As filed with the Securities and Exchange Commission on February 4, 2000
Registration No. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POWER MARKETING, INC.
(Name of small business issuer in its charter)
Delaware 13-3851304
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
311 South State Street, Suite 460, Salt Lake City, Utah 84111
(801) 364-9262
(Address & telephone number of principal executive offices and place of
business)
Lynn Dixon
311 South State Street, Suite 460, Salt Lake City, Utah 84111
(801) 364-9262
(Name, address and telephone number of agent for service)
Copies to:
Thomas G. Kimble & Van L. Butler
THOMAS G. KIMBLE & ASSOCIATES
311 South State Street, #440
Salt Lake City, Utah 84111
(801) 531-0066
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this registration statement.
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount
of Securities to be Registered Offering Price/Unit Aggregate Price of fee
Registered
Warrants; underlying 1,250,000 $ 1.00 $ 1,250,000 $330.00
Common Stock
TOTALS 330.00
</TABLE>
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section
8(a), may determine.
<PAGE>
POWER MARKETING, INC.
1,250,000 SHARES OF COMMON STOCK
UNDERLYING COMMON STOCK PURCHASE WARRANTS
Our company, Power Marketing, Inc., has registered:
bullet 1,250,000 warrants, to be distributed as soon as practicable after the
date of this prospectus to common stockholders of record as of [a date
within 20 days after the date of this prospectus].
bullet 1,250,000 shares of common stock, to be issued upon exercise of the
warrants, at $1.00 per share underlying warrants.
Each warrant allows you to purchase one share of our common stock, at
any time until June 30, 2002, if this prospectus is still current or has been
updated. Whether a current prospectus is effective or not, we can call and
redeem the warrants for $.01 per warrant, on 30 days notice, at any time after
the date of this prospectus.
Our common stock is quoted on the NASD Electronic Bulletin Board under
the Symbol "PMKT". The current bid price quotation is $.01.
YOU SHOULD NOT PURCHASE THESE SECURITIES IF YOU CANNOT AFFORD TO RISK THE LOSS
OF YOUR ENTIRE INVESTMENT. INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL
RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The 1,250,000 warrants will be distributed without cash consideration. The
1,250,000 shares of common stock will be offered only to holders of the
warrants at $1.00 per share, or $1,250,000 in the aggregate if all warrants
are exercised, and will be sold by Power Marketing without any underwriting
discounts or other commissions. The offering price is payable in cash upon
exercise of the warrants. No minimum number of warrants must be exercised,
and no assurance exists that any warrants will be exercised.
The date of this prospectus is , 2000
<PAGE>
TABLE OF CONTENTS Page
PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPARATIVE DATA . . . . . . . . . . . . . . . . . . . . . . . . . . 6
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MARKET INFORMATION & DIVIDEND POLICY . . . . . . . . . . . . . . . . 7
MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . . . . . . . . . . 7
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . .11
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
PRINCIPAL SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . .13
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . .13
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . .14
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . .17
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . F-1
2
<PAGE>
PROSPECTUS SUMMARY
Power Marketing is in the business of buying and reselling select
vintages of red wine, champagne and other fine wines, and holding the
wines for investment appreciation and eventual resale. Our address is
311 South State Street, Suite 460, Salt Lake City, Utah 84111. Our phone
number is (801) 364-9262.
THE OFFERING
Securities 1,250,000 shares of our common stock.
offered
Offering Prices $1.00 per share underlying the
warrants.
Plan of DistributionShares will be offered and sold without
discounts or other
commissions, to holders of the
warrants, upon exercise.
Use of Proceeds We could receive as much as $1,250,000
from sale of the
1,250,000 shares of common stock to be
issued upon
exercise of the warrants, if all
warrants are exercised. Any
proceeds will be used generally to
provide additional
working capital, but have not been
specifically allocated,
since we do not know if any warrants
will be exercised.
Transfer Agent Interwest Transfer Company, Inc., 1981
East 4800 South,
Suite 100, Salt Lake City, Utah 84117,
(801) 272-9294.
Securities OutstandingWe are authorized to issue up to
50,000,000 shares of
common stock and presently have
1,250,000 shares of
common stock issued and outstanding. We
have reserved
from our authorized capital 1,250,000
shares of common
stock for issuance upon exercise of the
warrants. We are
also authorized to issue up to 500,000
shares of preferred
stock in one or more series with rights
and preferences as the
board of directors may designate. The
board of directors has
not designated any series of preferred stock.
Warrants Each warrant allows you to purchase one
share of common
stock at any time until June 30, 2002,
if this prospectus is
still current or has been updated. The
exercise price is $1.00
per share, with adjustment in certain
events. The warrants
can be redeemed by us for $.01 per
warrant on 30 days
notice at any time after the date of
this prospectus.
3
<PAGE>
RISK FACTORS
The securities involve a high degree of risk. You should carefully
consider the following risk factors and all other information in this
prospectus before investing in Power Marketing.
WE HAVE INCURRED NET LOSSES SINCE INCEPTION AND HAVE AN ACCUMULATED
DEFICIT. We do not know if or when the business may become profitable. These
facts raise substantial doubt about our ability to continue as a going
concern.
WE MAY NOT BE ABLE TO SELECT CHAMPAGNE OR OTHER WINES TO PURCHASE AND
HOLD FOR INVESTMENT THAT WILL APPRECIATE IN VALUE ENOUGH TO GENERATE A PROFIT
UPON SALE. Management has no prior experience with or knowledge of the wine
industry and will have to rely on the advice of others on the selection of
wines to purchase for investment and the timing of purchase and sale.
YOU ARE NOT ASSURED THAT ANY PROCEEDS WILL BE RECEIVED FROM EXERCISE OF
WARRANTS. This increases your risk if you exercise your warrants, because you
do not know if any additional warrants will be exercised or if we will receive
further funding. Proceeds may not be sufficient to defray offering expenses.
Because no minimum number of warrants must be exercised, there is no escrow of
funds. Any proceeds received will immediately be retained by us for use in our
business. The amount of capital currently available to us is limited. If
proceeds from this offering and our existing capital are not sufficient to
enable us to develop and expand our business and generate a profit, we may
need additional financing, for which we have no commitments or arrangements
from commercial lenders or other sources.
YOU MAY NOT BE ABLE TO EXERCISE YOUR WARRANTS. You can exercise your
warrants only if the exercise is permitted under the securities laws of your
state, and only while this prospectus is current and the registration
statement remains effective. We intend to update the prospectus as necessary
to keep it current and maintain federal and state registration or
qualification for the exercise, but may not always do so. Whether a current
prospectus is effective or not, warrants are redeemable for $.01 per warrant
at any time. If redeemed when no current prospectus is effective, you will
have no opportunity to exercise the warrants, but will be compelled to accept
the nominal redemption price.
ISSUANCE OF ADDITIONAL STOCK IN THE FUTURE WILL REDUCE YOUR
PROPORTIONATE OWNERSHIP AND VOTING POWER AND/OR CREATE ADDITIONAL SECURITIES
WITH DIVIDEND AND LIQUIDATION PREFERENCES OVER COMMON STOCK. Directors can
issue additional common and/or preferred stock, without shareholder approval
to the extent authorized. We are authorized to issue 50,000,000 shares of
common stock and 500,000 shares of preferred stock, the rights and preferences
of which may be designated in series by our board of directors. The board of
directors has not designated any series or issued any shares of preferred
stock.
ANTI-TAKEOVER MEASURES MAY RESULT IN YOU RECEIVING LESS FOR YOUR STOCK
THAN YOU OTHERWISE MIGHT. The ability of directors, without stockholder
approval, to issue additional shares of common stock and/or preferred stock
4
<PAGE>
could be used as anti-takeover measures. These provisions could prevent,
discourage or delay a takeover attempt.
YOU ARE NOT ASSURED YOU WILL BE ABLE TO SELL YOUR COMMON STOCK IN THE
FUTURE AT A PRICE WHICH EQUALS OR EXCEEDS THE EXERCISE PRICE. The exercise
price of the warrants was arbitrarily determined by us and set at a level
substantially in excess of prices recently paid for securities of the same
class. The price bears no relationship to our assets, book value, net worth
or other economic or recognized criteria of value. In no event should the
exercise price be regarded as an indicator of any future market price of our
securities.
YOU MAY NOT BE ABLE TO LIQUIDATE YOUR INVESTMENT READILY OR AT ALL WHEN
YOU NEED OR DESIRE TO SELL. Although our common stock is eligible for
quotation on the Electronic Bulletin Board maintained by the NASD, there has
been no active public trading market. You are not assured that an active
trading market will develop, or if a market does develop, that it will
continue. As a result, an investment in our common stock may be totally
illiquid.
SALES OF SUBSTANTIAL AMOUNTS OF COMMON STOCK IN THE PUBLIC MARKET COULD
DEPRESS THE MARKET PRICE. 50,000 of the 1,250,000 shares of our common stock
presently outstanding are freely tradeable, and all of the 1,250,000 shares of
common stock underlying the warrants will also be freely tradeable into the
public market immediately upon issuance.
DILUTION
You will suffer substantial dilution in the purchase price of your stock
compared to the net tangible book value per share immediately after the
purchase. The exact amount of dilution will vary depending upon the number of
warrants exercised.
Dilution is the difference between the warrant exercise price of $1.00
per share, and the net tangible book value per share of common stock
immediately after its purchase. Net tangible book value per share is
calculated by subtracting total liabilities from total assets less intangible
assets, and then dividing by the number of shares of common stock then
outstanding. Based on the December 31, 1999, financial statements of Power
Marketing, net tangible book value was $48,721 or about $.04 per common share.
Before exercise of any warrants, 1,250,000 shares of common stock are
outstanding.
If all warrants get exercised, which is not assured, 2,500,000 shares of
common stock will then be outstanding. The estimated pro forma net tangible
book value (which gives effect to receipt of the net proceeds from exercise
and issuance of the underlying shares of common stock, but does not take into
consideration any other changes in net tangible book value after December 31,
1999), would then be $1,278,721 or about $.51 per share. This would result in
dilution to persons exercising warrants of $.49 per share, or 49% of the
exercise price of $1.00 per share. Net tangible book value per share would
increase to the benefit of present stockholders from $.04 before the offering
to $.51 after the offering, or an increase of $.47 per share attributable to
exercise of the warrants.
5
<PAGE>
The following table shows the estimated net tangible book value ("NTBV")
per share after exercise of the warrants and dilution to persons purchasing
the underlying common stock.
<TABLE>
<S> <C> <C>
Exercise of all warrants:
Warrant exercise price/share $1.00
NTBV/share before exercise $.04
Increase attributable to warrant exercise .47
Pro forma NTBV/share after exercise .51
Dilution $ .49
</TABLE>
If less than all the warrants get exercised, dilution to the exercising
warrant holders will be greater than the amount shown. The fewer warrants
exercised, the greater dilution will be on the warrants that are exercised.
COMPARATIVE DATA
The following chart shows prices paid for, and proportionate ownership
in Power Marketing represented by, common stock purchased since inception by
initial shareholders and other present shareholders, compared to the price
that will be paid and proportionate ownership represented by common stock that
will be acquired by exercising warrant holders, assuming all warrants are
exercised.
<TABLE>
<S> <C> <C> <C> <C> <C>
Shares PercentCash Paid Percent Avg
Owned Price/share
Initial 1,000,000 40% $ 33,500 2.5% $.0335
Shareholders
Other Shareholders 250,000 10% $ 50,000 3.8% $ .20
Warrant Holders 1,250,00050% $1,250,00093.7% $1.00
</TABLE>
USE OF PROCEEDS
The net proceeds from the sale of the shares of common stock underlying
the warrants at the exercise price of $1.00 per share will vary depending upon
the total number of warrants exercised. If all warrants get exercised, we
would receive gross proceeds of $1,250,000. We do not know if all or any
warrants will be exercised. Regardless of the number of warrants exercised, we
expect to incur offering expenses estimated at $20,000 for legal, accounting,
printing and other costs in connection with the offering. Since there is no
assurance that all or any warrants will be exercised nor any requirement that
any minimum number of the warrants be exercised, there are no escrow
provisions. Any proceeds that are received will be immediately available to
provide additional working capital to be used for general corporate purposes.
Proceeds have not been specifically allocated, and the exact uses of the
6
<PAGE>
proceeds will depend on the amounts received and the timing of receipt.
Management's general intent is to use whatever additional funds may be
generated from warrant exercise to finance further development and expansion
of our business by investing all available proceeds in additional vintages of
select wines.
MARKET INFORMATION & DIVIDEND POLICY
Our common stock is quoted on the National Association of Securities
Dealers, Inc. Electronic Bulletin Board under the symbol PMKT, but has not
been traded in the over-the-counter market. The only bid quotation has been
$.01. This price represents interdealer quotations, without retail markup,
markdown or commissions, and may not represent actual transactions. As of
January 5, 2000, there were about 100 record holders of our common stock.
Our common stock is considered a low priced security under rules
promulgated by the Securities and Exchange Commission. Under these rules,
broker-dealers participating in transactions in these securities must first
deliver a risk disclosure document which describes risks associated with these
stocks, broker-dealers' duties, customers' rights and remedies, market and
other information, and make suitability determinations approving the customers
for these stock transactions based on financial situation, investment
experience and objectives. Broker-dealers must also disclose these
restrictions in writing, provide monthly account statements to customers, and
obtain specific written consent of each customer. With these restrictions,
the likely effect of designation as a low priced stock is to decrease the
willingness of broker-dealers to make a market for the stock, to decrease the
liquidity of the stock and increase the transaction cost of sales and
purchases of these stocks compared to other securities.
DIVIDEND POLICY
Power Marketing has not previously paid any cash dividends on common
stock and does not anticipate or contemplate paying dividends on common stock
in the foreseeable future. Our present intention is to utilize all available
funds for the development of our business. The only restrictions that limit
the ability to pay dividends on common equity or that are likely to do so in
the future, are those restrictions imposed by law. Under Delaware corporate
law, a corporation may declare and pay dividends only out of its surplus, as
defined, or if there is no surplus, out of its net profits for the fiscal year
in which the dividend is declared and/or the preceding fiscal year.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis should be read in conjunction with
our financial statements and the notes associated with them contained
elsewhere in this prospectus. This discussion should not be construed to
imply that the results discussed in this prospectus will necessarily continue
into the future or that any conclusion reached in this prospectus will
necessarily be indicative of actual operating results in the future. The
discussion represents only the best present assessment of management.
7
<PAGE>
PLAN OF OPERATIONS.
Management's plan of operation for the next twelve months is to continue
using existing capital and any funds from exercise of warrants in this
offering to acquire additional inventory of select wines to hold for
investment and resale, and also to provide general working capital during the
next twelve months. Under this plan of operations Power Marketing has no
specific capital commitments and the timing of capital expenditures will
depend upon the receipt of additional funds from warrant exercise or
elsewhere, none of which is assured. Cash flows will also depend upon the
timing of sale of the wines, which is also not assured, and receipt of the
proceeds from these sales. We have not determined how long existing capital
can satisfy any cash requirements, but we do not presently anticipate that we
will have to raise additional funds within the next twelve months. While we
do not anticipate any need to raise additional capital, we believe Power
Marketing will have the opportunity to invest whatever additional funds may be
received from the exercise of warrants in purchasing additional vintages of
investment grade wines. We do not anticipate any capital commitments for
product research and development or significant purchases of plant or
equipment, or any change in the number of employees.
Initially, we purchased one hundred cases of investment grade champagne
from an affiliated company, at the affiliate's cost, and later purchased
several different vintages of investment grade wines at a cost of $37,741.
BUSINESS
HISTORY AND DEVELOPMENT OF POWER MARKETING
Power Marketing, Inc. was incorporated under the laws of the State of
Delaware on August 1, 1995. In connection with the organization, the founder
contributed $28,500 cash to initially capitalize Power Marketing in exchange
for 950,000 shares of common stock.
On September 19, 1995, Power Marketing commenced a public offering in
reliance upon Rule 504 of Regulation D, promulgated by the U.S. Securities &
Exchange Commission under the Securities Act of 1933. 50,000 shares of common
stock were offered and sold and the offering closed in October, 1995.
Power Marketing was initially formed to engage in the infomercial
business marketing hair products. This business was not successful and
operations were eventually discontinued. In November-December, 1999,
management of Power Marketing decided to engage in the business of wine
investing, and raised additional capital for this purpose. Power Marketing
sold 250,000 shares of common stock in a non public offering, at $.20 per
share, and raised gross proceeds of $50,000. This increased the total issued
and outstanding common stock to 1,250,000 shares.
INDUSTRY BACKGROUND
Power Marketing intends to take advantage of what management believes is
8
<PAGE>
a money making opportunity that can be realized through buying, selling and
investing in select vintages of wines. The philosophy is simple; buy
California's and France's premier red wines when they are first released and
hold them for investment, appreciation and later resale, then sell the wines
after a 12 to 24 month period. We anticipate, but cannot assure, that the
appreciation of the wines will be greatest within this period. We will then
take any proceeds from investment, roll it over, and reinvest in the next
release of the wines. We also invest in select vintages of champagne and
other sparkling wines which are top ranked, such as 1990 Dom Perignon, and
will hold them for investment, appreciation and later resale whenever aging
and anticipation of demand results in an increase in value sufficient to
realize a good return on investment.
Power Marketing intends to purchase the actual wines directly from
suppliers rather than purchasing futures contracts, and will not be purchasing
futures contracts. Management is aware of companies that supply wines for
various purposes including investment, from which Power Marketing acquires the
wines it holds for investment. These companies conduct research regarding the
world's top wines and will provide educated recommendations to management
about the specific wines that can be purchased for investment and are likely
to appreciate in value over time. These companies buy and sell wines held for
investment from collectors and charge a commission of 10% to 15% for the
services. They also typically provide for a fee suitable temperature
controlled storage facilities in which to keep the wines while they age.
Wine investing, or using wines as an investment vehicle, is based on the
principle of aging. Some wines are believed by professional connoisseurs to
benefit from the aging process. As a result, these wines have the potential
to become more valuable with the passage of time. Most investment grade wines
are red wines, because white wines generally do not benefit from aging. Aging
allows a fine red wine, on the other hand, to develop distinctive traits which
are highly valued by connoisseurs. Select vintages of other wines, such as
champagne, may also benefit from the aging process enough to become investment
grade wines, if they are or become a top ranked vintage. For instance, 1990
Dom Perignon champagne is generally considered to be a top ranked vintage of
champagne. As a result of this aging process, the vintages of wines that are
sought after as investment grade wines may increase several times in value as
they are aged over a period of years, especially if the wines achieve a "First
Growth" or top ranked classification as they are aged.
A second factor upon which wine investing is based is anticipation of
demand, and the timing of demand, for such vintages. Because of the aging
factor, those vintages of red wine, champagne and other wines which become the
most highly sought after achieve such status only after having been "aged to
perfection" for a number of years. Obviously, at that point in time, the
supply of such vintages is fixed and cannot be further increased, even though
the demand is continuing to increase. Combined with the fact of general
increases in demand which will occur at various times as a result of certain
events such as celebrations and other festivities, the potential exists for
significant increases over time in the value of the most highly sought after
vintages, if the demand continues to increase, since the supply is fixed.
9
<PAGE>
Power Marketing has purchased its wine investments mostly through Nevada
Wine Company, using the brokerage and other services provided by that company.
Nevada Wine Company is not affiliated with Power Marketing or its principals.
Nevada Wine Company is a six year old Las Vegas based company that supplies
wine for many large and small businesses and also sells many of the world's
finest wines to collectors or to others who just want a good bottle of wine to
drink. These wines range from good inexpensive wine to wines worth hundreds
of dollars. In December, 1999, Power Marketing used the proceeds of its
recently completed offering to purchase several vintages of investment grade
wines, which it is still holding. The following table shows the wine
investments Power Marketing has purchased so far.
<TABLE>
<S> <C> <C> <C>
Description Quantity Price Total
1996 Pahlmeyer Red Table 18 $65.00 $1,170.00
1996 Quintessa Cabernet 120 75 9,000
1996 Opus One 24 130 3,120
1995 Berringer Reserve Cabernet 60 60 3,600
1997 Diamond Creek Gravely Meadow 24 120 2,880
1997 Diamond Creek Red Rock Terrace 24 120 2,880
1997 Diamond Creek Volcanic Hill 24 120 2,880
1995 Silver Oak Alex 24 60 1,440
1996 Lokoya Cabernet 11 125 1,375
1997 Dow Port 36 55 1,980
1997 Taylor Port 36 78 2,808
1997 Fonsecs Port 36 78 2,808
1997 Del Dotto 36 50 1,800
1990 Dom Perignon (champagne) 1,200 96.53 115,830.00
Balance December 31, 1999 1,673.00$1,232.53$153,571.00
</TABLE>
There is absolutely no assurance that Power Marketing will be successful
in this venture. Management has little or no prior experience in this
business or industry and will have to rely on the advice of others.
Management believes that any additional funds that may be received from
exercise of warrants can be used to increase the amounts of purchases or
investments Power Marketing can make.
COMPETITION
The business of buying, selling and investing in fine wines is intensely
competitive, with many companies who have greater technical expertise,
financial resources and marketing capabilities than Power Marketing. We are
aware of a number of competitors which will compete directly with us. There
is no assurance we will be able to overcome competitive disadvantages we face
as a small, start up company with limited capital. If we cannot compete
effectively, regardless of the success of this offering, we will not succeed.
10
<PAGE>
EMPLOYEES
As of the date hereof, Power Marketing has no full-time employees.
Because we are using the services provided by Nevada Wine Company, only a
minimal amount of management time is needed. No full-time employees are
presently needed.
FACILITIES
Power Marketing has no office facilities and does not presently
anticipate the need to lease commercial office space or facilities, but for
the time being uses the address of the President as the business address. We
may lease commercial office facilities at such time in the future as our
operations have developed to the point where the facilities are needed, but we
have no commitments or arrangements for any facilities, and there is no
assurance regarding the future availability of commercial office facilities or
terms on which we may be able to lease facilities in the future, nor any
assurance regarding length of time the present arrangement may continue. In
connection with the purchase of an inventory of wines to hold for investment
and resale, Power Marketing has leased from third parties or otherwise paid
for the use of temperature controlled or otherwise suitable storage facilities
for the wines.
AVAILABLE INFORMATION
We filed a registration statement on Form SB-2 with the United States
Securities and Exchange Commission, under the Securities Act of 1933, covering
the securities in this offering. As permitted by rules and regulations of the
Commission, this prospectus does not contain all of the information in the
registration statement. For further information regarding both Power
Marketing and the securities in this offering, we refer you to the
registration statement, including all exhibits and schedules, which may be
inspected without charge at the public reference facilities of the
Commission's Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C.
20549. Copies may be obtained upon request and payment of prescribed fees.
As of the date of this prospectus, we became subject to the information
requirements of the Securities Exchange Act of 1934. Accordingly, we will
file reports and other information with the Commission. These materials will
be available for inspection and copying at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: New York
Regional Office, 75 Park Place, New York, New York 10007; Chicago Regional
Office, 500 West Madison Street, Chicago, Illinois 60661. Copies of the
material may be obtained from the public reference section of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Commission maintains an Internet Web site located at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding issuers that file reports electronically with the Commission. The
site is accessible by the public through any Internet access service provider.
Copies of our Annual, Quarterly and other Reports filed with the
11
<PAGE>
Commission, starting with the Quarterly Report for the first quarter ended
after the date of this prospectus (due 45 days after the end of the quarter)
will also be available upon request, without charge, by writing Power
Marketing, Inc., 311 South State Street, Suite 460, Salt Lake City, Utah
84111.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table shows directors, executive officers and other
significant employees, their ages, and all offices and positions with Power
Marketing. Each director is elected for a period of one year and thereafter
serves until his successor is duly elected by the stockholders and qualifies.
Officers and other employees serve at the will of the board of directors.
<TABLE>
<S> <C> <C>
Term Served As Positions
Name of Director Age Director/Officer With Company
Lynn Dixon 52 Since inception President, Secretary-
Treasurer & Director
</TABLE>
This individual serves as the sole officer and director. A brief
description of his positions, duties, background and business experience
follows:
LYNN DIXON. Mr. Dixon graduated with a B.S. Degree in business from
Utah State University in 1969. From 1969 through 1972, he was employed at
Thiokol Chemical Corporation as a cost accountant. From 1972 through 1979, he
was employed as a stock broker with Olsen and Company in Salt Lake City, Utah.
From 1979 to the present, Mr. Dixon has devoted his full time to managing his
own investments.
There are no arrangements or understandings regarding the length of time
a director is to serve in that capacity.
EXECUTIVE COMPENSATION
Power Marketing has not paid any compensation to its executive officer
and director to date. We have no employment agreement with nor key man life
insurance on management. Management is entitled to reimbursement of any out of
pocket expenses reasonably and actually incurred on our behalf. The officer
does not devote full time or a significant amount of time to the affairs of
Power Marketing, is not a full time employee and does not receive any salary
or wage. There is no assurance regarding the length of time that this
arrangement may continue, nor any assurance that the services of the officer
will continue to be available for any specified length of time.
12
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table contains stock ownership information about officers
or directors, and other stockholders who we know to be beneficial owners of
more that 5% of our stock. A beneficial owner of stock is any person who has
or shares the power to decide how to vote or whether to dispose of the stock.
<TABLE>
<S> <C> <C> <C>
Title of Amount & Nature of % of
Name and Address Class Beneficial Ownership Class
1,025,700 shares
Lynn Dixon Common 82%
311 S. State, #460
SLC, UT 84111
1,025,700 shares
All officers and Common 82%
directors as a group (1person)
</TABLE>
The foregoing amounts include all shares these persons may be considered
to beneficially own regardless of the form of ownership.
CERTAIN TRANSACTIONS
In connection with the organization, the founder contributed $28,500
cash to initially capitalize Power Marketing in exchange for 950,000 shares of
common stock.
On September 19, 1995, Power Marketing commenced a public offering of up
to 50,000 shares of common stock, in reliance upon Rule 504 of Regulation D,
promulgated by the U.S. Securities & Exchange Commission under the Securities
Act of 1933. The offering closed in October, 1995. In December, 1999, Power
Marketing sold 250,000 shares of common stock in a non public offering, at
$.20 per share, and raised gross proceeds of $50,000 increasing the total
issued and outstanding common stock to 1,250,000 shares.
During November and December 1999, Power Marketing purchased for a price
of $153,571, champagne and wine to hold as an investment. The champagne was
purchased from a company that, at the time of the purchase, was affiliated
with the president of Power Marketing, for a note payable of $115,830. The
note was due in 6 months and provided for interest at 6% per annum.
Subsequent to the end of the year the note was settled and discharged for
$75,000.
CONFLICTS OF INTEREST
Other than as described in this prospectus we do not expect to have
significant further dealings with affiliates. However, if there are dealings
the parties will attempt to deal on terms competitive in the market and on the
same terms that either party would deal with a third person. Presently none
13
<PAGE>
of the officers and directors have any transactions which they contemplate
entering into with Power Marketing, aside from the matters described in this
prospectus.
Management will attempt to resolve any conflicts of interest that may
arise in favor of Power Marketing. Failure to do so could result in fiduciary
liability to management.
INDEMNIFICATION AND LIMITATION OF LIABILITY OF MANAGEMENT
The General Corporation Law of Delaware permits provisions in the
articles which limit liability of directors for breach of fiduciary duty to
certain specified circumstances, namely, breach of the director's duty of
loyalty to the corporation or its stockholders; acts or omissions not in good
faith or which involve intentional misconduct or knowing violation of law;
unlawful stock purchases, redemptions or payment of dividends; or any
transaction from which the director derived an improper personal benefit. Our
articles limit liability of directors to the full extent permitted by Delaware
law. With these exceptions this eliminates personal liability of a director
to Power Marketing or its shareholders, for monetary damages for breach of
fiduciary duty. Therefore a director cannot be held liable for damages to
Power Marketing or its shareholders for gross negligence or lack of due care
in carrying out his fiduciary duties as a director. Delaware law permits
indemnification if a director or officer acts in good faith in a manner
reasonably believed to be in, or not opposed to, the best interests of the
corporation. A director or officer must be indemnified as to any matter in
which he defends himself successfully. Indemnification is prohibited as to
any matter in which the director or officer is adjudged liable to the
corporation.
This will limit your ability as shareholders to hold officers and
directors liable and collect monetary damages for breaches of fiduciary duty,
and requires us to indemnify officers and directors to the full extent
permitted by law. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers, and controlling
persons under these provisions or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Act and is unenforceable.
DESCRIPTION OF SECURITIES
The following statements do not purport to be complete and are qualified
in their entirety by reference to the detailed provisions of our articles of
incorporation and bylaws, copies of which will be furnished to an investor
upon written request.
COMMON STOCK
We are presently authorized to issue 50,000,000 shares of common stock.
Power Marketing presently has 1,250,000 shares of common stock outstanding and
has reserved from its authorized but unissued shares a sufficient number of
shares of common stock for issuance of the shares offered in this offering.
The shares of common stock to be issued on completion of the offering will be,
when issued according to the terms of the offering, fully paid and non-
assessable.
14
<PAGE>
The holders of common stock, including the shares offered in this
offering, are entitled to equal dividends and distributions, per share, on the
common stock when, as and if declared by the board of directors from funds
legally available for that. No holder of any shares of common stock has a
pre-emptive right to subscribe for any securities nor are any common shares
subject to redemption or convertible into other securities. Upon liquidation,
dissolution or winding up, and after payment of creditors and preferred
stockholders, if any, the assets will be divided pro-rata on a share-for-share
basis among the holders of the shares of common stock. All shares of common
stock now outstanding are fully paid, validly issued and non-assessable. Each
share of common stock is entitled to one vote on the election of any director
or any other matter upon which shareholders are required or permitted to vote.
Holders of our common stock do not have cumulative voting rights, so that the
holders of more than 50% of the combined shares voting for the election of
directors may elect all of the directors, if they choose to do so and, in that
event, the holders of the remaining shares will not be able to elect any
members to the board of directors.
PREFERRED STOCK
We are also presently authorized to issue 500,000 shares of preferred
stock. Under our articles of incorporation, the board of directors has the
power, without further action by the holders of the common stock, to designate
the relative rights and preferences of the preferred stock, and issue the
preferred stock in one or more series as designated by the board of directors.
The designation of rights and preferences could include preferences as to
liquidation, redemption and conversion rights, voting rights, dividends or
other preferences, any of which may be dilutive of the interest of the holders
of the common stock or the preferred stock of any other series. The issuance
of preferred stock may have the effect of delaying or preventing a change in
control without further shareholder action and may adversely effect the rights
and powers, including voting rights, of the holders of common stock. In
certain circumstances, the issuance of preferred stock could depress the
market price of the common stock. The board of directors effects a
designation of each series of preferred stock by filing with the Delaware
Secretary of State a Certificate of Designation defining the rights and
preferences of each series. Documents so filed are matters of public record
and may be examined according to procedures of the Delaware Secretary of
State, or copies may be obtained from Power Marketing.
WARRANTS
Power Marketing has declared a distribution of 1,250,000 common stock
purchase warrants to shareholders of record as of [a date within 20 days after
the date of this prospectus]. The warrants are exercisable at $1.00 per share,
on or before June 30, 2002, upon effectiveness of registration of the warrants
and underlying shares.
(a) Power Marketing may redeem all or a portion of the warrants,
at $.01 per warrant, at any time upon 30 days' prior written notice to
the warrant holders. The warrants may be redeemed whether or not a
current registration statement is effective. Any warrant holder who
does not exercise his warrants before the Redemption Date, as set forth
on the Notice of Redemption, will forfeit his right to purchase the
15
<PAGE>
shares of common stock underlying the warrants, and after the Redemption
Date any outstanding warrants referred to in the Notice will become void
and be canceled. If not redeemed, the warrants will expire at the
conclusion of the exercise period unless extended by us.
(b) Power Marketing may at any time, and from time to time,
extend the exercise period of the warrants provided that written notice
of the extension is given to the warrant holders before the expiration
date. Also, Power Marketing may, at any time, reduce the exercise price
by written notification to the holders. We do not presently contemplate
any extensions of the exercise period or reduction in the exercise price
of the warrants.
(c) The warrants contain anti-dilution provisions on the
occurrence of certain events, such as stock splits or stock dividends.
The anti-dilution provisions do not apply in the event of a merger or
acquisition. In the event of liquidation, dissolution or winding-up,
warrant holders will not be entitled to participate in the assets.
Warrant holders have no voting, preemptive, liquidation or other rights
of a stockholder, and no dividends may be declared on the warrants.
(d) The warrants may be exercised by surrendering to Power
Marketing, a warrant certificate evidencing the warrants to be
exercised, together with the exercise form duly completed and executed,
and paying the exercise price per share in cash or check payable to
Power Marketing. Stock certificates will be issued as soon thereafter
as practicable.
(e) The warrants will not be exercisable unless the warrants and
the shares of common stock underlying the warrants are registered or
otherwise qualified in applicable jurisdictions.
(f) The warrants will be nontransferable by their terms, cannot
be transferred without the consent of Power Marketing and will be
stamped with a restrictive legend.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 1,250,000 shares of our common stock outstanding before the
exercise of any warrants, 50,000 shares are currently freely tradeable. In
addition, the 1,250,000 shares of common stock underlying the warrants will
also be freely tradeable into the public market immediately upon issuance.
Sales of substantial amounts of this common stock in the public market could
depress the market price of the common stock. Furthermore, all of the
remaining shares of common stock presently outstanding are restricted and/or
affiliate securities which are not presently, but may in the future be sold,
under Rule 144, into any public market that may exist for the common stock.
Future sales by current shareholders could depress the market prices of the
common stock in any market.
In general, under Rule 144 as currently in effect, a person (or group of
persons whose shares are aggregated), including affiliates of an issuer, can
sell within any three-month period, an amount of restricted securities that
does not exceed the greater of 1% of the total number of outstanding shares of
16
<PAGE>
the same class, or (if the Stock becomes quoted on NASDAQ or a stock
exchange), the reported average weekly trading volume during the four calendar
weeks preceding the sale; provided, that at least one year has elapsed since
the restricted securities being sold were acquired from the issuer or any
affiliate of the issuer, and provided further that certain other conditions
are also satisfied. If at least two years have elapsed since the restricted
securities were acquired from the issuer or an affiliate of the issuer, a
person who has not been an affiliate of the issuer for at least three months
can sell restricted shares under Rule 144 without regard to any limitations on
the amount.
PLAN OF DISTRIBUTION
This prospectus and the registration statement of which it is part
relate to the offer and sale of 1,250,000 shares of common stock to be issued
upon the exercise of the warrants at an exercise price of $1.00 per share.
The warrants are being distributed as a dividend on the common stock to all
the shareholders of record as of [a date within 20 days after the date of this
prospectus. The warrants are exercisable until June 30, 2002, if this
prospectus is still current or has been updated.
The offering will be managed by Power Marketing without an underwriter,
and the shares are being offered and sold without any discount, sales
commissions or other compensation being paid to anyone in connection with the
offering. Power Marketing will pay the costs of preparing, mailing and
distributing this prospectus to the holders of the warrants. Brokers,
nominees, fiduciaries and other custodians are requested to forward copies of
this prospectus to the beneficial owners of securities held of record by them,
and the custodians will be reimbursed for their expenses.
There is no assurance that all or any shares will be sold, nor any
requirement, or escrow provisions to assure that, any minimum amount of
warrants will be exercised. All funds received upon the exercise of any
warrants will be immediately available for our use.
EXERCISE PROCEDURES
The warrants may be exercised in whole or in part by presentation of the
Warrant Certificate, with the Purchase Form on the reverse side filled out and
signed at the bottom, together with payment of the Exercise Price and any
applicable taxes at the principal office of Interwest Stock Transfer Co., 1981
East 4800 South, Suite 100, Salt Lake City, Utah 84117. Payment of the
Exercise Price shall be made in lawful money of the United States of America
in cash or by cashier's or certified check payable to the order of "Power
Marketing, Inc., Warrant Exercise Account."
All holders of warrants will be given an independent right to exercise
their purchase rights. If, as and when properly completed and duly executed
notices of exercise are received by the Transfer Agent and/or Warrant Agent,
together with the Certificates being surrendered and full payment of the
Exercise Price in cleared funds, the checks or other funds will be delivered
to Power Marketing and the Transfer Agent and/or Warrant Agent will promptly
17
<PAGE>
issue certificates for the underlying common stock. It is presently estimated
that certificates for the shares of common stock will be available for
delivery in Salt Lake City, Utah at the close of business on the tenth
business day after the receipt of all required documents and funds.
LEGAL MATTERS
Management knows of no material litigation that is pending or threatened
against Power Marketing. The validity of the issuance of the shares offered
in this offering will be passed upon for Power Marketing by Thomas G. Kimble &
Associates, Salt Lake City, Utah.
EXPERTS
The financial statements of Power Marketing for the years ended December
31, 1999 and 1998 which are included in this prospectus have been examined by
Pritchett, Siler & Hardy, P.C., independent certified public accountants, as
indicated in their report, and are included in this prospectus in reliance on
the report given upon the authority of that firm as experts in accounting and
auditing.
18
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998
<PAGE>
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
POWER MARKETING, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Independent Auditors' Report 1
- Balance Sheets, December 31, 1999 and 1998 2
- Statements of Operations, for the years ended
December 31, 1999 and 1998, and from
inception on August 1, 1995 through
December 31, 1999 3
- Statement of Stockholders' Equity, from
inception on August 1, 1995 through
December 31, 1999 4
- Statements of Cash Flows, for the years ended
December 31, 1999 and 1998, and from
inception on August 1, 1995 through
December 31, 1999 5
- Notes to Financial Statements 6 - 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
POWER MARKETING, INC.
Salt Lake City, Utah
We have audited the accompanying balance sheets of Power Marketing, Inc. [a
development stage company] at December 31, 1999 and 1998, and the related
statements of operations, stockholders' equity and cash flows for the years
ended December 31, 1999 and 1998 and for the period from inception on August
1, 1995 through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements audited by us present fairly, in all
material respects, the financial position of Power Marketing, Inc. as of
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years ended December 31, 1999 and 1998, and for the period from
inception through December 31, 1999, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed Note 8 to the financial
statements, the Company has suffered losses since inception and has not yet
been successful in establishing profitable operations, raising substantial
doubt about its ability to continue as a going concern. Management's plans
in regards to these matters are also described in Note 8. The financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
January 12, 2000
Salt Lake City, UT
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
BALANCE SHEETS
ASSETS
December 31,
___________________________
1999 1998
____________ ____________
CURRENT ASSETS:
Cash in bank $ 12,356 $ 1,089
Investment 153,571 -
____________ ____________
Total Current Assets 165,927 1,089
ORGANIZATION COSTS, net - 167
____________ ____________
$ 165,927 $ 1,256
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-related party $ 500 $ -
Accounts payable - 53
Note payable-related party 115,830 -
Accrued interest-related party 876 -
____________ ____________
Total Current Liabilities 117,206 53
____________ ____________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
500,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,250,000 and 1,000,000 shares issued and
outstanding, respectively 1,250 1,000
Additional paid-in capital 77,300 27,550
Deficit accumulated during the
development stage (29,829) (27,347)
____________ ____________
Total Stockholders' Equity 48,721 1,203
____________ ____________
$ 165,927 $ 1,256
____________ ____________
The accompanying notes are an integral part of these financial statement.
-2-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
STATEMENTS OF OPERATIONS
From Inception on
For the Year Ended August 1, 1995
December 31, Through
_______________________ December 31,
1999 1998 1999
__________ __________ ___________
REVENUE $ - $ - $ -
EXPENSES:
General and administrative 1,606 1,348 10,697
__________ __________ ___________
Total Expenses 1,606 1,348 10,697
__________ __________ ___________
LOSS BEFORE OTHER INCOME
(EXPENSE) (1,606) (1,348) (10,697)
__________ __________ ___________
OTHER INCOME (EXPENSE):
Interest Expense (876) - (876)
Interest Income - - 44
__________ __________ ___________
Total Other Income (876) - (832)
__________ __________ ___________
LOSS BEFORE INCOME TAXES (2,482) (1,348) (11,529)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ___________
(LOSS) FROM CONTINUING
OPERATIONS (2,482) (1,348) (11,529)
__________ __________ ___________
DISCONTINUED OPERATIONS:
(Loss) from operations of
discontinued hair product
marketing operations - - (18,990)
Gain on disposition of hair
product marketing operations - - 690
__________ __________ ___________
LOSS FROM DISCONTINUED
OPERATIONS - - (18,300)
__________ __________ ___________
NET LOSS $(2,482) $(1,348) $(29,829)
__________ __________ ___________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.01)
Discontinued operations (.00) (.00) (.02)
__________ __________ ___________
Loss Per Common Share $ (.00) $ (.00) $ (.03)
__________ __________ ___________
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
STATEMENT OF STOCKHOLDERS' EQUITY
FROM THE DATE OF INCEPTION ON AUGUST 1, 1995
THROUGH DECEMBER 31, 1999
Deficit
Accumulated
Preferred Stock Common Stock Capital in During the
________________ ______________ Excess of Development
Shares Amount Shares Amount Par Value Stage
_______ ________ ______________ ________ _________
BALANCE, August 1, 1995 - $ - - $ - $ - $ -
Issuance of 950,000 shares
common stock for cash,
September 15, 1995 at $.03
per share - - 950,000 950 27,550 -
Issuance of 50,000 shares
of common stock for cash,
October 4, 1995 at $.10
per share, net of offering
costs - - 50,000 50 - -
Net loss for the period
ended December 31, 1995 - - - - - (23,780)
_______ _______ _________ _______ ________ __________
BALANCE, December 31, 1995 - - 1,000,000 1,000 27,550 (23,780)
Net loss for the year ended
December 31, 1996 - - - - - (51)
_______ _______ _________ _______ ________ __________
BALANCE, December 31, 1996 - - 1,000,000 1,000 27,550 (23,831)
Net loss for the year ended
December 31, 1997 - - - - - (2,168)
_______ _______ _________ _______ ________ __________
BALANCE, December 31, 1997 - - 1,000,000 1,000 27,550 (25,999)
Net loss for the year ended
December 31, 1998 - - - - - (1,348)
_______ _______ _________ _______ ________ __________
BALANCE, December 31, 1998 - - 1,000,000 1,000 27,550 (27,347)
Issuance of 250,000 shares
of common stock for
cash at .02 per share - - 250,000 250 49,750
- -
Net loss for the year ended
December 31, 1999 - - - - - (2,482)
_______ _______ _________ _______ ________ __________
BALANCE, December 31, 1999 - $ - 1,250,000 $1,250 $ 77,300 $ (29,829)
_______ _______ _________ _______ ________ __________
The accompanying notes are an integral part of this financial statement.
-4-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
STATEMENTS OF CASH FLOWS
From Inception on
For the Year Ended August 1, 1995
December 31, Through
___________________________ December 31,
1999 1998 1999
____________ ______________ ____________
Cash Flows from Operating
Activities:
Net loss $ (2,482) $ (1,348) $ (29,829)
Adjustments to reconcile net (loss)
to net cash used by operations:
Amortization 167 100 500
Changes in assets and liabilities:
Increase (decrease) in
accounts payable (53) 53 -
Increase in
accounts payable-related 500 - 500
Increase in accrued
interest-related 876 - 876
___________ ______________ _____________
Net Cash Provided (Used) by
Operating Activities (992) (1,195) (27,953)
___________ ______________ _____________
Cash Flows from Investing Activities:
Organization costs - - (500)
Purchase of investment (153,571) - (153,571)
___________ ______________ _____________
Net Cash Provided (Used) by
Investing Activities (153,571) - (154,071)
___________ ______________ _____________
Cash Flows from Financing Activities:
Proceeds from sale of common stock 50,000 - 83,500
Payment of stock offering costs - - (4,950)
Proceeds from note
payable-related party 115,830 - 115,830
___________ ______________ _____________
Net Cash Provided by
Financing Activities 165,830 - 194,380
___________ ______________ _____________
Net Increase (Decrease) in Cash 11,267 (1,195) 12,356
Cash at Beginning of Period 1,089 2,284 -
___________ ______________ _____________
Cash at End of Period $ 12,356 $ 1,089 $ 12,356
___________ ______________ _____________
Supplemental Disclosures of Cash Flow information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Non-Cash Investing and Financing Activities:
For the Year Ended December 31, 1999:
None
For the Year Ended December 31, 1998:
None
The accompanying notes are an integral part of these financial statement.
-5-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the State of
Delaware on August 1, 1995. The Company is considered a development stage
company as defined in SFAS No. 7. The Company was formed to engage in the
business of television marketing of hair products. During 1996, the Company
discontinued the marketing of hair products and is currently considering
other business opportunities or potential business acquisitions. During
1999, the Company purchased champagne as an investment, but is still seeking
other potential business ventures. The Company has, at the present time, not
paid any dividends and any dividends that may be paid in the future will
depend upon the financial requirements of the Company and other relevant
factors.
Organization Costs - The Company is amortizing its organization costs, which
reflect amounts expended to organize the Company, over sixty [60] months
using the straight line method. Amortization expense for 1999 and 1998 was
$167 and $100.
(Loss) Per Common Share - The computation of loss per common share is based
on the weighted average number of shares outstanding during the period
presented.
Accounting Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that effect the reported amounts of assets and
liabilities, the disclosures 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
estimated by management.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 132, "Employer's Disclosure about Pensions and Other
Postretirement Benefits", SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", SFAS No. 134, "Accounting for Mortgage-
Backed Securities." and SFAS No. 135, "Rescission of FASB Statement No. 75
and Technical Corrections" were recently issued. SFAS No. 132, 133, 134 and
135 have no current applicability to the Company or their effect on the
financial statements would not have been significant
NOTE 2 - CAPITAL STOCK
Common Stock - During September, 1995, in connection with its organization,
the Company issued 950,000 shares of its previously authorized, but unissued
common stock. Total proceeds from the sale of stock amounted to $28,500 (or
$.03 per share). During October, 1995, the Company made a public offering of
50,000 of its previously authorized but unissued common stock. Total
proceeds from the public sale of stock amounted to $5,000. Direct offering
costs offset against the proceeds were $4,950.
During December 1999, the Company issued 250,000 shares of its previously
authorized but unissued common stock. Total proceeds from the sale of stock
amounted to $50,000 (or $.20 per share)
Preferred Stock - The Company has authorized 250,000 shares of preferred
stock, $.001 per value, with such rights, preferences and designations and to
be issued in such series as determined by the Board of Directors. No shares
are issued and outstanding at December 31, 1999 and 1998.
-6-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - INVESTMENT
During November 1999 the Company acquired champagne from an entity that at
the time was related to a significant shareholder of the Company. A note
payable in the amount of $115,830 was given as consideration for the
champagne.
During December 1999 the Company paid cash of $37,741 to purchase wine as an
investment. The wine was purchased from an unrelated entity.
NOTE 4 - NOTE PAYABLE - RELATED PARTY
On November 15, 1999 the Company purchased $115,830 of its investment in
champagne from controlled by a shareholder of the Company for a note payable
in the amount of $115,830. The note is due in 6 months and provides for
interest at 6% per annum. Subsequent to the date of this audit the note was
settled and paid in full.
[See Note 10]
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability equal
to the expected future tax benefit/expense of temporary reporting differences
between book and tax accounting methods and any available operating loss or
tax credit carryforwards.
The Company has available at December 31, 1999, unused operating loss
carryforwards of approximately $29,000 which may be applied against future
taxable income and which expire in various years from 2010 through 2018. The
amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax
laws in effect, the future earnings of the Company, and other future events,
the effects of which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company has
established a valuation allowance equal to the amount of the loss
carryforwards and, therefore, no deferred tax asset has been recognized for
the loss carryforwards. The net deferred tax assets are approximately $9,900
and $9,200 as of December 31, 1999 and 1998, respectively, with an offsetting
valuation allowance at each year end of the same amount resulting in a change
in the valuation allowance of approximately $700 during 1999.
NOTE 6 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any compensation to its
officers and directors.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his office
as a mailing address, as needed, at no expense to the Company.
NOTE 7 - DEVELOPMENT STAGE COMPANY
The Company was formed with a very specific business plan. The Company
expended virtually all of its working capital in a relatively short time
period and was not successful in establishing on-going profitable operations.
Consequently, the Company discontinued its operations of engaging in
television marketing. The Company currently has no on-going operations.
-7-
<PAGE>
POWER MARKETING, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles which contemplate continuation of
the Company as a going concern. However, the Company has incurred losses
since inception, has expended most of its working capital and has not yet
been successful in establishing profitable operations. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. In this regard, management is proposing to raise additional funds
through loans, or through additional sales of its
common stock or through the acquisition of other companies. There is no
assurance that the Company will be successful in raising this additional
capital.
NOTE 9 - EARNINGS PER SHARE
The following data shows the amounts used in computing loss per share for the
periods presented.
For the From Inception
Year Ended on August 1,
December 31, 1995 Through
_________________ December 31,
1999 1998 1999
________ ________ _____________
Loss from continuing operations
available to common shareholders
(numerator) $(2,482) $ (1,348) $ (11,529)
________ ________ _____________
Loss from discontinued operations
(numerator) $ - $ - $ (18,300)
________ ________ _____________
Weighted average number of
common shares outstanding used
in loss per share calculation for
the period (denominator) 1,015,753 1,000,000 1,001,581
_________ ________ _____________
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to December 31, 1999 the Company was released from a note payable
by entering into a settlement agreement wherein the Company paid $75,000.
A shareholder loaned the Company $75,000 which was used to negotiate and
settle the note payable. [See Note 4]
-8-
<PAGE>
No dealer, salesman or other person is
authorized to give any information or to
make any representations other than those
contained in this prospectus in connection
with the offer made in this offering. If
given or made, the information or
representations must not be relied upon
as having been authorized by Power
Marketing. This prospectus does not
constitute an offer to sell or a solicitation
of an offer to buy any of the securities
covered in this offering, in any
jurisdiction or to any person to whom it is
unlawful to make the offer or solicitation
in the jurisdiction. Neither the delivery of
this prospectus nor any sale made
hereunder shall, in any circumstances,
create any implication that there has been
no change in the affairs of Power
Marketing since the date hereof.
Until [90 days after the date of this
prospectus], all dealers that effect
transactions in these securities, whether
or not participating in this offering, may
be required to deliver a prospectus. This
is in addition to the dealers' obligation to
deliver a prospectus when acting as
underwriters and with respect to their
unsold allotments or subscriptions.
POWER MARKETING, INC.
1,250,000 Shares
Common Stock
PROSPECTUS
, 2000
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The statutes, charter provisions, bylaws, contracts or other arrangements
under which controlling persons, directors or officers of the registrant are
insured or indemnified in any manner against any liability which they may
incur in such capacity are as follows:
1. Section 145 of the Delaware General Corporation Law provides that each
corporation shall have the following powers:
(a) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation)
by reason of the fact that the person is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had
no reasonable cause to believe the person's conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in
a manner which the person reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person's conduct was
unlawful.
(b) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action or
suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and
except that no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a present or former director or officer of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because the person has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made,
with respect to a person who is a director or officer at the time of such
determination, (1) by a majority vote of the directors who are not parties to
such action, suit or proceeding, even though less than a quorum, or (2) by a
committee of such directors designated by majority vote of such directors,
even though less than a quorum, or (3) if there are no such directors, or if
such directors so direct, by independent legal counsel in a written opinion,
or (4) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director in
defending any civil, criminal, administrative or investigative action, suit or
proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that such person is not entitled to be indemnified by the
corporation as authorized in this section. Such expenses (including attorneys'
fees) incurred by former directors and officers or other employees and agents
may be so paid upon such terms and conditions, if any, as the corporation
deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in
such person's official capacity and as to action in another capacity while
holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against such person and incurred by such person in any such capacity, or
arising out of such person's status as such, whether or not the corporation
would have the power to indemnify such person against such liability under
this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power
and authority to indemnify its directors, officers, and employees or agents,
so that any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall
stand in the same position under this section with respect to the resulting or
surviving corporation as such person would have with respect to such
constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee
or agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner such
person reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to hear
and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
2. The Issuer's Articles of Incorporation limit liability of its Officers and
Directors to the full extent permitted by the Delaware General Corporation
Law. The bylaws provide for indemnification in accordance with the foregoing
statutory provisions.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
The following table sets forth all estimated costs and expenses, other than
underwriting discounts, commissions and expense allowances, payable by the
registrant in connection with the maximum offering for the securities included
in this registration statement:
Amount
SEC registration fee $ 330.00
Blue sky fees and expenses 2,500.00
Printing and shipping expenses 500.00
Legal fees and expenses 12,000.00
Accounting fees and expenses 3,000.00
Transfer and Miscellaneous expenses 1,670.00
-----------------
Total $ 20,000.00
* All expenses are estimated except the Commission filing fee.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In connection with the organization of the Company, the founder
contributed $28,500 cash to initially capitalize Power Marketing in exchange
for 950,000 shares of common stock. This transaction was not registered under
the Act in reliance on the exemption from registration in Section 4(2) of the
Act, as a transaction not involving any public offering. These securities
were issued as restricted securities and the certificates were stamped with
restrictive legends to prevent any resale without registration under the Act
or in compliance with an exemption.
On September 19, 1995, Power Marketing commenced a public offering in
reliance upon Rule 504 of Regulation D, promulgated by the U.S. Securities &
Exchange Commission under the Securities Act of 1933. 50,000 shares of common
stock were offered and sold and the offering closed in October, 1995. These
transactions were not registered under the Act in reliance on the exemption
from registration in Section 3(b) of the Act, and Rule 504 of Regulation D
promulgated thereunder. Form D was filed with the Securities and Exchange
Commission.
In December, 1999, Power Marketing sold 250,000 shares of common stock
in a non public offering to 10 investors, at $.20 per share, and raised gross
proceeds of $50,000. This increased the total issued and outstanding common
stock to 1,250,000 shares. This transaction was not registered under the
Act in reliance on the exemption from registration in Section 4(2) of the Act,
as a transaction not involving any public offering. These securities were
issued as restricted securities and the certificates were stamped with
restrictive legends to prevent any resale without registration under the Act
or in compliance with an exemption.
ITEM 27. EXHIBITS INDEX
SEC No. Document Exhibit No.
3 Articles of Incorporation 3.1
3 By-Laws 3.2
4 Common Stock Specimen Certificate 4.1
4 Form of Warrant Agreement 4.2
4 Form of Warrant Certificate 4.3
5,24 Opinion & Consent of Counsel 5.1 & 24.1
23 Consent of Accountants 23.1
27 Financial Data Schedules 27
ITEM 28. UNDERTAKINGS
The registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a post-
effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;
(ii) Include any additional or changed material information on the plan of
distribution; and
(iii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
Registration Statement.
(2) For determining any liability under the Securities Act, treat each post-
effective amendment as a new Registration Statement of the securities offered,
and the offering of the securities at that time to be the initial bona fide
offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
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 Salt Lake, State of Utah, on February 03, 2000.
POWER MARKETING, INC.
By: /s/ Lynn Dixon
Lynn Dixon, Chairman (Chief Executive/Financial Officer)
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Thomas G. Kimble or Van L. Butler, the
undersigned's true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for the undersigned and in the undersigned's
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same with all exhibits thereto, and all documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing, requisite and necessary to be done in
and about the premises, as fully 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 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 has been signed by the following persons in the
capacities and on the date indicated.
Signature: /s/ Lynn Dixon Date: February 03, 2000
Lynn Dixon, Director
CERTIFICATE OF INCORPORATION
OF
POWER MARKETING, INC.
FIRST: The name of this corporation shall be:
POWER MARKETING, INC.
SECOND: Its registered office in the State of Delaware is
to be located at 1013 Centre Road, in the City of Wilmington,
County of New Castle and its registered agent at such address is
CORPORATION SERVICE COMPANY.
THIRD: The purpose or purposes of the corporation shall
be:
To engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law
of Delaware.
FOURTH: The total number of shares of stock which this
corporation is authorized to issue is:
(a) Common. 50,000,000 shares of Common Stock having
a par value of $.001 per share:
(b) Preferred. 500,000 shares of Preferred stock
having a par value of $.001 per share and to be issued in
such series and to have such rights, preferences, and
designation as determined by the Board of Directors of the
Corporation.
FIFTH: The name and address of the incorporator is as
follows:
Sharon J. Branscome
Corporation Service Company
1013 Centre Road
Wilmington, DE 19805
SIXTH: The Board of Directors shall have the power to
amend or repeal the by-laws.
SEVENTH: No director shall be personally liable to the
Corporation or its stockholders for monetary damages from any
breach of fiduciary duty by such director as a director.
Notwithstanding the foregoing sentence, a director shall be
liable to the extent provided by applicable law, (i) for breach
of the directory's duty of loyalty to the Corporation 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 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. No amendment to
or repeal of this Article Seventh shall apply to or have any
effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of
such director occurring prior to such amendment.
IN WITNESS WHEREOF, the undersigned, being the incorporator
hereinbefore named, has executed, signed and acknowledged this
certificate of incorporation this first day of August, A.D.,
1995.
Sharon J. Branscome
Incorporator
BY-LAWS
OF
POWER MARKETING, INC.
ARTICLE I - OFFICES
SECTION 1. The registered office of the corporation in the
State of Delaware shall be at 1013 Centre Road, Wilmington,
Delaware 19805-1297.
The registered agent in charge thereof shall be CSC Networks.
SECTION 2. The corporation may also have offices at such
other places as the Board of Directors may from time to time
appoint or the business of the corporation may require.
ARTICLE II - SEAL
SECTION 1. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
SECTION 1. Meetings of stockholders shall be held at the
registered office of the corporation in this state or at such
place, either within or without this state, as may be selected from
time to time by the Board of Directors.
SECTION 2. ANNUAL MEETINGS: The annual meeting of the
stockholders shall be held on such date as is determined by the
Board of Directors for the purpose of electing directors and for
the transaction of such other business as may properly be brought
before the meeting.
SECTION 3. ELECTION OF DIRECTORS: Elections of the directors
of the corporation shall be by written ballot.
SECTION 4. SPECIAL MEETINGS: Special meetings of the
stockholders may be called at any time by the President, or the
Board of Directors, or stockholders entitled to cast at least
one-fifth of the votes which all stockholders are entitled to cast
at the particular meeting. At any time, upon written request of
any person or persons who have duly called a special meeting, it
shall be the duty of the Secretary to fix the date of the meeting,
to be held not more than sixty days after receipt of the request,
and to give due notice thereof. If the Secretary shall neglect or
refuse to fix the date of the meeting and give notice thereof, the
person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined
to the objects stated in the call and matters germane thereto,
unless all stockholders entitled to vote are present and consent.
Written notice of a special meeting of stockholders stating
the time and place and object thereof, shall be given to each
stockholder entitled to vote thereat at least ten days before such
meeting, unless a greater period of notice is required by statute
in a particular case.
SECTION 5. QUORUM: A majority of the outstanding shares of
the corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum at a meeting of stockholders. If
a majority of the outstanding shares entitled to vote is
represented at a meeting, a majority of the shares so represented
may adjourn the meeting from time to time without further notice.
At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The stockholders
present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
SECTION 6. PROXIES: Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another
person or persons to act for him by proxy, but no such proxy shall
be voted or acted upon after three years from its date, unless the
proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that
it is irrevocable and if, and only as long as, it is coupled with
an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest
with which it is coupled is an interest in the stock itself or an
interest in the corporation generally. All proxies shall be filed
with the Secretary of the meeting before being voted upon.
SECTION 7. NOTICE OF MEETINGS: Whenever stockholders are
required or permitted to take any action at a meeting, a written
notice of the meeting shall be given which shall state the place,
date and hour of the meeting, and, in the case of a special
meeting, the purpose or purposes for which the meeting is called.
Unless otherwise provided by law, written notice of any
meeting shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote
at such meeting.
SECTION 8. CONSENT IN LIEU OF MEETINGS: Any action required
to be taken at any annual or special meeting of stockholders of a
corporation, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented
in writing.
SECTION 9. LIST OF STOCKHOLDERS: The officer who has charge
of the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged
in alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. No share of stock upon which any installment is due
and unpaid shall be voted at any meeting. The list shall be open
to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at
least ten days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at
the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder who is
present.
ARTICLE IV - DIRECTORS
SECTION 1. The business and affairs of this corporation shall
be managed by its Board of Directors, no less than one in number or
such other minimum number as is required by law. The directors
need not be residents of this state or stockholders in the
corporation. They shall be elected by the stockholders of the
corporation or in the case of a vacancy by remaining directors, and
each director shall be elected for the term of one year, and until
his successor shall be elected and shall qualify or until his
earlier resignation or removal.
SECTION 2. REGULAR MEETINGS: Regular meetings of the Board
shall be held without notice other than this by-law immediately
after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time
and place for the holding of additional regular meetings without
other notice than such resolution.
SECTION 3. SPECIAL MEETINGS: Special Meetings of the Board
may be called by the President or any director upon two day notice.
The person or persons authorized to call special meetings of the
directors may fix the place for holding any special meeting of the
directors called by them.
SECTION 4. QUORUM: A majority of the total number of
directors shall constitute a quorum for the transaction of
business.
SECTION 5. CONSENT IN LIEU OF MEETING: Any action required
or permitted to be taken at any meeting of the Board of Directors,
or of any committee thereof, may be taken without a meeting if all
members of the Board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee. The Board of
Directors may hold its meetings, and have an office or offices,
outside of this state.
SECTION 6. CONFERENCE TELEPHONE: One or more directors may
participate in a meeting of the Board, of a committee of the Board
or of the stockholders, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other; participation in
this manner shall constitute presence in person at such meeting.
SECTION 7. COMPENSATION: Directors as such, shall not
receive any stated salary for their services, but by resolution of
the Board, a fixed sum and expenses of attendance, if any, may be
allowed for attendance at each regular or special meeting of the
Board provided, that nothing herein contained shall be construed to
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
SECTION 8. REMOVAL: Any director or the entire Board of
Directors may be removed, with or without cause, by the holders of
a majority of the shares then entitled to vote at an election of
directors, except that when cumulative voting is permitted, if less
than the entire Board is to be removed, no director may be removed
without cause if the votes cast against his removal would be
sufficient to elect him if then cumulatively voted at an election
of the entire Board of Directors, or, if there be classes of
directors, at an election of the class of directors of which he is
a part.
ARTICLE V - OFFICERS
SECTION 1. The executive officers of the corporation shall be
chosen by the directors and shall be a President, Secretary and
Treasurer. The Board of Directors may also choose a Chairman, one
or more Vice Presidents and such other officers as it shall deem
necessary. Any number of offices may be held by the same person.
SECTION 2. SALARIES: Salaries of all officers and agents of
the corporation shall be fixed by the Board of Directors.
SECTION 3. TERM OF OFFICE: The officers of the corporation
shall hold office for one year and until their successors are
chosen and have qualified. Any officer or agent elected or
appointed by the Board may be removed by the Board of Directors
whenever in its judgment the best interest of the corporation will
be served thereby.
SECTION 4. PRESIDENT: The President shall be the chief
executive officer of the corporation; he shall preside at all
meetings of the stockholders and directors; he shall have general
and active management of the business of the corporation, shall see
that all orders and resolutions of the Board are carried into
effect, subject, however, to the right of the directors to delegate
any specific powers, except such as may be by statute exclusively
conferred on the President, to any other officer or officers of the
corporation. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation. He shall be
EX-OFFICIO a member of all committees, and shall have the general
power and duties of supervision and management usually vested in
the office of President of a corporation.
SECTION 5. SECRETARY: The Secretary shall attend all
sessions of the Board and all meetings of the stockholders and act
as clerk thereof, and record all the votes of the corporation and
the minutes of all its transactions in a book to be kept for that
purpose, and shall perform like duties for all committees of the
Board of Directors when required. He shall give, or cause to be
given, notice of all meetings of the stockholders and of the Board
of Directors, and shall perform such other duties as may be
prescribed by the Board of Directors or President, and under whose
supervision he shall be. He shall keep in safe custody the
corporate seal of the corporation, and when authorized by the
Board, affix the same to any instrument requiring it.
SECTION 6. TREASURER: The Treasurer shall have custody of
the corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation, and shall keep the moneys of the corporation in a
separate account to the credit of the corporation. He shall
disburse the funds of the corporation as may be ordered by the
Board, taking proper vouchers for such disbursements, and shall
render to the President and directors, at the regular meetings of
the Board, or whenever they may require it, an account of all his
transactions as Treasurer and of the financial condition of the
corporation.
ARTICLE VI - VACANCIES
SECTION 1. Any vacancy occurring in any office of the
corporation by death, resignation, removal or otherwise, shall be
filled by the Board of Directors. Vacancies and newly created
directorships resulting from any increase in the authorized number
of directors may be filled by a majority of the directors then in
office, although less than a quorum, or by a sole remaining
director. If at any time, by reason of death or resignation or
other cause, the corporation should have no directors in office,
then any officer or any stockholder or an executor, administrator,
trustee or guardian of a stockholder, or other fiduciary entrusted
with like responsibility for the person or estate of a stockholder,
may call a special meeting of stockholders in accordance with the
provisions of these By-Laws.
SECTION 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one
or more directors shall resign from the Board, effective at a
future date, a majority of the directors then in office, including
those who have so resigned, shall have power to fill such vacancy
or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
SECTION 1. Any stockholder of record, in person or by
attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's
stock ledger, a list of its stockholders, and its other books and
records, and to make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's
interest as a stockholder. In every instance where an attorney or
other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney
or such other writing which authorizes the attorney or other agent
to so act on behalf of the stockholder. The demand under oath
shall be directed to the corporation at its registered office in
this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
SECTION 1. The stock certificates of the corporation shall be
numbered and registered in the share ledger and transfer books of
the corporation as they are issued. They shall bear the corporate
seal and shall be signed by the president.
SECTION 2. TRANSFERS: Transfers of shares shall be made on
the books of the corporation upon surrender of the certificates
therefor, endorsed by the person named in the certificate or by
attorney, lawfully constituted in writing. No transfer shall be
made which is inconsistent with law.
SECTION 3. LOST CERTIFICATE: The corporation may issue a new
certificate of stock in the place of any certificate theretofore
signed by it, alleged to have been lost, stolen or destroyed, and
the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative to give the
corporation a bond sufficient to indemnify it against any claim
that may be made against it on account of the alleged loss, theft
or destruction of any such certificate or the issuance of such new
certificate.
SECTION 4. RECORD DATE: In order that the corporation may
determine the stockholders entitled to notice of or to vote at any
meeting of stockholders or any adjournment thereof, or to express
consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution
or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix,
in advance, a record date, which shall not be more than sixty nor
less than ten days before the date of such meeting, nor more than
sixty days prior to any other action. If no record date is fixed:
(a) The record date for determining stockholders entitled to
notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice
is given, or, if notice is waived, at the close of business on the
day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to
express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall
be the day on which the first written consent is expressed.
(c) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the Board of Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS: The Board of Directors may declare and
pay dividends upon the outstanding shares of the corporation, from
time to time and to such extent as they deem advisable, in the
manner and upon the terms and conditions provided by statute and
the Certificate of Incorporation.
SECTION 6. RESERVES: Before payment of any dividend there
may be set aside out of the net profits of the corporation such sum
or sums as the directors, from time to time, in their absolute
discretion, think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the
manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 1. CHECKS: All checks or demands for money and notes
of the corporation shall be signed by such officer or officers as
the Board of Directors may from time to time designate.
SECTION 2. FISCAL YEAR: The fiscal year shall begin on the
first day of January.
SECTION 3. NOTICE: Whenever written notice is required to be
given to any person, it may be given to such person, either
personally or by sending a copy thereof through the mail, or by
telegram, charges prepaid, to his address appearing on the books of
the corporation, or supplied by him to the corporation for the
purpose of notice. If the notice is sent by mail or by telegraph,
it shall be deemed to have been given to the person entitled
thereto when deposited in the United States mail or with a
telegraph office for transmission to such person. Such notice
shall specify the place, day and hour of the meeting and, in the
case of a special meeting of stockholders, the general nature of
the business to be transacted.
SECTION 4. WAIVER OF NOTICE: Whenever any written notice is
required by statute, or by the Certificate or the By-Laws of this
corporation a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice. Except in the case of a special meeting of stockholders,
neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting.
Attendance of a person either in person or by proxy, at any meeting
shall constitute a waiver of notice of such meeting, except where
a person attends a meeting for the express purpose of objecting to
the transaction of any business because the meeting was not
lawfully called or convened.
SECTION 5. DISALLOWED COMPENSATION: Any payments made to an
officer or employee of the corporation such as a salary,
commission, bonus, interest, rent, travel or entertainment expense
incurred by him, which shall be disallowed in whole or in part as
a deductible expense by the Internal Revenue Service, shall be
reimbursed by such officer or employee to the corporation to the
full extent of such disallowance. It shall be the duty of the
directors, as a Board, to enforce payment of each such amount
disallowed. In lieu of payment by the officer or employee, subject
to the determination of the directors, proportionate amounts may be
withheld from his future compensation payments until the amount
owed to the corporation has been recovered.
SECTION 6. RESIGNATIONS: Any director or other officer may
resign at any time, such resignation to be in writing and to take
effect from the time of its receipt by the corporation, unless some
time be fixed in the resignation and then from that date. The
acceptance of a resignation shall not be required to make it
effective.
ARTICLE X - ANNUAL STATEMENT
SECTION 1. The President and the Board of Directors shall
present at each annual meeting a full and complete statement of the
business and affairs of the corporation for the preceding year.
Such statement shall be prepared and presented in whatever manner
the Board of Directors shall deem advisable and need not be
verified by a Certified Public Accountant.
ARTICLE XI - INDEMNIFICATION AND INSURANCE:
SECTION 1. (A) RIGHT TO INDEMNIFICATION. Each person who was
or is made a party or is threatened to be made a party or is
involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director or
officer, of the Corporation or is or was serving at the request of
the Corporation as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to employee
benefit plans, whether the basis of such proceeding is alleged
action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director,
officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the Delaware
General Corporation Law, as the same exists or may hereafter be
amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in
paragraph (b) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or
part thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this
Section shall be a contract right and shall include the right
to be paid by the Corporation the expenses incurred in defending
any such proceeding in advance of its final disposition: provided,
however, that, if the Delaware General Corporation Law requires,
the payment of such expenses incurred by a director or officer in
his or her capacity as a director or officer (and not in any other
capacity in which service was or is rendered by such person while
a director or officer, including, without limitation, service to an
employee benefit plan) in advance of the final disposition of a
proceeding, shall be made only upon delivery to the corporation of
an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined
that such director or officer is not entitled to be indemnified
under this Section or otherwise. The Corporation may, by action of
its Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(B) RIGHT OF CLAIMANT TO BRING SUIT:
If a claim under paragraph (a) of this Section is not paid in
full by the Corporation within thirty days after a written claim
has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has
been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the Delaware
General Corporation law for the Corporation to indemnify the
claimant for the amount claimed, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has met
the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the
Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard or conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable
standard or conduct.
(c) Notwithstanding any limitation to the contrary
contained in sub-paragraphs (a) and 8 (b) of this section, the
corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented,indemnify any and all persons
whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities or other matters
referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law,
agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall
continue as to a person who has ceased to be director, officer,
employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(D) INSURANCE:
The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or
loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under
the Del General Corporation Law.
ARTICLE XII - AMENDMENTS
SECTION 1. These By-Laws may be amended or repealed by the
vote of directors.
Lynn Dixon, Secretary
September , 1995
T48bylaws.pmi
[Stock Certificate Border Graphics]
Not Valid Unless Countersigned by Transfer Agent
Incorporated Under the Laws of the State of Delaware
Number Shares
[No. of Cert] [No. of Shares]
POWER MARKETING, INC.
Authorized Common Stock: 50,000,000 Shares
Par Value: $.001
THIS CERTIFIES THAT [Name of Shareholder]
IS THE RECORD HOLDER OF [Number of Shares]
Shares of POWER MARKETING, INC. Common Stock
transferable on the books of the Corporation in person or by duly
authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by
the Transfer Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.
Dated: [date of Certificate]
/s/Lynn Dixon /s/Lynn Dixon
Secretary President
[Graphic of Corporate Seal]
[Border Graphics]
Interwest Transfer Co. Inc. P.O. Box 17136/Salt Lake City, Utah 84117
Countersigned & Registered ______________________________
WARRANT AGREEMENT
POWER MARKETING, INC.
AND
INTERWEST TRANSFER CO., INC.
WARRANT AGENT
THIS WARRANT AGREEMENT (the "Agreement") is dated effective as of
__________, 2000, between Power Marketing, Inc., a Delaware Corporation (the
"Company"), and Interwest Transfer Co., Inc., Salt Lake City, Utah (the
"Warrant Agent").
WHEREAS, the Company proposes to distribute as a dividend with respect
to its Common Stock, and issue to the shareholders of record as of __________,
2000 (the record date), 1,250,000 Common Stock Purchase Warrants (the
"Warrants");
WHEREAS, in conjunction with the potential exercise of the Warrants, the
Company anticipates the issuance of up to 1,250,000 shares of its Common Stock
(the "Warrant Shares");
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer and exchange of Warrant Certificates and
exercise of the Warrants.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter set forth, it is agreed that:
1. WARRANTS/WARRANT CERTIFICATES. Each Warrant will, in the future
during the period specified in the Warrant Certificate, upon fulfillment of
the conditions and subject to the terms set forth therein, entitle the holder
(the "Registered Holder" or, in the aggregate, the "Registered Holders") in
whose name the Warrant Certificate shall be registered on the books maintained
by the Warrant Agent to purchase one share of Common Stock on exercise
thereof, subject to modification and adjustment as provided in Section 8.
Warrant Certificates representing the right to purchase Warrant Shares shall
be executed by the Company's President and attested to by the Company's
Secretary or Assistant Secretary, or shall bear facsimile signatures of such
officers, and shall be delivered to the Warrant Agent upon execution of this
Agreement for distribution to the Company's shareholders pursuant to written
instructions from the Company to the Warrant Agent.
Subject to the provisions of Sections 3, 5, 6 and 8, the Warrant Agent
shall deliver Warrant Certificates in required whole number denominations to
Registered Holders in connection with any transfer or exchange permitted under
this Agreement. Except as provided in Section 6 hereof, no Warrant
Certificates shall be issued except (i) Warrant Certificates initially issued
hereunder, (ii) Warrant Certificates issued on or after the initial issuance
date, upon the exercise of any Warrants, to evidence the unexercised Warrants
held by the exercising Registered holder, and (iii) Warrant Certificates
issued after the initial issuance date, upon any transfer or exchange of
Warrant Certificates or replacements of lost or mutilated Warrant
Certificates.
2. FORM AND EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be substantially in the form attached hereto as Exhibit A.
The Warrant Certificates shall be dated as of the date of their issuance,
whether on initial issuance, transfer or exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates.
Each Warrant Certificate shall be numbered serially with the designation
"A" appearing on each Warrant Certificate.
The Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. In the
event any officer of the Company who executed the Warrant Certificates shall
cease to be an officer of the Company before the date of issuance of the
Warrant Certificates or before countersignature and delivery by the Warrant
Agent, such warrant Certificates may be countersigned, issued and delivered by
the Warrant Agent with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be an officer of the
Company.
3. EXERCISE. Subject to the provisions of Sections 4, 7 and 8, the
Warrants, when evidenced by a Warrant Certificate, may be exercised at a price
(the "Exercise Price") of $1.00 per share, in whole or in part, commencing on
the date of issuance (the "Initial Exercise Date") and terminating on June 30,
2002, unless extended by the Company's Board of Directors (the "Exercise
Period"), at any time during such period that the Company's Registration
Statement with respect to the Warrant Shares is effective and current. The
Company shall promptly notify the Warrant Agent of the effectiveness of such
Registration Statement, any suspension of effectiveness and of any such
extension of the Exercise Periods. A Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date (the
"Exercise Date") of the surrender for exercise of the Warrant Certificate.
The exercise form shall be executed by the Registered Holder thereof or his
attorney duly authorized in writing and will be delivered together with
payment to the Warrant Agent at 1981 East 4800 South, Salt Lake City, Utah
84117, (the "Corporate Office") or such other place as designated by the
Company, in cash or by official bank or certified check, of an amount equal to
the aggregate Exercise Price, in lawful money of the United States of America.
Unless Warrant Shares may not be issued as provided herein, the person
entitled to receive the number of Warrant Shares deliverable on such
exercise shall be treated for all purposes as the holder of such Warrant
Shares as of the close of business on the Exercise date. In addition, the
Warrant Agent shall also, at such time, verify that all of the conditions
precedent to the issuance of Warrant Shares set forth in Section 4 have been
satisfied as of the Exercise Date. If any one of the conditions precedent set
forth in Section 4 are not satisfied as of the Exercise Date, the Warrant
Agent shall request written instructions from the Company as to whether to
return the Warrant and pertinent Exercise Price to the exercising Registered
Holder or to hold the same until all such conditions have been satisfied. The
Company shall not be obligated to issue any fractional share interests in
Warrant Shares issuable or deliverable on the exercise of any Warrant or scrip
or cash therefor and such fractional shares shall be of no value whatsoever.
If more than one Warrant shall be exercised at one time by the same Registered
Holder, the number of full Shares which shall be issuable on exercise thereof
shall be computed on the basis of the aggregate number of full shares issuable
on such exercise.
Within thirty days after the Exercise Date and in any event prior to the
pertinent Expiration Date, the Warrant Agent shall cause to be issued and
delivered to the person or persons entitled to receive the same, a certificate
or certificates for the number of Warrant Shares deliverable on such exercise.
No adjustment shall be made in respect of cash dividends on Warrant Shares
delivered on exercise of any Warrant. The Warrant Agent shall promptly notify
the Company in writing of any exercise and of the number of Warrant Shares
delivered and shall cause payment of an amount in cash equal to the pertinent
Exercise Price to be promptly made to the order of the Company.
Upon the exercise of any Warrant, the Warrant Agent shall promptly
deposit the payment into a segregated account established by mutual agreement
of the Company and the Warrant Agent at a federally insured commercial bank.
All funds deposited in the escrow account will be disbursed on a weekly basis
to the Company once they have been determined by the Warrant Agent to be
collected funds. Once the funds are determined to be collected the Warrant
Agent shall cause the share certificate(s) representing the exercised Warrants
to be issued.
Expenses incurred by the Warrant Agent while acting in the capacity as
Warrant Agent will be paid by the Company. These expenses, including delivery
of exercised share certificates to the shareholder, will be deducted from the
exercise fee submitted prior to distribution of funds to the Company.
A detailed accounting statement relating to the number of shares
exercised and the net amount of exercised funds remitted will be given to the
Company with the payment of each exercise amount. This will serve as an
interim accounting for the Company's use during the exercise periods. A
complete accounting will be made by the Warrant Agent to the Company
concerning all persons exercising Warrants, the number of shares issued and
the amounts paid at the completion of the Exercise Period.
The Company may deem and treat the Registered Holder of the Warrants at
any time as the absolute owner thereof for all purposes, and the Company shall
not be affected by any notice to the contrary. The Warrants shall not entitle
the holder thereof to any of the rights of shareholders or to any dividend
declared on the Common Stock unless the holder shall have exercised the
Warrants and purchased the shares of Common Stock prior to the record date
fixed by the Board of Directors of the Company for the determination of
holders of Common Stock entitled to such dividend or other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants
that it will at all times reserve and have available from its authorized
Common Stock such number of shares as shall then be issuable on the exercise
of all outstanding Warrants. The Company covenants that all Warrant Shares
which shall be so issuable shall be duly and validly issued, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof.
The Company and the Warrant Agent acknowledge that the Company will be
required, pursuant to the Securities Act of 1933, as amended (the "Act"), to
deliver to each Registered Holder, upon the exercise of Warrants and delivery
of Warrant Shares, a prospectus covering the issuance of the Warrant Shares
which meets the requirements of the Act, which prospectus must be a part of an
effective registration statement under the Act at the time that the Warrant is
exercised. No Warrants may be exercised nor may Warrant shares be issued by
the Company's transfer agent or delivered by the Warrant Agent unless, on the
Exercise Date: (i) the Company has an effective registration statement
covering the issuance of the Warrant Shares under the Act; (ii) the Warrant
Agent has copies of the prospectus which is a part of such effective
registration statement and which the Warrant Agent hereby agrees to deliver
with the Warrant Shares; and (iii) the Warrant Shares may legally be issued
and delivered to the exercising Registered Holder under the securities laws of
the state in which such Registered Holder resides.
The Company agrees to use its best efforts to maintain, to the extent
required by the Act, an effective registration statement under the Act
covering the issuance of the Warrant Shares during the period the Warrants are
exercisable, but there may be times when no such registration statement will
be currently effective. The exercise of Warrants may be temporarily suspended
without liability to the Company during times when no such registration
statement is currently effective, or during times when, in the reasonable
opinion of the Board of Directors of the Company, such suspension is necessary
to preclude violation of any requirements of applicable law of regulatory
bodies having jurisdiction over the Company. If any Warrant would expire
during such a suspension, then if exercise of such Warrant is duly tendered
before its expiration, such Warrant shall be exercisable and exercised (unless
the attempted exercise is withdrawn) as of the first day after the end of such
suspension. The Company further agrees, from time to time, to furnish the
Warrant Agent with copies of the Company's prospectus to be delivered to
exercising Registered Holders, as set forth above.
If any shares of Common Stock to be reserved for the purpose of exercise
of Warrants hereunder require any other registration with or approval of any
government authority under any federal or state law before such shares may be
validly issued or delivered, then the Company covenants that it will in good
faith and as expeditiously as possible endeavor to secure such registration or
approval, as the case may be. No Warrant Shares shall be issued unless and
until any such registration requirements have been satisfied.
The Registered Holder shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect to the issuance
of the Warrants, or the issuance, transfer or delivery of any Warrant Shares
on exercise of the Warrants. In the event the Warrant Shares are to be
delivered in a name other than the name of the Registered Holder of the
Warrant Certificate, no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of any such taxes
or charges incident thereto.
In the event the Warrant Agent ceases to also serve as the stock
transfer agent for the Company, the Warrant Agent is irrevocably authorized to
requisition the Company's new transfer agent from time to time for
Certificates of Warrant Shares required upon exercise of the Warrants, and the
Company will authorize such transfer agent to comply with all such
requisitions. The Company will file with the Warrant Agent a statement
setting forth the name and address of its new transfer agent, for shares of
Common Stock or other capital stock issuable upon exercise of the Warrants and
of each successor transfer agent.
5. REGISTRATION OF TRANSFER. The Warrants are NONTRANSFERABLE and
Warrant Certificates may not be transferred in whole or in part unless
permitted by the Company. In any permitted transfer, the Warrant Certificates
to be exchanged shall be surrendered to the Warrant Agent at its Corporate
Office. The Company shall execute and the Warrant Agent shall countersign,
issue and deliver in exchange therefor the Warrant Certificate or Certificates
which the holder making the transfer shall be entitled to receive.
The Warrant Agent shall keep transfer books at its Corporate Office
which shall register Warrant Certificates and the transfer thereof. On due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and
deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Warrants. All Warrant
Certificates presented for registration of transfer or exercise shall be duly
endorsed or be accompanied by a written instrument or instruments or transfer
in form satisfactory to the Company and the Warrant Agent. At the time of
exercise, the transfer fee shall be paid by the Company. The Company may
require payment of a sum sufficient to cover any tax or other government
charge that may be imposed in connection therewith.
All Warrant Certificates so surrendered, or surrendered for exercise, or
for exchange in case of mutilated Warrant Certificates, shall be promptly
canceled by the Warrant Agent and thereafter retained by the Warrant Agent
until termination of the agency created by this Agreement. Prior to due
presentment for registration of transfer thereof, the Company and the Warrant
Agent may treat the Registered Holder of any Warrant Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company or the Warrant Agent), and the
parties hereto shall not be affected by any notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company and the Warrant
Agent of evidence satisfactory as to the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate, the Company shall
execute, and the Warrant Agent shall countersign and deliver in lieu thereof,
a new Warrant Certificate representing an equal aggregate number of Warrants.
In the case of loss, theft or destruction of any Warrant Certificate, the
individual requesting issuance of a new Warrant Certificate shall be required
to indemnify the Company and Warrant Agent in an amount satisfactory to each
of them. In the event a Warrant Certificate is mutilated, such certificate
shall be surrendered and canceled by the Warrant Agent prior to delivery of a
new Warrant Certificate. Applicants for a new Warrant Certificate shall also
comply with such other regulations and pay such other reasonable charges as
the Company may prescribe.
7. CALL OPTION. At any time, whether or not the Company's
Registration Statement with respect to the Warrant Shares is then current and
effective, the Company shall have the right and option with respect to each of
the Warrants, upon thirty (30) days written notice to each Warrantholder (or
such longer period as is required under any applicable law), to call, redeem
and acquire each of the Warrants which remain outstanding and unexercised at
the date specified for such redemption in such notice (the "Redemption Date"),
which Redemption Date shall be 30 days after the date of such notice, for an
amount equal to $.01 per Warrant; provided, however, that if the Company's
Registration Statement is then current and effective, the Warrantholders shall
have the right during the 30-day period immediately following the date of such
notice to exercise the Warrants in accordance with the provisions of Section 3
hereof. In the event any Warrants are exercised during such 30-day period,
this call option shall be deemed not to have been exercised by the Company as
to the Warrants so exercised by the holders thereof. Said notice of
redemption shall require each Warrantholder to surrender to the Company, on
the Redemption Date, at the Corporate Office of the Warrant Agent (or its
successor), his certificate or certificates representing the Warrants to be
redeemed. Notwithstanding the fact that any Warrants called for redemption
have not been surrendered for redemption and cancellation on the Redemption
Date, after the Redemption Date, such Warrants shall be deemed to be expired
and all rights of the holders of such unsurrendered Warrants shall cease and
terminate, other than the right to receive the redemption price of $.01 per
Warrant for such Warrants, without interest provided, however, that such right
to receive the redemption price of $.01 per Warrant for such Warrants shall
itself expire on the Expiration Date of the Warrants. The Company shall
notify the Warrant Agent verbally, with confirmation in writing, of the call
of the Warrants and of the Redemption Date and the Company shall instruct the
Warrant Agent accordingly as to the procedures to be followed by the Warrant
Agent in connection with the redemption of the Warrants.
8. ADJUSTMENT OF EXERCISE PRICE AND SHARES. After each adjustment of
the Exercise Price pursuant to this Section 8, the number of shares of Common
Stock purchasable on the exercise of each Warrant shall be the number derived
by dividing such adjusted pertinent Exercise Price into the original pertinent
Exercise Price. The pertinent Exercise Price shall be subject to adjustment
as follows:
(a) In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall issue any shares of its Common Stock as a
share dividend or shall subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such events, the
Exercise Price per share of Common Stock purchasable pursuant to the Warrants
in effect at the time of such action shall be reduced proportionately and the
number of shares purchasable pursuant to the Warrants shall be increased
proportionately. Conversely, in the event the Company shall reduce the number
of shares of its outstanding Common Stock by combining such shares into a
smaller number of shares, then, in such event, the Exercise Price per share
purchasable pursuant to the Warrants in effect at the time of such action
shall be increased proportionately and the number of shares of Common Stock at
that time purchasable pursuant to the Warrants shall be decreased
proportionately. Any dividend paid or distributed on the Common Stock in
shares of any other class of the Company or securities convertible into shares
of Common Stock shall be treated as a dividend paid in Common Stock to the
extent that shares of Common Stock are issuable on the conversion thereof.
(b) In the event the Company, at any time while the Warrants shall
remain unexpired and unexercised, shall sell all or substantially all of its
property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provision shall be made as part
of the terms of any such sale, dissolution, liquidation or winding up such
that the holder of a Warrant may thereafter receive, on exercise thereof, in
lieu of each share of Common Stock of the Company which he would have been
entitled to receive, the same kind and amount of any share, securities, or
assets as may be issuable, distributable or payable on any such sale,
dissolution, liquidation or winding up with respect to each share of Common
Stock of the Company; provided, however, that in the event of any such sale,
dissolution, liquidation or winding up, the right to exercise this Warrant
shall terminate on a date fixed by the Company, such date to be not earlier
than 4:00 p.m., Eastern Time, on the 10th day next succeeding the date on
which notice of such termination of the right to exercise the Warrants has
been given by mail to the holders thereof at such addresses as may appear on
the books of the company.
(c) In the event, prior to the expiration of the Warrants by exercise
or by their terms, the Company shall determine to take a record of the holders
of its Common Stock for the purpose of determining shareholders entitled to
receive any share dividend or other right which will cause any change or
adjustment in the number, amount, price or nature of the shares of Common
Stock or other securities or assets deliverable on exercise of the Warrants
pursuant to the foregoing provisions, the Company shall give to the Registered
Holders of the Warrants at the addresses as may appear on the books of the
Company at least 10 days prior written notice to the effect that it intends to
take such a record. Such notice shall specify the date as of which such
record is to be taken; the purpose for which such record is to be taken; and
the number, amount, price and nature of the Common Shares or other shares,
securities or assets which will be deliverable on exercise of the Warrants
after the action for which such record will be taken has been completed.
Without limiting the obligation of the Company to provide notice to the
Registered Holders of the Warrant Certificates of any corporate action
hereunder, the failure of the Company to give notice shall not invalidate such
corporate action of the Company.
(d) No adjustment of the Exercise Price shall be made as a result of or
in connection with (i) the issuance of Common Stock of the Company pursuant to
options, warrants and share purchase agreements outstanding or in effect on
the date hereof, (ii) the establishment of additional option plans of the
Company, the modification, renewal or extension of any plan now in effect or
hereafter created, or the issuance of Common Stock, on exercise of any options
pursuant to such plans, in connection with compensation arrangements for
officers, employees or agents of the Company or any subsidiary, and the like
or (iii) the issuance of Common Stock in connection with an acquisition or
merger of any type (therefore, the antidilution provisions of this Section 8
will not apply in the event a merger or acquisition is undertaken by the
Company).
(e) This Agreement shall be incorporated by reference on the Warrant
Certificates.
Upon any adjustment of the exercise Price required to be made pursuant
to this Section 8, the Company within 30 days thereafter shall (A) cause to be
filed with the Warrant Agent a certificate setting forth the pertinent
Exercise Price after such adjustment and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based,
and (B) cause to be mailed to each of the Registered Holders of the Warrant
Certificates written notice of such adjustment.
9. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. In addition to
any adjustments made to the Exercise Price pursuant to Section 8, the
Company's Board of Directors may, at its sole discretion, reduce the Exercise
Price of the Warrants in effect at any time either for the life of the
Warrants or any shorter period of time determined by the Company's Board of
Directors. The Company shall promptly notify the Warrant Agent and the
Registered Holders of any such reductions in the Exercise Price.
10. DUTIES. Compensation and Termination of Warrant Agent. The Warrant
Agent shall act hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the provisions hereof.
The Warrant Agent shall not, by issuing and delivering Warrant Certificates or
by any other act hereunder, be deemed to make any representation as to the
validity, value or authorization of the Warrant Certificates or the Warrants
represented thereby or of the Common Stock or other property delivered on
exercise of any Warrant. The Warrant Agent shall not at any time be under any
duty or responsibility to any holder of the Warrant Certificates to make or
cause to be made any adjustment of the Exercise Price or to determine whether
any fact exists which may require any such adjustments.
The Warrant Agent shall not (i) be liable for any recital or statement
of fact contained herein or for any action taken or omitted by it in reliance
on any Warrant Certificate or other document or instrument believed by it in
good faith to be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations contained in this
Agreement except for its own negligence or willful misconduct, or (iii) be
liable for any act or omission in connection with this Agreement except for
its own negligence or willful misconduct.
The Company agrees to indemnify the Warrant Agent against any and all
losses, expenses and liabilities which the Warrant Agent may incur in
connection with the delivery of copies of the Company's prospectus to
exercising Registered Holders upon the exercise of any Warrants as set forth
in Section 4.
The Warrant Agent may at any time consult with counsel satisfactory to
it (which may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in
accordance with the opinion or advice of such counsel. Any notice,
statement, instruction, request, direction, order or demand of the Company
shall be sufficiently evidenced by an instrument signed by its President and
attested by its Secretary or Assistant Secretary. The Warrant Agent shall not
be liable for any action taken or omitted by it in accordance with such
notice, statement, instruction, request, order or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse the Warrant Agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against
any and all losses, expenses and liabilities, including judgments, costs and
counsel fees, for any action taken or omitted by the Warrant Agent in the
execution of its duties and powers hereunder, excepting losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or willful
misconduct.
The Warrant Agent may resign its duties or the Company may terminate the
Warrant Agent and the Warrant Agent shall be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of
the Warrant Agent's own negligence or willful misconduct), on 30 days' prior
written notice to the other party. At least 15 days prior to the date such
resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to the Registered Holder of each
Warrant Certificate. On such resignation or termination the Company shall
appoint a new warrant agent. If the Company shall fail to make such
appointment within a period of 30 days after it has been notified in writing
of the resignation by the Warrant Agent, then the registered holder of any
Warrant Certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent.
After acceptance in writing of an appointment of a new warrant agent is
received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; provided, however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed. The
Company shall file a notice of appointment of a new warrant agent with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent shall be a successor Warrant Agent under this Agreement,
provided that such corporation is eligible for appointment as a successor to
the Warrant Agent under the provisions of the preceding paragraph. Any such
successor Warrant Agent shall promptly cause notice of its succession as
Warrant Agent to be mailed to the Company and to the Registered Holder of each
Warrant Certificate. No further action shall be required for establishment
and authorization of such successor warrant agent.
The Warrant Agent, its officers or directors and its subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the Company
and otherwise deal with the Company in the same manner and to the same extent
and with like effect as though it were not Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company
or for any other legal entity.
11. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may
by supplemental agreement make any changes or corrections in this Agreement
(i) that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or mistake or error herein contained; or
(ii) that they may deem necessary or desirable and which shall not adversely
affect the interests of the holders of Warrant Certificates; provided,
however, this Agreement shall not otherwise be modified, supplemented or
altered in any other respect except with the consent in writing of the
registered holders of Warrant Certificates representing not less than 51% of
each class of Warrants outstanding. Additionally, except as provided in
Section 8, no change in the number or nature of the Warrant Shares purchasable
on exercise of a Warrant, increase the purchase price therefor, or the
acceleration of the Expiration Date of a Warrant shall be made without the
consent in writing of the Registered Holder of the Warrant Certificate
representing such Warrant, other than such changes as are specifically
prescribed or allowed by this Agreement.
12. NOTICES. All notices, demands, elections, opinions or requests
(however characterized or described) required or authorized hereunder shall be
deemed given sufficiently if in writing and sent by registered or certified
mail, return receipt requested and postage prepaid, or by tested telex,
telegram or cable to the last known address of the Company, the Warrant Agent
and if to the Registered Holder of a Purchase Warrant Certificate, at the
address of such holder as set forth on the books maintained by the Warrant
Agent.
13. BINDING AGREEMENT. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Purchase Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim or to impose on any
other person any duty, liability or obligation.
14. FURTHER INSTRUMENTS. The parties shall execute and deliver any
and all such other instruments and shall take any and all other actions as may
be reasonably necessary to carry out the intention of this Agreement.
15. SEVERABILITY. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable, or inoperative
for any reason by any court of competent jurisdiction, government authority
or otherwise, such holding, declaration or pronouncement shall not affect
adversely any other provision of this Agreement, which shall otherwise remain
in full force and effect and be enforced in accordance with its terms, and the
effect of such holding, declaration or pronouncement shall be limited to the
territory or jurisdiction in which made.
16. WAIVER. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the
exercise of any right or remedy arising from a breach of this Agreement shall
operate as a waiver of any subsequent right or remedy arising from a
subsequent breach of this Agreement. The consent of any party where required
hereunder to act or occurrence shall not be deemed to be a consent to any
other action or occurrence.
17. GENERAL PROVISIONS. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of Delaware.
Except as otherwise expressly stated herein, time is of the essence in
performing hereunder. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, and this Agreement may
not be modified or amended or any term or provisions hereof waived or
discharged except in writing signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of
this Agreement are for convenience in reference only and shall not limit or
otherwise affect the meaning hereof. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
POWER MARKETING, INC.
By
Authorized Officer
THE WARRANT AGENT:
INTERWEST TRANSFER CO., INC.
By
Authorized Officer
WARRAGR1.wpd
Exhibit A to Warrant Agency Agreement
dated , 2000
NUMBER
W-A WARRANTS
VOID AFTER 5:00 P.M., UTAH TIME,
ON JUNE 30, 2002
CERTIFICATE FOR WARRANTS
FOR THE PURCHASE OF COMMON STOCK, $.001 PAR VALUE, OF
POWER MARKETING, INC.
Incorporated Under The Laws Of The State of Delaware
CUSIP N
THIS WARRANT CERTIFICATE CERTIFIES THAT, for value received,
or its
registered assigns ("Holder"), is the registered holder of the number of
warrants (Warrants) set forth above, issued by Power Marketing, Inc., a
Delaware corporation ("Company").
This Warrant Certificate is issued under and subject to all of the
terms, provisions and conditions of the Warrant Agency Agreement, dated as of
, 2000 the ("Warrant Agreement"), between the Company and
Interwest Transfer Company, Inc. (the "Warrant Agent"), to all of which terms,
provisions and conditions the holder of this Warrant consents by acceptance
hereof. The Warrant Agreement is incorporated herein by reference and made a
part hereof, and reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the Holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the offices of the Warrant Agent at 1981 East 4800 South, Suite 100, Salt Lake
City, Utah 84117, or may be obtained upon written request addressed to the
Company at 426 South 1000 East, #704, Salt Lake City, Utah 84102.
Each Warrant entitles the Holder thereof to purchase from the Company,
subject to the terms and conditions set forth hereinafter and in the Warrant
Agreement, one (1) fully paid and nonassessable share of common stock, $.001
par value, of the Company ("Common Stock") upon presentation and surrender of
this Warrant Certificate with the exercise form hereon duly completed and
executed, at any time prior to 5:00 p.m., Utah time, on June 30, 2002
("Exercise Period"), at the stock transfer office of the Warrant Agent or of
any successor warrant agent or, if there be no successor warrant agent, at the
corporate offices of the Company, and upon payment of $1.00 per share of
Common Stock ("Purchase Price") and any applicable taxes paid either in cash,
or by certified or official bank check, payable in lawful money of the United
States of America to the order of the Company. The Holder may exercise all or
any whole number of Warrants evidenced hereby. The Purchase Price and the
number of shares of Common Stock issuable upon exercise of a Warrant are
subject to adjustment in certain events specified in the Warrant Agreement.
The purchase rights represented by this Warrant Certificate shall not be
exercisable with respect to a fraction of a share of Common Stock. As to any
fractions of a share which would otherwise be purchasable on the exercise of a
Warrant, the Company shall pay the cash value thereof determined as provided
in the Warrant Agreement. In case of the purchase of less than all the shares
purchasable under this Warrant Certificate, the Company shall cancel this
Warrant Certificate upon the surrender hereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of shares purchasable
hereunder.
This Warrant Certificate shall not entitle the holder hereof to any
voting rights or other rights as a shareholder of the Company, or to any other
rights whatsoever except the rights herein expressed and such as are set
forth, and no dividends shall be payable or shall accrue in respect of the
Warrants represented by this Warrant Certificate except to the extent that
such Warrants shall be exercised.
Upon 30 days' prior written notice, the Company may at any time redeem
all or any portion of the outstanding Warrants for $0.01 per Warrant.
The Warrants are exercisable immediately, provided that a current
prospectus relating to the shares of Common Stock issuable upon exercise
hereof is in effect and that such shares are qualified for sale or deemed to
be exempt from qualification, under applicable state securities laws. All
Warrants not theretofore exercised or redeemed shall expire at 5:00 p.m., Utah
time on June 30, 2002, and any Warrant not exercised by such time shall become
void unless extended by the Company.
This Warrant Certificate, with or without other Certificates, upon
presentation and surrender to the Warrant Agent, any successor warrant agent
or, in the absence of any successor warrant agent, at the corporate offices of
the Company, may be exchanged for another Warrant Certificate or Certificates
evidencing in the aggregate the same number of Warrants as the Warrant
Certificate or Certificates so surrendered, subject to such terms and
conditions set forth in the Warrant Agreement. If the Warrants evidenced by
this Warrant Certificate shall be exercised in part, the holder hereof shall
be entitled to receive upon surrender hereof another Warrant Certificate or
Certificates evidencing the number of Warrants not so exercised.
The Company shall not be required to issue or deliver any certificate
for shares of Common Stock or other securities upon the exercise of Warrants
evidenced by this Warrant Certificate until any tax which may be payable in
respect thereof by the Holder pursuant to the Warrant Agreement shall have
been paid.
This Warrant Certificate shall not be valid or obligatory for any
purpose until countersigned by the Warrant Agent.
Except as permitted by the Company, this Warrant Certificate and all
rights hereunder are nontransferable. If and only if permitted by the Company,
a transfer by the registered holder hereof in person or by its duly authorized
attorney, may be made on the books of the Warrant Agent upon surrender of this
Warrant Certificate, properly endorsed, to the Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and has caused a facsimile of its corporate seal to
be imprinted hereon.
POWER MARKETING, INC.
Date of Issuance
By:
Lynn Dixon, President
COUNTERSIGNED:
( Corporate Seal ) Interwest Transfer Company, Inc.
As Warrant Agent
by:
Authorized Signature
WARCERTA.wpd
THOMAS G. KIMBLE & ASSOCIATES
311 South State Street, Suite 440
Salt Lake City, Utah 84111
(801) 531-0066
January 31, 2000
Board of Directors
Power Marketing, Inc.
311 South State Street, Suite 460
Salt Lake City, Utah 84111
Re: Opinion and Consent of Counsel with respect to
Registration Statement on Form SB-2
TO WHOM IT MAY CONCERN:
You have requested the opinion and consent of this law firm,
as counsel, with respect to the proposed issuance and public
distribution of certain securities of the Company pursuant to the
filing of a registration statement on Form SB-2 with the Securities
and Exchange Commission.
The proposed offering and public distribution relates to
1,250,000 shares of Common Stock, $.001 par value to be offered and
sold to the the holders of Warrants at a price of $1.00 per
share. The Warrants are being distributed as a dividend with respect
to the Common Stock of the Company to shareholders of record as of a
date to be determined prior to the effective date of the registration
statement. It is our opinion that the shares of Common Stock will,
when issued in accordance with the terms and conditions set forth in
the registration statement, be duly authorized, validly issued, fully
paid and nonassessable shares of common stock of the Company in
accordance with the corporation laws of the State of Delaware.
We hereby consent to be named as counsel for the Company in
the registration statement and prospectus included therein.
Sincerely yours,
THOMAS G. KIMBLE & ASSOCIATES
/s/Van L. Butler
Van L. Butler
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting
part of this Registration Statement on Form SB-2 for Power
Marketing, Inc., of our report dated January 12, 2000,
relating to the December 31, 1999 financial statements of
Power Marketing, Inc., which appears in such Prospectus. We
also consent to the reference to us under the heading
"Experts".
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
Salt Lake City, Utah
February 2, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted from financial
statements as of December 31, 1999 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 12,356
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 165,927
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 165,927
<CURRENT-LIABILITIES> 117,206
<BONDS> 0
0
0
<COMMON> 1,250
<OTHER-SE> 47,471
<TOTAL-LIABILITY-AND-EQUITY> 165,927
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 876
<INCOME-PRETAX> (2,482)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,482)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,482)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
