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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. 2)
Abalone, Inc.
(Name of small business issuer in its charter)
New York 8748 22-3919975
State of jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization Classification Code Number) Identification No.)
Executive Office Suites, Attn: Abalone, Inc. 230 Park Ave., Suite 648, New York,
NY, 10169 Ph. (212) 286-1100
(Address and telephone number of principal executive offices)
As above
(Address of principal place of business or intended principal
place of business)
William Schmocker 230 Park Avenue - Suite 648, New York, NY 10169
Ph.(212)286-1100
(Name, address and telephone number of agent for service)
Approximate date of proposed sale to the public AS SOON AS PRACTICAL AFTER THE
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box: [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum
class of securities Shares to be offering price aggregate offering Amount of
to be registered registered per share price registration fee
- ------------------- ------------ ---------------- ------------------ ----------------
Common Stock,
$.0001 par value 1,000,000 $10.00 $10,000,000 $1070.00(a)
(a) Previously Paid.
Persons who are to respond to the collection of information contained
in this form are not required to respond unless the form displays a
currently valid OMB control number.
SEC 2335 (11-03)
Note: Specific details relating to the fee calculation shall be furnished in
notes to the table, including references to provisions to Rule 457 (Section
230.457 of this chapter) relied upon, if the basis of the calculation is not
otherwise evident from the information presented in the table. If the filing fee
is calculated pursuant to Rule 457(o) under the Securities Act, only the title
of the class of securities to be registered, the proposed maximum aggregate
offering price for that class of securities and the amount of registration fee
need to appear in the Calculation of Registration Fee table. Any difference
between the dollar amount of securities registered for such offerings and the
dollar amount of securities sold may be carried forward on a future registration
statement pursuant to Rule 429 under the Securities Act.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
CROSS REFERENCE SHEET
Showing Location in Prospectus of Information Required by Items 1 through 23,
Part I of Form SB-2, Pursuant to Item 501(b) of Regulation S-K
Registration Statement - Item Number and Caption Prospectus Caption
- ------------------------------------------------ ------------------
1. Front of Registration Statement and Outside Front Cover of Forepart of the Registration Statement; Outside Front Cover
Prospectus Page of Prospectus
2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information and Risk Factors Prospectus Summary; Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Cover Page of Prospectus; Determination of Offering Price
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Cover Page of Prospectus; Issuance; Subscription information;
Part II Item 25
9. Legal Proceedings Litigation; Legal Matters
10. Directors, Executive Officers, Promoters and Control Persons Management
11. Security Ownership of Certain Beneficial Owners and Principal Stockholders
Management
12. Description of Securities Description of Securities
13. Interest of Named Experts and Counsel Legal Matters; Part II Exhibit D; Experts
14. Disclosure of Commission Position of Indemnification for Part II; Item 24-Indemnification of Directors and Officers
Securities Act Liabilities
15. Organization within Last Five Years Business; Certain Transactions; Principal Stockholders
16. Description of Business Business
17. Management's Discussion and Analysis or Plan of Operation Prospectus Summary; Use of Proceeds; Business
18. Description of Property Not Applicable
19. Certain Relationships and Related Transactions Management; Certain Transactions; Principal Stockholders
20. Market for Common Equity and Related Stockholder Dilution; Description of Securities
Matters
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes In and Disagreements With Accountants on Accounting Not Applicable
and Financial Disclosure
SUBJECT TO COMPLETION, DATED FEBRUARY, 2006
PRELIMINARY PROSPECTUS
1,000,000 SHARES
ABALONE, INC.
1,000,000 SHARES OF COMMON STOCK
$10.00 PER SHARE
Prior to this offering there has been no market for the securities offered
hereby and there can be no assurance that such a market will develop after this
offering. The offering price has been determined by Abalone, Inc. ("AI" or the
"Company") and bears no relationship to the Company's assets, earnings, book
value or other generally accepted criteria of value. (See "Risk Factors.")
The Company will sell up to 1,000,000 shares, offered hereby on a "Best
Efforts-No Minimum" basis, within six (6) months from the date of this
Prospectus, unless extended at the Company's discretion for an additional six
(6) months. There is no firm commitment by any person to purchase or sell any of
the shares, and there is no assurance that any such shares will be sold.
Proceeds will not be escrowed and will be utilized by the Company as received.
(See "Description of Securities" and "Issuance.")
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
THE SECURITIES OFFERED HEREBY HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), AS AMENDED, AND ARE BEING OFFERED AND SOLD IN RELIANCE ON THE
REGISTRATION REQUIREMENTS OF SAID ACT AND UNDER REGULATION S-B IN WHICH
SECURITIES ARE HEREBY OFFERED IN COMPLIANCE THEREWITH AS WELL AS WITH STATE
SECURITIES LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY
OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING
OR THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Offering Contingent Proceeds to
Price (1) Fees (2) Company (3)
----------- ---------- -----------
Per Share... $ 10.00 $ 1.00 $ 9.00
Total ...... $10,000,000 $1,000,000 $9,000,000
(See notes on following page.)
This Offering Involves:
(a) Immediate substantial dilution. (See "Dilution.")
(b) Absence of a present market for the shares being offered. (See "Risk
Factors.")
(c) Special risks related to the operations of the Company. (See "Risk
Factors.")
(d) No assurance that the Company will be able to operate profitably in the
future. (See "Risk Factors.")
Issuer
ABALONE, INC.
MAILING ADDRESS: EXECUTIVE OFFICE SUITES
ATTN: ABALONE, INC.
230 PARK AVENUE - SUITE 648
NEW YORK, N.Y. 10169
(212) 286-1100
(1) The illustrated offering price of $10.00 per share applies to subscriptions
on any and all 1,000,000 shares of stock. All references to offering price and
calculations therefrom in this Preliminary Prospectus will be based on a $10.00
per share illustrated offering price. (See "Determination of Offering Price" and
"Issuance.")
(2) This Offering is being made directly by the Company on a "Best Efforts"
basis through its directors, officers and employees who shall serve without
additional compensation. The Company has no underwriter or selling agent
presently. However, the Company believes it may attract the support of
Broker/Dealers or "finders" during the Offering period. Therefore, the Company
has allocated 10% commission.
(3) The Proceeds to the Company are before deducting a 3% non-accountable
expense allowance payable to Broker/Dealers or "finders" (who may in the future
be so engaged) of $0.30 per Share, or $300,000, if all 1,000,000 Shares (the
"Maximum") are sold.
INVESTMENT IN THE COMPANY INVOLVES A NUMBER OF SIGNIFICANT RISK FACTORS AND
SHOULD BE UNDERTAKEN ONLY BY PERSONS WHOSE FINANCIAL RESOURCES ARE SUFFICIENT TO
ENABLE THEM TO ASSUME SUCH RISKS. THIS SECTION SETS FORTH A BRIEF SUMMARY OF
SOME OF THE PRINCIPAL RISKS AND PROSPECTIVE INVESTORS SHOULD EVALUATE THESE
FACTORS CAREFULLY IN ADDITION TO THE OTHER FACTORS SET FORTH ELSEWHERE IN THIS
PROSPECTUS.
NEITHER THIS PROSPECTUS, NOR ANY SALES MADE HEREUNDER, SHALL UNDER ANY
CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE MATTERS
DISCUSSED HEREIN SINCE THE DATE HEREOF.
ANY PERSON WHO ACCEPTS DELIVERY OF THIS PROSPECTUS AGREES TO HOLD IT IN
CONFIDENCE, AND IF HE OR SHE ELECTS NOT TO INVEST, TO RETURN IT TO THE COMPANY.
REPRODUCTION OR DISTRIBUTION OF THIS PROSPECTUS IN WHOLE OR IN PART, OR THE
DISCLOSURE OF ANY OF ITS CONTENTS, WITHOUT THE PRIOR WRITTEN APPROVAL OF THE
COMPANY, IS FORBIDDEN.
THESE SHARES ARE BEING OFFERED SUBJECT TO PRIOR SALE AND TO FURTHER CONDITIONS
SET FORTH HEREIN. NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS.
ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON.
THIS PROSPECTUS IS SUBMITTED IN CONNECTION WITH THE PUBLIC OFFERING OF THE
SHARES AND DOES NOT CONSTITUTE AN OFFER OR SOLICITATION IN ANY JURISDICTION IN
WHICH SUCH AN OFFER OR SOLICITATION IS UNAUTHORIZED.
A PROSPECTIVE INVESTOR DETERMINING WHETHER TO INVEST IN THE SECURITIES SHOULD
CONSIDER ONLY THAT INFORMATION CONTAINED IN THIS PROSPECTUS OR PROVIDED BY THE
COMPANY AFTER THE DATE HEREOF. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER OF THE SECURITIES, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS PROSPECTUS AS
LEGAL OR TAX ADVICE. EACH INVESTOR IS ADVISED TO CONSULT WITH HIS PERSONAL
COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX, ECONOMIC, AND RELATED
MATTERS CONCERNING THE INVESTMENT DESCRIBED HEREIN AND IT'S SUITAILITY FOR HIM.
FOR FOREIGN RESIDENTS ONLY:
IT IS THE RESPONSIBILITY OF EACH PERSON PURCHASING THE COMMON SHARES OFFERED
HEREBY TO FULLY OBSERVE THE LAWS OF ANY RELEVANT TERRITORY OR JURISDICTION
OUTSIDE THE UNITED STATES OF AMERICA IN CONNECTION WITH ANY SUCH PURCHASE.
2
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information, including financial statements, appearing in this Prospectus:
THE COMPANY
Company ............... Abalone, Inc.
Founded ............... Incorporated in the State of New York, January 12, 2006
Business .............. Abalone, Inc., ("AI") is in the business of providing
corporate financial advisement and the arranging of
capital through asset based lenders and equity
investors as well as arranging mergers, acquisitions
and divestitures. (See "Risk Factors" and
"Business.")
Executive
Offices ............... Executive Office Suites
Attn: Abalone, Inc.
230 Park Avenue, Suite 648
New York, N.Y. 10169
Telephone
Number ................ (212) 286-1100
Fax Number ............ (212) 286-9828
Email ................. amfsg@aol.com
Fiscal Year ........... December 31st.
THE OFFERING
Securities Offered .... 1,000,000 shares of Common Stock. (See "Description
of Securities.")
Offering Price ........ $10.00 per share.
Duration of Offering... Six (6) months from the date of this Prospectus,
unless extended for an additional six (6)
months.
Proceeds .............. Maximum Gross Proceeds - $10,000,000
Maximum Net Proceeds - $8,700,000 *
* If sold through the potential future engagement of Brokers/Dealers and/or finders.
Use of Proceeds ....... Marketing & advertising; engagement of key personnel; recruitment, training and support
of Independent Financial Advisers; establishment of new products and services; and,
working capital. (See "Use of Proceeds.")
Securities to be Issued
and Outstanding After
the Offering, if
Maximum Sold .......... There are 1,000,000 Common Stock shares offered hereby. The present shareholders
own 1,500,000 shares of such Common Stock.
3
SELECTED FINANCIAL INFORMATION
The following sets forth certain selected financial information as of:
January 31, 2006
Balance Sheet Data (Audited)
- ------------------ ----------------
Assets
Cash $5,000
Total Assets $5,000
Liabilities and Shareholder's Equity
Common Stock $ 150
Stockholders' Equity $4,850
Total Liabilities and Shareholder's Equity $5,000
Before After Offering
Offering Maximum
--------- --------------
Book Value Per Share ........... $0.003333 $4.002000
Tangible Book Value Per Share .. $0.003333 $3.482000
The foregoing summary is qualified in its entirety by reference to the
Company's Financial Statements attached herein as "Financial Statements."
USE OF NET PROCEEDS (ONE YEAR):
If Maximum
Sold
----------
Marketing and advertising of services ................................ $2,700,000
Engagement of key personnel .......................................... 500,000
Recruitment, training and support of Independent Financial Advisors .. 1,000,000
Establishment of new products and services ........................... 3,000,000
Working capital ...................................................... 1,500,000
----------
TOTAL ................................................................ $8,700,000
FORWARD LOOKING STATEMENTS
Any statements that are not historical facts are forward-looking statements
that involve risks and uncertainties; actual results may differ from the
forward-looking statements. Sentences or phrases that use such words as
"believes," "anticipates," "plans," "may," "hopes," "can," "will," "expects,"
"is designed to," "with the intent," "potential" and others indicate
forward-looking statements, but their absence does not mean that a statement is
not forward-looking. Factors that could have a material and adverse impact on
actual results will be described in the Company's annual report on Form 10-K
filed with the Securities and Exchange Commission under the heading "Risk
Factors." The Company undertakes no obligation to publicly release the results
of any revisions to these forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
RISK FACTORS
The offering involves an extremely high degree of risk and prospective
investors should understand that the prospects are substantial that they may
lose all or part of their investment. (See "Risk Factors.")
4
INTRODUCTION STATEMENT
Abalone, Inc., ("AI") was incorporated in the State of New York on January
12, 2006. It is in the business of providing corporate financial advisement and
the arranging of capital through asset based lenders and equity investors as
well as arranging mergers, acquisitions and divestitures. (See "Business.")
THE COMPANY
This is an offering of securities involving an extremely high degree of
risk. The Company was incorporated on January 12, 2006. The Company intends
initially to engage key personnel to commence the recruitment, training and
support of Independent Financial Advisers. The Company has no operation to date
nor is any specific allocation contemplated. The proposed business activities of
the Company will not commence until after, and are wholly dependent upon, the
completion of this offering. There is absolutely no assurance that this offering
will be successfully completed or that the Company's plans, which it will not
begin to substantially formulate until after the completion of this offering,
will prove to be commercially successful or feasible.
DESCRIPTION OF OFFERING
The Company is presently offering 1,000,000 shares of Common Stock at
$10.00 per share in reliance upon the public offering registration provided in
Section S-B of the Securities Act of 1933 (the "Act"), as amended. Although the
Shares shall not be required to carry a restrictive legend unless required under
states securities laws, a potential investor should be aware that no market for
the Common Stock of the Company presently exists. If a market for the Shares
does develop after the consummation of this Offering, there can be no assurance
given that such market will be a liquid market or that prices quoted on such
market will be representative of the value of the Common Stock. (See "Issuance"
and "Determination of Offering Price.")
Sales of the Company's Common Stock will be conducted by AI's Officers,
Directors and employees. The Company has not entered into any underwriting
agreement or placement agreement with any Broker/Dealer nor has it licensed
individuals or entities to undertake the sale of its Common Stock offered
herein. If, in the future, the Company does engage the services of such
companies or individuals, it intends to pay commissions or referral fees as may
be permitted by applicable law to Broker/Dealers and/or finders of not more than
ten percent (10%) of the proceeds plus a 3% non-accountable expense allowance.
No commissions will be paid to the Officers, Directors or employees for sales of
the securities described herein.
This offering is being offered on a best efforts "all or any" basis and the
funds will be available for use by the Company immediately. Proceeds will not be
escrowed.
Each subscriber hereof shall be required to complete and sign a
Subscription Agreement. The Subscription Agreement indicates the number of
shares to be purchased by the Subscriber, the aggregate offering price and the
terms of this Offering. The Subscription Agreement must be properly executed by
the subscriber hereof and returned to AI with a check evidencing the purchase of
the shares. A copy of the Subscription Agreement, properly executed by the
Company, shall be returned to the subscriber upon acceptance of said
subscription by AI. (See "Description of Securities" and "Issuance.")
Certificates representing shares purchased shall be registered in the
name(s) of the beneficial owner(s) as it appears on the Subscription Agreement
and mailed to the address appearing therein.
RISK FACTORS
EXTREMELY HIGH RISKS
The securities being offered hereby represent an extremely speculative
investment and an extremely high degree of risk. Therefore, prospective
investors should thoroughly consider all of the risk factors discussed below, as
more fully amplified in the remainder of this Prospectus, and should understand
that the prospects are substantial that investors may lose all or part of their
investment. No person should consider investing who cannot afford to lose his or
her entire investment or who is in any manner dependent upon the funds that he
or she is investing.
5
1. RECENTLY ORGANIZED COMPANY/LIMITED OPERATING HISTORY. AI was incorporated in
New York State on January 12, 2006, by its incorporator and President, Harry
Abrams ("Abrams"), who has only recently created AI. The Company must therefore
be considered promotional and in its formative stage. The Company has no current
operating history, has not generated any current revenues and must be considered
promotional and in its early embryonic and developmental stages, embarking upon
a brand new venture. There can be no assurance that the Company's proposed
activities will be successful or profitable. Potential investors should be aware
of the problems, delays, expense and difficulties encountered by a new
enterprise in its embryonic state especially in view of the intense competition
that the Company will assuredly encounter. No facts exist at this time upon
which to base an assumption that the Company's plans will either materialize or
prove successful, and if not, stockholders may lose all or a substantial portion
of their investment.
2. NO OTHER BUSINESS PLAN. The Company has no specific business plan other than
as described and within the time shown herein. There are no specific criteria
that have been established for use by the Company or management in choosing how
and where to invest the Company's funds. Therefore, the Company cannot provide a
prospective investor, prior to his investment, information regarding the
relevant data and timing of its proposed activities.
3. DEPENDENCE ON MANAGEMENT. The Company's future operations will be primarily
dependent upon current management, namely, Harry Abrams ("Abrams"), its
President, and William G. Schmocker ("Schmocker), its Vice President. It is
expected that Abrams and Schmocker will devote a majority of their time to the
affairs of the Company, will oversee the operations of the Company and will be
instrumental in evaluating the direction of the Company's future business. If,
for any reason, Abrams or Schmocker should terminate their association with the
Company, there can be no assurance that a qualified replacement can be found, or
in the event a qualified replacement is found, that the Company will be in a
financial position to pay the remuneration demanded by such replacement.
Accordingly, no person should purchase shares in the Company unless such person
is willing to entrust all aspects of the Company's management to Abrams and
Schmocker. Management may also require dependence on independent consultants.
(See "Management.")
4. EXECUTIVE COMPENSATION. No Officer or Director of the Company will receive
compensation until the Company generates cash flow from its activities. To date
there have been no employment contracts written. It is expected that all key
employees will enter into employment contracts which will include compensation,
term, retirement, disability and non-compete provisions. It is further
anticipated that such agreements with management will include provisions
permitting the board of directors to grant stock and cash bonuses to any officer
or employee of the Company, within the board's discretion. (See
"Management-Executive Compensation.")
5. UNSPECIFIED ACQUISITIONS. The Company may engage in acquisitions of other
companies and businesses and may use its stock as consideration therefore. Such
acquisitions may involve speculative and risky undertakings by the Company.
There are presently no plans, negotiations or understandings regarding
acquisitions of other assets, companies, or businesses, nor are any probable in
the immediate future. Prospective investors are herein advised that a change in
management of the Company could be effected. In the event that the Company
engages in acquisitions of other companies or businesses, the Company may need
additional financing. Such need may require the Company to seek capital through
the sale of additional shares of Common Stock. Such sales, if consummated, may
be at prices below the then current book value of the Company, thereby diluting
the equity of the then Common Stockholders.
6. UNSPECIFIED MERGERS. The Company may enter into a merger agreement under
which the Company may not be the surviving entity. In such event, shareholders
may be dependent on different management, different capitalization and different
risk factors than those which are set forth in this Prospectus.
7. MINIMAL NUMBER OF EMPLOYEES; RELIANCE ON OTHERS. The Company has a minimal
number of employees. Therefore, it might be necessary for the Company, at least
for the near future, but perhaps longer, to rely upon the services and abilities
of independent consultants and non-company personnel with respect to its
activities.
8. UNCERTAINTY AS TO MANAGEMENT'S ABILITY TO CONTROL COSTS AND EXPENSES. The
Company cannot accurately project, or give any assurance with respect to
management's ability to control the Company's operating costs and expenses.
6
9. INDEMNIFICATION OF OFFICERS AND DIRECTORS. At present the Company has not
entered into individual agreements with its officers and/or directors which
provide for indemnification rights which are greater than those rights afforded
under New York corporate law. However, the Company's By-laws provide a
comprehensive indemnification provision which provides that the Company shall
indemnify, to the fullest extent under New York law, its directors and officers
against certain liabilities incurred with respect to their service in such
capabilities. In addition, the By-laws provide that the personal liability of
directors and officers of the Company and its stockholders for monetary damages
will be limited. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended and is, therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being offered or sold, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933, as amended and will be governed by the
final adjudication of such case.
10. ABILITY TO ACHIEVE DESIRED EXPANSION. The Company's growth strategy is to
focus on the controlled development of new clients for its financial products
and services. The Company's ability to expand will depend on a number of
factors, including the availability of appropriate investments, availability of
skilled management and personnel, the availability of adequate financing, and
other factors, some of which are beyond the control of the Company.
11. INTENSE COMPETITION. There are inherent difficulties for any company seeking
to enter an established field, including any company seeking to produce, market
and sell its financial products and services. The financial industry is an
intensely competitive field and the Company will be competing with numerous
other firms already so engaged who have more financial resources, more employees
and more extensive facilities than the Company.
12. DIVIDENDS ON COMMON STOCK. The Company does not anticipate paying any cash
dividends on its Common Stock in the foreseeable future because it intends to
retain its earnings to finance the expansion of its business. There can be no
assurance that the operations of the Company will result in sufficient revenues
to enable the Company to operate at profitable levels or to generate positive
cash flow. Therefore, investors who anticipate the need of immediate income, in
the form of dividends on their common stock should refrain from purchasing the
securities being offered hereby. (See "Description of Securities.")
13. NOT A TAX SHELTER INVESTMENT. Investors are cautioned that this is not a tax
shelter investment.
14. DILUTION. The present stockholders of the Company acquired their securities
at an average cost per share which was significantly less than that which the
new investors will pay for their securities. The Company had a net tangible book
value at January 31, 2006, of $0.003333 per share. Consequently, the new
investors will bear the majority of the risk of any loss that may be incurred in
the Company's operations. An investment in the Company's Common Stock by new
investors will result in an immediate substantial dilution of the new investor's
entire investment. (See "Dilution.")
15. ADDITIONAL FINANCING. No assurance can be given that the Company will not
require additional financing to conduct its operations or that, if required,
such financing will be available on reasonable terms. Moreover, in the event the
Company attempts to expand its operations, through acquisitions or otherwise,
additional financing is likely to be required. (See "Use of Proceeds.")
16. NO MINIMUM OFFERING. The Company will use its best efforts to sell the
shares offered hereby without regard to minimum amounts. If none or relatively
few shares are sold, the Company may be unable to conduct its business operation
as planned, which may adversely affect an investor's financial interest in the
Company.
17. KEY MAN LIFE INSURANCE. The Company does not presently own life insurance
covering the death of any officer, director or key employee of the Company. The
Company is planning to purchase such insurance in order to
7
provide adequate funding for the Company's repurchase of shares of Common Stock
from the estate of any officer or director as a result of death, and to provide
the Company with capital to replace the exclusive loss. However, the Company can
make no assurance if and when such life insurance coverage will be obtained, and
if available, whether the premiums payable for coverage will be reasonable.
18. DIRECTORS' AND OFFICERS' INSURANCE. The Company is exploring the possibility
of obtaining directors' and officers' liability insurance. The Company has
obtained premium quotations but has not entered into any contractual
arrangements with any insurance company to provide said coverage as of the date
of this Prospectus. Furthermore, there is no assurance that the Company will be
able to obtain such coverage in the future, or that if the coverage is
obtainable, that the premiums will be cost prohibitive.
19. RISK OF LOW PRICED STOCK AND PENNY STOCK REGULATIONS. The Securities and
Exchange Commission (the "SEC" or "Commission") has adopted regulations which
define a "penny stock" to be any equity security that has a market price (as
defined) of less than $5.00 per share or an exercise price of less than $5.00
per share, subject to certain exceptions. The Company's common stock may, if and
when it does go public, be covered by the penny stock rules, which impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally institutions with assets in excess of $5,000,000 or individuals with
a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with spouse). For transactions covered by the rule, the
broker-dealer must make a special suitability determination for the purchase and
receive the purchaser's written agreement to the transaction prior to the sale.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of purchasers in such an
offering to sell their shares in the secondary market.
The foregoing penny stock restrictions will not apply to the Company's
securities if such securities are listed on the NASDAQ National Market System or
are otherwise listed on the regional NASDAQ System and have certain price and
buying information provided on a current and continuing basis or meet certain
minimum net tangible assets or average revenue criteria. Furthermore, if the
Company is successful in raising at least $4,000,000 from this Initial Public
Offering in the amount of $10,000,000, the Company's securities will initially
qualify for these exemptions from the penny stock restriction. Otherwise, the
Company will remain subject to Section 15(b) (6) of the Exchange Act governing
these penny stock restrictions. If the Company's securities were subject to the
existing rules on penny stocks, the market liquidity for the Company's
securities could be adversely affected.
20. NO PRIOR PUBLIC MARKET; LISTING ON ELECTRONIC BULLETIN BOARD; DETERMINATION
OF OFFERING PRICE; POSSIBLE VOLATILITY OF SHARE PRICE: Prior to this Offering,
there has been no public trading market for the Common Stock, and no assurance
is hereby given that such a market will develop after this Offering terminates.
The Offering price was determined by the officers and directors of the Company,
not by negotiations between the Company and any underwriter. Subject to sale of
the maximum number of Shares in this Offering, the Company intends to make
application for quotation of the Common Stock on the OTC Bulletin Board, a
NASD-sponsored and operated inter-dealer automated electronic quotation system
for equity securities. The OTC was introduced in June of 1990 as an alternative
to the NQB Pink Sheets published by the National Quotation Bureau Incorporated
for the trading of over-the-counter securities. For a variety of reasons, there
can be no assurance given that the Company's Common Stock will ever be approved
for price quotations on the OTC Bulletin Board. There can be no assurance that
the OTC Bulletin Board will be recognized by the brokerage community as an
acceptable alternative to quotation on a NASDAQ stock market or in the NQB Pink
Sheets. In the absence of such recognition, the liquidity and price of the
Common Stock in the secondary market may be adversely affected, and there can be
no assurance that a public market for the Common Stock will develop or, if
developed, that it will be sustained. In the event that the Common Stock is
quoted on the OTC Bulletin Board following this Offering, the market price of
the Company's securities following this Offering also may be highly volatile.
There have been periods of extreme fluctuation in the stock market that, in many
cases, were unrelated to the operating performance of, or announcements
concerning, the issues of the affected securities. Securities of issuers having
relatively limited capitalizations are particularly susceptible to fluctuation
based on short-term trading strategies of certain investors. If the Common Stock
is quoted on the OTC Bulletin Board following the Offering, no assurance can be
given that the price of the Common Stock will be maintained at any price level.
OFFERING MADE IN RELIANCE UPON REGULATION S-B: This Offering is made in reliance
upon Reg. S-B.
8
IN COMPLIANCE WITH THE ABOVE RULES AND REGULATIONS, AI HAS REGISTERED ITS REG
S-B OFFERING IN NEW YORK STATE, PURSUANT TO NEW YORK STATE SECURITIES LAWS, AND
IS PROVIDING ALL PROSPECTIVE PURCHASERS A COPY OF THIS SUBSTANTIVE PROSPECTUS.
SHARES ELIGIBLE FOR FUTURE SALE
At such time as a public market exists for the Common Stock, the shares
owned by a "control person", officers and directors are deemed "restricted
securities" as that term is defined under the Act; and in the future these
shares may be resold into a public market under Rule 144, which provides, in
essence, that a person holding restricted securities for a period of one year
may sell every three months, in brokerage transactions and/or market maker
transactions, an amount equal to the greater of (a) one percent (1%) of the
Company's' issued and outstanding Common Stock or (b) the average weekly trading
volume of the Company's Common Stock during the four calendar weeks prior to
such sale. Rule 144 also permits, under certain circumstances, the sale of
shares without any quantity limitation by a person who is not an "affiliate" of
the Company and has satisfied a two year holding period. At the date of this
Prospectus, there are no shares of Common Stock outstanding in the hands of
affiliates of the Company that would qualify for Rule 144 resales if and when
all other conditions of Rule 144 are complied with and a public market for the
Common Stock develops. There can be no assurance as to the effect of such
resales on the market price of the Common Stock. Significant sales by holders of
these shares could adversely affect the prevailing market price and thereby
impair the Company's future ability to raise capital through the sales of its
equity securities and otherwise depress the market price of the Common Stock.
DILUTION
Upon completion of this offering, assuming the Maximum is sold, a total of
2,500,000 shares of Common Stock of the Company will be issued and outstanding.
The purchasers of the shares offered hereby will own 1,000,000 shares of the
Company's Common Stock, representing approximately 40% of such outstanding
amount, for which they will have paid $10,000,000, or $10.00 per share, and the
present stockholders of the Company will own 1,500,000 shares of the Company's
Common Stock, representing 60% of such outstanding amount, which had a net
tangible book value at January 31, 2006 of $5,000 or $0.003333 per share.
Giving effect to the sale by the Company of 1,000,000 shares of it's Common
Stock at the offering price of $10.00 per share, the net tangible book value of
the Company at January 31, 2006, would have been $8,705,000 or $3.482000 per
share, representing an immediate increase in net tangible book value of
$3.478667 per share to present shareholders and an immediate dilution of
$6.518000 per share to new investors purchasing shares at the offering price
herein. The following table illustrates this per share dilution:
Offering Price per Common Share (1) $10.00000
Net tangible book value before offering (2) $0.003333
Increase attributable to payment of shares
purchased by new investors 3.478667
Net tangible book value after offering (2) 3.482000
Dilution to new investors $6.518000
---------
- ----------
(1) Assumed solely for the purpose of illustration.
(2) Net tangible book value per share is determined by dividing the number of
shares of Common Stock outstanding into the tangible net worth of the
Company (tangible assets less liabilities).
9
DETERMINATION OF OFFERING PRICE
Prior to the offering made hereby, there has been no market for the
securities of the Company. The offering price of the shares was arbitrarily
determined by the Company's management and bears no relationship to assets,
earnings, book value or other established criteria of value. In determining the
offering price, the Company considered such factors as the total amount of
capital estimated to be required to conduct the proposed business of the
Company, the price per share which might be expected to be acceptable to the
proposed purchasers, dilution to be experienced by the purchasers and
distribution of equity and control among the purchasers in this offering and the
present stockholders. As the offering price was arbitrarily determined, in
considering these factors, no relative weight was assigned each of the factors
mentioned in establishing the arbitrarily determined offering price.
USE OF PROCEEDS
Assuming that all of the shares offered hereby are sold, of which there can
be no assurance, the gross proceeds to the Company will be approximately
$10,000,000 and the net proceeds to the Company (if sold through the potential
future engagement of Broker/Dealers or finders) will be $8,700,000.
In view of the nature of this offering and the fact that the Company may
negotiate but does not anticipate it will conduct business operations until the
completion of this offering, it is difficult for the Company to state
definitively its anticipated use of the proceeds of this offering or
specifically to address the priority of each such use. The Company intends to
allocate the net proceeds to the purposes itemized below over a two year period.
In the event that the Company sells only a minimum number of shares being
offered herein, the Company will have less working capital and, thus, its
activities may be of a reduced scope and nature.
These amounts merely indicate the proposed use of proceeds. Actual
expenditures may vary somewhat from these estimates, depending upon overall
economic conditions and management's choice among various opportunities, should
they be available. Assuming the sale of all the shares offered hereby, the
Company expects that the proceeds from this offering will be sufficient to
finance its intended activities for a two year period. However, if only a
minimum number of shares offered hereby are sold or if for any other reason the
proceeds from this offering prove insufficient to enable the Company to
participate in all or any potential prospects it believes have merit, the
Company may seek to obtain additional funds through loans or other financing
arrangements. No such arrangements exist as of the date hereof and there can be
no assurance that they may be obtained in the future should the need arise.
It is difficult for the Company to state definitively its anticipated use
of the proceeds of this offering. It is also impossible for it, at this time, to
set forth the order of projected use of the proceeds of this offering or
specifically to address the priority of each such use. The Company may, under
certain circumstances, use the net proceeds to finance acquisitions of other
businesses. The Company has no present plans, arrangements or intentions to
enter into any such acquisitions and has no pending or contemplated negotiations
with respect to such acquisitions, except as described herein. However,
circumstances that are not presently anticipated by the Company may arise,
causing the present intention of the Company to be changed. The Company intends
to allocate the net proceeds to the purposes itemized below over a one-year
period. In the event that the Company sells less than the maximum number of
shares being offered hereby, the Company will have less capital than set forth
and, thus, its activities may be of a reduced scope and nature. However, no
assurance can be given that management of the Company will not deviate
substantially from this allocation with respect to short-term investments, long
range planning based on future circumstances or for the acquisition of other
businesses in the event future opportunities arise. The Company reserves the
right to change the use of net proceeds based on future circumstances.
Such future circumstances prompting the Company to change the use of
proceeds will be based on options that arise in the future which are not
presently available to the Company.
However, any such change within one-year from the date of this Prospectus
will not be implemented without the affirmative vote of those holding a majority
of the Company's Common Stock. Shareholders are further advised that the Company
reserves the right to vary the use of proceeds in the event that opportunities
arise through possible acquisitions and/or mergers. (See "Risk Factors" No.5 and
No.6.)
10
Management believes that the proceeds being raised by this offering will be
sufficient to create profitability within one year. However, the foregoing
assumption may be inapplicable in the event that the ventures that management
undertakes are not successful. The result may be that the Company will not be a
profitable entity in the one-year or any subsequent period.
The following illustrates the Company's projected use of gross proceeds
from the offering for one year:
If Maximum Number
of Shares are Sold
------------------
Commissions ...................................... $ 1,000,000*
Non-Accountable Expense Allowance ................ 300,000*
Marketing and advertising of services ............ 2,700,000
Engagement of key personnel ...................... 500,000
Recruitment, training and support of Independent
Financial Advisers ............................ 1,000,000
Establishment of new products and services ....... 3,000,000
Working capital .................................. 1,500,000
-----------
TOTAL ............................................ $10,000,000
* If sold through Broker/Dealers or "finders" (not presently engaged)
CAPITALIZATION
The capitalization of the Company as of the date of this Prospectus and as
adjusted to give effect to the issuance and sale of the shares offered hereby,
exclusive of any long-term debt, is as follows:
Amount Amount
Title of Class Authorized Outstanding
- -------------- ----------------- ----------------
Common Stock, 0.0001 Par Value .. 20,000,000 Shares 1,500,000 Shares
Amount Outstanding After
Fully Completed Offering ..... 2,500,000 Shares
CERTAIN TRANSACTIONS
Abalone, Inc. ("AI" or the "Company") was incorporated in the State of New
York on January 12, 2006. The Company's Articles of Incorporation authorize
20,000,000 shares of Common Stock, $0.0001 par value. The Company's Board of
Directors issued 1,500,000 shares of Common Stock which are currently
outstanding.
BUSINESS
Abalone Inc., ("AI") was incorporated in the State of New York on January
12, 2006. It is in the business of providing corporate financial advisement and
the arranging of capital through asset based lenders and equity investors as
well as arranging mergers, acquisitions and divestitures.
AI will further provide a host of products and services in the areas of
investment banking, finance, securities, accounting, tax preparation, wills,
trusts, estate planning, and direct purchasing of industrial, commercial, and
residential properties, prior to, during, and after foreclosure.
11
AI anticipates producing, through its future efforts, an aggregate of
approximately $100,000,000 in gross revenue in the first 5 years derived from:
a) the recruitment and training of Independent financial advisers; and, b) the
introduction of debt lenders and equity investors (consisting of commercial
banks, A/R financing companies, factors, leasing companies, venture capitalists
and investment bankers that AI will maintain on computerized databases of well
over 2,500 such entities along with contacts and lender/investor parameters so
as to be able to match IFA's client requirements with appropriate funding
sources).
The Company has no current plans, arrangements, or commitments for
acquiring participating interest in the business opportunities discussed above
and may engage in other activities not enumerated above. Should a business
opportunity develop, the potential venture may involve acquisition of, or merger
with, a company which does not need substantial additional capital but which
desires to establish a public trading market for its shares. A company
attempting to consolidate its operations by a merger, reorganization, asset
acquisition, or some other form of combination through this company's
participation may desire to do so to avoid what it may deem to be adverse
consequence of underwriting a public offering itself. Factors considered may
include time delays, significant expense, loss of voting control and the
liability or unwillingness to comply with various federal and state laws enacted
for the protection of investors. No assurance can be had or given that this
offering, upon which the business activities of the Company are contingent, will
be successfully completed, or the proceeds of the offering will be sufficient
for the Company's requirements, or that the Company's future activities will
prove to be profitable.
The Company will rely primarily upon the abilities of Abrams, its President
and Treasurer, or Schmocker, its Vice President and Secretary to recruit and
train the independent financial advisors, as well as establish the new products
and support services necessary to enable them to succeed, to acquire
participating interest in one or more business opportunities through the
discretion of management or to engage in any lawful business. The company has
had no operations to date nor is any specific allocation contemplated.
The Company has not set any criteria to determine whether or not it will
enter into a merger or acquisition agreement. Even if the Company were
relatively successful in its own endeavor, management may determine that the
attractiveness of opportunities available through a merger or acquisition
agreement are enough to cause the Company to enter into such agreement
regardless of the success or lack of success the Company is experiencing. The
fact that approximately 60% of the outstanding common shares will be held by the
present stockholders after the offering will enable the present stockholders to
have a major voice in such merger or acquisition.
If the Company intends to acquire other companies or divisions thereof in
order to acquire properties and/or marketing facilities, there can be no
assurance that any such acquisitions will be achieved, or if achieved, will be
successful. Also, management may elect to merge the Company into a larger
company, in which case the capitalization and management of the surviving
company would probably change radically. The Company has not entered into any
plans, arrangements, or undertakings for the acquisition of any specific
properties or companies. Although it is the present intention of the Company to
seek business opportunities via the creation of a network of Independent
Financial Advisers (IFAs), and then creation of a portfolio of products to offer
to prospective clients via this network, the specific future business activities
of the Company cannot be predicted. Management believes that business
opportunities in the financial services field often are available for relatively
limited periods of time. Therefore, this offering seeks to obtain capital for
business opportunities which may arise. Such capital will provide greater
flexibility so that the Company need not wait until an intended plan of
operation or business has been more fully determined. It is the position of this
company, in this instance, that, if during the offering period, the registrant
enters into any contract, arrangement or understanding pursuant to which a
material portion of the net proceeds of the offering will be used to purchase an
interest not described in the prospectus, then the offering will be immediately
suspended until such time as an appropriately revised prospectus has been filed
as part of a post-effective amendment and such amendment has been declared
effective.
AI is headquartered in New York City.
12
SECURITY AND EXCHANGE COMMISSION'S FINAL RULE REGARDING THE OFFER AND SALE OF
SECURITIES TO CANADIAN TAX-DEFERRED RETIREMENT SAVINGS ACCOUNTS
As of June 23, 2000, the Commission adopted a new rule that permits foreign
securities to be offered to U.S. participants in certain Canadian tax-deferred
retirement accounts and sold to those accounts without being registered under
the Securities Act of 1933. The Commission also adopted a new rule that permits
foreign investment companies to offer securities to those U.S. participants and
sell securities to their Canadian retirement accounts without registering under
the Investment Company Act of 1940. These rules will enable investors who hold
securities in certain Canadian tax-deferred retirement accounts, and who reside
or are temporarily present in the United States, to manage their investments
within those accounts. A Canadian retirement account includes a Registered
Retirement Savings Plan ("RRSP"), Registered Retirement Income Fund ("RRIF"),
and similar retirement accounts established under Canadian law to provide
tax-deferred retirement benefits. The offer and sale of these securities,
however, will remain fully subject to the antifraud provisions of the U.S.
securities laws.
BUSINESS STRATEGY
In general it appears that companies require financial advisement and
capital to expand, survive or start. In light of the high rate of unemployment
wherein more executives are out of work than ever before due to consolidations,
downsizing, the outsourcing of jobs, and the economy in general, and where it
appears that companies require financial advisement and capital to expand,
survive or start, AI believes that, with its knowledge and experience in
training people to go into a turn-key business for themselves as Independent
Financial Advisers, with all the products and services that AI has to offer to
support such IFAs makes for a potentially strong future and wise business
strategy. AI anticipates earning an aggregate of approximately $100,000,000 in
gross revenue in the first 5 years, derived from the recruitment and training of
IFAs, and sharing in subsequent deals and offers.
The proposed strategy is to establish a center in New York for training and
an international program for advertising. And, instead of recruiting and
training individuals only, to focus AI's attention on Human Resource companies
that have placement programs for their former executives. (See "Management" and
"Use of Proceeds.")
FACILITIES
AI's main office is located at Executive Office Suites, Attn: Abalone,
Inc., 230 Park Avenue, Suite 648, New York, N.Y. 10169.
MANAGEMENT
OFFICERS AND DIRECTORS
The Officer(s) and Director(s) of the Company is (are):
Name and Address Age Position
- ---------------- --- --------
Harry Abrams 71 President and Treasurer
230 Park Avenue - Suite 648
New York, NY 10169
William G. Schmocker 46 Vice President and Secretary
4 Tulip Lane
Colts Neck, NJ 07722
The Directors of the Company are elected to serve until the next annual
shareholders' meeting or until their respective successors are elected and
qualified. Officers of the Company hold office until the meeting of the Board of
Directors after the next annual shareholders' meeting or until removal by the
Board of Directors in accordance with the Company's By-Laws.
13
DEPENDENCE ON MANAGEMENT
All operations of the Company will be entirely dependent upon present
management. It is anticipated that Abrams and Schmocker will devote a majority
of their time to the affairs of the Company, and will make most decisions with
regard thereto. If, for any reason, Abrams or Schmocker terminates his
association with the Company, there can be no assurance that a qualified
replacement can be found, or in the event a qualified replacement is found, that
the Company will be in a financial position to pay the remuneration demanded by
such replacement. (See "Risk Factors - Dependence of Management.")
BACKGROUND OF OFFICERS AND DIRECTORS
Harry Abrams - President and Treasurer
Harry Abrams ("Abrams") has a Juris Doctor degree in law and a Master of
Business Administration degree in finance from Southland University and a
Bachelor of Science degree in professional accountancy from Long Island
University. He is a New York State licensed Real Estate Broker and a New York
State licensed Insurance Agent and Broker. Following his discharge from the U.S.
Navy in 1953, Abrams held various positions in the financial, printing and
graphic arts industries.
In 1959, Abrams formed the sole proprietorship of American Financial
Services Co., a provider of various financial services. From 1964 through 1978
Abrams was CEO and COO of Donrico, Inc., a cosmetic industry printing and
packaging company, the Plate Shop, Inc., a printing industry preparatory and
plate making company and Penthouse Designs, Inc., a designer and manufacturer of
greeting cards.
In 1979, after receiving NASD licenses and registration as a General
Principal, Financial & Operations Principal, Options Principal, Commodities
Trader, Municipal Bond Principal and as an Investment Advisor, Abrams formed
Underwriters, Ltd., which, as a member of the NASD, SIPC and MSRB was a
Registered Broker/Dealer specializing in underwriting Initial Public Offerings,
NASDAQ Market making, Mergers, Acquisitions, Divestitures, Securities Trading
and Investment Advisory Services. During his tenure as CEO and COO of Omni
Mutual Inc., Abrams served as an officer and/or director of many public and
private companies.
Abrams is the senior partner of American Financial Services Group
("AMFSG"), a New York State general partnership (originally formed as a sole
proprietorship in 1959 and made into a partnership in 1991). AMFSG provides
training, ongoing support and a turn-key opportunity to people interested in
going into business for themselves as Independent Financial Advisers and
providers of various products and services to corporations and corporate
executives including the arranging of debt and equity financing.
Separately, Abrams is CEO, COO and CFO of American Services Group, Inc.
("ASGI"), an investment banking company providing financial services in public
offerings, private placements, mergers, acquisitions & divestitures, business
loans, A/R financing, factoring and leasing,; a CEO, COO and CFO of Harry Abrams
Capital Corp. ("HACC"), a New York State commercial and residential real estate
brokerage company; CEO, COO and CFO of Joseph Irving & Company, Inc. ("JI"), a
New York State life, accident & health and property & casualty insurance
brokerage company; CEO of American Imaging Solutions Inc. ("AISI"), a New York
State (Canadian based), wide-format scanning & digital imaging company; CEO of
Money Find International Inc. ("MFII"), a New York State private lending and
investing company; Sole Proprietor of Executive Office Suites ("EOS"), an
executive office space leasing company; a General Partner of Harry Abrams
Capital Group ("HACG"), a New York State accounting, tax preparation, wills,
trusts and estate planning limited partnership; and, CEO of Money Find Inc.
("MFI"), a New York State (Canadian based) Venture Capital Company.
CIVIL VIOLATIONS - SEC ACTION DISCLOSURE
On November 28, 1989 (and on June 4, 1990, in a related SEC administrative
proceeding), Abrams as CEO and COO of the aforementioned registered
broker-dealer, Underwriters, Ltd., by consent, without admitting or denying the
allegations in a complaint filed by the Securities and Exchange Commission
against him, was enjoined from association with any broker, dealer, investment
company, investment adviser or municipal securities dealer and
14
was enjoined by the United States District Court for the Southern District of
New York from further direct and indirect violation of Section 17(a) of the
Securities Act of 1933 ("Securities Act"), Section 10(b) of the Exchange Act and
Rule 10(b)-5 promulgated thereunder. Abrams was also enjoined from aiding and
abetting violations of Sections 15(c) and 17(a) of the Exchange Act and Rules
15c3-1, 15c3-3, 15c2-4, 17a-3, 17a-5, 17a-8 and 17a-11 promulgated thereunder.
SEC v. Harry Abrams, 89 Civ. 7849 (KC) (S.D.N.Y. 1989).
William G. Schmocker - Vice President and Secretary
William G. Schmocker ("Schmocker") earned a Bachelor of Science degree in
Chemical Engineering from Northwestern University in 1982 and an MBA degree in
Management from Washington University in 1984. He joined American Services
Group, Inc. as a Vice President, Director and Shareholder in June, 2004.
From 1979 to 2002, Schmocker held various engineering, finance, marketing
and management positions with Johnson Controls, Inc., Mallinckrodt Chemical, Dow
Chemical U.S.A., Amoco Performance Products, Inc., Amoco Chemical Co., Amoco
Polymers, Inc., BP Amoco Polymers, BP Chemicals, and, from 2002 to 2004, as
an Independent Business Management and Marketing Consultant.
As a senior executive Schmocker had a dynamic management career - building
and leading organizations through fast-track growth and global market expansion.
He was consistently successful in identifying and capitalizing on marketing
opportunities to drive revenue growth, expand market penetration, win dominant
market share, and deliver bottom-line profitability.
Schmocker has equally strong qualifications in general management,
organizational development, corporate finance and human resource development. He
has a superior track record in domestic and international sales, business
management and marketing.
Schmocker is fluent in English and Spanish. He is currently a member of
MENSA, Triangle Fraternity Alumni Association, Joseph Priestley Society, GPSEG,
ChemPharma, and a past member of SPI, SPE, TLARGI, ACS, TANDEC, ANTEC and ISBM.
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation which will be paid by
the Company with respect to the services to be rendered to the Company during
the first fiscal year of operations subsequent to this offering by the Company.
Harry Abrams ("Abrams") and William G. Schmocker ("Schmocker'), the current sole
Officers and Directors of the Company will serve in their capacity without
remuneration in order to establish, develop and prepare the Company for entering
its operational stage until the Company generates positive cash flow. (See "Risk
Factors.")
Cash
Name Position Remuneration
- ---- -------- ------------
Harry Abrams President and Treasurer -0-
William G. Schmocker Vice President and Secretary -0-
All Executive Officers
as a Group -0-
Future remuneration of Officers will be determined by the Board of
Directors based upon the financial condition and performance of the Company, the
financial requirements of the Company, and upon the individual performance of
each Officer. The Board of Directors intends to ensure that salaries paid to the
Company's Officers and employees are reasonable and prudent.
Officer's future remuneration will not be determined through "arm length"
negotiations, but by the Board of Directors on a case-by-case basis. The
Directors of the Company will serve in their capacities with the Company without
remuneration. The Company has no retirement, pension or profit sharing program
for the benefit of its
15
Officers, Directors or employees, but the Board of Directors may recommend one
or more such programs for adoption at such time as the Company is sufficiently
developed to warrant such a program.
LITIGATION
The Company is not presently a party to any litigation, nor to the best of
management's knowledge, is any litigation threatened.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the date hereof, the beneficial
ownership (before and after giving effect to the sale of the shares offered
hereby) of outstanding voting securities of the Company by (i) all of the
present officers and directors of the Company, naming them, (ii) all of the
present officers and directors of the Company, as a group, and (iii) each person
known by the Company, to be the beneficial owner of more than 5% of the issued
and outstanding voting securities of the Company. (See "Certain Transactions"
and "Management.")
Pro Forma Share
Ownership
Name and Address of Share Ownership as (Assuming Sale
Record Holder of Date Hereof of Maximum Shares)
- ------------------ ------------------ ------------------
(i) Harry Abrams 1,200,000 Shares 1,200,000 Shares
230 Park Avenue 80% 48%
New York, NY 10169
William G. Schmocker 300,000 Shares 300,000 Shares
4 Tulip Lane 20% 12%
Colts Neck, NJ 07722
(ii) All Officers and directors 1,500,000 Shares 1,500,000 Shares
as a group 100% 60%
(iii) Other Investors -0- Shares 1,000,000 Shares
-0-% 40%
---------------- ----------------
Total 1,500,000 Shares 2,500,000 Shares
================ ================
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized by its Articles of Incorporation to issue only a
single class of common stock, consisting of 20,000,000 shares of Common Stock,
$0.0001 par value. The outstanding shares of Common Stock offered hereby when
issued as described herein, will be fully paid and nonassessable.
NO CUMULATIVE VOTING
The holders of shares of Common Stock of the Company do not have cumulative
voting rights which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors
nominated, if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. Assuming the
present offering is completed, the present stockholders will own approximately
60% of the then outstanding shares if all shares offered hereby are sold.
16
NO PRE-EMPTIVE RIGHTS
Should any additional shares be issued by the Company, pursuant to future
public or private offerings, existing shareholders will not be given the
pre-emptive right to purchase such shares on a pro-rata basis of current
ownership.
DIVIDENDS
The payment by the Company of dividends, if any, in the future rests within
the discretion of its Board of Directors and will depend, among other things,
upon the Company's earnings, its capital requirements and its financial
condition, as well as other relevant factors. The Company, by reason of its
present financial status and its contemplated financial requirements, does not
contemplate or anticipate declaring any dividends in the immediate future.
REPORTS TO SHAREHOLDERS
The Company will furnish, within 120 days of its calendar year end, an
annual report to its stockholders which will include financial statements. The
Company may issue quarterly and such other interim reports to its stockholders
as it deems appropriate.
ISSUANCE
TERMS OF SALE AND ISSUANCE
The Company is offering, as a direct issuer of its own securities,
1,000,000 shares of Common Stock, 0.0001 par value, for sale at $10.00 per share
on a "Best Efforts No Minimum" basis for a period of six (6) months from the
date of this offering unless extended at the discretion of the Company for an
additional six (6) months.
SUITABILITY STANDARDS
A Purchaser may be an "accredited investor" (unlimited in number) or an
"unaccredited investor" (limited in number) as defined in Regulation S-B
promulgated under the Securities Act of 1933, as amended. A description of
Investors who qualify as accredited investors is provided as follows:
1. a bank, as defined in Section 3(a) (2) of the Securities Act of 1933,
as amended (the "Securities Act"), or a savings and loan institution
as defined in Section 3(a)5(A) of the Securities Act, whether acting
in its individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934; an
insurance company as defined in Section 2(13) of the Securities Act;
an investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section 2(a) (48)
of such act; a small business investment company licensed by the
United States Small Business Administration under Section 301 (c) or
(d) of the Small Business Investment Act of 1958; a plan established
and maintained by a state, its political subdivision, for the benefit
of its employees if such plan has total assets in excess of
$5,000,000; and employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of
such act, which is either a bank, savings and loan association,
insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if
a self-directed plan, with investment decisions made solely by persons
that are in this or one of the following categories; or
2. a private business development company as defined in Section 202 (a)
(22) of the Investment Advisers Act of 1940; or
3. an organization described in Section 501 (c) (3) of the Internal
Revenue Code, a corporation, a business trust, or a Partnership, not
formed for the specific purpose of acquiring the Shares with
17
total assets in excess of $5,000,000; or
4. a director of the Company; or
5. a natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his purchase exceeds $1,000,000;
or
6. a natural person who had an individual income in excess of $200,000 in
each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income level in the
current year; or
7. a trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring the Shares whose purchase is directed by
a sophisticated person as described in Section 230.506(b)(2)(ii) of
Regulation D promulgated under the Securities Act; or
8. an entity in which all of the equity owners are one of the preceding
categories.
For investors who are not accredited investors, the Company has established
the following minimum suitability standards, whereby each such investor:
1. The investment in the securities offered hereby does not exceed 10% of
an investor's net worth (exclusive of home, furnishings, and
automobiles) or the investor is purchasing in a fiduciary capacity for
a person or entity meeting such investment standard.
2. The investor can bear the economic risks of the investment for an
indefinite period of time and at the present time can afford a
complete loss of such investment.
3. The investor has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks
of an investment in the securities issued by the Company or the
investor and his investment advisor have such knowledge and experience
in financial and business matters that they are capable of evaluating
the merits and risks of an investment in the securities offered by the
Company.
These standards represent minimum requirements for non-accredited investors
and do not necessarily mean that these securities are a suitable investment for
any investor meeting these requirements. Moreover, the Company reserves the
right to modify the suitability standards on a case-by-case basis in view of an
investor's financial circumstances or investment experience. In addition,
prospective investors should be aware that certain States in which the Company
may make the offering have established or may require different suitability
standards and minimum purchase requirements.
The Company has established a minimum purchase requirement of $5,000.00 and
may, in its sole discretion, accept a lesser purchase amount provided there are
not more than 35 non-accredited purchasers of the securities offered hereby or
except as otherwise provided in Regulation S-B and applicable state securities
laws. The Company may accept subscriptions from any number of purchasers who
qualify as accredited investors also pursuant to Regulation S-B and subject to
applicable state securities laws.
Prospective investors will be required to execute ancillary subscription
documents prepared for the offering. The subscription documents are subject to
the approval and acceptance by the Company. The Company may reject a
subscription for any reason whatsoever. (See "Subscription Information.")
SUBSCRIPTION INFORMATION
The outstanding capital stock of the Company has been duly and validly
authorized, issued and is fully paid and nonassessable. The Company's Articles
of Incorporation, By-Laws and shareholder records conform to all statements made
in this Prospectus with respect thereto.
18
The Company has been legally incorporated and is now, and always during the
period of the offering will be, a validly existing corporation under the laws of
the State of New York, lawfully qualified to conduct the business for which it
was organized and which it proposes to conduct. The Company, during the period
of the offering, intends to qualify its business as a foreign corporation in
each jurisdiction where the nature of its business requires such qualification.
STOCK CERTIFICATE AND TRANSFER AGENT
Stock certificates representing the Shares offered herein shall be
initially evidenced by a Subscription Agreement and acceptance letter, executed
by the Chairman of the board of directors of the Company and sent to each
subscriber, until the actual Common Stock certificate is prepared and mailed to
each subscriber, which shall be within 60 days of the acceptance by the Company
of the Subscription Agreement. The Company has elected to act as its own
transfer agent until such time as a transfer agent is appointed. Upon the
appointment of a transfer agent all shareholders will be notified by mail. Any
questions related to stock certificates should be directed to the Company at:
EXECUTIVE OFFICE SUITES
Attn: ABALONE, INC.
230 Park Avenue - Suite 648
New York, NY 10169
Phone 212-286-1100
Facsimile 212-286-9828
Checks should be made payable as follows: ABALONE, INC.
The following provisions apply to the Common Stock:
All subscriptions are subject to acceptance by the Company. If the
subscription is not accepted, subscribers' checks will be returned.
A signed copy of a Subscription Agreement/Investment Letter must be
returned together with an Offeree Representative Certificate, if
applicable, a Non-Disclosure Confidentiality Agreement and an Investor
Suitability Questionnaire, all of which will be supplied by the
Company to each investor.
The Company may accept or reject any offer to subscribe as, in its sole and
uncontrolled discretion, it deems advisable.
EXPERTS
Meilke and Holladay, LLP, independent certified accountants, have audited
our financial statements included in this prospectus. These financial statements
are included herein in reliance upon their report and upon their authority as
experts in accounting and auditing.
LEGAL MATTERS
Legal matters in connection with the securities offered hereby have been
passed upon for the Company by itself. It did not retain securities counsel.
Neither the Company nor any of its subsidiaries are presently parties to any
litigation.
LEGAL OPINIONS
The validity of the authorization and issuance of the Common Stock offered
hereby will be passed upon for the Company by Emanuel Baetich, Esq., New York,
NY.
19
ADDITIONAL INFORMATION
The Company will file with the Securities and Exchange Commission all
reports and other documentation required to secure registration as provided in
Section 4(2) of the Securities Act of 1933, as amended, and Regulation S-B under
the Act and with the securities administrators of all states in which this
offering is made, all reports and other documentation required to secure the
registration requirements there.
Prospective investors may direct any questions or requests for additional
information to Harry Abrams, President of the Company, or William Schmocker,
Vice President of the Company, at (212) 286-1100.
TAXATION
There have been certain recent adjustments to the tax law that may affect
investor decisions. Perhaps the most significant adjustment is that of long-term
capital gains. Real estate, stocks and other long-term investments that exceed
one year are now taxed at only a 15% long-term capital gains tax rate versus the
previous tax law, which was taxed at 20%.
Nothing has changed as it relates to capital losses. Congress did not raise
the $3,000 annual limitation on deductions of excess capital losses. You are
still only allowed to take up to $3,000 annually while any remainder gets
carried forward to the next tax year.
Giving your child or grandchild appreciated securities that you have owned
for over one year can lower your overall tax liability. If the child is in a
10% tax bracket and is at least 14 years old, gains on the child's sale of the
securities will be taxed at just 5%. That makes giving securities and other
long-term investments to your children and grandchildren well worth
considering.
Nothing has changed as it relates to short-term capital gains, that being
assets owned for less than one year. They currently continue to be taxed at the
ordinary income tax rate, the top level of which, on a Federal basis is, 35%.
PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS PROSPECTUS AS
LEGAL OR TAX ADVICE. EACH INVESTOR IS ADVISED TO CONSULT WITH HIS PERSONAL
COUNSEL, ACCOUNTANT AND OTHER ADVISORS AS TO LEGAL, TAX, ECONOMIC, AND RELATED
MATTERS CONCERNING THE INVESTMENT DESCRIBED HEREIN AND IT'S SUITAILITY FOR HIM.
Special note regarding forward looking statements
This Form SB-2 contains forward-looking statements. For this purpose, any
statements contained in this Form SB-2 that are not statements of historical
fact may be deemed to be forward-looking statements. You can identify
forward-looking statements by those that are not historical in nature,
particularly those that use terminology such as "may," "will," "should,"
"expects," "anticipates," "contemplates," "estimates," "believes," "plans,"
"projected," "predicts," "potential," or "continue" or the negative of these
similar terms. In evaluating these forward-looking statements, you should
consider various factors, including those listed below under the heading "Risk
Factors". The Company's actual results may differ significantly from the
results projected in the forward-looking statements. The Company assumes no
obligation to update forward-looking statements
20
FINANCIAL STATEMENTS
ABALONE, INC.
BALANCE SHEET
JANUARY 31, 2006
21
MEILKE & HOLLADAY, LLP
CERTIFIED PUBLIC ACCOUNTANT
230 PARK AVENUE SUITE 2430
NEW YORK, NEW YORK 10169
TELEPHONE (212) 808-4180
TELECOPIER (212) 808-0436
EMAIL: RAN.HOLLADAY@ATTORNEY-CPA.COM
C. RAN(DOLPH) HOLLADAY PETER A. MEILKE (1946-1999)
February 3, 2006
Shareholders
Abalone, Inc.
New York, New York
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Abalone, Inc., as of
January 31, 2006. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
statement 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 financial statements are free of material
misstatements. 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 statement referred to above presents fairly, in all
material respects, the net assets of Abalone, Inc., as of January 31, 2006 in
conformity with generally accepted accounting principles.
/s/ Meilke & Holladay, LLP
----------------------------------------
MEILKE & HOLLADAY, LLP
22
ABALONE, INC.
BALANCE SHEET
AS OF JANUARY 31, 2006
ASSETS:
Cash $5,000
------
TOTAL ASSETS: $5,000
======
LIABILITIES AND SHAREHOLDERS'S EQUITY
LIABILITIES: 0
SHAREHOLDER'S EQUITY
Common Stock $ 150
(Par Value of $0.0001, 20,000,000
shares authorized and 1,500,000
shares outstanding)
Additional Paid in Captial 4,850
------
TOTAL SHAREHOLDER'S EQUITY $5,000
------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $5,000
======
23
NOTES TO FINANCIAL STATEMENTS
ABALONE, INC.
AS OF JANUARY 31, 2006
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis for Recording Income:
The Company records income and expenses on the accrual basis, reporting all
income when earned and all expenses when incurred.
24
TABLE OF CONTENTS
PROSPECTUS SUMMARY............................................ 3
INTRODUCTION STATEMENT........................................ 5
RISK FACTORS.................................................. 5
DILUTION...................................................... 9
DETERMINATION OF OFFERING PRICE............................... 10
USE OF PROCEEDS............................................... 10
CAPITALIZATION................................................ 11
CERTAIN TRANSACTIONS.......................................... 11
BUSINESS...................................................... 11
SECURITY AND EXCHANGE COMMISSION'S FINAL RULE REGARDING THE
OFFER AND SALE OF SECURITIES TO CANADIAN TAX-DEFERRED
RETIREMENT SAVINGS ACCOUNTS................................... 13
MANAGEMENT.................................................... 13
LITIGATION.................................................... 16
PRINCIPAL STOCKHOLDERS........................................ 16
DESCRIPTION OF SECURITIES..................................... 16
ISSUANCE...................................................... 17
SUBSCRIPTION INFORMATION...................................... 18
EXPERTS....................................................... 19
LEGAL MATTERS................................................. 19
LEGAL OPINIONS................................................ 19
ADDITIONAL INFORMATION........................................ 20
TAXATION...................................................... 20
FINANCIAL STATEMENTS.......................................... 21
25
1,000,000 SHARES
ABALONE, INC.
OFFERING PRICE: $10.00 PER SHARE
PROSPECTUS
2006
26
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS, INSURANCE -
(a) A corporation may 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
(other than an action by or in the right of the corporation) 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 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 such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with 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 no lo contendere or its equivalent, shall 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 with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may 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 as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his duty to the corporation unless and to the extent that the Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnify for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) 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 subsections (a) and (b) of this
action, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall 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 because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding, or (2) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
board of directors in the specific case upon receipt of any undertaking by or on
behalf of such director or officer to repay such amount unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
II-1
(f) The indemnification provided by this section shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
(g) A corporation shall have power to purchase and maintain insurance 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 against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "lines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee, or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of any employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the estimated expenses to be incurred by
the Registrant in connection with the issuance and distribution of the
Securities being registered hereby, other than underwriting discounts and
commission.
Registration Fee $ 1,070.00
Printing and Engraving $ 3,000.00
Accountants' Fees and Expenses $ 3,500.00
Blue Sky Filing Fees and Expenses $ 5,000.00
Legal Fees and Expenses $10,000.00
NASD $ 0
Underwriter's Expenses $ 0
Transfer Agent's and Registrar's
Fees and Expenses $ 0
Miscellaneous $ 5,000.00
----------
TOTAL: $27,570.00
==========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
There were no securities sold by registrant within the past three
years which were not registered under The Securities Act of 1933.
II-2
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
A. Copy of Specimen Stock Certificate
B. Certificate of Incorporation filed January 12, 2006
C. By-Laws of Registrant
D. Opinion and Consent of Counsel for Registrant
E. Consent of Certified Public Accountant
ITEM 28. UNDERTAKINGS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a) (3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
Insofar as indemnification for liabilities under the Securities Act of 1933
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in a successful defense of any action, suit or
proceeding) is asserted by a director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issuer.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form SB-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the County of New York, State of New York on March 7, 2006.
Abalone, Inc.
/s/ Harry Abrams
----------------------------------------
Harry Abrams,
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ Harry Abrams Chairman of the Board, March 7, 2006
- ------------------------- President, Chief Financial Officer,
Harry Abrams Treasurer
/s/ William Schmocker Vice President, Secretary March 7, 2006
- -------------------------
William Schmocker
BY: /s/ Harry Abrams
------------------------------------
Harry Abrams
Attorney-in-Fact
LIST OF CONSENTS
CONSENT OF COUNSEL
The consent of Emanuel Baetich, Esq., is contained in his opinion, Exhibit D.
CONSENT OF CERTIFIED PUBLIC ACCOUNTANT
The consent of C. Randolph Holladay, C.P.A. appears in Exhibit E.
II-5
EXHIBIT INDEX
EXHIBIT PAGE NUMBER
- ------- -----------
A.(+) COPY OF SPECIMEN STOCK CERTIFICATE A-1
B.(+) CERTIFICATE OF INCORPORATION FILED JANUARY 12, 2006 B-1
C.(+) BY-LAWS OF REGISTRANT C-1
D.(+) OPINION AND CONSENT OF COUNSEL FOR REGISTRANT D-1
E.(+) CONSENT OF CERTIFIED PUBLIC ACCOUNTANT E-1
- ---------------
(+) Previously Filed.
II-6