Outstanding at July 31, 2006
Common Stock, par value $.001 per share 21,096,969
Item 1.01 Entry into a Material Definitive Agreement.
On April 20, 2007, the Registrant entered into an Agreement and Plan of Merger (the "Agreement") with its wholly-owned subsidiary Multi Sub, Inc., a New Jersey corporation , USA Real New Technology, Inc., a New Jersey corporation ("Real New") and direct parent of Shaanxi Real New Technology Co., Ltd., a limited liability corporation incorporated under the laws of The People's Republic of China, Robert L. Frome ("Frome"), an individual, Bridge Ventures, Inc., a Florida corporation ("Bridge Ventures"), and Michael Potter, an individual ("Potter")(Frome, Bridge Ventures and Potter are hereinafter collectively referred to as the "Controlling Shareholders").
Pursuant to the Agreement, Multi Sub Inc. will merge with and into Real New. At the closing of the Agreement, the Controlling Shareholders shall have converted a portion of the Registrant's 6% Convertible Debentures (the "Debentures") held by the Controlling Shareholders into 18,903,031 shares of common stock of the Registrant, such amount representing 47.3% of the 40,000,000 issued and outstanding shares of common stock, and shall issue these shares to the shareholders of Real New in addition to the unconverted Debentures In consideration of the issuance of the shares and the unconverted Debentures, Real New shall pay to the Controlling Shareholders an aggregate of $200,000 and 2% of the outstanding capital stock of the Registrant subsequent to the reverse stock split described below. The merger is scheduled to close on or about May 15, 2007, but no later than May 31, 2007.
Upon the filing of a Certificate of Amendment to increase the amount of authorized shares of common stock of the Company, the shareholders of Real New shall (i) convert the unconverted portion of the Debentures into an aggregate of 858,381 shares of common stock and (ii) shall be issued an additional 9,296,619 shares of common stock, after taking into account the reverse stock split as described herein. The Agreement also provides for a 1:64 reverse split of the Registrant's common stock at the time the Certificate of Amendment is filed. As a result, upon completion of the merger and after taking into account the reverse stock split, the Registrant will have 11,000,000 shares of common stock outstanding, with 95% held by Real New shareholders, and 5% held by the Registrant's current shareholders, 2% of which are owned by the Controlling Shareholders. The Agreement is conditioned upon satisfactory completion of due diligence and other corporate actions.
On the Closing, Jerome Goubeaux ("Goubeaux") and Ken Roberts ("Roberts"), the sole Directors of the Registrant shall stay in office and Real New shall nominate two additional members to the Board of Directors (the "Board"), however, each will resign from their position as President and Secretary respectively. The Registrant shall distribute to its shareholders an Information Statement with respect to the additional new directors to be elected to the Board, and following the expiration of any applicable notice period, and upon conversion of the unconverted portion of the debentures, Messrs. Gobeaux and Roberts shall resign as directors, and be replaced by the directors chosen by the holders of a majority of the then outstanding shares of common stock of the Registrant.