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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 2001
REGISTRATION NO. 333-54116
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ACKEEOX CORP.
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(Name of small business issuer in its charter)
FLORIDA 0100 65-1047681
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(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation Industrial Classification Identification No.)
or organization) Code Number)
2835 North Military Trail
West Palm Beach, Florida 33409
(561) 616-0776
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(Address and telephone number of principal executive offices and
principal place of business)
JEROLD H. KRITCHMAN
President and Chief Executive Officer
Ackeeox Corp.
2835 North Military Trail
West Palm Beach, Florida 33409
(561) 616-0776
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(Name, address and telephone number of agent for service)
Copies to:
MARK H. MIRKIN, ESQ.
Mirkin & Woolf, P.A.
1700 Palm Beach Lakes Boulevard #580
West Palm Beach, Florida 33401
(561) 687-4460
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
this registration statement becomes effective.
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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,
please check the following box. [ ]
Calculation of Registration Fee
TITLE OF EACH CLASS OF
SECURITIES TO BE AMOUNT TO OFFERING PRICE PER AGGREGATE AMOUNT OF
REGISTERED BE REGISTERED SECURITY OFFERING PRICE REGISTRATION FEE
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Units, consisting of
one share of common
stock and one warrant
to purchase one share
of common stock 1,000,000 $5.00 $5,000,000 $1250.00
Shares of common stock
underlying the
warrants included in
the units 1,000,000 $5.00 $5,000,000 $1250.00
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Total registration fee $2500.00
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.
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SUBJECT TO COMPLETION
PROSPECTUS DATED ___________, 2001
PROSPECTUS
ACKEEOX CORP.
1,000,000 UNITS
EACH UNIT CONSISTING OF ONE SHARE OF COMMON STOCK AND A WARRANT
TO PURCHASE ONE SHARE OF COMMON STOCK
This is an initial public offering of units of Ackeeox Corp. We are offering a
minimum of 200,000 and a maximum of 1,000,000 units, each unit consisting of one
share of our common stock and a three-year warrant to purchase one share of our
common stock at a price of $5.00 per share. There is currently no public market
for the units, the common stock or the warrants. The price to the public in the
offering is $5.00 per unit. Each subscriber is required to purchase a minimum of
20 units. The units will trade as a whole until the common stock and the
warrants included in the units become separately transferable on September 30,
2002.
We anticipate that the units, common stock and warrants will be listed on the
American Stock Exchange under the symbols ________, ________ and ________.
INVESTING IN THE UNITS INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SEC- URITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The purpose of the offering is to capitalize our new venture with the working
capital needed to commence operations.
We will not utilize an underwriter to offer or sell the units. Instead, our
executive officers will offer and sell the units on our behalf on a "best
efforts" basis. The officers will not receive any commissions or additional
compensation for these efforts.
The initial expiration date of the offering is September 30, 2001. However, we
reserve the right to extend the expiration date without notice to subscribers
until December 31, 2001.
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We will deposit all amounts received from subscribers into an escrow account
which we have established with BankAtlantic, FSB, as escrow agent. The escrow
agent will hold all of the amounts deposited in the escrow account subject to
the following condition: The escrow agent will return all of the funds deposited
in the escrow account to subscribers, without interest or deduction, in the
event that we do not sell at least 200,000 units (i.e., raise at least
$1,000,000) prior to the expiration date of the offering.
After we have sold 200,000 units we may continue to offer any unsold units until
the expiration date of the offering.
We will issue common stock certificates and warrant certificates to subscribers
once the escrow agent releases the proceeds from the escrow account to us. As a
result, subscribers may receive evidence of their investment at different times.
The escrow account will be interest-bearing. We will retain all interest earned
on the account, regardless of whether the offering is completed or canceled.
Subscribers may not revoke any subscriptions for units without our consent,
which may be withheld in our sole discretion.
We have the right to cancel the offering at any time prior to the
release of funds from the escrow account. If we cancel the offering, the escrow
agent will promptly return all funds received from subscribers, without interest
or deduction.
UNDERWRITING
PRICE TO PUBLIC COMMISSIONS
---------------- ---------------
Per Unit................... $5.00 None
Minimum Offering*........... $1,000,000.00 None
Maximum Offering*........... $5,000,000.00 None
*Before deducting offering expenses payable by the Company estimated at
$100,000.
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND IMMEDIATE AND SUBSTANTIAL DILUTION. SEE "RISK FACTORS" BEGINNING ON PAGE 5
AND "DILUTION" BEGINNING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS TO BE
CONSIDERED BY INVESTORS.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is _____________, 2001.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY..............................................4
RISK FACTORS....................................................5
USE OF PROCEEDS................................................14
DILUTION ......................................................16
CAPITALIZATION.................................................17
DIVIDEND POLICY................................................18
SELECTED FINANCIAL DATA........................................18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATION...........................................19
BUSINESS ......................................................21
MANAGEMENT.....................................................30
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.....................................................33
CERTAIN TRANSACTIONS...........................................34
DESCRIPTION OF SECURITIES......................................34
SHARES ELIGIBLE FOR FUTURE SALE................................39
TERMS OF OFFERING..............................................40
LEGAL MATTERS..................................................42
EXPERTS........................................................42
ADDITIONAL INFORMATION.........................................43
INDEX TO FINANCIAL STATEMENTS.................................F-1
EXHIBIT A - SUBSCRIPTION AGREEMENT
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PROSPECTUS SUMMARY
This summary highlights information contained in other parts of this prospectus.
Because it is a summary, it does not contain all of the information that you
should consider before investing in our units. You should read the entire
prospectus carefully.
OUR PLANNED BUSINESSES
The Company was formed in October 2000 to pursue two businesses: domestic
cultivation and commercialization of akee, the national fruit of Jamaica, and
development of specialty food stores based on the OXTAILS & MORE store in West
Palm Beach, Florida pursuant to a license from Oxtails Corp. Oxtails Corp. is
owned by Jerold H. Kritchman and his son, Jayme A. Kritchman, founders of the
Company.
OUR MANAGEMENT TEAM
Jerold Kritchman and his son Jayme Kritchman are the founders, sole
shareholders, officers and directors of the Company. Jerold has spent over 25
years in the food industry. Jayme has spent over six years in the food industry.
OUR ADDRESS AND TELEPHONE NUMBER
Our address is 2835 North Military Trail, West Palm Beach, Flori- da, 33409 and
our telephone number is (561) 616-0776. We share offices with Oxtails Corp.
THE OFFERING
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Securities Offered for Sale: We are offering a minimum of 200,000 and a
maximum of 1,000,000 units, each unit consisting of one
share of our common stock and one warrant to purchase one
share of our common stock.
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Price to Public: $5.00 per unit
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Shares to be
Outstanding
after the
Offering: We will have a minimum of 3,200,000 and a maximum of
4,000,000 shares of common stock outstanding after the
offering.
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Warrants and
Options to be
Outstanding
after the
Offering: We will have a minimum of 169,711 and a maximum of 1,169,711
warrants and options to purchase common stock outstanding
after the offering.
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Exercise Terms: The warrants are exercisable at any time after they
become separately tradeable, each to purchase one share of
common stock at a price of $5.00.
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Expiration Date: The warrants expire June 30, 2004.
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Escrow Account: We have established an escrow account at
BankAtlantic, FSB. We will deposit all proceeds of the
offering into the escrow account. The escrow agent will
release these amounts to us if we sell 200,000 units by the
expiration date.
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Secondary
Market: We shall apply to list our units, shares of common stock and
warrants on the American Stock Exchange.
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Use of
Proceeds: We will utilize the proceeds of the offering to finance the
launch of our two businesses.
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Risk Factors: You should read the "Risk Factors" section below
before deciding to invest in our units.
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RISK FACTORS
An investment in our units involves a high degree of risk. You should carefully
read this prospectus in its entirety and consider the risks below and other
information in this prospectus as well as general investment risks before
deciding to invest in our units. An investment in our units should be made only
by investors who can assume high risks and is suitable only for investors able
to sustain the loss of their entire investment.
1. WE HAVE INCURRED A LOSS SINCE INCEPTION AND WE MAY CONTINUE TO INCUR
LOSSES.
We incorporated on October 12, 2000. From that date through December 31, 2000,
we have incurred a loss of $2330. This loss was primarily due to the costs of
planning this offering. See "Management's Discussion and Analysis of Financial
Condition or Plan of Operation."
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We expect to incur a loss in 2001 arising from the costs of establishing our
businesses. A newly-formed agricultural business is ordinarily expected to incur
operating losses in its early years because of an inability to generate
sufficient revenues to cover operating expenses. Newly-planted akee seedlings
will not produce fruit until 2004. Those operating losses can be significant and
can occur for longer periods than planned depending on the business' ability to
control operating expenses and generate revenues. We do not plan to open a new
specialty food store before the end of 2001 because of the long lead time
necessary for site planning, site preparation, design, construction, stocking,
etc.
We do not expect to become profitable for several years. Our ability to become
profitable by that time depends on our ability to establish our new businesses.
There is a risk that we may never become profitable.
If the proceeds of this offering are not sufficient to enable us to lease and
purchase grove land, plant, cultivate and harvest akee trees, construct and
operate a canning and packaging facility, market and sell canned product and
develop specialty stores and our efforts to raise additional financing are
unsuccessful, we may be required to cease operations, which would result in the
loss of your entire investment.
2. THE ESCROW AGENT MAY HOLD YOUR FUNDS UNTIL SEPTEMBER 30, 2001 OR DECEMBER
31, 2001 AND THEN RETURN THEM TO YOU, WITHOUT INTEREST.
The escrow agent will hold the funds deposited in the escrow account until
either the condition to release the funds is fulfilled or the expiration date of
the offering. As a result, it is possible that the escrow agent could hold the
funds in escrow until September 30, 2001, or December 31, 2001 if the offering
is extended. On that date, the escrow agent would be required to return the
funds in the escrow account to you without interest or deduction if we have not
sold 200,000 units.
3. YOU WILL NOT RECEIVE ANY INTEREST ON THE FUNDS DEPOSITED IN ESCROW EVEN IF
THE ESCROW AGENT RETURNS YOUR FUNDS.
We will retain all interest earned on the escrow account, regardless of whether
the offering is consummated or canceled.
4. WE ARE DEPENDENT UPON THE EFFORTS OF OUR KEY MANAGEMENT PER- SONNEL.
Our future success depends, in large part, upon the continuing efforts of Jerold
and Jayme Kritchman, our key management personnel. The loss of services of one
or both of these key employees could have a material adverse effect on our
operations and financial condition. We can provide no assurance that we will be
able to retain such key employees or attract or retain qualified per-
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sonnel in the future. We do not maintain "key man" life insurance that would
result in a payment to us in the event of the death of either of our executives.
Furthermore, our executives also own and operate Oxtails Corp., to which they
plan to devote about half of their time. As a result, certain conflicts of
interest may exist between the Company and its executives.
5. WE MAY NOT BE ABLE TO HIRE ENOUGH ADDITIONAL MANAGEMENT AND OTHER PERSONNEL
AS OUR BUSINESS GROWS.
The success of our business depends upon our ability to attract and retain
motivated, qualified management and other personnel. We face significant
competition in the recruitment of qualified employees. If we are unable to
recruit or retain a sufficient number of qualified employees, or if the costs of
compensation, or of outsourcing these tasks to third-party providers, or of
employee benefits were to increase substantially, our business would suffer. Our
employees are not unionized. If they organize into labor unions, our labor costs
should increase, perhaps significantly.
6. WE ARE INEXPERIENCED IN AGRIBUSINESS.
Because we have no experience in agricultural business, we will be heavily
reliant upon the advice of third party consultants, which may cause us to
exhaust our financial resources prior to commencing business.
7. WE DO NOT EXPECT TO PAY DIVIDENDS ON OUR COMMON STOCK FOR THE FORESEEABLE
FUTURE.
All earnings of the Company will be retained for our use in the operation of our
businesses. Accordingly, we do not anticipate that we will pay dividends on our
common stock in the foreseeable future. See "Dividend Policy."
8. OUR MANAGEMENT ARBITRARILY DETERMINED THE OFFERING PRICE FOR THE UNITS
BECAUSE THERE IS NO PUBLIC TRADING MARKET FOR OUR COMMON STOCK OR OUR
WARRANTS.
Prior to the offering, there has been no active trading market in our common
stock or our warrants. Our Board of Directors arbitrarily determined the
offering price without the assistance of underwriters or other valuation
experts. The offering price bears no relationship to the value of our assets,
book value, shareholders' equity or other typical criteria of value, and may
exceed the price at which shares of common stock or warrants may be bought or
sold after the offering. Consequently, you may lose a portion of your investment
simply as a result of an inaccurately-determined offering price.
9. FUTURE SALES OF OUR COMMON STOCK COULD DEPRESS THE PRICE OF YOUR COMMON
STOCK.
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After the offering, the market price of our common stock could be materially and
adversely affected by the sale or the availability for sale of shares of common
stock now held by our two current shareholders. After the offering, we will have
a minimum of 3,200,000 and a maximum of 4,000,000 shares of common stock
outstanding.
Only the shares sold in the offering will be eligible for sale in the open
market without restriction. Our two current shareholders hold an aggregate of
3,000,000 shares. We expect that they will not acquire shares in the offering.
See "Shares Eligible For Future Sale."
10. YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION IN THE VALUE OF YOUR
SHARES.
Investors purchasing units in this offering will incur immediate and substantial
dilution in the value of the shares of common stock they acquire. If we sell a
minimum of 200,000 units in the offering, then the pro forma book value of one
share of common stock as of December 31, 2000 would have been $0.3069, or
$4.6931 less than the offering price of $5.00 per unit, assuming all of the
$5.00 unit price is attributed to the shares. If we were to sell a maximum of
1,000,000 units in the offering, then the pro forma net tangible book value as
of December 31, 2000 would have been $1.2455, or $3.7545 less than the offering
price of $5.00 per unit, assuming all of the $5.00 unit price is attributed to
the shares. See "Dilution."
11. WE MAY NEED TO RAISE ADDITIONAL CAPITAL WHICH COULD DILUTE YOUR OWNERSHIP.
We may need to raise additional capital in the future to support our businesses
and expand our operations. At the present time, we do not expect to sell
additional shares of common stock or other equity securities before 2002.
However, we believe that we will need to sell additional securities after that
time in order to support the planned expansion of our businesses. If we do sell
additional securities in the future to raise capital, the sale will dilute your
ownership interest and such dilution could be substantial.
12. CERTAIN PROVISIONS OF FLORIDA LAW MAY DISCOURAGE OR PREVENT A TAKEOVER OF
OUR COMPANY AND RESULT IN A LOWER MARKET PRICE FOR OUR COMMON STOCK.
Florida law, as well as certain federal regulations, contain anti-takeover
provisions that apply to us. While these provisions may provide us with
flexibility in managing our Company, they could discourage potential buyers from
seeking to acquire us, even though certain shareholders may wish to participate
in a sale transaction. These provisions could also potentially adversely affect
the market price of our common stock. See "Description of Securities --
Anti-Takeover Provisions."
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13. WE DO NOT EXPECT AN ACTIVE PUBLIC TRADING MARKET FOR OUR SECURITIES TO
DEVELOP AFTER THE OFFERING.
There is currently no established public trading market for our securities and
we do not expect an active public trading market to develop in the future. We do
not currently have any brokers or other persons who make a market in our
securities although we will encourage brokers to establish a market in the
future. We intend to seek the listing of our securities on the American Stock
Exchange. The absence of an active public trading market for our securities will
make it difficult for investors to resell their securities and is likely to
depress the price at which the securities may be resold.
14. NO SEPARATE TRANSFER OF COMMON STOCK OR WARRANTS.
The common stock and the warrants included in the units will not be separately
transferable and thus may only be purchased together as units until September
30, 2002. It is anticipated that they will be quoted on the American Stock
Exchange. The liquidity and stock price of the Company's securities in the
secondary market may be adversely affected in that there can be no assurance
that any holder of the Company's securities will be able to sell his securities
readily.
15. DISCLOSURE RELATING TO LOW-PRICED "PENNY" STOCKS.
If the trading price of the common stock falls below $5.00 per share, trading in
the common stock would become subject to certain rules promulgated under the
Securities and Exchange Act of 1934 which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any equity security that has a market price of less than
$5.00 per share). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchaser and have received the purchaser's written consent to the
transaction prior to sale. The additional burdens imposed upon broker-dealers by
such requirements may discourage them from effecting transactions in the common
stock, thereby severely limiting the market liquidity of the common stock and
the ability of purchasers in this offering to sell the common stock in the
secondary market.
16. CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.
The Company will be able to issue shares of common stock upon exercise of the
warrants only if there is a current prospectus relating to such common stock
under an effective registration statement filed with the Securities and Exchange
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Commission and only if such shares of common stock are qualified for sale or
exempt from qualification under applicable state securities laws of the
jurisdictions in which the various warrantholders reside. There can be no
assurance that the Company will be able to do so. Although the warrants will not
knowingly be sold to purchasers in jurisdictions in which the warrants are not
registered or otherwise qualified for sale, purchasers may buy warrants in the
aftermarket or may move to jurisdictions in which the common stock issuable upon
exercise of the warrants is not so registered or qualified. In this event, the
Company would be unable to issue shares of common stock to those warrantholders
upon exercise of the warrants unless and until the common stock issuable upon
exercise of the warrants is qualified for sale or exempt from qualification in
jurisdictions in which such holders reside. Accordingly, the warrants may be
deprived of any value if a then current prospectus covering the common stock
issuable upon exercise of the warrants is not effective pursuant to an effective
registration statement or if such common stock is not qualified or exempt from
qualification in the jurisdictions in which the warrantholders reside. There can
be no assurance that the Company will be able to effect any required
registration or qualification.
17. YOU WILL HAVE MINIMAL INFLUENCE ON SHAREHOLDER DECISIONS.
Our two current shareholders beneficially own all 3,000,000 shares of common
stock outstanding as of December 31, 2000. They are not expected to purchase
units in the offering. Jerold H. Kritchman, our president and a director, and
Jayme A. Kritchman, our executive vice president/secretary/treasurer and a
director, each currently holds 50% of our shares of common stock. See
"Securities Ownership of Certain Beneficial Owners and Management." Our two
directors/executive officers have the ability to control our management policies
and decisions as well as issues that require a shareholder vote. If our
directors/executive officers vote together, they can control the outcome of
certain corporate actions requiring shareholder approval, including the election
of directors and the approval or non-approval of significant corporate
transactions, such as the merger or sale of all or substantially all of our
assets. Their interests may differ from the interests of other shareholders with
respect to management issues.
18. THE TWO BUSINESSES WE PLAN TO ENGAGE IN ARE COMPETITIVE.
Food production in the U.S. is a competitive business in which sizable
well-known companies compete. Although the canned akee market in the United
States is largely undeveloped, Ashman Food Products Ltd. and Canco Ltd. export
canned akee to the United States from Jamaica for sale at specialty food stores
and on the Internet via e-commerce retailers such as www.caribship.com. With the
opening of the United States market in July 2000, growers in other Caribbean
nations, Mexico and Hawaii are reported to be investigating entry into the
market. With the entry of new entities into the market and the ability to grow
and sell akee in the United States, it is possible that competitive forces may
depress akee prices.
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19. AGRIBUSINESS IS SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION.
The Company's agribusiness operations and properties will be subject to
regulation by various federal, state and local governmental agencies. As a
producer of food products, the Company's operations will be subject to stringent
production, packaging, quality, labeling and distribution standards, including
the federal Food and Drug Act. The operations of the Company's production and
distribution facilities will be subject to various federal, state and local
environmental laws and workplace regulations. These laws and regulations include
the Occupational Safety and Health Act, the Fair Labor Standards Act, the Clean
Air Act, and the Clean Water Act, among others. The United States Department of
Agriculture and the Florida Department of Agriculture have regulations to which
the Company must adhere. Compliance with, or any violation of, current and
future laws or regulations could require material expenditures by the Company or
otherwise have a material adverse effect on the Company's business, financial
condition and results of operations.
20. AGRIBUSINESS IS SUBJECT TO ENVIRONMENTAL CONTROLS.
The business operations of the Company and the occupancy and operation of real
property by the Company will be subject to extensive and changing federal, state
and local environmental laws and regulations pertaining to storage, use and
production of certain hazardous and other regulated materials, the release or
discharge of contaminants into the environment, the operation of pollution
control equipment and systems and the management and disposition of wastes
(including solid and hazardous wastes) or otherwise relating to protection of
the environment.
21. THE FOOD INDUSTRY POSES GENERAL RISKS.
The food processing industry is subject to a number of general risks, including:
(i) potential adverse changes in general economic conditions; (ii) evolving
consumer preferences; (iii) federal, state and local food processing controls;
(iv) consumer product liability claims; (v) product tampering; and (vi) the
availability and cost of product liability insurance. The realization of any of
these risks could have a material adverse effect on the Company's business,
financial condition and results of operations.
22. THE COMPANY IS SUBJECT TO PRODUCT LIABILITY CLAIMS AND PRODUCT RECALLS.
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The Company may be liable if the consumption of any of its food products causes
injury, illness or death. The Company also may be required to recall food
products that become contaminated or are damaged or mislabeled. A product
liability judgment against the Company or a product recall could have a material
adverse effect on the Company's business, financial condition and results of
operations. Although the Company intends to purchase product liability
insurance, there can be no assurance that it will be obtainable at an affordable
cost or that the deductible thereunder will not be so large that its payment by
the Company would not have an adverse effect on the Company.
23. SEVERE WEATHER CONDITIONS AND NATURAL DISASTERS COULD HARM THE GROVES.
Severe weather conditions and natural disasters, such as freezes, frosts,
floods, hurricanes, tornados, droughts, fires or earthquake, may affect the
Company's groves and its facilities. No assurance can be given that, if such
adverse weather conditions persist, akee cultivation will not be affected with
consequent adverse effects on the Company's earnings potential.
24. THE COMPANY WILL BE DEPENDENT ON ONE CANNING AND PACKAGING FACILITY.
A disruption in regularly conducted business at the Company's planned
manufacturing operations in Palm Beach County, Florida caused by a catastrophic
event would have a material adverse effect on the Company's operations.
25. THE FOOD INDUSTRY IN GENERAL IS AFFECTED BY LITIGATION AND PUBLICITY
CONCERNING FOOD QUALITY, HEALTH AND OTHER ISSUES, WHICH CAN CAUSE CUSTOMERS
TO AVOID OUR PRODUCTS AND SUBJECT US TO LIABILITIES.
Food businesses can be adversely affected by litigation and complaints from
customers or government authorities resulting from food quality, illness, injury
or other health concerns or operating issues stemming from one store or a
limited number of stores. Adverse publicity about any allegations against our
products may negatively affect us and our business, regardless of whether the
allegations are true, by discouraging customers from buying our products. A
lawsuit or claim could result in a decision against us that could materially
adversely affect our business and results of operations. Also, we could incur
substantial litigation costs, regardless of the result of the litigation.
26. DEFECTIVE SEEDS COULD RESULT IN UNUSABLE TREES.
Seeds may contain adverse characteristics that are difficult to detect prior to
cultivation. Contaminated seeds could result in lost crops. Crop failures could
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result in negative publicity, which could have a material adverse effect on our
business, results of operations or financial condition.
27. UNAVAILABILITY OF GROVE LAND.
Palm Beach County is acquiring land in the Agricultural Reserve area for leasing
to farmers and new farmers. Two tracts, each more than 30 acres, are anticipated
to be advertised for lease in the near future via a competitive process overseen
by the Board of County Commissioners. Preference will be given to those who have
farmed in the area in the past or who currently do so. There can be no assurance
that land will be available for leasing by the Company. Although the Company
plans to purchase grove land with a portion of the proceeds of this offering,
there can be no assurance that suitable land will be available for purchase in
Palm Beach County or at a price attractive to the Company.
28. THE LOSS OF THE OXTAILS LICENSE COULD HARM OUR BUSINESS.
Although Jerold and Jayme Kritchman control both Oxtails Corp., our licensor of
the right to open OXTAILS & MORE specialty food stores, and the Company, such
ownership could change. In the event we do not perform satisfactorily with
respect to the licensed rights granted to us, the license could be revoked,
leaving us solely in the akee cultivation business.
29. WE MAY FAIL TO OPEN NEW SPECIALTY STORES.
We may not be able to open new specialty stores as currently planned or
otherwise. Our ability to do so will depend upon a number of factors, many of
which are beyond our control, including our ability to:
- select and secure suitable sites;
- negotiate acceptable lease terms for new sites;
- secure required governmental permits and approvals;
- coordinate and manage operations in multiple and perhaps
geographically distant and diverse locations; and
- generate funds from operations or obtain adequate financing from
third parties on favorable terms or at all.
Our failure to open additional stores as planned will significantly and
negatively impact our retail expansion plans.
30. NEW SPECIALTY STORES MAY NOT SUCCEED.
We currently plan to open one specialty food store during calendar 2001 and one
or two specialty stores in succeeding years. Our proposed expansion will require
the implementation of enhanced operational and financial systems as well as
additional management, operational and financial resources. Failure to implement
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16
these systems or to have these resources would likely restrict us from opening
new stores as planned. In addition, if new stores are opened, our failure to
achieve positive results at these stores would hurt our business.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.
We have made forward-looking statements in this prospectus that are subject to
risks and uncertainties. These forward-looking statements include information
about possible or assumed future results of our operations or performance after
the offering. When we use any of the words "believes," "expects," "anticipates,"
"intends," or "may" or similar expressions, we are making forward-looking
statements. Many possible events or factors could affect our future financial
results and could cause those results or performances to differ materially from
those expressed in our forward-looking statements. These possible events or
factors include the following:
o legal and regulatory risks and uncertainties;
o economic, political and competitive forces affecting our businesses,
markets or securities; and
o the risk that our analyses of these risks and forces could be
incorrect, or that the strategies we have developed to deal with them
may not succeed.
All forward-looking statements are necessarily speculative and speak only as of
the date made, and we advise potential investors that various risks and
uncertainties, such as those described above, could cause actual results for
future periods to differ materially. Although we believe that the expectations
reflected in such forward-looking statements are reasonable, we can give no
assurance that any expectations will prove to be correct.
USE OF PROCEEDS
We will receive a minimum of $1,000,000 and a maximum of $5,000,000 in gross
proceeds from the offering. We will deposit the gross proceeds into an escrow
account until $1,000,000 shall have been raised.
We will pay the estimated offering expenses of $100,000 from the proceeds of the
offering, less pre-paid amounts. The balance of the proceeds will be used to
fund the purchasing and/or leasing of the grove land, planting and cultivation,
construction of a canning facility and related administrative expenses and the
site preparation, design, construction, stocking, etc. of a specialty food store
at the groves.
The following table sets forth our estimated uses of the proceeds:
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IF MAXIMUM NUMBER IF MINIMUM NUMBER
OF UNITS SOLD OF UNITS SOLD
----------------- -----------------
Store development $2,000,000 $ 400,000
Purchase 40 acres of grove land 800,000 0
Construct canning plant 800,000 0
Agricultural labor (4 years) 400,000 80,000
Land preparation, including irrigation 150,000 20,000
Lease 20 acres of grove land (4 years) 140,000 40,000
Greenhouse for ripening fruit 20,000 20,000
Seeds, labor, supplies 60,000 11,000
Offering expenses 100,000 100,000
Working capital 530,000 329,000
---------- ---------
Total: $5,000,000 $1,000,000
========== =========
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DILUTION
The difference between the initial public offering price and the net tangible
book value per share of common stock after this offering constitutes the
dilution to investors in the offering. Net tangible book value per share is
determined by dividing total tangible assets less total liabilities by the
number of outstanding shares of common stock.
As of December 31, 2000, our net tangible book value, on a pro forma basis as
adjusted for the sale of a minimum of 200,000 and a maximum of 1,000,000 units
offered in the offering, would have been approximately $0.3069 per share of
common stock in the case of a minimum offering and $1.2455 per share of common
stock in the case of a maximum offering, assuming all of the $5.00 unit price is
attributed to the shares. The following table illustrates this per share
dilution:
MINIMUM MAXIMUM
OFFERING OFFERING
-------- --------
Offering price per share ............................ $ 5.00 $ 5.00
Net book value per share as of December 31,
2000 ................................................ ( .00594) ( .00594)
Increase per share attributable to new
investors ........................................... .31284 1.25144
Pro forma net book value per share after the offering .3069 1.2455
Pro forma dilution per share to new
investors ........................................... 4.6931 3.7545
The following tables summarize on a pro forma basis as of December 31, 2000 the
differences between the total consideration paid and the price per share paid by
the existing shareholders prior to the offering and by new investors in the
offering.
MINIMUM OFFERING
(200,000 UNITS)
UNITS PURCHASED TOTAL CONSIDERATION
---------------------------- ------------------------------
NUMBER PERCENT AMOUNT PERCENT
------ ------- ------ -------
Existing shareholders 3,000,000 93.75% $ 30,000 2.91%
Investors in the offering 200,000 6.25 1,000,000 97.09
--------- ------- --------- ------
Total 3,200,000 100.00% $1,030,000 100.00%
========= ======= ========== =======
Maximum Offering
(1,000,000 UNITS)
UNITS PURCHASED TOTAL CONSIDERATION
---------------------------- ------------------------------
NUMBER PERCENT AMOUNT PERCENT
------ ------- ------ -------
Existing shareholders 3,000,000 75.00% $ 30,000 0.60%
Investors in the offering 1,000,000 25.00% 5,000,000 99.40
--------- ------- --------- ------
Total 4,000,000 100.00% $5,030,000 100.00%
========= ======= ========== =======
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CAPITALIZATION
The following table sets forth our actual capitalization as of December 31,
2000, on an as-adjusted basis to give effect to the sale of a minimum of 200,000
units in the offering and the application of the net proceeds from such units
and on an as-adjusted basis to give effect to the sale of a maximum of 1,000,000
units in the offering and the application of the net proceeds from such units.
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition or Plan of Operation" and the Financial
Statements included in this prospectus.
AS ADJUSTED TO GIVE EFFECT AS ADJUSTED TO GIVE
TO THE SALE OF 200,000 EFFECT TO THE SALE OF
ACTUAL UNITS 1,000,000 UNITS
------ ---------------------- ---------------------
Shareholders' equity:
Common stock, $0.01 par value;
50,000,000 shares authorized,
3,000,000 shares issued and
outstanding (actual), 3,200,000
issued and outstanding (as
adjusted for sale of 200,000
units); 4,000,000 shares issued
and outstanding (as adjusted for
sale of 1,000,000 units) 30,000 32,000 40,000
Additional paid-in capital 998,000 4,990,000
Accumulated deficit (26,936) (26,936) (26,936)
Total shareholders' equity 3,064 1,003,064 5,003,064
Total capitalization 3,064 1,003,064 5,003,064
- ----------------------
(1) Does not include 170,711 shares of our common stock issuable upon the
exercise of outstanding stock options and warrants.
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DIVIDEND POLICY
We have never declared or paid any dividends on our common stock. Following the
offering, we do not intend to pay dividends in the foreseeable future. We
currently intend to retain all earnings for use in connection with the launch
and operation of our businesses. Our board of directors will have sole
discretion in determining whether to declare and pay dividends in the future.
The declaration of dividends will depend on our profitability, financial
condition, cash requirements, future prospects and other factors deemed relevant
by our board of directors.
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the period from
inception through December 31, 2000. The selected financial data has been
derived from our financial statements, which have been audited by Francine H.
Alperstein, C.P.A., P.A., independent certified public accountants. The selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition or Plan of Operation" and our Financial
Statements and Notes thereto included in this prospectus.
YEAR ENDED
DECEMBER 31, 2000
-----------------
FINANCIAL CONDITION DATA
Total Amount of:
Assets................................ 24,413.00
Shareholders' Equity.................. 3,064.00
OPERATING DATA
Legal, Consulting, Accounting......... 24,856.00
Compensation.......................... --
Other expenses........................ 2,519.00
Net loss.............................. 26,936.00
Loss per share........................ (0.008978)
Total shares outstanding at end of period... 3,000,000.00
Book value per share........................ (0.00594)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION OR PLAN OF OPERATION
The following financial review and analysis is intended to assist prospective
investors in understanding and evaluating the financial condition and results of
operations of the Company for the period from inception (October 12, 2000)
through December 31, 2000. This information should be read in conjunction with
the Company's financial statements and the accompanying notes thereto,
"Selected Financial Data" and other detailed information regarding the Company
set forth in this prospectus.
RESULTS OF OPERATIONS
LIMITED OPERATIONS. The Company has had only limited operations and has had no
revenues since its inception. In the future the Company anticipates revenues
from its akee cultivation and commercialization and its specialty food store
development businesses.
CAPITAL AND LIQUIDITY. Liquidity is a measure of an entity's ability to meet
potential cash requirements, including ongoing operations and for general
purposes. Cash for operations will be obtained through anticipated cash flow
from investment and operations.
The Company has significant ongoing liquidity needs to support its businesses
through their initial growth. It will be the responsibility of Company
management to manage and review on an ongoing basis the Company's financial
status, including liquidity, to ensure the maintenance of adequate funding for
requirements.
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Management anticipates that cash generated from operations will be insufficient
to cover capital requirements for at least the next 12 months if less than the
maximum number of units offered hereby is sold. The Company may need to seek
additional equity financing in 2002 through a secondary securities offering.
Management expects that the minimum number of units offered hereby will be sold
by the September 30, 2001 expiration date and that the Company will obtain
access to the sale proceeds once that minimum threshold is attained. If the
minimum threshold is not attained by September 30, 2001, management has the
right to extend the offering through December 31, 2001. If after such extension
the Company has not met the minimum threshold, all proceeds collected from
investors shall be promptly returned.
During the subject period there was no cash flow from operating activities.
Unless the minimum threshold is attained, there is a high probability that the
Company will not commence operations and therefore never generate cash flow.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities, which establishes accounting and reporting
standards for derivative instruments and hedging activities. SFAS No. 133
requires recognition of all derivative instruments in the statement of financial
position as either assets or liabilities and the measurement of derivative
instruments at fair value. SFAS No. 133 is effective for fiscal years beginning
after June 15, 1999. The adoption of SFAS No. 133 is not expected to affect the
Company's financial statement.
MARKET SUMMARY
The focus and purpose of the Company is to cultivate and can akee and then
market and sell it at a profit. Additionally, the Company aims to develop retail
food specialty stores patterned upon OXTAILS & MORE and operate them at a
profit.
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BUSINESS
The Company was formed in October 2000 to pursue two businesses: domestic
cultivation and commercialization of akee, the national fruit of Jamaica, and
the development of specialty food stores based on the OXTAILS & MORE store in
West Palm Beach, Florida pursuant to a license from Oxtails Corp. Oxtails Corp.
is owned by Jerold H. Kritchman and his son, Jayme A. Kritchman, the founders of
the Company.
DOMESTIC CULTIVATION AND COMMERCIALIZATION OF AKEE: INTRODUCTION
Akee is the national fruit of Jamaica. It grows in clusters on evergreen akee
trees throughout Jamaica, with the main producing areas in Clarendon and St.
Elizabeth. More widely known for its poisonous properties than as an edible
fruit, the akee, BLIGHIA SAPIDA K. Konig (syn. CUPANIA SAPIDA Voigt.), of the
family Sapindaceae, is sometimes called akee, akee apple or vegetable brain
(SESO VEGETAL in Spanish). Other Spanish names are ARBOL DE SESO, PALO DE SESO
(Cuba); HUEVO VEGETAL and FRUTO DE HUEVO (Guatemala and Panama); ARBOR DEL HUEVO
and PERA ROJA (Mexico); MEREY DEL DIABLO (Venezuela); BIEN ME SABE or PAN Y
QUESITO (Colombia); AKI (Costa Rica). In Portuguese, it is CASTANHA or
CASTANHEIRO DE AFRICA. In French, it is ARBRE FRICASSE or ARBRE A FRICASSER
(Haiti); YEUX DE CRABE OR RIS DE VEAU (Martinique). In Surinam it is known as
AKIE. On the Ivory Coast of West Africa, it is called KAKA or FINZAN; in the
Sudan, FINZA. Elsewhere in Africa it is generally known as AKYE, AKYEN or ISHIN,
though it has many other dialectal names. In the timber trade, the wood is
marketed as ACHIN. The name "akee" may refer to the mamoncillo in Barbados. As a
colloquial term for the mamoncillo it may be a corruption of the Mayan "acche"
which was applied to several plants whose flowers attract honeybees. However,
the name "akee" is West African, from where the trees originated. Captain
William Bligh brought akee to Jamaica as food for slaves in 1793 from forests of
the Ivory Coast and Gold Coast of western tropical Africa, where it is seldom
eaten but used domestically.
The akee tree, reaching 33 to 40 feet, usually has a short trunk up to six feet
in circumference, and a dense crown of spreading branches. Its bark is gray and
nearly smooth. The evergreen (rarely deciduous) leaves are compound with three
to five pairs of oblong, or elliptic leaflets, six to 12 inches long, rounded at
the base, short-pointed at the apex; bright-green and glossy on the upper
surface, dull and paler and finely hairy on the veins on the under side. Flowers
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are long, fragrant, five petalled, white and hairy. The fruit is a leathery,
pear shaped, three-lobed capsule three to four inches (7-10 cm) long; basically
yellow, more or less flushed with bright-scarlet. Akee fruit turns red on
reaching maturity and splits open (or "yawns") with continued sun exposure. When
it is fully mature, it splits open revealing three cream-colored, fleshy, glossy
arils, crisp, nutty-flavored, attached to the large, black, nearly round,
smooth, hard, shining seeds. Upon splitting, the akee is harvested and the
arilli removed and cleaned in preparation for cooking. Once akee has "yawned",
the seeds are discarded and the fresh firm arils are parboiled in salt water or
milk and then lightly fried in butter.
The akee tree is tropical to subtropical and flourishes from sea-level to an
elevation of 3000 feet in Jamaica. It does not bear fruit in Guatemala City; it
fruits heavily in southern Florida where young trees have been killed by winter
cold but mature trees have escaped serious injury during brief periods of 26
degrees F. The tree does very well on oolitic limestone and on sand in southern
Florida and the Bahamas, though it grows faster in more fertile soils. Akee
trees are grown from seeds or by shield-budding, and show very little variation.
In European greenhouses, cuttings of ripe shoots are rooted in sand and raised
in a mixture of peat and loam. In warm climates, the tree grows fast and
requires little cultural attention. There is some flowering and fruiting all
year in Jamaica. In Florida, flowers appear in spring and the fruits in mid
summer and there may be a light blooming period in the fall. In the Bahamas,
there are two distinct crops a year, the first from February through April and
the second from July to October.
In Jamaica, akee is often cooked with codfish, onions and tomatoes. After
parboiling, it is added to a stew of beef, salted pork, scallions, thyme and
other seasonings. Sometimes it is curried and eaten with rice. Jamaica is
virtually the only country where akee is widely eaten. In other parts of the
world, akee has other uses. For example, in Ghana, akee trees are admired
ornamentally and used as shade trees on streets. Some cultures use unripe akee
fruit to produce lather in water for laundering. Some burn the oily seeds and
use the ashes in making soap. In Cuba, an extract of akee flowers is appreciated
as cologne. In West Africa, the green fruits, which produce lather in water, are
used for laundering. Crushed fruits are employed as fish poison. The seeds,
because of their oil content, and the jacket because of its potash content, are
burned and the ashes used in making soap. Some cultures mix the pulverized bark
with ground hot pepper for use as a liniment. Others use termite-resistant akee
wood for construction, pilings, oars, paddles and caskets.
Medicinally, Brazilians use a seed extract to expel parasites. Cubans blend ripe
akee arils with sugar and cinnamon to treat dysentery. On the Ivory Coast, akee
bark is mixed with spices in an ointment applied to relieve pain, while akee
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leaves are applied on the forehead to relieve headaches and, when crushed with
salt, are poulticed on ulcers. Akee leaf juice is used in eye drops for
ophthalmia and conjunctivitis. In Colombia, the leaves and bark are used to
treat epilepsy and yellow fever.
Natural toxins in the seeds, in the outer rind and in unripe and or overripe
akee, can cause the fruit to be poisonous if not handled or served correctly.
Resulting health hazards range from vomiting to coma and death. As a result, the
U.S. Food and Drug Administration prohibited importation of akee beginning in
1973. In July 2000, it revised its regulations to permit importation of akee
from those foreign facilities meeting FDA standards and which have received FDA
approval.
IMPORTATION OF AKEE SEEDS FROM JAMAICA
The Company plans to import akee seeds from Jamaica as its initial step towards
domestic cultivation. The U.S. Department of Agriculture (the "USDA") grants
permits for the importation of plants and seeds, certain of which are subject to
post-entry quarantine. In such cases, the USDA regulates the quarantine process
by entering into "growing agreements" with growers. A permit is needed for
importation of akee seeds into the United States and they must be free of pests
and soil at Customs inspection. Plants grown from imported akee seeds are not
subject to post-entry quarantine.
CULTIVATION OF AKEE
The Company plans to lease and/or purchase up to 100 acres of land through the
Palm Beach County (Florida) Agricultural Reserve Leasing Program (described
below) to develop akee groves. Once the imported akee seeds pass Customs and
USDA inspection in Miami, either the Company or a nursery selected by the
Company will germinate the seeds, meaning that the seeds will sprout into
seedlings. When the seedlings have grown to four feet tall -- estimated at eight
months -- they will then be planted on the Company's land in the Agricultural
Reserve. Six inch diameter pots of seedlings will be planted in the center of 10
foot diameter burms, fertilized, watered and left to grow. The seedlings will be
planted in rows to produce akee hedges, the way Florida orange groves are
developed. About eight months after planting, the trees should reach six feet in
height. Each tree should bloom in three years and produce fruit in four to five
years. The fruit will be picked when it is open or close to opening. If picked
prior to opening, the akee will be placed on wire racks to ripen. Approximately
one acre of land will be used for this purpose.
Rain is known to damage ripe akee, so the ripening area will be covered with a
plastic roof material with the sides open allowing in sunshine. With the side
areas open, heat will be able to pass through and moisture maintained while
still sheltering the fruit from the rain. Freezing temperatures could also harm
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26
young plants. Accordingly, the Company will not plant the seedlings in the
winter months and will be prepared with spray irrigation to wet down the
seedlings with warm water in case of a late autumn or early spring freeze. Cold
air typically passes over the Agricultural Reserve because of its location;
swamp land to the west and gulf stream waters to the east have a warming effect
on this land. Bugs have not been known to eat akee and insecticides have not
been known to harm it.
The Agricultural Reserve program was established as part of the Palm Beach
County 1989 Land Use Plan, revised in 1999, in accordance with Florida Statutes
Section 163.3177. The Agricultural Reserve area is a portion of Palm Beach
County that is made up of unique farmland and wetlands. It also encompasses
areas that may become urbanized, however it is designated to be preserved
primarily for agricultural use if possible, and if not, to be developed only at
low residential density.
The Agricultural Reserve program is designed to provide ways for new farmers to
engage in farming and for specialty crop development. The Agricultural Reserve
infrastructure is in place to support the Company's plans. There are 11 packing
houses, scores of fertilizer and pesticides sellers, tractor dealers, parts
suppliers and related agribusiness entities. Over the last five decades,
Agricultural Reserve farms have cultivated over 80 varieties of vegetables and
12 types of fruit, not including citrus.
CANNING AND PACKING OF AKEE
The Company plans to build a canning and packaging plant near its akee groves to
can akee in strict accordance with Hazard Analysis and Critical Control Point
("HACCP") international standards for low-acid food canning (discussed below)
and to can other products for other growers. Generally, the akee will be
deseeded, cooked and canned in water and salt. Additional akee-derived items may
also be canned such as salt- fish, akee casserole or other recipes. These
products might include items to be sold in OXTAILS & MORE specialty stores to be
developed by the Company such as oxtail soup, pumpkin beef soup, cock soup,
goats head, cow cod soup, calaloo tropical fruit cocktail with mangos,
breadfruit, jack fruit, etc. The Company will determine which items make most
business sense based on potential retail revenue, lower cost of materials and
availability of materials.
HACCP LOW-ACID FOOD CANNING PROCEDURES
HACCP is a prevention-based food safety system. HACCP systems are designed to
prevent the occurrence of potential food safety problems by assessing the
inherent risks attributable to a product or a process and then determining the
necessary steps that will control the identified risks. The National Advisory
Committee on Microbiological Criteria for Foods, which developed HACCP
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principles, was established in 1988 and has as members officials from several
federal agencies, including the Food and Drug Administration, the Centers for
Disease Control and Prevention, the Food Safety Inspection Service, the
Agricultural Research Service, the National Marine Fisheries Service, and the
U.S. Army.
HACCP identifies and monitors specific foodborne hazards -- biological,
chemical, or physical properties -- that can adversely affect the safety of the
food product. This hazard analysis serves as the basis for establishing critical
control points. Critical control points identify those points in the process
that must be controlled to ensure the safety of the food. Further, critical
limits are established that document the appropriate parameters that must be met
at each critical control point. Monitoring and verification steps are included
in the system to ensure that potential risks are controlled. The hazard
analysis, critical control points, critical limits, and monitoring and
verification steps are documented in a HACCP plan. The HACCP plan includes the
following seven principles: hazard analysis, identification of critical control
points in food preparation, establishment of critical limits for preventive
measures associated with each identified critical control point, establishment
of procedures to monitor critical control points, establishment of corrective
action to be taken when monitoring shows that a critical limit had been
exceeded, establishment of effective record keeping systems that document the
HACCP system, and, finally, establishment of procedures to verify that the HACCP
system is working.
RAW MATERIALS
In the growing process, the Company will maintain growing supplies including
soil, fertilizer, water and other substances for growing as needed. Suppliers
for these items will be determined based on cost, service and product
effectiveness.
In the canning and packaging process, the Company will use water, salt, tin
cans, paper products for labeling, carton packaging and corrugated cardboard, as
well as plastics or other materials to package and ship its products. All of the
Company's needs will be supplied by competitive vendors to be chosen based on
cost.
DISTRIBUTION
The Company will primarily distribute canned akee through the establishment of
OXTAILS & MORE specialty stores as described below, as well as through other
wholesale and retail channels, including e-commerce. If additional revenue
opportunities arise or become necessary for financial success, the Company will
consider other direct market channels or retail supermarket chains for
distribution.
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GOVERNMENTAL REGULATION
Prior to July 2000, the importation of akee into the United States was
prohibited because of the risk that it may have contained poisonous and
deleterious substances, namely hypoglycin-A and hypoglycin-B. The FDA had
determined that akee contains the two toxic substances when the fruit is either
green or over-ripe. The seeds, pinkish membrane under the seeds, and outer rind
of the fruit contain the toxic substances at all times. Hypoglycin-A and
hypoglycin-B are dangerous natural toxins that have been known to cause
poisoning and death. The ingestion of immature akee is conclusively linked to
"vomiting sickness" in Jamaica. One or more periods of vomiting and quiescence
have been followed by convulsions, coma, and death. In the unripened fruit,
hypoglycin is located throughout the fruit, seeds, membrane under the seeds,
and outer rind. In ripe akee, the edible portion of the fruit is safe to
consume. However, the FDA had concluded that the seeds and outer rind, however,
still contain high levels of hypoglycin and should not be consumed.
As a result of lobbying from the Jamaican government and business communities,
through the efforts of the United States Ambassador to Jamaica, Stanley
McClelland, the FDA lifted the ban on the importation of akee in July 2000 and
instituted an FDA approval process for foreign canners instead. Because of the
possibility that green or over-ripe fruits or seeds could get into the cans
during commercial canning, the FDA has approved two canners to import akee into
the United States: Ashman Food Products Ltd. and Canco Ltd. These approved
processors have food safety controls in place to ensure that only properly
ripened akee fruit, without seeds, membrane or outer rind, are used for canning.
Our planned operations and properties will similarly be subject to regulation by
federal agencies, as well as by state and local government entities. Our
operations will be subject to stringent production, packaging, quality, labeling
and distribution standards. Our production and distribution facilities will be
subject to various federal, state and local environmental laws and workplace
regulations. These laws and regulations include the Occupational Safety and
Health Act, the Fair Labor Standards Act, the Clean Air Act and the Clean Water
Act. The United States Department of Agriculture and the Florida Department of
Agriculture have regulations with which fruit canners must comply. In addition,
Palm Beach County government agencies may investigate and monitor our handling
and preparation of akee to control disease incurrence and waste handling and
disposal.
MARKETING
Jamaican government and business sources speculate that demand for akee in the
United States may be between $15 and $40 million annually. Insofar as we
anticipate there to be such demand in the United States for canned akee
products, we do not intend to devote more than nominal resources to marketing.
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CUSTOMERS
Typical United States akee consumers are immigrants from Carribean countries,
their friends and families. The fruit is the national fruit of Jamaica and has
very strong patriotic and homeland associations for Jamaican consumers spanning
all income brackets.
According to the Immigration and Naturalization Services, between 15,000 and
20,000 persons immigrated annually from Jamaica to the United States from 1995
through 1998. INS statistics from 1996 indicate approximately 50,000 illegal
Jamaican immigrants in the United States.
MARKET
The Company intends to plant 100 trees per acre which should yield between 400
and 960 cases (24 cans) of akee per acre per year. If the Company leases and/or
purchases 100 acres of property in the Agricultural Reserve, the total average
estimated annual output should be 40,000 - 96,000 cases of canned akee.
Currently, a wholesale case of akee from Jamaica sells in the United States for
$140.
Jamaican business and government sources estimate current Jamaica akee exports
approximately $13 million per year. Primary destinations for these exports have
been the United Kingdom and
Canada. Despite the FDA ban on the importation of akee into the United States,
some of these exported cans have ended up for sale in the United States at
specialty food stores and over the internet.
The FDA has approved shipment of canned akee from only two canners in Jamaica:
Ashman Food Products Ltd. and Canco Ltd. Because of the rigorous standards of
the FDA, it is not likely that other Jamaican canners will soon receive FDA
approval. Approximately 21 other Jamaican food processors produce canned akee.
The Jamaican government has sponsored a program to develop up to 2000 additional
acres of planted akee trees in the next several years to meet the Ministry of
Agriculture's prediction of a 10 percent increase in Jamaica's akee export
market.
EMPLOYEES
The Company will hire farm workers for the planting, growing and maintenance of
the akee trees. Pickers and other handlers will be employed for the growing
process. Canning, packaging and distribution of fresh and canned akee will
require low skilled employees. Using industry consultants, the Company will
train such employees as necessary for the HACCP process and closely supervise
their work.
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DEVELOPMENT OF SPECIALTY FOOD STORES: INTRODUCTION
OXTAILS & MORE is a West Palm Beach, Florida specialty food store offering fresh
meat, vegetables and other products for customers of African, Caribbean and
Spanish heritage. The store is owned and operated by Oxtails Corp., a five-year
old Florida corporation owned by Jerold Kritchman and Jayme Kritchman, founders
of the Company.
LICENSE
On October 31, 2000, Oxtails Corp. licensed the Company to develop a chain of
specialty food stores based on the flagship OXTAILS & MORE store. The licensed
territory includes the State of Florida, the countries adjacent to the Caribbean
Sea and the countries comprising Central America. The license entitles the
Company to replicate the store concept and use the store name. The Company may
not transfer, assign or sublicense its licensed rights, which were granted on a
non-exclusive basis; no other licenses have been granted by Oxtails Corp. and
none is presently under contemplation.
The Company shall pay Oxtails Corp. a royalty of three percent of net revenues
derived from sales generated at new stores.
CONCEPT
OXTAILS & MORE caters to ethnic food consumers who appreciate the sense of
community generated by product selection and store accouterments, including
ethnic heritage photographs and posters. The store is spacious, bright and clean
with an extensive inventory and state of the art refrigeration and storage
facilities, food-handling, cutting, packing, marinating and cooking equipment
and vibrant display cases. High volume inventory items include fresh oxtails,
goats, chickens, turkeys, pigs and beef, Jamaican produce, frozen fish and
imported spices and sauces.
Store personnel provide superior customer service based on their familiarity
with the store's product offerings. Oxtails sources approximately 300
stock-keeping units ("SKUs") from approximately 30 vendors to ensure that a
diverse assortment of specialty food products. The flagship store carries a
broad range of special foods in diverse food categories.
The cost of goods runs approximately 60% of annual revenue. Other expenses
include labor, paper supplies, legal and accounting, utilities, pest control,
uniforms, insurance, waste management and related items, which run approximately
25% of annual revenue.
Annual revenue for 2000 for the flagship store shall be approximately
$3,000,000.
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ADVERTISING AND MARKETING
Historically, Oxtails Corp. has invested only a modest amount in local
advertising and promotion for the flagship store. As the chain grows, the
advertising budget may need to grow as well.
MARKET
Overall, the market for food consumption and population in Florida is
predicted to increase.
The USDA's Economic Research Service has estimated an increase of one to two
percent in food consumption at home nationally in the following categories in
the year 2000: beef and veal, pork, other meats, poultry, fish and seafood,
eggs, dairy products, fats and oils, fresh fruits, fresh vegetables, processed
fruits and vegetables, sugar and sweets, cereals and bakery products,
nonalcoholic beverages, and other foods. The National Restaurant Association
forecasts a continuation of growth in the food industry and ethnic food market,
noting that the Florida market is one of the greatest nationally. In 2000, the
Association expects the southeastern region to have employment growth of 1.8%,
population growth of 1.3% and personal income growth of 3.5%. Other Florida
educational and government research sources expect a population increase in
southern Florida of about 12.8% in the next 10 years. Current statistics show
about 40% to 75% of the southern Florida population to be Asian, Black or
Hispanic and about 73% to 80% to be White, with Hispanic persons considered
both. Additionally, undocumented immigrants may result in even greater numbers.
CUSTOMERS
The typical OXTAILS & MORE customers are immigrants or their friends and
families from African, Caribbean or Hispanic countries. The store's product mix
takes advantage of the strong patriotic and homeland product associations of
consumers. The customers are usually between 15 and 75 years of age, blue collar
employees and their families who are cost conscious but desirous of purchasing
foods that mirror their ethnic tastes and heritage. Accordingly, the store
competes on the basis of offering first-quality "hard to find" products, rather
than on price, enabling realization of high gross margins on its products.
GOVERNMENT REGULATION
The operation of OXTAILS & MORE is not regulated by the USDA. Whether the
handling of food items such as meat and fish will subject the Company to USDA
regulation in the future will depend on several factors, including whether we
sell food products on a wholesale basis or whether we obtain food products from
non-USDA inspected facilities. In the future, the USDA may require costly
changes to our food handling operations. We will also be required to comply with
local health regulations concerning the preparation and packaging of any food
items that we prepare on-site. Applicable federal, state or local regulations
may cause us to incur substantial compliance costs or delay the availability of
items at our markets.
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As a seller of food products, the Company's operations will be subject to
various federal, state and local environmental laws and workplace regulations.
These laws and regulations include local and state health and safety
regulations, and the Occupational Safety and Health Act and the Fair Labor
Standards Act.
EMPLOYEES
As of December 31, 2000 Oxtails Corp. employed 16 people at OXTAILS & MORE, 14
of whom worked full-time, none of whom were represented by unions.
WEBSITE
Oxtails Corp. is in the process of improving its website www.oxtails.com to
make its design more attractive, increase the number of products offered and
improve customers' ability to navigate therein. Oxtails will offer its website
customers access to educational information on the products offered,
entertaining content regarding food and immediate access to recipes and products
designed to encourage customers to visit the website frequently.
The Company is currently constructing its own website www.ackeeox.com.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers and directors are:
NAME AGE POSITIONS
- ---- --- ---------
Jerold H. Kritchman 57 President, Director
Jayme A. Kritchman 27 Executive Vice President, Secretary, Treasurer,
Director
JEROLD H. KRITCHMAN received a bachelors degree in botany from Long Island
University in 1965. Previously, since age 11 he had worked at his father's
butcher shop in Harlem, New York. After college, he spent 25 of the ensuing 35
years working in meat and grocery businesses. In 1971 he began opening his own
food industry businesses. Mr. Kritchman has started and operated wholesale and
retail stores, restaurants and other businesses in New York City, including
Rosita Meats, Rosita Meat Warehouse, Rosita's Bakery, Sara's Back Country Store,
El Gardel Restaurant, La Mano de Oro Cuchifrito Restaurant, Jaime's Meats &
Poultry, Food-O-Mat Farms Limited, The Meat Machine and Big J's Ranch House
Restaurant.
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In 1982 Mr. Kritchman discontinued his career in the food industry and founded
an oil and gas exploration venture, which he operated for eight years. In 1984
he founded Jerold Securities & Equities Corp., an N.A.S.D.-member firm
specializing in private placements. During a five year period, he also became a
residential real estate developer in Greenwich, Connecticut. In 1989 he opened a
retail aquarium business in White Plains, New York, which he sold in 1992 to
cover his real estate investment losses. In 1992 after a year as a consultant to
an energy company in Wilton, Connecticut, Mr. Kritchman moved to Florida to
operate Rosita Meat Wholesalers Inc. in Lake Park, Florida. He left that
employment in 1998 when he founded Oxtails Corp. and opened OXTAILS & MORE in
West Palm Beach.
JAYME A. KRITCHMAN, son of Jerold Kritchman, attended West Virginia Wesleyan
College from 1991 through 1993. He too had worked alongside his father since age
11. After working as a gymnastics instructor, painter, roofer, carpenter,
snowmaker and cook, he co-managed Rosita Meat Wholesalers from 1994 through
1997, leaving to co-found Oxtails Corp. and launch OXTAILS & MORE in 1998.
EMPLOYMENT AGREEMENTS; EXECUTIVE COMPENSATION
Each of Jerold Kritchman and Jayme Kritchman is a party to an Employment
Agreement with the Company dated October 31, 2000 running through October 2003.
Each has committed to devote approximately one half of his business time and
attention to the Company. Each has agreed to work without compensation through
the first anniversary of the date that the Company first receives funds from the
escrow account established for this offering. Thereafter, each shall be paid a
salary of $50,000 per year, which shall accrue should the Company have
insufficient cash flow from operations to allow for salaries to be paid.
STOCK OPTION PLAN
We have adopted the 2000 Stock Option Plan, effective as of October 31, 2000.
The plan provides for grants of stock options to purchase shares of common stock
to certain employees of the Company and Oxtails Corp. The purpose of the plan is
to attract and retain qualified personnel, provide additional incentives to such
persons and promote the success of our business. As of the date of this
prospectus, options to acquire 47,000 shares of our common stock have been
granted at the initial public offering price of the units offered hereby, and
options to purchase an additional 453,000 shares of common stock remain
available for issuance pursuant to the plan.
The board of directors administers and interprets the plan. The board of
directors has complete discretion to determine which employees are eligible to
receive option grants, the number of shares subject to each such grant, the time
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or times when options will be granted, the price of the shares subject to each
option, the time when each option may be exercised, any other provisions of the
option agreement and all questions relating to the administration of the plan.
The shareholders of the Company may terminate, modify or amend the plan at any
time. In addition, the board of directors may amend or modify the plan at any
time, provided that no such amendment or modification may adversely affect the
rights and obligations of the participants with respect to their outstanding
options or vested shares without their consent. In addition, no amendment of the
plan may, without the approval of shareholders:
o increase the number of shares for which options may be granted under
the plan;
o increase the purchase price for the shares subject to options;
o alter the periods during which options may be granted or exercised;
o alter the provisions relating to the determination of employees to
whom options may be granted;
o alter the provisions relating to the annual dollar limitation upon
options granted to any employee;
o alter the provisions relating to the transferability of the options;
or
o alter the provisions relating to the employment status of an
employee to whom an option may be granted.
The plan will terminate on October 31, 2010; however, such termination will not
affect any options granted under the plan or vested shares.
Each option granted under the plan has a maximum term of 10 years, subject to
earlier termination following the participant ceasing to be an employee. The
exercise price of an option granted under the plan must be at least 100% of the
fair market value of the stock subject to the option on the date of grant (or
110% with respect to an option granted to a holder of more than 10% of the
combined voting power of all classes of stock of the Company). The minimum
number of shares for which options may be exercised at any one time is 100
shares. In general, options vest ratably over a four year period commencing one
year from the date of grant. The purchase price for shares of common stock is
payable in cash immediately upon the exercise of the option. Each option granted
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under the plan is non-transferable and exercisable only during the holder's
lifetime. In the event that the holder dies prior to exercising an option, such
option may be exercised by the personal representative of the estate of such
holder for a period of one year after such representative's appointment. In the
event that the holder is terminated for any reason other than death, such option
may be exercised at any time prior to the expiration date of the option or
within three months after the date of such termination (12 months in the case of
an employee who is disabled), whichever is earlier, but only to the extent such
holder had the right to exercise such option at the date of such termination;
provided, however, that, if the holder's employment is terminated as a result
of deliberate, willful or gross misconduct, all rights under the option shall
terminate and expire upon such termination. If options granted under the plan
expire or are terminated for any reason without being exercised, the shares of
common stock underlying such grant will again be available for purposes of the
plan.
In the event of a reorganization, merger or consolidation in which the Company
is not the surviving corporation, the sale of substantially all of the assets of
the Company to another corporation, or a change in control of the Company, all
options granted prior to such event under the plan shall become immediately
exercisable. Unless otherwise determined by the board of directors, the term
"control" shall refer to the acquisition of 10 percent or more of the voting
securities of the Company by any person or group acting in concert.
SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 31, 2000, the number and
percentage of shares of the Company's outstanding common stock which are
beneficially owned, directly or indirectly, by our two
Shareholders/directors/executive officers. We determine beneficial ownership
based on the rules of the Securities and Exchange Commission. In general,
beneficial ownership includes shares over which the indicated person has sole or
shared voting or investment power and shares which he or she has the right to
acquire within 60 days of the date of this prospectus. Unless otherwise
indicated, the persons listed have sole voting and investment power over the
shares beneficially owned.
SHARES
NAME POSITION BENEFICIALLY OWNED PERCENTAGE
- ---- -------- ------------------ ----------
Jerold H. Kritchman President, Director 1,500,000 50%
Jayme A. Kritchman Executive Vice 1,500,000 50%
President, Secretary,
Treasurer, Director
Both Executive officers and directors 3,000,000 100%
as a group (2 persons)
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CERTAIN TRANSACTIONS
On October 12, 2000 we sold 1,500,000 shares of common stock to each of Jerold
Kritchman and Jayme Kritchman for an aggregate consideration to us of $30,000.
On October 31, 2000 we entered into a Credit Agreement with Oxtails Corp.,
pursuant to which Oxtails extended to us a one year revolving line of credit to
borrow $80,000, with interest accruing on indebtedness thereunder at the rate of
nine percent per annum, payable monthly. On November 30, 2000 we granted options
under our 2000 Stock Option Plan to 17 employees to purchase an aggregate of
47,000 shares of common stock at a price of $5.00 per share. On December 4, 2000
we issued a warrant to Mirkin & Woolf, P.A., as trustee for members of the law
firm, to purchase up to 123,711 shares of common stock at a price of $5.00 per
share; the warrant vests in increments of 30,928 shares for each million dollars
in investment capital we raise.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000 shares of
common stock, par value $0.01 per share. As of the date of this prospectus,
3,000,000 shares of common stock were issued and outstanding, held in equal
halves by Jerold Kritchman and Jayme Kritchman.
UNITS
Each unit consists of one share of common stock and one warrant to purchase one
share of common stock. The units will trade as a whole until September 30, 2002,
at which time the shares and warrants will become separately tradeable.
COMMON STOCK
Holders of common stock are entitled to receive dividends, if any, declared by
the board of directors out of funds legally available for dividends. See
"Dividend Policy." In the event of the liquidation, dissolution or winding up of
the Company, holders of common stock are entitled to share ratably, based on the
number of shares held, in the assets, if any, remaining after payment of all the
Company's debts and liabilities.
Holders of common stock are entitled to one vote per share for each share held
of record on any matter submitted to the holders of common stock for a vote.
Because holders of common stock do not have cumulative voting rights with
respect to the election of directors, the holders of a majority of the shares of
common stock represented at a meeting can elect all of the directors.
Holders of common stock do not have preemptive or other rights to subscribe for
or purchase any additional shares of capital stock issued by the Company or to
convert their common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the common stock.
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WARRANTS
Each warrant will entitle the holder of the warrant to purchase one share of
common stock at a price of $5.00 at any time after the warrants become
separately tradeable on September 30, 2002. The warrants will be issued in
registered form under a warrant agreement between the Company and its registrar.
Reference is made to the warrant agreement which has been filed as an exhibit to
the registration statement in which this prospectus is included for a complete
description of the terms and conditions therein. The warrants may be exercised
upon surrender of the warrant certificate on or prior to the expiration date at
the offices of the warrant agent, with the exercise form on the reverse side of
the warrant certificate completed and executed as indicated, accompanied by full
payment of the exercise price to the warrant agent for the number of warrants
being exercised. The warrant holders do not have the rights or privileges of
holders of common stock.
No warrant will be exercisable unless, at the time of exercise, the Company has
filed a current registration statement with the Securities and Exchange
Commission covering the shares of common stock issuable upon exercise of the
warrant and the shares have been registered or qualified or deemed to be exempt
from registration or qualification under the securities laws of the state of
residence of the holder of the warrant. The Company will use its best efforts to
have all the shares so registered or qualified on or before the exercise date
and to maintain a current prospectus relating thereto until the expiration of
the warrants, subject to the terms of the warrant agreement. We may not,
however, be able to have a prospectus in effect when this prospectus is no
longer current.
No fractional shares will be issued upon exercise of the warrants. However, if a
warrant holder exercises all warrants then owned of record by him, we will pay
to the warrant holder, in lieu of the issuance of any fractional share which is
otherwise issuable, an amount in cash based on the market value of the common
stock on the last trading day prior to the exercise date.
The exercise price and number of shares of common stock or other securities
issuable upon exercise of the warrants are subject to adjustment in specified
circumstances, including in the event of a stock dividend, recapitalization,
reorganization, merger or consolidation of the Company. However, the warrants
are not subject to adjustment for issuances of common stock at prices below the
exercise price of the warrants.
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OPTIONS AND OTHER OUTSTANDING WARRANTS
The Company has options to acquire 47,000 and a warrant to acquire 123,711
shares of common stock outstanding. The options are held by 17 employees and are
incentive options issued under the Company's 2000 Stock Option Plan in
accordance with Section 422 of the Internal Revenue Code of 1986. The warrant is
held by our corporate and securities counsel. All options and the warrant are
exercisable at $5.00 per share. The options vest in equal quarters over the
first through fourth anniversary of the grant date (November 30, 2000) and are
exercisable through November 30, 2005. The warrant vests in equal quarters tied
to each million dollars in investment capital received by the Company and is
exercisable through December 4, 2003.
ANTI-TAKEOVER PROVISIONS
The Florida Business Corporation Act contains provisions designed to enhance the
ability of the board of directors of a Florida corporation to respond to
attempts to acquire control. These provisions may be deemed to have an
anti-takeover effect and may discourage takeover attempts which have not been
approved by the board of directors. This could include takeover attempts that
some of our shareholders may deem to be in their best interest. These provisions
may also adversely affect the price that a potential purchaser would be willing
to pay for our common stock and deprive our shareholders of the opportunity to
obtain a takeover premium for their shares. To the extent that takeover attempts
are discouraged, temporary fluctuations in the market price of the common stock
resulting from actual or rumored takeover attempts may be inhibited. These
provisions also could make the removal of incumbent management more difficult
and may permit a minority of our directors and the holders of a minority of our
outstanding voting stock to prevent, discourage or make more difficult a merger,
tender offer or proxy contest, even though the transaction may be favorable to
the interests of shareholders. These provisions could also potentially adversely
affect the market price of the common stock.
The following briefly summarizes protective provisions contained in the Florida
Business Corporation Act and is not intended to be a complete description of all
the features and consequences of these provisions. The following is qualified in
its entirety by reference to the Company's articles of incorporation and the
relevant provisions of Florida law.
AUTHORIZED BUT UNISSUED STOCK. The authorized but unissued shares of common
stock will be available for future issuance without shareholder approval. These
additional shares may be used for a variety of corporate purposes, including
future public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued and unreserved
shares of common stock may enable the board of directors to issue shares of
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stock to persons friendly to existing management. This may have the effect of
discouraging attempts to obtain control of the Company through a proxy contest,
tender offer, merger or otherwise, thereby protecting the continuity of current
management.
EVALUATION OF ACQUISITION PROPOSALS. The Florida Business Corporation Act
expressly permits the board of directors, when evaluating any proposed tender or
exchange offer, any merger, consolidation or sale of substantially all of the
assets of the Company, or any similar extraordinary transaction, to consider (a)
all relevant factors including, without limitation, the social, legal, and
economic effects on the employees, customers, suppliers, and other
constituencies of the Company, on the communities and geographical areas in
which the Company operates or is located, and on any of the business and
properties of the Company, and (b) the consideration being offered, not only in
relation to the then current market price for the Company's outstanding shares
of capital stock, but also in relation to the then current value of the Company
in a freely negotiated transaction and in relation to the board of directors'
estimate of the future value of as an independent going concern. The board of
directors believes that these provisions are in the long-term best interests of
the Company and its shareholders.
CONTROL SHARE ACQUISITIONS. We will be subject to the Florida control share
acquisitions statute which is designed to afford shareholders of public
corporations in Florida protection against acquisitions in which a person,
entity or group seeks to gain voting control of the public corporation. With
enumerated exceptions, the statute provides that shares of a public corporation
acquired within certain specific ranges will not possess voting rights in the
election of directors unless the voting rights are approved by a majority vote
of the public corporation's disinterested shareholders. Disinterested shares are
shares other than those owned by the acquiring person or by a member of a group
with respect to a control share acquisition, or by any officer of the
corporation or any employee of the corporation who is also a director. The
specific acquisition ranges that trigger the statute are: acquisitions of shares
possessing one-fifth or more but less than one-third of all voting power;
acquisitions of shares possessing one-third or more but less than a majority of
all voting power; or acquisitions of shares possessing a majority or more of all
voting power. Under certain circumstances, the statute permits the acquiring
person to call a special shareholders meeting for the purpose of considering the
grant of voting rights to the holder of the control shares. Unless otherwise
provided in a corporation's articles of incorporation or bylaws before a control
share acquisition has occurred, in the event the shares acquired in a control
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share acquisition are accorded full voting rights and the acquiring person has
acquired a majority or more of all voting power, then all shareholders of the
public corporation have dissenter's rights to receive fair value for their
shares. There is currently no provision in our articles of incorporation or our
bylaws limiting or eliminating such rights. The statute also enables a
corporation to provide redemption under certain circumstances of control shares
with no voting rights. Among the acquisitions specifically excluded from the
statute are acquisitions consummated pursuant to a merger or plan of share
exchange in compliance with law if the public corporation is a party to the
agreement of merger or plan or share exchange. A corporation may opt out of the
statute by so providing in its articles of incorporation. We have not opted out
of the statute.
TRANSACTIONS WITH INTERESTED SHAREHOLDERS. We are also currently subject to the
Florida affiliated transactions statute which, with enumerated exceptions,
places restrictions on mergers, consolidations, sales of assets, liquidations,
reclassifications or other similar kinds of transactions with or between a
public corporation in Florida and any person who owns, directly or indirectly,
10% or more of the voting power of the outstanding voting shares of the public
corporation. The statute provides that the public corporation may not engage in
any affiliated transaction with any 10% or greater shareholder of the
corporation for a period of two years following the date the person became a 10%
shareholder unless before the date the person became a 10% shareholder either
(a) the affiliated transaction or (b) the purchase of shares that first made the
shareholder a 10% shareholder is approved by a majority of the "disinterested"
members of the board of directors of the corporation. A member of the board is
"disinterested" if the director is not a present or former officer or employee
of the public corporation or a related corporation. The statute further provides
that, subject to various exceptions, a public corporation may not engage at any
time in an affiliated transaction with a 10% shareholder unless the transaction
complies with all of the requirements of the public corporation's articles of
incorporation and either (a) the transaction is approved by the board of
directors of the public corporation before the date the shareholder first became
a 10% shareholder, or the purchase of shares made by the 10% shareholder on the
date the shareholder first became a 10% shareholder has been approved by the
board of directors of the public corporation before the date the shareholder
first became a 10% shareholder, (b) the transaction is approved by the
affirmative vote of the holders of a majority of the outstanding voting shares
not beneficially owned by the 10% shareholder proposing the transaction at a
meeting called for that purposes no earlier than two years after the date the
shareholder first became a 10% shareholder, or (c) the transaction meets
specified fair price and form of consideration requirements. A company may opt
out of the affiliated transaction statute by so providing in its articles of
incorporation. We have not opted out of the statute.
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TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our securities will be Florida Atlantic
Stock Transfer, Inc., 7130 Nob Hill Road, Tamarac, Florida 33321.
LIMITED LIABILITY AND INDEMNIFICATION
Under the Florida Business Corporation Act, a director is not personally liable
for monetary damages to the corporation or any other person for any statement,
vote, decision, or failure to act unless (a) the director breached or failed to
perform his duties as a director and (b) a director's breach of, or failure to
perform, those duties constitutes (i) a violation of the criminal law, unless
the director had reasonable cause to believe his conduct was lawful or had no
reasonable cause to believe his conduct was unlawful, (ii) a transaction from
which the director derived an improper personal benefit, either directly or
indirectly, (iii) a circumstance under which an unlawful distribution is made,
(iv) in a proceeding by or in the right of the corporation to procure a judgment
in its favor or by or in the right of a shareholder, conscious disregard for the
best interest of the corporation or willful misconduct, or (v) in a proceeding
by or in the right of someone other than the corporation or a shareholder,
recklessness or an act or omission which was committed in bad faith or with
malicious purpose or in a manner exhibiting wanton and willful disregard of
human rights, safety, or property. A corporation may purchase and maintain
insurance on behalf of any director or officer against any liability asserted
against him and incurred by him in his 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 the Florida Business Corporation Act.
The Company's articles of incorporation and bylaws provide that we shall, to the
fullest extent permitted by applicable law, as amended from time to time,
indemnify all directors of the Company, as well as any officers or employees of
the Company to whom we have agreed to grant indemnification.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the offering, we will have a minimum of 3,200,000 shares and
a maximum of 4,000,000 shares of common stock outstanding. The shares held by
the two current shareholders of the Company will not be freely tradeable without
restriction or registration under the Securities Act of 1933. They will need to
comply with the resale limitations of Rule 144 under the Securities Act of 1933
because they are "affiliates" of the Company. Rule 144 defines an "affiliate" as
a person who directly, or indirectly through one or more intermediaries,
controls, or is controlled by, or is under common control with, a company.
Affiliates of a company generally include its directors, officers and principal
shareholders and the directors and executive officers of its principal
subsidiaries.
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Purchasers of the common stock in the offering, other than affiliates, may
resell their shares immediately. Our affiliates will be subject to the volume
and other limitations of Rule 144. Rule 144 in general permits affiliates to
sell within any three-month period a number of shares that does not exceed the
greater of one percent of the outstanding shares of common stock or the average
weekly trading volume during the four calendar weeks preceding his sale. Sales
under Rule 144 are also subject to manner of sale provisions, notice
requirements and the availability of current public information about the
Company.
A person who sheds his affiliate status at least three months before the sale of
restricted securities beneficially owned for at least two years may sell the
restricted securities under Rule 144 without regard to any of the Rule 144
limitations.
Before this offering, there was no public market for our common stock. We cannot
predict the effect, if any, that sales of, or the availability for sale of, our
common stock will have on the market price of our common stock prevailing from
time to time. Nevertheless, substantial amounts of common stock in the public
market, including shares issuable upon the exercise of outstanding warrants or
options, could adversely affect the prevailing market price of our common stock
and could impair our ability to raise capital in the future through the sale of
securities.
TERMS OF OFFERING
We are offering a minimum of 200,000 units and a maximum of 1,000,000 units at a
price of $5.00 per unit. Each unit comprises one share of our common stock and a
warrant to purchase one share of our common stock for $5.00 per share,
exercisable through September 30, 2003.
MINIMUM SUBSCRIPTION
Each subscriber must agree to purchase a minimum of 20 units.
PLAN OF DISTRIBUTION
We will not utilize an underwriter to offer the shares. Instead,
our executive officers will offer the shares on our behalf on a "best efforts"
basis. These officers will not receive any commissions or additional
compensation for these efforts. Any units offered for sale in any state other
than Florida will be offered and sold through registered or licensed brokers or
dealers in such states, if state law so requires. In addition, in certain
states, the units will not be offered or sold unless they have been registered
or qualified for sale in those states requiring registration or qualification,
or an exemption from such registration or qualification requirements is
available and with which the Company has complied.
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EXPIRATION DATE
The initial expiration date of the offering is September 30, 2001. However, we
have the right to extend the expiration date without notice to subscribers until
December 31, 2001.
ESCROW TERMS
We will deposit all amounts received from each subscriber into an escrow account
which we have established with BankAtlantic FSB as escrow agent.
The escrow agent will hold all of the amounts deposited in the escrow account
subject to the following condition: The escrow agent will return all of the
funds deposited in the escrow account to subscribers, without interest or
deduction, in the event that we do not sell at least 200,000 units prior to the
expiration date of the offering.
After we have sold 200,000 units we may continue to offer any unsold units until
the expiration date of the offering. The escrow account will be interest
bearing. We will retain all interest earned on the account, regardless of
whether the offering is completed or canceled.
ISSUANCE OF SHARES
We will issue shares to subscribers at the same time as the escrow agent
releases the proceeds from the escrow account to us. As a result, subscribers
may receive evidence of their investment at different times.
CANCELLATION OF OFFERING
We have the right to cancel the offering at any time prior to the
release of funds from the escrow account. If we cancel the offering, the escrow
agent will promptly return all funds received from subscribers, without interest
or deduction.
HOW TO SUBSCRIBE
If you desire to purchase units you must:
o Complete and sign the Subscription Agreement accompanying this
prospectus;
o Make full payment for the purchase price for the units in United
States currency by check, bank draft or money order payable to
"BankAtlantic FSB - Ackeeox Corp. Escrow Account"; and
o Deliver the executed Subscription Agreement, together with full
payment for the purchase price, in person or by mail, to the address
shown in the Subscription Agreement.
-41-
44
SUBSCRIPTION TERMS
We reserve the right to disregard any subscription which is not fully paid when
we receive it. No subscription will be binding until we have accepted it, and we
may refuse to accept any subscription, in whole or in part, for any reason. In
determining which subscriptions to accept, in whole or in part, we may take into
account the order in which we receive subscriptions. In the event we reject all
or part of your subscription, the escrow agent will refund by mail all or the
appropriate portion of the amount paid by you with the subscription, without
interest, promptly after the rejection.
If you have any questions about the offering or how to subscribe,
please call Jerold Kritchman at 561-616-0776. If you subscribe, you should
retain a copy of the completed subscription documents for your records.
LEGAL MATTERS
The validity of the units offered hereby will be passed upon for the Company by
Mirkin & Woolf, P.A., West Palm Beach, Florida, holder of a warrant to purchase
123,711 shares of our common stock.
EXPERTS
The financial statements of the Company as of December 31, 2000 included in this
prospectus have been audited by Francine H. Alperstein, C.P.A., P.A.,
independent certified public accountants, as stated in their opinion, which has
been rendered upon the authority of said firm as experts in accounting and
auditing.
-42-
45
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a registration
statement on Form SB-2 under the Securities Act of 1933, as amended. The
registration statement covers the units offered in the offering. As permitted by
the rules and regulations of the Securities and Exchange Commission, this
prospectus does not contain all of the information contained in the registration
statement and its exhibits. Prospective investors may refer to the registration
statement and its exhibits for further information concerning the securities
offered by this prospectus.
Each statement contained in this prospectus as to the contents of a document
filed as an exhibit to the registration statement is qualified by reference to
that exhibit for a complete statement of its terms and conditions. Copies of
these materials, as well as periodic reports and information filed by the
Company, can be obtained upon payment of the fees prescribed by the Securities
and Exchange Commission, or may be examined at the offices of the Securities and
Exchange Commission without charge, at the public reference section of the
S.E.C., Room 1024, 450 Fifth Street, NW, Washington, DC 20549. The Securities
and Exchange Commission also maintains a website that contains reports, proxy
and information statements and other information regarding registrants such as
the Company that file electronically with the Securities and Exchange
Commission. The address of this website is http://www.sec.gov.
On the date of this prospectus, we will become subject to the reporting
requirements of the Securities Exchange Act of 1934 and in accordance with these
requirements will file reports, proxy statements and other information with the
S.E.C. We intend to furnish our shareholders with annual reports containing
audited financial statements and other periodic reports as may be required by
law.
We have not authorized any dealer, salesperson or any other person to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information. This prospectus does not constitute an
offer to sell or buy any units in any jurisdiction where it is unlawful.
-43-
46
ACKEEOX CORP.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 2000
TABLE OF CONTENTS
Independent Auditors' Report......................................... F-2
Balance Sheet........................................................ F-3
Statement of Loss.................................................... F-4
Statement of Changes in Stockholders' Equity......................... F-5
Statement of Cash Flows.............................................. F-6
Notes to Financial Statements....................................F-7 - F-10
F-1
47
FRANCINE H. ALPERSTEIN, C.P.A., P.A.
CERTIFIED PUBLIC ACCOUNTANT
3792 NORTHEAST 209TH TERRACE
AVENTURA, FLORIDA 33180
INDEPENDENT AUDITORS REPORT
January 25, 2001
To the Board of Directors and Stockholders
of AckeeOx Corp.
We have audited the accompanying balance sheets of AckeeOx Corp. (a development
stage company) as of December 31, 2000, and the related statements of loss,
changes in stockholders' equity and cash flows for the period October 12, 2000
(Inception) through December 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurances 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 financial statements referred to above present fairly, in
all material respects, the financial position of AckeeOx Corp. as of December
31, 2000 and the results of its operations, changes in stockholders' equity and
its cash flows for the period October 12, 2000 (Inception) through December 31,
2000 in conformity with generally accepted accounting principles. These
financial statements were previously issued and reported on, by us, on January
11, 2001. Since our report date of January 11, 2001, we have determined that
legal fees totaling $24,856, which had been capitalized on the Balance Sheet as
organizational costs and amortized accordingly, have been reclassified and
reported as on the Statement of Loss as legal fees in accordance with Generally
Accepted Accounting Principles.
Francine H. Alperstein
Francine H. Alperstein, C.P.A., P.A.
AckeeOx Corp.
Notes to Financial Statements
F-2
48
ACKEEOX CORP.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 2000
ASSETS
CURRENT ASSETS:
Cash $ 3,507
Prepaid expenses 15,145
--------
Total current assets 18,652
OTHER ASSETS:
Organization costs (Note A) 5,820
Less: accumulated amortization (59)
--------
Total other assets 5,761
--------
Total assets $ 24,413
========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,349
Affiliated company loan (Note C) 20,000
--------
Total current assets 21,349
STOCKHOLDERS' EQUITY:
Common stock, 50,000,000 shares of $ .01 par value
stock authorized, 3,000,000 issued and outstanding 30,000
Deficit accumulated during development stage (26,936)
--------
Total stockholders' equity 3,064
--------
Total liabilities and stockholders' equity $ 24,413
========
The accompanying notes to financial statements are an integral
part of these statements.
F-3
49
ACKEEOX CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF LOSS
For the Period October 12, 2000 (Inception) through December 31, 2000
REVENUES FROM SALES
Retail Sales $ --
Canning sales --
--------
Total Revenues --
COST OF SALES
Food --
Growing supplies --
Canning and packaging costs --
Total cost of sales --
GENERAL AND ADMINISTRATIVE EXPENSES:
Legal fees 24,856
Amortization expense 59
Bank service charges 105
Licenses and permits 5
Printing and stationery 1,278
Travel and lodging 822
--------
Total general and administrative expenses 27,125
OTHER REVENUES
Interest Income 189
--------
Loss before provision for income taxes (26,936)
--------
PROVISION FOR INCOME TAXES --
--------
Net loss $(26,936)
========
The accompanying notes to financial statements are an integral
part of these statements.
F-4
50
ACKEEOX CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period October 12, 2000 (Inception) through December 31, 2000
DEFICIT
ACCUMULATED
ADDITIONAL DURING
COMMON PAID-IN DEVELOPMENT
STOCK CAPITAL STAGE TOTAL
------------- --------------- ------------- -------------
BALANCES, October 12,
2000 (Inception) $ -- $ -- $ -- $ --
Issuance of 3,000,000
shares of common stock
at $ .01 par value -- --
to Jerold H. Kritchman 15,000 15,000
Issuance of 3,000,000
shares of common stock
at $ .01 par value
to Jayme A. Kritchman 15,000 -- -- 15,000
Sale of stock under stock
option plan (Note D)
Net loss for the period
ended December 31, 2000 -- -- (26,936) (26,936)
-------- -------- -------- --------
BALANCES, December 31, 2000 $ 30,000 $ -- $(26,936) $ 3,064
======== ======== ======== ========
The accompanying notes to financial statements are an integral
part of these statements.
F-5
51
ACKEEOX CORP
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
For the Period October 12, 2000 (Inception) through December 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(26,936)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization expense 59
(Increase) decrease in:
Prepaid expenses (15,145)
Increase (decrease) in:
Accounts payable 1,349
--------
Net cash used in investing activities (40,673)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for organization costs (5,820)
--------
Net cash used in investing activities (5,820)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sales of common stock 30,000
Loan from affiliate company (Note C) 20,000
--------
Net cash provided by financing activities 50,000
--------
Net increase in cash 3,507
CASH, Beginning of period --
--------
CASH, End of period $ 3,507
========
The accompanying notes to financial statements are an integral
part of these statements.
F-6
52
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company was formed on October 12, 2000 to pursue two different businesses:
domestic cultivation and commercialization of akee, the national fruit of
Jamaica, and the development of specialty food stores based on the Oxtails &
More store in West Palm Beach, Florida pursuant to a license agreement from
Oxtails Corp. Oxtails Corp. is a separate company owned by Jerold H. Kritchman
and his son, Jayme A. Kritchman.
Cash and Cash Equivalents
The Company has a money market account at a local bank which bears interest and
is shown as a cash equivalent on the balance sheet.
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
Amortization
The Company incurred organizational costs in the amount of $5,820 during the
period ended December 31, 2000. These costs are being amortized over a five year
period on a straight-line basis.
NOTE B - RELATED PARTY TRANSACTONS
Licensing Agreement
The Company entered into a licensing agreement with Oxtails Corp. on October 31,
2000 to own and operate retail stores under the name Oxtails & More in the State
of Florida, the countries adjacent to the Caribbean Sea and the countries
comprising Central America. This is a non-exclusive, non-assignable,
non-sublicensable and nontransferable license for a period of ten years. Oxtails
Corp. has the right to terminate this agreement at any time if the Company
defaults on any of its debts, insurance and various reporting obligations
required under the agreement.
The Company is obligated to pay Oxtails Corp. three percent (3%) of its "net
revenues". Net revenues are defined in the agreement as all gross revenues
generated by the retail stores less any discounts, co-op advertising costs,
sales commissions, freight, insurance and other shipping charges.
AckeeOx Corp.
Notes to Financial Statements
F-7
53
NOTE B - RELATED PARTY TRANSACTIONS - continued
Employment Agreements
The Company entered into two separate employment agreements with the owners of
Oxtails Corp. (which licenses the Company's right to own and operate retail
specialty food stores), Jerold H. Kritchman and his son, Jayme A. Kritchman.
Jerold is to serve as President and Chief Executive Officer. Jayme is to serve
as Vice-President and Chief Operating Officer. Each is to serve a three-year
term, which began November 01, 2000. Neither is to receive a salary for a period
of one year from the date the Company first receives proceeds from an escrow
account established for the receipt of investment proceeds from an initial
public offering the Company intends to make sometime in the near future (see
note H). Thereafter, each officer will be entitled to receive an annual salary
from the Company of fifty thousand dollars ($50,000) each per year, along with
incentive bonuses. They are expected to spend one-half their normal work time
managing the Company. The remainder of their time will be involved managing
Oxtails Corp. Additionally, they will be entitled each year to three
non-consecutive, non-cumulative weeks for vacation at full pay and reimbursement
for various customary business expenses including but not limited to travel and
entertainment.
NOTE C - AFFILIATED COMPANY LOAN
On October 31, 2000, Oxtails Corp. agreed to extend a revolving line of credit
to the Company and to make advances to the Company from time to time in an
aggregate principal amount outstanding at any one time not to exceed eighty
thousand dollars ($80,000). The Company's indebtedness under the revolving line
of credit shall be evidenced by a promissory note in said amount to be executed
and delivered by the Company payable to the order of the lender, Oxtails Corp.
The indebtedness will bear interest at the rate of nine percent (9%) per annum.
Such interest is payable monthly with the principal and any unpaid interest
payable on October 31, 2001.
NOTE D - STOCK OPTION AGREEMENT
On October 31, 2000, the Company adopted a stock plan as a means to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to employees, directors and consultants, and to
promote the success of the Company's business. Options for 47,000 shares have
been issued to seventeen optionees for five-year terms at a price exercisable
for $5.00 per share. Exercise of these options will cause an immediate dilution
of existing shareholder value which could be substantial depending upon the
number of the then outstanding shares at the time the exercise of the options
occur.
AckeeOx Corp.
Notes to Financial Statements
F-8
54
NOTE E - GOING CONCERN
The Company does not expect to be profitable for several years. Its ability to
become profitable by then depends upon many things, not the least of which is
upon its ability to successfully establish new businesses, obtain necessary
advice from knowledgeable consultants in the agricultural business, adhere to
strict agri-business federal, state and local laws, and avail itself of limited,
suitable lands in Palm Beach County. The Company may not be able to establish
new specialty stores as quickly as currently planned or as is needed to retain
its license. This could result in it losing its right to continue to operate
such specialty stores, leaving it solely in the akee cultivation business. If
this should happen, or if it can not raise enough money in sufficient time to
simultaneously open new stores, successfully lease and purchase grove land,
plant, cultivate and harvest akee trees, construct and operate a canning and
packaging facility, and market and sell canned products it may be required to
cease operations. There is an inherent risk that the Company may never be
profitable, resulting in a loss of all investment monies.
NOTE F - OTHER INHERENT RISKS
The Company's President and Vice President have had no experience in the
agricultural business, making them heavily reliant upon the advice of third
party consultants. This reliance could cause the Company to exhaust all its
financial resources even before it commences business.
Natural toxins in akee seeds, in its outer rind and in unripe or overripe akee,
can cause the fruit to be poisonous if not handled or served correctly.
Resulting health hazards range from vomiting to coma and death. As a result, the
U.S. Food and Drug Administration prohibited importation of akee beginning in
1973. In July 2000, it revised its regulation to permit importation of akee from
those foreign facilities meeting FDA standards and which have received FDA
approval. Accordingly, today only approved facilities can be used for canning.
The Company may be liable if the consumption of any of its food products is
found to cause injury, illness or death. The Company also may be required to
recall food products that become contaminated, are damaged or mislabeled. A
product liability judgement against the Company or a product recall could have a
material adverse effect on the Company's business, financial condition and
results of operations. Although the Company intends to purchase product
liability insurance, there can be no assurance that it will be obtainable at an
affordable cost or that the related deductible will not be so large that its
payment by the Company would not have an adverse effect on the Company.
AckeeOx Corp.
Notes to Financial Statements
F-9
55
NOTE F - OTHER INHERENT RISKS - Continued
Severe weather conditions and natural disasters, such as freezes, frosts,
floods, hurricanes, tornadoes, droughts, fires or earthquake, may affect the
Company's groves and its facilities. No assurance can be given that, if such
adverse weather conditions persist, akee cultivation will not be affected
without consequent adverse effects on the Company's earnings potential.
Finally, a disruption in regularly conducted business at the Company's planned
manufacturing operations in Palm Beach County, Florida caused by a catastrophic
event would have a material adverse effect on the Company's operations.
NOTE G - PROVISION FOR INCOME TAXES
No provision for income taxes is necessary because the Company sustained losses
for the period ended December 31, 2000. The net operating loss carryforward
amounts to $26,936 and expires in 2020.
NOTE H - SUBSEQUENT EVENT
The Company has plans to make an initial public offering of one million
(1,000,000) units sometime in the near future. Each unit will consist of one
share of stock and a three-year warrant to purchase one additional share of
stock at a price of $5.00 per share. There is currently no public market for the
units, the common stock or the warrants. Each subscriber will be required to
purchase a minimum of twenty units.
F-10
56
TABLE OF CONTENTS
Prospectus Summary .................................................... 4
Risk Factors .......................................................... 5
Cautionary Statement Regarding
Forward-Looking Statements .......................................... 13
Use of Proceeds ....................................................... 14
Dilution .............................................................. 16
Capitalization ........................................................ 17
Dividend Policy ....................................................... 18
Selected Financial Data ............................................... 18
Management's Discussion and Analysis of Financial
Condition or Plan of Operation ..................................... 19
Business .............................................................. 21
Management ............................................................ 30
Securities Ownership of Certain Beneficial Owners
and Management ...................................................... 33
Certain Transactions .................................................. 34
Description of Securities ............................................. 34
Shares Eligible for Future Sale ....................................... 39
Terms of Offering .................................................... 40
Legal Matters ......................................................... 42
Experts ............................................................... 42
Available Information ................................................. 43
Index to Financial Statements ......................................... F-1
Until __________, 2001 (25 days after the date of this prospectus), all dealers
effecting transactions in the registered securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers' obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
1,000,000 SHARES OF COMMON STOCK AND
WARRANTS TO PURCHASE 1,000,000 SHARES OF COMMON STOCK
PROSPECTUS
_________, 2001
57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws limit, to the maximum extent permitted by
Florida law, the personal liability of directors and officers for monetary
damages for breach of their fiduciary duties as directors or officers. The
Bylaws provide further that the Company shall indemnify to the fullest extent
permitted by Florida law any person made a party to an action or proceeding by
reason of the fact that such person was director, officer, employee or agent of
the Company. The Bylaws also provide that directors and officers who are
entitled to indemnification shall be paid their expenses incurred in connection
with any action, suit, or proceeding in which such director or officer is made a
party by virtue of his being an officer or director of the Company to the
maximum extent permitted by Florida law.
Reference is made to the following documents filed as Exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere herein:
DOCUMENT EXHIBIT NUMBER
- -------- --------------
Articles of Incorporation 3.1
Bylaws 3.2
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses payable in connection with
the sale of the units being registered hereby. All amounts are estimates, except
the registration fee.
ITEM AMOUNT
- ---- ------
S.E.C. registration fee $ 2,640
Blue sky fees and expenses *
Printing and engraving expenses 5,000
Legal fees and expenses 85,000
Auditors' fees and expenses 4,500
Transfer agent and registrar fees *
Miscellaneous expenses *
- -----------------------
*To be determined
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
The following is a summary of the transactions by the Company since its
incorporation on October 12, 2000 involving sales of securities that were not
registered under the Securities Act of 1933, as amended (the "Securities Act").
II-1
58
On October 12, 2000, the Company sold 1,500,000 shares of its common stock to
each of Jerold Kritchman and Jayme Kritchman at a price of $0.01 per share.
These transactions were exempt from Section 5 of the Securities Act of 1933
pursuant to Section 4(2) of the Securities Act.
On November 30, 2000 the Company granted options to purchase an aggregate of
47,000 shares of its common stock to 17 optionees pursuant to the Company's 2000
Stock Option Plan. The options are exercisable at $5.00 per share through
November 30, 2005, vesting in equal quarters on the first through fourth
anniversaries of the grant.
On December 4, 2000 the Company issued a warrant to Mirkin & Woolf, P.A.,
Trustee, to purchase 123,711 shares of its common stock. The warrant is
exercisable at $5.00 per share through November 30, 2003, vesting in increments
of 30,928 shares for each million dollars in investment capital the Company
raises.
ITEM 27. EXHIBITS.
(a) Exhibits
EXHIBIT
NUMBER EXHIBIT
- --------- -------
3.1 Articles of Incorporation, as amended
3.2 Bylaws
4.1 Specimen Common Stock Certificate
4.2 Warrant Agreement*
4.3 Specimen Warrant Certificate*
5.1 Opinion of Mirkin & Woolf, P.A.*
10.1 2000 Stock Option Plan
10.2 Employment Agreement between the Company and Jerold Kritchman
dated October 31, 2000
10.3 Employment Agreement between the Company and Jayme Kritchman
dated October 31, 2000
10.4 Escrow Agreement between the Company and BankAtlantic FSB*
10.5 Credit Agreement
23.1 Consent of Accountants
23.2 Consent of Mirkin & Woolf, P.A. (included in Exhibit 5.1)*
99.1 Consent of Bernard Feldman, Proposed Director*
- -------------------------------
*To be filed by amendment
(b) Financial Statement Schedules: None
II-2
59
ITEM 28. UNDERTAKINGS.
The undersigned Company 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; (ii) To reflect
in the prospectus any facts or events which, individually or together, represent
a fundamental change in the registration statement; (iii) To include any
additional or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act, to treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(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.
(4) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officer or controlling persons of
the registrant, 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, 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 the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, 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 whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
60
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of West
Palm Beach, State of Florida on January 29, 2001.
ACKEEOX CORP.
By: /s/ Jerold H. Kritchman
------------------------------
Jerold H. Kritchman, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
NAME TITLE DATE
- ---- ----- ----
Jerold H. Kritchman President, Director January 29, 2001
Jayme A. Kritchman Executive Vice President, January 29, 2001
Secretary, Treasurer,
Director
II-4
61
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT
- ------ -------
3.1 Articles of Incorporation, as amended
3.2 Bylaws
4.1 Specimen Common Stock Certificate
4.2 Warrant Agreement*
4.3 Specimen Warrant Certificate*
5.1 Opinion of Mirkin & Woolf, P.A.*
10.1 2000 Stock Option Plan
10.2 Employment Agreement between the Company and Jerold Kritchman
dated October 31, 2000
10.3 Employment Agreement between the Company and Jayme Kritchman
dated October 31, 2000
10.4 Escrow Agreement between the Company and Bank-Atlantic FSB*
10.5 Credit Agreement
23.1 Consent of Accountants
23.2 Consent of Mirkin & Woolf, P.A. (included in Exhibit 5.1)*
99.1 Consent of Bernard Feldman, Proposed Director*
- -------------------------------
*To be filed by amendment
II-5