Financial Statements
EXHIBIT "A" - Balance Sheet as of April 1, 2005
EXHIBIT "B" - Statement of Income for the period from inception
January 1, 2005 to April 1, 2005
EXHIBIT "C" - Statement of Cash Flows for the period from inception
January 1, 2005 to April 1, 2005
Notes to Financial Statements
EXHIBIT "A"
Western North Carolina Real
Estate Fund
(a development stage
company)
BALANCE SHEET
April 1, 2005
ASSETS
Current Assets:
Cash: $ 0
Total Assets: $ 0
Liabilities And Stockholders' Equity
Current Liabilities:
None $0
Stockholder Equity:
Investment in
Corporation $0
Total Liabilities And Members' Equity: $ 0
EXHIBIT "B"
Western North Carolina
Real Estate Fund
(a development stage
company)
Statement Of Income
For the period
from inception (January 1, 2005) to April 1, 2005
None
EXHIBIT "C"
Western North Carolina
Real Estate Fund
(a development stage company)
Statement Of Cash Flow
For The Period
From Inception (January 1, 2005) to April
1, 2005.
Cash Flow From Operating
Activities
None $ 0
Cash Flow From Financing
Activities
Stockholders' contribution: $0
Net increase in cash: $0
Cash, at inception: $0
Cash, at April 15, 2005 $ 0
Western North Carolina
Real Estate Fund
(a development stage company)
Notes To Financial
Statements
April 1, 2005
NOTE 1
Summary Of Significant Accounting Policies
Organization
Western
North Carolina Real Estate Fund (The
Fund) is a North Carolina Corporation organized on January 1, 2004. The Company is a development stage company
because its planned principal operations have not yet commenced. During its development stage, the Company
has been principally involved with raising capital.
Accounting Year
The
Company has elected a calendar accounting period beginning on January 1 and
ending on December 31. These financial
statements have been prepared for the initial period from inception.
Method of Accounting
The
financial statements of Western North Carolina Real Estate Fund have been
prepared on the accrual basis of accounting.
Under this method, certain revenues are recognized when earned, and
certain expenses and purchases of assets are recognized when the obligation is
incurred.
Income Taxes
Western
North Carolina Real Estate Fund is treated as a corporation for federal income
tax purposes. Consequently, federal
income taxes are payable by the Company. Shareholders are taxed individually on
their dividends paid from the Company's earnings. The Company's net income or
loss is allocated among the stockholders in accordance with the number of
shares in Company stock.
Management's Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Underwriting & Selling Agreement
In
regard to the offerings being made by Western North Carolina Real Estate Fund,
Inc., (The Fund), or successors, in a stock offering under the
Securities Act of 1933 or an exemption, direct investment, merger or
acquisition, The Fund agrees to pay to Les Smith:
1. A Registered Investment Advisors Fee
of 2% of the net annual assets under managements from the investment or
offering, contingent upon achieving the minimum specified in any offering.
2. Mutually agreed expenses including
fees of any state where Les Smith must register for The Fund
offering. If an offering is terminated,
Les Smith will be reimbursed only for the actual, accountable, out-of-pocket
expenses.
3. And agrees to hold Les Smith and his
agents harmless from, and indemnify their agents for, any and all costs of
investigation of claims, costs, expenses, attorney fees or other liabilities or
disbursements arising out of any administrative investigation or proceeding or
any litigation, commenced or threatened, relating to this underwriting which
stem from any misstatements or incorrect information from The Fund principals,
employees, directors or agents, including without limitation, the implementation
of this Agreement, the distribution of stock or funds, the investment of funds,
the interpretation of this Agreement or similar matters. The Underwriter will
not be indemnified for any claims, costs, expenses or other liability arising
from its bad faith or negligence or that of its employees, officers, directors
or agents.
4. And agrees that all subscription
checks will be promptly deposited to the Escrow Account, at the escrow agent,
no later than noon of the next business day.
Such funds will be handled in accordance with the Escrow Agreement filed
as an exhibit to the offering document.
Les Smith shall fully comply with the provisions of Rules 2730, 2740,
2750 and 2420 of the NASD Conduct Rules.
WNCREF________________________________
Escrow Agreement
This
Escrow Agreement is made and entered into by and between Western North Carolina
Real Estate Fund, a North Carolina Company, (the "Company"),
Les Smith (the "Underwriter") and Wachovia (the "Escrow
Agent").
Background
Pursuant to the Offering of the Company dated on or about August 1, 2005, the Company is offering for sale through Les Smith, 100,000 shares of common stock (the "Shares"), $10.00 per share, of the Company (the "Common Stock") at a price of $10.00 per share (the "Offering"). Those persons who desire to purchase shares ("Subscribers") are required to execute and deliver to the Underwriter a subscription agreement ("Subscription Agreement") and are required to pay the purchase price of the shares subscribed for by check, directed or made payable, to the Escrow Agent as escrow agent for the Company. Checks are to be sent by the Underwriter for deposit no later than noon of the first business day following receipt.
The
sale of any shares pursuant to the Offering is subject to various conditions,
including the receipt of acceptable Subscriptions and payment in respect of the
shares of Common Stock. The purpose of
this Escrow Agreement is to assure that no proceeds of the Offering are
disbursed to or on behalf of the Company until the conditions set forth herein
shall be satisfied. Once acceptable
Subscriptions and funds for the minimum number of shares have been received,
the Escrow Agent, pursuant to this Escrow Agreement, funds will be released to
the Company. The parties hereto, wish
to set forth herein the terms and conditions governing the escrow account and
the funds being delivered to and held by the Escrow Agent.
NOW
THEREFORE, in
consideration of the mutual promises herein contained, each intending to be
legally bound hereby, the parties hereto agree as follows:
1. Escrow
Agent. On behalf of the
Subscribers, the Company hereby designates and appoints Wachovia as Escrow
Agent to serve in accordance with the terms and conditions of this Escrow
Agreement and the Escrow Agent agrees to act as such Escrow Agent in accordance
with the terms and conditions of this Escrow Agreement.
2. Creation
of Escrow. At any time and from
time to time after the date hereof until completion of the Offering and Closing
thereunder, the Underwriter shall cause to be delivered to the Escrow Agent,
from the Subscribers, funds or instruments payable to the Escrow Agent as
escrow agent representing the purchase price of shares subscribed for by
Subscribers. The Escrow Agent shall accept and hold in escrow all such funds so
received by it for deposit in escrow hereunder (the "Escrowed Funds")
until released as set forth herein. The Escrow Agent shall maintain books and
records of account detailing the source of all funds received by the Escrow
Agent.
3. Investment
of Escrowed Funds. Pending release
from escrow, the Escrowed Funds shall be invested by the Escrow Agent in
interest bearing short-term United States government securities or other
short-term federally insured money market investments, which are readily
liquid. All interest accrued on the
Escrowed Funds or interest earned on the Escrowed Funds shall be retained by
the Escrow Agent as part of the Escrowed Funds and released in accordance with
the provisions of this Escrow Agreement.
It is acknowledged and agreed that the Escrowed Funds, including any
interest or earnings thereon, are not assets or deposit liabilities of the
Escrow Agent or the Company, but constitute funds submitted to the Escrow Agent
by the Subscribers for safekeeping, pending disbursement in accordance with the
provisions of this Escrow Agreement.
4. Information. The Company has undertaken
responsibility for tax reporting of the interest or other amounts earned on the
Escrowed Funds with respect to each Subscriber in the event of the release of
Escrowed Funds in accordance with the provisions of Section 5(b) hereof, and
disbursement of said interest or other earnings to Subscribers. From time to
time upon the request of the Underwriter as agent for the Subscribers, the
Escrow Agent shall furnish to the Underwriter a statement of the amount of
Escrowed Funds held by the Escrow Agent, the approximate amount of any accrued
interest thereon, and such information as the Underwriter may reasonably
request, The Escrow Agent shall immediately notify the Underwriter if any check
or instrument representing Escrowed Funds or other purported transfer to Escrow
Agent of Escrowed Funds fails to result in the actual delivery of funds to the
Escrow Agent.
5. Release
of Escrowed Funds.
(a)
Release of Escrowed Funds to the Company.
Immediately upon the receipt of the Officer's Certificate of the Company
as described below, the Escrow Agent shall release and deliver to the Company
such portion of the Escrowed Funds as represents payment of the purchase price
of shares in respect of which the Company has accepted Subscriptions plus all
interest or other earnings accrued on such portion of the Escrowed Funds. The
Escrow Agent shall not release any portion of the Escrowed Funds to the Company
unless the following condition (the "Condition") shall have
been satisfied: it has received a certification of the President or Chairman of
the Board of Directors of the Company to the effect that (i) the Company has
received acceptable Subscriptions (including payment in full of the purchase
price) with respect to not less than 5,000 shares, and has accepted
Subscriptions with respect to not less than 5,000 shares, and all terms of the
Offering have been complied with. Such certification shall also indicate the
number of shares with respect to which Subscriptions have been accepted and the
number of shares, if any, and identity of the Subscribers with respect to which
Subscriptions have been rejected. Notwithstanding anything to the contrary
contained herein, the delivery of the foregoing certification shall be in the
sole discretion of the Company, and nothing contained herein shall constitute
any obligation, express or implied, of the Company to deliver such
certification, or to deliver it at any specified time.
(b) Release of Escrowed Funds to
Subscribers. Immediately after
receiving a certification of the President or Chairman of the Board of
Directors of the Company to the effect that the Company has either (i)
terminated the Offering in whole or in part; or (ii) rejected, revoked or
canceled in whole or in part any Subscription; or if the Condition shall not
have been satisfied prior to April 1, 2006, then the Escrow Agent shall return
to the Subscriber whose Subscription shall have been rejected, revoked or
canceled, in whole or in part, as a result of termination of the Offering, the
failure of satisfaction of the Condition prior to April 1, 2006 or otherwise,
Escrowed Funds representing such Subscriber's rejected, revoked or canceled
payments, or all Subscribers' payments in the event of termination of the
Offering as a whole or the failure of satisfaction of the Condition, without
such Subscriber's share of any interest or other earnings accrued on such
portion of the Escrowed Funds.
6. Limitation
of Liability. It is agreed that the
duties of the Escrow Agent are limited to those herein specifically provided
and are ministerial in nature. It is
further agreed that the Escrow Agent shall incur no liability whatsoever except
by willful misconduct, gross negligence or bad faith. The Escrow Agent shall be under no obligation in respect to
amounts held in escrow hereunder other than faithfully to follow the
instructions herein contained or delivered to the Escrow Agent in accordance
with this Escrow Agreement. It shall
not be required to institute legal proceedings of any kind. It shall have no responsibility for the
genuineness or validity of any document or other item deposited with it, and it
shall be fully protected in acting in accordance with the Escrow Agreement upon
written instructions given to it and reasonably believed by it to have been
duly executed by the Company or Underwriter in accordance herewith. The Company shall indemnify and hold the
Escrow Agent harmless with respect to anything done by the Escrow Agent in good
faith in any and all matters covered by this Agreement in accordance with the
instructions or provisions set forth herein.
NOTE:
Neither
the Escrow Agent nor any of its Officers, Directors or employees have reviewed
the Offering nor have they or do they make any representations, or statements
regarding the truth, accuracy or effectiveness of the Offering.
7. Compensation. The Company shall pay all compensation,
expenses and other charges of the Escrow Agent relating to its services
hereunder, including all fees and commissions relating to the investment of the
aforesaid escrowed funds, for so long as the Escrow Agent holds any amount in
Escrow hereunder. The Escrow Agent shall
not make any deduction or setoff of the amount of compensation for its services
hereunder (including all expenses, fees and commissions) against the Escrowed
Funds.
8. Resignation. The Escrow Agent, or any successor to it
hereafter appointed, may at any time resign by giving notice in writing to the
Company and Underwriter and, upon the appointment of a successor Escrow Agent
as hereinafter provided, shall be discharged from any further duties hereunder,
In the event of such resignation, a successor Escrow Agent, which shall be a
bank or trust company organized under the laws of the United States of America,
shall be appointed by the Company. Any
such successor Escrow Agent shall deliver to the Company and Underwriter a
written instrument accepting such appointment hereunder, and thereupon it shall
succeed to all of the unaccrued rights and duties of the Escrow Agent hereunder
and shall be entitled to receive all of the then remaining amounts held in
escrow hereunder.
9. Termination. This Escrow Agreement shall terminate
upon the earlier of, (i) the receipt by the Escrow Agent of a written notice of
termination signed by the Company accompanied by sufficient certifications or
other documentation to verify that all Subscriptions and commitments to which
the Escrowed Funds relate shall have been accepted and certificates
representing such Shares issued, or rejected in whole; or (ii) the distribution
of all of the Escrowed Funds in accordance with this Escrow Agreement. Upon
termination pursuant to clause (i) above, the Escrow Agent shall deliver any
Escrowed Funds remaining after return to Subscribers of Escrowed Funds
representing rejected Subscriptions as instructed in such notice of termination
in accordance with the provisions of Section 5(b) hereof
10. Notices. Except as otherwise provided in this
Agreement, any notice or other communication hereunder shall be in writing and
shall be deemed delivered upon personal delivery or upon receipt if sent by
facsimile transmission, express delivery service or mailed by registered or
certified first class mail, postage prepaid, and addressed as follows:
To the Company: Western North
Carolina Real Estate Fund 124 College St., Asheville, NC
28801
To the Escrow Agent: Wachovia of
NC/SC
To the Underwriter: Les Smith
Or to
such other addresses or persons as the parties, from time to time, may furnish
one another by notice given in accordance with this section.
11. Miscellaneous.
(a)
Assignment. This Escrow Agreement and
the rights of the parties hereunder may not be assigned by the Escrow Agent
without the consent of the Company and Underwriter, which consent may be
withheld in the absolute discretion of the Company and Underwriter, and any
attempted assignment in Violation of this Section 11 (a) shall be void. This Escrow Agreement and all action taken
hereunder in accordance with its terms shall be binding upon and inure to the
benefit of each of the parties hereto and its respective successors, permitted
assigns, heirs, and legal representatives.
(b)
Amendment. This Escrow Agreement may be
amended, consistent with the protection of the interests of the Subscribers,
upon written notice to the Escrow Agent at any time by the Company or
Underwriter, however the duties, responsibilities or compensation of the Escrow
Agent may not be modified without its consent.
(c)
Waiver. Waiver of any term or condition of this Escrow Agreement by any party
shall not be construed as a waiver of a subsequent breach or failure of the
same term or condition, or a waiver of any other term, or condition of this
Escrow Agreement.
(d)
Governing Law. This Escrow Agreement
shall be governed by and construed in accordance with the laws of North and/or
South Carolina.
(e)
Integration. This Escrow Agreement
constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and there are no other
agreements, covenants, representations or warranties except as set forth
herein.
(f)
Authority. Each party executing this
Escrow Agreement warrants its authority to execute this Escrow Agreement.
(g)
Counterparts. This Escrow Agreement may
be executed in two or more counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
(h)
Attorneys Fees. In the event Escrow
Agent is required to seek legal advise, take any legal action or defend any
legal action the Company shall reimburse Escrow Agent for all attorney’s fees
and costs associated therewith, which are incurred by Escrow Agent.
(i)
Beneficiaries. The terms and provisions
of this Escrow Agreement shall create no right in any person, firm or
corporation other than the parties and their respective successors and assigns
and no third party shall have the right to enforce of benefit from the terms
hereof.
Transmittal. The Underwriter specifically agrees to
transmit all received
funds to the Escrow Agent no
later than noon of the day following receipt.
Commencement
of the Offering. The Escrow Period will
commence upon qualification of the Offering by the
Securities and Exchange Commission.
(l) Collected Funds.
The phrase "collected funds" relates to the total amount
of
...funds received by the Escrow Agent from the
Underwriter.
IN WITNESS WHEREOF, the parties hereto
have caused this Escrow Agreement to be signed the day and year first above
written,
ATTEST:
Western North Carolina Real Estate Fund
By:_______________________________ By:
____________________________
Name: ____________________________ Name:
__________________________
Title: _____________________________
Title: ___________________________
Date: ____________________________
Date:____________________________
Buyer:
By:_______________________________ By:
______________________________
Name: ____________________________ Name:
____________________________
Title: _____________________________
Title: _____________________________
Date: ____________________________
Date: _____________________________
Subscription Agreement
1. Subscription:
Subject to the terms and conditions hereof the undersigned, intending to be
legally bound, irrevocably subscribes for and agrees to purchase that number of
shares of common stock ("Shares") of Western North Carolina Real
Estate Fund, Inc., a North Carolina Corporation (the "Company"), set
forth on the signature page hereof, for the price stated thereon. This subscription is made in connection with
a private offering by the Company of up to 100,000 shares of its common stock
under an exemption to the Securities Act of 1933, as amended. This Offering will continue until the
Company has sold a maximum of 100,000 shares totaling $1,000,000 or the
termination date of April 1, 2006 whichever occurs first. Subscription is pursuant to the amended
memorandum dated April 1, 2005. Any
previous offerings with respect to the Western North Carolina Real Estate Fund
("WNCREF") should be disregarded.
2. Representations
and Warranties of Investor: The undersigned
represents and warrants to the Company that:
2.1
The undersigned acknowledges and understands that (a) the Shares have not been
registered under the Securities Act of 1933 and are being offered in reliance
on an exemption from registration thereunder; (b) there is presently no public
market for the Shares, nor is any such market expected to develop after the
Offering; and (c) the undersigned may not be able to liquidate his or her
investment in the event of an emergency.
2.2
The Shares are being purchased for the undersigned’s own account, without the
intention of reselling or redistributing the same; and the undersigned has made
no agreement with others to subdivide, sell, assign, transfer, pledge or
otherwise dispose of the Shares.
2.3
The undersigned understands that no federal or state agency has made any
findings or determination as to the fairness of an investment in, or any
recommendation or endorsement of, the Shares.
3. Irrevocability: The undersigned hereby acknowledges and agrees that, except
as otherwise provided by the laws of the State of North Carolina and/or South
Carolina, this subscription is irrevocable and the undersigned is not entitled
to cancel or withdraw it.
4. Joint
and Several Undertaking; Entities: If more than one person is signing this
Agreement, each representation, warranty and undertaking herein shall be the
joint and several representation, warranty and undertaking of each such
person. If the undersigned is a
partnership, corporation, trust or other entity, the undersigned further
represents and warrants that (a) the individual executing this Agreement has
full power and authority to execute and deliver this Agreement on behalf of the
undersigned; (b) the undersigned has full right and power to perform its
obligations pursuant to the provisions hereof; and (c) the undersigned was not
formed for the specific purpose of acquiring Shares.
5. Survival: Each representation and warranty
contained herein and all information furnished by the undersigned to the
Company is true, correct and complete in all respects as of the date hereof,
and the same will be true, correct and complete as of the date on which the
Company accepts this subscription, as if made on such date. The undersigned undertakes to notify the
Company immediately of any change in the any representation, warranty or other
information set forth herein.
Subscribers agree to personally guarantee any conventional financing
required to close on the sale of the real estate, and to allow the Company to
submit their credit history to any appropriate financial institution for this
purpose. The undersigned further agrees
to indemnify and hold harmless the Underwriter and the Company, its officers,
directors, and employees from and against any and all loss, damage or liability
due to or arising out of a breach of any such representation or warranty of the
undersigned.
6. Non-assignment:
This Agreement
shall not be assignable by the undersigned without the prior written consent of
the Company.
7. Acceptance
by the Company: The
Company reserves the right to accept or reject any subscription in whole or in
part in its sole and absolute discretion.
No subscription will be effective until accepted by the Company. If the Company decides to reject a subscription,
it will do so in writing within a reasonable time after having received it.
8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of North Carolina and/or
South Carolina.
Within
five days of its receipt of a subscription agreement from the Underwriter, confirming that an accompanying check for the purchase price
of Shares has been received, the Company will send by first-class mail a written
confirmation to notify the subscriber of the extent, if any, to which
subscription has been accepted by the Company.
The Company reserves the right to reject orders for the purchases of
Shares in whole or in part. Not more
than thirty days following the mailing of its written confirmation a
subscriber’s Common Stock certificate will be mailed by first-class mail. The company shall not use the proceeds paid
by an investor until such time as the offering ceases.
Accepted as to ______________
Shares on _________________.
Are you an officer or director
of a publicly held company? Yes____, No____
Are you over 21 years of
age? Yes____, No ____
Name and address of employer
______________________________________________
______________________________________________________________________
Occupation
_____________________________________________________________
Individual income over or under
$200,000 ($300,000 with spouse)? Over___ Under ____
Net Worth over or under
$1,000,000? Over___ Under ___
Investment objective:
conservative _____ speculative ______ income _____
Please make your check payable
to: Western North Carolina Real Estate Fund, Inc.
Mail to: 124 College St.,
Asheville, NC 28801
Western North Carolina Real Estate Fund, Inc.
Subscription Agreement
Signature Page
The
undersigned, by executing this Signature Page, agrees to all of the terms,
conditions, warranties and representations in the accompanying Subscription
Agreement, and subscribes for the number of shares of the Company’s Common Stock
set forth below at a price of $10.00 per share.
Number of Shares Subscribed for:
________________
Total Purchase Price:
$_________________________
A
check in the full amount of the purchase price, payable to "Western North
Carolina Real Estate Fund, Inc." accompanies this executed Subscription
Agreement.
Form of
Ownership:
__ Individual __ Partnership
__ Joint Tenants With Rights of
__ Trust survivorship (both sign) __ Limited
Liability Company, LLC
__Tenants in Common (all sign)
__ Corporation
Individual(s)
______________________________________
___________________
Signature
of
Subscriber
Date
______________________________________
Print
Name
_______________________________________________________________________
Mailing
Address
_____________________________
______________________________
Telephone
Number Social
Security Number
______________________________________________
____________________
Signature
of
Subscriber
Date
______________________________________________
Print
Name
________________________________________________________________________
Mailing
Address
_____________________________
______________________________
Telephone
Number
Social Security Number
Corporations,
Trusts, Partnerships, LLCs
Name of Corporation, Trust,
Partnership or LLC:
_________________________________________________________________________
By:
_________________________________ By:__________________________________
Signature of Authorized
Representative Signature
of Authorized Representative
By:
_________________________________ By:__________________________________
Print
Name Print
Name
____________________________________
___________________________________
Capacity of Authorized Representative
Capacity
of Authorized Representative
Date________________________________
Date:_______________________________
Mailing
Address:____________________________________________________________
_________________________________________________________________________
Western
North Carolina Real Estate Fund, Inc.
By:
_________________________________ By:________________________________
Capacity
of Authorized Representative
Capacity
of Authorized Representative
Date:_______________________________
Date:____________________________