Registration of Securities by a Small-Business Issuer — Form SB-2
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SB-2 Registration Statement 109 405K
2: EX-3.1 Certificate of Incorporation 8 27K
3: EX-3.2 Ajk Perfect Renaissance, Inc. By-Laws 14 60K
4: EX-4.2 Please Supply Document Description <====== 2 7K
5: EX-21.1 Subsidiaries of Ajk Perfect Renaissance, Inc. 2 6K
6: EX-24.1 Consent of Independent Certified Public Accountant 1 6K
As filed with the Securities and Exchange Commission on June ____, 2000
Registration No.
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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AJK PERFECT RENAISSANCE, INC.
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(Exact name of registrant as specified in its charter)
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Delaware 52-2210600 5180
(State or other jurisdiction of (I.R.S. Employer (Primary Standard Industrial
incorporation or organization) Identification Number) Classification Code Number)
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20533 Biscayne Blvd., #4-108
Aventura, Florida 33180
Telephone - 305-932-1006
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Curtis Sittenfeld
20533 Biscayne Blvd., #4-108
Aventura, Florida 33180
Telephone 305/932-1006
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement 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, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
CALCULATION OF REGISTRATION FEE
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Title of Each Class of Amount Proposed Proposed Amount
Securities to be Registered to be Maximum Maximum of Registration
Registered Offering Aggregate Fee
Price per Share Offering Price
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Shares of Common Stock
being offered by AJK 600,000 $5.50 $3,300,000 $924
(maximum offering)
Shares of Common Stock held 1,604,095 $.0001 (1) $ 160 $ 5 (2)
by Selling Securityholders
TOTAL $3,300,160 $929 (3)
(1) There is no current market for the securities and the per share book value
of the common stock is $(.001). The par value per share is $.0001
(2) Estimated solely for the purpose of calculating the registration fee based
on Rule 457(f)(2).
(3) Paid simultaneously with the filing hereof.
PROSPECTUS Subject to Completion, Dated June ___, 2000.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement which has been filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
AJK PERFECT RENAISSANCE, INC.
Minimum of 300,000 shares and maximum of 600,000 shares
of Common Stock offered by AJK and
1,604,095 shares of Common Stock to be sold by the Holders thereof
The Registration Statement of which this Prospectus is a part relates to the
offer and sale of a minimum of 300,000 shares and a maximum of 600,000 shares of
common stock of AJK Perfect Renaissance, Inc., a recently created Delaware
corporation ("AJK") by AJK and also relates to the offer and sale of 1,604,095
shares of common stock by the holders thereof. All costs incurred in the
registration of the shares are being borne by AJK.
Prior to this offering, there has been no public market for AJK's common stock.
No assurances can be given that a public market will develop following
completion of this offering or that, if a market does develop, it will be
sustained.
Price to Public (1) Underwriting Discounts and Proceeds to AJK or
Commissions (2) Other Persons
Per Share $5.50 $300,000 $3,000,000 (3)
(1) AJK is offering a minimum of 300,000 and a maximum of 600,000 shares of
common stock at a price of $5.50 per share. For the 1,604,095 shares of
common stock being sold by the selling securityholders, no offering price to
the public has been determined. Each selling securityholder will sell its
shares in separate transactions at prices to be negotiated at that time.
(2) For shares being sold by it or the selling securityholders, AJK has no
agreements or understandings with any broker or dealer for the sales of
those shares. If any commissions are paid it is anticipated that such
commissions will not exceed 10%. Any broker-dealers that AJK determines to
utilize for the sale of the shares must seek and obtain clearance of the
compensation arrangements from the National Association of Securities
Dealers, Inc.
(3) AJK will receive $3,300,000 net proceeds from the sale of the maximum number
of the shares being offered by AJK. The selling securityholders will receive
the proceeds from the sale of the shares held by them. See "DESCRIPTION OF
SECURITIES".
These securities involve a high degree of risk. See "RISK FACTORS"
beginning on page 6.
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.
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The date of this Prospectus is June ____, 2000
Following the completion of this offering, certain broker-dealers may
be the principal market makers for the securities offered hereby. Under these
circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. No assurance can be given that any market
making activities of the market makers, if commenced, will be continued.
For a period of at least one year following the closing of this
offering, AJK will be required by the Securities and Exchange Act of 1934 to
file periodic reports and other information with the Securities and Exchange
Commission. Such material may be inspected at the Commission's principal offices
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20459 or at its web
site at http://www.sec.gov and copies may be obtained on payment of certain fees
prescribed by the Commission. AJK will furnish to holders of its common stock
annual reports containing audited financial statements examined and reported
upon, and with an opinion expressed by an independent certified public
accountant. AJK may issue other unaudited interim reports to its shareholders as
it deems appropriate.
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
in this Prospectus. Reference is made to, and this summary is qualified by, the
more detailed information set forth in this Prospectus, which should be read in
its entirety.
All references to "dollars," "U.S. dollars," "$," or "US$" are to
United States dollars. All references to "lei" or "leu" are to Roumanian lei. As
of May 24, 2000, the official exchange rate was 20,580.00 lei to $1.00 dollar,
or $0.00004859 dollars to 1 lei.
Risk Factors
There are substantial risk factors involved in investment in AJK.
Investment in AJK is speculative and no assurances can be made of any return to
investors. See "RISK FACTORS" beginning on page 6.
AJK Perfect Renaissance, Inc.
AJK is a development stage company, that through its subsidiaries, is
engaged in the production and marketing of Roumanian vodka, flavored vodka and
other distilled spirits and liqueurs in Eastern Europe, and the distribution and
marketing in Roumania and Central and Eastern Europe of watches and other
jewelry. AJK was incorporated on March 24, 1999 as a Delaware corporation named
Allegiance Acquisition Corporation, which changed its name to AJK Perfect
Renaissance, Inc. on July 21, 1999. Effective May 5, 2000, AJK acquired all of
the shares of social capital owned by Ferrand Investment Limited (a company
incorporated in the British Virgin Islands), of Ferrand's substantially
wholly-owned subsidiaries S.C. Perfect Renaissance, S.R.L., S.C. Renaissance,
S.R.L. and S.C. Renaissance Alpha 2000, S.R.L., limited liability companies
registered under the laws of Roumania.
Shares, or "social parts," of social capital of a Roumanian
corporation, represents the assigned value of goods, services, or money
contributed to the corporation. The percentage of ownership expressed as social
capital entitles the holders thereof to proportionally share in the profits and
losses of the corporation, and to vote on matters put forth for a vote as
required by law or by the corporation's articles or incorporation or by-laws. In
the event of the corporation's liquidation, holders of social capital
participate proportionally after the fulfillment of debts to creditors. A holder
of social capital is personally liable to creditors of the corporation for an
amount equal to the amount of the holder's contribution to the social capital,
but not for any greater amount.
Subsequent to such transaction, S.C. Perfect Renaissance, S.R.L., S.C.
Renaissance, S.R.L. and S.C. Renaissance Alpha 2000, S.R.L. became subsidiaries
of AJK. For purposes of this Prospectus, the term "AJK" includes AJK Perfect
Renaissance, Inc., its Roumanian subsidiaries, and predecessor companies, unless
the context requires otherwise.
AJK maintains its principal United States offices at 20533 Biscayne
Boulevard, #4-108, Aventura, Florida 33180. Its telephone number is 305-932-1006
and its fax number is 305-932-3888.
Trading Market
There is currently no trading market for AJK's securities. AJK intends
to apply initially for admission to quotation of its securities on the NASD OTC
Bulletin Board. When qualified, if ever of which there can be no assurance, AJK
intends to apply for quotation of its securities on the Nasdaq SmallCap Market.
There can be no assurance that AJK will qualify for listing of its securities on
the NASD OTC Bulletin Board or to be quoted on the Nasdaq SmallCap Market.
Selected Financial Data
As of December 31, 1999, AJK was nominally capitalized with no income
or revenues. As of December 31, 1999, AJK had 500,000 shares of common stock
outstanding for an aggregate price of $50 and had incurred $535 in organization
expense. At December 31, 1999, the total assets of AJK were $50. Subsequent to
December 31, 1999, AJK acquired its three operating subsidiaries for an
aggregate of 5,000,000 shares of common stock.
The following information is based on the audited combined financial
statements for AJK's three subsidiaries:
Year Ended December 31,
1999 1998
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Income Statement Items:
Sales $ 4,689,593 $ 5,544,717
Cost of Sales (2,734,291) (3,218,066)
Gross profit 1,955,302 2,326,651
Net Income 570,623 895,885
Balance Sheet Items:
Cash 46,680 203,456
Total Current Assets 1,103,297 1,670,511
Total Assets 8,703,061 7,657,691
Total Current Liabilities 2,910,906 6,226,415
Long-Term Debt 3,272,684
Total shareholders' equity 3,686,326 1,432,276
Total liabilities and shareholders' equity 8,703,061 7,657,691
RISK FACTORS
The securities offered hereby are speculative in nature and involve a high
degree of risk. The securities offered hereby should be purchased only by
persons who can afford to lose their entire investment. Therefore, each
prospective investor should, prior to purchase, consider very carefully the
following risk factors, as well as all the other information set forth elsewhere
in this prospectus and the information contained in the financial statements,
including all notes thereto.
Uncertainty as to the continuation of AJK as a going concern
The audited combined financial statements for S.C. Perfect Renaissance,
SRL, S.C. Renaissance, SRL and S.C. Renaissance Alpha 2000, SRL, the operating
subsidiaries of AJK, for the period ended December 31, 1999, reflect combined
current liabilities exceeding combined current assets by US $1,807,609. This
condition raises substantial doubt about AJK's ability to continue as a going
concern.
AJK has limited operating history
AJK was recently formed to expand the international and United States
operations of the Company's operating subsidiaries, S.C. Perfect Renaissance,
S.R.L., S.C. Renaissance, S.R.L. and S.C. Renaissance Alpha 2000, S.R.L. The
Company's management is unfamiliar with the United States marketplace and the
other markets in which it may be operating. AJK and its products have no
established reputation and will need to be heavily promoted. There is no
assurance that the Company will have or can obtain the expertise to distribute
or market its products in the markets it enters, or whether it will sell a
sufficient quantity to justify the costs incurred.
AJK may need additional financing
Future events, including the problems, delays, expenses and
difficulties frequently encountered by companies may lead to cost increases that
could make the net proceeds of this offering insufficient to fund AJK's proposed
operations. AJK may seek additional sources of capital, including an additional
offering of its equity securities, an offering of debt securities or obtaining
financing through a bank or other entity. AJK has not established a limit as to
the amount of debt it may incur nor has it adopted a ratio of its equity to a
debt allowance. If AJK needs to obtain additional financing, there is no
assurance that financing will be available, from any source, or that it will be
available on terms acceptable to it, or that any future offering of securities
will be successful. AJK could suffer adverse consequences if it is unable to
obtain additional capital when needed.
Lack of an underwriter increases speculative nature of investment
Because AJK has not obtained an underwriter to sell its securities, the
officers and directors are selling the securities on a direct participation
basis. As a direct participation offering, there is a greater likelihood that
not all or possibly even none of the securities offered will be sold. In
addition, in an offering without the services of an underwriter a potential
investor cannot rely on the additional investigation and examination of the
issuer and its operations that an underwriter provides prior to consenting to
act as an underwriter.
Sales by selling securityholders may lower market price of common stock
The large number of shares available for sale by the selling
securityholders could reduce the market price of the common stock, if a market
should develop, and the availability of lower priced shares could hinder the
sale of the shares offered by the Company. The selling securityholders may offer
and sell their shares at prices and at times they determine, in accordance with
applicable federal and state securities laws. The timing of such sales and the
price at which the selling securityholder shares are sold could have an adverse
effect upon the public market for the common stock, should one develop.
Risk of doing business in Roumania
Roumania is a developing country that until the last decade was allied
with the former Soviet Union under a communist economic system led by former
dictator Nicolae Caeucescu. The region is still unstable, given the recent
history of the former Yugoslavia, the breakup of Czechoslovakia, military
uprisings in Chechnya and other former Soviet states, the rise of political and
criminal corruption in Russia, and the lack of experience and unpredictability
of the civil justice system. Roumania in particular continues to suffer from
high unemployment, low wages, low literacy rates, and rumors of corruption.
Business risks include, among others, internal political or civil unrest, war,
or government restrictions. These risks are dynamic and difficult to quantify.
AJK will be subject to the risks normally associated with changes in general
national economic conditions or local market conditions, competition, patronage,
changes in market rates, and the need to periodically upgrade and replace
equipment to maintain desirability, and to pay the costs thereof. Although many
of the governments of the countries of Central and Eastern Europe have
liberalized policies on international trade, foreign ownership and development,
investment, and currency repatriation, increasing both international trade and
investment accordingly, such policies might change unexpectedly. AJK will be
affected by the rules and regulations regarding foreign ownership of real and
personal property, including manufacturing plants and other property. Such rules
may change quickly and dramatically which may have an adverse impact on
ownership and may result in a loss without recourse of property or assets of
AJK. The likelihood of any foreign company successfully prevailing in any
dispute with the government or any private litigant under the Roumanian legal
system is difficult to quantify or predict.
Enforceability of certain civil liabilities
The Company's officers and directors reside outside the United States.
The Company anticipates that a substantial portion of the assets that may be
developed or acquired by it will be located outside the United States and, as a
result, it may not be possible for investors to effect service of process within
the United States upon the officers or directors, or to enforce against the
Company's assets or against such person judgements obtained un United States
courts predicated upon the liability provisions, and most particularly the civil
liability provisions, of the United States securities laws or state corporation
or other law.
The Roumanian economy is volatile and subject to hyperinflation
The Roumanian economy has been extremely volatile since the fall of the
Caeucescu regime, with a generally high inflation rate ranging from 41% to 151%
during the years 1996 through 1998. Financial statements, contracts and business
transactions are generally drawn and contemplated to adjust for inflation, but
there can be no assurance that continued periods of hyperinflation will not
adversely impact the Company's business.
The Company is dependent on its suppliers
AJK is dependant on suppliers of raw materials, including grain, yeast,
flavorings, bottles, labels, and other packaging materials. A disruption in
deliveries in an unsteady Roumanian economy, or under adverse social, economic,
political or even weather conditions, could adversely affect the Company's
ability to maintain its production and delivery schedules. Furthermore, there
can be no assurance that AJK's suppliers will maintain their relationship with
it.
The Company is dependent on distributors
The Company is seeking to expand its operations into new international
markets, including the United States. However, there can be no assurance that
the Company's marketing staff will be able to persuade retail liquor stores to
stock the Company's products, what prominence those outlets will choose in
shelving the Company's products, or once shelved, whether the Company's products
will be given a lower profile in the future.
The distillation process could have environmental risks
The process of distilling and manufacturing vodka involves the burning
of fossil fuels. It also utilizes an exothermic distillation process that uses
local water in the cooling process, which is then returned to its source,
warmed. Although the Roumanian government has expressed no substantial concern
over industrial air, water, or thermal pollution from the Company's plant, an
attempt to regulate the effluents from AJK's operations could have increase
costs of doing business. The Company's new distillation plant is considered
state-of-the-art with respect to minimizing environmental pollution.
Trademark protection and proprietary marks
Notwithstanding the pending registration of certain trade names with
the United States Patent and Trademark Office, and with the appropriate
authorities in Roumania and Moldova, there is no assurance that AJK will be able
to enforce against use of any of its marks. There is also no assurance that AJK
will be able to prevent competitors from using the same or similar names, marks,
concepts or appearances or that it will have the financial resources necessary
to protect is marks against infringing use. It is also possible that the Company
will encounter claims from prior users of a similar name in areas where the
Company operates.
Issuance of future shares may dilute investors' share value
The Certificate of Incorporation of AJK authorizes the issuance of
100,000,000 shares of common stock and 20,000,000 shares of non-designated
preferred stock. The future issuance of all or part of the remaining authorized
common stock may result in substantial dilution in the percentage of its common
stock held by its then shareholders. Moreover, any common stock issued in the
future may be valued on an arbitrary bases by AJK. The issuance of shares for
future services or acquisitions or other corporate actions may have the effect
of diluting the value of the shares held by investors, and might have an adverse
effect on any trading market, should a trading market develop for the Company's
common stock.
Acquisition financing; additional dilution
The Company may attempt to finance future purchases and acquisitions
using shares of the Company's common stock, preferred stock, options, cash,
borrowed funds or a combination thereof. The Company has no arrangements,
agreements or understandings to that effect at this time. If the Company's
common stock does not maintain a sufficient market value, or if the price of the
Company's common stock is highly volatile, or if potential acquisition
candidates are otherwise unwilling to accept the Company's common stock as part
of the consideration for the sale of their businesses, the Company may be
required to use more of its cash resources or more borrowed funds in order to
initiate and maintain an acquisition program. If the Company does not have
sufficient cash resources, its growth could be limited unless it is able to
obtain additional capital through debt or equity offerings. The Company may also
enter into credit facilities with one or more lenders to obtain financing to be
used in connection with future purchases or acquisitions. There can be no
assurance that the Company will be able to obtain such financing if and when it
is needed or that any such financing will be available on terms it deems
acceptable.
Issuance of additional common stock or preferred stock may dilute share value
The Certificate of Incorporation of AJK authorizes the issuance of a
maximum of 100,000,000 shares of common stock of which 5,604,096 are outstanding
and 20,000,000 shares of "non-designated" preferred stock of which none are
designated or outstanding. The issuance of all or part of the remaining
authorized common stock could result in substantial reduction in the percentage
of AJK's common stock held by its shareholders, including the investors in this
offering, and reduce the ability to control or influence any shareholder vote.
Moreover, any common stock issued in the future may be valued on an arbitrary
basis by the Company. The issuance of the Company's securities for future
services or acquisitions or other corporate actions may have the effect of
diluting the value of the shares offered hereby, and might have an adverse
effect on any trading market, should a trading market develop for the Company's
common stock.
Additional shares entering market pursuant to Rule 144 without additional
capital contribution
All of the issued and outstanding shares of common stock are
"restricted securities" including the shares which are the subject of this
registration statement, as such term is defined in Rule 144 ("Rule 144") of the
General Rules and Regulations of the Securities and Exchange Commission (the
"Rules") promulgated under the Securities Act. In
general, under Rule 144, if adequate public information is available with
respect to a company, a person who has satisfied a one year holding period as to
his restricted securities or an affiliate who holds unrestricted securities may
sell, within any three month period, a number of that company's shares that does
not exceed the greater of one percent of the then outstanding shares of the
class of securities being sold or, if the security is trading on the Nasdaq
Stock Market or an exchange, the average weekly trading volume during the four
calendar weeks prior to such sale. Sales of restricted securities by a person
who is not an affiliate of the company (as defined in the Securities Act) and
who has satisfied a two year holding period may be made without any volume
limitation. Pursuant to such Rule 144, after the expiration of the holding
period certain shares of common stock now restricted for trading will become
eligible for trading in the public market without any payment therefore or
increase to the Company's capitalization. Possible or actual sales of the
Company's outstanding common stock by all or some of the present stockholders
may have an adverse effect on the market price of AJK's common stock should a
public trading market develop. The additional availability of such shares to be
traded in the public market would increase the "public float" of the Company
without any corresponding increase in the its capital.
Upon effectiveness of the registration statement of which this
prospectus forms a part, the shares registered herein will no longer be subject
to Rule 144 except as such rule apples to the registered shares held by
affiliates of the Company (including officers and directors) which will continue
to be subject to the restrictions on affiliates contained in Rule 144.
Resales of the selling securityholder shares under state securities laws
The National Securities Market Improvement Act of 1996 ("NMSIA") limits
the authority of states to impose restrictions upon sales of Securities made
pursuant to ss.ss.4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales by the
selling securityholders of their shares in the secondary market will be made
pursuant to Section 4(1) (sales other than by an issuer, underwriter or broker).
It is anticipated that following the effective date of this prospectus the
selling securityholder's shares will be eligible for resale in the secondary
market in each state.
Limited state registration of shares offered by AJK
AJK anticipates that it will primarily sell its shares in a limited
number of states. AJK will not accept subscriptions from investors resident in
other states unless it effects a registration therein or determines that no such
registration is required.
In order to comply with the applicable securities laws, if any, of
certain states, the shares offered by the Company will be offered or sold in
such states through registered or licensed brokers or dealers in those states.
In addition, in certain states, the shares may not be offered or sold unless
they have been registered or qualified for sale in such states or an exemption
from such registration or qualification requirement is available and with which
Perfect has complied.
The possibility of AJK issuing preferred stock with certain preferences may
depress market price of the common stock
AJK has 20,000,000 shares of non-designated preferred stock authorized
which it may issue from time to time by action of the Board of Directors. As of
the date hereof, AJK has not designated or issued any shares of preferred stock.
However, the Board of Directors may designate voting and other preferences
without shareholder consent which designations may give the holders of the
preferred stock voting control and other preferred rights such as to liquidation
and dividends. The authority of the Board of Directors to issue such stock
without shareholder consent may have a depressive effect on the market price of
AJK's common stock even prior to any such designation or issuance of the
preferred stock.
The possibility of issuing preferred stock for anti-takeover effect could
prevent takeovers favored by shareholders
The Board of Directors has the authority, without further approval of
AJK's stockholders, to issue preferred
stock, having such rights, preferences and privileges as the Board of Directors
may determine. Any such issuance of shares of preferred stock, under certain
circumstances, could have the effect of delaying or preventing a change in
control of the Company or other takeover attempt and could adversely materially
affect the rights of holders of shares of the common stock.
No Current trading market for the Company's securities
There is no assurance that a public trading market for the common stock
will develop or that a public trading market, if developed, will be sustained.
No market makers have committed to becoming market makers for the Company's
common stock, and there is no assurance that any market makers will do so. If
for any reason the common stock is not listed on the NASD OTC Bulletin Board or
the Nasdaq SmallCap Market or a public trading market does not otherwise
develop, investors in the offering may have difficulty selling their common
stock should they desire to do so.
AJK common stock may be subject to penny stock regulation
There has been no public market for AJK's common stock. If a market for
the common stock develops and the price of the common stock falls below $5.00
per share, then the common stock may be considered "penny stock". Penny stocks
generally are equity securities with a price of less than $5.00 per share other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. AJK's securities may be subject to "penny stock" rules that impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prescribed by the
Commission related to the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements must be sent disclosing recent price information on the limited
market in penny stocks. Consequently, the "penny stock" rules may restrict the
ability of broker-dealers to sell AJK's securities.
Management and affiliates own enough shares to influence shareholder vote
Upon the closing of this offering assuming the maximum number of shares
is sold and all the selling securityholders shares are sold, AJK's executive
officers and directors, together with entities affiliated with them, will
beneficially own approximately 64% of the then outstanding common stock. As a
result, these executive officers and directors will be able to exercise
substantial interest over matters requiring stockholder approval, including the
election of directors and the approval of material corporate matters such as
change of control transactions. The effects of such influence could be to delay
or prevent a change of control of AJK unless the terms are approved by such
stockholders.
Speculative nature of investment
The liquor industry is extremely competitive and the commercial success
of any product is often dependent on factors beyond the control of AJK,
including but not limited to market acceptance and retailers' prominently
shelving and selling the products. AJK may experience substantial cost overruns
in manufacturing and marketing its products, and may not have sufficient capital
to successfully complete any of its projects. AJK may not be able to manufacture
or market its products because of industry conditions, general economic
conditions, competition from other manufacturers and distributors, or lack of
acceptance for its products by consumers or retail outlets. AJK may also incur
uninsured losses for liabilities which arise in the ordinary course of business
in the manufacturing industry, or which are unforeseen, including but not
limited to trademark infringement, product liability, and employment liability.
See "BUSINESS."
Possible adverse impact of domestic and foreign government regulation
AJK's operations are in Central and Eastern Europe and AJK's management
resides in Roumania. AJK will be subject to and affected by significant U.S.
Government regulation, as well as regulation by several countries including
Roumania. Government laws and regulations, whether existing today or adopted in
the future, could adversely affect AJK's ability to market and sell its
products, and could impair AJK's profitability. See "BUSINESS - Regulation."
AJK's operations are dependent on expertise of its key officers
Jacob Kieselstein is Chairman, President and a director of AJK. Petru
Willkovits is a Vice President and Manager of Operations for the Company's
distillery and bottling plant in Timisoara, Roumania. See "MANAGEMENT."
Virtually all decisions concerning the conduct of the business of AJK, including
the properties and rights to be acquired by AJK and the arrangements to be made
for such distribution, are made by or significantly influenced by Messrs.
Kieselstein and Willkovits. The loss of their services for any reason would have
a material adverse effect on AJK's business and operations and its prospects for
the future. AJK does not have "key man" life insurance on the lives of any of
its executive officers, but is contemplating the purchase of such insurance.
Certain officers or directors may be participating in possible conflicting
activities
The officers or directors of AJK have participated in and may continue
to participate in other entities which engage in activities similar to those of
AJK. Conflicts of interest may arise as a result of such officers or directors
involvement with other ventures which may compete directly or indirectly with
AJK. See "MANAGEMENT - Possible Conflicts of Interest."
AJK has never paid dividends
AJK has never paid cash dividends on its common stock and no cash
dividends are expected to be paid on the common stock in the foreseeable future.
AJK anticipates that for the foreseeable future all of its cash resources and
earnings, if any, will be retained for the operation and expansion of AJK's
business.
Officers and directors have limited liability and have indemnity rights
The Certificate of Incorporation and By-Laws of AJK provide that AJK
indemnify its officers and directors against losses sustained or liabilities
incurred which arise from any transaction in such officer's or director's
respective managerial capacity unless such officer or director violates a duty
of loyalty, did not act in good faith, engaged in intentional misconduct or
knowingly violated the law, approved an improper dividend, or derived an
improper benefit from the transaction. AJK's Certificate of Incorporation and
By-Laws also provide for the indemnification by it of its officers and directors
against any losses or liabilities incurred as a result of the manner in which
such officers and directors operate AJK's business or conduct its internal
affairs, provided that in connection with these activities they act in good
faith and in a manner which they reasonably believe to be in, or not opposed to,
the best interests of AJK, and their conduct does not constitute gross
negligence, misconduct or breach of fiduciary obligations.
AVAILABLE INFORMATION
AJK has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form SB-2 under the Securities Act
with respect to the securities offered hereby. This prospectus does not contain
all the information contained in that registration statement. For further
information regarding AJK and the securities offered hereby, reference is made
to the registration statement, including all exhibits and schedules thereto,
which may be inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Each statement contained in this prospectus with respect to a document
filed as an exhibit to the registration statement is qualified by reference to
the exhibit for its complete terms and conditions.
AJK will be subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith will file
reports and other information with the Commission. Reports, proxy
statements and other information filed by AJK can be inspected and copied on the
Commission's home page on the World Wide Web at http://www.sec.gov or at the
public reference facilities of the Commission, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, as well as the following Regional Offices:
7 World Trade Center, Suite 1300, New York, N.Y. 10048; and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois. 60661-2511. Copies can be
obtained from the Commission by mail at prescribed rates. Request should be
directed to the Commission's Public Reference Section, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549.
AJK intends to furnish its stockholders with annual reports containing
audited financial statements and such other reports as may be required by law.
THE COMPANY: AJK PERFECT RENAISSANCE, INC.
Background
AJK is a development stage company that, through its operating
subsidiaries, is engaged in the production and marketing of Roumanian vodka,
flavored vodka and other distilled spirits and liqueurs in Eastern Europe, and
the distribution and marketing of watches and other jewelry. AJK plans to expand
their distribution into Western Europe and the United States.
AJK was incorporated on March 24, 1999 as a Delaware corporation named
Allegiance Acquisition Corporation, which changed its name to AJK Perfect
Renaissance, Inc. on July 21, 1999. Subsequently, AJK acquired all the shares
owned by Ferrand Investment Limited, a company incorporated in the British
Virgin Islands, of Ferrand's limited liability company Roumanian subsidiaries
including:
S.C. Perfect Renaissance, S.R.L.
S.C. Renaissance, S.R.L. and
S.C. Renaissance Alpha 2000, S.R.L.
Subsequent to such transaction, these companies became subsidiaries of AJK. AJK
is the owner of between 90% and 99.995% interest in the three Roumanian
subsidiaries. Due to a requirement of Roumanian law that Roumanian companies
cannot be wholly-owned by foreign nationals, the remaining interest in two of
such companies is owned by Petru Willkovits, AJK's Vice President and a
Roumanian national, and the interest in the remaining company is owned by one of
the other two companies. For accounting purposes, the subsidiaries will be
treated as if wholly-owned.
AJK believes that its principal product, Perfect Vodka, is one of the
dominant vodka brands available in Roumania comprising approximately at least
20% of the Roumanian vodka market, which market aggregated approximately $25
million in 1999. Sales of Perfect Vodka in Ukraine, Moldova, Tajikistan,
Kazakhstan, Hungary and other Central and Eastern European markets totaled
approximately $750,000 in 1998.
Roumanian Subsidiaries
AJK's primary operations are performed by its subsidiary, S.C. Perfect
Renaissance, S.R.L., including the purchase of raw materials for AJK's vodka
production, the distillation, mixing and bottling operations, ownership of the
distillery and bottling plant, lease and purchase of real estate, marketing and
sales of vodka and other products. S.C. Perfect Renaissance, S.R.L. was
incorporated on November 11, 1994 as a limited liability company under the laws
of Roumania.
S.C. Renaissance S.R.L was established in Timisoara, Roumania on April
15, 1991, as a limited liability company under the laws of Roumania. It is
principally involved in the import, marketing and distribution of digital and
analog watches from Asia and other jewelry from around the world.
S.C. Renaissance Alpha 2000, S.R.L. was incorporated on November 22,
1994 as a limited liability company under the laws of Roumania. It is
principally involved in the sale of glassware and ornaments.
BUSINESS
Operations-Jewelry and watch business
AJK's primary products are its vodka products, but AJK operates a
jewelry and watch business primarily through its Renaissance, S.R.L. and
Renaissance Alpha 2000, subsidiaries. In 1990, after the fall of the communist
Ceaucescu regime, Jacob Kieselstein, the President and a director of AJK,
organized the predecessor to AJK by setting up a watch and jewelry importing and
distribution organization.
In 1999, gross sales of watches totaled $305,416 while gross sales of
jewelry totaled $372,286. Net income after taxes from watches and jewelry was
approximately $131,000 and $149,000, respectively. The principal countries of
origin are Japan, Hongkong, Taiwan, Brazil, Denmark and England.
Customers are primarily retail shops throughout Roumania, supplied by a
network of 20 sales agents and wholesalers of AJK. The number of shops offering
AJK's watches and jewelry increased from 365 shops in 1997 to 420 shops in 1998,
475 shops in 1999 and an expected 522 shops in 2000. Management's gross sales
target for 2000 is $900,000 cumulatively for watches and jewelry, with net
income of $300,000, and anticipates 20% annual growth if the Roumanian economy
continues to improve, although there is no assurance that these goals can be
achieved.
AJK imports and distributes watches under its own name, "Xedox".
Operations-Vodka
The manufacture of vodka consists mainly of blending alcohol with
purified water. Until December 1999, AJK purchased alcohol from outside vendors,
mixed and bottled the vodka, and marketed it in Roumania.
Commencing in December 1999 AJK has operated its own distillery in
Timisoara, Roumania. The Roumania distillery has a capacity of 13,000 liters of
grain alcohol per day, using locally grown corn as raw material. The plant will
operate approximately 335 days per year, 24 hours a day, with the balance of the
time used for maintenance and repair.
The corn is dry-milled, batch-cooked and fermented using commercially
available enzymes and dry yeast. The alcohol distillation process is continuous.
The plant operation is mostly manual, given the local supply of cheap labor.
Operation of the distillery is currently under the training and supervision of
Ex-Klar, although Company personnel are being trained in all phases of the
plant's operations, which training is expected to continue until the end of
2000.
The Fermentation Process
Corn is stored in four silos, each having a capacity of approximately
585 metric tons, enough for approximately 60 days' operation. A corn receiving
area receives the corn from dump trucks at a rate of approximately 7.5 metric
tons per hour. Plant consumption is approximately 36 metric tons per day. The
corn is cleaned and mechanically milled into meal containing particles not
larger than 1/8" in diameter. The meal is weighed for production and inventory
control and yield calculations and discharged into cookers, mixed with hot water
and enzymes and cooked and agitated into Mash. The Mash is mixed with yeast and
allowed to ferment for approximately 48 hours. Fermentation is exothermic and
heat generated during the process must be dissipated.
The Distillation Process
After fermentation, the Mash, now called "Beer," is pumped into a
continuous distillation unit, which reduces the Beer to a concentration of 96%
alcohol, while removing impurities known as Cogeners. A boiler burning No. 2
fuel oil heats the distillation unit. The waste products from the fermentation
cycle, known as Stillage, is sold to local farmers as animal feed. AJK expects
to earn approximately $160,000 per year from the sale of stillage. Another
by-product of the distillation process is carbon dioxide, which can be marketed
to the soft drink industry. AJK expects to earn approximately $120,000 per year
from sale of carbon dioxide. However, some additional equipment is required
for the production on carbon dioxide and AJK does not plan to make this
additional investment until the year 2002.
Additionally, AJK expects its distillation plant to earn additional
revenues from sales of alcohol and by-products to customers in the chemical
industry, pharmaceutical industry, cosmetic industry, and other producers of
alcoholic beverages. However, there can be no assurance that AJK will be able to
establish sales relationships with any other companies, or whether any such
relationships will be maintained or be profitable.
The 96% alcohol is known as "neutral alcohol", which is tested to
conform with specific chemical analyses such as acidity levels, levels of
cogeners, color and odor. The neutral alcohol is then mixed with purified water
to make vodka. AJK's distillation plant includes a water treatment and
purification plant purchased from U.S. Filter Corporation.
AJK's new distillery has an annual production capacity of approximately
4.3 million liters of neutral alcohol per year. Daily production is
approximately 13,000 liters.
The Finishing and Bottling Process
After the neutral alcohol is blended with purified water ("cut"), it is
stored in large securely vented storage tanks. From there, batches are pumped
over to blending tanks, where the vodka, now cut to 40% alcohol (80 Proof) is
either blended with various flavors or fed directly as "white" vodka to the
bottling plant.
Flavors include Orange, Lemon, Peach, Melon, Blackcurrant, Strawberry
and Hot Pepper. Test marketing with other flavors is conducted on a regular
basis.
Flavoring agents are purchased on the world market from suppliers such
as International Flavors & Fragrances, Inc., Monsanto and Bayer.
The bottling plant has a capacity of 60 bottles per minute and is fully
automatic. The empty bottles are first rinsed and then go to a rotary filling
machine, a capping machine and a labeling machine. They are interconnected by
chain conveyors so that the product never needs to be touched by operators.
After bottling, the product is packed in "re-shippers" (the same
cartons in which the empty bottles are supplied from the glass plant) and either
conveyed to the plant warehouse or shipped out immediately to satellite
warehouses or to distributors. AJK's warehouse system is fully automated and
inventory-controlled.
Bank loan for Construction of Roumania Distillery
In 1998, S.C. Perfect Renaissance SRL, prior to becoming a subsidiary
of AJK, entered into an agreement with Ex-Klar Technologies, Inc. for the
design, construction, start-up and commissioning of a state-of-the-art
distillery with a capacity of 13,000 liters of neutral alcohol per day. The new
distillery was completed in late 1999 and began operations in December 1999.
Perfect Renaissance entered into a loan agreement with Bancorex, the
then-principal bank in Timisoara, Roumania, for US$3,918,409 to provide funding
for expenses associated with the construction of the distillery and ancillary
facilities at an annual interest rate of 14.75% for a five-year term loan upon
completion of the distillery, repayable in semi-annual installments of
approximately $435,000 including principal plus accrued interest. The loan was
secured by Perfect Renaissance's real property, other fixed assets and
inventories.
In late 1998 Bancorex was declared insolvent by the government of
Roumania, which controlled Bancorex, and was taken over by Banca Comerciala
Romana controlled by the Roumanian government. The Roumanian government created
the Roumanian Bank Restructuring Organization ("AVAB", after its initials in the
Roumanian language) to handle bank insolvencies. AVAB is similar in concept and
organization to the Resolution Trust Corporation created by the United States
government at the time of the savings and loan crisis in this country.
Approximately $1,685,788 of the Company's loan from Bancorex was
assigned to AVAB with a monthly
repayment schedule with total repayment due by August 31, 2001. AJK anticipates
that its entire loan will be assigned to AVAB with a then-established monthly
payment schedule. Under the rules of AVAB, loans assigned to it do not accrue
additional interest.
Vodka Products
AJK currently produces ten types of vodka, bottled in four
different-sized bottles. AJK sells unflavored vodka in strengths of 50%, 40% and
33%, and vodkas with aromas of lemon, orange, peach, blackcurrant, melon,
strawberry and hot pepper (all 40% strength). Additionally, AJK sells an
oak-aged vodka as "Baron Vodka" and recently introduced a less expensive brand
as "Total Vodka". Each variety of vodka is sold in .5-liter, .7-liter, one-liter
and 1.75-liter bottles.
In addition, AJK produces seven types of liqueurs: Napoleon 444 brandy,
raspberry, chocolate, coffee, cherry, pina colada, and vishniak (a sour cherry
brandy). Each liqueur is sold in .7-liter bottles.
Distribution, Marketing and Sales of Vodka
AJK's products are marketed throughout Roumania, Central and Eastern
Europe, and are sold in shops, mini-markets, restaurants, hotels and bars. AJK
sells through 16 independent, exclusive sales agents and 16 wholesalers, who
deal with 47 nonexclusive distributors, employing in turn over 200 agents.
AJK is conducting studies to determine the feasibility of setting up
its own company-owned distribution centers in selected markets.
Licenses
AJK also has obtained a license to manufacture, bottle and market
Bardinet Brandy in Roumania, a product of Cie Bardinet. Cie. Bardinet, Bordeaux,
France is an established and well-known producer of Napoleon, VSOP and XO
cognacs. Cie. Bardinet supplies certain ingredients to AJK and closely
supervises the manufacture of Bardinet products on AJK's premises.
Right of first refusal to acquire Renaissance Perfect
AJK has a right of first refusal to acquire any shares sold by the
shareholders of Renaissance Perfect, a Moldovan company that currently
distributes AJK products in Moldova. Renaissance Perfect is 33% owned by Jacob
Kieselstein, President and a director of AJK. See "MANAGEMENT - Possible
Conflicts of Interest" and "Related Transactions."
Major Competitors
Major competitors in Central and Eastern Europe include numerous local
distillers and bottlers as well as international brands such as "Absolut",
"Finlandia" and "Smirnoff". If AJK enters the American market, it will compete
with all the major liquor companies doing business in the United States.
Inventory
AJK's distillery plant has inventory of 60 days' worth of grain, and
approximately 20 days' worth of finished, bottled and marketable products. AJK
also keeps an inventory of approximately a 30 day supply of glass bottles and
labels, and a 60 day supply of flavorings. AJK generally keeps approximately a
60 day supply of watches and jewelry for the watch and jewelry business.
Raw Materials
AJK purchases its raw materials including corn, grains, bottles, corks,
caps, on the open market from various dealers. AJK believes that these materials
are readily available from various suppliers. AJK has recently completed
the installation of a mile-long gas pipeline to allow it to switch from fuel oil
to natural gas. AJK has its own water purification system for blending purposes.
Seasonality
Sales of vodka, flavored vodka, distilled spirits and liqueurs are not
seasonal in nature except for a slight increase in sales in the fourth calendar
quarter around end-of-year holidays.
Inflation
AJK believes that inflation has not had a material impact on its
operations to date. Substantial increases in labor, raw materials,
transportation and other operating expenses could adversely affect the
operations of AJK. Europe, particularly Roumania, may experience different
economic conditions than the United States.
Patents and trademarks
AJK's brand name "Perfect", along with its bottles and labeling, is
trademarked in Roumania which trademark registration is effective for 10 years
from issuance of a Certificate of Registration by the State Office of Inventions
and Trademarks. The following certificates have been issued in Roumania:
Certificate No. 24903 issued March 18, 1994 with respect to AJK's
name, .7 liter bottle and label.
Certificate No. 28081 issued March 2, 1998 with respect to AJK's
name, 1.75 liter bottle and label.
Certificate No. 24981 issued May 4, 1995 with respect to AJK's Lemon
Vodka name, bottle and label.
Certificate No. 27674 issued July 25, 1995 with respect to AJK's
Orange Vodka name, bottle and label.
Certificate No. 27685 issued November 23, 1996 with respect to AJK's
Peach Vodka name, bottle and label.
Certificate No. 27852 issued November 20, 1996 with respect to AJK's
Blackcurrant Vodka name, bottle and label.
AJK was granted the exclusive right to use the trademark "Perfect" in
connection with alcoholic beverages in bottles with labels of various shapes,
colors, and designs, in combinations, for an indefinite period commencing July
16, 1997, in the Republic of Moldova, by the Ministry of Justice by Certificate
No. 17700391 issued June 12, 1997.
AJK filed U.S. Trademark Application No. 75/910001 to import, market
and advertise alcoholic beverages under the trade name "Perfect Vodka."
Regulation
The operations of AJK are conducted through its wholly-owned operating
subsidiaries, which are limited liability companies incorporated under the laws
of Roumania, and are subject to extensive regulation by Roumanian governmental
authorities and are subject to various laws and judicial and administrative
decisions imposing requirements and restrictions on part or all of its
operations.
AJK believes that it is in substantial compliance in all material
respects with applicable laws, rules and regulations. There can be no assurance
that laws, rules or regulations will not be adopted in the future which could
make compliance much more difficult or expensive, restrict AJK's ability to do
business, or otherwise adversely affect the business of AJK.
Because AJK's business is highly regulated, the laws, rules and
regulations applicable to AJK are subject to regular modification and change.
There can be no assurance that laws, rules or regulations will not be adopted in
the future which could make compliance much more difficult or expensive,
restrict AJK's ability to do business, or otherwise adversely affect the
business or prospects of AJK.
Insurance
AJK intends to secure political risk insurance coverage to protect
investors from various risks of doing business in Roumania and other formerly
communist countries. The policy will cover confiscation, expropriation,
nationalization, non-repossession and transfer risks. Coverage attaches in the
event the present government, any succeeding government (whether legally in
power or otherwise) or any local authority takes any action which may impair the
normal operations of AJK and its Management. The policy will cover unlawful
seizure of the plant and facilities, inability to operate due to uprisings,
terrorism, revolution, illegal acts and other action by government authorities
which may prevent AJK from enforcing its rights to run the business in a normal
and legal manner.
The policy will also protect investors against government actions which
may prevent AJK from obtaining and remitting dividends, lease payments and
interest payments and repatriating capital in U. S. dollars.
After analyzing and pricing several insurance providers, AJK has
selected Aon Risk Services Inc., Miami, Florida to provide coverage. Aon is the
second largest provider of insurance services in the world. The policy as bid
and offered provides reimbursement for covered losses up to $25,000,000 under
the policy. The annual premium is expected to be approximately $375,000, or 1.5%
of the policy amount.
Employees
AJK has 185 full-time employees, including its executive officers.
Property
AJK's distillery and bottling plant and main offices in Timisoara,
Roumania are located in six buildings aggregating 65,000 square feet. In
additional to its distillery and bottling plant, AJK maintains the following
warehouse and office space. All cities are in Roumania unless otherwise noted
All properties listed as Company-owned are owned without indebtedness.
[Enlarge/Download Table]
Area Annual
Address City (Sq. Meter) Lease ($) Expires
-------------------------------------------------------------------------------------------------
20 Sulina Street Timisoara 14,500 Owned N/A
4 Stefan cel Mare Street Timisoara 146.5 4,700
14 V. Lupu Street Timisoara 461 Owned N/A
16 V. Lupu Street Timisoara 910 Owned N/A
137 Calea Plevnei Bucharest 114.4 7,920
122 Drumul Taberei Bucharest 46.81 Owned N/A
15 Gr. Tocilescu Street Ploieste 25 132
2 Chimiei Street Bacau 140 2,700
9A Republicii Street Adjud 22.2 840
42-969 Nicolina Street Iasi 15 264
8 Tudor Vladimirescu Blvd Zalau 41.3 Owned N/A
71A Mihai Viteazu Blvd Zalau 168 2,040
17 Calea Moldovei Bistrita 160 1,800
229 Traian Street Tr. Severin 25 1,125
3 Moshe Dayan Road Yahud, Israel
20533 Biscayne Blvd Aventura, Florida, USA
USE OF PROCEEDS
AJK is offering for sale a minimum of 300,000 and a maximum of 600,000
shares of its common stock at a gross price of $5.50 per share. The net proceeds
from the maximum offering, after deducting discounts, commissions and expenses
will be approximately $3,000,000.
AJK expects to use the net proceeds from the maximum offering as
follows:
[Download Table]
Description Amount Percentage
Establish a sales organization in the United
States, open a sales office,
furniture and fixtures and equipment,
personnel, insurance,
warehouse facilities, inventory. $ 750,000 25%
Advertising and marketing activities 600,000 20%
Repayment of debt incurred in connection
with the construction of the distillery 1,000,000 33.3%
General working capital including salaries, rent
utilities, supplies and telecommunications 450,000 15%
Reserve 200,000 6.7%
Total $ 3,000,000 100.0%
In the event only the minimum offering is sold, AJK expects the net
proceeds from the minimum offering, after deducting discounts, commissions and
expenses will be approximately $1,485,000 ($1,650,000 minus $165,000), which AJK
will devote primarily to establishing its United States sales and marketing
operations.
DIVIDEND POLICY
AJK presently does not intend to pay cash dividends on its common stock
in the foreseeable future and intends to retain future earnings, if any, to
finance the expansion and development of its business. Any future decision of
AJK's Board of Directors to pay dividends will be made in light of AJK's
earnings, financial position, capital requirements and other relevant factors
then existing.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONDITION AND RESULTS OF OPERATIONS
The following should be read in connection with AJK's financial
statements, including those financial statements of its subsidiaries, related
notes and other financial information included elsewhere in this Prospectus.
Background
Following the anti-Communist revolution and the end of the Ceausescu
dictatorship early in 1990, Jacob Kieselstein returned to Roumania and started
the Perfect Renaissance companies, selecting the name to signify the family
return to Roumania from which it had fled during World War II. Initially AJK
imported and distributed jewelry and watches and within several years, achieved
a degree of success throughout Roumania. Subsequently AJK decided to enter the
vodka business.
AJK bought grain alcohol from existing distilleries in Roumania and
then re-processed the alcohol so as to assure maximum purity and quality. Sales
grew from less than $150,000 in 1990 to over $5 million in 1999. As the market
expanded and AJK's principal product, "Perfect Vodka," gained market acceptance
and popularity throughout Roumania and in nearby countries.
AJK entered into an agreement in late 1997 with Ex-Klar Technologies,
Inc. of Pawling, New York for the construction contract of its own distillery.
AJK obtained a letter of credit for the value of the contract, supported by
financing from Bancorex, AJK's lead bank. The distillery was completed in
December 1999 and commenced production. Ex-Klar will continue to provide
technical support and operating personnel for at least another year.
Now that AJK controls its own in-house supply of the key raw
material, it is in a position to expand its market
coverage within Roumania as well to other important markets in central and
eastern Europe. In addition, AJK intends to begin marketing its products in the
United States. A major portion of the proceeds of this offering will be
dedicated to establishing a distribution network, advertising and shelf space
acquisition in the United States. AJK has registered the trademark "Perfect
Vodka" with the United States Patent and Trademark Office. Discussions are
on-going with potential importers and distributors in New York, New Orleans and
Los Angeles.
AJK anticipates that it will be able to compete with other established
brands based on its competitive production costs in Roumania and the excellent
quality and purity of its products.
AJK manufactures and bottles Bardinet brandy under an arrangement with
Cie. Bardinet of France. AJK is in discussion with an international liquor
company regarding the possibility of a joint venture to market such liquor
company's products in Roumania utilizing AJK's well-established distribution
network.
Although Roumania has a population approaching 25 million, is in line
to become a member of the European Union and the economy is slowly growing and
improving, it is nevertheless still a poor country and the general population
has limited purchasing power. Therefore the volume of sales of liquor products
(if an agreement is concluded) and Bardinet brandy is anticipated to be small
and may expand only gradually over several years, if a market exists at all, of
which there can be no assurance. The impact of these relationships on AJK's
profits will clearly not be very meaningful for some time to come. However,
management believes that even a small sales volume of these prestigious brands
will lend prestige and visibility to AJK and will contribute to the marketing
programs of its own "Perfect" brands.
AJK employs 185 persons which makes AJK one of the largest employers in
the Timisoara area, in a country with a rate of unemployment or underemployment
of 35% or more. Management believes that this position makes for good relations
with local and national authorities.
Many of AJK's Roumanian employees are long-term employees and
management considers its staff to be well educated. In addition, AJK conducts
in-house training and refresher courses for technical and sales staff and from
time to time sends selected personnel out of the country for specialized
training.
AJK has made and intends to continue to make shares in AJK available to
employees, as rewards and incentives.
Nevertheless, Roumania is in a volatile and unstable part of the world,
in the Balkans between Ukraine and Serbia. AJK has therefore determined to
purchase political risk insurance, to cover losses for events such as
confiscation, expropriation, nationalization, selective discrimination,
deprivation, forced abandonment, forced divestiture, strikes, riots, civil
commotion, malicious damage, business interruption and non-availability of hard
currency to remit interest, dividends and profits and repatriate capital.
AJK believes that it will grow and diversify. There are several
opportunities in Roumania which would be complementary to the spirits business.
There are opportunities in countries adjacent to Roumania, where existing
facilities are being offered at a fraction of cost as part of the privatization
movement. AJK will also look at opportunities in the United States, especially
in the areas of packaged ethnic foods and wine.
Results and Plan of Operations
AJK's subsidiaries are in a period of steady growth and sustained
market development. Sales of AJK's own branded products as well as products
being marketed under license have increased and are expected to continue to
increase.
The new distillery gives AJK its own supply of neutral alcohol and the
distillery is also expected to generate revenues of approximately $160,000 per
year from the sale of stillage and approximately $120,000 per year from sale of
carbon dioxide. However, some additional equipment is required for the
production of carbon dioxide and AJK does not plan to make this additional
investment until the year 2002.
Over time, AJK's jewelry and watch business has become somewhat
overshadowed by the liquor business but remains an important source of revenue
and profit. Sales of jewelry and watches are projected to be in the area of
$900,000 in the year 2000, with a net profit of $280,000. While the existing
business is reaching maturity and is not expected to grow dramatically in the
coming years, AJK has recently been approached by a major watch company and is
in ongoing discussions about a possible exclusive distributorship.
AJK's growth and market penetration in its primary market in Roumania
and elsewhere have met or exceeded AJK's expectations. Roumania experienced a
deep recession in 1999 which is reflected in the Company's sales for that year.
In addition the Company incurred large expenses in 1999 in connection with the
completion and startup of the distillery. Year to year gains in sales and
profits of AJK's subsidiaries have exceeded projections and are expected to
continue to do so. The Company projects increased sales in 2000 and 2001 based
on reasonable expectations for continued improvement of the Roumanian economy
and possible revenues from the potential licensing or from sales in the United
States. Combined sales and net income from AJK's subsidiaries are:
Net Income
Year Sales From Operations
---- ----- ---------------
1997 $ 3,128,254 $333,787
1998 5,544,717 895,885
1999 4,689,593 570,623
AJK's proposed sale of 600,000 shares of common stock to the public is
expected to provide additional working capital to AJK of $3,000,000 after fees,
expenses and commissions are deducted. The funds will be employed primarily to
gain greater market share by improving and expanding the sales and distribution
network and on advertising, which is the lifeblood of the liquor business. In
the United States, AJK will aim for penetration of selected markets, with
emphasis on the greater New York metropolitan area, southern California, south
Florida and the Washington, DC area. In addition, selected markets in
Pennsylvania, Ohio and Illinois, where there is a substantial ethnic Roumanian
population, will also be addressed.
For the time being, AJK's aim is to capture only a tiny share of the
U.S. market for superpremium imported vodka. However, even a tiny share will
have a major impact on AJK's sales and net income.
Similarly, European markets are huge and a relatively modest marketing
effort is expected to yield substantial additional income for AJK over time.
Liquidity and Capital Resources
AJK's available cash on hand increased from $63,610 at the beginning of
1998 to $203,456 at the end of the year. Available cash on hand at the end of
1999 was $46,680.
From AJK's founding in 1990, management has been very conservative and
prudent in its conduct of the business. The Roumanian economy has been slow to
adjust to western free market policies and many sectors, especially the banking
sector, have had and continue to have difficulties. As the result, much of AJK's
business with its clients is conducted on a cash-for-product basis. Purchases
and investments were traditionally supported by cash in banks. Only when AJK
decided to build its own distillery, requiring an investment close to
$7,000,000, did AJK seek financing from its principal bank in Timisoara.
However, Bancorex, the bank holding the loan, was declared insolvent by the
government of Roumania and AJK has negotiated with its successors and the
Roumanian government. See "Bank loan."
Fiscal Year Ended December 31, 1999 Compared to Fiscal Year Ended December 31,
1998
Net sales decreased from $5,544,717 in 1998 to $4,689,593 in 1999 due
to a deep recession in Roumania. Gross profit decreased from $2,326,651 in 1998
to $1,955,302 in 1999 due to reduced net sales and increased expenses connected
with completion and startup of the Company's distillery. Net income after taxes
decreased from $895,885 in 1998 to $570,643 in 1999.
Total assets increased from $7,657,691 in 1998 to $8,703,061 in 1999,
largely attributable to an increase in property, plant and equipment arising
from completion of the Company's distillery.
MANAGEMENT
Officers and Directors
The following table sets forth certain information with respect to
AJK's directors, executive officers and key consultants:
Name Position
---- --------
Jacob Kieselstein Chairman, President, Chief Executive and Director
Petru Willkovits Vice President and Manager, Watch and Jewelry Division
Violeta Chioreanu Financial Manager
Curtis J. Sittenfeld Secretary
Kochava Kieselstein Director
Juda Erlich Director
Dalia Levy Director
Dr. Zvi Yadin Director
Jacob Kieselstein, 53, founded the predecessor to Perfect Renaissance
in Roumania in 1991. He has been involved in marketing and foreign trade for
almost 30 years in Roumania and in Israel. Since 1990, he was the founder and
president of AJK Kieselstein Chain Stores Ltd., an Israel chain of jewelry and
watch stores no longer active. Mr. Kieselstein is a 33%-shareholder of
Renaissance Perfect, a Moldovan company that distributes AJK's products. Mr.
Kieselstein studied industrial psychology , economics, finance, accounting and
industrial management at Bar-Ilan University in Ramat-Gan, Israel and at the
Israeli School for Production and Management. Mr. Kieselstein attained the rank
of Captain in the Israeli Defense Forces.
Petru Willkovits, 49, has been with Perfect Renaissance and its
predecessors since 1992. From 1975 until 1989, Mr. Wilkovits worked primarily in
the areas of plant maintenance and transportation. Mr. Willkovits received a
bachelor of science degree in Mechanical Engineering from the Traian Vula
Polytechnic Institute in Timisoara, Roumania and did graduate work in alcohol
distillation technology in Louisville, Kentucky. Mr. Willkovits is a reserve
captain in the Roumanian Army.
Violeta Chioreanu, 49, has been the Financial Manager of Perfect
Renaissance and its predecessor companies since inception in 1992. Ms. Chioreanu
is a graduate of the Economic Academy in Bucharest, Roumania and subsequently
did post-graduate high economic studies at Timisoara University in the area of
cost studies.
Curtis J. Sittenfeld, 68, was appointed Secretary of AJK in 2000. Mr.
Sittenfeld has been president of TechProjects International, Inc., an
international project development consulting firm in Aventura, Florida since
April 1993. Prior to forming TechProjects International, Mr. Sittenfeld was
Executive Director of Bolinvest Export and International Promotion Project
underwritten by the United States Agency for International Development from 1989
to 1993. From 1970 to 1989 he was President of I.R.A.S Development Corp. and
Techno-Design Ltd., a NASDAQ-listed international engineering and construction
company. From 1955 to 1970 he was President and Chief Executive Officer of
National Filter Corporation, a manufacturer of machinery for the food and
beverage industries. Mr. Sittenfeld has a bachelor of science degree in
Engineering and Economics from the University of Pennsylvania and has taken
graduate courses in Economics and Business Administration from City College in
New York City (now part
of the City University of New York) and in International Negotiations from the
Wharton School of Business of the University of Pennsylvania. Mr. Sittenfeld is
also a member of the American Chemical Society, the American Society of
Agricultural Engineers, the New York Academy of Sciences, the International Wood
Products Association, the Korean War Veterans Foundation and was listed in Who's
Who in Finance and Industry (22nd ed.). He was the author of four articles
published between 1953 and 1991.
Kochava Kieselstein, 50, has been a Director of AJK since 2000. Mrs.
Kieselstein has been a high school teacher at the Ironi "D" High School in Tel
Aviv, Israel. Ms. Kieselstein received a bachelor of arts in history and
literature from Bar-Ilan University in Ramat-Gan, Israel. Ms. Kieselstein is the
wife of Jacob Kieselstein.
Juda Erlich, 52, has been a Director of AJK since 2000. Mr. Erlich is a
certified public accountant in Ramat-Gan, Israel and is also a principal in
Erlich Investments & Counseling Ltd. and in Erlich Real Estate Ltd. in
Ramat-Gan. In addition, Mr. Erlich is also a director of Gazit Inc., a company
listed on the Israel Stock Exchange, and also a director of Atarim Co., and of
Chalamish Co., companies that are each wholly-owned by the Israeli government.
Mr. Erlich earned his bachelor's degree and Masters in Business Administration
from the University of Tel Aviv, Israel and is a member of the Israel Institute
of Certified Public Accountants.
Dalia Levy 52, has been a Director of AJK since 2000. Ms. Levy has been
the office manager of Perfect Renaissance and its predecessors since 1985. Ms.
Levy attended the Management Center of Bar-Ilan University in Bar-Ilan, Israel.
Dr. Zvi Yadin, 50, has been a Director of AJK since 2000. Dr. Yadin has
been the Clinic Director at the FEGS Mental Health Center in Far Rockaway, New
York since 1992. Dr. Yadin has earned Ph.D degrees from Bar-Ilan University,
Bar-Ilan, Israel (in Hebrew literature), and Adelphi University, Garden City,
New York (in clinical psychology) and has a post-doctoral diploma (in
psychoanalysis) from Adelphi. Dr. Yadin is a member of the American
Psychological Association and the American Board of Psychological Specialties
and is the author of three articles published in the ASPP newsletter.
All directors hold office until the next annual meeting of stockholders
and until their successors are elected. Officers are elected to serve, subject
to the discretion of the Board of Directors, until their successors are
appointed.
Executive Compensation
Mr. Kieselstein receives from AJK and its subsidiaries a base salary of
$120,000 per year and benefits valued at $60,000 per year.
Mr. Willkovits receives a base salary of $14,000 per year and benefits
valued at $10,000 per year.
Mrs. Chioreanu receives a base salary of $8,000 per year and benefits
valued at $4,000 per year.
Mr. Sittenfeld is the president of TechProjects International, Inc.
which has received consulting fees totaling $7,500 per month since April 1999.
Directors do not receive cash compensation for their services to AJK as
directors, but are reimbursed for expenses actually incurred in connection with
attending meetings of the Board of Directors.
Employment Agreements
AJK has not entered into any employment agreements with its executive
officers or other employees to date. AJK may enter into employment agreements
with them in the future.
Indemnification of Officers, Directors, Employees and Agents
The Certificate of Incorporation and By-Laws of AJK provide that AJK
shall, to the fullest extent permitted
by applicable law, as amended from time to time, indemnify all directors of AJK,
as well as any officers or employees of AJK to whom AJK has agreed to grant
indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
corporation to indemnify its directors and officers and to purchase insurance
with respect to liability arising out of their capacity or status as directors
and officers provided that this provision shall not eliminate or limit the
liability of a director
For any breach of the director's duty of loyalty to the corporation or
its stockholders;
For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; Under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the General Corporation Law of the State of Delaware; or
For any transaction from which the director derived an improper
personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any other
rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
The effect of the foregoing is to require AJK to indemnify the officers
and directors of AJK for any claim arising against such persons in their
official capacities if such person acted in good faith and in a manner that he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURITIES ACT OF
1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR PERSONS CONTROLLING
AJK PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION OF THE SECURITIES
AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST PUBLIC POLICY AS
EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the effective
date of this prospectus regarding the beneficial ownership of AJK's common stock
by each officer and director of AJK and by each person who owns in excess of
five percent of AJK's common stock.
[Enlarge/Download Table]
Percentage of Shares of Class Owned
Shares of Common Stock Prior to After
Name, Position and Address Beneficially Owned Offering (1) Offering (2)
--------------------------------------------------------------------------------------------------
Jacob Kieselstein 5,000,000 (3) 89.29% 64.52%
Chairman, President,
Chief Executive and Director
Petru Willkovits 0 (4) * *
Vice President and Plant Manager
Violeta Chioreanu 395 * *
Financial Manager
Curtis Sittenfeld __ __ __
Secretary
Kochava Kieselstein 5,000,000 (3) 89.29% 64.52%
Director
[Download Table]
Juda Erlich 0 * *
Director
Dalia Levy 0 * *
Director
Dr. Zvi Yadin 0 * *
Director
All officers and directors 5,000,395 89.29% 64.53%
as a group (8 persons)
Ferrand Investments Limited 5,000,000 89.29% 62.52%
c/o Integro Corporate
Services (BVI) Ltd.
Havelet Trust Company
P.O. Box 348
Road Town Tortola
British Virgin Islands
* Less than 1 percent
(1) Based upon 5,604,095 shares outstanding.
(2) Assumes maximum number of shares registered will be sold for an outstanding
amount of 6,204,095.
(3) Includes 5,000,000 shares owned by Ferrand Investments Limited, a British
Virgin Islands corporation of which Mr. Kieselstein is the beneficial owner.
Of the 5,000,000 shares held by the named shareholder 1,000,000 are being
offered for sale.
(4) Mr. Willkovits is the owner of a small minority of the social capital of two
of AJK's Roumanian subsidiaries, but Mr. Willkovits is not the owner of any
shares of Company common stock..
RELATED TRANSACTIONS AND POSSIBLE CONFLICTS OF INTEREST
AJK distributes its products to parties affiliated with the Company and
Jacob Kieselstein, AJK's chairman and chief executive. In 1999, AJK sold
$255,793 in products to Impex Renaissance, a Roumanian distributor of vodka,
which is 90% owned by AJK Israel. Also in 1999, AJK sold $76,511 in liquor to
Renaissance Perfect, a Moldavian company 33% owned by Mr. Kieselstein.
AJK Perfect Renaissance, Inc. has a right of first refusal to acquire
any shares sold by the shareholders of Renaissance Perfect. None of these
transactions were bargained for as arms length transactions.
AJK owes $858,934 to Ferrand Investment Ltd., a British Virgin Islands
corporation beneficially owned by Jacob Kieselstein, President and a director of
AJK. Ferrand was formerly the majority shareholder of AJK's Roumanian
subsidiaries until their acquisition by AJK. AJK also owed $44,150 to AJK
Israel, a company also under the control of Jacob Kieselstein.
SELLING SECURITYHOLDERS
AJK is also registering for offer and sale by the holders thereof (the
"Selling Securityholders") 1,604,095 shares of common stock. The Selling
Securityholders will offer their securities for sale on a continuous or delayed
basis pursuant to Rule 415 under the 1933 Act.
The following table sets forth the beneficial ownership of the
Securities of AJK held by each person who is a Selling Securityholder and by all
Selling Securityholders as a group.
Percent of Stock Owned
Name and Address of Prior to After
Beneficial Owner Common Stock Offering (1) Offering (2)
--------------------------------------------------------------------------------
Ferrand Investments Limited (3) 1,000,000 89.22% 64.47%
c/o Integro Corporate
Services (BVI) Ltd.
Havelet Trust Company
P.O. Box 348
Road Town Tortola
British Virgin Islands
Jovanda Ltd. 250,000 4.46% 0%
18034 Ventura Boulevard
Suite 119
Encino, California 91316
James M. Cassidy 125,000 2.23% 0%
1504 R Street, N.W.
Washington, DC 20009
James McKillop 125,000 2.23% 0%
1875 Century Park East
Suite 1165
Los Angeles, California 90067
Ioan Adrian 200 * *
str. Timis Triaj nr. 6
Brasov, Romania
Ioan Adrian 250 * 0%
str. Timis Triaj nr. 6
Brasov, Romania
Silvica Aghiorghiesei 110 * 0%
str. Pogonici nr. 4
Timisoara, Romania
Nicolae Albert 150 * 0%
Bobota nr. 435
j. Salaj com, Romania
Nicolae Albu 200 * 0%
Bd. Alexandru cel Bun nr. 79
Iasi, Romania
Nicolae Albu 250 * 0%
Bd. Alexandru cel Bun nr. 79
bl. D1, parter
Iasi, Romania
Petre Argetoianu 150 * 0%
str. Crisana 1
Dr. Tr. Severin, Romania
Constantin Arnautu 200 * 0%
str. Somesului nr. 8
Resita, Romania
Constantin Arnautu 250 * 0%
str. Somesului nr. 8
Resita, Romania
Costel Atanasescu 395 * 0%
Manager
str. Epurelui nr. 3
Timisoara, Romania
Daniel Atanassescu 150 * 0%
str. Valea Iasului
Curtea de Arges, Romania
Maria Avramica 150 * 0%
Bd. Revolutiei 3
Timisoara, Romania
Marinela Baciu 150 * 0%
str. Ipatescu nr. 17
Timisoara, Romania
Constantin Badiant 190 * 0%
str. Mehedinti nr. 14
Timisoara, Romania
Emerich Balayti 110 * 0%
dstr. Lisabona nr. 3/1
Timisoara, Romania
Alexandru Balint 110 * 0%
Dorobantilor bl. 9
Timisoara, Romania
Gheorghe Bancescu 200 * 0%
str. Zamca nr. 21 bis
Suceava, Romania
Gheorghe Bancescu 250 * 0%
str. Zamca nr. 21 bis
Suceava, Romania
Marius Banda 200 * 0%
Bd. Unirii nr. 19
Bucuresti, Romania
Marius Banda 250 * 0%
Bd. Unirii nr. 19
Bucuresti, Romania
Jeremiah Bar-Joseph 5,000 * 0%
Iuliana Barlenghea 110 * 0%
str. Transilvania nr. 9
Timisoara, Romania
Cornel Cristian Barticel 200 * 0%
Str. Iancu de Hunedoara Nr. 45
Miercurea Ciuc, Romania
Daniela Becheru 150 * 0%
str. Caraiman 68
Bucuresti, Romania
Tibor Becze 200 * 0%
Bd. Fratiei nr. 26
Miercurea Ciuc, Romania
Simon Bela 200 * 0%
str. Lemnarilor nr. 18
Odorheiul Secuiesc, Romania
Simon Bela 250 * 0%
str. Lemnarilor nr. 18
Odorheiul Secuiesc, Romania
Camella Bengescu 200 * 0%
Str. Laculul Nr. 34
Timisoara, Romania
Edgar Alexandru Bleier 190 * 0%
str. G. Dragalina nr. 35
Timisoara, Romania
Liviu Bobarsc 150 * 0%
str. Titulescu nr. 6
Timisoara, Romania
Ana Boeru 190 * 0%
str. Paul Chinezu nr. 4
Timisoara, Romania
Clementina Bonea 250 * 0%
str. Constructorul bl. B
Petrosani, Romania
Ovidiu Botirca 250 * 0%
str. Republicii nr. 19
Tirgu Mures, Romania
Florina Botos 150 * 0%
Str. Tulcea nr. 8
Constanta, Romania
Emil Brancsik 190 * 0%
Str. Brad nr. 4
Timisoara, Romania
Marin Breje 285 * 0%
Sales Manager
str. Astrei 3
Zalau, Romania
Dumitru Brisc 110 * 0%
str. M. cel Batran nr. 27
Timisoara, Romania
Gianina Brumar 110 * 0%
str. Transilvaniei nr. 9
Timisoara, Romania
Florin Bunda 110 * 0%
str. Albac nr. 3
Timisoara, Romania
Rodica Burghelea 150 * 0%
Mioritei nr. 23
Bacau, Romania
Mircea Buzetoiu 150 * 0%
zona Parvan J5B
Timisoara, Romania
Ioan Chichere 110 * 0%
al. Farului nr. 12
Timisoara, Romania
Violeta Chioreanu 415 * 0%
Economic Manager
str. lpatescu 8
Timisoara, Romania
Elisabeta Chioteanu 250 * 0%
str. Petre Ispirescu nr. 7
Bucuresti, Romania
Liliana Chiu 190 * 0%
Str. Eroilor 22
Timisoara, Romania
Valentin Cioca 110 * 0%
al. Cinepei nr. 3
Timisoara, Romania
Maria Ciogolea 150 * 0%
str. I. Maniu nr. 40
Timisoara, Romania
Valentin Ciuca 200 * 0%
Str. Vasile Cirlova Nr. 9
Timisoara, Romania
Gheorghe Cernescu Coman 110 * 0%
str. N. Filimon nr. 28
Timisoara, Romania
Minerva Coniac 200 * 0%
str. Garii, bl. 7
Focsani, Romania
Minerva Coniac 250 * 0%
str. Garii, bl. 7
Focsani, Romania
Liviu Contiu 200 * 0%
Bd. Unirii nr. 8
Baia Mare, Romania
Liviu Contiu 250 * 0%
Bd. Unirii Nr. 8
Baia Mare, Romania
Coca Costiug 150 * 0%
str. Odobescu nr. 38
Timisoara, Romania
Ivan Cabrera 10,000 * 0%
4 Charles Colman Blvd.
Pawling, NY 12564
Sara Coon 500 * 0%
33 Flanagan Hill Rd.
Armenia, NY 12501
Dumitru Cordeanu 110 * 0%
str. Albac nr. 22
Timisoara, Romania
Eugenia Cota 150 * 0%
str. Dacilor 6
Piatra Neamt, Romania
Mihai Cracana 150 * 0%
sos. Nicolina 42
Iasi, Romania
Gheorghe Csavossy 200 * 0%
Str. Carpati Nr. 4
Oradea, Romania
Adrian Cucu 110 * 0%
str. Ardealului nr/2/8
Timisoara, Romania
Ovidiu Curuti 110 * 0%
str. Titulescu nr. 21
Timisoara, Romania
Christian Alexandru Dacu 200 * 0%
Bul. Iullu Maniu Nr. 3
Timisoara, Romania
Dorina Dambolu 200 * 0%
Str. Hebe Nr. 29
Timisoara, Romania
Lucille DaSilva 500 * 0%
125 S. Harmony Hill Rd.
Pawling, NY 12564
Mihaela Delca 200 * 0%
Prelungirea Ghencea nr. 16-18
Bucuresti, Romania
Mihaela Delca 250 * 0%
Prelungirea Ghencea nr. 16-18
Bucuresti, Romania
Mariana Delescu 200 * 0%
str. Penes Curcanul nr. 237
Vaslui, Romania
Mariana Delescu 250 * 0%
str. Penes Curcanul nr. 237
Vaslui, Romania
Adrian Alex. Dinca 190 * 0%
str. Histria 6
Bucuresti, Romania
Ana Dobre 110 * 0%
str. Astrilor 34
Timisoara, Romania
Veronica Doloiu 150 * 0%
str. Mihai Viteazu bl. 4
Bacau, Romania
Gheorghe Dumitru 110 * 0%
Nou nr. 592
Peciu, Romania
Emilian Ene 200 * 0%
Bd. Unirii nr. 70
Bucuresti, Romania
Emilian Ene 250 * 0%
Bd. Unirii nr. 70
Bucuresti, Romania
Iehuda Erlich 80 * 0%
Tel Aviv
Israel
Erika Fabian 110 * 0%
str. Agronomiei nr. 15
Timisoara, Romania
Ionel Farcau 110 * 0%
str. Dreptatea 57
Timisoara, Romania
Oana Felicia 500 * 0%
Str. Szabo Arpad Nr. 35
Dambrovita, Romania
Keren Gabay 800 * 0%
76 Rothschild Blvd.
Tel-Aviv, Israel
Pavel Galdos 200 * 0%
Str. Gheorghe Doja Bloc D 38
Zalau, Romania
Constantin Ganea 150 * 0%
Bd. Chisinau 20
Bucuresti, Romania
Doina Ganea 150 * 0%
Bd. Chisinau 21
Bucuresti, Romania
Emanuel Gelber 3,000 * 0%
4 Stefancel Mare
Timisoara, Romania
Gheorghe Gemes 190 * 0%
al. Sportivilor 23
Timisoara, Romania
Razvan Georgescu 150 * 0%
str. Caraiman nr. 68
Bucuresti, Romania
Niculina Gheata 110 * 0%
str. Slavici Bl. B8
Timisoara, Romania
Ionel Ghizdaveanu 110 * 0%
str. S. Furtuna nr. 2
Timisoara, Romania
Eugenia Lucia Grapa 110 * 0%
str. Transilvania nr. 9
Timisoara, Romania
Gabriel Grapa 110 * 0%
str. Transilvania nr. 9
Timisoara, Romania
Cristian Grigore 150 * 0%
str. 1 Septembrie 6
Cernavoda, Romania
Mariana Grigore 150 * 0%
str. Apelor nr. 4
Timisoara, Romania
Romica Florea Grigorescu 110 * 0%
Zona Steaua Bl 15
Timisoara, Romania
Ioan Hadti Pop 110 * 0%
str. V. Lupu nr. 20
Timisoara, Romania
Miriam Hirschl 150 * 0%
zona Steaua 39
Timisoara, Romania
Cornel Alexandru Hodor 200 * 0%
Str. Gheorghe Doja Nr. 3
Timisoara, Romania
Dr. Zev Holender 1,200 * 0%
76 Rothschild Blvd.
Tel-Aviv, Israel
Robert Holcz 110 * 0%
Str. Rasaritului 37
Timisoara, Romania
Ioan Horvat 110 * 0%
str. Abrud 76
Bucuresti, Romania
Marius Ilie 190 * 0%
P. Chinezu nr. 4
Timisoara, Romania
Adrian Ilion 110 * 0%
str. V. Lupu nr. 17
Timisoara, Romania
Marinel Ilion 110 * 0%
str. Daliei nr. 15
Timisoara, Romania
Florica Ilion 110 * 0%
str. V. Lupu nr. 17
Timisoara, Romania
Victor Ionescu 200 * 0%
Str. Socrate Nr. 10A
Timisoara, Romania
Cristina Jascu 110 * 0%
str. Lirei nr/3
Timisoara, Romania
Dorel Lucian Julean 200 * 0%
Str. Mos Ion Roata Nr. 9
Timisoara, Romania
Nedal Kaluf 200 * 0%
str. Romania Muncitoare nr. 83
Craiova, Romania
Nedal Kaluf 250 * 0%
str. Romania Muncitoare nr. 83
Craiova, Romania
Eyai Bar-Kayama 1,000 * 0%
39 Jerusalem Street
Bat-Yam, Israel
Igal Katsif 500 * 0%
45 Sokolov Street
Tel-Aviv, Israel
Zsolt Kerekes 190 * 0%
str. Panselelor 12
Bacau, Romania
Magdalena Kiss 190 * 0%
str. M. Viteazul 24
Zalau, Romania
Boris Kleynburg 500 * 0%
11 Drysdale Blvd.
Salt Lake City, Utah
Arkadiy Kofman 500 * 0%
11 Stony Hill Drive
Marlboro, NJ 07751
Eva Lang 150 * 0%
Intr. Muntilor 6
Timisoara, Romania
Constantin Lazar 110 * 0%
I. Ciobanului nr. 1
Timisoara, Romania
Dorina Lazarescu 150 * 0%
str. Brandusei nr. 11
Timisoara, Romania
Nava Leaker 1,000 * 0%
17/A Hakarmel Street
Kiyiryat-Tivon, Israel
Ioana Lenesiu 150 * 0%
str. cosmonautilor 4
Timisoara, Romania
Dan Lepadat 200 * 0%
str. Cozia nr. 36
Rimnicu Vilcea, Romania
Dan Lepadat 250 * 0%
str. Cozia nr. 36
Rimnicu Vilcea, Romania
Dalia Levi 395 * 0%
Tel Aviv
Israel
Florentina Lezeu 150 * 0%
str. Radulescu Motru nr. 20
Bucuresti, Romania
Shmueli Lior 700 * 0%
1 Brener Street
Kiryat-Ono, Israel
Nicoleta Lucescu 200 * 0%
str. Decebal bl. R
Deva, Romania
Nicoleta Lucescu 250 * 0%
str. Decebal bl. R
Deva, Romania
Alexandru Lungu 190 * 0%
Calea Aradului nr. 120
Timisoara, Romania
Eva Lupas 200 * 0%
str. Meseriilor nr. 5
Clui, Romania
Eva Lupas 250 * 0%
str. Meseriilor nr. 5
Clui, Romania
Viorel Lupu 150 * 0%
zona Steaua nr. 41
Timisoara, Romania
Fanica Machedon 110 * 0%
str. Vlasiei nr. 4
Timisoara, Romania
Ionut Machedon 110 * 0%
str. Lacului nr. 12
Timisoara, Romania
Delia Marganovici 110 * 0%
zona Steaua 36
Timisoara, Romania
Cristian Matis 110 * 0%
str. Fraternitatii 4
Timisoara, Romania
Aurel Mainea 150 * 0%
sos. Colentina 76
Bucuresti, Romania
Felicia Manase 190 * 0%
str. lalomita nr. 41
Timisoara, Romania
Dana Marcela Lupu 200 * 0%
Str. Alleea Sportivilor Nr. 14
Timisoara, Romania
Mircea Maries 150 * 0%
str. Barnutiu nr. 114
Zalau, Romania
Sinisa Marin 150 * 0%
str. M. cel Batran nr. 62
Timisoara, Romania
Camelia Matei 200 * 0%
str. Campului nr. 22
Tulcea, Romania
Camelia Matei 250 * 0%
str. Campului nr. 22
Tulcea, Romania
Vicki Maer 30,000 * 0%
37 Tenafly Drive
New Hyde Park, NY 11040
Robert Maer 200 * 0%
37 Tenafly Drive
New Hyde Park, NY 11040
Benjamin Maer 200 * 0%
37 Tenafly Drive
New Hyde Park, NY 11040
Iulian Mereuta 110 * 0%
str. Postavarului 1
Brasov, Romania
Vasile Miclea 110 * 0%
Bd. Cetatii 38
Timisoara, Romania
Stela Micu 285 * 0%
Sales Manager
Al. Farului nr12
Timisoara, Romania
Ioan Miculaiciuc 110 * 0%
str. Podgoriei nr. 23
Timisoara, Romania
Ciprian Mierea 110 * 0%
loc. Padureni
Timisoara, Romania
Ion Mierea 150 * 0%
j. Timis
Padureni, Romania
Maria Militaru 110 * 0%
str. Valiug 14
Timisoara, Romania
Maria Milotin 110 * 0%
str. Progresului 18
Timisoara, Romania
Remus Mitrica 150 * 0%
str. Ghioceilor
Hunedoara, Romania
Eugen Mocan 150 * 0%
C. Sagului nr. 1
Timisoara, Romania
Simona Molnar 150 * 0%
str. C. Brancoveanu 168
Timisoara, Romania
Stefan Molnar 150 * 0%
str. C. Brancoveanu 168
Timisoara, Romania
Josefina Morosan 500 * 0%
Calea 13 Sept 235 V3
Bucharest, Romania
Ion Motohon 110 * 0%
str. Cimpina nr. 32
Timisoara, Romania
Blanca Munteanu 150 * 0%
str. Poiana Rusca nr. 13
Timisoara, Romania
Gheorghe Muresan 150 * 0%
str. Pietrosu 2
Bistrita, Romania
Laura Muresan 150 * 0%
str. Pietrosu nr. 2
Bistrita, Romania
Gabriel Muscalu 150 * 0%
Cimpia Islaz nr. 141
Craiova, Romania
Andrei Nagy 150 * 0%
str. Torontal nr. 10
Timisoara, Romania
Clara Nagy 200 * 0%
str. Buftea nr. 2
Timisoara, Romania
Clara Nagy 250 * 0%
str. Buftea nr. 2
Timisoara, Romania
Mirela Nagy 150 * 0%
str. Torontal 10
Timisoara, Romania
Emil Neicu 200 * 0%
str. Brazda lui Novac nr. 215
Craiova, Romania
Emil Neicu 250 * 0%
str. Brazda lui Novac nr. 215
Craiova, Romania
Angela Negru 200 * 0%
Str. Mures Nr. 14
Orastle, Romania
Ionel Nemes 200 * 0%
Intrarea Sepiel Nr. 8
Timisoara, Romania
Lenuta Nicolaescu 200 * 0%
Calea Bucuresti, bl. 28
Pitesti, Romania
Lenuta Nicolaescu 250 * 0%
Calea Bucuresti, bl. 28
Pitesti, Romania
Ana Nicula 200 * 0%
str. Carpatilor nr. 31
Sibiu, Romania
Ana Nicula 250 * 0%
str. Carpatilor nr. 31
Sibiu, Romania
Ovidiu Nicula 150 * 0%
Str. Carpatilor nr. 31
Sibiu, Romania
Dan Nistor 200 * 0%
Valea Aurie bl. 32
Sibiu, Romania
Dan Nistor 250 * 0%
Valea Aurie bl. 32
Sibiu, Romania
Adrian Noiculescu 200 * 0%
Intr. Ciclopului nr. 2
Bucuresti, Romania
Adrian Noiculescu 250 * 0%
Intr. Ciclopului nr. 2
Bucuresti, Romania
Poliana Oarcea 150 * 0%
str. Sarmizagetusa 5
Brasov, Romania
Lilia O'Hara 500 * 0%
32 S. Quaker Hill Road
Pawling, NY 12564
Thomas O'Hara 100 * 0%
32 S. Quaker Hill Road
Pawling, NY 12564
Dennis O'Hara 100 * 0%
32 S. Quaker Hill Road
Pawling, NY 12564
Razvan Ionut Olari 1,000 * 0%
Str. Ilpia Tralana Nr. 34
Timisoara, Romania
Pastita Olaru 200 * 0%
Cartier Rovine, bl. C34
Craiova, Romania
Pastita Olaru 250 * 0%
Cartier Rovine, bl. C34
Craiova, Romania
Minel Oncio 200 * 0%
str. Depozitelor nr. 14
Pitesti, Romania
Minel Oncio 250 * 0%
str. Depozitelor nr. 14
Pitesti, Romania
Cezar Oprea 150 * 0%
str. Agriselor 5
Ploiesti, Romania
Cosmin Oprea 110 * 0%
str. Ardealului nr. 2/8
Timisoara, Romania
Vasile Paceagiu 110 * 0%
str. Ipatescu nr. 13
Timisoara, Romania
Gheorghe Panait 250 * 0%
sect. 3, Bd. M. Bravu nr. 288
Bucuresti, Romania
Vasile Pancec 110 * 0%
j. Timis
Remetea, Romania
Florian Parvu 150 * 0%
str. Banatului 133
Pitesti, Romania
Flaviu Pasare 110 * 0%
str. Ipatescu nr. 16
Timisoara, Romania
Ionela Pascaru 110 * 0%
al. Poenitei nr. 6
Timisoara, Romania
Claudiu Patru 110 * 0%
str. I. Vacarescu nr. 37
Timisoara, Romania
Bianca Patrul 200 * 0%
Aleea Poenitel Nr. 5
Timisoara, Romania
Haim Peres 500 * 0%
5 Ilitit Street
Richon-le-Tzion, Israel
Anita Petru 150 * 0%
Intr. Jean Steriade
Bucuresti, Romania
Lajos Piroska 200 * 0%
Str. Dej Nr. 9
Timisoara, Romania
Marius Poenaru 190 * 0%
str. Enercu B4
Craiova, Romania
Claudiu Pop 110 * 0%
j. Timis
Becicherecul Mic, Romania
Ramona Pop 110 * 0%
str. Ardealului 2/12
Timisoara, Romania
Victor Popean 395 * 0%
Str. Culturii nr. 6
Timisoara, Romania
Ion Popescu 110 * 0%
str. Cercului 10
Timisoara, Romania
Valentin Popescu 150 * 0%
str. Negoiu nr. 3
Timisoara, Romania
Valeriu Precup 95 * 0%
Sos. Mihai Bravu Bl. ALMO 3
Bucuresti, Romania
Olimpia Racasan 150 * 0%
str. Brasov 20
Bucuresti, Romania
Daniel Ranca 110 * 0%
str. Valiug nr. 10
Timisoara, Romania
Daniel Reznick 500 * 0%
43/5 Horovitz Street
Rishon-le Tzion, Israel
Marius Roman 150 * 0%
str. Vladimirescu nr. 50/8
Zalau, Romania
Ion Rosculescu 110 * 0%
str. Farului 14
Timisoara, Romania
Mioara Rosculescu 110 * 0%
Al. Farului nr. 14
Timisoara, Romania
Alina Rostek 110 * 0%
Al. Poenitei nr. 9
Timisoara, Romania
Sorin Rujescu 110 * 0%
str. V. Lupu nr/8
Timisoara, Romania
Lucian Rusu 150 * 0%
str. V. Lupu 8
Cluj Napoca, Romania
Ana Sabou 110 * 0%
str. Fabricii Bl.P/60
Zalau, Romania
Ioan Salman 110 * 0%
str. Chiriac nr. 9
Timisoara, Romania
Basel Sakshir 200 * 0%
Bd. 21 Decembrie nr. 146
Cluj, Romania
Basel Sakshir 250 * 0%
Bd. 21 Decembrie nr. 146
Cluj, Romania
Catalin Savin 200 * 0%
Str. Rampei nr. 18-20
Iasi, Romania
Catalin Savin 250 * 0%
Str. Rampei nr. 18-20
Iasi, Romania
Marieta Schipor 190 * 0%
str. Fagaras 68
Ghiroda Veche, Romania
Batia Shahar 1,000 * 0%
2 Visoker Street
Petach Tikva, Israel
Daniela Siclovan 110 * 0%
str. Albac nr. 10
Timisoara, Romania
Mircea Silaghi 200 * 0%
str. Marasti nr. 10
Satu Mare, Romania
Mircea Silaghi 250 * 0%
str. Marasti nr. 10
Satu Mare, Romania
Emilian Sima 150 * 0%
str. Delinesti nr. 8
Bucuresti, Romania
Alexandru Simion 110 * 0%
str. Fraternitatii 4
Timisoara, Romania
Marian Simion 110 * 0%
str. Fraternitatii 4
Timisoara, Romania
Gheorghe Sirca 200 * 0%
Str. Circumvalatunil Nr. 69
Timisoara, Romania
Nachshon Sobol 700 * 0%
11 Hyalom Street
Holon, Israel
Romeo Somogy 150 * 0%
str. M. Viteazul nr. 14
Zalau, Romania
Corin Soporean 150 * 0%
str. Molidului nr. 6
Timisoara, Romania
Dorina Sotter 200 * 0%
str. Banatul nr. 59
Timisoara, Romania
Dorina Sotter 250 * 0%
str. Banatul nr. 59
Timisoara, Romania
Elisabeta Spataru 400 * 0%
Str. Caraiman Nr. 4
Timisoara, Romania
Tatiana Stanca 150 * 0%
str. Stadion 10
Zalau, Romania
Georgian Stanciu-Raileanu 110 * 0%
str. Andreescu nr 63/A
Timisoara, Romania
Maria Stanclu 200 * 0%
Aleea Sporivilor Nr. 15
Timisoara, Romania
Mihaela Stepan 190 * 0%
str. Fagaras 68
Ghiroda Veche, Romania
Casian Steti 150 * 0%
str. Rasaritului nr. 4
Timisoara, Romania
Victoria Stirbu 200 * 0%
Str. V.V. Stanclu Nr. 16
Bucuresti, Romania
Scumpina Stoia 150 * 0%
str. Circumvalatiunii nr. 14
Timisoara, Romania
Florin Stoica 150 * 0%
compl. Studentesc c19/c
Timisoara, Romania
Ion Stolojan 110 * 0%
str. Borzesti Bl. A83
Timisoara, Romania
Raimon Stubner 150 * 0%
str. I.I. de la Brad nr. 36
Timisoara, Romania
Violeta Sucio 150 * 0%
str. Barierei nr. 8
Oradea, Romania
Gheorghe Tatar 200 * 0%
Str. Circumvalatiunil Nr. 16
Timisoara, Romania
Ana Tiran 110 * 0%
Intr. Apelor nr. 8
Timisoara, Romania
Adrian Alex Tiron-Emandi 190 * 0%
str. Bogdanesti 2
Timisoara, Romania
Eugen Doru Tiuhan 110 * 0%
str. Valiug nr. 26
Timisoara, Romania
Marin Todor 110 * 0%
str. Stelelor nr. 5
Timisoara, Romania
Gheorghe Tulcan 150 * 0%
Circumvalatiunii 67
Timisoara, Romania
Rita Umlauf 190 * 0%
str. Porumbescu nr. 2
Timisoara, Romania
Virgil Umlauf 190 * 0%
str. Porumbescu nr. 2
Timisoara, Romania
Lenuta Vancea 150 * 0%
str. 16 DEC. 1989 nr. 79
Timisoara, Romania
Daniela Vit 200 * 0%
Str. Tudor Vladimirescu Nr. 214
Dumbravita, Romania
Dragomir Vlaicov 110 * 0%
str. Varga nr. 3
Timisoara, Romania
Iosi Weg 110 * 0%
Tel Aviv
Israel
Andrei Willkovits 150 * 0%
str. Privighetorilor nr. 2
Timisoara, Romania
Vlad Willkovits 190 * 0%
str. Mendeleev nr. 2
Timisoara, Romania
Baluta Wylli 250 * 0%
bd. Unirii nr. 68
Bucuresti, Romania
Crina Zdravcu 200 * 0%
str. Chilia Veche nr. 6
Bucuresti, Romania
David Zublin 1,000 * 0%
125 S. Quaker Hill Road
Pawling, NY 12564
Total 1,604,095
(1) Based on 5,604,095 shares outstanding as of the date of this Prospectus.
(2) Assumes all shares registered will be sold assuming the maximum sale of
600,000 shares offered by AJK..
(3) Ferrand Investments Limited is a British Virgin Islands corporation of
which Mr. Kieselstein, the President and a director of AJK, is the
beneficial owner and may be deemed the beneficial owner of the shares being
registered for sale by it. Ferrand Investments Limited owns an aggregate of
5,000,000 shares of common stock of which 1,000,000 are being registered
herein for sale.
No Set Offering Price for Selling Shareholders' Shares
The Shares will be offered by the Selling Securityholders in private
transactions. There is not and will not be any set offering price.
Market Making
If AJK meets the requirements of the NASD OTC Bulletin Board it will
apply for listing thereon. When qualified, if ever of which there can be no
assurance, AJK intends to apply for quotation of its securities on the Nasdaq
SmallCap Market. There can be no assurance that AJK will qualify for listing of
its securities on the NASD OTC Bulletin Board or to be quoted on the Nasdaq
SmallCap Market. If it should be accepted for listing thereon, then certain
underwriters may engage in passive market making transactions in AJK's common
stock in accordance with Rule 103 of Regulation M.
Following the completion of this offering, certain broker-dealers may
be the principal market makers for the securities offered hereby. Under these
circumstances, the market bid and asked prices for the securities may be
significantly influenced by decisions of the market makers to buy or sell the
securities for their own account. No assurance can be given that any market
making activities, if commenced, will be continued.
Resales of the Securities under State Securities Laws
The National Securities Market Improvement Act of 1996 ("NSMIA") limits
the authority of states to impose restrictions upon sales of Securities made
pursuant to Sections 4(1) and 4(3) of the Securities Act of companies which file
reports under Sections 13 or 15(d) of the Securities Exchange Act. Sales of the
Securities in the secondary market will be made pursuant to Section 4(1) of the
Securities Act (sales other than by an issuer, underwriter or broker). It is
anticipated that following the Effective Date the Selling Securityholders'
Securities will be eligible for resale in the secondary market in each state.
DESCRIPTION OF SECURITIES
Authorized Capital
The total number of authorized shares of stock of AJK is one hundred
million (100,000,000) shares of common stock with a par value of $.0001 per
share and twenty million (20,000,000) shares of non-designated preferred shares
with a par value of $.0001 per share.
Incorporation
AJK Perfect Renaissance, Inc. was incorporated under the laws of
Delaware in 1999 under the name Allegiance Acquisition Corporation, which
changed its name to AJK Perfect Renaissance, Inc. on July 21, 1999. AJK's
certificate of incorporation, by-laws and corporate governance, including
matters involving the issuance, redemption and conversion of securities, are
subject to the provisions of the Delaware General Corporation Law, as amended
and interpreted from time to time.
Common Stock
AJK's Certificate of Incorporation authorizes the issuance of
100,000,000 shares of common stock, $.0001 value per share, of which 5,599,095
shares outstanding.
Holders of shares of common stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of common stock
do not have cumulative voting rights. Holders of common stock are entitled to
share ratably in dividends, if any, as may be declared from time to time by the
Board of Directors in its discretion from funds legally available therefor. In
the event of a liquidation, dissolution or winding up of AJK, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are,
and the shares of common stock offered by AJK pursuant to this Offering will be,
when issued and delivered, fully paid and non-assessable.
Holders of common stock have no preemptive rights to purchase AJK's
common stock. There are no conversion or redemption rights or sinking fund
provisions with respect to the common stock.
All outstanding shares of common stock are validly issued, fully paid
and nonassessable, and all shares to be sold and issued as contemplated hereby
will be fully paid and nonassessable when sold in accordance with the terms
hereof and pursuant to a valid and current prospectus. The Board of Directors is
authorized to issue additional shares, on such terms and conditions and for such
consideration as the Board may deem appropriate without further stockholder
action.
Noncumulative Voting
Each holder of common stock is entitled to one vote per share on all
matters on which such stockholders are entitled to vote. Shares of common stock
do not have cumulative voting rights. The holders of more than 50 percent of the
shares voting for the election of directors can elect all the directors if they
choose to do so, and, in such event, the holders of the remaining shares will
not be able to elect any person to the Board of Directors.
Penny Stock Regulation
The offering price of the Securities has been arbitrarily determined by
AJK. If the market price of AJK common stock, if a market for its common stock
develops and is maintained, falls below $5.00 per share, then the common stock
of AJK may be considered "penny stock". Penny stocks generally are equity
securities with a price of less than $5.00 per share other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
Stock Market, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. AJK's
securities may be subject to "penny stock" rules that impose additional sales
practice requirements on broker-dealers who sell such securities to persons
other than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $ 200,000 or $300,000
together with their spouse). For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchase of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission related to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock" rules may restrict the ability of broker-dealers
to sell AJK's securities.
Preferred Stock
AJK's certificate of incorporation authorizes the issuance of
20,000,000 shares of preferred stock, $.0001 par value per share. In the case of
voluntary or involuntary liquidation, dissolution or winding up of AJK, holders
of shares of preferred stock are entitled to receive the liquidation preference
before any payment or distribution is made to the holders of common stock or any
other series or class of AJK's stock hereafter issued that ranks junior as to
liquidation rights to the preferred stock, but holders of the shares of the
preferred stock will not be entitled to receive the liquidation preference of
such shares until the liquidation preference of any other series or class of
AJK's stock hereafter issued that ranks senior as to liquidation rights to the
preferred stock ("senior liquidation stock") has been paid in full. The holders
of preferred stock and all series or classes of AJK's stock hereafter issued
that rank on a parity as to liquidation rights with the preferred stock are
entitled to share ratable, in accordance with the respective preferential
amounts payable on such stock, in any distribution (after payment of the
liquidation preference of the senior liquidation stock) which is not sufficient
to pay in full the aggregate of the amounts payable thereon. After payment in
full of the liquidation preference of the shares of the preferred stock, the
holders of such shares will not be entitled to any further participation in any
distribution of assets by AJK. Neither a consolidation or merger of AJK with
another corporation, nor a sale or transfer of all or part of AJK's assets for
cash, securities or other property will be considered a liquidation, dissolution
or winding up of AJK.
The Board of Directors is authorized to provide for the issuance of
additional shares of preferred stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from time
to time the number of shares to be included in each such series, and to fix the
designation, powers, preferences and rights of the shares of each such series
and the qualifications, limitations or restrictions thereof without any further
vote or action by the shareholders. Any shares of preferred stock so issued
would have priority over the common stock with respect to dividend or
liquidation rights. Any future issuance of preferred stock may have the effect
of delaying, deferring or preventing a change in control of AJK without further
action by the shareholders and may adversely affect the voting
and other rights of the holders of common stock. At present, AJK has no plans to
issue any further preferred stock nor adopt any further series, preferences or
other classification of preferred stock.
Additional Information Describing Stock
The above descriptions concerning the stock of AJK do not purport to be
complete. Reference is made to AJK's Certificate of Incorporation and By-Laws
which are included in the Registration Statement of which this Prospectus is a
part and which are available for inspection at AJK's offices. Reference is also
made to the applicable statutes of the State of Delaware for a more complete
description concerning rights and liabilities of shareholders.
Admission to Quotation on Nasdaq SmallCap Market or NASD OTC Bulletin Board
If AJK meets the qualifications, AJK intends to apply for quotation of
its securities on the NASD OTC Bulletin Board. Until AJK meets such
qualifications, its securities will be quoted in the daily quotation sheets of
the National Quotation Bureau, Inc., commonly known as the "pink sheets". When
qualified, if ever of which there can be no assurance, AJK intends to apply for
quotation of its securities on the Nasdaq SmallCap Market. There can be no
assurance that AJK will qualify for listing of its securities on the NASD OTC
Bulletin Board or to be quoted on the Nasdaq SmallCap Market.
If AJK's Securities are not quoted on the NASD OTC Bulletin Board, a
securityholder may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, AJK's Securities. The over-the-counter
market ("OTC") differs from national and regional stock exchanges in that it (1)
is not cited in a single location but operates through communication of bids,
offers and confirmations between broker-dealers and (2) securities admitted to
quotation are offered by one or more broker-dealers rather than the "specialist"
common to stock exchanges. To qualify for quotation on the NASD OTC Bulletin
Board, an equity security must have one registered broker-dealer, known as the
market maker, willing to list bid or sale quotations and to sponsor such a
Company listing. If it meets the qualifications for trading securities on the
NASD OTC Bulletin Board AJK's Securities will trade on the NASD OTC Bulletin
Board until such future time, if at all, that AJK applies and qualifies for
admission for listing on the Nasdaq SmallCap Market. There can be no assurance
that AJK will qualify or if qualified that it will be accepted for listing of
its securities on the NASD Small Cap Market.
To qualify for admission for listing on the Nasdaq SmallCap Market, an
equity security must, in relevant summary, (1) be registered under the
Securities Exchange Act of 1934; (2) have at least three registered and active
market makers, one of which may be a market maker entering a stabilizing bid;
(3) for initial inclusion, be issued by a company with $4,000,000 in net
tangible assets, or $50,000,000 in market capitalization, or $750,000 in net
income in two of the last three years (if operating history is less than one
year then market capitalization must be at least $50,000,000); (4) have a public
float of at least 1,000,000 shares with a value of at least $5,000,000; (5) have
a minimum bid price of $5.00 per share; and (6) have at least 300 beneficial
shareholders.
Trading of Shares
There are no outstanding options, options to purchase, or securities
convertible into, the shares of AJK which are not being registered hereby. AJK
has not agreed with any shareholders, to register their shares for sale, other
than for this registration. AJK does not have any other public offerings in
process or proposed.
Transfer Agent
AJK will apply to StockTrans, Inc., Ardmore, Pennsylvania, to act as
transfer agent for its securities.
Reports to Shareholders
AJK will furnish to holders of its common stock annual reports
containing audited financial statements examined and reported upon, and with an
opinion expressed by, an independent certified public accountant. AJK may issue
other unaudited interim reports to its shareholders as it deems appropriate.
PLAN OF DISTRIBUTION
Arbitrary Determination of Offering Price
The initial offering price of the shares being offered by AJK has been
determined arbitrarily by AJK. Among the factors considered were AJK's potential
operations, current financial conditions and financial requirements, estimates
of its business potential and prospects, prospects for the Roumanian economic
improvement, the general condition of the equities market, and other factors.
Limited State Registration
AJK will qualify or register its sales of the shares being offered by
AJK in a limited number of states. It will not accept subscriptions from
investors resident in other states.
Sale of the Shares
The shares are being offered by AJK on a "direct participation" basis
through its officers and directors. AJK anticipates that its executive officers
will primarily sell the shares. No sales commission will be paid to any officer
or director.
AJK will pay all expenses incurred in connection with the offer and
sale of its shares by its officers and directors. The officers and directors are
relying on Rule 3a4-1 of the Exchange Act as a "safe harbor" from registration
as a broker-dealer in connection with the offer and sales of the shares.
AJK will hold subscription proceeds in escrow with Citibank N.A. until
the minimum offering is achieved. If the minimum offering is not achieved within
6 months of the effective date of the registration statement, AJK will promptly
refund all subscription proceeds. If the minimum offering is achieved within 6
months, sales will continue at AJK's option until the maximum offering is
achieved.
AJK may extend the offering if in its sole discretion it determines
that such extension is in its best interests. AJK will file an post-effective
amendment to this registration statement for such extension if required.
Use of a Broker-Dealer
AJK may locate a broker-dealer who may offer and sell the shares on
terms acceptable to it. If AJK determines to use a broker-dealer, such
broker-dealer must be a member in good standing of the National Association of
Securities Dealers, Inc. and registered, if required, to conduct sales in those
states in which it would sell the shares. AJK anticipates that it would not pay
in excess of 10% as a sales commission for any sales of the shares. If a
broker-dealer were to sell the shares, it is likely that such broker-dealer
would be deemed to be an underwriter of the securities as defined in Section
2(11) of the Securities Act and AJK would be required to obtain a no-objection
position from the National Association of Securities Dealers, Inc. regarding the
underwriting and compensation terms entered into between AJK and such potential
broker-dealer. In addition, AJK would be required to file a post-effective
amendment to the registration statement of which this prospectus is a part to
disclose the name of such selling broker-dealer and the agreed underwriting and
compensation terms. AJK currently has no agreements or understandings with any
broker-dealer to offer its shares for sale.
In order to comply with the applicable securities laws, if any, of
certain states, the shares will be offered or sold in such states through
registered or licensed brokers or dealers in those states.
Sale of the Selling Securityholder Shares
AJK will not receive the proceeds of any sale of shares by the Selling
Securityholders. The Selling Securityholder shares may be sold to purchasers
from time to time directly by and subject to the discretion of the Selling
Securityholders. The Selling Securityholders may from time to time offer their
securities for sale through underwriters, dealers or agents, who may receive
compensation in the form of underwriting discounts, concessions or commissions
from the Selling Securityholders and/or the purchasers of the securities for
whom they may act as agents. Any underwriters, dealers or agents who participate
in the distribution of the securities may be deemed to be "underwriters" under
the 1933 Act and any discounts, commissions or concessions received by any such
underwriters, dealers or agents may be deemed to be underwriting discounts and
commissions under the 1933 Act.
At the time a particular offer is made by or on the behalf of the
Selling Securityholders, a prospectus, including any necessary supplement
thereto, will be distributed which will set forth the number of shares of common
stock and other securities being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, the purchase
price paid by any underwriter for the Selling Securityholder shares purchased
from the Selling Securityholders, any discounts, commissions and other items
constituting compensation from the selling securityholders, any discounts,
commissions or concessions allowed, reallowed or paid to dealers, and the
proposed selling price to the public.
Pursuant to Regulation M of the General Rules and Regulations of the
Securities and Exchange Commission, any person engaged in a distribution of
securities, including on behalf of a Selling Securityholder, may not
simultaneously bid for, purchase or attempt to induce any person to bid for or
purchase securities of the same class for a period of five business days prior
to the commencement of such distribution and continuing until the selling
security holder (or other person engaged in the distribution) is no longer a
participant in the distribution.
If, at some time, AJK meets the requirements of the Nasdaq SmallCap
Market it will apply for listing thereon. If is should be accepted for listing
thereon, then certain underwriters may engage in passive market making
transactions in AJK's common stock in accordance with Rule 103 of Regulation M.
The shares sold by the Selling Securityholders may be sold from time to
time in one or more transactions:
(i) at an offering price that is fixed or that may vary from
transaction to transaction depending upon the time of sale or
(ii) at prices otherwise negotiated at the time of sale.
Such prices will be determined by the Selling Securityholders or by
agreement between the Selling Securityholders and any underwriters.
In order to comply with the applicable securities laws, if any, of
certain states, the securities will be offered or sold in such states through
registered or licensed brokers or dealers in those states. In addition, in
certain states, the securities may not be offered or sold unless they have been
registered or qualified for sale in such states or an exemption from such
registration or qualification requirement is available and with which has
complied.
AJK will pay all of the expenses incident to the registration of the
shares for sale by the Selling Securityholders (including registration pursuant
to the securities laws of certain states) other than commissions, expenses,
reimbursements and discounts of underwriters, dealers or agents, if any.
LEGAL MATTERS
Legal Proceedings
AJK is not a party to any litigation and management has no knowledge of
any threatened or pending litigation against AJK.
AJK's subsidiaries are limited liability companies incorporated under
the laws of Roumania. Doing business in Roumania is highly structured and
bureaucratic. Each Roumanian company's certificate of incorporation must set out
exactly what it can and cannot do, who its shareholders are, what its
capitalization is, locations in which AJK is doing business, and other ordinary
activities. Changes in this information must in many instances be reflected in
an official filing, approved by judicial decree sometimes reflected as a
"judgment."
Legal Opinion
Cassidy & Associates, Washington, D.C. has given its opinion as
attorneys-at-law that the common stock, when issued pursuant to the terms hereof
will be fully paid and non-assessable. Cassidy & Associates has passed on the
validity of the securities being issued but purchasers of the securities offered
by this prospectus should not rely on Cassidy & Associates with respect to any
other matters.
James M. Cassidy, a principal of Cassidy & Associates, is a shareholder
of AJK.
EXPERTS
The financial statements of AJK for the year ended December 31, 1999
have been included in reliance upon the report of Weinberg & Company, P.A.,
certified public accountants, and upon the authority of such firm as expert in
accounting. The consolidated financial statements for the three Roumanian
subsidiaries for the years ended December 31, 1998 and December 31, 1999 have
been included in reliance upon the report of Arthur Anderson & Co., certified
public accountants.
FINANCIAL STATEMENTS
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
PAGE 1 BALANCE SHEET AS OF MARCH 31, 2000
PAGE 2 STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO MARCH 31, 2000
PAGE 3 STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO MARCH 31, 2000
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF MARCH 31, 2000
(UNAUDITED)
ASSETS
[Enlarge/Download Table]
Cash $ 50
------------------
TOTAL ASSETS $ 50
------------
==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities $ -
------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.0001 par value, 20 million shares authorized, none issued and
outstanding -
Common stock, $.0001 par value, 100 million shares authorized, 500,000 issued and
outstanding 50
Additional paid in capital 535
Deficit accumulated during development stage (535)
------------------
TOTAL STOCKHOLDERS' EQUITY 50
------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50
------------------------------------------
==================
1
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO MARCH 31, 2000
(UNAUDITED)
[Enlarge/Download Table]
Three months ended March 24, 1999
(inception) to March
March 31, 2000 31, 2000
---------------------- ----------------------
Income $ - $ -
EXPENSES
Organization expense - 535
---------------------- ----------------------
Total Expenses - 535
---------------------- ----------------------
NET LOSS $ - $ (535)
--------
====================== ======================
NET LOSS PER SHARE $ - $ (.001)
====================== ======================
WEIGHTED AVERAGE SHARES OUTSTANDING DURING THE PERIOD 500,000 500,000
====================== ======================
2
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO MARCH 31, 2000
(UNAUDITED)
[Enlarge/Download Table]
March 24, 1999
Three months ended (inception) to March
March 31, 2000 31, 2000
---------------------- ----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ - $ (535)
Adjustment to reconcile net loss to net cash used by operating activities:
Capitalized income - 535
---------------------- ----------------------
Net cash used in operating activities - -
---------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES - -
---------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - net - 50
---------------------- ----------------------
Net cash provided by financing activities - 50
---------------------- ----------------------
INCREASE IN CASH AND CASH EQUIVALENTS - 50
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 50 -
---------------------- ----------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 50 $ 50
-----------------------------------------
====================== ======================
3
AJK PERFECT RENNAISANCE, INC.
-----------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
FINANCIAL STATEMENTS
--------------------
AS OF DECEMBER 31, 1999
-----------------------
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONTENTS
--------
PAGE 1 INDEPENDENT AUDITORS' REPORT
PAGE 2 BALANCE SHEET AS OF DECEMBER 31, 1999
PAGE 3 STATEMENT OF OPERATIONS FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
PAGE 4 STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE PERIOD
FROM MARCH 24, 1999 (INCEPTION) TO DECEMBER 31, 1999
PAGE 5 STATEMENT OF CASH FLOWS FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
PAGE 6 - 10 NOTES TO FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors of:
AJK Perfect Renaissance
(A Development Stage Company)
We have audited the accompanying balance sheet of AJK Perfect Renaissance, Inc.
(a development stage company) as of December 31, 1999 and the related statements
of operations, changes in stockholders' equity and cash flows for the period
from March 24, 1999 (inception) to December 31, 1999. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
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 AJK Perfect Renaissance, Inc.(a
development stage company) as of December 31, 1999, and the results of its
operations and its cash flows for the period from March 24, 1999 (inception) to
December 31, 1999 in conformity with generally accepted accounting principles.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
April 5, 2000 (Except for Note 5
as to which the date is May 5, 2000)
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
AS OF DECEMBER 31, 1999
-----------------------
ASSETS
------
Cash $ 50
---------
TOTAL ASSETS $ 50
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES $ -
----------
STOCKHOLDERS' EQUITY
Preferred Stock, $.0001 par value, 20 million
shares authorized, none issued and outstanding -
Common Stock, $.0001 par value, 100 million
shares authorized, 500,000 issued
and outstanding 50
Additional paid-in capital 535
Deficit accumulated during development stage (535)
--------
Total Stockholders' Equity 50
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50
========
See accompanying notes to financial statements.
2
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
Income $ -
Expenses
Organization expense 535
-----------
Total expenses 535
-----------
NET LOSS $ (535)
===========
Net loss per share $ (.001)
===========
Weighted average shares outstanding
during the period 500,000
===========
See accompanying notes to financial statements.
3
AJK PERFECT RENAISSANCE INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
--------------------------------
[Enlarge/Download Table]
Deficit
Additional Accumulated
Common Stock Paid-In During Devel-
Shares Amount Capital opment Stage Total
-------- -------- ----------- -------------- --------
Common stock issuance 5,000,000 $ 500 $ - $ - $ 500
Redemption of common stock (4,500,000) (450) - - (450)
Expenses contributed
by stockholder - - 535 - 535
Net loss for the period
ended December 31, 1999 - - - (535) (535)
----------- -------- ----------- -------------- -------
BALANCE AT DECEMBER 31,
1999 500,000 $ 50 $ 535 $ (535) $ 50
========= ======== =========== ============== ========
See accompanying notes to financial statements.
4
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM MARCH 24, 1999
(INCEPTION) TO DECEMBER 31, 1999
--------------------------------
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $ (535)
Adjustment to reconcile net loss
to net cash used by operating activities:
Capitalized expenses 535
----------
Net cash used in operating activities -
----------
CASH FLOWS FROM INVESTING ACTIVITIES -
----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - net 50
----------
Net cash provided by financing activities 50
----------
INCREASE IN CASH AND CASH EQUIVALENTS 50
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD -
----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 50
==========
See accompanying notes to financial statements.
5
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business Operations
Allegiance Acquisition Corporation (a development stage company) was
incorporated in Delaware on March 24, 1999 to serve as a vehicle to
effect a merger, exchange of capital stock, asset acquisition or other
business combination with a domestic or foreign private business.
Effective July 1, 1999 the Board of Directors and Stockholder changed
the Company's name to AJK Perfect Renaissance, Inc. ("The Company").
At December 31, 1999, the Company had not yet commenced any formal
business operations, and all activity to date relates to the Company's
formation and proposed fund raising. The Company's fiscal year end is
December 31.
The Company's ability to commence operations is contingent upon its
ability to identify a prospective target business and raise the
capital it will require through the issuance of equity securities,
debt securities, bank borrowings or a combination thereof. (See Note
5)
B. Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
C. Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with an original maturity of three
months or less to be cash equivalents.
6
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D)
D. Income Taxes
The Company accounts for income taxes under the Financial Accounting
Standards Board of Financial Accounting Standards No. 109, "Accounting
for Income Taxes" ("Statement 109"). Under Statement 109, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
basis. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Under Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. There were no current or deferred income
tax expense or benefits due to the Company not having any material
operations for the period ended December 31, 1999.
E. Earnings Per Share
Net loss per common share for the period ended December 31, 1999 is
computed based upon the weighted average common shares outstanding as
defined by Financial Accounting Standards No. 128, "Earnings Per
Share". In computing weighted average shares the redemption of shares
discussed in Note 2(B) has been treated as a retroactive
recapitalization at inception.
NOTE 2 - STOCKHOLDERS' EQUITY
A. Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred
stock at $.0001 par value, with such designations, voting and other
rights and preferences as may be determined from time to time by the
Board of Directors.
7
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 2 - STOCKHOLDERS' EQUITY - (CONT'D)
B. Common Stock
The Company is authorized to issue 100,000,000 shares of common stock
at $.0001 par value. The Company originally issued 4,750,000 shares of
its common stock to Pierce Mill Associates, Inc. and 125,000 shares
each to James McKillop and James Cassidy pursuant to Rule 506 for an
aggregate consideration of $500. On May 20, 1999, Pierce Mill
Associates, Inc. transferred 250,000 of its shares in the Company to
Jovanda Ltd. for $25. On August 1, 1999, the Company redeemed
4,500,000 shares of its common stock from Pierce Mill Associates, Inc.
for $450.
C. Additional Paid-In Capital
Additional paid-in capital at December 31, 1999 represents the fair
value of the amount of organization costs incurred by a stockholder on
behalf of the Company.
NOTE 3 - AGREEMENT
On May 20, 1999, Perfect Renaissance, Ltd. and affiliates (a group of
Romanian Limited Liability Companies) together with any successors
(collectively "Perfect Renaissance") entered into an agreement with
TPG Capital Corporation ("TPG") (see Note 4) to effect transactions
intended to merge or otherwise combine Perfect Renaissance with the
Company and for other related matters. The Agreement calls for TPG to
provide the following services:
a.) Advise Perfect Renaissance on the structure of the transactions
and actions to be taken by Perfect Renaissance in preparation for the
completion of the transactions.
b.) Merge Perfect Renaissance, or exchange its stock with, or assist
in transferring its assets into the Company, which will become a
reporting entity under the Securities Exchange Act of 1934, as
amended. (See Note 5)
8
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 3 - AGREEMENT - (CONT'D)
c.) Prepare the agreement for the business combination.
d.) Prepare and file the required forms and documents with the
Securities and Exchange Commission for the Company following the
business combination.
e.) Introduce the Company to one or more market makers and assist the
Company with listing its securities on the NASD OTC Bulletin Board or,
if the Company meets such requirements, apply for admission to the
NASDAQ Stock Market or other regional or national stock exchange.
Perfect Renaissance will pay TPG $75,000 for its services in regard to
the aforementioned transactions, of which $25,000 was paid upon
execution of the agreement. The balance due of $50,000 will be paid in
two $25,000 installments, $25,000 upon the business combination and
$25,000 upon filing the required forms with the Securities and
Exchange Commission.
Additionally, Perfect Renaissance granted a 5 year transferable
warrant ("TPG Warrant") to acquire up to 500,000 registered shares of
the Company's common stock at an exercise price of $5.00 per share.
NOTE 4 - RELATED PARTIES
Legal counsel to the Company is a firm owned by a stockholder/director
of the Company who also owns a controlling interest in the outstanding
stock of Pierce Mill Associates and TPG.
NOTE 5 - SUBSEQUENT EVENTS
The Company has completed an Asset Purchase Agreement with Ferrand
Investment Limited, ("Ferrand") a British Virgin Islands holding
corporation that owns the Perfect Renaissance Romanian companies.
9
AJK PERFECT RENAISSANCE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999
-----------------------
NOTE 5 - SUBSEQUENT EVENTS - (CONT'D)
Under the terms of the Agreement, Ferrand transferred assets
consisting of all of its rights, title and interests in the Romanian
companies to the Company in exchange for 5,000,000 shares of the
Company's voting common stock in a transaction intended to qualify as
a reorganization under Internal Revenue Code Sec. 368(a)(1)(c), and a
recapitalization of the Perfect Renaissance Romanian companies for
financial accounting purposes.
The Company is also in the process of preparing a Form SB- 2
Registration Statement under the Securities Act of 1933 to register
and sell 600,000 shares of new common stock plus 1,604,095 shares
already held by stockholders, which includes 1,000,000 shares of the
5,000,000 shares issued under the asset purchase agreement, 500,000
shares held by the stockholders at December 31, 1999 and 104,095
shares issued subsequent to December 31, 1999.
10
S.C. PERFECT RENAISSANCE SRL, S.C. RENAISSANCE SRL
AND
S.C. RENAISSANCE ALPHA 2000 SRL
Combined balance sheets as of
March 31, 2000 and 1999
(Currency - United States dollars ("USD"))
UNAUDITED LIMITED REVIEW
[Download Table]
2000 1999
CURRENT ASSETS:
Cash 51,497 180,669
Trade receivables, net of allowance for doubtful 293,980 443,455
Due from related parties 28,757 3,885
Inventories, net 282,959 332,317
Other current assets 2,056 351,940
Deferred tax assets, net 0 5,730
Total current assets 659,249 1,317,996
PROPERTY, PLANT AND EQUIPMENT, net 7,290,080 780,724
CONSTRUCTION-IN-PROGRESS 414,384 6,190,581
OTHER NON-CURRENT ASSETS 217,569 3,770
Total assets 8,581,282 8,293,071
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short-term bank borrowings 42,934 242,175
Current portion of long-term debt 1,820,756 4,183,445
Trade payables 461,728 429,988
Due to related parties 48,674 906,130
Other current liabilities and accrued expenses 430,919 471,444
Total current liabilities 2,805,010 6,233,182
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 2,912,684 265,036
Long-term debt to a related party 820,000
Taxes payable 81,847 132,249
TOTAL LONG TERM LIABILITIES 3,814,532 397,285
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Paid-in capital 490,265 458,295
Retained earnings 1,471,475 1,204,308
Total shareholders' equity 1,961,740 1,662,603
Total liabilities and shareholders' equity 8,581,282 8,293,071
S.C. PERFECT RENAISSANCE SRL, S.C. RENAISSANCE SRL
AND
S.C. RENAISSANCE ALPHA 2000 SRL
Combined statements of income for the period ended
March 31, 2000 and 1999
(Currency - United States dollars ("USD"))
UNAUDITED LIMITED REVIEW
[Download Table]
2000 1999
NET SALES 1,079,170 1,155,824
COST OF SALES (703,891) (719,984)
Gross profit 375,279 435,840
SELLING, GENERAL AND
ADMINISTRATIVE EXPESES (163,898) (101,063)
FINANCIAL EXPENSES, net (345,982) (1,889,387)
OTHER EXPENSE, net (26,526) (9,289)
TRANSLATION GAIN, net 436,541 1,795,226
Income before provision for taxes 275,414 231,327
PROVISION FOR TAXES:
- Current
- Deferrend
Net income 275,414 231,327
S.C. PERFECT RENAISSANCE SRL, S.C. RENAISSANCE SRL
AND
S.C. RENAISSANCE ALPHA 2000 SRL
Combined statements of cash flows for the period ended
March 31, 2000 and 1999
(Currency - United States dollars ("USD"))
UNAUDITED LIMITED REVIEW
[Enlarge/Download Table]
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the year 275,414 231,327
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 25,306 21,901
Decrease in deferred tax asset 0 2,079
Changes in operating assets and liabilities:
Trade receivables, net 329,534 182,216
Inventories, net 89,626 148,440
Other current assets 323 (18,846)
Due from related parties 29,382 15,839
Trade payables (251,793) 12,712
Due to related parties (65,977) 64,703
Other current liabilities and accrued expenses (63,186) (246,397)
Other non-current assets (212,694) 1,368
Long-term taxes payable 68,702 132,249
Net cash provided by operating activities 224,636 547,592
CASH FLOW FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (14,014) (24,180)
Additions to construction in progress (120,867) (986,984)
Net cash used in investing activities (134,881) (1,011,164)
CASH FLOW FROM FINANCING ACTIVITIES:
Cash proceeds from bank borrowings 15,104 (89,287)
Cash proceeds from long-term debt (100,043) 530,072
Net cash provided by financing activities (84,939) 440,785
(DECREASE)/INCREASE IN CASH 4,817 (22,787)
CASH AT THE BEGINNING OF THE PERIOD 46,680 203,456
CASH AT THE END OF THE PERIOD 51,497 180,669
S. C. PERFECT RENAISSANCE, SRL, S. C. RENAISSANCE, SRL
AND
S. C. RENAISSANCE ALPHA 2000, SRL
COMBINED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1999 AND 1998
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors' and Shareholders' of
S. C. Perfect Renaissance, SRL, S. C. Renaissance, SRL and
S. C. Renaissance Alpha 2000, SRL
1. We have audited the accompanying combined balance sheets of S. C. Perfect
Renaissance, SRL, S. C. Renaissance, SRL and S. C. Renaissance Alpha 2000,
SRL (altogether, the "Companies"), as of December 31, 1999 and 1998 and the
related combined statements of income, shareholders' equity and cash flows
for the years then ended. These combined financial statements are the
responsibility of the Companies' management. Our responsibility is to
express an opinion on these combined financial statements based on our
audits.
2. We conducted our audits in accordance with generally accepted auditing
standards in the United States. 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 audits provide a reasonable basis for our opinion.
3. In our opinion, the combined financial statements referred to in the first
paragraph above, present fairly, in all material respects, the combined
financial position of the Companies as of December 31, 1999 and 1998 and
the results of their operations for the years then ended and their cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States.
4. The accompanying combined financial statements have been prepared assuming
that the Companies will continue as a going concern. As discussed in Note
23 to the accompanying combined financial statements, as of December 31,
1999, the Companies combined current liabilities exceeded their combined
current assets by United States Dollars ("USD") 1,807,609 that raises
substantial doubt about their ability to continue as a going concern.
Management's plan in regard to this matter is also described in Note 23.
The combined financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Bucharest, Romania,
April 14, 2000 (except with respect to the matters discussed in Notes 1 and 24
(iii) and (iv), as to which the dates are May 5, 2000 and May 24, 2000)
Arthur Andersen SRL
Paolo Biondi
S. C. PERFECT RENAISSANCE, SRL, S. C. RENAISSANCE, SRL
AND
S. C. RENAISSANCE ALPHA 2000, SRL
Combined balance sheets as of
December 31, 1999 and 1998
(Currency - United States dollars ("USD"))
[Download Table]
Note 1999 1998
----- ----
ASSETS:
CURRENT ASSETS:
Cash 4 46,680 203,456
Trade receivables, net of allowance for doubtful
accounts of USD 133,942 and USD 54,177, respectively 5 623,514 625,671
Due from related parties 6 58,139 19,724
Inventories, net 7 372,585 480,757
Other current assets 8 2,379 333,094
Deferred tax assets, net 17 -- 7,809
--------- ---------
Total current assets 1,103,297 1,670,511
PROPERTY, PLANT AND EQUIPMENT, net 9 7,301,372 778,445
CONSTRUCTION-IN-PROGRESS 10 293,517 5,203,597
OTHER NON-CURRENT ASSETS 4,875 5,138
--------- ---------
Total assets 8,703,061 7,657,691
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
CURRENT LIABILITIES:
Short-term bank borrowings 11 27,830 331,462
Current portion of long-term debt 12 1,560,799 3,918,409
Trade payables 13 713,521 417,276
Due to related parties 14 114,651 841,427
Other current liabilities and accrued expenses 15 494,105 717,841
--------- ---------
Total current liabilities 2,910,906 6,226,415
LONG-TERM LIABILITIES:
Long-term debt, net of current portion 12 3,272,684 --
Long-term debt to a related party 14 820,000 --
Taxes payable 15 13,145 --
COMMITMENTS AND CONTINGENCIES 23
SHAREHOLDERS' EQUITY:
Paid-in capital 16 490,265 458,295
Retained earnings 1,196,061 972,981
--------- ---------
Total shareholders' equity 1,686,326 1,431,276
--------- ---------
Total liabilities and shareholders' equity 8,703,061 7,657,691
========= =========
The accompanying notes are integral part of these combined statements.
S. C. PERFECT RENAISSANCE, SRL, S. C. RENAISSANCE, SRL
AND
S. C. RENAISSANCE ALPHA 2000, SRL
Combined statements of income for the years ended
December 31, 1999 and 1998
(Currency - United States dollars ("USD"))
Note 1999 1998
----- ----
NET SALES 18 4,689,593 5,544,717
COST OF SALES 18 (2,734,291) (3,218,066)
---------- ----------
Gross profit 18 1,955,302 2,326,651
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 19 (802,417) (577,826)
FINANCIAL EXPENSE, net 20 (50,958) (114,732)
OTHER EXPENSE, net (169,245) (314,942)
TRANSLATION LOSS, net (353,330) (101,947)
---------- ----------
Income before provision for taxes 579,352 1,217,204
PROVISION FOR TAXES: 17
- Current (920) (130,335)
- Deferred (7,809) (190,984)
---------- ----------
Net income 570,623 895,885
========== ==========
The accompanying notes are integral part of these combined statements.
S. C. PERFECT RENAISSANCE, SRL, S. C. RENAISSANCE, SRL
AND
S. C. RENAISSANCE ALPHA 2000, SRL
Combined statements of shareholders' equity for the years ended
December 31, 1999 and 1998
(Currency - United States dollars ("USD"))
Total
Paid-in Retained shareholders'
capital earnings equity
------- -------- ------------
Balances at December 31, 1997 370,895 661,883 1,032,778
------- --------- ------------
Issuance of capital 87,400 -- 87,400
Payment of dividends -- (584,787) (584,787)
Net income for the year -- 895,885 895,885
------- --------- ------------
Balances at December 31, 1998 458,295 972,981 1,431,276
Transfer of capital (Note 1) 18,769 -- 18,769
Issuance of capital 13,201 -- 13,201
Payment of dividends -- (297,973) (297,973)
Profit of 1998 declared but not paid -- (49,570) (49,570)
Net income for the year -- 570,623 570,623
------- --------- ------------
Balances at December 31, 1999 490,265 1,196,061 1,686,326
======= ========= ============
The accompanying notes are integral part of these combined statements.
S. C. PERFECT RENAISSANCE, SRL, S. C. RENAISSANCE, SRL
AND
S. C. RENAISSANCE ALPHA 2000, SRL
Combined statements of cash flows for the years ended
December 31, 1999 and 1998
(Currency - United States dollars ("USD"))
[Enlarge/Download Table]
1999 1998
----- -----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income for the year 570,623 895,885
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 161,170 91,371
Decrease in deferred tax asset 7,809 190,984
Changes in operating assets and liabilities:
Trade receivables, net 2,157 (154,464)
Inventories, net 108,172 284,337
Other current assets 330,715 (93,958)
Due from related parties (38,415) 55,469
Trade payables 296,245 158,849
Due to related parties (776,346) 519,469
Other current liabilites and accrued expenses (223,736) 436,108
Other non-current assets 263 444
Long-term taxes payable 13,145 --
----------- ---------
Net cash provided by operating activities 451,802 2,384,494
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment (31,434) (280,789)
Additions to construction in progress (1,742,583) (5,056,271)
----------- ---------
Net cash used in investing activities (1,774,017) (5,337,060)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash proceeds from bank borrowings 27,830 3,589,799
Cash proceeds from long-term debt 583,612 --
Increase in long-term debt to a related party 820,000 --
Transfer of capital 18,769 --
Proceeds from issuance of capital 13,201 87,400
Payment of dividends (297,973) (584,787)
----------- ---------
Net cash provided by financing activities 1,165,439 3,092,412
(DECREASE)/INCREASE IN CASH (156,776) 139,846
CASH AT THE BEGINNING OF THE YEAR 203,456 63,610
----------- ---------
CASH AT THE END OF THE YEAR 46,680 203,456
=========== =========
The accompanying notes are integral part of these combined statements.
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
1. INCORPORATION AND PRINCIPAL ACTIVITIES OF THE COMPANIES:
S. C. Perfect Renaissance, SRL ("Perfect"), with head office in Str. Vasile
Lupu, nr. 16, Timisoara, registered in the Official Commercial Register of Timis
under the number J35/2863/1994, is a limited liability company. During 1998
Perfect was dedicated mainly to the production and sale of vodka and liquors
(alcoholic beverages) and in 1999 to the production and sale of vodka and
liquors (alcoholic beverages) and to the sale of glassware and ornaments.
S. C. Renaissance, SRL ("Renaissance"), with head office in Str. Stefan cel
Mare, nr. 4, et. 1 Apt 5, Timisoara, registered in the Official Commercial
Register of Timis under the number J35/321/1991 is a limited liability company,
During 1998 Renaissance was dedicated mainly to the sale of vodka and liquors
and in 1999 has no significant operations.
S. C. Renaissance Alpha 2000, SRL ("Alpha"), with head office in Str. Vasile
Lupu, nr. 16, Timisoara, registered in the Official Commercial Register of Timis
under the number J35/3065/1994, is a limited liability company. During 1998
Alpha was dedicated mainly to the sale of glassware and ornaments and in 1999 to
sale of vodka and liquors.
As of December 31, 1999 and 1998, Perfect, Renaissance and Alpha (altogether,
the "Companies") have the same management.
As of December 31, 1999 and 1998, the breakdown of shareholders and their
respective shareholding percentages in the Companies is as follows:
[Enlarge/Download Table]
As of December 31, 1999 (%) As of December 31, 1998 (%)
------------------------------------- ------------------------------------
Perfect Renaissance Alpha Perfect Renaissance Alpha
--------- ---------------- --------- ---------- --------------- ---------
Ferrand Investment
Limited ("Ferrand") 99.995 - 90.9 97 - 90.9
A.J.K. Kieselstein
Chain Stores,
LTD.("AJK") - 90 - - 90 -
Renaissance 0.005 - - 3 - -
Petru Willkovits - 10 9.1 - 10 9.1
--------- ---------------- --------- ---------- --------------- ---------
Total 100 100 100 100 100 100
========= ================ ========= ========== =============== =========
During 1999 Renaissance transferred, free of charge, share capital owned in
Perfect, representing 2.995% of Perfect's share capital, to Ferrand.
-1-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
Ferrand, a company incorporated in the British Virgin Islands, and AJK, a
company incorporated in Israel, are under the control of the same shareholder,
namely, Mr. Jacob Kieselstein ("JK"). As explained in Notes 6 and 14, the
Companies have significant transactions with the above-mentioned related
parties.
In May 5, 2000, Ferrand concluded an asset transfer agreement with AJK Perfect
Renaissance, Inc, a company incorporated in Delaware, United States of America.
Through this asset transfer, Ferrand obtained 5,000,000 shares of the voting
common stock of AJK Perfect Renaissance, Inc and transferred the shares
presently owned in the Companies to AJK Perfect Renaissance, Inc.. As a result,
the attached financial statements present the combined balance sheets and
results of operations and cash flows of the Companies.
Additionally, Ferrand has intention to exchange the accounts receivable and
other receivables it detains over the Companies with shares in AJK Perfect
Renaissance, Inc. (Note 14).
In 1999, all the vodka and liquor produced by Perfect was sold in Romania (1998
- 99.5%). The glassware and ornaments are sold in the Romanian market.
The Romanian vodka market is very competitive in terms of local producers,
imported vodka and both local and foreign substitutes, and is mainly based on
the low selling price.
Alcohol, which is a significant part of the production cost, and other raw
materials are acquired on the local market. In 1998, Perfect started the
construction of an alcohol distillery in order to assure the supply of its main
raw material on a timely basis. The main raw material to be used in the
production of alcohol will be corn, which will be acquired on the local market.
In December 1999, the construction of the alcohol distillery was completed and
alcohol production was started on a test basis to be done at Perfect's premises.
On February 1, 2000, Perfect obtained license to produce alcohol, but as of
April 16, 2000 has not obtained the license to sell alcohol. Perfect's
management expects to obtain the license to sell alcohol during 2000.
The alcohol production capacity of the distillery is estimated in 13,000 liters
of alcohol per day. During 1999, Perfect consumed approximately 731,056 liters
of alcohol (1998: 649,627 liters).
The formula to produce vodka was acquired by JK at no cost who then provided it
to Perfect. There is no license fee paid for its use. The brand name, Perfect,
is registered.
-2-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
As of and for the years ended December 31, 1999 and 1998, a summary of the
significant accounts balances of the Companies, before and after combination,
was as follows:
[Enlarge/Download Table]
December 31, 1999
----------------------------------------------------------------------------------------
Perfect Renaissance Alpha Total Elimination Combined
------------- --------------- ------------ ------------- -------------- --------------
Total assets 8,673,731 45,496 43,280 8,672,507 (59,446) 8,703,061
Total shareholders'
equity 1,683,527 2,525 274 1,686,326 - 1,686,326
Net sales 4,672,706 - 177,292 4,849,998 (160,405) 4,689,593
Net income/(loss) 668,224 (54,401) (43,200) 570,623 - 570,623
[Enlarge/Download Table]
December 31, 1998
----------------------------------------------------------------------------------------
Perfect Renaissance Alpha Total Elimination Combined
------------ --------------- ------------ -------------- -------------- --------------
Total assets 7,501,317 212,035 84,895 7,798,247 (140,556) 7,657,691
Total shareholders'
equity 1,207,623 180,250 62,171 1,450,044 (18,768) 1,431,276
Net sales 5,152,334 424,152 81,316 5,657,802 (113,085) 5,544,717
Net income/(loss) 1,033,284 (75,992) (61,407) 895,885 - 895,885
The decrease in net sales and total assets of Renaissance and Alpha from 1998 to
1999 are due to the transfer of certain operations to Perfect.
2. BASIS OF PRESENTATION AND COMBINATION:
a) Basis of presentation:
The Companies maintain their statutory books of account and prepare their
statutory financial statements in accordance with Romanian Law and generally
accepted accounting principles in Romania ("RAS"). The accompanying combined
financial statements are based on the statutory records, which are maintained
under the historical cost convention (except for the revaluation of tangibles)
with adjustments and reclassifications, including the remeasurement of
operations and balances in Romanian Lei ("ROL") into United States dollars
("USD") for the purpose of presentation in accordance with generally accepted
accounting principles in the United States of America ("US GAAP").
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
As of April 14, 2000, the statutory financial statements of the Companies are
pending the approval from the shareholders. It is management conviction that
they will be approved without material changes.
-3-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
b) Combination:
As explained in Note 1, the Companies are under the same control and are managed
as if they were one single entity. Management considers that these combined
financial statements are more meaningful then the individual financial
statements.
These combined financial statements are the result of the aggregation, on a line
by line basis, of similar items of assets, liabilities, equity and expenses.
During this process intercompany receivables and payables, and all significant
intercompany transactions and resulting unrealized profits or losses, are
eliminated.
3. SIGNIFICANT ACCOUNTING POLICIES:
A summary of significant accounting policies applied in preparation of the
accompanying combined financial statements, is set out below:
a) Reporting currency:
The Companies maintains their statutory records in conformity with Romanian
Accounting Law, in Romanian Lei ("ROL"). As mentioned in Note 2 a), the
accompanying combined financial statements have been presented in accordance
with US GAAP and are presented in USD, applying the remeasurement principles
defined in the Statements on Financial Accounting Standards ("SFAS") 52, issued
by the Financial Accounting Standards Board of the United States of America
("FASB").
SFAS 52 requires that the financial statements of an entity that keeps its books
in the currency of a hyperinflationary economy be adjusted to take into account
the effects of inflation. The standard requires that economies should be
regarded as hyperinflationary if the cumulative inflation rate over a period of
three years exceeds 100%, among other factors. The general inflation rate in
Romania for the period from January 1 to December 31, 1999, 1998 and 1997 were
54%, 41% and 151%, respectively. Therefore, the provisions of SFAS 52 have been
adopted in preparing the accompanying combined financial statements.
-4-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
The accompanying financial statements have been translated into USD using the
following exchange rates:
[Enlarge/Download Table]
Caption 1999 1998
------- ---- ----
Monetary assets and liabilities Year end (1 USD = 18,255 ROL) Year end (1 USD = 10,951 ROL)
Equity and Treasury Shares Historical rate Historical rate
Tangibles Historical rate Historical rate
Profit and Loss (except for depreciation Average rate for the month of Average rate for the month of
expense) original booking original booking
Depreciation Historical rate Historical rate
Provisions Year end (1 USD = 18,255 ROL) Year end (1 USD = 10,951 ROL)
Foreign currency transactions:
Balance sheet items denominated in a currency other than the USD have been
translated into USD at the exchange rate prevailing at the balance sheet dates
or at the exchange rate between the other currency, the ROL and the USD.
b) Use of estimates
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
c) Trade receivables
Trade receivables are shown net of a reserve for doubtful accounts that is
recorded for purposes of recording the estimated recoverable amount of these
accounts. The reserve is based on specific amounts that are considered
uncollectable.
-5-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
d) Related parties:
For the purpose of the accompanying combined financial statements, the Companies
shareholders' and the parties identified by the Companies to be affiliated with
them are regarded as and referred to as "related parties".
The Companies have extensive transactions and relationships with related
parties. It is possible that the terms of these transactions are not the same as
those that would result from transactions among completely unrelated parties.
e) Inventories:
Raw, subsidiary, purchased merchandised and consumable materials are stated at
the lower of cost or net realizable value, computed on an average cost basis.
Finished goods are stated at production cost, which is lower than market value.
Production cost includes the cost of raw materials, direct labor, packaging and
auxiliary materials. Cost is determined primarily on the basis of weighted
average cost.
f) Property, plant and equipment:
Property, plant and equipment are recorded at cost, including related costs of
transportation and duties, which has been restated in accordance with SFAS 52
and capitalized interest cost incurred during the fixed assets' construction
period.
Depreciation is provided on a straight-line basis over the estimated useful
lives of the assets set out below, based on the historical cost translated as
defined in paragraph a).
Years
------------------
Buildings 25
Machinery and equipment 10
Furniture and fixtures 5
g) Taxation:
Current:
The tax provisions for income tax, VAT, and other tax related items are
calculated in accordance with Romanian tax law and are accrued for the period to
which they relate.
-6-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
Deferred:
Certain items of income and expense are subject to taxation in periods different
than those in which they are recognized in the financial statements (temporary
differences). The tax effect of these temporary differences is computed as
deferred taxation in accordance with SFAS 109 by using the liability method.
Valuation allowances are provided to reduce deferred tax assets to the amounts
that is more likely than not of being realized.
h) Revenues and expenses recognition:
Income and expenses are recognized on the accrual basis. Revenues are recognized
when ownership title is transferred which is upon delivery of the goods.
i) New accounting standard:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". The Statement
establishes accounting and reporting standards requiring that every derivative
instrument (including certain derivative instruments embedded in other
contracts) be recorded in the balance sheet as either an asset or liability
measured at its fair value. The Statement requires that changes in derivative's
fair value be recognized currently in the earnings unless specific hedge
accounting criteria are met. Special accounting for qualifying hedges allows a
derivative's gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally document,
designate, and assess the effectiveness of transactions that receive hedge
accounting.
SFAS No. 137 delayed the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Companies do not expect the impact of this
new statement on the Companies' combined balances sheet or results of operations
to be material.
4. CASH:
The breakdown of cash and banks, as of December 31, 1999 and 1998, is as
follows:
[Download Table]
1999 1998
--------------- ------------
Bank accounts in ROL 40,148 134,242
Checks 1,876 66,365
Petty cash 4,028 2,392
Bank accounts in foreign currency 628 457
--------------- ------------
Total 46,680 203,456
=============== ============
-7-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
5. TRADE RECEIVABLES, NET:
The breakdown of trade receivables, net, as of December 31, 1999 and 1998, is as
follows:
[Download Table]
1999 1998
---------------- ------------
Trade accounts receivable 757,456 699,848
Less: Allowance for doubtful accounts (133,942) (74,177)
---------------- ------------
Total 623,514 625,671
================ ============
6. DUE FROM RELATED PARTIES:
The balance due from related parties, as of December 31, 1999 and 1998 and the
sales made to them in 1999 and 1998, can be summarized as follows:
[Enlarge/Download Table]
Due from Sales
------------------------------ ------------------------------
1999 1998 1999 1998
--------------- -------------- -------------- --------------
Impex Renaissance, Srl
("Impex") 38,035 550 255,793 -
Renaissance Perfect Chisinau
("Perfect Moldova") 20,104 19,174 76,511 141,885
--------------- -------------- -------------- --------------
Total 58,139 19,724 332,304 141,885
=============== ============== ============== ==============
Perfect Moldova is a company incorporated in the Republic of Moldova, dedicated
to the production of vodka under the brand "Perfect". No fees are paid to the
Companies for using the brand name. This company is a related party as it is 33%
owned by JK.
Impex is a company incorporated in Romania, dedicated to the distribution of
vodka in the Romanian County of Moldavia. This company is 90% owned by AJK and
10% by Mrs. Eugenia Willkovits, wife of Mr. Petru Willkovits.
-8-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
7. INVENTORIES, NET:
As of December 31, 1999 and 1998, inventories can be summarized as follows:
1999 1998
------------- --------------
Raw materials 91,507 154,724
Finished goods 165,577 107,727
Purchased merchandise 128,935 149,282
Packaging 41,319 125,237
Provision for inventories (54,753) (56,213)
------------- --------------
Total 372,585 480,757
============= ==============
8. OTHER CURRENT ASSETS:
As of December 31, 1999 and 1998, other current assets can be summarized as
follows:
1999 1998
------------- --------------
Value Added Tax ("VAT") to be recovered 203 237,362
Other receivables 2,176 95,732
------------- --------------
Total 2,379 333,094
============= ==============
Taxes receivable as of December 31, 1998 represent mainly VAT to be recovered
from equipment imported for the alcohol distillery.
Other receivables as of December 31, 1999 and 1998 consist mainly of amounts
collected by the Companies commissioner's from clients and cashed by the
Companies after the balance sheet dates.
-9-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998r.
(Currency - United States dollars ("USD"), unless otherwise indicated)
9. PROPERTY, PLANT AND EQUIPMENT, NET:
The movements in property, plant and equipment and their related accumulated
depreciation for the years ended December 31, 1999 and 1998, are the following:
[Enlarge/Download Table]
Balances as of Balances as of Transfer Balances as
December 31, December 31, from CIP of December
Translated cost 1997 Additions Disposals 1998 (Note 10) Additions Disposals Transfers 31, 1999
---------------------- ------------ ----------- ----------- --------- ----------- --------- --------- --------- -----------
Land 6,072 -- -- 6,072 -- -- -- -- 6,072
Buildings 139,955 138,271 -- 278,226 1,072,030 5,745 -- 63,709 1,419,710
Machinery and equipment 496,025 132,202 (4,219) 624,008 5,580,633 42,815 (27,545) (34,784) 6,185,127
Furniture and fixtures 51,822 16,017 (2,248) 65,591 -- 1,604 -- (28,925) 38,270
--------- --------- --------- --------- --------- --------- --------- --------- ----------
Total 693,874 286,490 (6,467) 973,897 6,652,663 50,164 (27,545) -- 7,649,179
--------- --------- --------- --------- --------- --------- --------- --------- ----------
[Enlarge/Download Table]
Balances as of Balances as of Balance as
Accumulated December 31, Charge for December 31, Charge for of December
depreciation 1997 the year Disposals 1998 the year Disposals Transfers 31, 1999
---------------------- --------------- ------------ --------- ----------- ----------- ----------- ---------- -----------
Buildings (854) (10,743) -- (11,597) (21,186) -- (18,351) (51,134)
Machinery and equipment (95,729) (69,735) 206 (165,258) (138,344) 8,815 3,134 (291,653)
Furniture and fixtures (8,264) (10,893) 560 (18,597) (1,640) -- 15,217 (5,020)
--------- --------- --------- --------- --------- --------- --------- ---------
Total (104,847) (91,371) 766 (195,452) (161,170) 8,815 -- (348,807
--------- --------- --------- --------- --------- --------- --------- ---------
Net book value 589,027 778,445 7,301,372
========= ======== =========
The pledges and mortgages provided by the Companies in connection with the
short-term borrowings and long-term debt are disclosed in Note 23.
-10-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise noted)
10. CONSTRUCTION-IN-PROGRESS:
Construction-in-progress ("CIP") consists of equipment, buildings and special
constructions not yet put into service. In December 1999, Perfect concluded the
construction of the new alcohol plant and installation of related equipment and
transferred them to Property, Plant and Equipment (Note 9). In order to finance
the acquisition of the equipment, on December 22, 1997 Perfect concluded a
contract with Bancorex for a long-term debt, in amount of 3,918,409,
representing 85% of the total amount of equipment. Due to the bankruptcy of
Bancorex and subsequent merger with Banca Comerciala Romana ("BCR"), in 1999 the
loan was transferred to BCR, and is presently held at BCR and Agentia de
Valorificare a Activelor Bancar ("AVAB" - organization created by the Romanian
Government for bank restructuring) - see also Notes 11 and 12.
The movement of CIP during 1998 and 1999, including the components in it, is as
follows:
[Enlarge/Download Table]
Balance as of Balance as Balance as of
December 31, of December Transfers Disposals December 31,
1997 Additions 31, 1998 Additions (Note 9) (Note 19) 1999
------------ ------------ ------------ ------------ -------------- ------------ ---------------
Cost of equipment for
alcohol distillery - 3,918,409 3,918,409 514,366 (4,235,070) (16,631) 181,074
Customs duties and
commissions - 270,321 270,321 161,511 (431,305) - 527
Capitalized interest
(Note 20) - 488,428 488,428 726,616 (1,161,235) - 53,809
Warehousing and
transportation costs - 959 959 - (959) - -
------------ ------------ ------------ ----------- -------------- ------------ ---------------
Total for Distillery - 4,678,117 4,678,117 1,402,493 (5,828,569) (16,631) 235,410
Other Projects 147,326 378,154 525,480 356,721 (824,094) - 58,107
------------ ------------ ------------ ----------- -------------- ------------ ---------------
Total 147,326 5,056,271 5,203,597 1,759,214 (6,652,663) (16,631) 293,517
============ ============ ============ =========== ============== ============ ===============
-11-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise noted)
11. SHORT-TERM BANK BORROWINGS:
Short-term bank borrowings as of December 31, 1999 and 1998 are as follows:
[Enlarge/Download Table]
December 31,
-------------------------
Annual Interest
Bank Currency Maturity rate (%) 1999 1998
--------------------------- ------------ ------------ ------------------ ----------- ------------
Bancorex USD Jul, 1996 12.5- 13 - (*)
- Dec, 1999 323,043
Bancorex ROL Aug, 1999 70 - 8,419
Banca Comerciala Ion ROL Jun, 2000 66 27,830 -
Tiriac ("BCIT")
----------- ------------
27,830 331,462
=========== ============
(*) Subsequent to December 31, 1998 this loan was transferred to BCR
(see Notes 12 and 24).
12. LONG-TERM DEBT:
On December 12, 1997 Perfect signed a long-term loan of 3,918,409 (agreement no.
62508) with Bancorex, used to open a letter of credit for Ex-Klar Technologies
Inc., New York related to the acquisition of equipment for investment in the new
alcohol distillery (Note 10). The loan, which is denominated in USD, has an
annual interest rate of 14.75% and is repayable by semi-annual installments of
435,379, started with February 1999 and having the last installment in February
2003.
On July 16, 1999, when the first installment was already past due, Perfect
submitted a request to Bancorex in order to reschedule this installment and the
future payments. Because Bancorex was in a process of restructuring no decision
was taken at that time.
At the end of 1999, Bancorex merged with BCR and the loan, including interest,
transferred to BCR. According to the Romanian Government Law that rules the
merger between BCR and Bancorex, BCR has the right to transfer any outstanding
debts to AVAB. Additionally, from the loans transferred from Bancorex, BCR can
transfer future outstanding amounts to AVAB.
On December 14, 1999, BCR transferred to AVAB 1,785,832, representing principal
(870,758), interest (including penalty interest) and commissions. The remaining
part of the loan,
-12-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise noted)
amounting to 3,047,651 is held at BCR.
According to the contract signed with Bancorex, now at BCR, in the case that
Perfect does not pay the installments in due time, BCR will open a credit line,
with no specified payment term, with an interest rate of 18.5% per year, until
the complete payment of the debt.
Subsequent to December 31, 1999 the Company reached an agreement with AVAB
regarding the set up of a payment rescheduling of the amount transferred from
BCR, above mentioned (see Note 24). As stipulated in the agreement, if BCR
transfers any amount from the existing loan of 3,047,651 to AVAB, this entity
will decide upon the reschedule of the amount transferred, for the period
preceding of the existing reschedule, taking into consideration the conditions
existing at that time.
The Company's management is confident that the loan, now at BCR will be
transferred to AVAB and payments will be rescheduled with AVAB to suit the needs
of Perfect.
According to the loan agreement, the Bank can cancel the contract and ask for
the immediate payment of all the amounts due, if Perfect is in payment default.
The loan contract contains covenants, including having the fixed assets pledged
insured and having BCR as the beneficiary of the insurance (see Note 24).
The schedule for repayments is as follows:
1999
-----------------------------------------------
AVAB BCR Total
--------------- --------------- ---------------
2000 690,041 870,758 1,560,799
2001 1,095,791 870,758 1,966,549
2002 - 870,758 870,758
2003 - 435,377 435,377
--------------- --------------- ---------------
Total loans 1,785,832 3,047,651 4,833,483
=============== =============== ===============
-13-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise noted)
13. TRADE PAYABLES:
As of December 31, 1999 and 1998, trade payables can be summarized as follows:
1999 1998
----------- ----------
Raw material suppliers 630,655 396,550
Fixed assets suppliers 82,866 20,726
----------- ----------
Total 713,521 417,276
=========== ==========
As of December 31, 1999, trade payables consist mainly of payables to S. C.
Alcorom, S.A., an alcohol supplier, in the amount of ROL 7,973,119 thousand
(equivalent to USD 436,764).
As of December 31, 1998, trade payables consist mainly of payables to Perfect
raw materials supplier, Roaim Product, S.R.L. in the amount of ROL 3,133,080
thousand (equivalent to USD 286,099).
14. DUE TO RELATED PARTIES:
Balances due to related parties as of December 31, 1999 and 1998 and the
purchases made from them in 1999 and 1998, can be summarized as follows:
[Enlarge/Download Table]
Other debts
December 31, 1999 Payables (****) Total payables Purchases
----------------------------- -------------- ------------ -------------- -------------
AJK (*) 44,150 - 44,150 -
Ferrand (**) 218,987 639,947 (***) 858,934 15,320
K.A.Y. 27,707 - 27,707 2,734
Perfect Moldova 3,860 - 3,860 6,123
-------------- ------------ -------------- -------------
Total 294,704 639,947 934,651 24,177
============== ============ ============== =============
December 31, 1998 Payables Loans Total payables Purchases
----------------------------- -------------- ------------ -------------- -------------
Impex - 720 720 836
Ferrand 800,483 - 800,483 222,485
Associates - 40,224 40,224 -
-------------- ------------ -------------- -------------
Total 800,483 40,944 841,427 223,321
============== ============ ============== =============
(*) Includes dividends payable amounting to ROL 669,042 thousand (equivalent
to USD 36,650).
-14-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
(**) Includes dividends payable amounting to ROL 235,867 thousand (equivalent
to USD 12,920).
(***) As of December 31, 1999, Ferrand agreed to transfer the balance of
820,000 as long-term debt and it was reflected as a long-term liability
in the accompanying balance sheet as of December 31, 1999
(****) Other debts to Ferrand represent 15% of the acquisition price of the
alcohol plant, which was paid in advance by Ferrand to Ex-Klar (the
supplier), on behalf of Perfect.
Generally, the commercial relationships between the Companies and the foreign
suppliers are done through Ferrand. Ferrand provides advances to the foreign
suppliers, who in return supply the goods to the Companies. As of December 31,
1999 and 1998, the amounts due to Ferrand are related with the mentioned advance
payments to the Companies' foreign suppliers, regarding mainly the acquisition
of raw and auxiliary materials.
The purchases from Ferrand are mainly related with raw materials (essence for
vodka) and ornaments.
15. OTHER CURRENT LIABILITIES AND ACCRUED EXPENSES:
1999 1998
------------ -----------
Provision for tax penalties 230,867 47,393
Taxes and state payables 156,182 414,663
Interest accrual 107,617 245,431
Other current liabilities 12,584 10,354
------------ -----------
507,250 717,841
Long-portion of taxes and state
payables (13,145) -
------------ -----------
494,105 717,841
============ ===========
During 1999 Perfect did not reverse charged VAT and assessed withholding tax for
know-how invoiced by Ex-Klar, supplier of the alcohol plant. A provision for tax
penalties regarding withholding tax penalties and late interest penalty was
booked in order to recognize this liability.
Taxes and state payables represent mainly customs duties related to the import
of equipment for the alcohol plant. Subsequent to December 31, 1998, Perfect has
rescheduled the payment of VAT and customs duties due to the State.
-15-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
16. PAID-IN CAPITAL:
Paid-in capital is made up of cash contributions and contributions in-kind
valued at cost. The paid-in capital of the Companies is composed of quotas
ranging from ROL 10,000 to ROL 100,000 per unit. As of December 31, 1999 and
1998, the statutory paid-in capital in ROL, the number of quotas and their value
are as follows:
[Enlarge/Download Table]
Perfect Renaissance Alpha
--------------------------- ---------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
------------- ------------- -------------- ------------- ------------- -------------
Share capital 1,782,447 1,648,547 188,000 188,000 18,579 18,579
No. of quotas 17,824 16,485 1,880 1,880 1,858 1,858
Value (ROL in 100 100 100 100 10 10
thousand)
The restated share capital amounts are:
Company 1999 1998
----------------------------------- ------------------ -----------------
Share capital
Perfect Renaissance 439,368 407,398
Renaissance 40,150 40,150
Renaissance Alpha 10,747 10,747
------------------ -----------------
Total 490,265 458,295
================== =================
In 1999, Perfect issued a number of 1,339 capital quotas to Ferrand, which made
an in-kind contribution of production equipment.
17. DEFERRED TAXES:
Until December 7, 1999 Perfect was corporate tax exempt. Starting from December
8, 1999 Perfect is subject to income taxes at the corporate tax rate applicable
in Romania. Renaissance and Alpha are subject to income taxes at the corporate
tax rate applicable in Romania. The corporate tax rate for profits generated in
the years ended December 31, 1999 and 1998 is 38%.
Beginning with January 1, 2000 the Romanian Government changed the corporate tax
rate from 38% to 25%, applicable to the profits generated starting with that
date.
As required by FASB Statement No. 109 - Accounting for Income Taxes, deferred
income taxes are recognized for tax consequences of temporary differences, by
applying the statutory tax rate to differences between the financial reporting
and the tax basis of existing assets and liabilities.
-16-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
Deferred tax asset/(liability) resulting from temporary differences as of
December 31, 1999 are as follows:
[Enlarge/Download Table]
Net deferred
Deferred Deferred tax tax asset
December 31, 1999 tax assets liability /(liability)
------------------------------------------------------------ ------------- --------------- ---------------
1. Tax effect of foreign currency accounting for
assets and liabilities denominated in foreign currency 601,190 (159,892) 441,298
2. Tax effect of inventories costing method 13,754 - 13,754
3. Tax effect of expense accrual for services
received 59,306 (73,247) (13,941)
4. Tax effect of reserve for accounts receivable 29,956 (4,297) 25,659
------------- --------------- ---------------
Total deferred tax 704,206 (237,436) 466,770
============= =============== ===============
Valuation allowance (466,770)
---------------
Deferred Tax, net of valuation allowance -
===============
The future realization of the tax benefit of the existing deductible temporary
difference depends, among other things, of sufficient taxable income, of the
appropriate character, within the carryforward period available under the
Romanian tax law. As expressed on Note 21, the legislation and fiscal
environment in Romania and their implementation into practice change frequently
and are subject to different interpretations by various Ministries of the
Government.
As of December 31, 1999 since the future realization of the deferred tax assets
is uncertain due to expected future statutory losses, the Companies recorded an
allowance for the full amount of the deferred tax asset.
-17-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
Deferred tax asset/(liability) resulting from temporary differences as of
December 31, 1998 are as follows:
[Enlarge/Download Table]
Net
deferred
Deferred Deferred tax tax asset
December 31, 1998 tax assets liability /(liability)
------------------------------------------------------------ ------------- --------------- ---------------
1. Tax effect of reserve for doubtful accounts receivable 15,508 - 15,508
2. Tax effect of foreign currency accounting for assets
and liabilities denominated in foreign currency
- (11,005) (11,005)
3. Tax effect of inventories costing method 9,939 (24,171) (14,232)
4. Tax effect of expense accrual for services received
2,236 - 2,236
5. Tax effect of bank commissions - (6,059) (6,059)
6. Tax effect of reserve for obsolete and slow moving
inventories 21,361 - 21,361
------------- --------------- ---------------
Total 49,044 (41,235) 7,809
============= =============== ===============
The temporary differences are the differences between the tax base of an asset
or liability, in the specific circumstance the differences between the value in
the Romanian statutory financial statements and its carrying amount in the
balance sheet. FASB Statement No.109 prohibits the recognition of a deferred tax
liability or asset for differences related to assets and liabilities that are
remeasured from the local currency into the functional currency using historical
exchange rates and that result from (1) changes in exchange rates or (2)
indexing for tax purposes, under SFAS 52 - Foreign Currency Translation.
Accordingly, no adjustment for deferred taxes was made regarding the above
mentioned differences.
-18-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
The total provision for taxes reflected in the accompanying financial statements
is different from the amounts computed by applying the statutory income tax rate
of 38% to income before taxes. The items causing this difference are explained
below:
[Enlarge/Download Table]
1999 1998
--------- ------------
Net income before provision for taxes 579,352 1,217,204
--------- ------------
Provision for income tax at the statutory income tax rate of 38% (220,154) (462,537)
Effect of permanent non-taxable items, including translation gain, net
683,035 (119,199)
Tax effect of deferred tax computation at enacted tax rate of 25% (242,720) -
Effect of tax holiday 237,880 260,417
--------- ------------
Total 458,041 (321,319)
--------- ------------
Deferred tax valuation allowance (466,770) -
--------- ------------
Provision for taxes as per accompanying statement of income (8,729) (321,319)
========= ============
Of which:
- Current (920) (130,335)
- Deferred (7,809) (190,984)
--------- ------------
Total (8,729) (321,319)
========= ============
-19-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States Dollars ("USD"), unless otherwise indicated)
18. SEGMENT INFORMATION:
Sales and cost of sales for the year ended December 31, 1999 are as follows:
[Enlarge/Download Table]
Intercompany
Vodka Ornaments Others sales Total
--------------------------- ------------------ --------------- --------------- ----------------- --------------
Sales 4,103,247 645,912 100,839 (48,788) 4,801,210
Excise duties (111,617) - - - (111,617)
------------------ --------------- --------------- ----------------- --------------
Net sales 3,991,630 645,912 100,839 (48,788) 4,689,593
Cost of sales:
Raw materials (1,661,164) - - 48,788 (1,612,376)
Depreciation (148,785) - - (148,785)
Packaging (389,872) - - (389,872)
Others (70,626) - - (70,626)
Merchandise (161,289) (278,972) (72,371) (512,632)
------------------ --------------- --------------- ----------------- --------------
Total (2,431,736) (278,972) (72,371) 48,788 (2,734,291)
------------------ --------------- --------------- ----------------- --------------
Gross profit 1,559,894 366,940 28,468 - 1,955,302
================== =============== =============== ================= ==============
Sales and cost of sales for the year ended December 31, 1998 are as follows:
Intercompany
Vodka Ornaments Others sales Total
--------------------------- ------------------ --------------- --------------- ----------------- --------------
Sales 4,833,633 731,546 292,558 (113,085) 5,744,652
Excise duties (199,935) - - - (199,935)
------------------ --------------- --------------- ----------------- --------------
Net sales 4,633,698 731,546 292,558 (113,085) 5,544,717
Cost of sales:
Raw materials (1,906,958) - - 113,085 (1,793,873)
Depreciation (81,100) - - - (81,100)
Packaging (389,552) - - - (389,552)
Others (310,256) - - - (310,256)
Merchandise - (429,170) (214,115) - (643,285)
------------------ --------------- --------------- ----------------- --------------
Total (2,687,866) (429,170) (214,115) 113,085 (3,218,066)
------------------ --------------- --------------- ----------------- --------------
Gross profit 1,945,832 302,376 78,443 - 2,326,651
================== =============== =============== ================= ==============
-20-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
Sales of vodka and ornaments are done in the Romanian market. Other revenues are
related to the sale of boxes, glassware and other materials mainly to Perfect
Moldova (see Note 6.).
In 1998, excise duty taxes were paid over the sale of alcoholic drinks by the
producer. In the beginning of 1998, the law changed and the taxes, instead of
being applied to the producer of alcoholic drinks, are applied to the producer
of alcohol.
The major vodka clients of the Companies (more than 5% of total Vodka sales)
are: Gabis & Pappa Reale (9.47%); Impex Renaissance, a related party - see Note
6 (6.52%); Deovex (6.31%) and Grosbi Impex (5.91%).
There are no ornament clients with more then 5% of total ornament sales.
Reporting of segment assets is not done to the chief operating decision-maker
and consequently, it is not presented in the accompanying Notes.
19. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses for the years ended December 31,
1999 and 1998, are as follows:
1999 1998
---------- ----------
Personnel 180,867 194,290
Provision for bad debts 62,456 40,119
Provision for tax penalties (see Note 15) 183,474 47,393
Telecommunication 57,001 65,843
Advertising and promotion 38,579 54,651
Insurance 22,108 24,068
Rent 15,405 22,484
Energy and water 16,363 19,750
Expenses with other materials 7,025 11,930
Transportation 5,778 9,943
Training related with alcohol distillery (Note 10) 16,631 -
Services rendered by third parties 107,427 3,053
Other 89,303 84,302
---------- ----------
Total 802,417 577,826
========== ==========
-21-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
20. FINANCIAL ITEMS:
Financial items for the years ended December 31, 1999 and 1998, are as follows:
1999 1998
----------- -----------
Financial income
Interest income 10,591 2,727
Other financial revenues 12,587 22,553
----------- -----------
Total financial income 23,178 25,280
Financial expense
Gross interest expense (777,796) (576,748)
Interest capitalized (Note 10) 726,616 488,428
----------- -----------
Interest expense (51,180) (88,320)
Other financial expenses (3,374) (51,692)
Other financial losses (19,582) --
----------- -----------
Total financial expense (74,136) (140,012)
----------- -----------
Financial expense, net (50,958) (114,732)
=========== ===========
21. TAXES AND BUSINESS IN ROMANIA:
The legislation and fiscal environment in Romania and their implementation into
practice change frequently and are subject to different interpretations by
various Ministries of the Government. The Romanian government has a number of
agencies that are authorized to conduct audits ("controls") of Romanian
companies as well as foreign companies doing business in Romania. These controls
are similar in nature to tax audits performed by taxing authorities in many
countries, but may extend not only to tax matters but to other legal or
regulatory matters in which the applicable agency may be interested. In
addition, the agencies conducting these controls appear to be subject to
significantly less regulation and the company under review appears to have
significantly less practical safeguards than is customary in many countries.
Generally, tax declarations remain open and subject to inspection for a period
of five years. Substantially, the Companies tax declarations have been reviewed
by the Tax Authorities during 1998 and 1999. As a result, the tax authorities
imposed fines and penalties, and the Companies signed agreements with the tax
authorities, rescheduling the payment of due taxes and penalties (see Note 15).
Management believes that the Companies is in substantial compliance with the tax
laws affecting their operations; however, the risk remains that those relevant
authorities could take different positions with regard to interpretative issues
and the effect could be significant.
-22-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
The fact that a year has been reviewed, and that the Companies signed agreements
with the tax authorities rescheduling the payment of due taxes and penalties,
does not exempt that year, or any tax declaration applicable to that year, from
further review during the five year period.
The region where Romania is located is unstable, and characterized many times by
the rise of political and criminal corruption, the lack of experience and
unpredictability of the civil justice system. Romania in particular suffers from
high unemployment, low wages, low literacy rates, high hyperinflation and rumors
of corruption.
Business risks include, among others, internal political or civil unrest, war,
or government restrictions. These risks are dynamic and difficult to quantify.
The Companies will be subject to the risks normally associated with changes in
general national economic conditions or local market conditions, competition,
patronage, changes in market rates, and the need to periodically upgrade and
replace equipment to maintain desirability, and to pay the costs thereof.
Although many of the governments of the countries of Central and Eastern Europe
have liberalized policies on international trade, foreign ownership and
development, investment, and currency repatriation, increasing both
international trade and investment accordingly, such policies might change
unexpectedly. The Companies will be affected by the rules and regulations
regarding foreign ownership of real and personal property, including
manufacturing plants and other property. Such rules may change quickly and
dramatically which may have an adverse impact on ownership and may result in a
loss without recourse of property or assets of the Companies. Additionally,
several authorizations, licenses and permissions are still necessary from
different Government agencies in order to perform, what in more developed
countries, is not restricted and considered normal course of business (for
instance, necessary authorizations for repatriation of profits, prohibition to
perform payments in ROL to foreign entities, among others).
The likelihood of any foreign company successfully prevailing in any dispute
with the government or any private litigant under the Romanian legal system is
difficult to quantify or predict.
-23-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
22. FOREIGN CURRENCY EXPOSURE:
The major assets and liabilities denominated in foreign currency as of December
31, 1999 and 1998, can be detailed as follows:
[Enlarge/Download Table]
December 31, 1999 December 31, 1998
------------------------------ ----------------------------------
USD USD
Assets: Currency Amount equivalent Amount equivalent
-------------------------------- -------------- ------------- --------------- ---------------- ----------------
Cash and banks USD 108 108 420 420
Others 520 61 37
--------------- ----------------
628 457
--------------- ----------------
Clients USD 1,101 1,101 - -
--------------- ----------------
Due from related parties USD 20,104 20,104 19,174 19,174
--------------- ----------------
Total assets denominated in
foreign currencies 21,833 19,631
=============== ================
1999 1998
------------------------------ ----------------------------------
USD USD
Liabilities: Currency Amount equivalent Amount equivalent
-------------------------------- -------------- ------------- --------------- ---------------- ----------------
Short-term bank borrowings USD - - (331,462) (331,462)
Long-term debt USD (3,272,684) (3,272,684) - -
Current portion of long-term
debt USD (1,560,799) (1,560,799) (3,918,409) (3,918,409)
--------------- ----------------
(4,833,483) (4,249,871)
Interest accrued USD (107,617) (107,617) (245,431) (245,431)
--------------- ----------------
Due to related Parties USD (828,053) (828,053) (646,217) (646,217)
DKK - - (527,489) (82,560)
GBP - - (11,542) (19,124)
DEM (110,989) (56,981) (77,589) (46,273)
CHF - - (8,617) (6,254)
ITL (92,000) (48) (92,000) (55)
---------------
----------------
(885,082) (800,483)
--------------- ----------------
Total liabilities denominated
in foreign currencies (5,826,182) (5,295,785)
--------------- ----------------
Net exposure (5,804,349) (5,276,154)
=============== ================
-24-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
The Companies do not use financial instruments to hedge or protect against
foreign exchange or interest rates movements.
23. CONTINGENCIES AND COMMITMENTS:
a) Going concern assumption:
The accompanying combined financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As shown in the combined
financial statements, at December 31, 1999, the Companies' combined current
liabilities exceed their combined current assets by 1,807,609. This factor,
among others, indicates that the Companies may be unable to continue as a going
concern for a reasonable period of time.
These combined financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might be necessary should the Companies
be unable to continue as a going concern. The Companies' continuation as a going
concern is dependent upon their ability to (a) generate sufficient cash flow to
meet their obligations on a timely basis, and (b) obtain additional financing
and/or reschedule the existing debt, as may be required.
The management of the Companies plans to resolve the net working capital deficit
of 1,807,609 as of December 31, 1999 as follows:
(i) Management believes that an agreement with BCR and AVAB will be reached for
the amount of 435,379 due in February and for an equal amount, which will
be due in August, as well as for all other installments to be paid to BCR.
Therefore, an amount of 870,758 included in current liabilities will be
rescheduled for 2001 and the following years as well as all other
installments will be rescheduled to suit the needs of Perfect (see Note
12).
(ii) The management of the Companies believes that together with the operation
of the new alcohol distillery plant, the Companies will be able to generate
sufficient cash flows to sustain and meet their current liabilities.
b) Commitments:
All of the Company credit conventions with Bancorex (see Notes 10 and 12)
require pledges and mortgages.
-25-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
As of December 31, 1999 and 1998 pledges and mortgages, as per the respective
contracts were as follows:
(i) Pledges:
Amount
Type of pledge Currency pledged
-------------------------------------- -------------------- --------------
Inventory ROL thousand 6,853,485
(ii) Mortgages:
Amount
Type of mortgage Currency mortgaged
------------------------------------ -------------------- ----------------
Fixed assets ROL thousand 5,072,571
Fixed assets USD 4,486,869
24. SUBSEQUENT EVENTS:
(i) Subsequent to December 31, 1999, Perfect reached an agreement with AVAB
regarding the rescheduling of the remaining part of the loan
transferred from BCR to AVAB. The loan is interest free, during the
period of the loan, and is payable in USD. The resulting payment
schedule is:
Total
2000 2001 rescheduled
--------------- ------------- ----------------
690,041 1,095,791 1,785,832
The effect of this agreement was reflected in the accompanying balance
sheet as of December 31, 1999.
(ii) Subsequent to December 31, 1999 the credit line at Banca Comerciala Ion
Tiriac, S.A. was increased from thousand ROL 1,000,000 to thousand ROL
1,500,000 and the interest rate to 70% per year.
(iii) Subsequent to the balance sheet date, on May 5, 2000, Ferrand concluded
an asset transfer agreement with AJK Perfect Renaissance, Inc, a
company incorporated in Delaware, United States of America. Through
this asset transfer, Ferrand obtained 5,000,000 shares of the voting
common stock of AJK Perfect Renaissance, Inc and
-26-
S.C. PERFECT RENAISSANCE, SRL., S.C. RENAISSANCE, SRL.
AND
S.C. RENAISSANCE ALPHA 2000, SRL.
NOTES TO THE COMBINED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMEBER 31, 1999 AND 1998
(Currency - United States dollars ("USD"), unless otherwise indicated)
transferred the shares presently owned in the Companies to AJK Perfect
Renaissance, Inc..
(iv) Subsequent to the balance sheet date, on May 24, 2000, Perfect received
the authorization to sell refined ethyl alcohol.
25. SUPPLEMENTARY CASH FLOW INFORMATION:
For the years ended December 31, 1999 and 1998, the supplementary cash flows
information comprised the following:
1999 1998
------------- --------------
Taxes paid 76,228 83,249
Interest Paid - 88,320
-27-
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations may not
be relied on as having been authorized by Alpine or by any of the underwriters.
Neither the delivery of this prospectus nor any sale made hereunder shall under
any circumstances create an implication that there has been no change in the
affairs of AJK since the date hereof. This prospectus does not constitute an
offer to sell, or solicitation of any offer to buy, by any person in any
jurisdiction in which it is unlawful for any such person to make such offer or
solicitation. Neither the delivery of this prospectus nor any offer,
solicitation or sale made hereunder, shall under any circumstances create any
implication that the information herein is correct as of any time subsequent to
the date of the Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary .............................................
Risk Factors ...................................................
Available Information ..........................................
The Company ....................................................
Business .......................................................
Use of Proceeds ................................................
Dividend Policy ................................................
Management's Discussion and Analysis of
Financial Condition and Results of Operations .................
Management .....................................................
Security Ownership of Certain Beneficial
Owners and Management .........................................
Related Transactions ...........................................
Selling Securityholders ........................................
Description of Securities ......................................
Plan of Distribution ...........................................
Legal Matters ..................................................
Experts ........................................................
Financial Statements ...........................................
Until ________ 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 dealers' obligations to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
==================
AJK PERFECT RENAISSANCE, INC.
Minimum of 300,000 Shares of common stock
Maximum of 600,000 Shares of common stock
offered by AJK; and
1,604,095 shares of Common Stock offered
by the holders thereof
----------
PROSPECTUS
----------
June ______20, 2000
==================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
AJK is incorporated in Delaware. Under Section 145 of the General
Corporation Law of the State of Delaware, a Delaware corporation has the power,
under specified circumstances, to indemnify its directors, officers, employees
and agents in connection with actions, suits or proceedings brought against them
by a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any action, suit or proceeding. The Certificate of Incorporation and
the By-Laws of AJK provide for indemnification of directors and officers to the
fullest extent permitted by the General Corporation Law of the State of
Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such provision
shall not eliminate or limit the liability of a director
For any breach of the director's duty of loyalty to the corporation or
its stockholders;
For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; Under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the General Corporation Law of the State of Delaware; or
For any transaction from which the director derived an improper
personal benefit.
AJK's Certificate of Incorporation contains such a provision.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, MAY BE PERMITTED TO DIRECTORS, OFFICERS OR
PERSONS CONTROLLING AJK PURSUANT TO THE FOREGOING PROVISIONS, IT IS THE OPINION
OF THE SECURITIES AND EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS AGAINST
PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS THEREFORE UNENFORCEABLE.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All such expenses are estimates, other than the filing
fees payable to the Securities and Exchange Commission:
Filing Fee - Securities and Exchange Commission $ 1,000
Fees and Expenses of Accountants 40,000
Fees and Expenses of legal counsel 100,000
Blue Sky Fees and Expenses 3,500
Printing and Filing Expenses 10,000
Miscellaneous Expenses 2,500
Total $157,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On March 24, 1999, AJK's initial director accepted a subscription for
5,000,000 shares of AJK's common stock for consideration of $500. On August 1,
1999, AJK agreed redeemed all but 500,000 shares of such subscription for a
redemption price of $450.
On May 5, 2000, pursuant to an Asset Agreement among AJK Perfect
Renaissance, Inc., a Delaware corporation, Ferrand Investment Limited, a British
Virgin Islands corporation, S.C. Perfect Renaissance, SRL, a Roumanian limited
liability company, S.C. Renaissance, SRL, a Roumanian limited liability company,
and S.C. Renaissance Alpha 2000, SRL, a Roumanian limited liability company, the
shares of the Roumanian Companies owned by Ferrand were exchanged for an
aggregate of 5,000,000 shares of common stock of AJK pursuant to Rule 506 of
Regulation D of the General Rules and Regulations of the Securities and Exchange
Commission.
The Company issued an aggregate of 104,095 shares of common stock to
278 employees, suppliers and associates of the Company.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Certificate of Incorporation of AJK Perfect Renaissance, Inc., as
amended
3.2 By-Laws of AJK Perfect Renaissance, Inc.
4.2 Form of common stock Certificate
5.1* Opinion of Cassidy & Associates
10.1* Agreement with Ex-Klar Technologies, Inc.
10.2* Loan Agreement with Bancorex, as amended by certain letters and notices
10.3* License Agreement with Cie. Bardinet
21.1 Subsidiaries of AJK Perfect Renaissance, Inc.
24.1 Consent of Weinberg & Company, certified public accountants
24.2 Consent of Arthur Andersen S.R.L., certified public accountants
24.3* Consent of Cassidy & Associates (included in Exhibit 5.1)
27.1* Financial Data Schedule
----
* To be filed by Amendment
(d) The following financial statement schedules are included in this
Registration Statement.
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration state (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission is 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 the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, 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 registrant pursuant to Rule 424(b)(1) or 497(h) under
the Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
AJK Perfect Renaissance, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2 and has
duly caused this Registration Statement on Form SB-2 to be signed on its behalf
by the undersigned, thereunto duly authorized, in Aventura, Florida on the 31st
day of May, 2000.
JK PERFECT RENAISSANCE, INC.
By: /s/ Jacob Kieselstein
---------------------------
President
By: /s/ Violeta Chioreanu
--------------------------
Financial Manager
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
[Download Table]
Signature Title Date
--------- ----- ----
/s/ Jacob Kieselstein Chairman, President, May 31, 2000
Chief Executive and Director
/s/ Kochava Kieselstein Director May 31, 2000
/s/ Juda Erlich Director May 31, 2000
/s/ Dalia Levy Director May 31, 2000
/s/ Dr. Zvi Yadin Director May 31, 2000
Dates Referenced Herein
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