As Filed with the Securities and Exchange Commission on January 10, 2006
Registration No. 333-130943
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM SB-2
(AMENDMENT NO. 1)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
EMERGING MARKETS HOLDINGS, INC.
(Name of Small Business Issuer in its Charter)
Florida 6770 22-3917571
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
Incorporation or Organization) Classification Code Number)
309 Celtic Court
Oviedo, Florida 32765
Telephone (407) 620-1063
(Address and Telephone Number of Principal Executive Offices)
------------------------
309 Celtic Court
Oviedo, Florida 32765
Telephone (407) 620-1063
(Address and Principal Place of Business or
Intended Principal Place of Business)
------------------------
Greene & Lee, PL
111 North Orange Avenue, Suite 1450
Orlando, Florida 32801
Telephone (407) 648-1700
Facsimile (407) 648-0071
(Name, Address, Including Zip Code, and Telephone Number of Agent for Service)
------------------------
Copies to
Robert Q. Lee, Esq.
Greene & Lee, PL
111 North Orange Avenue, Suite 1450
Orlando, Florida 32801
Telephone (407) 648-1700
Facsimile (407) 648-0071
------------------------
Approximate Date of Proposed Sale to the Public: As soon as practicable within
180 days after the effective date of this Registration Statement.
Once the registration statement becomes effective, the securities
offered herein will be on sale for a period of 180 days.
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, as amended (the "Securities Act"), 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 of the earlier effective
registration statement number for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
Maximum Maximum
Maximum Aggregate Amount of
Amount To Be Offering Price Offering Registration
Title of Each Class of Securities To Be Registered Registered Per Security Price Fee (1)
- -----------------------------------------------------------------------------------------------------------------------------
Common stock, $.0001 par value 500,000 $ 1.00 $ 500,000 $ 580.85
- -----------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 to the Securities Act of 1933.
------------------------
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 hereafter become effective in accordance with Section 8(A) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to such Section 8(a),
may determine.
------------------------
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission, of which this prospectus is a part, is
effective. This preliminary prospectus is not an offer to sell these securities
and nor is it a solicitation of an offer to buy these securities in any state
where the offer or sale is not permitted.
DATED _________________, 2006
PROSPECTUS
EMERGING MARKETS HOLDINGS, INC.
500,000 SHARES OF COMMON STOCK
Emerging Markets Holdings, Inc. is a start-up company organized in the
State of Florida to pursue a business combination. We are offering for sale
500,000 shares of our common stock at a fixed purchase price of $1.00 per share.
We are selling the shares on a "best-efforts, all or none basis" for a period of
180 days from the date of the prospectus. We are a "blank check" company as
defined by, and will conduct the offering in compliance with, Rule 419 of
Regulation C, promulgated under the Securities Act of 1933, as amended. The
proceeds of the offering will initially be deposited in a non-interest bearing
escrow account. The funds and securities escrowed pursuant to Rule 419 of the
Securities Act will be maintained at Regions Bank, 1425 East Mitchell Hammock
Road, Oviedo, Florida 32765, telephone number (407) 366-8641, serving as escrow
agent. If all of the 500,000 shares are not sold within the 180 day period, all
escrowed funds will be promptly returned, without interest. After the escrow
agent receives a signed representation from us that we have consummated a
business combination or acquisition in accordance with the requirements of Rule
419, all of the funds in the escrow account will be released to us and your
purchased securities will be released to you. This offering will be conducted by
our management without the use of an underwriter or securities dealer. We will
not pay commissions on the sale of the shares. Neither our management nor our
promoters will purchase any of the 500,000 offered by this prospectus.
This is our initial public offering, and no public market currently
exists for our stock. Our initial public offering price for our stock will be
$1.00 per share, which is an arbitrary determination of the market price. There
is no minimum purchase requirement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
These securities are highly speculative, involve a high degree of risk
and should be purchased only by persons who can afford to lose their entire
investment. SEE "RISK FACTORS" COMMENCING ON PAGE 5 FOR RISKS CONCERNING US AND
THE OFFERING.
Underwriting
Price to Discounts and Proceeds to
Public Commissions the Company
- --------------------------------------------------------------------------------
Per Share $ 1.00 $ 0 $ 1.00
TOTAL $ 500,000 $ 0 $ 500,000
The date of this prospectus is _______________, 2006
TABLE OF CONTENTS
Prospectus Summary 1
Summary Financial Information 4
Risk Factors 5
Warning About Forward-Looking Statements 9
Your Rights And Substantive Protection Under Rule 419 Deposit Of Offering Proceeds And Securities 10
Dilution 12
Use Of Proceeds 13
Capitalization 14
Dividend Policy 14
Proposed Business 15
Management 22
Statement As To Indemnification 25
Market For Our Common Stock 26
Shares Eligible For Future Sale 27
Certain Transactions 28
Principal Stockholders 28
Description Of Securities 29
Plan Of Distribution 30
Where You Can Find More Information 32
Legal Matters 33
Experts 33
Index To Financial Statements F-1
PROSPECTUS SUMMARY
Emerging Markets Holdings, Inc.
Emerging Markets Holdings, Inc. is a "blank check" company formed as a
Florida corporation on October 11, 2005. We have no operating business. We are
conducting a blank check offering subject to the Securities and Exchange
Commission's Rule 419 under the Securities Act of 1933, which we refer to in
this prospectus as the "Securities Act." Since our inception, our operating
activities have been limited to our organization and the preparation of a
registration statement and prospectus for our initial public offering. We were
formed as a vehicle to effect a business combination with an unidentified
company or business. We have no plans, arrangements or understandings with any
prospective business combination candidates and have not targeted any business
for investigation and evaluation. We cannot assure you that we will find a
suitable company or business with which to combine.
If a significant acquisition or a business combination becomes
probable, we will promptly file a post-effective amendment to this registration
statement disclosing the information applicable to such acquisition. This
information will include, among other things, the identity and description of
the company, the terms of the business combination or acquisition, information
regarding the business of the company, information from appropriate industry
guides, our financial statements, the audited financial statements of the
company to be acquired and pro forma financial information required by
applicable rules and regulations.
As described in more detail in this prospectus, the business must have
a minimum fair market value of at least 80% of the maximum offering proceeds. We
will need a sufficient number of investors to reconfirm their investments prior
to consummating any business combination. Before you vote, we must file and
deliver to you an amendment to this prospectus outlining the proposed
combination and business. Unless we complete a business combination within 18
months of the date of the commencement of this offering (i.e., by December 1,
2007), the entire proceeds will be returned to the investors who subscribed to
this offering.
The funds and securities escrowed pursuant to Rule 419 of the
Securities Act will be maintained at Regions Bank, 1425 East Mitchell Hammock
Road, Oviedo, Florida 32765, telephone number (407) 366-8641, serving as escrow
agent.
We maintain our office at 309 Celtic Court, Oviedo, Florida 32765. Our
telephone number is (407) 620-1063.
Principal Terms Of The Offering
Shares offered 500,000 shares
Common stock outstanding prior 5,000,000 shares
to the offering
Common stock to be outstanding 10,000,000 shares
after the offering
Offering price per share $1.00
Use of proceeds The proceeds of the offering will initially
be deposited in a non-interest bearing
escrow account. If all of the 500,000
offered shares are sold within 180 days,
then all of the funds will be transferred to
an interest bearing escrow account, bearing
interest at the Escrow Agent's then
applicable rate for money market investment
accounts. As of the date of this prospectus,
such rate was 0.60%, but that rate may
increase or decrease depending on the Escrow
Agent's applicable money market rate at the
time the offering is completed and the funds
are transferred into the interest bearing
account. If all of the 500,000 shares are
not sold in the 180-day period, the funds
will be promptly returned to the investors,
without interest. Neither our management nor
1
our promoters, nor any of their affiliates,
will purchase any of the 500,000 shares
offered by this prospectus. If the funds are
retained in the escrow account, Emerging
Markets Holdings, Inc. has until December 1,
2007 (18 months following the date of this
prospectus) to consummate a business
combination with another entity. If we fail
to consummate such a combination within the
18-month period, then Emerging Markets
Holdings, Inc. will return the funds to the
investors, plus interest from the date funds
were transferred to the interest bearing
escrow account. Each investor will have an
opportunity to respond to a reconfirmation
offer given when such a combination is
anticipated, included in a post-effective
amendment to this registration statement, to
reconfirm its interest in the offering and
approve the potential business combination
or have your funds returned, plus interest
from the date your funds were transferred to
the interest bearing escrow account.
2
Offering Conducted In Compliance With Rule 419
We are a "blank check" company. A "blank check" company is a
development stage company like ours that has no specific business plan, and
whose sole business purpose is to merge or acquire or otherwise combine with a
presently unidentified company or business. Consequently, this offering is being
conducted in compliance with Rule 419 as follows:
o The securities purchased by investors and all of the funds received in
the offering will be deposited and held in an escrow account until an
acquisition is completed.
o Before the acquisition can be completed, and before the investors'
funds can be released to us and certificates representing the
securities sold in the offering can be released to the investors, we
are required to update the registration statement with a
post-effective amendment. Within five days after the effective date of
the post-effective amendment, we are required to furnish investors
with a prospectus.
o The prospectus, which is part of the post-effective amendment, will
contain a reconfirmation of the offering and information regarding the
acquisition candidate and its business, including the terms and
conditions of the acquisition and audited financial statements of the
acquisition candidate.
o Investors will have no less than 20 and no more than 45 business days
from the effective date of the post-effective amendment to decide to
reconfirm their investment and remain an investor or, alternately, to
require the return of their funds, plus interest from the date their
funds were transferred to the interest bearing escrow account, from
escrow.
o Investors not making a decision within 45 business days will
automatically have their escrowed funds returned, plus interest from
the date their funds were transferred to the interest bearing escrow
account, within five business days from the end of the reconfirmation
offer period.
o If we do not complete an acquisition meeting our specified criteria
within 18 months of the date of this prospectus, all of the funds in
the escrow account will be returned to investors, plus interest from
the date their funds were transferred to the interest bearing escrow
account, within five business days from the end of the 18 month
period.
o Thus, if the offering period extends to its 180-day limit, we will
have only 12 months in which to consummate a merger or acquisition.
None of our officers, directors or principal stockholders has prior
experience in blank check offerings under Rule 419 of the Securities Act.
Limited State Registration Exemption
Our securities initially may be sold by us only in a limited number of
states including Florida, New York, Pennsylvania and California, or those states
which have an exemption from registration requirements applicable to shares of a
blank check company. In the event we expand the number of states in which our
securities will be sold, we will file a post-effective amendment to the
registration statement and re-circulate prospectuses to all prospective
investors to whom prospectuses had previously been distributed.
Under Rule 419, the securities sold pursuant to this prospectus and the
proceeds received will be held in escrow pending completion of an acquisition as
described above. While in escrow, the shares will remain as issued and deposited
and shall be held for the sole benefit of the purchasers, who shall have voting
right with respect to securities held in their names, as provided by applicable
Florida law. No transfer or other disposition of securities held in the escrow
or any interest related to such securities will be permitted other than by will
or the laws of descent and distribution, or pursuant to a qualified domestic
relations order as described in Rule 419. After completion of an acquisition as
described above and the release of your securities from escrow, they may be
resold by you only in those states where the securities were registered, or
those states which have an applicable exemption from registration for such
secondary sales.
3
SUMMARY FINANCIAL INFORMATION
The table below contains certain summary historical financial data. The
summary information in this table should be read in conjunction with the
financial statements and notes to the financial statements, and other financial
information included in this prospectus. As a "blank check company," we do not
currently have operations or a revenue source and our independent registered
public accounting firm has expressed substantial doubt as to our ability to
continue as a going concern.
Period from
October 11, 2005
(Date of
Inception)
To March 31, 2006
Statement of Operations Data:
Net sales $ --
Net loss $ (19,045)
Net loss per share $ --
Shares outstanding 5,000,000
At March 31, 2005
Balance Sheet Data:
Common Stock Issuance $ 500
Total assets $ 2,164
Total liabilities $ 11,109
Additional paid-in capital $ 9,600
Deficit accumulated during development stage $ (19,045)
Total stockholders' deficiency $ (8,945)
4
RISK FACTORS
The securities we are offering are highly speculative in nature and involve an
extremely high degree of risk. You should not purchase these securities unless
you can afford to lose your entire investment. The risks described below are all
of the material risks that we are currently aware of that are facing our
company. You should carefully consider the risk factors relating to our business
and the purchase of these securities, including, but not limited to, those risk
factors discussed below.
Conflicts of interest create the risk that management may have an incentive to
act adversely to the interests of other investors.
A conflict of interest may arise between our management's personal
pecuniary interest and its fiduciary duty to our stockholders. The management of
our company will identify any potential business combination targets and
recommend to the stockholders and our company such target companies.
Additionally, the current stockholders presently comprising our management will
own approximately more than 50% of our outstanding common stock immediately
after the offering is completed (of which management will not participate).
Since the present stockholders will hold more than 50% of our outstanding common
stock following the completion of the offering, the present stockholders may
affect the outcome of any vote (assuming that all currently existing
stockholders holding more than 50% of our outstanding common stock immediately
after the completion of the offering will collectively cast identical votes).
Thus, the current stockholders may be able to effectively determine which
potential business combination targets to pursue and which acquisition to
consummate, regardless of other investors' preferences.
Our management may experience conflicts of interest between their duties on
behalf of Emerging Markets Holdings, Inc. and their roles with other entities
and transactions.
Currently our officers and directors are not involved with any similar
transactions or blank check offerings. However, our officers and directors may
become involved with similar transactions or other blank check offerings in the
future, which may create conflicts in the pursuit of business combinations with
such shell or other blank check companies. If Emerging Markets Holdings, Inc.
identifies the same business combination candidate(s) as one of these other
entities, some of our officers and directors may face a conflict of interest,
complicating the business combination process and potentially resulting in a
delay which could jeopardize our limited timeline to complete such a
transaction. In the event there is more than one company conducting a blank
check offering and there is insufficient independence among officers and
directors of the companies, our directors and offices will advocate that the
company that first filed a registration statement with the Securities and
Exchange Commission, i.e., Emerging Markets Holdings, Inc., should be entitled
to proceed with the proposed transaction. In the event officers or directors of
Emerging Markets Holdings, Inc. become affiliated with a shell company that has
not conducted a blank check offering and there is insufficient independence
among that company and Emerging Markets Holdings, Inc. to choose which of the
entities may pursue the opportunity, the choice among entities will be
determined by the preferences of the target. Directors may still individually
take advantage of opportunities if we should decline to do so. There is no
written policy in place with respect to such conflict of interest and except as
set forth above, we have not adopted any other conflict of interest policy with
respect to those transactions.
Our officers and directors have no previous experience launching and operating
"blank check" companies and may not have the experience to successfully complete
the offering or identify a business combination or acquisition target.
Our officers and directors have no previous experience launching and
operating "blank check" companies under Rule 419, such as Emerging Markets
Holdings, Inc. Thus, our officers and directors may not have the experience to
facilitate a successful offering or to identify a business combination or
acquisition target.
As we have no operating history or revenue and only minimal assets, there is a
risk that we will be unable to continue as a going concern and consummate a
business combination.
We have had no operating history nor any revenues or earnings from
operations since inception. We have no significant assets or financial
resources. We will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in our incurring a net operating loss that will
increase continuously until we can consummate a business combination and even
thereafter increase if the business opportunity with whom we merge is not
profitable. We cannot assure you that we can identify a suitable business
opportunity that offers profit or growth potential or consummate a business
combination.
5
The report of our independent auditors indicates uncertainty concerning our
ability to continue as a going concern and this may impair our ability to
consummate a business combination.
Our independent auditors have raised substantial doubt about our
ability to continue as a going concern. We cannot assure you that this will not
impair our ability to consummate a business combination. Additionally, we cannot
assure you that we will ever achieve significant revenues and therefore remain a
going concern.
If the offering is not successfully completed within 180 days, your funds will
be returned without interest, in which case you will have obtained no return on
your investment.
The proceeds of the offering will initially be deposited in a
non-interest bearing escrow account. If we are unable to sell all of the 500,000
shares within the 180-day offering period, the funds will be returned to the
investors, without interest. The return of your funds without interest means you
will have obtained no return on your investment. If all of the 500,000 offered
shares are sold within 180 days, then all of the funds will be transferred to an
interest bearing escrow account for a maximum of 12 months. If we fail to
consummate a business combination within the 18-month period, then Emerging
Markets Holdings, Inc. will return the funds to the investors, plus interest
from the date funds were transferred to the interest bearing escrow account.
However, if we do not consummate a business combination within the 12-month
period during which the funds are in the interest bearing escrow account, it is
unlikely that you will realized a substantial return on your investment, since
your only return would be the interest accrued on the funds while in the escrow
account.
Escrowed securities can only be transferred under limited circumstances,
resulting in little or no liquidity for your investment for a substantial period
of time.
No transfer or other disposition of the escrowed securities sold in
this offering is permitted other than by will or the laws of descent and
distribution, or under a qualified domestic relations order as defined by the
Internal Revenue Code of 1986 or Title 7 of the Employee Retirement Income
Security Act of 1974, known as ERISA, or the related rules. Under Rule 15g-8 of
the Securities Exchange Act of 1934, which we refer to as the "Exchange Act", it
is unlawful for any person to sell or offer to sell the securities or any
interest in or related to the securities held in a Rule 419 escrow account other
than under a qualified domestic relations order in divorce proceedings.
Therefore, any and all contracts for sale to be satisfied by delivery of the
securities and sales of derivative securities to be settled by delivery of the
securities are prohibited. You are further prohibited from selling any interest
in the securities or any derivative securities whether or not physical delivery
is required while the securities are in the Rule 419 escrow. As a result, you
will have little or no liquidity for your investment for a substantial period of
time, and may therefore be unable to invest your funds in alternative
investments. Depending upon how soon a business combination could be
consummated, you will have no right to the return of or the use of your funds or
the securities purchased for a period of up to 18 months from the date of this
prospectus. You will be offered the return of your funds only under the
circumstances set forth in Rule 419.
There currently is no trading market for our stock, which would eliminate or
adversely impact your ability to sell your shares.
There currently is no trading market for our stock and a trading market
will not develop prior to or after the effectiveness of this prospectus or while
the common stock under this offering is maintained in escrow. We expect the
initial market for our stock following the release of shares from escrow to be
limited if a market develops at all. Even if a limited trading market does
develop following the release of shares from escrow, there is a risk that the
absence of potential buyers will prevent you from selling your shares if you
determine to reduce or eliminate your investment in Emerging Markets Holdings,
Inc. Additionally, the offering price may not reflect the market price of our
shares after the offering. This pricing difference and a lack of an adequate
number of potential buyers or other factors may very well result in your
receiving a lower price for your shares upon their sale than you paid in this
offering.
The nature of our operations is highly speculative and there is a consequent
risk of loss of your investment.
The success of our plan of operation will depend to a great extent on
the operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
6
entities having established operating histories, we cannot assure you that we
will be successful in locating candidates meeting those criteria. In the event
we complete a business combination, the success of our operations may be
dependent upon management of the successor firm and numerous other factors
beyond our control.
We are in a highly competitive market for a small number of business
opportunities which could reduce the likelihood of consummating a successful
business combination.
We are and will continue to be an insignificant participant in the
business of seeking mergers with and acquisitions of small private and public
entities. A large number of established and well-financed entities, including
small public companies and venture capital firms, are active in mergers and
acquisitions of companies that may be desirable target candidates for us. We
expect that most of these entities have significantly greater financial
resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.
We have no existing agreement for a business combination or other transaction
and therefore cannot guarantee that we will be able to negotiate a business
combination on favorable terms.
We have no arrangement, agreement or understanding with respect to engaging in a
merger with, joint venture with or acquisition of, a private or public entity.
We can give no assurances that we will successfully identify and evaluate
suitable business opportunities or that we will conclude a business combination.
Management has not identified any particular industry or specific business
within an industry for evaluation. We cannot guarantee that we will be able to
negotiate a business combination on favorable terms, and there is consequently a
risk that funds allocated to the purchase of our shares will not be invested in
a company with active business operations. If we are unable to make such an
investment, it is unlikely that you will make a substantial return on your
investment in Emerging Markets Holdings, Inc.
Management intends to devote only a limited amount of time to seeking a target
company which may adversely impact our ability to identify a suitable
acquisition candidate.
While seeking a business combination, management anticipates devoting
between five and fifteen hours per week to Emerging Markets Holdings, Inc.
affairs in total. None of our officers have entered into written employment
agreements with us and none is expected to do so in the foreseeable future.
Further, our current directors and executive officers have notified us of their
intent to resign upon the closing of a business combination. Although Serguei
Melnik and Ramon Rosales may be invited to serve as directors, officers or
consultants with the post-acquisition entity, depending on the structure and
circumstances of the business combination and the experience of the target's
board, our directors may elect not to do so. This limited current commitment and
these individuals' lack of willingness to be involved in the management of the
post-acquisition entity may adversely impact our ability to identify and
consummate a successful business combination.
We cannot guarantee that the business combination will meet the statutory
requirements of a tax-free reorganization or that the parties will obtain the
intended tax-free treatment upon a transfer of stock or assets and you may
therefore be subject to taxation.
If a business combination does not meet the statutory requirements of a
tax-free reorganization, the business combination would result in the imposition
of both federal and state taxes that may have an adverse effect on both parties
to the transaction.
The availability of our shares for sale could adversely affect our share price
as there is a risk our promoters or affiliates could sell a sufficient volume of
shares to lower the share price.
The 5,000,000 shares of our common stock presently issued and
outstanding as of the date hereof are held by our management, promoters or their
affiliates, and are "restricted securities" as that term is defined under the
Securities Act and in the future may only be sold pursuant to a registration
statement filed under the Securities Act. It should be noted that these shares
may not be sold by our management, promoters or their affiliates, or their
transferees, pursuant to Rule 144 of the Securities Act. This is true for any
such sale either before or after a business combination with an operating
company or other person, regardless of technical compliance with the rule. The
position of the staff of the Division of Corporation Finance of the Securities
and Exchange Commission is that any such resale transaction under Rule 144 would
7
appear to be designed to distribute or redistribute such shares to the public
without coming within the registration requirements of the Securities Act.
Therefore, our management, promoters or their affiliates, or their transferees,
can only resell the shares they hold as of the date hereof through a
registration statement filed under the Securities Act.
Investors should be aware that there is a risk that sales of the shares
held by our management and promoters pursuant to a registration statement filed
under the Securities Act is likely to have a depressive effect on the market
price of our securities in any market which may develop for such securities. A
subsequent sale of a large number of shares by our promoters following a demand
or piggyback registration, or even the availability of these shares for sale,
may have the effect of materially and adversely decreasing the prevailing market
price of our common stock by increasing or threatening to increase the number of
shares available in the open market.
The offering price has been arbitrarily determined and you run the risk of
paying an amount in excess of what you will ultimately receive upon sale of our
securities.
The initial offering price of $1.00 per share has been arbitrarily
determined by us, and bears no relationship whatsoever to our assets, earnings,
book value or any other objective standard of value. Among the factors
considered by us were our lack of operating history, estimates of our business
potential, the proceeds to be raised by the offering, the amount of capital to
be contributed by the public in proportion to the amount of stock to be retained
by present stockholders, our relative requirements, and the current market
conditions in the over-the-counter market. You are therefore bearing the risk
that you are paying more for our shares than our shares are actually or
objectively worth or will be valued by the public markets. This could result in
an insufficient return, or even a loss, on your investment even if we
successfully consummate a business combination.
There will be additional dilution as additional shares are issued which may
decrease the market price of our common stock.
Once a business combination is consummated, additional offerings will
likely have to be made in the future to meet additional cash flow needs. Such
offerings may include warrants for issuance of additional common stock, further
diluting the number of shares of common stock outstanding from time to time.
Moreover, a substantial issuance of our shares can be expected as part of the
business combination itself in light of management's plan to offer at least a
controlling interest in Emerging Markets Holdings, Inc. to a target business in
order to achieve a tax free reorganization. The actual amount of that interest
and the resulting number of shares issued will depend on negotiations with the
potential target. An increase in the number of our shares from these events or
others may result in a decrease of the market price for our common stock.
Our securities initially may be sold by us in a limited number of states which
have an exemption from registration requirements applicable to shares of a blank
check company which may limit our ability to successfully complete this
offering.
Our securities initially may be sold by us only in a limited number of
states which have an exemption from registration requirements applicable to
shares of a blank check company. The limited number of states providing such
exemption may restrict the market for our shares of common stock being offered
and thus may limit our ability to successfully complete this offering.
Serguei Melnik and Ramon Rosales may be invited to serve as directors, officers
or consultants with the post-acquisition entity and any negotiations of
employment agreements may present conflicts of interest between their duties on
behalf of Emerging Markets Holdings, Inc. and their individual interests.
Serguei Melnik and Ramon Rosales may be invited to serve as directors,
officers or consultants with the post-acquisition entity. Messrs. Melnik and
Rosales may engage in the negotiations of their employment or consulting
agreements concurrently with the negotiations of the acquisition terms. In such
event, their individual interests in the financial and non-financial terms of
their relationships with the post-acquisition entity may conflict with the
interests of Emerging Markets Holdings, Inc.
8
WARNING ABOUT FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements."
Forward-looking statements address future events, developments or
results and typically use words such as
"believe,""anticipate,""expect,""intend,""plan,""estimate" or words with similar
meanings. For example, our forward-looking statements may include statements
regarding:
o our growth plans, including our plans to acquire an operating business
entity;
o the possible effect of inflation and other economic changes on our
costs, and profitability, including the possible effect of future
changes in operating costs and capital expenditures;
o our cash needs, including our ability to fund our proposed capital
expenditures and working capital requirements;
o this being a start-up situation, the timing of cash requirements and
the expected projected profitability; and
o our expectations regarding competition.
For a discussion on the risks, uncertainties, and assumptions that
could affect our future events, developments or results, you should carefully
review "Risk Factors." In light of these risks, uncertainties and assumptions,
the future events, developments or results described by our forward-looking
statements in this prospectus or in the documents referred to in this prospectus
could turn to be materially different from those we discuss or imply.
9
YOUR RIGHTS AND SUBSTANTIVE PROTECTION UNDER RULE 419
DEPOSIT OF OFFERING PROCEEDS AND SECURITIES
Rights And Protections Under Securities Act Rule 419
Rule 419 requires that offering proceeds, after deduction for
underwriting commissions, underwriting expenses and dealer allowances, if any,
and the securities purchased by you and other investors in this offering, be
promptly deposited into an escrow or trust account governed by an agreement that
contains certain terms and provisions specified by Rule 419. Please note that we
will pay no underwriting commission or underwriting expenses and dealer
allowances in connection with this offering. Under Rule 419, the full amount of
the proceeds of the offering will be released to us and the securities you
purchased in the offering will be released to you only after we have met several
basic conditions. Please note that under Rule 419, we may receive up to ten
percent (10%) of the proceeds remaining after payment of underwriting
commissions, underwriting expenses and dealer allowances, exclusive of interest
or dividends, as those proceeds are deposited into the escrow or trust account.
We will not request such release of any proceeds that are deposited into the
escrow or trust account.
First, we must execute an agreement for an acquisition of a business or
asset that will constitute our business and for which the fair value of the
business or net assets to be acquired represents at least 80% of the maximum
offering proceeds.
Second, we must file a post-effective amendment to the registration
statement that includes the results of this offering including the gross
offering proceeds raised, that indicates we have paid no amounts for
underwriting commissions, underwriting expenses or dealer allowances, and that
states the amounts dispersed to us and the amounts remaining in the escrow
account. In addition, we must disclose the specific amount, use and
appropriation of funds disbursed to us, including, payments to officers,
directors, controlling shareholders or affiliates, the amounts and purposes of
these payments, and the terms of a reconfirmation offer that must contain
conditions prescribed by the rules. The post-effective amendment must also
contain information regarding the acquisition candidate and its business,
including audited financial statements.
Third, we must mail to each investor, within five business days of the
effectiveness of the post-effective amendment, a copy of the prospectus
contained in the post-effective amendment.
Fourth, in accordance with Rule 419(e)(2)(ii), the post-effective
amendment must contain the terms of a reconfirmation offer with respect to which
you will have no less than 20 and no more than 45 business days from the
effective date of the post-effective amendment to decide to reconfirm your
investment and remain an investor, or, alternately, to require the return of
your funds, plus interest from the date your funds were transferred to the
interest bearing escrow account, from escrow. If you do not make a decision
within 45 business days, your escrowed funds will be automatically returned to
you, plus interest from the date your funds were transferred to the interest
bearing escrow account, within five business days of the end of the
reconfirmation offer period.
Fifth, we must submit a signed representation to the escrow agent that
the requirements of Rule 419 have been met and the acquisition is closed, after
which the escrow agent can release the funds in the escrow to us and the
securities you purchased in the offering to you.
In accordance with the requirements of Rule 419(e)(2)(iv), if we do not
complete an acquisition meeting specified criteria within 18 months from the
date of this prospectus, all of the funds in the escrow account must be returned
to investors, plus interest from the date their funds were transferred to the
interest bearing escrow account. Thus, if the offering period is extended to its
180-day limit, we will have only approximately 12 months in which to consummate
a merger, an acquisition or another type of business combination.
Finally, in accordance with the requirements of Rule 419(d), if during
the period in which we are offering our securities for sale a significant
acquisition becomes probable, we will promptly file a post-effective amendment
to this registration statement disclosing the information applicable to such
acquisition. We must sell all 500,000 shares offered hereby within the 180-day
limit of the offering period or all funds will be promptly returned without
interest. Any post-effective amendment filed during the 180-day offering period
is subject to the review of the SEC and we are required to discontinue the
offering until the post-effective amendment is declared effective. This
information will include, among other things, information from appropriate
industry guides, our financial statements, the financial statements of the
company to be acquired and pro forma financial information required by
applicable rules and regulations.
10
Rights And Protections Under The Terms And Provisions Of The Escrow Agreement
In accordance with the above requirements, we have entered into an
escrow agreement with Regions Bank, as escrow agent and insured depositary
institution, and Pacific Stock Transfer Company, as administrator, which
provides that the proceeds of the offering are to be deposited into the escrow
account maintained by the escrow agent promptly upon their receipt. The funds
and any dividends or interest thereon, if any, are to be held for the sole
benefit of the investor and can only be invested in bank deposit, in money
market mutual funds, federal government securities or securities for which the
principal or interest is guaranteed by the federal government.
All securities sold in the offering and any other securities issued,
including stock splits, stock dividends or similar rights are to be deposited
directly into the escrow account promptly upon their issuance. Your name must be
included on the stock certificates or other documents evidencing the securities.
The securities held in the escrow account must remain in the name in which they
are issued, and will be held for your sole benefit. You retain the voting rights
to the securities held in your name. You may not transfer or dispose of any
interest created in your securities in the escrow account other than by will or
the laws of descent and distribution, or under a qualified domestic relations
order as defined by the Internal Revenue Code of 1986 or Table 1 of ERISA.
Pursuant to the escrow agreement, funds representing the subscription
price of the 500,000 shares offered by this prospectus will be held in a
separate non-interest bearing escrow account until the completion of the "best
efforts, all or none" offering. If that offering is not successfully completed
within 180 days after the date of this prospectus, the funds in the non-interest
bearing escrow account will be promptly returned to the subscribers, without
interest. If the offering is successfully completed, Emerging Markets Holdings,
Inc. shall deposit stock certificates representing 500,000 shares into the
escrow account and the escrow account will commence bearing interest on the
funds at the Escrow Agent's then applicable rate for money market investment
accounts. As of the date of this prospectus, such rate was 0.60%, but that rate
may increase or decrease depending on the Escrow Agent's applicable money market
rate at the time the offering is completed and the funds are transferred into
the interest bearing account. After the escrow agent receives a signed
representation from Emerging Markets Holdings, Inc. that it has consummated a
business merger or acquisition in accordance with the requirements of Rule 419,
all of the funds in the escrow account will be released to Emerging Markets
Holdings, Inc. The escrow agreement has been filed as an exhibit to the
registration statement of which this prospectus forms a part.
Rights To Information
We have filed a registration statement relating to the shares with the
Commission under the Securities Act. We have not included in this prospectus all
of the information in the registration statement and the attached exhibits.
Statements regarding the contents of any document mentioned in this prospectus
are not necessarily complete. Copies of these documents are contained as
exhibits to the registration statement. We will provide to you a copy of any
referenced information if you contact us at 309 Celtic Court, Oviedo, Florida
32765, telephone (407) 620-1063.
We intend to furnish to our stockholders, after the close of each
fiscal year, an annual report relating to our operations containing audited
financial statements examined and reported upon by an independent certified
public accountant. In addition, we may furnish to our stockholders, from time to
time, such other reports as may be authorized by our Board of Directors. Our
fiscal year-end is December 31.
Right To Prospectus Delivery
Until 90 days after the date when the escrowed funds and certificates
representing the common stock are released from escrow, all dealers effecting
transactions in the shares may be required to deliver a prospectus.
11
DILUTION
Our net tangible book value as of March 31, 2006 was $(9,600), or
approximately $0.00 per share based on 5,000,000 shares outstanding.
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the initial public offering price per share of
our common stock and the pro forma net tangible book value per share of our
common stock after this offering. We calculate pro forma net tangible book value
per share by dividing the net tangible book value, tangible assets less total
liabilities, by the number of outstanding shares of common stock.
After giving effect to the sale of the 500,000 shares of common stock
by us at the initial public offering price of $1.00 per share, less our
estimated offering expenses, our pro forma net tangible book value at [December
1, 2006], would be $(167,500.00), or approximately $0.00 per share. This
represents an immediate dilution of $1.00 per share (or 100 %) to new investors
purchasing shares at the initial public offering price of $1.00 per share.
The following table illustrates this per share dilution:
Initial public offering price per share $ 1.00
Net tangible book value per share at [December 1, 2006] $ (167,500)
Increase per share attributable to offered shares --
------
Pro forma net tangible book value per share after this offering $ (167,500)
Dilution per share to new investors in this offering $ 1.00
The following table sets forth, as of the date of the prospectus, the
percentage of shares to be purchased by the public investors compared to the
percentage of shares to be owned by the present stockholders, and the
comparative amounts paid for the shares by the public investors as compared to
the total consideration paid by our present stockholders.
Percentage Approximate
Total Percentage
Shares Total Total
Shares Purchased Outstanding Consideration Consideration
---------------- ----------- ------------- -------------
New Investors 500,000 9.09% $ 500,000 98.02%
Existing Stockholders (3) 5,000,000 90.91% $ 10,100 1.98%
--------- ----- --------- ----
Total 5,500,000 100% $ 510,100 100%
========= === ========= ===
- ----------------------
12
USE OF PROCEEDS
---------------
Gross proceeds of the offering will be $500,000, as set forth in the
following table:
Percentage of
Net Proceeds of
Amount the Offering
Escrowed funds pending business combination $ 500,000 100%
- ----------------------
(1) Since we are a "blank check" company, the purpose of the offering is to
raise funds to enable us to merge with or acquire an operating company.
Upon the consummation of a business combination and the reconfirmation
thereof (which reconfirmation offering must precede such consummation), pursuant
to Rule 419, $500,000, less any amounts returned to investors who did not
reconfirm their investment pursuant to Rule 419, will be released to us. Once
released from escrow, we intend to use the net proceeds of this offering to pay
the costs incurred to merge with or acquire an operating company, approximately
as follows:
o $100,000 to structure, negotiate and document a business combination
transaction;
o $75,000 to satisfy our Exchange Act reporting obligations, including
legal, accounting, filing and printing fees; and
o $15,000 for due diligence activities related to potential business
combination candidates.
We anticipate the fees and expenses relating to this offering to total
approximately $100,000. These fees and expenses will first be paid from our
treasury. As of March 31, 2006, the expenses incurred relating to the offering
totaled $19,045 and our available cash balance was $2,164. Our President, Ramon
Rosales, has executed an agreement with us, agreeing to advance any fees and
expenses relating to this offering in excess of the amounts held in treasury, up
to $100,000. Any such loans by Mr. Rosales pursuant to this agreement will bear
no interest, will be documented by a promissory note and will be repaid only on
consummation of a merger or acquisition. Upon consummation of a merger
transaction, the proceeds of the offering may be used to repay such loans or we
may seek to have the other party to a consummated merger transaction complete
the repayment of such loans from other funds. All offering proceeds will be
placed in escrow until all of the shares are sold. Rule 419 permits 10% of the
offering proceeds to be released from escrow to us. However, we will not request
the release of these funds. All funds held in escrow at the time a business
combination is consummated will be released. No amounts will be paid with
respect to salaries, as our officers do not receive any salary-based
compensation. Currently, we have no other employees.
While we presently anticipate that we will be able to locate and
consummate a suitable business combination, if we determine that a business
combination requires additional funds, we may seek additional financing through
loans, issuance of additional securities or through other financing
arrangements. We have not negotiated any such financial arrangement, and we can
give no assurances that such additional financing will be available or, if
available, that such additional financing will be on acceptable terms.
Anticipated legal fees relating to this offering and the anticipated business
combination are subject to numerous factors, including the length of time
required to complete all related regulatory matters and the nature of the
business combination. We currently estimate the total legal fees involved in the
present offering to be approximately $50,000 and for a standard business
combination to be approximately $100,000.
Business associates and acquaintances of our management may identify
for us potential target businesses. Such business associates and acquaintances
may include current and former business referrals and university classmates. If
we consummate a business combination with an entity introduced to us by a third
party we may be required to pay a "finder's fee" in connection with such
introductions. However, we do not currently intend to retain any person or
entity to act as a "finder" or broker to identify or analyze or advise us on the
merits of potential target businesses. Further, no member or affiliate of our
management will be entitled to a "finder's fee" under any circumstance.
13
Offering proceeds will be placed in escrow at Regions Bank, an insured
depository institution, pending consummation of a business combination and
reconfirmation by investors, in a certificate of deposit, interest bearing
savings account or in short-term government securities as required by Rule 419.
CAPITALIZATION
The following table sets forth our capitalization as of March 31, 2006:
March 31, 2006
Current liabilities $ 11,109
Stockholders' equity: --
Common stock, $.0001 par value; 15,000,000 shares authorized;
5,000,000 shares issued and outstanding 500
Additional paid-in capital 9,600
Deficit accumulated during development stage (19,045)
--------
Total stockholders' equity $ (8,945)
========
Total capitalization $ (8,945)
========
DIVIDEND POLICY
Holders of our common stock are entitled to dividends when, as and if
declared by the Board of Directors, out of funds legally available therefor. We
do not anticipate the declaration of payment of any dividends in the foreseeable
future even if we successfully complete a business combination. We intend to
retain available funds, if any, to finance the development and expansion of our
business. Future dividend policy will be subject to the discretion of the Board
of Directors and will be contingent upon future earnings, if any, our financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends of any kind will ever be
paid.
14
PROPOSED BUSINESS
History And Organization
We were organized under the laws of the State of Florida on October 11,
2005. Since our inception, we have been engaged in organizational efforts and
obtaining initial financing. We were formed as a vehicle to pursue a business
combination. We have made no efforts to identify a possible business combination
and, as a result, have not conducted negotiations or entered into a letter of
intent concerning any target business.
We are, based on proposed business activities, a "blank check" company.
The Commission defines those companies as "any development stage company that is
issuing a penny stock, within the meaning of Section 3(a)(51) of the Exchange
Act, and that has no specific business plan or purpose, or has indicated that
its business plan is to merge with an unidentified company or companies." Many
states have enacted statutes, rules and regulations limiting the sale of
securities of "blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a market to develop
in our securities, either debt or equity, until we have successfully concluded a
business combination. We intend to comply with the periodic reporting
requirements of the Exchange Act for so long as we are subject to those
requirements.
Plan of Operation
We were organized as a vehicle to investigate and, if such
investigation warrants, acquire a target company or business seeking the
perceived advantages of being a publicly held corporation. Our principal
business objective for the next 18 months will be to achieve long-term growth
potential through a combination with a business rather than immediate,
short-term earnings. Members of our management will rely on their business
contacts to identify potential acquisition targets. They will contact business
associates and professionals in the financial and corporate industries to
inquire about potential target companies. We will not restrict our potential
candidate target companies to any specific business, industry or geographical
location and, thus, may acquire any type of business.
We do not currently engage in any business activities that provide cash
flow. Investors purchasing shares in the offering and other stockholders will
not have the opportunity to participate in any of these decisions. The reference
to us as a "blank check" company is because investors will entrust their
investment monies to our management without knowing the ultimate use to which
their money may be put. All of the proceeds of the offering are intended to be
utilized generally to effect a business combination. Investors will have an
opportunity to evaluate the specific merits or risks only of the business
combination our management decides to enter into.
During the next 18 months we anticipate incurring costs related to:
(i) filing of Exchange Act reports (approximately
$15,000),
(ii) filing of a post-effective registration statement
amendment and related to the reconfirmation offer,
upon identification of a suitable merger candidate
(approximately $50,000), and
(iii) costs relating to consummating a stockholder approved
acquisition (approximately $100,000).
We believe we will be able to meet these costs through additional
amounts as may be loaned to us by our President, Ramon Rosales, and deferral of
fees by certain service providers, if necessary. Any advancement would be made
in connection with Mr. Rosales' commitment to provide us with funds to make
payments for our expenses, prior to the consummation of a business combination,
to the extent such expenses are not deferred and would either exceed our
available funds or would render us effectively insolvent upon our payment. Any
loans by Mr. Rosales would be on an interest-free basis, documented by a
promissory note and payable only upon consummation of a merger transaction. Upon
consummation of a business combination, the target will reimburse Mr. Rosales
for any such loans out of the proceeds from funds furnished by the target. The
repayment of these loans by the target company will be a condition to any
consummation of a business combination.
15
We may consider a business which has recently commenced operations, is
a developing company in need of additional funds for expansion into new products
or markets, is seeking to develop a new product or service, or is an established
business which may be experiencing financial or operating difficulties and is in
need of additional capital. In the alternative, a business combination may
involve the acquisition of, or merger with, a company which does not need
substantial additional capital, but which desires to establish a public trading
market for its shares, while avoiding, among other things, the time delays,
significant expense, and loss of voting control which may occur in a public
offering.
Under Rule 419, we cannot acquire a target business unless its fair
value represents at least 80% of the maximum offering proceeds.
To determine the fair market value of a target business, our management
will examine the audited financial statements, including balance sheets and
statements of cash flow and stockholders' equity, of any candidate, focusing
attention on its assets, liabilities, sales and net worth. In addition, our
management will participate in a personal inspection of any potential target
business. If we determine that the financial statements of a proposed target
business do not clearly indicate that its fair value represents at least 80% of
the maximum offering proceeds, we may obtain an opinion with respect to the
satisfaction of such criteria from an unaffiliated professional who, for
compensation, engages in the business of advising others as to the value of
properties, businesses or securities, including an investment banking firm which
is a member of the National Association of Securities Dealers, Inc.
None of our officers, directors or affiliates has had any preliminary
contact or discussions with any representative of any other entity regarding a
business combination with us. Any target business that is selected may be a
financially unstable company or an entity in its early stages of development or
growth, including entities without established records of sales or earnings. In
that event, we will be subject to numerous risks inherent in the business and
operations of financially unstable and early stage or potential emerging growth
companies. In addition, we may effect a business combination with an entity in
an industry characterized by a high level of risk, and, although our management
will endeavor to evaluate the risks inherent in a particular target business,
there can be no assurance that we will properly ascertain or assess all
significant risks.
Our management anticipates that it will likely be able to effect only
one business combination, due primarily to our limited financing, and the
dilution of interest for present and prospective stockholders, which is likely
to occur as a result of our management's plan to offer a controlling interest to
a target business in order to achieve a tax free reorganization. This lack of
diversification should be considered a substantial risk in investing in us,
because it will not permit us to offset potential losses from one venture
against gains from another.
We anticipate that the selection of a business combination will be
complex and extremely risky. Because of general economic conditions, rapid
technological advances being made in some industries and shortages of available
capital, our management believes that there are numerous firms seeking the
perceived benefits of becoming a publicly traded corporation. Such perceived
benefits of becoming a publicly traded corporation include, among other things,
facilitating or improving the terms on which additional equity financing may be
obtained, providing liquidity for the principals of a business, creating a means
for providing incentive stock options or similar benefits to key employees, and
providing liquidity, subject to restrictions of applicable statutes, for all
stockholders. Potentially available business combinations may occur in many
different industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such business
opportunities extremely difficult and complex.
Evaluation of Business Combinations
Upon the effectiveness of this registration statement, our officers and
directors will commence contacting third parties with respect to prospective
business combination targets. Our management also will analyze or supervise the
analysis of prospective business combinations. Our management intends to
concentrate on preliminary prospective business combinations, which may be
brought to its attention through persons having pre-existing business or
personal relationships with members of the Company's management and interested
persons referred to the Company by persons having such pre-existing
relationships with members of its management or other third parties. At present,
we contemplate that only our management will identify potential business
combinations through such sources and we do not currently intend to retain any
person or entity to act as a "finder" or broker to identify or analyze or advise
us concerning the merits of potential target businesses. If we consummate a
business combination with an entity introduced to us by a "finder" or broker, we
may be asked to pay a "finder's fee, but given the limited amount of our
available resources, we would, in all likelihood, decline to pay such a fee
unless the target agreed to assume the obligation therefor or indemnified the
Company therefrom. No member or affiliate of our current management will be
entitled to a "finder's fee" under any circumstance.
16
While we have not established definitive criteria for acquisition
candidates, we intend to focus on candidates satisfying some, but not
necessarily all, of the following criteria:
o A U.S.-based or foreign entity,
o Minimum of one year operating history, and
o At least $1 million net worth.
In analyzing prospective business combinations, our management will
also consider such matters as the following:
o Available technical, financial, and managerial resources,
o Working capital and other financial requirements,
o Prospects for the future,
o Nature of present and expected competition,
o The quality and experience of management services which may be
available and the depth of that management,
o The potential for further research, development, or exploration,
o Specific risk factors not now foreseeable but which then may be
anticipated to impact on our proposed activities,
o The potential for growth or expansion,
o The potential for profit,
o The perceived public recognition or acceptance of products or
services, and
o Name identification and other relevant factors.
As a part of our investigation, our officers and directors will meet
personally with management and key personnel, visit and inspect material
facilities, check references of management and key personnel, and take other
reasonable investigative measures, to the extent of our limited financial
resources and management expertise. Our limited financial resources will
restrict us from investigating every prospective target company that may be
available to us and will require that we narrow our choices of prospective
targets to the ones our management will deem as having the most favorable
conditions. Our limited management expertise with business combination
transactions also may restrict us in our investigation and analysis of
prospective target companies.
Since we will be subject to Section 13 or 15(d) of the Exchange Act, we
will be required to furnish information about significant acquisitions,
including audited financial statements for the target company, covering one, two
or three years depending upon the relative size of the acquisition.
Consequently, acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the Exchange Act are applicable.
We anticipate that any business combination will present certain risks.
Our management may not be able to adequately identify and evaluate many of these
risks prior to selection. Our investors must, therefore, recognize that there
17
are certain risks in relying on the ability of our management to identify and
evaluate the risks of a prospective business combination. We anticipate that the
principals of some of the combinations which will be available to us will have
been unable to develop a going concern or that such business will be in its
development stage in that it has not generated significant revenues from its
principal business activity. The risk exists that even after the consummation of
such a business combination and the related expenditure of our funds, the
combined enterprise will still be unable to become a going concern or advance
beyond the development stage. Many of the potential business combinations may
involve new and untested products, processes or market strategies. We may assume
such risks although they may adversely impact on our stockholders because we
consider the potential rewards to outweigh them.
Business Combinations
In implementing a structure for a particular business combination, we
may become a party to a merger, consolidation, or reorganization with another
corporation or entity. We may alternatively purchase stock or assets of an
existing business.
Any merger, acquisition or other business combination can be expected
to have a significant dilutive effect on the percentage of shares held by our
existing stockholders, including investors in the offering. The target business
we consider will, in all probability, have significantly more assets than we do.
Therefore, in all likelihood, our management will offer a controlling interest
in our company to the owners of the target business. While the actual terms of a
transaction to which we may be a party cannot be predicted, we expect that the
parties to the business transaction will find it desirable to avoid the creation
of a taxable event and thereby structure the acquisition in a so-called
"tax-free" reorganization under Sections 368(a)(1) or 351 of the Internal
Revenue Code. In order to obtain tax-free treatment under the Internal Revenue
Code, the owners of the acquired business may need to own 80% or more of the
voting stock of the surviving entity. As a result, our stockholders, including
investors in the offering, would retain 20% or less of the issued and
outstanding shares of the surviving entity, which would result in significant
dilution in percentage of ownership of the entity after the combination and may
also result in a reduction in the net tangible book value per share of our
investors. In addition, a majority or all of our directors and officers will
probably, as part of the terms of the acquisition transaction, resign as
directors and officers.
Our management will not actively negotiate or otherwise consent to the
purchase of any portion of their common stock as a condition to or in connection
with a proposed business combination, unless such a purchase is demanded by the
principals of the target company as a condition to a merger or acquisition. Our
officers and directors have agreed to this restriction which is based on an oral
understanding between members of our management. Members of our management have
no plans to change or eliminate this policy.
The issuance of substantial additional securities and their potential
sale into any trading market which may develop in our common stock may have a
depressive effect on our trading market.
The structure of the business combination will depend on, among other
factors:
o The nature of the target business,
o Our needs and desires and the needs and desires of the persons
controlling the target business,
o The management of the target business, and
o Our relative negotiating strength compared to the strength of the
persons controlling the target business.
If at any time prior to the completion of the 180-day or shorter period
of the offering, we enter negotiations with a possible acquisition candidate and
such a transaction becomes probable, we will suspend the offering and file an
amendment to the registration statement which will include financial statements,
including balance sheets, statements of operations, statements of cash flow and
statements of stockholders' equity, of the proposed target.
Our management is currently not affiliated with any entity that may be
a business combination or target company. We will not purchase the assets of any
company of which a majority of the outstanding capital stock is beneficially
18
owned by one or more of our officers, directors, promoters or affiliates or
associates. Furthermore, we intend to adopt a procedure whereby a special
meeting of our stockholders will be called to vote upon a business combination
with an affiliated entity, and stockholders who also hold securities of such
affiliated entity will be required to vote their shares of stock in the same
proportion as our publicly held shares are voted. If the prospective target is
affiliated with our company, we will also retain an independent auditor and
appraiser to evaluate such prospective target. Our officers and directors have
not approached and have not been approached by any person or entity with regard
to any proposed business venture which desires to be acquired by us. If at any
time a business combination is brought to us by any of our promoters,
management, or their affiliates or associates, disclosure as to this fact will
be included in the post-effective amendment to the registration statement
required by Rule 419. This will allow our public investors the opportunity to
evaluate the business combination before voting to reconfirm their investment.
Competition
We are an insignificant player among the firms which engage in business
combinations. There are many established venture capital and financial concerns
which have significantly greater financial and personnel resources and technical
expertise than we will. In view of our combined limited financial resources and
limited management availability, we will continue to be at a significant
competitive disadvantage compared to our competitors. Also, we will be competing
with a number of other small, blank check public and shell companies.
Determination of Offering Price
The offering price of $1.00 per share has been arbitrarily determined
by us. This price bears no relation to our assets, book value or other customary
investment criteria, including, among other things, our prior operating history.
Among the factors considered by us in determining the offering price were:
o Our lack of operating history,
o Estimates of our business potential,
o Our limited financial resources,
o The amount of equity desired to be retained by present
stockholders,
o The amount of dilution to the public, and
o The general condition of the securities markets, specifically the
over-the-counter market.
Investment Company Regulation
The Investment Company Act defines an "investment company" as an issuer
which is, or holds itself out as, being engaged primarily in the business of
investing, reinvesting or trading of securities. While we do not intend to
engage in such activities, we could become subject to regulations under the
Investment Company Act in the event we obtain a minority interest in a number of
enterprises. We would incur significant registration and compliance costs if
required to register under the Investment Company Act. Accordingly, our
management will continue to review our activities from time to time with a view
toward reducing the likelihood we could be classified as an investment company.
"Penny Stock" Regulation
Broker-dealers participating in sales of our stock following the
release of our shares from escrow will be subject to the so called "penny stock"
regulations covered by Rule 15g-9 under the Exchange Act. Under the rule,
broker-dealers must furnish to all investors in penny stocks a risk disclosure
document required by the rule, make a special suitability determination of the
purchaser and have received the purchaser's written agreement to the transaction
prior to the sale. In order to approve a person's account for a transaction in a
penny stock, the broker or dealer must
19
(i) obtain information concerning the person's financial situation,
investment experience and investment objectives;
(ii) reasonably determine, based on the information required by
paragraph (i) that transactions in penny stock are suitable for the person and
that the person has sufficient knowledge and experience in financial matters
that the person reasonably may be expected to be capable of evaluating the risks
of transactions in penny stock;
(iii) deliver to the person a written statement
o setting forth the basis on which the broker or dealer made the
determination required by paragraph (ii) in this section;
o stating in a highlighted format that it is unlawful for the
broker or dealer to effect a transaction in a designated security
subject to the provisions of paragraph (ii) of this section
unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the
person;
o stating in a highlighted format, immediately preceding the
customer signature line, that the broker or dealer is required to
provide the person with the written statement and the person
should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person's financial
situation, investment experience and investment objectives; and
o obtain from the person a signed and dated copy of the written
statement.
The broker or dealer may not sell a penny stock to, or to effect the purchase of
a penny stock by, for or with the account of a customer less than two business
days after the broker or dealer sends the customer the required disclosure
document and written statement.
A "penny stock" is any equity security other than a security (i)
registered, or approved for registration, upon notice of issuance on a national
securities exchange that has been continuously registered as a national
securities exchange since April 20, 1992, and has maintained quantitative
listing standards that are substantially similar to or stricter than those
listing standards that were in place on that exchange on January 8, 2004; (ii)
listed on a national securities exchange or an automated quotation system
sponsored by a registered national securities association (including Nasdaq)
that satisfies certain minimum quantitative listing standards; (iii) that has a
price of five dollars or more; or (iv) whose issuer has net tangible assets in
excess of $5,000,000, if in continuous operation for less than three years,
demonstrated by financial statements dated less than 15 months previously that
the broker or dealer has reviewed and has a reasonable basis to believe are true
and complete in relation to the date of the transaction with the person with
limited exceptions. Consequently, our stock is likely a "penny stock" and Rule
15g-9 may adversely affect the ability of broker-dealers to sell our securities.
Employees
We presently have no employees apart from our management. Our
President, Chief Financial Officer and Secretary are engaged in outside business
activities and they anticipate that they each will devote to our business only
between five and fifteen hours per week until the acquisition of a successful
business opportunity has been consummated. We expect no significant changes in
the number of our employees other than such changes, if any, incident to a
business combination.
Facilities
Our Chief Financial Officer, Secretary and Director, Serguei Melnik,
currently provides our office space at no cost to Emerging Markets Holdings,
Inc., an arrangement which we expect to continue until the completion of the
offering. At the completion of the offering and until a business combination is
consummated, we are not required to pay any rent. We presently do not own any
equipment, and do not intend to purchase or lease any equipment prior to or upon
completion of a business combination.
20
Recent Accounting Pronouncements
We have adopted all recently issued accounting pronouncements. The
adoption of the accounting pronouncements is not anticipated to have a material
effect on our operations.
Litigation; Legal Proceedings
We are not a party to any legal proceedings, nor are we aware of any
threat of litigation against the company.
21
MANAGEMENT
The following table provides information concerning our officers and
directors. All directors hold office until the next annual meeting of
stockholders or until their successors have been elected and qualified. Each of
the individuals listed in the table constitute "promoters" as that term is
defined under Rule 405 of the Securities Act.
Name Age Position Year Appointed
- ---- --- -------- --------------
Ramon Rosales 62 President and CEO 2005
Serguei Melnik 33 Secretary and CFO 2005
Ramon Rosales, President, Chief Executive Officer and Director, is
currently a major shareholder (33%) of Progetrol Oil Supplier Limited Company,
an Ecuadorian company, with an average USD $5,000,000 in revenues per year. He
has served within the management of that company in the position of President
for the last 10 years. Progetrol Oil Supplier Limited Company was founded in
October 2nd, 1992, with paid-in capital of $10,000 U.S. dollars. The company
engages in foreign trade. It imports foreign products, and promotes and sells
various products manufactured in Ecuador. The company also provides services in
the oil industry, sells and acquires repair parts and materials within the
industry. The company serves as a domestic (in Ecuador) and foreign supplier for
oil companies, industries, and other various enterprises. It engages in domestic
(in Ecuador) and foreign trade, creates business consortia and partnerships, and
presents property offers for public and private actions, bids, and purchases.
Mr. Rosales also has vast experience in sales and marketing, and in
restructuring small businesses for strategic comparative advantage
opportunities. He also maintained holdings in construction projects and farming
projects located in the Republic of Ecuador during the last 15-year period.
Since 1995, Mr. Rosales has been involved with real estate development in the
City of Quito, Province of Pichincha-Ecuador.
Mr. Rosales and his partners have developed "Calderon" Parish (a 37
unit two-story townhouse community), Maria Isabel II (a development comprising
three groups of six apartments (each 75 square meters) in each group, Maria Paz
I (a 46- unit development; 30 units of 100 square meters each and 16 units of
138 square meters each), and Maria Paz II (an 42-unit (100 square meters each)
apartment community acquired in 2002). He owns approximately 54.45% of the Maria
Paz I project and approximately 50% of the Maria Paz II project. In the Northern
Region of Quito, in the area of El Ponceano, Mr. Rosales' holdings include
approximately 1800 square meters territory on which Mr. Rosales contemplates
another building project of about eight clusters of three-story buildings. Each
cluster is being designed to have capacity for six apartments. This property was
purchased earlier in 2006.
Mr. Melnik, Chief Financial Officer, Secretary and Director, serves as
a financial and marketing consultant to public companies and companies seeking
to list or issue their securities on the U.S. stock exchanges. Between July,
2003 and May, 2005 Mr. Melnik also served as Director and officer of Asconi
Corporation, a public company trading on the American Stock Exchange. He has
provided legal and financial advice linked to the U.S. financial markets,
securing non-leveraged funds from investment bankers and institutions, and
consulting on obtaining lines of credit from U.S. financial institutions. Mr.
Melnik has previously provided financial consulting services to Eastern European
companies desiring to trade their securities on the U.S. exchanges, served as a
financial advisor and advised clients with respect to sales and purchases of
securities and mutual funds allocations, and worked as a financial analyst. Mr.
Melnik received his Juris Doctorate at Moldova State University in Chisinau,
Moldova. He practiced law as an in-house corporate counsel for Expert Consultant
Company and with the Department of Foreign Affairs for JSC Bank in Chisinau,
Moldova. Additionally, he directed a successful marketing awareness campaign to
introduce Asconi Corporation products into the U.S. markets including the
conduct of independent research analysis, and the development of investors
relations programs to maximize the exposure of Asconi Corporation any and an
integrated fundraising tracking system for Asconi Corporation.
No member of management is currently holding any position of management
or directorship in any reporting companies. There are currently no agreements or
understandings whereby any officer or director would resign at the request of
another person. None of our officers or directors is acting on behalf of or will
act at the direction of any other person.
22
Prior Blank Check Company Experience
Our management has no prior experience managing companies conducting
"blank check" offerings under Rule 419. Thus, our management may not have the
experience to facilitate a successful offering or to successfully identify a
business combination or acquisition target.
Prior Shell Company Experience
Our officers and directors have no previous experience launching and
operating "blank check" companies under Rule 419. Thus, our officers and
directors may not have the experience to facilitate a successful offering or to
identify a business combination or acquisition target.
Conflicts Of Interest
Members of our management are, and may in the future become, associated
with other firms involved in a range of business activities. Consequently, there
are inherent potential conflicts of interest in their acting as officers and
directors of Emerging Markets Holdings, Inc. Because the officers and directors
are engaged in other business activities, they anticipate that they will devote
only a limited amount of time to our affairs.
We do not currently plan to enter into any related-party transactions.
If we do enter into any related-party transactions in the future, any such
transactions will be made on an arms-length basis and will be on terms no more
favorable than those given to an unaffiliated third party.
Each of Messrs. Melnik and Rosales will likely in the future become
stockholders, officers or directors of other companies that may be engaged, or
formed for the purpose of engaging in business activities similar to those to be
conducted by us. Such activities by Messrs. Melnik and/or Rosales could occur
before we identify a target acquisition candidate or begin negotiations
therefor. Accordingly, additional direct conflicts of interest may arise in the
future with respect to individuals acting on behalf of Emerging Markets
Holdings, Inc. and other entities. Moreover, additional conflicts of interest
may arise with respect to opportunities that come to the attention of these
individuals in the performance of their duties. Emerging Markets Holdings, Inc.
does not currently have a contractual right of first refusal pertaining to
opportunities that come to management's attention where the opportunity may
relate to Emerging Markets Holdings, Inc.'s proposed business operations.
Serguei Melnik and Ramon Rosales may be invited to serve as directors,
officers or consultants with the post-acquisition entity. Messrs. Melnik and
Rosales may engage in the negotiations of their employment or consulting
agreements concurrently with the negotiations of the acquisition terms. In such
event, their individual interests in the financial and non-financial terms of
their relationships with the post-acquisition entity may present potential
conflicts with the interests of Emerging Markets Holdings, Inc.
Our officers and directors are, so long as they remain our officers or
directors, subject to the restriction that all opportunities contemplated by our
plan of operation that come to their attention, in the performance of their
duties or in any other manner, will be considered opportunities of, and be made
available to us and the other companies that they are affiliated with on an
equal basis. A breach of this requirement will be a breach of the fiduciary
duties of the officer or director. If we and any companies that the officers and
directors are affiliated with both desire to take advantage of an opportunity,
then those officers and directors would abstain from voting upon the
opportunity. In the event there is more than one company conducting a blank
check offering and there is insufficient independence among officers and
directors of the companies, our directors and offices will advocate that the
company that first filed a registration statement with the Securities and
Exchange Commission, i.e., Emerging Markets Holdings, Inc., should be entitled
to proceed with the proposed transaction. In the event officers or directors of
Emerging Markets Holdings, Inc. become affiliated with a shell company that has
not conducted a blank check offering and there is insufficient independence
among that company and Emerging Markets Holdings, Inc. to choose which of the
entities may pursue the opportunity, the choice among entities will be
determined by the preferences of the target. Directors may still individually
take advantage of opportunities if we should decline to do so. There is no
written policy in place with respect to such conflict of interest and except as
set forth above, we have not adopted any other conflict of interest policy with
respect to those transactions.
23
We have no plans to enter into a business combination or acquisition
involving an entity in which any of our promoters, officers, directors, or their
affiliates may directly or indirectly have an ownership interest. We do not have
any existing corporate policy prohibiting such transactions. However, we do
intend to adopt a procedure whereby a special meeting of our stockholders will
be called to vote upon a business combination with an affiliated entity, and
stockholders who also hold securities of such affiliated entity will be required
to vote their shares of stock in the same proportion as our publicly held shares
are voted. If the prospective target is affiliated with our company, we will
also retain an independent auditor and appraiser to evaluate such prospective
target.
Currently no other company affiliated with or related to Messrs.
Rosales and Melnik has filed a registration statement with the SEC.
Remuneration
None of our officers or directors has received any cash or other
remuneration since our inception. Officers will not receive any remuneration on
account of services rendered in such capacity. No remuneration of any nature has
been or will be paid for or on account of services rendered by a director in
such capacity. Neither of the officers and directors intends to devote more than
fifteen hours a week to our affairs.
It is possible that, after we successfully consummate a business
combination with an unaffiliated entity, that entity may desire to employ or
retain one or a number of members of our management for the purposes of
providing services to the surviving entity. However, we have adopted a policy
whereby the offer of any post-transaction employment to members of management
will not be a consideration in our decision whether to undertake any proposed
transaction. Each member of management has agreed to disclose to the Board of
Directors discussions concerning possible employment by any entity that proposes
to undertake a transaction with us and further, to abstain from voting on the
transaction. Therefore, as a practical matter, if each member of the Board of
Directors is offered employment in any form from any prospective business
combination candidate, the proposed transaction will not be approved by the
Board of Directors as a result of the inability of the Board to affirmatively
approve the transaction. The transaction would then be presented to our
stockholders for approval.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by Emerging Markets
Holdings, Inc. for the benefit of its employees.
Management Involvement
We have conducted no business as of yet, aside from raising initial
funding associated with our offering. After the closing of the offering, our
management intends to search for target businesses and then will consider and
negotiate with target businesses until an acquisition agreement is executed. Our
management has not divided these duties among its members. No member of
management has any distinct influence over the other in connection with his or
her participation in our affairs. Our management will be responsible for
distributing to stockholders written communications pertaining to Emerging
Markets Holdings, Inc. and for responding to potential investor inquiries.
Management Control
Our management may not divest themselves of ownership of our shares of
common stock prior to the consummation of an acquisition or merger transaction.
This policy is based on an unwritten agreement among management. Management has
no plans, and does not intend, to change or eliminate this policy.
The shares of common stock held by our officers and directors are
"restricted securities" as that term is defined in the Securities Act and may
not be sold by these persons, or their transferees pursuant to Rule 144 of the
Securities Act either before or after a business combination, regardless of
technical compliance with the rule. The position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission is that any such
resale transaction by those persons under Rule 144 would appear to be designed
to distribute or redistribute such shares to the public without coming within
the exemption from the registration requirements of the Securities Act.
Therefore, these persons, and their affiliates, or transferees, can only resell
the shares they hold as of the date hereof through such registration.
24
STATEMENT AS TO INDEMNIFICATION
Section 607.0850 of the Florida Business Corporation Act provides for
indemnification of our officers, directors, employees and agents. Under Article
VII of our by-laws, we will indemnify and hold harmless to the fullest extent
authorized by the Florida Business Corporation Act, any of our directors,
officers, agents or employees, against all expense, liability and loss
reasonably incurred or suffered by such person in connection with activities on
our behalf. Complete disclosure of relevant sections of our certificate of
incorporation and by-laws is provided in Part II of the registration statement
of which this prospectus forms a part. This information can also be examined as
described in "Further Information."
We have been informed that in the opinion of the Commission
indemnification for liabilities arising under the Securities Act, which may be
permitted to our directors, officers or control persons pursuant to our
certificate of incorporation and by-laws, is against the public policy as
expressed in the Securities Act and is, therefore, unenforceable.
25
MARKET FOR OUR COMMON STOCK
Prior to the date of the prospectus, no trading market for our common
stock has existed. Pursuant to the requirements of Rule 15g-8 of the Exchange
Act, a trading market will not develop prior to or after the effectiveness of
the registration statement while certificates representing the shares of common
stock remain in escrow. Stock certificates must remain in escrow until the
consummation of a business combination and its confirmation by our investors
pursuant to Rule 419. There are currently three holders of our outstanding
common stock, which was purchased in reliance upon an exemption from
registration requirements of the Securities Act. All current stockholders are
sophisticated investors and are accredited investors as defined in Rule 501 of
the Securities Act. Current stockholders will own more than 50% of the
outstanding shares upon completion of this offering. We can offer no assurance
that a trading market will develop upon the consummation of a business
combination and the subsequent release of the stock certificates from escrow. To
date, neither we, nor anyone acting on our behalf, have taken any affirmative
steps to retain or encourage any broker-dealer to act as a market maker for our
common stock. Further, we have not entered into any discussions, or
understandings, preliminary or otherwise, through our management or through
anyone acting on our behalf and any market maker concerning the participation of
a market maker in the future trading market, if any, for our common stock.
Our common stock is not quoted at the present time. The Commission has
adopted a rule that established the definition of a "penny stock," for purposes
relevant to us, as any equity security that has a market price of less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require:
o that a broker or dealer approve a person's account for
transactions in penny stocks; and
o the broker or dealer receive from the investor a written
agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny
stocks, the broker or dealer must
o obtain financial information and investment experience and
objectives of the person; and
o make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has
sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transaction in penny stocks.
The broker or dealer must also deliver, no less than two business days prior to
any transaction in a penny stock, a disclosure schedule in a form specified by
the Commission relating to the penny stock market, which, in highlight form,
o sets forth the basis on which the broker or dealer made the
suitability determination; and
o states that the broker or dealer must receive a signed, written
agreement from the investor prior to the transaction.
Disclosure also has to be made about
o the risks of investing in penny stocks in both public offerings
and in secondary trading,
o the commissions payable to both the broker-dealer and the
registered representative,
o current quotations for the securities, and
o the rights and remedies available to an investor in cases of
fraud in penny stock transactions.
Finally, monthly statements have to be sent by the broker-dealer disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks.
26
We cannot predict whether, upon a successful business combination, our
securities will comply with the requirements for exemption from classification
as "penny stock" under Rule 3a51-1 of the Exchange Act, or the applicable "penny
stock" regulations for listing on NASDAQ or some other national exchange, or if
they were to become listed, be able to maintain the maintenance criteria
necessary to insure continued listing. If our securities fail to qualify for the
exemption or fail to qualify or meet the relevant maintenance criteria after
qualification in the future, it may result in the discontinuance of the
inclusion of our securities on a national exchange. However, trading, if any, in
our securities may then continue in the over the counter market and quotations
may be available from the over the counter bulletin board or in the so-called
pink sheets, a centralized quotation service that collects and publishes market
maker quotes for over the counter securities. As a result, a stockholder may
find it more difficult to dispose of, or to obtain accurate quotations as to the
market value of, our securities.
The offering price of $1.00 per share has been arbitrarily determined
by us. This price bears no relation to our assets, book value or any other
customary investment criteria, including our prior operating history. Among the
factors considered by us in determining the offering price were:
o Our lack of operating history,
o Estimates of our business potential,
o Our limited financial resources,
o The amount of equity desired to be retained by present
shareholders,
o The amount of dilution to the public, and
o The general condition of the securities markets, specifically the
over-the-counter market.
Present management does not anticipate that it will undertake or will
employ consultants or advisers to undertake any negotiations or discussions with
market makers prior to the execution of an agreement for a business combination.
Our management expects that discussions in this area will ultimately be
initiated by the party or parties controlling the entity or assets which we may
acquire who may employ consultants or advisors to obtain market makers.
SHARES ELIGIBLE FOR FUTURE SALE
There has been no public market for our common stock and we cannot
assure you that a significant public market for our common stock will be
developed or be sustained after this offering assuming successful completion of
a business combination. Sales of substantial amounts of common stock in the
public market after this offering, or the possibility of substantial sales
occurring, could adversely affect prevailing market prices for the common stock
or our future ability to raise capital through an offering of equity securities.
The 5,000,000 shares of our common stock currently outstanding are
"restricted securities" as that term is defined in the Securities Act and are
held by certain of our officers, directors and promoters. These shares may not
be sold by these persons, or their transferees pursuant to Rule 144 of the
Securities Act either before or after a business combination, regardless of
technical compliance with the rule. The position of the staff of the Division of
Corporation Finance of the Securities and Exchange Commission is that any such
resale transaction by those persons under Rule 144 would appear to be designed
to distribute or redistribute such shares to the public without coming within
the exemption from the registration requirements of the Securities Act.
Therefore, these persons, and their affiliates, or transferees, can only resell
the shares they hold as of the date hereof through such registration.
We have not issued any options or warrants to purchase, or securities
convertible into, our common equity.
27
CERTAIN TRANSACTIONS
The sales of substantial amounts of our common stock in the public
market or the prospect of such sales could materially and adversely affect the
market price of our common stock.
On October 12, 2005, our promoters purchased an aggregate of 5,000,000
shares of our common stock for an aggregate cash consideration of $9,600. No
other assets, services or other consideration was received by our company from
any of our promoters.
Nothing of value has been paid by our company to any of our promoters.
Ramon Rosales, President and Chief Executive Officer, beneficially owns
1,000,000 shares of our common stock.
Serguei Melnik, Secretary and Chief Financial Officer, beneficially
owns 4,000,000 shares of our common stock (1,000,000 of which he owns
personally, and 3,000,000 of which he owns beneficially as a 100% shareholder of
Wolf Blitz, Inc.).
Except as otherwise indicated in this prospectus, there have been no
related party transactions, or any other transactions or relationships required
to be disclosed pursuant to Item 404 of Regulation S-B.
PRINCIPAL STOCKHOLDERS
The table that follows sets forth certain information regarding the
beneficial ownership of our common stock as of May 22, 2006, and as adjusted to
reflect the sale of the shares in the offering, by
o each person or entity who is known by us to own beneficially more
than 5% of our outstanding common stock;
o each of our officers and directors; and
o all of our directors and officers as a group.
Shares of Common Stock Beneficially Owned
Prior to Offering Owned after Offering
----------------- --------------------
Name and Address of Beneficial Owner (1) Class of Stock Number Percent Number Percent
- ---------------------------------------- -------------- ------ ------- ------ -------
Ramon Rosales Common 1,000,000 20 1,000,000 18.18
Serguei Melnik Common 4,000,000 80 4,000,000 72.73
(1) The address for each person or entity listed on the table is c/o
Emerging Markets Holdings, Inc., 309 Celtic Court, Oviedo,
Florida 32765.
Shares of Common Stock Beneficially Owned
Prior to Offering Owned after Offering
----------------- --------------------
Name and Address of Beneficial Owner (1) Class of Stock Number Percent Number Percent
- ---------------------------------------- -------------- ------ ------- ------ -------
Ramon Rosales - CEO, President, Director Common 1,000,000 20 1,000,000 18.18
Serguei Melnik - CFO, Secretary, Director Common 4,000,000 80 4,000,000 72.73
(1) The address for each person or entity listed on the table is c/o
Emerging Markets Holdings, Inc., 309 Celtic Court, Oviedo,
Florida 32765.
28
Shares of Common Stock Beneficially Owned
Prior to Offering Owned after Offering
----------------- --------------------
Name and Address of Beneficial Owner (1) Class of Stock Number Percent Number Percent
- ---------------------------------------- -------------- ------ ------- ------ -------
Officers and Directors Common 5,000,000 100 5,000,000 90.90
(1) The address for each person or entity listed on the table is c/o
Emerging Markets Holdings, Inc., 309 Celtic Court, Oviedo,
Florida 32765.
Each of Messrs. Rosales and Melnik may be deemed "Promoters" as that
term is defined under the Securities Act.
DESCRIPTION OF SECURITIES
Common Stock
We are authorized to issue 15,000,000 shares of common stock, $.0001
par value per share, of which 5,000,000 shares are issued and outstanding. Each
outstanding share of common stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by their holders at meetings of
the stockholders.
Holders of our common stock:
(i) have equal ratable rights to dividends from funds legally
available therefor, if declared by our Board of Directors;
(ii) are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon our liquidation,
dissolution or winding up;
(iii) do not have preemptive, subscription or conversion rights or
redemption or sinking fund provisions; and
(iv) are entitled to one non-cumulative vote per share on all matters
on which stockholders may vote at all meetings of our
stockholders.
The holders of shares of our common stock do not have cumulative voting rights
in the election of directors, which means that the holders of more than 50% of
outstanding shares voting for the election of directors can elect all of our
directors if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of our directors. At the completion of the
offering, the present officers and directors and present stockholders will
beneficially own more than 50% of the outstanding shares of common stock.
Accordingly, after completion of the offering, our present stockholders will be
in a position to control all of our affairs and elect all of our directors.
Preferred Stock
As of the date of the prospectus, no shares of preferred stock have
been issued. Our Board of Directors, without further approval of our
stockholders, is authorized to fix the dividend rights and terms, conversion
rights, voting rights, redemption rights, liquidation preferences and other
rights and restrictions relating to any series. Issuances of shares of preferred
stock, while providing flexibility in connection with possible financings,
acquisitions and other corporate purposes, could, among other things, adversely
affect the voting power of the holders of our common stock and prior series of
preferred stock then outstanding.
29
Future Financing
In the event the proceeds of the offering are not sufficient to enable
us to successfully fund a business combination, we may seek additional
financing. At this time, we believe that the proceeds of the offering will be
sufficient for such purpose and therefore do not expect to issue any additional
securities before the consummation of a business combination. However, we may
issue additional securities, incur debt or procure other types of financing if
needed. We have not entered into any agreements, plans or proposals for such
financing and at present have no plans to do so. We will not use the escrowed
funds as collateral or security for any loan or debt incurred. If we require
additional financing, there is no guarantee that such financing will be
available to us or if available that such financing will be on terms acceptable
to us.
Reports To Stockholders
We intend to furnish our stockholders with annual reports containing
audited financial statements as soon as practicable after the end of each fiscal
year. Our fiscal year ends on December 31st.
Transfer Agent
We have appointed Pacific Stock Transfer Company as transfer agent for
our shares of common stock.
PLAN OF DISTRIBUTION
Conduct of the Offering
We hereby offer the right to subscribe for 500,000 shares at $1.00 per
share on a "best efforts, all or none basis." There is no minimum purchase
requirement for participation in this offering. We will not compensate any
person in connection with the offer and sale of the shares.
Our management shall distribute prospectuses related to the offering.
We estimate that Messrs. Rosales and Mr. Melnik will distribute approximately
100 prospectuses, limited to acquaintances, friends and business associates of
the promoters and persons who are referred to us by such parties. Our management
shall conduct the offering of the shares and shall only contact potential
investors with whom our promoters have a pre-existing relationship. Management
will respond to inquiries from such parties, or their affiliates or persons who
are referred to us by such parties consistent with the information in the
prospectus, will provide persons who are referred to the Company by such parties
with a prospectus, and will provide subscribing investors with the required
subscription agreement.
Messrs. Rosales and Mr. Melnik are "associated persons" of us, as that
term is defined in Rule 3a4-1 under the Exchange Act. However, none of these
individuals will be deemed to be a broker because each:
(1) is not and will not be subject to a statutory disqualification as
that term is defined in Section 3(a)(39) of the Exchange Act at
the time of his participation in the sale of our securities;
(2) is not and will not be compensated in connection with his
participation in the sale of our securities by the payment of
commissions or other remuneration based either directly or
indirectly on transactions in securities;
(3) is not and will not be an associated person of a broker or dealer
at the time of his participation in the sale of our securities;
and
(4) will restrict his participation to the following activities:
(a) preparing any written communication or delivering it through
the mails or other means that does not involve the oral
solicitation of a potential purchaser;
(b) responding to inquiries of a potential purchaser in a
communication initiated by the potential purchaser, provided
however, that the content of each response is limited to
information contained in a registration statement filed
under the Securities Act or other offering document; and
30
(c) performing ministerial and clerical work involved in
effecting any transaction.
Following the effective date of this registration statement, our
management will through written communications provide information about this
offering and solicit subscriptions for shares of our common stock to its
business associates and acquaintances. The company also will organize a series
of road show meetings with brokerages and securities instituions. No offer for
the sale of our stock will be communicated orally.
As of the date of the prospectus, we have not retained a broker in
connection with the sale of the shares. In the event we retain a broker who may
be deemed an underwriter, we will file an amendment to the registration
statement with the Commission. However, we have no present intention of using a
broker.
We will not approach nor permit anyone acting on our behalf to approach
a market maker or take any steps to request or encourage a market in our
securities prior to the completion of a business combination and reconfirmation
by our stockholders of their offering and their approval of the business
combination transaction. We have not conducted any preliminary discussions or
entered into any understandings with any market maker regarding a future trading
market in our securities, nor do we have any plans to engage in any discussions.
We do not intend to use consultants to obtain market makers. No member
of our management, no promoter or anyone acting at their direction will
recommend, encourage or advise investors to open brokerage accounts with any
broker-dealer which makes a market in the shares. Our investors shall make their
own decisions regarding whether to hold or sell their securities. We shall not
exercise any influence over investors' decisions.
We intend to sell our securities initially in a limited number of
states including Florida, New York, Pennsylvania and California, or those states
which have an exemption from registration requirements applicable to shares of a
blank check company.
Method Of Subscribing
Persons may subscribe for shares by completing and signing the
subscription agreement and delivering it to us prior to the expiration date of
the offering. Subscribers must pay $1.00 per share by check payable in United
States dollars to "Regions Bank/ Emerging Markets Holdings, Inc.'s Escrow
Account" or via wire transfer, as provided in the subscription agreement. The
offering is being made on a "best efforts, all or none basis." Thus, unless all
500,000 shares are sold, none will be sold.
Expiration Date
The offering will end upon the earlier of the receipt of subscriptions
for 500,000 shares or 180 days from the date of this prospectus.
Escrow
The proceeds from the offering will be held in escrow pursuant to an
escrow agreement in accordance with Rule 419. Initially funds received from
investors will be held in a non-interest bearing account with an insured
depositary institution. If in the 180-day offering period we are not successful
in selling all of the 500,000 shares in the offering, the funds raised will be
promptly returned to the investors, without interest. If we are successful, the
escrow account will begin to bear interest at the Escrow Agent's then applicable
rate for money market investment accounts. As of the date of this prospectus,
such rate was 0.60%, but that rate may increase or decrease depending on the
Escrow Agent's applicable money market rate at the time the offering is
completed and the funds transferred into the interest bearing account. None of
the funds in escrow will be released to us to cover our initial fees and
expenses. The remaining funds will be left in escrow until we consummate a
business combination in accordance with Rule 419 or 18 months from the date of
this prospectus have passed. If the time period elapses, the remaining funds in
escrow, plus interest, from the date funds were transferred to the interest
bearing escrow account, will be returned to the investors. If a business
combination is consummated, the remaining funds in the escrow account, other
than funds returned to investors that elect not to continue their investment in
the combined entity pursuant to the reconfirmation offer, will be disbursed to
Emerging Markets Holdings, Inc. for its operations.
31
WHERE YOU CAN FIND MORE INFORMATION
We have not previously been required to comply with the reporting
requirements of the Exchange Act. We have filed with the Commission a
registration statement on Form SB-2 to register the shares of common stock. The
prospectus is part of the registration statement, and, as permitted by the
Commission's rules, does not contain all of the information in the registration
statement. For further information about us, and the securities offered under
the prospectus, you may refer to the registration statement and to the exhibits
and schedules filed as a part of this registration statement. As of the
effective date of the registration statement, we will be a reporting company and
will be subject to the reporting requirements of the Exchange Act. In the event
that our obligation to file such reports is suspended under Section 15(d) of the
Exchange Act we will voluntarily register in order to continue to file such
periodic reports. Our filings may be inspected and copied without charge at the
offices of the Commission, 100 F Street, N.E., Washington, D.C. 20549. Copies of
our filings can be obtained from the Public Reference Section of the Commission,
100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. You may call the
Commission at 1-800-SEC-0330 for further information on the public reference
room. We have filed this registration statement and will file all future
registration statements and other documents and reports electronically through
EDGAR, the Electronic Data Gathering, Analysis and Retrieval System. These
documents are publicly available through the Commission's Internet World Wide
Web site at http://www.sec.gov.
You can also call or write us at any time with any questions you may
have. We would be pleased to speak with you about any aspect of our business and
the offering.
32
LEGAL MATTERS
Greene & Lee, P.L., Orlando, Florida, will pass upon the validity of the
shares of common stock offered by the prospectus for us.
EXPERTS
Our financial statements as of, and for the period ended, March 31,
2006, included in this prospectus and in the registration statement, have been
so included in reliance upon the report of Wiener, Goodman & Company, P.C.,
independent registered public accounting firm, included in this prospectus, and
given upon the authority of said firm as experts in accounting and auditing.
33
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Registered Public Accounting Firm F-2
Balance Sheet as of March 31, 2006 (Unaudited) F-4
Statement of Operations for the three months ended
March 31, 2006 and for the
period October 11, 2005
(Date of Formation) through March 31, 2006 (Unaudited) F-5
Statement of Stockholders' Equity (Deficiency), period
October 11, 2005 (Date of Formation) through
March 31, 2006 (Unaudited) F-6
Statement of Cash Flows for the three months ended
March 31, 2006 and for the,
period October 11, 2005
(Date of Formation) through March 31, 2006 (Unaudited) F-7
Notes to Unaudited Financial Statements F-8 - F-9
F-1
Ten Industrial Way East, Suite 2, Eastontown, NJ 07724 (732)544-8111
Fax (732) 544-8788 E-mail: tax@wgpc.net
Wiener, Goodman
& Company, P.C.
---------------
Certified Public Accountants
& Consultants
Joel Wiener, CPA
Gerald Goodman, CPA
Memberships
SEC Practice Section of AICPA
PCPS of AICPA
American Institute of CPA
New Jersey Society of CPA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of Emerging Markets Holdings Inc.
Emerging Markets Holdings Inc.
Attn.: Serguei Melnik, President
309 Celtic Court
Oviedo, FL 32765
We have audited the accompanying balance sheet of Emerging Markets Holdings,
Inc. (the "Company") (a development stage company) as of December 31, 2005 and,
the related statements of operations, stockholders' deficiency and cash flows
for the Period October 11, 2005 (Date of Formation) through December 31, 2005.
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 audits in accordance with the standards of the Public Company
Accounting Oversight Board (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 audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 2005, and the
results of their operations and their cash flows for the Period October 11, 2005
(Date of Formation) through December 31, 2005 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As more fully explained in Note 1 to the
financial statements the Company needs to obtain additional financing to fulfill
its proposed activities and find a merger candidate to expand its operations.
F-2
These uncertainties raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans are also described in Note 1.
The accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties should the Company be unable to
continue as a going concern.
/s/ Wiener Goomdna & Company, P.C.
- ----------------------------------
WIENER, GOODMAN & COMPANY, P.C.
Eatontown, New Jersey
March 10, 2006
F-3
EMERGING MARKETS HOLDINGS INC.
BALANCE SHEET
MARCH 31, 2006
(A Development Stage Company)
(Unaudited)
ASSETS
Current Assets:
Cash in bank $ 2,164
--------
TOTAL ASSETS $ 2,164
--------
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Accrued expenses $ 3,918
Loan payable-related party 6,365
Note payable 826
--------
TOTAL CURRENT LIABILITIES 11,109
Commitments and Contingencies
Stockholders' Deficiency:
Common Stock, $.0001 par value - 15,000,000
shares authorized; 5,000,000 shares outstanding 500
Paid in capital 9,600
Deficit accumulated during the development stage (19,045)
--------
Total Stockholders' Deficiency (8,945)
--------
TOTAL LIABILITIES AND STOCKHOLDERS'
DEFICIENCY $ 2,164
--------
See notes to financial statements
---------------------------------
F-4
EMERGING MARKETS HOLDINGS INC.
STATEMENT OF OPERATIONS
(A Development Stage Company)
(Unaudited)
For the Period
October 11, 2005
For the Three Months (Date of Formation)
Ended Through
March 31, 2006 March 31, 2006
-------------- --------------
Costs and expenses:
General and
administrative expenses $ 4,519 $ 19,045
----------- -----------
Net Loss $ (4,519) $ (19,045)
----------- -----------
Loss per common share -
basic and diluted $ --
-----------
Weighted average number of
common shares outstanding -
basic and diluted 5,000,000
-----------
See notes to financial statements
---------------------------------
F-5
EMERGING MARKETS HOLDINGS INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
PERIOD OCTOBER 11, 2005 (DATE OF FORMATION)
THORUGH MARCH 31, 2006
(A Development Stage Company)
(Unaudited)
Deficit
Accumulated
Common Stock During the
No of Paid- In Development
Total shares Amount Capital Stage
----- ------ ------ ------- -----
October 11, 2005 (Date of
Formation) $ -- $ -- $ -- $ -- $ --
Issuance of shares 10,100 5,000,000 500 9,600 --
Net loss (14,526) -- -- -- (14,526)
Balance, December 31, 2005 (4,426) 5,000,000 500 9,600 (14,526)
Net loss (4,519) -- -- -- (4,519)
Balance, March 31, 2006 $ (8,945) 5,000,000 $ 500 $ 9,600 $ (19,045)
========== ========== ========== ========== ==========
See notes to financial statements
---------------------------------
F-6
EMERGING MARKETS HOLDINGS INC.
STATEMENT OF CASH FLOWS
(A Development Stage Company)
(Unaudited)
For the Period
October 11, 2005
For the Three Months (Date of Formation)
Ended Through
March 31, 2006 March 31, 2006
-------------- --------------
Cash flows from operating activities:
Net loss $ (4,519) $(19,045)
-------- --------
Adjustments to reconcile net loss to net cash
used in operating activities:
Change in operating assets and liabilities:
Increase in accrued expenses 2,407 3,918
-------- --------
Net cash used in operating activities (2,112) (15,127)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common
stock -- 10,100
Proceeds from borrowings - related party 3,715 6,365
Proceeds from borrowings 327 826
-------- --------
Net cash provided by financing activities 4,042 17,291
-------- --------
Net increase in cash 1,930 2,164
Cash - beginning of period 234 --
-------- --------
Cash - end of period $ 2,164 $ 2,164
-------- --------
See notes to financial statements
---------------------------------
F-7
EMERGING MARKETS HOLDINGS INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2006
(A DEVELOPMENT STAGE COMPANY)
1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
- ---------------------
Emerging Markets Holdings, Inc. (the "Company") was incorporated in the State of
Florida on October 11, 2005. The Company was formed by Serguei Melnik as
incorporator. Since inception, the Company has been engaged in organizational
efforts and obtaining initial financing. The Company was formed to pursue a
business combination.
Organization
- ------------
The Company is considered a development stage enterprise as defined in Financial
Accounting Standards Board ("FASB") Statement No. 7, "Accounting and Reporting
for Development Stage Companies". The Company is a "blank check" company and has
indicated that its business plan is to merge with an unidentified company or
companies. The Securities and Exchange Commission defines a "blank check"
company as any development stage company that is issuing a penny stock, within
the meaning of Section 3(a) (51) of the Exchange Act, and that has no specific
plan or purpose, or has indicated that its business plan is to merge with an
unidentified company or companies.
Going Concern
- -------------
The Company's initial activities have been dedicated to raising capital for
future operations.
The ability of the Company to achieve its business plan to merge with an
unidentified company or companies is contingent upon its success in raising
additional capital until a merger is consummated.
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 shown in the financial
statements, development stage losses from October 11, 2005 (Date of Formation)
through March 31, 2006 aggregated $19,045. The Company's cash flow requirements
during the period have been met by the sale of common stock. If the Company is
unable to obtain additional funds for its working capital, it may have to cease
operations. There is no assurance that additional capital will be obtained. This
raises substantial doubt about the ability of the Company to continue as a going
concern.
These financial statements do not include any adjustments relating to
recoverability and classification of recorded asset amounts or the amounts and
classifications of liabilities that might be necessary should the Company be
able to continue as a going concern.
F-8
Significant Accounting Policies
- -------------------------------
Use of Estimates
- ----------------
The preparation of financial statements in conformity with accounting principles
accepted in the United States of America 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.
Income Taxes
- ------------
The Company accounts for income taxes using an asset and liability approach
under which deferred income taxes are recognized by apply enacted tax rates
applicable to future years to the differences between the financial statement
carrying amount and the tax basis of reported assets and liabilities.
The principal item giving rise to deferred taxes are temporary differences
caused by the capitalization of start-up expenditures as required by Section 195
of the Internal Revenue Code of 1986, as amended, for tax purposes and expensing
for book purposes.
Loss Per Share
- --------------
Basic losses per common share are computed by dividing net loss by weighted
average number of common shares outstanding during the year. Diluted earnings
per common share are computed by dividing net earnings by the weighted average
number of common share and potential common shares outstanding during the year.
As of March 31, 2006, there were 5,000,000 outstanding common shares.
New Financial Accounting Standards
- ----------------------------------
In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 123(R) that will require compensation costs related to share-based payment
transactions to be recognized in the financial statements. With limited
exceptions, the amount of compensation cost will be measured based on the
grant-date fair value of the equity or liability instruments issued. In
addition, if granted, liability awards will be remeasured each reporting period.
Compensation cost will be recognized over the period that an employee provides
service in exchange for the reward. SFAS No. 123(R) is effective as to the
Company as of the beginning of the Company's 2006 fiscal year. The Company is
currently evaluating its position and will make its determination to account for
stock-based compensation costs either prospectively or retroactively at the time
of adoption. The adoption of SFAS 123(R) did not have a material effect on the
Company's consolidated results of operations.
In December 2004, the FASB issued SFAS No. 153, an amendment of APB Opinion No.
29 "Exchanges of Nonmonetary Assets". SFAS No. 153 amends APB Opinion No. 29 by
eliminating the exception under APB No. 29 for nonmonetary exchanges of similar
F-9
productive assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary exchange
has commercial substance if the future cash flows of the entity are expected to
change significantly as a result of the exchange. SFAS No. 153 is effective for
periods beginning after June 15, 2005. The adoption of SFAS No. 153 did not have
a material effect on the Company's financial position or results of operations.
In November 2004, the FASB issued SFAS No. 151, an amendment to Accounting
Research Bulletin No. 43 chapter 4 "Inventory Costs". SFAS No. 151 requires that
abnormal costs of idle facility expenses, freight, handling costs and wasted
material (spoilage) be recognized as current-period charges. SFAS No. 151 is
effective for fiscal years beginning after June 15, 2005. Adoption of SFAS No.
151 did have a material impact on the Company's results of operations or
financial position.
In May 2005 the FASB issued SFAS No. 154, "Accounting Changes and Error
Correction" - a replacement of APB Opinion No. 20 and FASB Statement No. 3. This
statement applies to all voluntary changes in accounting principles. It also
applies to changes required by an accounting pronouncement in the unusual
instance that the pronouncement does not include specific transition provisions.
This statement requires retrospective application to prior periods' financial
statements of changes in accounting principles, unless it is impracticable to
determine either the period-specific effects or the cumulative effect of the
change. This statement is effective for accounting changes and corrections made
in fiscal years beginning after December 31, 2005.
2. NOTE PAYABLE
The Company has a line of credit with Sun Trust Bank in the amount of $5,000. As
of March 31, 2006, the Company owed $826 on this line of credit. The annual rate
of interest is 4.9% per annum. $6 interest was expensed as of March 31, 2006.
3. LOAN FROM RELATED PARTY
During November and December 2005, the Company borrowed $6,365 from a related
party, Wolf Blitz Inc., a stockholder of the Company. The Note is a demand note
with interest at six percent (6%) per annum. Interest expense for the three
months ended March 31, 2006 and for the period October 11, 2005, (date of
formation) through March 31, 2006 amounted to $42 and $53 respectively and is
included in accrued expenses on the Company's balance sheet.
4. COMMON STOCK
In October 2005, the month of the Company's formation, the Company issued
5,000,000 shares of its common stock, $.0001 par value to principals of the
Company and received proceeds of $10,100.
5. INCOME TAXES
At March 31, 2006, the Company has a net operating loss carry-forward of
approximately $19,000. Deferred income taxes reflect the impact of net operating
carryforwards. In recognition of the uncertainty regarding the ultimate amount
of income tax benefits to be derived from the Company's net operating
F-10
loss-carryforwards, the Company has recorded a valuation allowance for the
entire amount of the deferred asset. Section 195 of the Internal Revenue Code of
1986 requires the capitalization of start-up expenditures for tax purposes until
the Company becomes an operational entity. At that time, the capitalized
expenditures will be amortized over a period of five years.
F-11
Until 90 days after the date when the funds and securities are released from the
escrow account, all dealers effecting transactions in the shares, whether or not
participating in the distribution, may be required to deliver a prospectus. This
is in addition to the obligation of dealers to deliver a prospectus when acting
as underwriters to their unsold allotments or subscriptions.
500,000 shares
EMERGING MARKETS HOLDINGS, INC.
Common Stock
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant is a Florida corporation and the provisions of the
Florida Business Corporation Act will be applicable to the indemnification the
Registrant offers to its officers, directors and agents. In its Articles of
Incorporation, as amended, the Registrant generally agrees to indemnify each
person who is a director or officer of the Registrant, or serves at the request
of a director or officer as a director, officer, employee or agent of another
company, in accordance with the Registrant's by-laws, to the fullest extent
permissible by the Florida Business Corporation Act or other applicable laws. In
its by-laws the Registrant indicates that, in connection with any such
indemnification, it is within the discretion of the Board of Directors whether
to advance any funds in advance of disposition of any action, suit or
proceeding.
Under the Articles of Incorporation, the Bylaws, and the Florida
Business Corporation Act, no director of the Registrant will be personally
liable to the Registrant or its stockholders for monetary damages, or expenses
in defense of an action, for breach of fiduciary duty as a director or by reason
of the fact that he is or was a director, officer, employee or agent of the
Registrant, or serving in such capacity for another entity at the request of the
Registrant, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) pursuant to Section 607.0850 of the Florida Business Corporation Act
or (iv) for any transaction from which the director derived an improper personal
benefit. The Registrant has the power to purchase and maintain insurance on
behalf of any persons potentially eligible for indemnification. The rights to
indemnification are also applicable to those persons entitled to such rights by
virtue of the Registrant's consummation of a business combination, including
such consummations wherein the Registrant is merged into or reorganized as a new
entity.
The foregoing description of available indemnification is a summary
only, and is qualified in its entirety by the complete terms and provisions of
the Florida Business Corporation Act and also the Registrant's Articles of
Incorporation and Bylaws, filed herewith as exhibits.
ITEM 25. ESTIMATED EXPENSES OF ISSUANCE AND DISTRIBUTION
The other expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are estimated as
follows:
Escrow Fee $ 3,000.00
Securities and Exchange Commission Registration Fee 535.00
Legal Fees 50,000.00
Accounting Fees 5,000.00
Printing and Engraving 2,985.00
Blue Sky Qualification Fees and Expenses 5,000.00
Transfer Agent Fee 5,000.00
Miscellaneous 4,000.00
-------------
TOTAL $ 75,520.00
=============
All expenses are estimated except for the Securities and Exchange
Commission fee.
II-1
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
The registrant issued 5,000,000 shares of common stock on October 11,
2005, to three investors for cash consideration of $0.0025 per share for an
aggregate investment of $12,500. The registrant sold these shares of common
stock under the exemption from registration provided by Section 4(2) of the
Securities Act.
Neither the registrant nor any person acting on its behalf offered or
sold the securities by means of any form of general solicitation or general
advertising. No services were performed by any purchaser as consideration for
the shares issued.
All purchasers of our securities are accredited investors and
represented in writing that they acquired the securities for their own accounts.
A legend was placed on the stock certificates stating that the securities have
not been registered under the Securities Act and cannot be sold or otherwise
transferred without an effective registration or an exemption therefrom.
ITEM 27. EXHIBITS
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Specimen Certificate of Common Stock
4.2 Escrow Agreement
4.3 Transfer Agent Agreement
5.1 Opinion of Greene & Lee, PL
10.1 Form of Subscription Agreement
10.2 Agreement to Advance Funds by Ramon Rosales
23.1 Consent of Wiener, Goodman & Company, P.C.
23.2 Consent of Greene & Lee, PL, included in Exhibit 5.1
24.1 Power of attorney (included on signature page of Registration
Statement)
II-2
ITEM 28. UNDERTAKINGS
The Registrant undertakes:
(1) To file, during any period in which offers or sales are being
made, post-effective amendments to this registration
statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933 (the
"Securities Act");
(b) To reflect in the prospectus any facts or events
arising after the Effective Date of this registration
statement, or the most recent post-effective
amendment thereof, which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement.
Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) any deviation from
the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus
filed with the commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price
represent more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement,
including, but not limited to, the addition of an
underwriter;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
treated as a new registration statement of the securities
offered, and the offering of the securities at that time to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(4) To deposit into the Escrow Account at the closing,
certificates in such denominations and registered in such
names as required by the Registrant to permit prompt delivery
to each purchaser upon release of such securities from the
Escrow Account in accordance with Rule 419 of Regulation C
under the Securities Act. Pursuant to Rule 419, these
certificates shall be deposited into an escrow account, not to
be released until a business combination is consummated.
(5) That, for the purpose of determining any liability under the
Securities Act, in the offering pursuant to this
Registration Statement, regardless of the underwriting
method used to sell such securities to the purchaser, if the
securities are offered or sold to such purchaser by means of
any of the following communications, the Registrant will be
a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(a) Any preliminary prospectus or prospectus of the
Registrant relating to the offering required to be
filed pursuant Rule 424 of Regulation C under the
Securities Act;
(b) Any free writing prospectus relating to the
offering prepared by or on behalf of the Registrant
or used or referred to by the Registrant;
II-3
(c) The portion of any other free writing prospectus
relating to the offering containing material
information about the Registrant or its securities
provided by or on behalf of the Registrant; and
(d) Any other communication that is an offer in the
offering made by the Registrant to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to any provisions contained in its Certificate of
Incorporation, or by-laws, or otherwise, the Registrant has been advised that in
the opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities, other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling person
in connection with the securities being registered, 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
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Orlando,
Florida, on May 22, 2006.
EMERGING MARKETS HOLDINGS, INC.
By: /s/ Ramon Rosales
---------------------------------
Ramon Rosales, President
(Principal Executive Officer)
POWER OF ATTORNEY
We the undersigned officers and directors of Emerging Markets Holdings, Inc.,
hereby severally constitute and appoint Serguei Melnik, our true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
in said person for him and in his name, place and stead, and in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement (or any other Registration Statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933), and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, and full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as full to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Ramon Rosales Dated: May 22, 2006
- ----------------------------------------
Ramon Rosales
President (Prinicipal Executive Officer)
and Director
/s/ Serguei Melnik Dated: May 22, 2006
- ----------------------------------------
Serguei Melnik
Chief Financial Officer (Principal
Financial and
Accounting Officer), Secretary and
Director
/s/ Serguei Melnik Dated: May 22, 2006
- ----------------------------------------
Serguei Melnik
Attorney-In-Fact
II-4