financial Officer
-----------------------------
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