Registration No. 333-105793
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(Amendment Number 6)
----------------------
MEDALLION CREST MANAGEMENT, INC.
(Name of Small Business Issuer in its Charter)
FLORIDA 5313 06-1686744
-------------------- ----------------- ---------------
(State of Other Jurisdiction of (Primary Standard Industrial (IRS Employer
Incorporation or Organization) Classification Code Number) Identification No.)
3675 North Country Club Drive, Suite 1907
Aventura, FL 33180
(305) 933-6737
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(Address and telephone number of principal executive offices
and principal place of business)
Sean Miller, Vice President
3675 North Country Club Drive, Suite 1907
Aventura, FL 33180
(305) 933-6737
(Name, address and telephone number of agent for service)
COPIES TO:
James G. Dodrill II, Esq.
The Law Office of James G. Dodrill II, P.A.
5800 Hamilton Way
Boca Raton, Florida 33496
(561) 862-0529
Facsimile (561) 862-0927
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Approximate date of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
----------------------
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, check the following box. (X)
If this Form is filed to register additional securities for
an offering pursuant to Rule 462 (b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of 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. ( ).
i
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. ( ).
CALCULATION OF REGISTRATION FEE
PROPOSED PRPOSED
TITLE OF EACH CLASS MAXIMUM MAXIMUM
OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SHARES TO BE BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE <F1> PRICE FEE
______________________ __________ _________ _________ ____________
Common Stock,
$.0001 par value to be
sold by selling 5,165,500 $0.25 $1,291,375 $104.48
shareholders
Common Stock,
$.0001 par value to be 4,000,000 $0.25 $1,000,000 $ 80.90
sold
by the company
TOTAL 9,165,500 $2,291,375 $185.38
<FN>
<F1>
(1) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457.
</FN>
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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.
Information contained herein is subject to completion or
amendment. A registration statement relating to these
securities has been filed with the Securities and Exchange
Commission. 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 in which the offer or sale is
not permitted.
ii
PROSPECTUS
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 2003
9,165,500 Shares of Common Stock
MEDALLION CREST MANAGMENT, INC.
(A Florida Corporation)
This is our initial public offering. We are offering a total of 9,165,500
shares of our common stock. All of the shares being offered by us will be
sold at a price per share of $0.25. The selling shareholders will sell their
shares at a price per share of $0.25. Of the shares being offered:
1) 5,165,500 are being offered for sale by selling shareholders and
2) 4,000,000 are being offered for sale by us
We will not receive any proceeds from the sale of any of the shares by
selling shareholders. We will be selling all of the 4,000,000 shares of
common stock we are offering on a "best efforts basis" and will not use an
underwriter or pay a commission for the sale of the shares. No arrangements
have been made to place funds in escrow, trust or any similar account. There
is no minimum amount we are required to raise in this offering and any
funds received will be immediately available to us. Our offering will
terminate on the earlier of the sale of all of the shares by us or 90 days
after the date of the prospectus.
There is no established public market for our common stock and we have
arbitrarily determined the offering price.
_________________________________
INVESTING IN OUR STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER
THE RISK FACTORS BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon
the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The information in this prospectus is not complete and may be changed.
None of these securities may be sold until a registration statement filed
with the Securities and Exchange Commission is effective. The 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.
Underwriting
Price to Discounts and Proceeds
Public Commissions (1) to Company
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Per Share $0.25 $0 $0.25
Total $0 $1,000,000
(1) We have agreed to pay substantially all of the expenses incidental to
the registration, offering and sale of the common stock to the public other
than commissions, fees and discounts of underwriters, brokers, dealers and
agents. We estimate these expenses to total $60,000.
The date of this Prospectus is November 20, 2003
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TABLE OF CONTENTS
Page
----
Prospectus Summary 3
The Offering 4
Summary Financial Information 7
Risk Factors 8
Use of Proceeds 16
Determination of Offering Price 18
Dividend Policy 18
Dilution 19
Management's Plan of Operations 20
Business 24
Management 29
Principal Shareholders 33
Selling Shareholders 34
Description of Securities 36
Indemnification 38
Plan of Distribution 39
Certain Relationships and Related Transactions 41
Legal Matters 41
Experts 41
Where You Can Find More Information 41
Index to Financial Statements
2
PROSPECTUS SUMMARY
Because this is a summary, it does not contain all of the information that
may be important to you. You should read the entire prospectus. You should
consider the information set forth under "Risk Factors" and our financial
statements and accompanying notes that appear elsewhere in this prospectus.
We are a development stage company and were incorporated in Florida on
April 4, 2003. We were formed in order to create and realize value by
identifying and making opportunistic real estate investments by the direct
acquisition, development, rehabilitation, financing and management of real
properties. We look to acquire real estate holdings and properties which
management believes can primarily produce capital appreciation. Depending on
the properties, we will also seek to gain income from these holdings.
Management is concentrating its efforts on defining and building focused
operating businesses with recurring sources of income. Based upon our defined
business plan and purpose we do not consider ourselves to be a blank check
company as defined under Rule 419(a)(2), Our executive offices are located at
3675 North Country Club Drive, Suite 1907, Aventura, FL 33180.
Our telephone number is (305) 933-6737. As of July 31, 2003 we
had operating capital of $41,884 and stockholders' equity of $39,650.
Please be aware that our independent auditor has expressed substantial doubt
about our ability to continue as a going concern and believes that our ability
to continue as such is dependent on our ability to implement our business
plan, raise capital and generate revenues.
Our operations are led by, Thomas Fastiggi, who serves as our Chief
Operating Officer. Mr. Fastiggi has over thirty years of experience in real
estate sales, property management, including operations, long range planning
and insurance risk management.
We have achieved no revenues to date and our loss from inception to
July 31, 2003 totaled $6,650.
3
The Offering
Shares we are offering:
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Please note that our shares are not currently traded on the OTC Bulletin
Board or any other public market.
Securities Offered 4,000,000 shares of common
stock are being offered at a price
of $0.25 per share for a period of
90 days or until we sell all shaes.
See "Description of Securities"
Use of Proceeds If we sell all 4,000,000 shares we
are offering, we will receive gross
proceeds of $1,000,000. Any and
all funds raised from our sale of
common stock will be used for
purchase and renovation of
property and for marketing
purposes and working capital
purposes. Unless we raise a
minimum of $500,000 none of the
proceeds will be used to pay any
officer or director in the form of
compensation, reimbursement,
debt repayment or otherwise. If
we raise at least $500,000, our
officers intend to begin taking a
nominal salary, the amounts of
which will be partially dependent
on the total amount we raise. See
"Use of Proceeds."
Method of Distribution We are offering the shares on a
self-underwritten, best-efforts
basis. Thomas Fastiggi, our COO
will participate in the distribution
on our behalf. See "Plan of
Distribution."
Shares being offered by selling shareholders:
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Securities Offered 5,165,500 shares of common
stock are being offered at a price
of $0.25 per share. See
"Description of Securities"
4
Use of Proceeds We will not receive any proceeds
from the sale of common stock by
our selling shareholders.
Method of Distribution The selling shareholders may sell
or distribute their common stock
through ordinary brokers'
transactions, in privately
negotiated transactions or in one
or more of several other manners.
See "Plan of Distribution."
Common Stock Outstanding, before offering 5,165,500
Common Stock Outstanding, after offering 9,165,500
Dividend Policy We do not intend to pay dividends
on our common stock. We plan
to retain any earnings for use in
the operation of our business and
to fund future growth.
5
Risk Factors
The securities offered by this prospectus are highly speculative and
very risky. We have described the material risks that we face below. Before
you buy, consider the risk factors described and the rest of this prospectus.
This prospectus also contains forward-looking statements that involve risks
and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including the risks faced by us described below and elsewhere in
this prospectus. Please refer to "Risks Associated with Forward-looking
Statements" on page 14.
6
Summary Financial Information
The following is a summary of our Financial Statements, which are included
elsewhere in this prospectus. You should read the following data together
with the "Management's Discussion and Analysis of Financial Condition and
Results of Operations" section of this prospectus as well as with our
Financial Statements and the notes therewith.
Three months
Period ended July
ended April 31, 2003
30, 2003 (unaudited)
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Statement of Operations Data:
Total Revenue $ 0 $ 0
========= =========
Gross Profit $ 0 $ 0
========= =========
Net Income (loss) $(163) $(6,487)
====== =========
As of
July 31, 2003
(unaudited)
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Balance Sheet Data
Cash $41,884
Total current assets $41,884
Total assets $41,884
Total current liabilities $ 2,234
Total stockholders' equity $39,650
Total liabilities and stockholders' equity $41,884
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RISK FACTORS
The securities offered are highly speculative. You should purchase them
only if you can afford to lose your entire investment in us. You should
carefully consider the following risk factors, as well as all other
information in this prospectus.
Investors should assume that if any of the following risks actually
materialize, our business, financial condition or results of future
operations could be materially and adversely affected. In that case, the
trading price of our common stock could decline, and you may lose all or part
of your investment.
Risks related to our business:
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We have very little operating capital and may be forced to file bankruptcy.
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The growth of our business will require significant additional investment.
We do not presently have adequate cash from operations or financing activities
to meet our long-term needs. As of July 31, 2003 we had a total of $41,884
in capital to use in executing our business plan. We are able to operate going
forward solely because our executive officers, all of whom are shareholders of
the company have agreed to defer receipt of compensation until we have raised a
minimum of $500,000 in gross proceeds or achieved $500,000 in revenue. We
anticipate that unless we are able to raise net proceeds of at least $500,000
within the next twelve months that we will not be able to execute our business
plan in a meaningful way. However, even if all shares offered through this
prospectus are sold, and we raise net proceeds of $1,000,000 there can be no
assurance that we will be successful in executing our plan or achieving
profitability. Due to our early stage of development, regardless of the
amount of funds we raise, there is a substantial risk that all investors may
lose all of their investment. Even if we sell all shares offered through this
registration statement, we expect that we will seek additional financing in
the future. However, we may not be able to obtain additional capital or
generate sufficient revenues to fund our operations. We do not currently
anticipate seeking a reverse merger/acquisition wihtin the next twelve months.
If all of these alternatives fail, we expect that we will be
required to seek protection from creditors under applicable bankruptcy
laws. Our independent auditor has expressed substantial doubt about
our ability to continue as a going concern and believes that our ability
is dependent on our ability to implement our business plan, raise capital and
generate revenues. See Note 1 of our financial statements.
We have not commenced full operations and we may not be able to achieve or
maintain profitability.
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We are a relatively young company and our proposed operations are subject
to all of the risks inherent in such a business enterprise. The likelihood of
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our success must be considered in light of the problems, expenses,
difficulties, complications, and delays frequently encountered in
connection with the development of a business in a competitive industry. As
with an investment in any emerging growth company, ownership of common shares
may involve a high degree of risk, and is not recommended if you cannot
reasonably bear the risk of a total loss of your investment.
If we are unsuccessful in raising at least $500,000 we expect to continue
to incur operating losses in fiscal 2004, which ends April 30, 2004. If we do
not achieve revenue growth sufficient to absorb our planned expenditures, we
could experience additional losses in future periods. These losses or
fluctuations in our operating results could cause the market value of our
common stock to decline.
We anticipate that in the future we will make significant investments in
our operations, particularly to support our acquisitions and marketing
activities and, that as a result, operating expenses are expected to continue
to increase. We intend to make such investments on an ongoing basis,
primarily from cash generated from operations and, to the extent necessary,
funds available from financing activities, as we develop and introduce new
products and expand into new markets. If net sales do not increase with
capital or other investments, we are likely to continue to incur net losses
and our financial condition could be materially adversely affected.
There can be no assurance that we will achieve or sustain profitability on a
quarterly or annual basis.
Our independent auditor has expressed doubts about our ability to continue as
a going concern.
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We are a development stage company as defined in Financial Accounting
Standards Board Statement No. 7. We are devoting substantially all of our
present efforts in establishing a new business and we have not achieved any
revenues. These factors raise substantial doubt about our ability to continue
as a going concern. Management's plans regarding our ability to continue as a
going concern are disclosed in Note 1 to the financial statements. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
We will face various risks associated with the acquisition, development,
construction and renovation of properties including the risk that such
investments will fail to perform as expected or that we may invest funds into
potential opportunities and subsequently abandon such opportunity after
determining that such opportunity is not feasible.
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Acquisition. We intend to acquire existing properties to the extent that
they can be acquired on advantageous terms and meet our investment criteria.
Acquisitions of properties entail general investment risks associated with any
real estate investment, including the risk that investments will fail to
perform as expected, that estimates of the cost of improvements to bring
an acquired property up to standards established for the intended market
9
position may prove inaccurate and the occupancy rates and rents achieved may
be less than anticipated. If any of these occur such event may have an
adverse effect on our results of operations.
Development, Construction and Renovation. We also intend to pursue the
selective development, construction and renovation of commercial and
residential properties for our own account or the account of, or through,
entities in which we own an equity interest as opportunities arise. Risks
associated with our development, construction and renovation activities
include the risks that: we may abandon development opportunities after
expending resources to determine feasibility; construction and renovation
costs of a project may exceed original estimates; occupancy rates and rents at
a newly completed property may not be sufficient to make the property
profitable; and development, construction, renovation and lease-up may not be
completed on schedule (including risks beyond our control, such as weather or
labor conditions or material shortages) resulting in increased debt service
expense and construction costs. Development, construction and renovation
activities are also subject to risks relating to the inability to obtain, or
delays in obtaining, all necessary zoning, land-use, building, occupancy and
other required governmental permits and authorizations. These risks could
result in substantial unanticipated delays or expenses and, under certain
circumstances, could prevent completion of development, construction and
renovation activities once undertaken, any of which could adversely affect our
financial condition and results of operations. Properties acquired for
development may generate little or no cash flow from the date of acquisition
through the date of completion of development and may experience operating
deficits after the date of completion. In addition, new development and
renovation activities, regardless of whether or not they are ultimately
successful, typically will require a substantial portion of management's time
and attention.
We will be dependent on the receipt of rental income from real property and
the failure to lease such properties in a timely manner or on economically
favorable terms may have a material adverse effect on the results of our
operations.
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In the future, we may acquire properties that are vacant or not fully
leased. We expect to incur significant costs, including those relating to
leasing commissions and tenant improvements, in connection with the
leasing of these properties and may be required to offer tenant
concessions, including free rental periods. Our failure to lease these
properties in a timely manner and on economically favorable terms may have a
material adverse effect on the results of our operations.
Our cash flow, results of operations and value of our assets would be
adversely affected if a significant number of future tenants of our future
failed to meet their lease obligations or if we or the owner of a property
were unable to lease a significant amount of space on economically
favorable terms. In the event of a default by a lessee, the owner may
experience delays in enforcing its rights as lessor and may incur substantial
costs in protecting its investment. The bankruptcy or insolvency of a major
tenant may have an adverse effect on a property. At any time, a tenant may
also seek protection under the bankruptcy laws, which could result in
rejection and termination of such tenant's lease and thereby cause a reduction
in the cash flow of the property. If a tenant rejects its lease, the owner's
claim for breach of the lease would (absent collateral securing the claim) be
treated as a general unsecured claim. Generally, the amount of
10
the claim would be capped at the amount owed for unpaid pre-petition lease
payments unrelated to the rejection, plus the greater of one year's lease
payments or 15% of the remaining lease payments payable under the lease (but
not to exceed the amount of three years' lease payments). No assurance can be
given that any of our future properties will not experience significant tenant
defaults.
We may experience adverse consequences as a result of undertaking debt
financing.
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Leverage. Some of our real estate equity investments may utilize a
leveraged capital structure, in which case a third party lender would be
entitled to cash flow generated by such investments prior to our receiving a
return. As a result of such leverage, we would be subject to the risks
normally associated with debt financing, including the risk that cash flow from
operations and investments will be insufficient to meet required payments of
principal and interest, the risk that existing debt (which in most cases will
not have been fully amortized at maturity) will not be able to be refinanced
or that the terms of such refinancings will not be as favorable to us and the
risk that necessary capital expenditures for such purposes as renovations
and other improvements will not be able to be financed on favorable terms or
at all. While such leverage may increase returns or the funds available for
investment by us, it also will increase the risk of loss on a leveraged
investment. If we default on secured indebtedness, the lender may
foreclose and we could lose our entire investment in the security for such
loan. Because we may engage in portfolio financings where several investments
are cross-collateralized, multiple investments may be subject to the risk of
loss. As a result, we could lose our interests in performing investments in
the event such investments are cross-collateralized with poorly
performing or nonperforming investments. In addition, recourse debt, which
we reserve the right to obtain, may subject other assets of ours to risk of
loss.
Existing Debt Maturities; Foreclosures. We anticipate that only a portion
of the principal of our indebtedness outstanding from time to time will be
repaid prior to maturity. However, we may not have sufficient funds to repay
such indebtedness at maturity; and it may therefore be necessary for us to
refinance debt through additional debt financing or equity offerings. If we
are unable to refinance this indebtedness on acceptable terms, we may be
forced to dispose of properties or other assets upon disadvantageous terms,
which could result in losses to us and adversely affect the amount of cash
available for further investment.
Risk of Rising Interest Rates. We may incur indebtedness in the future
that also bears interest at a variable rate or may be required to refinance
its debt at higher rates. Increases in interest rates could increase our
interest expense and adversely effect our financial condition and
results of operations.
Covenants. Various credit facilities or other debt obligations may
require that we comply with a number of financial and other covenants on an
ongoing basis. Failure to comply with such covenants may limit our ability to
borrow funds or may cause a default under any then-existing indebtedness.
11
No Limitation on Debt. Our Articles of Incorporation and Bylaws do not
contain any limitation on the amount of indebtedness we may incur. We also
have the ability to use a more highly leveraged business strategy than
typically used by REITs. Accordingly, we could become highly leveraged,
resulting in an increase in debt service that could increase the risk of
default on our indebtedness.
The nature of investments made by us may involve high risk due to the
illiquidity of real estate investments.
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We may make investments in real estate-related assets and businesses that
have experienced severe financial difficulties, which difficulties may never
be overcome. Since we may only make a limited number of investments and
since many of the investments may involve a high degree of risk, poor
performance by one of the investments could severely affect our financial
condition and results of operations.
Equity and debt investments in real estate may be relatively illiquid.
Such illiquidity limits our ability to modify our portfolio in response to
changes in economic or other conditions. Illiquidity may result from the
absence of an established market for the investments as well as legal or
contractual restrictions on their resale by us.
Our officers and directors are not required to continue as shareholders
and may not maintain an equity interest in the company in which case their
interests may not mirror those of our shareholders.
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We are registering all of our shares of common stock held by our officers
and directors and all shares held by our officers and directors are being
offered for sale. There is no requirement that our current or any of our
future officers and/or directors retain any of their shares of our common
stock. Accordingly, there is no assurance that all or any of our officers
and/or directors will continue to maintain an equity interest in the company.
Messers. Fastiggi, Miller and Kohen currently intend to remain as officer or
directors of the company for the foreseeable future, even after the sale of
all or a portion of their shares.
We have arbitrarily determined the offering price. Accordingly the price you
pay may not accurately reflect the value of our common stock.
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We have arbitrarily determined the offering price of the common stock
because there is no market for any of our securities. There can be no
assurance that the offering price accurately reflects the value of
our common stock or that investors will be able to sell the common stock for
at least the offering price or at any price at any time.
We are dependent on the services of our Chief Operating Officer and the loss
of those services would have a material adverse effect on our business.
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We are highly dependent on the services of Thomas Fastiggi, our Chief
Operating Officer. Mr. Fastiggi maintains responsibility for our overall
corporate operational strategy. Mr. Fastiggi has over thirty years of
experience in real estate sales, property management, including operations,
long range planning and insurance risk management. The loss of the services
of Mr. Fastiggi would have a material adverse effect upon our business and
12
prospects. Mr. Fastiggi currently intends to remain an officer of the
company for the foreseeable future, even after the sale of all or a
portion of his shares. Please note that Mr. Fastiggi is offering for sale all
shares of our common stock that he holds. Additionally, all of our officers
and directors are offering for sale all shares of our common stock that they
hold.
Most of our officers do not currently devote their full business efforts to
executing our business plan and do not intend to do so unless we raise
substantial funding.
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Other than Mr. Miller, all of our officers are currently employed by other
businesses. Although they intend to devote their full business efforts to
executing our business plan if we raise at least $500,000, in the event we
cannot successfully raise this funding they will all likely continue to work
for other businesses. In that event, the time they devote to our business
will vary, but in at least some instances will most likely be substantially
less than full time. If our officers continue to work for other businesses
their failure to devote full time to our business efforts could have a
material adverse effect upon our business and prospects.
Our executive officers along with our largest shareholder hold the voting
power to greatly influence our affairs and may make decisions that do not
necessarily benefit all shareholders equally.
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As of the date of this prospectus, our executive officers and our largest
shareholder together own approximately 53% of our outstanding Common Stock.
Consequently, they are in a position to greatly influence matters submitted
for shareholder votes, including the ability to elect a majority of our Board
of Directors and to exercise control over our affairs, generally.
Our officers and directors may engage in activities that cause a conflict of
interest with our business plan.
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Our officers and directors are permitted to purchase and/or sell
property or real estate that is not affiliated with us. They are also
permitted to engage in outside real estate investments. Other than Mr.
Miller, all of our officers are currently employed by other businesses.
Although the officers plan to devote their full business efforts to
executing our business plan after we raise at least $500,000, the officers
currently may be employed or work for business entities within the real
estate and property industry. Any of these factors could result in one or
more of our officers and directors having a conflict of interest between
their personal interests and those of our shareholders and us.
You may not be able to buy or sell our stock at will and may lose your entire
investment.
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We are not listed on any stock exchange at this time. We hope to become
a bulletin board traded company. These are often known as "penny stocks"
and are subject to various regulations involving certain disclosures to be
given to you prior to the purchase of any penny stocks. These disclosures
require you to acknowledge you understand the risk associated with
buying penny stocks and that you can absorb the entire loss of your
investment. Penny stocks are low priced securities that do not have a very
high trading volume. Consequently, the price of the stock is volatile and you
may not be able to buy or sell the stock when you want.
Our management will have broad discretion to use any proceeds from sales of
the common stock and their uses may not yield a favorable return.
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While we intend to use the net proceeds from any common stock we are able
to sell principally for working capital needs and general corporate purposes,
our management will have broad discretion to spend the proceeds from this
offering in ways with which stockholders may not agree. The failure of our
management to use these funds effectively could result in unfavorable returns.
This could have significant adverse effects on our financial condition and
could cause the price of our common stock to decline.
13
Future sales of our common stock may have a depressive effect upon its price.
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All of the currently outstanding shares of common stock were issued at
prices lower than the price of the shares of common stock in this offering.
In the future, sales of these securities may have an adverse effect on the
market price of our common stock should a public trading market develop for
such shares.
Risks related to this offering:
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There is no assurance of future dividends being paid.
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At this time we do not anticipate paying dividends in the future, but
instead plan to retain any earnings for use in the operation of our business
and to fund future growth. We are under no legal or contractual obligation
to declare or to pay dividends, and the timing and amount of any future cash
dividends and distributions is at the discretion of our Board of Directors
and will depend, among other things, on our future after-tax earnings,
operations, capital requirements, borrowing capacity, financial condition and
general business conditions.
14
Certain important factors may affect our actual results and could cause
those results to differ significantly from any forward-looking statements made
in this prospectus or otherwise made by us or on our behalf. For this purpose,
any statements contained in this prospectus that are not statements of
historical fact should be considered to be forward-looking statements. Words
such as "may," "expect," "believe," "anticipate," "intend," "could,"
"estimate," or "continue" or the negatives of those words, identify forward-
looking statements. These statements appear in a number of places in this
prospectus and include statements as to our intent, belief or expectations.
These forward-looking statements are subject to the risks detailed below or
elsewhere in this prospectus, or detailed from time to time in our filings
with the Securities and Exchange Commission.
Risks associated with forward-looking statements.
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This prospectus contains certain forward-looking statements regarding
management's plans and objectives for future operations, including plans
and objectives relating to our planned marketing efforts and future
economic performance. The forward-looking statements and associated risks
set forth in this prospectus includes or relate to:
(1) Our ability to identify desirable properties now and in the future
and to negotiate favorable terms for our investments into such
properties,
(2) Our ability to market our properties at competitive prices now and
in the future,
(3) Our ability to maintain an effective sales network,
(4) Our success in forecasting demand for our properties now and in
the future, and
(5) Our ability to maintain pricing and thereby maintain adequate
profit margins.
15
USE OF PROCEEDS
We will not receive any proceeds from the sale of
securities being offered by our selling shareholders.
Our proceeds from this offering will vary depending on how
many shares of our common stock we are able to sell. If we sell
all shares of common stock being registered in this offering, we
will receive proceeds of $1,000,000. A majority of any proceeds
received will be used for purchase and renovation of property and
for marketing purposes. Any funds not used for such purposes
will be used for working capital and general corporate purposes.
Working capital expenses include expenses for travel,
communications, office supplies, rent and utilities, and other
ongoing selling, general and administrative expenses and we
consider general corporate purposes to be expenses such as those
legal and accounting expenses typically incurred in connection
with being a publicly traded company.
We expect to incur expenses of approximately $60,000 in
connection with the registration of the shares.
The table below shows how proceeds from this offering would
be used for scenarios where we sell various amounts of the shares
and the priority of the use of net proceeds in the event actual
proceeds are not sufficient to accomplish the uses set forth.
While management has developed the following estimates to the
best of its ability, there can be no assurance that we will use
the proceeds exactly as laid out in the table.
Total shares offered 4,000,000 4,000,000 4,000,000 4,000,000
Percent of total shares offered 25% 50% 75% 100%
Shares sold 1,000,000 2,000,000 3,000,000 4,000,000
Gross proceeds from offering 250,000 500,000 750,000 1,000,000
Less: offering expenses 60,000 60,000 60,000 60,000
---------- --------- --------- ---------
Net proceeds from offering 190,000 440,000 690,000 940,000
Use of net proceeds
Accounting & legal fees 20,000 30,000 35,000 40,000
Marketing 19,000 44,000 69,000 94,000
Purchase of Property 80,000 200,000 330,000 450,000
Renovation of Property 40,000 100,000 165,000 225,000
Operating expenses & working capital 31,000 66,000 91,000 131,000
We have accounted for proceeds of the offering that will be used to pay
officers under the heading operating expenses and working capital. If we are
unable to raise a minimum of $500,000 none of the proceeds will be used to pay
any officer or director in the form of compensation, reimbursement, debt
repayment or otherwise. If we are able to raise a minimum of $500,000 our
officers intend to begin taking a nominal salary, the amounts of which will
be partially dependent on the total amount we raise, but will note exceed
twenty percent of the amount raised.
It is possible that no proceeds may be raised from this
offering. It is also possible that some, but not all, of the
4,000,000 shares offered will be sold. If fewer than all of the
shares are sold, we may ultimately need to modify or delay full
implementation of our business plan. There can be no assurance
that any delay or modification will not adversely affect our
development and ultimately our chance of success. If we require
additional funds to develop our plan, such funds may not be
available on terms acceptable to us, or at all.
16
The amounts set forth above are estimates developed by our
management for allocation of net proceeds of this offering based
upon our current plans and prevailing economic and industry
conditions and assumes that we are able to sell the numbers of
the shares set forth in each column above. Although we do not
currently contemplate material changes in the proposed use of
proceeds set forth above, to the extent that our management finds
that adjustments are required, the amounts shown may be adjusted
among the uses indicated above. Our proposed use of proceeds is
subject to changes in general, economic and competitive
conditions as well as timing of receipt of funds, each of which may
change the amount of proceeds expended for the purposes intended.
The proposed application of proceeds is also subject to changes
in market conditions and our financial condition in general.
Changes in general, economic, competitive and market conditions
and our financial condition would include, without limitation,
the occurrence of a national economic slowdown or recession, a
significant change in the real estate market and the environment
in which we operate, and/or regulatory changes in general. While
our management is not currently aware of the existence or pending
threat of any of the foregoing reasons, we provide you no
assurance that one or more of such events will not occur.
17
DETERMINATION OF OFFERING PRICE
Prior to this offering, there has been no market for our
common stock. The offering price of the shares was arbitrarily
determined and bears no relationship to assets, book value, net
worth, earnings, actual results of operations, or any other
established investment criteria. Among the factors considered in
determining the price were our historical sales levels, estimates
of our prospects, the background and capital contributions of
management, the degree of control which the current shareholders
desired to retain, current conditions of the securities markets
and other information.
DIVIDEND POLICY
It is our present policy not to pay cash dividends and to
retain future earnings for use in the operations of the business
and to fund future growth. Any payment of cash dividends in the
future will be dependent upon the amount of funds legally
available, our earnings, financial condition, capital
requirements and other factors that the Board of Directors may
think are relevant.
18
DILUTION
Net tangible book value per share represents the amount of
our total tangible assets less total liabilities, divided by the
total number of shares of common stock outstanding. Our net
tangible book value at July 31, 2003 was $.01 or a de minimus
amount per share of common stock. Dilution per share represents
the difference between the offering price of $0.25 per share and
the net tangible book value per share of common stock, as
adjusted, immediately after this offering.
After giving effect to the completion of the offering and
after deducting offering expenses estimated to be $60,000, our July 31, 2003
pro forma net tangible book value will be $979,650 or $0.11 per
share. This represents an immediate increase in pro forma net
tangible book value of $0.10 per share to existing stockholders
and an immediate dilution of $0.14 per share, or approximately
56% of the offering price, to investors purchasing shares of
common stock in the offering.
Public offering Price per share $ 0.25
Net Tangible Book Value per share before offering $ 0.01
Increase Per Share attributable to sale of these shares $ 0.10
Pro-Forma Net Tangible Book Value after offering $ 0.11
Dilution per share to Public Investors $ 0.14
The following table summarizes as of July 31, 2003, the
number of shares purchased as a percentage of our total
outstanding shares, the aggregate amount paid for such shares,
the aggregate amount paid figured as a percentage of the total
amount paid, and the average amount paid per share for such
shares. For purposes of this table, the sale to the public of
these shares is assumed to have taken place on July 31, 2003.
Shares Purchased Total Consideration Paid Average Price
Number Percent Amount Percent per Share
------ ------- ------ ------- ---------
Existing Shareholders 5,165,500 56.36% $ 39,650 4% $0.01
New Investors 4,000,000 43.64% $ 940,000 96% $0.25
--------- ------- --------- ------- ---------
Total 9,165,500 100.0% $ 979,650 100.0% $0.11
The following table sets forth the estimated net tangible
book value ("NTBV") per share after the offering and the dilution
to persons purchasing shares based upon various levels of sales
of the shares being achieved:
CAPTION>
Shares outstanding prior to offering 5,165,500
Total shares offered 4,000,000 4,000,000 4,000,000 4,000,000
Shares sold 1,000,000 2,000,000 3,000,000 4,000,000
Public offering price $0.25 $0.25 $0.25 $0.25
Per share increase attributable to
new investors $ 0.03 $ 0.06 $ 0.08 $ 0.10
NTBV per share prior to offering $ 0.01 $ 0.01 $ 0.01 $ 0.01
------------ ------------ ----------- -----------
Post offering pro forma NTBV per share $ 0.04 $ 0.07 $ 0.09 $ 0.11
Dilution to new investors $ 0.21 $ 0.18 $ 0.16 $ 0.14
Percent of dilution of the offering price 84% 72% 64% 56%
19
MANAGEMENT'S PLAN OF OPERATIONS
Results
- -------
For the period from inception through July 31, 2003 no revenue was
generated or anticipated by management's forecast.
We incurred expenses from inception to July 31, 2003 of $6,650, which also
equaled our loss during that period. This amount was financed primarily
through $46,300 of receipts from equity subscriptions. Our loss per share
through this date was de minimus. Our officers have agreed to defer all
salaries until we raise a minimum of $500,000 and to not seek reimbursement for
unpaid past compensation. Our principal executive and
administrative offices are currently located in space owned by an officer who
has agreed to contribute the value of the rent we would anticipate paying for
such a space. Accordingly, we are not presently incurring any rent expenses
associated with this space. We anticipate relocating from this space to a
leased space, within 90 days of our completion of raising financing in a
minimum amount of at least $250,000.
Management believes that, even though our auditors have expressed
substantial doubt about our ability to continue as a going concern, due to
our low cash requirements and the cooperation of our management in deferring
salaries, even if we are unsuccessful in selling any of the shares of common
stock offered by this prospectus, assuming that we do not commence
our anticipated operations, we will be able to satisfy our cash requirements
for at least the next 12 months. We will not, however, be able to commence
substantial operations, unless and until we have raised a minimum of $250,000
in funding through this offering or otherwise. Fully executing our business
plan will significantly change our cash needs and we will not be able to begin
such execution until we have raised substantial additional resources.
We do not anticipate that there will be any significant changes in the
number of employees or expenditures from what is discussed in this
prospectus.
Our management team is offering all shares of it common stock for sale
through this prospectus. Although our management team does not have a
present intention of selling all of its shares at any specific time, due to
the sacrifices they are making by not accepting a salary from the company
during its intitial growth phase management desires to have the ability to
offer shares from time to time pursuant to this prospectus. It is
management's current intention to remain employed by the company even if the
shares held are sold.
Plan of Operations
- ------------------
Over the next twelve (12) months, we intend to pursue opportunities to
provide revenue-generating activities. To accomplish this, we will need
to progress through several stages of initial operations. Initially, we
are currently seeking to raise up to $1,000,000 of capital through this
offering to be in position to commence full business operations.
We are attempting to raise these funds through this public offering of
our common stock. We do not currently anticipate seeking a reverse
merger/acquisition within the next twelve months.
20
Although we are not yet in a position to acquire any property, we have
identified and conducted preliminary due diligence on several specific
potential target properties that we intend to pursue farther once funds have
been obtained. The properties include:
1) Luxury units located in Miami Beach, Florida on the southern most
point of South Beach, with a price range from $1.6 million to $2.8
million per unit. We are currently negotiating the purchase of
several of these unites, but the purchase is contingent on our
raising sufficient funds.
2) A portion of a strip mall located in Pembroke Pines, Florida located
in a beautiful, high-income area. We are in the process of
conducting due diligence on this property in an attempt to determine
the value of this property versus other similar properties.
3) Contracts of pre-construction townhouses in Pembroke Pines, Florida,
which we believe to be one of the fastest growing areas in south
Florida. We are in the process of conducting due diligence on the
property and believe that due to the high growth rate in the area
that the townhouses could be desirable to purchase.
Once funds have been obtained, we will then conduct
extensive site evaluations for possible property purchases, acquisitions,
property development, renovation and lease/sale opportunities on these
and other properties. Our site evaluation will include detailed analysis
regarding the quality and suitability of potential opportunities and/or
parcels of land. It is our goal to explore opportunities that
demonstrate superior site quality features, such as, favorable
demographics, attractive site features (high visibility/traffic area)
and a limited competitive environment. Although this stage of
operation will be an ongoing business concern, we estimate a
maximum of two months for initial site evaluations to be conducted.
Once we have identified potential opportunities, we plan to enter
negotiations with potential investments. Based on the nature of such
investments, we anticipate 4-6 weeks of negotiations on any/all initial
projects that we may pursue. It is our goal in the negotiation stage to
position our self to accumulate various projects that are commercial,
acquisition or development in nature, at under valued amounts. We may
also look to pursue the same negotiation tactics regarding any distressed
real properties of interest. We anticipate engaging in formal contracts
within four months of raising sufficient funds through the offering. We will
look to secure commitments in the areas of property purchases, acquisitions,
property development, renovation and lease/sale opportunities on an ongoing
basis. We believe that sufficient revenue can be generated through the final
eight months of our first year of full operation to produce an operating
profit. This time frame includes the acquisition and sale of potential
properties, site development, commercial lease revenues, renovation and
resale. Achieving these revenues however remains strictly contingent
on raising sufficient funds for the initiation of full business operations.
We anticipate no substantial changes to our business plan if we raise funds
less than that of $1,000,000 through this offering or otherwise. In the case
that funds less than that of $1,000,000 are raised, our opportunities to
make possible property acquisitions will be more limited. Additionally,
investment opportunities that are capital intensive, such as large commercial
facilities or extensive renovation projects may no longer be immediately
feasible due to lack of funding.
We anticipate incurring various costs and expenses associated with
cultivating revenue-generating activities. Assuming we successfully
raise $1,000,000 we estimate site analysis during the preliminary site
analysis stage, (months 1-4 of full operations) to cost approximately
$75,000. Due to the nature of our business model, site analysis costs will be
a recurring cost for the Company. As sites are identified, we anticipate
incurring legal expenses associated with the negotiation and drafting of
documentation to consummate the transaction. Our two largest expenses will be
the actual purchase and renovation of property. We anticipate incurring costs
in renovating and improving properties equal to fifty percent of the
acquisition costs. Assuming we successfully raise $1,00,000 we estimate that
we would spend approximately $450,000 acquiring properties and an additional $
225,000 renovating these properties. We have included within the $450,000
amount our anticipated costs and expenses in regards to monthly rent/loan
payments.
Liquidity and Capital Resources
- -------------------------------
While at this time we do not have any significant current liabilities,
our business expansion will require significant capital resources that may be
funded through the issuance of notes payable or other debt arrangements that
may affect our debt structure.
To date we have spent a total of $6,650 in general operating expenses.
We raised the amounts used in these activities from a Regulation D offering in
which we raised $46,300.
To date, we have managed to keep our monthly cash requirements low for
two reasons. First, our officers, who are all founders and significant
shareholders have agreed not to draw a salary until a minimum of $500,000 in
21
funding is obtained or we have generated $500,000 in revenues. Once we have
achieved this threshold our board of directors will establish salaries for
our officers. These salaries will be at least partially determined by the
amount of funding we successfully raise. The officers will not be
reimbursed for their unpaid compensation during the offering period. Second,
we have been able to keep our operating expenses to a minimum by operating in
space owned by Sean Miller, our Chief Executive Officer. Mr. Miller has
agreed to contribute use of this space in a rent free arrangement until
completion of this offering and he will not be reimbursed for the rent of
this space.
Given our low monthly cash requirements and the agreement of our officers,
management believes that, even though our auditors have expressed substantial
doubt about our ability to continue as a going concern, and assuming that we
do not commence our anticipated operations it has sufficient financial
resources to meet its obligations for at least the next twelve months.
In the early stages of our business plan, we will need cash for
refinancing mortgages, financing acquisitions and development, and financing
capital improvements as well as for marketing. We anticipate that during the
first year, in order to execute our business plan to any meaningful degree,
we would need to spend a minimum of $500,000 on such endeavors. We anticipate,
however, that we will be able to commence substantial operatiosn once we have
raised a minimum of $250,000. We hope to raise these funds through this
offering. If we are unable to raise the funds through this offering we will
seek alternative financing through means such as borrowings from institutions
or private individuals. There can be no assurance that we will be able to
keep costs from being more than these estimated amounts or that we will be
able to raise such funds. Even if we sell all shares offered through this
registration statement, we may need to seek additional financing in the
future. However, we may not be able to obtain additional capital or generate
sufficient revenues to fund our operations. We do not currently anticipate
seeking a reverse merger/acquisition within the next twelve months. If
we are unable to obtain addtional capital or generate sufficient revenues
to fund our operations, we expect that we will be required to seek
protection from creditors under applicable bankruptcy laws. Our independent
auditor has expressed substantial doubt about our ability to continue as a
going concern and believes that our ability is dependent on our ability to
implement our business plan, raise capital and generate revenues. See Note 1
of our financial statements.
For the foreseeable future we do not intend to seek a buyer for our
business or look to engage in any joint ventures with other entities.
Uncertainties
- -------------
There is intense competition in the real estate investment market with
other companies that are much larger and both national and international
in scope and which have greater financial resources than we have. At
present, we require additional capital to make our full entrance into
this industry.
Forward Looking Statements
Certain statements in this report are forward-looking statements within
the meaning of the federal securities laws. Although the Company believes that
the expectations reflected in its forward-looking statements are based on
22
reasonable assumptions, there are risks and uncertainties that may cause
actual results to differ materially from expectations. These risks and
uncertainties include, but are not limited to, identifying desirable
properties, negotiating desirable investment terms, changes in the real estate
market, changing interest rates, and a general downturn in the economy.
Recent Accounting Pronouncements
Statement No. 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets" supercedes Statement No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121").
Though it retains the basic requirements of SFAS 121 regarding when and how
to measure an impairment loss, SFAS 144 provides additional implementation
guidance. SFAS 144 excludes goodwill and intangibles not being amortized
among other exclusions. SFAS 144 also supercedes the provisions of APB 30,
"Reporting the Results of Operations," pertaining to discontinued operations.
Separate reporting of a discontinued operation is still required, but SFAS 144
expands the presentation to include a component of an entity, rather than
strictly a business segment as defined in SFAS 131, Disclosures about Segments
of an Enterprise and Related Information. SFAS 144 also eliminates the
current exemption to consolidation when control over a subsidiary is likely
to be temporary. This statement is effective for all fiscal years beginning
after December 15, 2001. The Company believes that the future implementation
of SFAS 144 on January 1, 2002 will nothave a material effect on the Company's
financial position, results of operations or liquidity.
In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Account Standards No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. This Statement amends Statements
No. 123 to provide three alternative methods of transition for Statement No.
123's fair value method of accounting for stock-based employee compensation
for companies that elect to adopt the provision of Statement No. 123.
Statement No. 148 does not require the transition to the fair value accounting
method of Statement No. 123. The Company has elected to use the intrinsic
value method of accounting for stock compensation in accordance with APB No.
25 and related interpretations. Statement No. 148 also amends the
disclosure provisions of Statement No. 123 to require disclosure in the
summary of significant accounting policies of the effects of an entity's
accounting policy with respect to stock-based compensation on reported net
income and earnings per share in annual and interim financial statements. The
disclosure provision of Statement No. 148 are required to be adopted by all
companies with stock-based employee compensation, regardless of whether they
account for that compensation using the fair value method of Statement No. 123
or the intrinsic value method of APB No. 25. The Company does not anticipate
any material effect on the financial statements.
23
BUSINESS
GENERAL AND COMPANY HISTORY
Medallion Crest Management, Inc. was incorporated in the state of Florida
on April 4, 2003. We are positioning ourselves to acquire, develop and
operate commercial real estate property in the South Florida counties of Dade,
Broward and Palm Beach. As of the date of this prospectus we have not
generated any revenues.
We were organized to create and realize value by identifying and making
opportunistic real estate investments by the direct acquisition,
rehabilitation, development, financing and management of real properties and/
or participation in these activities through the purchase of debt instruments
or equity interests of entities engaged in such real estate businesses.
Management is concentrating its efforts on defining and building focused
operating businesses with recurring sources of income.
We intend to acquire under-performing office and other commercial or
residential properties below replacement cost, renovating and/or repositioning
them, and owning, operating and/or reselling such properties. We believe
that appropriate well-located commercial properties that are currently under-
performing can be acquired on advantageous terms and repositioned with the
expectation of achieving enhanced returns which are greater than returns which
could be achieved by acquiring a stabilized property. As opportunities emerge,
we may in the future expand our real estate-related businesses and activities.
We currently do not intend to qualify as a real estate investment trust
("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").
Consequently, we have the flexibility to respond quickly to opportunities
without the structural limitations inherent in REITs and to operate, when
deemed advantageous by management, on a more highly leveraged basis than
most REITs. We may elect REIT status for certain of our planned future
subsidiaries or affiliates when management deems it beneficial to our
shareholders. By not qualifying as a REIT under the Code (which would
require us to distribute each year at least 95% of our net taxable income,
excluding capital gains), we have the ability and currently intend to retain
for reinvestment our cash flow generated from operations and to sell
properties without the substantial income tax penalties which may be imposed
on REITs in such transactions. In addition, we differ from opportunity funds
that are typically structured as private partnerships. In that regard, our
business is conducted without the payment of acquisition, disposition or
advisory fees to general partners that should result in additional cash flow
being available for reinvestment as well as mitigate the potential for
conflicts of interest. In addition, unlike investors in opportunity funds,
our shareholders are expected to have enhanced liquidity through their ability
to sell or margin their stock. We also hope to attract a broader range of
investors because there is no stipulated investment minimum. However, unlike
REITs and opportunity funds, we are subject to corporate level taxation.
Our operations are led by Thomas Fastiggi, who serves as our Chief
Operating Officer. Mr. Fastiggi has over thirty years experience in real
estate sales and property management, including serving for the past nine
years as the General Manager of a $60 million rental community.
24
In analyzing potential investments and market trends and inefficiencies,
management has reviewed, and will continue to review, current economic and
market information.
BUSINESS STRATEGY
In furtherance of our business strategy, we plan to organize into two
strategic business units, each covering a separate line of business. As
opportunities emerge and in response to changes in market, real estate and
general economic conditions, we may in the future retract from, discontinue or
expand our real estate related business and activities.
Commercial Properties. We seek to acquire commercial properties below
replacement cost and operate and/or resell such properties after renovation,
redevelopment and/or repositioning. We believe that appropriate well-located
commercial properties which are currently under-performing can be acquired on
advantageous terms and repositioned with the expectation of achieving enhanced
returns which are greater than returns which could be achieved by acquiring
a stabilized property.
We are currently seeking to apply our business strategy to office
properties. As opportunities arise, the Company may seek to acquire other
types of commercial properties, including industrial properties.
Property Development. We plan to engage in selective development
activities as opportunities arise and when justified by expected returns.
We believe that by pursuing selective development activities we can achieve
returns that are greater than returns which could be achieved by acquiring
stabilized properties. We may also acquire land for speculation, future
development or subdivision. Certain development activities may be conducted
in joint ventures with local developers who may bear the substantial portion
of the economic risks associated with the construction, development and
initial rent-up of properties.
We may in the future make equity investments in entities owned by third
parties and which engage in real estate-related businesses and activities or
businesses that service the real estate industry. Some of the entities in
which we may invest may be start-up companies or companies in need of
additional capital. We may also in the future invest in retail, residential,
hotel and other types of properties and may also manage and lease properties
owned by us or in which we have an equity or debt investment.
In analyzing potential investments and market trends and inefficiencies,
management has reviewed, and will continue to review, current economic and
market information.
OPERATING STRATEGIES
We seek to enhance our operating performance by developing our core
investment segments through asset quality, customer service and establishing
market share within our operating region.
25
We believe that high-quality office buildings/complexes and retail centers
present an attractive investment opportunity given their typical strong
tenant covenants, stable yields, low vacancy levels and growth potential. Our
objective is to increase cash flow and the value of our future portfolio of
properties and to seek continued growth through the selective acquisition,
development, redevelopment, renovation and expansion of income-producing real
estate properties. We believe we will be able to implement an investment
strategy of acquiring additional properties with these characteristics to
provide additional cash flow and further enhance long-term portfolio value.
We believe that our investment program will enable us to enhance our presence
and continue to diversify our portfolio.
In order to minimize short-term leasing risk in our portfolio, we are
focusing our acquisition efforts on properties with long-term creditworthy
leases.
Management intends to undertake regular reviews of any property
investments we make and, based on experience and local market knowledge,
assess the ongoing opportunities for the properties. Appropriate capital
improvement projects, renovations and remarketing initiatives will be
implemented.
Our leasing strategy for each property will reflect the nature of the
property, its position within the local marketplace, prevailing and forecast
economic conditions, the state of the local real estate market and the status
of existing tenancies. Management recognizes the inherent cost efficiencies
of maintaining existing tenancies and believes that early renewal, proactive
negotiations with tenants, staggered lease maturities and contractual rental
rate increases can enhance cash flow and capital value. Our objective is to
maintain rents and occupancy levels that, through superior operating
practices, management services and leasing strategies, outperform local
markets.
Through sophisticated and prudent financial management we will commit
management to maximizing income form the properties we eventually own.
Management will endeavor to optimize the leveraged returns from our
anticipated portfolio of properties, while remaining within the overall debt
limits. Management believes significant additional proceeds will be available
as mortgages are expected to be refinanced. Accretive investment of such
proceeds is anticipated to increase revenues. Whenever possible, we will
utilize a fixed rate debt financing with terms which are appropriate for the
nature of the leases and the properties being financed. Management intends
to stagger our debt maturities for any new financings to manage refinancing
risk and to provide a source of additional capital when refinanced, and make
use of operating lines or acquisitions facilities to generate interim capital.
INVESTMENT POLICIES AND ACQUISITION STRATEGIES
We intend to acquire real estate or interests in real estate in Dade,
Broward and Palm Beach County, Florida. We plan to invest in real estate and
interests in real estate in commercial properties such as office buildings,
strip centers, industrial warehouses including mini-storage facilities and
residential properties to include single family homes, condominiums, and
residentially zoned land.
26
We intend to acquire properties through leveraged transactions, such as
first mortgages available through institutional lenders, seller financed
acquisitions, or a combination thereof. Additionally, proceeds of the
offering may be utilized to fund acquisitions without use of institutional or
seller financing. It is our intent to structure all debt financing thorough
the use of non-recourse financing, limiting our exposure to the amount of
funds we directly invest in a specific acquisition.
We intend to acquire under-performing office and other commercial and
residential properties below replacement cost, renovating and/or repositioning
them, and owning, operating and/or reselling such properties. We believe
that appropriate well-located commercial properties that are currently
under-performing can be acquired on advantageous terms and repositioned
with the expectation of achieving enhanced returns which are greater than
returns which could be achieved by acquiring a stabilized property.
We have established a policy limiting the percentage of our assets to be
invested in any one particular property to no greater than 49 % of our assets.
We intend to generate a substantial portion of our revenue through capital
gains on the properties we purchase. Although we intend to invest in
properties that produce income, our primary focus is to generate revenue
through the appreciation of real estate and properties. Our hope is that
income generated through properties we acquire will provide the capital needed
for further acquisitions.
We have not limited the percentage of securities of an issuer that we
may acquire. Due to our primary goal of generating revenue through
appreciation of real estate and properties we do not anticipate
acquiring debt securities.
Prior to acquiring a property, we intend to determine the possibilities
of creating value and forecast profitable sales scenarios. We will employ the
following procedure to analyze aspects of potential acquisitions:
* Market Depth: market liquidity and number of transactions within the
area
* Building Quality: age, category, type of facility, appeal for tenants
and investors, and technologies
* Discounted Income Quality: tenant quality, lease terms and expiry,
contract rent vs. market rent
* Current and Overall performance
* Financing: interest rates and cash assets
We intend to utilize two approaches in regards to our acquisition strategy.
Identify Attractive Acquisitions - We seek to acquire property or real
estate that is determined to be undervalued or possesses income potential.
We will only make acquisitions that can be negotiated with terms and
conditions at a price we believe to be less than current market prices.
We intend to promote this strategy to generate long-term profitability and cash
flow gains rather than just revenue growth.
Maintain a Sell Discipline - We intend to create a disposition strategy
at the time of acquisition. This disposition strategy will be reviewed
constantly throughout the investment cycle. We believe that value is created
during the acquisition and asset management phase of the investment cycle and
realized through the properly timed and executed sale of the property. We
intend to establish a successful track record of maximizing investment
returns by selling each asset at the optimal point in the investment cycle.
Management considers various factors when evaluating potential property
acquisitions. These factors include:
- The attractiveness of the property to existing and potential tenants;
- The likelihood and relative attractiveness of competitive supply;
- The anticipated demand for space in the local market;
- The creditworthiness and diversity of risk in the current tenants
occupying the property;
- The ability to acquire the asset at an attractive going-in yield, as
well as the potential to increase operating income over time by renewing
leases for increasing rents;
- The physical condition of the property, including the extent of funds
required for its maintenance and for physical upgrades needed in order
to establish or sustain its market competitiveness;
- The ability to operate the property with a competitive cost structure;
and
- The property's location in one of our target markets
In determining whether to enter into a new development, the foregoing
factors are considered as well as the additional risks of development,
including the following:
- The extent of lease-up risk in the context of the demand/supply
characteristics of the local market
- The ability to minimize construction risks; and
27
- The quality of local development partners, if relevant.
Please note that, although the above paragraphs describe our current
policy with respect to investing, these policies may be changed by the
directors without a vote of our security holders.
INVESTMENT GUIDELINES AND RESTRICTIONS
We may invest up to 49% of our assets in any one property.
We have not limited the percentage of securities of an issuer that we may
acquire. Due to our primary goal of generating revenue through appreciation
of real estate and properties we do not anticipate acquiring debt securities
or acquiring a significant amount of equity securities. We anticipate that
the vast majority of our acquisitions will be asset purchases. However in
situations we determine to be economically favorable for the company we may
acquire equity securities of an issuer or structure an acquisition as a stock
purchase instead of an asset purchase.
- - We have implemented the following guidelines for our investments:
- - We may invest up to 95% of our assets into real estate and properties.
- - Investment interests in REITs, partnerships and joint ventures may not
collectively exceed 25% of our assets.
- - Investments in securities in total may not exceed 30% of our assets. If
investments in securities grow in value to exceed 30% of our assets we will
liquidate sufficient amounts of the securities so that the value does not
exceed 30% of our assets. We are not an investment company as the focus of
our investments is in real property, not securities and we will diligently
monitor the value of our investments in order to ensure that we do not fall
within the definition of an investment company.
The types of real estate and interests in real estate in which we intend
to invest consist of commercial properties such as office buildings, strip
centers, industrial warehouses including mini-storage facilities and
residential properties to include single family homes, condominiums, and
residentially zoned land.
We intend to acquire properties through leveraged transactions, such as
first mortgages available through institutional lenders, seller financed
acquisitions, or a combination thereof. Additionally, proceeds of the
offering may be utilized to fund acquisitions without use of institutional
or seller financing. It is our intent to structure all debt financing
thorough the use of non-recourse financing, limiting our exposure to the
amount of funds we directly invest in a specific acquisition.
We intend to acquire under-performing office and other commercial and
residential properties below replacement cost, renovating and/or repositioning
them, and owning, operating and/or reselling such properties. We believe that
appropriate well-located commercial properties that are currently
under-performing can be acquired on advantageous terms and repositioned with
the expectation of achieving enhanced returns which are greater than returns
which could be achieved by acquiring a stabilized property.
We will also consider investing in Real Estate Investment Trusts (REITs),
and to a minor extent, partnerships and joint ventures. We will maintain the
following criteria when evaluating such investment opportunities:
- Management that is highly focused and free from conflicts of interests
- A track record of profitability through various market or business cycles
- Financial strength and flexibility
- Cash flow quality and growth potential
- Valuation of risk-adjusted potential returns
Furthermore, we will require that all potential REIT investments meet
guidelines such as:
- Ready access to capital
- Ownership of property that has appreciation potential
We will only consider investing in REITs that are invested in well-
located areas. We believe that well-managed equity REITs that are not
highly leveraged and generate most of their income from rents on established
or stable properties are the most attractive REIT investments. Key financial
factors, such as Funds From Operation (FFO) and Cash Available for Distribution
(CAD) will be analyzed as well.
Additionally, we will look for REITs with investment policies such as:
transparent investment policy and objective, holds real estate investments for
long term investment purpose, provides regular detailed reports regarding the
performance of the REIT, is subject to a high standard of corporate governance
and timely disclosure of financial information.
Please note that, although the above paragraphs describe our current
policy with respect to investing, these policies may be changed by the
directors without a vote of our security holders.
CONFLICT OF INTEREST
Our officers and directors are permitted to purchase and/or sell
property or real estate that is not affiliated with us. They are also
permitted to engage in outside real estate investments. Other than Mr.
Miller, all of our officers are currently employed by other businesses.
Although the officers plan to devote their full business efforts to executing
our business plan after we raise at least $500,000, the officers currently
may be employed or work for business entities within the real estate and
property industry.
COMPETITION
We compete in a variety of service disciplines within the commercial real
estate industry. Each of these business areas is highly competitive on a
national as well as local level. We face competition not only from other real
estate service providers, but also from boutique real estate advisory firms,
appraisal firms and self-managed real estate investment trusts. In general,
there can be no assurance that we will be able to ever compete effectively,
to achieve desirable fee levels or margins, or achieve any market share. We
look to increase relative strength and longevity in the markets in which we
plan to operate, and enhance our ability to offer clients a range of real
estate services on a local and regional basis. We believe that we can
operate successfully in the future in this highly competitive industry.
LEGAL PROCEEDINGS
We are not party to any legal proceedings as of the date of this
prospectus.
EMPLOYEES
As of the date of this prospectus we have 4 employees all of whom are
serving the company in executive capacities.
DESCRIPTION OF PROPERTY
Our principal office facility is presently located in space owned by an
officer. We are not presently incurring any rent expenses associated with
this space.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND/FINANCIAL DISCLOSURE.
We have had no disagreements with our accountants on accounting and
financial disclosure.
28
MANAGEMENT
Directors and Executive Officers
Our sole directors and executive officers are:
Director
Name Age Position Since
- ---- --- -------- --------
Thomas Fastiggi 46 Chief Operating Officer
Sean Miller 28 Chief Executive Officer,
Chief Financial Officer,
Chief Accounting Officer
and Director 2003
Vincent Kohen 62 President
Lisa Beach 42 Vice President
Rose Cabasso 48 Vice President, Secretary
and Director 2003
Sean Miller, Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer
With a background in accounting, finance and economics, Mr. Miller served
as Managing Director for Asset Management Group, LLC, a privately managed
hedge fund from May 2001 through July 25, 2003, at which time he became our
Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer.
Prior to joining Asset Management Group, Mr. Miller provided consulting
services to the money management firm of Greystone International Asset
Management, for the period of July 2000 until April 2001, in the capacity
of Assistant Portfolio Manager. Mr. Miller was responsible to provide
detailed research and analytical analysis on various equities. Mr.
Miller also incorporated a successful hedging strategy that was detailed
by the use of option and derivative trading. From April 1999 to July
2000,Mr. Miller served as District Manager for Automatic Data
Processing Inc., a Fortune 500 company which specializes in payroll and
tax services As District Manager, Mr. Miller's duties included: sales,
marketing and training. Mr. Miller achieved Top Salesperson for South Florida
twice and was responsible for regaining profitability in every territory he
was assigned. During his tenure at ADP, Mr. Miller's marketing efforts
averaged 165% above his district's quota. Mr. Miller currently devotes his
full business efforts to implementing our business plan.
Thomas Fastiggi, Chief Operating Officer
Mr. Fastiggi served as our Chief Executive Officer and Chief Financial Officer
from inception until July 25, 2003. He now serves as our Chief Operating
Officer. Mr. Fastiggi has over thirty years of experience in real estate
sales, property management, including operations, long range planning and
insurance risk management. This experience includes preparation of annual
budgets, office and facility administration and database management as well as
overall profit and loss responsibility. He has managed properties in Florida
and Hilton Head, South Carolina with amenities such as beach, tennis clubs,
130 + slip marina facilities and on site restaurants. This includes
29
supervision of all property management, rental and sales staff for
condominiums, hotel and time shared resorts.
As a licensed Real Estate Broker, his expertise includes real estate
marketing, as well as feasibility studies having worked for a major resort
marketing company with duties such as project profiling and positioning,
competitive property analysis, buyer profile demographics, marketing, media
selection, lead generation and sales training.
Mr. Fastiggi currently serves, and has served for the past nine years,
as General Manager of Peppertree Bay Realty, a $60 million gulf
front community in Sarasota Florida. His responsibilities include
operations, rental program and sales management, having
initiated the sales program at this location. During the last three
years, he directed a $2 million staged upgrade of the facility including
structural repairs with concrete restoration, renovation of on-site amenities,
elevators, fire alarm and safety upgrades as well as landscape and
road renovation.
He is a graduate of Seton Hall University with a degree in Business
Administration, and is licensed by the state of Florida as a Real Estate
Broker and Community Association Manager. He is a member of Community
Associations Institute (CAI). having earned the "Certified
Manager of Community Associations" ("CMCA") designation from the National
Board of Certification for Community Association Managers, a CAI sister
organization. He has earned the designated of Association Management
Specialist ("AMS") by CAI, one of less than 1200 such professionals
nationwide. He is a member of the Institute of Real Estate Management and
is a candidate for the Accredited Residential Manager ("ARM") designation.
He has participated as a guest speaker and panelist for the American Resort
and Recreation Development Association ("ARRDA") southeastern region
conventions.
Mr. Fastiggi is consulted on a weekly basis regarding strategic operational
decisions and the implementation of our business plan. Mr. Fastiggi intends
to devote his full business efforts to executing our business plan once we
have raised a minimum of $500,000. Mr. Fastiggi currently devotes up to five
hours per week to implementing our business plan.
Vincent J. Kohen, President
Mr. Kohen joined the company in July 2003 as its President and brings forth a
lifetime of expertise in the banking industry. His last assignment was as
President, Chief Executive Officer and Director of Twin Valley Bank of Ohio.
This position involved the turnaround of the institution from defalcation to a
five star rated financial institution. He retired from Twin Valley Bank in
2001 after sixteen years of dedicated services. Prior to that assignment,
Mr. Kohen spent twenty-four years as Vice President and Branch Administrator
of 39 bank branches for the First National Bank of Dayton, now National City
Bank, Dayton, Ohio.
He is a member of the American Institute of Banking, Dayton, Ohio, having
served as its President. In addition, he served as an instructor for the
Institute in the areas of marketing, bank operations and economics.
Mr. Kohen enjoyed a distinguished military career and retired at the rank of
Major in the United States Army Reserve with 18 years of experience.
A graduate of the U.S. Army Officer Candidate School, he graduated as the
number one graduate in his class.
30
He maintains a residence in Sarasota, Florida where he has served as a board
member of his community, the Peppertree Bay Association, for the last six
years. He was elected Treasurer in 2000 and offers his financial expertise as
needed on a volunteer basis.
Mr. Kohen is consulted on a weekly basis regarding the implementation of our
business plan. He intends to devote his full business efforts to executing
our business plan once we have raised a minimum of $500,000. Mr. Kohen
currently devotes up to five hours per week to implementing our business plan.
Lisa Beach, Vice President
Mrs. Lisa Beach has more than twenty years experience in the real estate
industry.
Mrs. Beach has served Peppertree Bay Reality, Inc. since 1978. In her present
position as onsite Sales and Rental Coordinator, she is responsible for
marketing a 362 unit gulf front condominium. At this community she has been
the top sales award winner, having won awards for Sales Associate of the Year
for each of the last 7 years. She consistently sells over 95% of her own
listings.
Her rental program experience includes marketing properties via tenant
inquiries by mail, telephone, World Wide Website, as well as walk in traffic
and existing resident referrals. She has also been responsible for the
selection of advertising media in market specific locations based on
demographically defined seasonal rental demand.
As Coordinator of the rental program Mrs. Beach introduces new clients of the
firm to the rental program, by explaining the responsibilities of the firm,
the owner and a prospective tenant. Reservations are handled by Mrs. Beach
through computer as well as backup systems. She is responsible for the escrow
of rental payments for payment of taxes, utilities, insurance and other
obligations of the unit owner, as well as distribution of rental proceeds to
the unit owner.
Mrs. Beach has responsibility for rental unit conditions, including purchase
and replacement of interior furnishings, kitchen and bath packages,
electronics, as well as other items typically found in a resort rental
condominium. She coordinates the cleaning and unit preparation from tenant to
tenant as well as scheduling use by owners or business or personal associates
of a unit owner.
Mrs. Beach is consulted on a weekly basis regarding the implementation of our
business plan. She intends to devote her full business efforts to executing
our business plan once we have raised a minimum of $500,000. Mrs. Beach
currently devotes up to five hours per week to implementing our business plan.
Rose Cabasso, Vice President and Secretary
Ms. Rose Cabasso, age 48 is a graduate of Brooklyn College with a degree in
Psychology and Business Administration.
During her career, she has been associated with many of the premier fashion
houses in various managerial positions. From 1975 to 1983, Ms. Cabasso was
employed with Kaiser Roth in the capacity of Advertising Manager and
Assistant Merchandising Manager. Her efforts were focused on promoting Kaiser
Roth's lingerie, lounge-ware, gloves & accessories. Ms. Cabasso was the
Director of Advertising and Sales Promotion for Bali Intimate Apparel from
1983 till 1986. She assumed a similar role at Lilly of France, as Director of
Advertising and Sales Promotion from 1986 to 1988. Her responsibilities were
centered in advertising, marketing, and product promotion through an
aggressive media campaign in the greater New York metropolitan area.
Ms. Cabasso developed unique point-of-purchase displays for the retailer.
Ms. Cabasso is consulted on a weekly basis regarding the implementation of our
business plan. She intends to devote her full business efforts to executing
our business plan once we have raised a minimum of $500,000. Ms. Cabasso
currently devotes up to five hours per week to implementing our business plan.
31
Directors' Remuneration
Our directors are presently not compensated for serving on the board of
directors. All officers are prepared to devote full-time attention to
successful implement our business plan. If minimum funding of $500,000 is
not obtained, officers may then decide to devote less than full-time towards
the business plan.
Executive Compensation
Employment Agreements
We have not entered into any employment agreements.
Summary Compensation Table
The following table sets forth the total compensation paid to or accrued
for the period from inception through April 30, 2003 to our CEO and our
President.
Annual Compensation
Other Restricted Securities All
Name and Annual Stock Underlying LTIP Other
Principal Position Year Salary Bonus Compensation Rewards Options Payouts Compensation
- -----------------------------------------------------------------------------------------------------------------------
Sean Miller, CEO, 2003 $0 0 0 0 0 0 0
CFO and CAO
- -----------------------------------------------------------------------------------------------------------------------
Thomas Fastiggi, COO 2003 $0 0 0 0 0 0 0
- -----------------------------------------------------------------------------------------------------------------------
Vincent J. Kohen, 2003 $0 0 0 0 0 0 0
President
- -----------------------------------------------------------------------------------------------------------------------
Lisa Beach, 2003 $0 0 0 0 0 0 0
Vice President
- -----------------------------------------------------------------------------------------------------------------------
Stock Option Grants in the past fiscal year
We have not issued any grants of stock options in the past fiscal year.
32
PRINCIPAL SHAREHOLDERS
The following table sets forth information regarding
beneficial ownership of our common stock as of the date of this
prospectus and as adjusted to reflect the sale of all shares
which may potentially be sold in connection with this
registration statement, by (i) those shareholders known to be the
beneficial owners of more than five percent of the voting power
of our outstanding capital stock, (ii) each director, and (iii)
all executive officers and directors as a group:
Number of Percent Number of
Shares Owned Owned Shares Owned Percent
Name and Address of Before Before After After
Beneficial Owner<F1> Offering Offering Offering Offering <F2>
- ------------------- ------------- ---------- ----------- ------------
Cardozo Services Limited(3) 1,540,000 29.8% 0 *
Ansbacher House
Bank Lane
PO Box N7768
Nassau, Bahamas
Vincent Kohen 5,000 * 0 *
Thomas Fastiggi 350,000 6.8% 0 *
Lisa Beach 25,000 * 0 *
Sean Miller 400,000 7.7% 0 *
Rose Cabasso 425,000 8.2% 0 *
Andrea Osman 400,000 7.7% 0 *
7745 Trieste Place
Delray Beach, FL 33446
Joseph Colonna 400,000 7.7% 0 *
2068 Arlington Street
Apartment A
Sarasota, FL 34239
Ronald Colonna 430,000 8.3% 0 *
6056 Midnight Pass Road
Sarasota, FL 34248
John Thristino 430,000 8.3% 0 *
7745 Trieste Place
Delray Beach, FL 33446
All Directors and Officers as
A Group (4 persons) 1,200,000 23.2% 0 *
- --------------------
<FN>
<F1>
(1) Unless otherwise indicated, the address of record for the
owner is 3675 North Country Club Drive, Suite 1907, Aventura,
FL 33180.
</FN>
<FN>
<F2>
(2) Assumes the sale of all shares offered hereunder.
</FN>
<FN>
<F3>
(3) The controlling shareholder of Cardozo Services Limited is Redcorn
Consultants Limited. The controlling persons of Redcorn Consultants Limited
are Mr. Paul Winder and Mr. Alan Cole.
</FN>
33
SELLING SHAREHOLDERS
The following table sets forth certain information with respect
to the ownership of our common stock by selling shareholders as
of September 30, 2003. Unless otherwise indicated, none of the selling
shareholders has or had a position, office or other material
relationship with us within the past three years.
Ownership of Ownership of
Common Stock Number of Common Stock
Prior to Offering Shares offered After Offering
Selling Shareholder Shares Percent Hereby Shares Percent<F1>
- --------------------------------------------------------------------------------------------------
Cardozo Services Limited 1,540,000 29.8% 1,540,000 0 *
Andrea Osman 400,000 7.7% 400,000 0 *
Thomas Fastiggi <F2> 350,000 6.8% 350,000 0 *
Lisa Beach <F3> 25,000 * 25,000 0 *
Sean Miller <F4> 400,000 7.7% 400,000 0 *
Rose Cabasso <F5> 425,000 8.2% 425,000 0 *
Jim Dodrill <F6> 100,000 1.9% 100,000 0 *
Joseph Colonna 400,000 7.7% 400,000 0 *
Ronald Colonna 430,000 8.3% 430,000 0 *
John Thristino 430,000 8.3% 430,000 0 *
Frank Sapienza 100,000 1.9% 100,000 0 *
James Fenmore 100,000 1.9% 100,000 0 *
Tom Milana 25,000 * 25,000 0 *
Peter Puelo 25,000 * 25,000 0 *
Joy Miller 2,500 * 2,500 0 *
Bryan Miller 2,500 * 2,500 0 *
Willy Casanas 5,000 * 5,000 0 *
Lindsay Latino 1,500 * 1,500 0 *
Michael Latino 1,500 * 1,500 0 *
John McClain 20,000 * 20,000 0 *
Ivan Katz 10,000 * 10,000 0 *
Wesley Sheperd 10,000 * 10,000 0 *
Michael Rossi 50,000 * 50,000 0 *
Evan Prizer 80,000 1.55% 80,000 0 *
Robyn Prizer 50,000 * 50,000 0 *
Richard Crowder 50,000 * 50,000 0 *
Richard Crowder, Inc. 50,000 * 50,000 0 *
Health Medical, Inc. 5,000 * 5,000 0 *
Melvin Negron 1,250 * 1,250 0 *
Marina Negron 1,250 * 1,250 0 *
Shawn Bartlett 1,000 * 1,000 0 *
Gabriela Bartlett 1,000 * 1,000 0 *
John Cairo 20,000 * 20,000 0 *
Jean Waldron 5,000 * 5,000 0 *
Hildegard Karounos 1,000 * 1,000 0 *
Janet Comuzzi 5,000 * 5,000 0 *
Hope Corson 5,000 * 5,000 0 *
S.G. Huneryager 5,000 * 5,000 0 *
Roberta Huneryager 5,000 * 5,000 0 *
Vincent Kohen 5,000 * 5,000 0 *
William Rosenberg 10,000 * 10,000 0 *
Don McGinnis 1,000 * 1,000 0 *
Kathy Shoemaker 1,000 * 1,000 0 *
Robert Collazo 5,000 * 5,000 0 *
Toma Sheperd 5,000 * 5,000 0 *
Total 5,165,500 5,165,500
* Indicates less than 1%
* Indicates less than 1%
<FN>
<F1>
1) Assumes that all shares are sold pursuant to this offering and that no
other shares of common stock are acquired or disposed of by the selling
shareholders prior to the termination of this offering. Because the
34
selling shareholders may sell all, some or none of their shares or may
acquire or dispose of other shares of common stock, no reliable estimate
can be made of the aggregate number of shares that will be sold pursuant
to this offering or the number or percentage of shares of common stock
that each shareholder will own upon completion of this offering.
</FN>
<FN>
<F2>
2) Mr. Fastiggi is our Chief Operating Officer.
</FN>
<FN>
<F3>
3) Ms. Beach is our Vice President.
</FN>
<FN>
<F4>
4) Mr. Miller is our Chief Executive Officer, Chief Financial Officer
and a Director.
</FN>
<FN>
<F5>
5) Ms. Cabasso is a Vice President and a Director.
</FN>
<FN>
<F6>
6) Mr. Dodrill is the principal of The Law Office of James G. Dodrill II,
PA, our law firm.
</FN>
<FN>
<F7>
7) Mr. Kohen is our President.
</FN>
35
DESCRIPTION OF SECURITIES
General
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $0.0001 per share, and 20,000,000 shares of preferred stock,
par value $.0001 per share. As of the date of this prospectus, 5,165,500
shares of common stock and no shares of preferred stock were outstanding. We
presently act as the transfer agent for our common stock but, prior to an
active trading market developing, will hire a professional transfer agent
service to serve as our transfer agent.
Common Stock
We are authorized to issue 100,000,000 shares of our common stock, $0.0001
par value, of which 5,165,500 shares are issued and outstanding as of the date
of this prospectus. The issued and outstanding shares of common stock are
fully paid and non-assessable. Except as provided by law or our certificate
of incorporation with respect to voting by class or series, holders of common
stock are entitled to one vote on each matter submitted to a vote at a meeting
of shareholders.
Subject to any prior rights to receive dividends to which the holders of
shares of any series of the preferred stock may be entitled, the holders
of shares of common stock will be entitled to receive dividends, if and when
declared payable from time to time by the board of directors, from funds
legally available for payment of dividends. Upon our liquidation or
dissolution, holders of shares of common stock will be entitled to share
proportionally in all assets available for distribution to such holders. None
of our shareholders have any preemptive rights.
Preferred Stock
The board of directors has the authority, without further action by our
shareholders, to issue up to 20,000,000 shares of preferred stock, par
value $.0001 per share, in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including dividend
rights, conversion rights, voting rights, terms of redemption, liquidation
preferences and the number of shares constituting any series or the
designation of such series. No shares of preferred stock are currently issued
and outstanding. The issuance of preferred stock could adversely
affect the voting power of holders of common stock and could have the effect
of delaying, deferring or preventing a change of our control.
Market for Common Equity and Related Stockholder Matters
There is no established public market for our common stock and we have
arbitrarily determined the offering price. Although we hope to be quoted
on the OTC Bulletin Board, our common stock is not currently listed or quoted
on any quotation service. There can be no assurance that our common stock
36
will ever be quoted on any quotation service or that any market for our stock
will ever develop or, if developed, will be sustained.
As of September 30, 2003, there were 45 shareholders of record of our
common stock and a total of 5,165,500 shares outstanding. Of the 5,165,500
shares of common stock outstanding, 2,740,000 shares of common stock are
beneficially held by "affiliates" of the company. All shares of common stock
registered pursuant to this Registration Statement will be freely transferable
without restriction or registration under the Securities Act, except to the
extent purchased or owned by our "affiliates" as defined for purposes of the
Securities Act.
Under certain circumstances, restricted shares may be sold without
registration, pursuant to the provisions of rule 144. In general, under rule
144, a person (or persons whose shares are aggregated) who has satisfied a
one-year holding period may, under certain circumstances, sell within any
three-month period a number of restricted securities which does not exceed the
greater of one percent of the shares outstanding or the average weekly
trading volume during the four calendar weeks preceding the notice of sale
required by rule 144. In addition, rule 144 permits, under certain
circumstances, the sale of restricted securities without any quantity
limitations by a person who is not an affiliate of ours and has satisfied a
two-year holding period. Any sales of shares by shareholders pursuant to rule
144 may have a depressive effect on the price of our common stock.
37
DISCLOSURE OF SEC POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation, as well as our By-Laws provide for the
indemnification of directors, officers, employees and agents of the
corporation to the fullest extent provided by the Corporate Law of
the State of Florida, as well as is described in the Articles of Incorporation
and the By-Laws. These sections generally provide that the Company may
indemnify any person who was or is a party to any threatened, pending
or completed action, suit or proceeding whether civil, criminal,
administrative or investigative except for an action by or in right of the
corporation by reason of the fact that he or she is or was a director,
officer, employee or agent of the corporation. Generally, no indemnification
may be made where the person has been determined to be negligent
or guilty of misconduct in the performance of his or her duties to the
Company.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers or controlling persons, pursuant
to the foregoing provisions, or otherwise, we have been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act of 1933, and is,
therefore, unenforceable.
38
PLAN OF DISTRIBUTION
Upon effectiveness of this registration statement, we will conduct the
sale of the shares we are offering on a self-underwritten, best-efforts
basis. This means that we do not have an underwriter and that we will sell
the shares directly to investors. Participating on our behalf in
the distribution is Thomas Fastiggi, our Chief Operating Officer, who is
exempt from registration as a broker dealer under Rule 3a4-1 of the Securities
Exchange Act. All shares of our common stock that we are registering for
sale by the company that we are able to sell will be sold at a price per
share of $0.25. There can be no assurance that we will sell all or any of
the shares offered. We have no arrangement or guarantee that we will sell
any shares. All subscription checks shall be made to the order of Medallion
Crest Management, Inc.
While we do not anticipate utilizing any registered securities broker-
dealers in connection with any sales of the shares and have no arrangements to
use any broker-dealers, we may, in our discretion, accept subscriptions for
shares through broker-dealers that are members of the National Association of
Securities Dealers, Inc. and are willing to, in connection with such sales,
pay a commission of up to 10% of the price of each share sold. No officers or
directors shall receive any commissions or compensation for their sale of the
shares pursuant to the terms hereof.
The selling shareholders will sell their shares at a price per share
of $0.25. The selling shareholders may sell or distribute their common stock
from time to time themselves, or by donees or transferees of, or other
successors in interests to, the selling shareholders, directly to one or more
purchasers or through brokers, dealers or underwriters who may act solely as
agents or may acquire such common stock as principals. These sales by
Selling Shareholders may occur contemporaneously with sales by us. The sale
of the common stock offered by the selling shareholders through this
prospectus may be affected in one or more of the following:
- - Ordinary brokers' transactions;
- - Transactions involving cross or block trades or otherwise
- - Purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus;
- - in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
- - in privately negotiated transactions; or
- - any combination of the foregoing.
Brokers, dealers, underwriters or agents participating in the distribution
of the shares as agents may receive compensation in the form of commissions,
discounts or concessions from the selling shareholders and/or purchasers of
the common stock for whom such broker-dealers may act as agent, or to whom
they may sell as principal, or both. The compensation paid to a particular
broker-dealer may be less than or in excess of customary commissions.
Neither we nor any selling shareholder can presently estimate the amount
of compensation that any agent will receive. We know of no existing
39
arrangements between any selling shareholder, any other shareholder, broker,
dealer, underwriter or agent relating to the sale or distribution of the
shares. In the event that we use an underwriter or a broker-dealer to
consummate the sale of the shares we are registering for sale by the company,
we will file a post-effective amendment to this registration statement
setting forth the name of such entity and the terms under which such entity
is participating in this offering.
We will pay all of the expenses incident to the registration, offering and
sale of the shares to the public, but will not pay commissions and discounts,
if any, of underwriters, broker-dealers or agents, or counsel fees or other
expenses of the selling shareholders. We have also agreed to indemnify the
selling shareholders and related persons against specified liabilities,
including liabilities under the Securities Act.
We have advised the selling shareholders that while they are engaged in a
distribution of the shares included in this prospectus they are required to
comply with Regulation M promulgated under the Securities Exchange Act of
1934, as amended. With certain exceptions, Regulation M precludes the selling
shareholders, any affiliated purchasers, and any broker-dealer or other
person who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is
the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases make in order to stabilize
the price of a security in connection with the distribution of that security.
All of the foregoing may affect the marketability of the shares offered hereby
in this prospectus.
40
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have not engagedin any transactions that are requred to be disclosed.
LEGAL MATTERS
The Law Office of James G. Dodrill II, PA of Boca Raton, Florida will give an
opinion for us regarding the validity of the common stock offered in this
prospectus. Mr. Dodrill is the owner of 100,000 shares of our common stock.
EXPERTS
The financial statements as of April 30, 2003 and for the period from April
4, 2003 (inception) to April 30, 2003 included in this prospectus have been so
included in reliance on the report of Daszkal Bolton LLP, independent certified
public accountants, given on the authority of said firm as experts in auditing
and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement under the Securities Act with
respect to the securities offered hereby with the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. This prospectus, which is a part of the
registration statement, does not contain all of the information contained in
the registration statement and the exhibits and schedules thereto, certain
items of which are omitted in accordance with the rules and regulations of
the Commission. For further information with respect to Medallion Crest
Management, Inc. and the securities offered hereby, reference is made to the
registration statement, including all exhibits and schedules thereto, which
may be inspected and copied at the public reference facilities maintained by
the Commission at 450 Fifth Street, N. W., Room 1024, Washington, D. C. 20549
at prescribed rates during regular business hours. You may obtain information
on the operation of the public reference facilities by calling the Commission
at 1-800-SEC-0330. Also, the SEC maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission at http://www.sec.gov.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference
is made to the copy of such contract or document filed as an exhibit to the
registration statement, each such statement being qualified in its entirety by
such reference. We will provide, without charge upon oral or written request
of any person, a copy of any information incorporated by reference herein.
Such request should be directed to us at Medallion Crest Management, Inc., 3675
North Country Club Drive, Suite 1907, Aventura, Florida 33180 Attention:
Sean Miller, CEO.
Following the effectiveness of this registration statement, we will file
reports and other information with the Commission. All of such reports and
other information may be inspected and copied at the Commission's public
reference facilities described above. The Commission maintains a web site
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission. The address
of such site is http://www.sec.gov. In addition, we intend to make available
to our shareholders annual reports, including audited financial statements,
unaudited quarterly reports and such other reports as we may determine.
41
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
PERIOD FROM APRIL 4, 2003 (INCEPTION)
THROUGH APRIL 30, 2003
AND FOR THE THREE MONTHS ENDED JULY 31, 2003
TABLE OF CONTENTS
Independent Auditor's Report 1
Financial Statements:
Balance Sheet as of April 30, 2003 and
July 31, 2003 (unaudited) 2
Statement of Operations for the period from April
4, 2003 (inception) through April 30, 2003, the
three months ended July 31, 2003 (unaudited) and
from Aptil 4, 2003 (inception) through July 31,
2003 (unaudited) 3
Statement of Changes in Stockholders' Equity for
the period from April 4, 2003 (inception)
through April 30, 2003 and July 31, 2003 (unaudited) 4
Statement of Cash Flows for the period from April
4, 2003 (inception) through April 30, 2003 and
April 4, 2003 (inception) through July 31,
2003 (unaudited) 5
Notes to Financial Statements 6
Michael I. Daszkal, CPA, P.A. 2401 N.W. Boca Raton Boulevard
Jeffrey A. Bolton, CPA, P.A. Boca Raton, FL 33431
Timothy R. Devlin, CPA, P.A. t: 561.367.1040
Michael S. Kridel, CPA, P.A. f: 561.750.3236
Marjorie A. Horwin, CPA, P.A. www.daszkalbolton.com
DASZKALBOLTON LLP
-----------------
INDEPENDENT AUDITOR'S REPORT
----------------------------
To the Board of Directors and Stockholders
Medallion Crest Management, Inc.
We have audited the accompanying balance sheet of Medallion Crest
Management, Inc., (a development stage company) as of April 30, 2003,
and the related statements of operations, changes in stockholders'
equity and cash flows for the period from April 4, 2003 (inception)
through April 30, 2003. 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 auditing standards generally
accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Medallion
Crest Management, Inc. as of April 30, 2003, and the results of its
operations and its cash flows for the period from April 4, 2003
(inception) through April 30, 2003, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 1
to the financial statements, the Company has experienced losses in
the development stage. This raises substantial doubt about the
Company's ability to continue as a going concern. Management's plans
in regard to these matters are also described in the Note 1. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ DASZKAL BOLTON LLP
Boca Raton, Florida
May 15, 2003
Member of American Institute of Certified Public Accountants - SEC and
Private Companies Practice Sections Member Affiliated Offices Worldwide
1
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
- ----------------------------------------------------------------
ASSETS
------
April 30, July 31,
2003 2003
---------- ---------
(unaudited)
Current assets:
Cash $ 46,137 $ 41,884
---------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Total liabilities $ - $ 2,234
---------- ---------
Stockholders' equity:
Preferred stock, 20,000,000
authorized, par value
$.0001; none issued and
outstanding - -
Common stock, 100,000,000
authorized, $.0001 par value;
5,165,500 issued and outstanding 517 517
Additional paid in capital 45,783 45,783
Deficit accumulated during the
development stage (163) (6,650)
---------- ---------
Total stockholders' equity 46,137 39,650
---------- ---------
Total liabilities and stockholders' equity $ 46,137 $ 41,884
========== =========
See accompanying notes to financial statements.
2
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------
April 4, 2003 Three months April 4, 2003
(inception) ended (inception)
through July 31, through
April 30, 2003 2003 July 31, 2003
-------------- ------------- -------------
(unaudited) (unaudited)
Revenue $ - 0 0
Selling, general and administrative expenses 163 6,487 6,650
----------- --------- ---------
Loss from operations (163) (6,487) (6,650)
----------- --------- ---------
Provision (benefit) for income taxes - - -
----------- --------- ---------
Net loss $ (163) $ (6,487) $ (6,650)
=========== ========= =========
Basic and diluted loss per share $ - - -
=========== ========= =========
Basic and diluted weighted average shares outstanding 2,127,712 5,165,500
=========== =========
See accompanying notes to financial statements.
3
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------
Accumulated
Common Stock Deficit
------------------- Additional Development
Shares Amount Paid-In Capital Stage Total
--------- -------- --------------- ----------- --------
Balance, April 4, 2003 (inception) - $ - $ - $ - $ -
Initial capital contributions 4,750,000 475 4,275 - 4,750
Common stock issued for cash 415,500 42 41,508 - 41,550
Net loss - April 30, 2003 - - - (163) (163)
--------- ------- -------- -------- --------
Balance, April 30, 2003 5,165,500 $ 517 $ 45,783 $ (163) $ 46,137
Net loss July 31, 2003 (unaudited) - - - (6,487) (6,487)
--------- ------- -------- -------- --------
Balance, July 31, 2003 (unaudited) 5,165,500 517 45,783 (6,650) 39,650
========= ======= ======== ======== ========
See accompanying notes to financial statements.
4
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------
April 4, 2003 Three months April 4, 2003
(inception) ended (inception)
through July 31, through
April 30, 2003 2003 July 31, 2003
-------------- ------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
Net loss $ (163) $ (6,487) $ (6,650)
--------- ---------- ----------
Increase in accounts payable - 2,234 2,234
--------- ---------- ----------
Net cash used in operating activities (163) (4,253) (4,416)
--------- ---------- ----------
Cash flows from financing activities
Common stock issued for cash 41,550 - 41,550
Initial capital contribution 4,750 - 4,750
--------- ---------- ----------
Net cash provided by financing activities 46,200 - 46,300
--------- ---------- ----------
Net increase in cash 46,137 (4,253) 41,884
Cash at beginning of period - 46,137 -
--------- ---------- ----------
Cash at end of period $ 46,137 $ 41,884 $ 41,884
========= ========== ==========
Supplementary information:
--------------------------
Cash paid for:
Interest $ - - -
========= ========== ==========
Income taxes $ - - -
========= ========== ==========
See accompanying notes to financial statements.
5
MEDALLION CREST MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
- ---------------------------------------------------------------------
NOTE 1 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK
Medallion Crest Management, Inc was incorporated on April 4, 2003 in
order to create and realize value by identifying and making
opportunistic real estate investments by the direct acquisition,
rehabilitation, financing and management of real properties.
The Company has no revenues to date. Since its inception, the Company
has been dependent upon the receipt of capital investment to fund its
continuing activities. In addition to the normal risks associated
with a new business venture, there can be no assurance that the
Company's business plan will be successfully executed. Our ability to
execute our business model will depend on our ability to obtain
additional financing and achieve a profitable level of operations.
There can be no assurance that sufficient financing will be obtained.
Nor can we give any assurance that we will generate substantial
revenues or that our business operations will prove to be profitable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Equivalents
The Company considers all highly liquid debt instruments with original
maturities of three months or less to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with general
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Basic and Diluted Earnings Per Share
Basic income per common share is computed by dividing the net income
by the weighted average number of shares of common stock outstanding
during the year. Diluted income per common share is determined using
the weighted-average number of common shares outstanding during the
year, adjusted for the dilutive effect of common stock equivalents,
consisting of shares that might be issued upon exercise of common
stock options. In periods where losses are reported, the weighted-
average number of common shares outstanding excludes common stock
equivalents, because their inclusion would be anti-dilutive.
Unaudited Interim Information
The information presented as of July 31, 2003 has not been audited. In
the opinion of management, the unaudited interim financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary
to present fairly the Company's financial position as of July 31, 2003 and the
results of operations, its cash flows and the statement of changes in
stockholders equity for the three months ended July 31, 2003. The results of
operations for the period ended July 31, 2003 are not necessarily indicative
of the results for the full year.
6
NOTE 3 - EQUITY TRANSACTIONS
Common Stock Issued for Cash
During the period ended April 30, 2003, the Company issued 4,750,000
of common stock to initial investors for cash. The Company valued the
shares at $.001 per share, for a total of $4,750.
Also during the period ended April 30, 2003, the Company issued
415,500 of common stock at $.10 per share, for a total of $41,550.
NOTE 4 - INCOME TAXES
For income tax purposes, the Company has elected to capitalize start-
up costs incurred during 2003 and totaling $6,650. The start-up costs
will be amortized over sixty months beginning in the year of initial
operations.
7
No dealer, salesman or other
person is authorized to give any
information or to make any
representations not contained in
this prospectus in connection with
the offer made hereby, and, if
given or made, such information or
representations must not be relied
upon as having been authorized by
Medallion Crest Management, Inc.
This prospectus does not constitute
an offer to sell or a solicitation
to an offer to buy the securities
offered hereby to any person in any
state or other jurisdiction in
which such offer or solicitation
would be unlawful. Neither the
delivery of this prospectus nor any
sale made hereunder shall, under
any circumstances, create any
implication that the information
contained herein is correct as of
any time subsequent to the date
hereof.
Until _________ __, 2004 (90 days
after the date of this prospectus)
all dealers that effect
transactions in these securities,
whether or not participating in
this offering, may be required to
deliver a prospectus. This is in
addition to the dealer's obligation
to deliver a prospectus when acting
as underwriters and with respect to
their unsold allotments or
subscriptions.
TABLE OF CONTENTS
Page
Prospectus Summary 3 Medallion Crest Management, Inc.
The Offering 4
Summary Financial Data 7
Risk Factors 8
Use of Proceeds 16
Determination of Offering Price 18
Dividend Policy 18
Dilution 19 9,165,500 SHARES
Management's Plan of Operation 20
Business 24
Management 29
Principal Shareholders 33
Selling Shareholders 34
Description of Securities 36
Indemnification 38 PROSPECTUS
Plan of Distribution 39
Certain Relationships and
Related Transactions 41
Legal Matters 41
Experts 41
Where You Can Find More
Information 41
Financial Statements
November 20, 2003
PART II
-------
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles of Incorporation, as well as our By-Laws provide
for the indemnification of directors, officers, employees and
agents of the corporation to the fullest extent provided by the
Corporate Law of the State of Florida, as well as is described in
the Articles of Incorporation and the By-Laws. These sections
generally provide that the Company may indemnify any person who
was or is a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or
investigative except for an action by or in right of the
corporation by reason of the fact that he or she is or was a
director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has
been determined to be negligent or guilty of misconduct in the
performance of his or her duties to the Company.
Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to our directors, officers or
controlling persons, pursuant to the foregoing provisions, or
otherwise, we have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933,
and is, therefore, unenforceable.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
We estimate that expenses in connection with this
registration statement will be as follows:
SEC registration fee* $ 186
Accounting fees and expenses $ 4,000
Legal $ 50,000
Miscellaneous* $ 5,814
=========
Total $ 60,000
* estimates
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The following information is furnished with regard to all
securities sold by us within the past three years that were not
registered under the Securities Act. The issuances described
hereunder were made in reliance upon the exemptions from
registration set forth in Section 4(2) of the Securities Act or
Regulation D, Rule 504 of the Securities Act. All shares were issued in
exchange for cash payments in the amount shown below under "Total
Price." None of the foregoing transactions involved a distribution or
public offering.
In April 2003 the Company issued 4,750,000 shares to fourteen investors as
"founder's shares" for a total price of $4,750. The transaction was exempt
from registration under Section 4(2) as all purchasers were sophisticated
and, either officers of the Company or were provided with access to the
Company's officers so as to receive all material information regarding the
Company that the recipient requested. The shares were issued with restrictive
legend and the transactions did not include a public distribution or offering.
In April 2003 the Company conducted a private placement offering whereby it
sold 415,500 shares to thirty-one investors for a total price of $41,550
pursuant to an exemption from registration claimed under section 4(2) of
the Securities Act of 1933, as amended, and Rule 504 of Regulation D
promulgated thereunder. The shares were sold through the company's officers
and directors. All purchasers had pre-existing relationships with Company
management and all purchasers were provided with information regarding the
company's business plan, financial status and risk factors. Additionally,
all purchasers were provided with access to the Company's officers so as to
receive all material information regarding the Company that the recipient
requested. The transaction was completed on April 29, 2003. All shares
were issued with a restrictive legend and the transactions and did not
include a public distribution or offering.
Date Name # of Shares Total Price
- -------------------------------------------------------------------
4/7/03 Joy Miller 2,500 $250
4/7/03 Bryan Miller 2,500 $250
4/8/03 Willy Casanas 5,000 $500
4/9/03 Lindsay Latino 1,500 $150
4/9/03 Michael Latino 1,500 $150
4/10/03 John McClain 20,000 $2,000
4/11/03 Ivan Katz 10,000 $1,000
4/12/03 Wesley Sheperd 10,000 $1,000
4/14/03 Cardozo Services
Limited 1,540,000 $1,540
4/14/03 Andrea Osman 400,000 $400
4/14/03 Michael Rossi 50,000 $5,000
4/14/03 Evan Prizer 80,000 $8,000
4/14/03 Robyn Prizer 50,000 $5,000
4/14/03 Sean Miller 40,000 $430
4/14/03 Jim Dodrill 100,000 $100
4/14/03 John Thristino 430,000 $430
4/15/03 Richard Crowder 50,000 $5,000
4/15/03 Richard Crowder,
Inc. 50,000 $5,000
4/21/03 Health Medical,
Inc. 5,000 $5,000
4/21/03 Melvin Negron 1,250 $1,250
4/21/03 Marina Negron 1,250 $1,250
4/21/03 Jean Waldron 5,000 $500
4/21/03 Hildegard Karounos 1,000 $100
4/22/03 Janet Comuzzi 5,000 $500
4/23/03 Hope Corson 5,000 $500
4/23/03 Shawn Bartlett 1,000 $1,000
4/23/03 Gabriela Bartlett 1,000 $1,000
4/24/03 John Cairo 20,000 $2,000
4/24/03 S.G. Huneryager 5,000 $500
4/25/03 Roberta Huneryager 5,000 $500
4/25/03 Vincent Kohen 5,000 $500
4/28/03 William Rosenberg 10,000 $1,000
4/24/03 Don McGinnis 1,000 $100
4/24/03 Kathy Shoemaker 1,000 $100
4/28/03 Thomas Fastiggi 350,000 $350
4/28/03 Lisa Beach 25,000 $25
4/28/03 Rose Cabasso 425,000 $425
4/28/03 Joseph Colonna 400,000 $400
4/28/03 Ronald Colonna 430,000 $430
4/29/03 Robert Collazo 5,000 $500
4/29/03 Frank Sapienza 100,000 $100
4/29/03 James Fenmore 100,000 $100
4/29/03 Tom Milana 25,000 $25
4/29/03 Peter Puelo 25,000 $25
4/29/03 Toma Sheperd 5,000 $500
ITEM 27. EXHIBITS
Exhibit Number Description
3.1 Articles of Incorporation of Medallion
Crest Management, Inc.
3.2 Bylaws of Medallion Crest Management, Inc.
3.3 Specimen certificate of the Common Stock of
Medallion Crest Management, Inc.
5.1 Opinion of Law Office of James G. Dodrill
II, PA as to legality of securities being
registered
23.1 Consent of Daszkal Bolton LLP
23.2 Consent of Law Office of James G. Dodrill
II, PA (included in Exhibit 5.1)
ITEM 28. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy and as expressed in
the Act and is, therefore, unenforceable.
The Company hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
i. Include any prospectus required by Section 10(a)(3) of the
Securities Act;
ii. Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus wiled with the
Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
iii. Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Securities Act, 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) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Company under Rule 424(b)(1) or (4) or 497(h)
under the Securities Act as part of this registration statement as of the
time the Commission declared it effective.
(5) For determining any liability under the Securities Act, treat each post-
effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.
(6) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or
otherwise, we have been advised by the Securities and Exchange Commission
II-4
that such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by one of our directors,
officers or controlling persons 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, we will, unless in the
opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-5
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable ground 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,
thereunto duly authorized, in the city of Aventura state of Florida, on
November 20, 2003.
MEDALLION CREST MANAGMENT, INC.
By: /s/ Sean Miller
-------------------
Sean Miller
Principal Executive Officer, Principal
Financial Officer and Chairman
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following person in the
capacities indicated on November 20, 2003.
/s/ Sean Miller Principal Executive Officer, Principal Financial Officer,
- ----------------- Principal Accounting Officer and Director
Sean Miller
/s/ Rose Cabasso Vice President, Secretary and Director
- -------------------
Rose Cabasso