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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
__________________________________
FORM 10-SB
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
ZEDIK ENTERPRISES, INC.
(Exact name of registrant as specific in its charter)
Colorado Applied For
(State of Incorporation) (I.R.S. Employer I.D. No.)
26 West Dry Creek Circle, Suite 600
Littleton, Colorado 80120
(Address of principal executive offices, including zip code)
Telephone number, including area code: (303) 794-9450
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue, Suite 503
Spokane, Washington 99204
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
(Title of Class)
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ITEM 1. BUSINESS.
HISTORY, ORGANIZATION AND CHANGE OF CONTROL
ZEDIK ENTERPRISES, INC. (the "Company"), was organized under
the laws of the State of Colorado, on February 23, 1996, to make
a distribution of the shares of Common Stock to friends and
business associates of the Company's officers and directors who are
accredited investors. The purpose of the distributions was to
allow the Company to become widely-held, thereby allowing it the
opportunity to merge in the future with a privately-held company
seeking a larger stockholder base.
As a result of the foregoing distribution, the Company
currently has 235 shareholders.
The Company is filing this Form 10 on a voluntary basis. It
has no obligations pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). The Company believes that by
filing such Form 10 and being obligated to file reports pursuant to
Section 13 of the Exchange Act, it can attract an acquisition
candidate of greater financial value with a track record of
success. While the Company believes it will be a more attractive
acquisition candidate, there is no assurance that the foregoing
assumption is correct. Further, effective January 4, 1999, in
order to become listed for trading on the Bulletin Board operated
by the National Association of Securities Dealers, Inc., the
Company must be filing reports with the Securities and Exchange
Commission (the "Commission") pursuant to Section 13 of the
Exchange Act.
The Company believes that there is a demand by non-public
corporations for shell corporations that have a public distribution
of securities, such as the Company. The Company believes that
demand for shells has increased dramatically since the Securities
and Exchange Commission (the "Commission") imposed additional
requirements upon "blank check" companies pursuant to Reg. 419 of
the Securities Act of 1933 (the "Act"). According to the
Commission, Rule 419 was designed to strengthen regulation of
securities offerings by blank check companies, which Congress has
found to have been a common vehicle for fraud and manipulation in
the penny stock market. See Securities Act Releases No. 6891 (April
17, 1991), 48 SEC Docket 1131 and No. 6932 (April 13, 1992) 51
Docket 0382, SEC Docket 0382. The foregoing regulation has
decreased, substantially, the number of "blank check" offerings
filed with the Commission, and as a result has stimulated an
increased demand for shell corporations. While the Company has
made the foregoing assumption, there is no assurance that the same
is accurate or correct and accordingly, no assurance that the
Company will be acquired by or acquire an existing non-public
entity.
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GENERAL
The Company proposes to seek, investigate and, if warranted,
acquire an interest in one or more business opportunities ventures.
As of the date hereof the Company has no business opportunities or
ventures under contemplation for acquisition but proposes to
investigate potential opportunities in the form of investors or
entrepreneurs with a concept which has not yet been placed in
operation, or in the form of firms which are developing companies.
The Company may seek out established businesses which may be
experiencing financial or operation difficulties and are in need of
the limited additional capital the Company could provide. The
Company anticipates that it will seek to merge with or acquire an
existing business. After the merger or acquisition has taken
place, the surviving entity will be the Company (ZEDIK ENTERPRISES,
INC.), however, management from the acquired entity will in all
likelihood operate the Company. There is however, a remote
possibility that the Company may seek to acquire and operate an
ongoing business, in which case the existing management might be
retained. Due to the absence of capital available for investment
by the Company, the types of business seeking to be acquired by the
Company will no doubt be smaller and higher risks types of
businesses. In all likelihood, a business opportunity will involve
the acquisition of or merger with a corporation which does not need
additional cash but which desires to establish a public trading
market for its Common Stock. Accordingly, the Company's ability to
acquire any business of substance will be extremely limited.
The Company does not propose to restrict its search for
investment opportunities to any particular industry, or
geographical location and may, therefore, engage in essentially any
business, anywhere, to the extent of its limited resources.
It is anticipated that business opportunities will be
available to the Company and sought by the Company from various
sources, throughout the United States including its Officers and
Directors, professional advisors such as attorneys and accountants,
securities broker/dealers, venture capitalists, members of the
financial community, other businesses and others who may present
solicited and unsolicited proposals. The reason for this is to
attract the most favorable business opportunities and ventures
available. Management believes that business opportunities and
ventures will become available to it, due to a number factors,
including, among others: (a) management's willingness to enter
into unproven, speculative ventures; (b) management's contacts and
acquaintances; and, (c) the Company's flexibility with respect to
the manner in which it may structure potential financing and/or
acquisitions. However, there is no assurance that the Company will
be able to structure or finance and/or acquire any business
opportunity or venture.
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OPERATION OF THE COMPANY
The Company intends to search throughout the United States for
a merger/acquisition candidate, however, because of the lack of
capital, the Company believes that the merger/acquisition candidate
will be conducting business within a limited geographical area.
The Company, however, intends to maintain its corporate
headquarters and principal place of business at 26 West Dry Creek
Circle, Suite 600, Littleton, Colorado 80120. All corporate
records will be maintained at said office, and it is anticipated
that all shareholders' meetings will take place in Colorado. In
the event that a merger or acquisition of the Company takes place,
no assurance can be given that the corporate records or
headquarters will continue to be maintained at Littleton, Colorado,
or that shareholders' meetings will be held in Colorado.
The Officers and Directors will personally seek
acquisition/merger candidates and/or orally contact individuals or
broker/dealers and advise them of the availability of the Company
as an acquisition candidate. The Officers and Directors will
review material furnished to them by the proposed
merger/acquisition candidates and decide if a merger/acquisition is
in the best interests of the Company and its shareholders.
The Company may employ outside consultants, however, until a
merger/acquisition candidate has been targeted by the Company,
management believes that it is impossible to consider the criteria
that will be used to hire consultants. While the Company may hire
independent consultants, it has not considered any criteria
regarding their experience, the services to be provided, or the
term of service. The Company has not had any discussions with any
consultants and there are no agreements or understandings with any
consultants.
Other than as disclosed herein, there are no other plans for
accomplishing the business purpose of the Company.
SELECTION OF OPPORTUNITIES
The analysis of new business opportunities will be undertaken
by or under the supervision of the Officers and Directors, none of
whom is a professional business analyst or has any previous
training or experience in business analysis. Inasmuch as the
Company will have no funds available to it in its search for
business opportunities and venture, the Company will not be able to
expend significant funds on a complete and exhaustive investigation
of such business or opportunity. The Company will however,
investigate, to the extent believed reasonable by its management,
such potential business opportunities or ventures.
As part of the Company's investigation, Officers and Directors
will meet personally with management and key personnel of the firm
sponsoring the business opportunity, may visit and inspect plants
<PAGE> 5
and facilities, obtain independent analysis or vertification of
certain information provided, check references of management and
key personnel, and conduct other reasonable measures, to the extent
of the Company's limited financial resources and management and
technical expertise.
Prior to making a decision to recommend to shareholders
participation in a business opportunity or venture, the Company
will generally request that it be provided with written materials
regarding the business opportunity containing such items as a
description of products, services and company history; management
resumes; financial information; available projections with related
assumptions upon which they are based; evidence of existing
patents, trademarks or service marks or rights thereto; present and
proposed forms of compensation to management; a description of
transactions between the prospective entity and its affiliates
during relevant periods; a description of present and required
facilities; an analysis of risks and competitive conditions; and,
other information deemed relevant.
It is anticipated that the investigation of specific business
opportunities and the negotiation, drafting and execution of
relevant agreements, disclosure documents and other instruments
will require substantial management time and attention and costs
for accountants, attorneys and others. The Company's officers and
directors anticipate funding the Company's operations, including
providing funds necessary to search for acquisition candidates,
until an acquisition candidate is found, without regard to the
amount involved. Accordingly, no alternative cash resources have
been explored.
There are no loan agreements or understandings. The Company
will not make any loans to officers or directors. Money
advanced by the officers and directors is and will be done
gratuitously without any obligation on the part of the Company to
repay the same.
The Company will have unrestricted flexibility in seeking,
analyzing and participating in business opportunities. In its
efforts, the Company will consider the following kinds of factors:
(a) Potential for growth, indicated by new technology, anticipated
market expansion or new products;
(b) Competitive position as compared to other firms engaged in
similar activities;
(c) Strength of management;
(d) Capital requirements and anticipated availability of required
funds from future operations, through the sale of additional
securities, through joint ventures or similar arrangements or
from other sources; and,
(e) Other relevant factors.
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Potentially available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
Potential investors must recognize that due to the Company's
limited capital available for investigation and management's
limited experience in business analysis, the Company may not
discover or adequately evaluate adverse facts about the opportunity
to be acquired.
The Company is unable to predict when it may participate in a
business opportunity. It expects, however, that the analysis of
specific proposals and the selection of a business opportunity may
take several months or more. The Company does not plan to raise
any capital at the present time, by private placements, public
offerings, pursuant to Regulation S promulgated under the Act, or
by any means whatsoever. Further, there are no plans, proposals,
arrangements or understandings with respect to the sale or issuance
of additional securities prior to the location of an acquisition or
merger candidate.
FORM OF ACQUISITION
The manner in which the Company participates in an opportunity
will depend upon the nature of the opportunity, the respective
needs and desires of the Company and the promoters of the
opportunity, and the relative negotiating strength of the Company
and such promoters. The exact form or structure of the Company's
participation in a business opportunity or venture will be
dependent upon the needs of the of the particular situation. The
Company's participation may be structured as an asset purchase
agreement, a lease, a license, a joint venture, a partnership, a
merger, or acquisition of securities.
As set forth above, the Company may acquire its participation
in a business opportunity through the issuance of Common Stock or
other securities in the Company. Although the terms of any such
transaction cannot be predicted, it should be noted that in certain
circumstances the criteria for determining whether or not an
acquisition is so-called "tax free" reorganization under Section
368(a)(1) of the Internal Revenue Code of 1954, as amended, may
depend upon the issuance to the shareholders of the acquired
company of at least eighty percent (80%) of the Common Stock of the
combined entities immediately following the reorganization. If a
transaction were structured to take advantage of these provisions
rather than other "tax free" provisions provided under the Internal
Revenue Code all prior shareholders may, in such circumstances,
retain twenty percent (20%) or less of the total issued and
outstanding Common Stock. If such a transaction were available to
the Company, it will be necessary to obtain shareholder approval to
effectuate a reverse stock split or to authorize additional shares
of Common Stock prior to completing such acquisition. This could
result in substantial additional dilution to the equity of those
who were shareholders of the Company prior to such reorganization.
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Further, extreme caution should be exercised by any investor
relying upon any tax benefits in light of the proposed new tax
laws. It is possible that no tax benefits will exist at all.
Prospective investors should consult their own legal, financial and
other business advisors.
The present management and the shareholders of the Company
will in all likelihood not have control of a majority of the
voting shares of the Company following a reorganization
transaction. In fact, it is most probable that the shareholders of
the acquired entity will gain control of the Company. Further,
management may make available for purchase by shareholders
of the acquired entity of up to 75% of the shares of Common Stock
owned by them. The terms of sale of the shares presently held by
officers and/or directors of the Company will not be afforded to
other shareholders of the Company. As part of such a transaction,
all or a majority of the Company's Directors may resign and new
Directors may be appointed without any vote by shareholders.
Present stockholders have not agreed to vote their respective
shares of Common Stock in accordance with the vote of the majority
of all non-affiliated future stockholders of the Company with
respect to any business combination.
The Company may not borrow funds and use funds to make
payments to Company promoters, management or their affiliates or
associates.
The Company has an unwritten policy that it will not acquire
or merge with a business or company in which the Company's
management or their affiliates or associates directly or indirectly
have an ownership interest. Management is not aware of any
circumstances under which the foregoing policy will be changed and
management, through their own initiative, will not change said
policy.
The Company is required by the regulations promulgated under
the Securities Exchange Act of 1934 to obtain and file with the
Commission, audited financial statements of the acquisition
candidate not later than sixty days from the date the Form 8-K is
due at the Commission disclosing the acquisition/merger.
RIGHTS OF DISSENTING SHAREHOLDERS
Under the Colorado Corporation Code, a business combination
typically requires the approval of two-thirds of the outstanding
shares of both participating companies. The Company's Articles of
Incorporation reduce the voting requirement to a majority of the
Company's outstanding Common Stock. Shareholders who vote against
any business combination in certain instances may be entitled to
dissent and to obtain payment for their shares pursuant to Sections
7-4-123 and 7-4-124 of the Colorado Corporation Code. The
requirement of approval of the Company's shareholders in any
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proposed business combination is limited to those transactions
identified as a merger or a consolidation. A business combination
identified as a share exchange does not require the approval of the
Company's shareholders, nor does it entitle shareholders to dissent
and obtain payment for their shares. Accordingly, unless the
acquisition is a statutory merger, requiring shareholder approval,
the Company will not provide shareholders with a disclosure
document containing audited or unaudited financial statements,
prior to such acquisition.
Prior to any business combination for which shareholder
approval is required, the Company intends to provide its
shareholders complete disclosure documentation concerning the
business opportunity or target company and its business. Such
disclosure will in all likelihood be in the form of a proxy
statement which will be distributed to shareholders at least 10
days prior to any shareholder's meeting.
None of the Company's officers, directors, promoters, their
affiliates or associates have had any preliminary contact or
discussions with and there are no present plans, proposals,
arrangements or understandings with any representatives of the
owners of any business or company regarding the possibility of an
acquisition or merger transaction contemplated in this registration
statement.
NOT AN "INVESTMENT ADVISER"
The Company is not an "investment adviser" under the Federal
Investment Advisers Act of 1940, which classification would involve
a number of negative considerations. Accordingly, the Company
will not furnish or distribute advice, counsel, publications,
writings, analysis or reports to anyone relating to the purchase or
sale of any securities within the language, meaning and intent of
Section 2(a)(11) of the Investment Advisers Act of 1940, 15 U.S.C.
80b2(a)(11).
NOT AN "INVESTMENT COMPANY"
The Company may become involved in a business opportunity
through purchasing or exchanging the securities of such business.
The Company does not intend however, to engage primarily in such
activities and is not registered as an "investment company" under
the Federal Investment Company Act of 1940. The Company believes
such registration is not required.
The Company must conduct its activities so as to avoid
becoming inadvertently classified as a transient "investment
company" under the Federal Investment Company Act of 1940, which
classification would affect the Company adversely in a number of
respects. Section 3(a) of the Investment Company Act provides the
definition of an "investment company" which excludes an entity
which does not engage primarily in the business of investing,
reinvesting or trading in securities, or which does not engage in
<PAGE> 9
the business of investing, owning, holding or trading "investment
securities" (defined as "all securities other than United States
government securities or securities of majority-owned subsidiaries")
the value of which exceeds forty percent (40%) of the value of its
total assets (excluding government securities, cash or cash items).
The Company intends to implement its business plan in a manner which
will result in the availability of this exemption from the definition
of "investment company." The Company proposes to engage solely in
seeking an interest in one or more business opportunities or
ventures.
Effective January 14, 1981, the Securities and Exchange
Commission adopted Rule 3a-2 which deems that an issuer is not
engaged in the business of investing, reinvesting, owning, holding or
trading in securities for purposes of Section 3(a)(1), cited above,
if, during a period of time not exceeding one year, the issuer has a
bona fide intent to be engaged primarily, or as soon as reasonably
possible (in any event by the termination of a one year period of
time), in a business other than that of investing, reinvesting,
owning, holding or trading in securities and such intent is evidenced
by the Company's business activities and appropriate resolution of
the Company's Board of Directors duly adopted and duly recorded in
the minute book of the Company. The Rule 3a-2 "safe harbor" may not
be relied on more than a single time.
COMPANY'S OFFICE
The Company's offices are located at 26 West Dry Creek Circle,
Suite 600, Littleton, Colorado 80120, and the telephone number is
(303) 794-9450. The Company's office is located in the office of
Earnest Mathis, Jr., the Company's President and a member of the
Board of Directors. The office will remain at Mr. Mathis's
office until an acquisition has been concluded. There are no written
documents memorializing the foregoing. The Company is not
responsible for reimbursement for out-of-pocket office expenses, such
as telephone, postage or supplies.
There are no preliminary agreements or understandings with
respect to the office facility subsequent to the completion of an
acquisition. Upon a merger or acquisition, the Company intends to
relocate its office to that of the acquisition candidate.
Employees
The Company is a development stage company and currently has no
employees other than certain of its Officers and Directors. See
"Management." Management of the Company expects to use consultants,
attorneys and accountants as necessary, and does not anticipate a
need to engage any full-time employees so long as it is seeking and
evaluating business opportunities. The need for employees and their
availability will be addressed in connection with the decision
whether or not to acquire or participate in a specific business
opportunity.
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RISK FACTORS
1. No Operating History. The Company was incorporated in the
state of Colorado on February 23, 1996. The Company has conducted
only organizational business and has no operating history. There can
be no assurance that the Company's activities will be profitable. As
of the date hereof, Prospectus, the Company has not entered into any
arrangement to participate in any business ventures or purchase any
products.
2. Assets of the Corporation. The Company has no substantial,
material, tangible assets as of the date hereof. Its present assets
are extremely limited. Any business activity that the Company
eventually undertakes may require substantial capital.
3. Speculative Nature of Company's Proposed Operations. The
success of the Company's proposed plan of operation will depend to a
great extent on the operations, financial condition and management of
the companies with which the Company may merge or which it acquires.
While management intends to seek a merger or acquisition of privately
held entities with established operating histories, there can be no
assurance that the Company will be successful in locating an
acquisition candidate meeting such criteria. In the event the
Company completes a merger or acquisition transaction, of which there
can be no assurance, the success of the Company's operations will be
dependent upon management of the successor firm and numerous other
factors beyond the Company's control. The Company anticipates that
it will seek to merge with an existing business. After the merger
has taken place, the surviving entity will be the Company (ZEDIK
ENTERPRISES, INC.), however, management from the acquired entity will
in all likelihood operate the Company. There is, however, a remote
possibility that the Company may seek to acquire and operate an
ongoing business, in which case the existing management might be
retained.
4. Dilution in Merger or Acquisition Transaction. The
Company's plan of operation is based upon a merger with or
acquisition of a private concern, which in all likelihood would
result in the Company issuing securities to shareholders of any such
target concern. The issuance of previously authorized and unissued
Common Stock of the Company would result in substantial dilution to
present and prospective shareholders of the Company, which may
necessarily result in a change in control or management of the
Company.
5. Dependence on Management. The success of the Company will
largely be dependent upon the active participation of its President,
Earnest Mathis Jr., and its Secretary/Treasurer, Gary McAdams.
Notwithstanding such dependence on current management, Earnest Mathis
and Gary McAdams have limited experience and Gary Agron has not had
any experience or background in the business in which the Company
proposes to engage, the acquisition of business opportunities, and
accordingly, management will probably be required to obtain
independent outside professionals to effectively evaluate and
appraise potential use and markets for and to render evaluations
<PAGE> 12
relating to potential opportunity, product, investment or business
acquisition. Each of the Officers and Directors has other full time
employment and will be available to participate in management
decisions only on a part time or as needed basis. It is expected
that management will each devote approximately one percent (1%) of
their time to the business affairs of the Company. Officers and
directors will not be compensated prior to a merger or acquisition.
Once the Company acquires a business opportunity, the present
management will probably be asked to resign. The amount of time the
Officers and Directors devote to Company matters may increase once
the Company operates an active business. The time which the Officer
and Directors devote to the business affairs of the Company and the
skill with which they discharge their responsibilities, will
substantially impact the Company's success.
6. Impact of Limited Time Devoted to the Company.
Opportunities available to the Company for mergers or acquisitions
may be lost or delayed as a result of the limited amount of time
devoted to the Company by management. As a result, an acquisition or
merger may never take place.
7. No Business Plan. The Company has not identified the
business opportunities in which it will attempt to obtain an
interest. The Company therefore cannot describe the specific risks
presented by such business. In general, it may be expected that
such business will present such a level of risks that conventional
bank financing would not be available on favorable terms. Such
business may involve an unproven product, technology or marketing
strategy, the ultimate success of which cannot be assured. The
acquired business opportunity may be in competition with larger, more
established firms over which it will have no competitive advantage.
The Company's investment in a business opportunity may be expected to
be highly illiquid and could result in a total loss to the Company if
the opportunity is unsuccessful.
8. Company's Securities are Subject to Penny Stock Rules. The
Company's shares are "penny stocks" consequently they are subject to
Securities and Exchange Commission regulations which impose sales
practice requirements upon broker/dealer.
9. Conflicts of Interest. All of the Directors are associated
with other firms or occupations involving a range of business
activities. Because of these affiliations and because these
individuals will devote only a minor amount of time to the affairs of
the Company. There are potential inherent conflicts of interest in
their acting as Directors and Officers of the Company. All of the
Company's Directors and Officers are or may be Directors or
controlling shareholders of other entities engaged in a variety of
businesses which may in the future have various transactions with the
Company. Additional conflicts of interest and non-arm's length
transactions may also arise in the future in the event the Company's
Officers or Directors are involved in the management of any firms
with which the Company transacts business. Management has adopted a
<PAGE> 13
policy that the Company will not seek a merger with or an acquisition
of any entity with which any of the Officers or Directors serve as
Officers, Directors or partners or in which they or their family
member own or hold an ownership interest. Business combinations with
entities owned or controlled by affiliates or associates of the
Company will not be considered, however, securities owned or
controlled by the affiliates and associates of the Company may be
sold in the business combination transaction without affording all
existing shareholders a similar opportunity. A buy-out of
managements' shares could occur from an offer by existing
shareholders, or by an offer from a merger/acquisition candidate. In
addition, management is not aware of any circumstances which would
precipitate a change in their intention not to negotiate for the buy-
out of their stock. Public shareholders will not be entitled to
receive any portion of the buy-out premium and will not have an
opportunity to approve such related party transaction.
10. Rights of Dissenting Shareholders. A shareholder of the
Company shall have the right to dissent to any plan of merger or
consolidation to which the Company is a party under Colorado state
law. A dissenting shareholder shall have the right to have his or
her shares purchased by the Company at the fair market value thereof
as of the day prior to the date which the vote was taken approving
the proposed corporation action. Such action by a dissenting
shareholder could result in a cancellation of any proposed merger or
acquisition. Colorado state law governs the rights of shareholders
to dissent. No other state's laws regarding the Company's
shareholders rights to dissent are applicable.
11. Dependence on Outside Advisors. In order to supplement the
business experience of management, the Company may employ
accountants, technical experts, appraisers, attorneys or other
consultants or advisors. The selection of any such advisors will be
made by management and without any control from shareholders.
Additionally, it is anticipated that such persons may be engaged by
the Company on an independent basis without a continuing fiduciary or
other obligation to the Company.
12. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its
Common Stock in the foreseeable future. Future dividends will depend
on earnings, if any, of the Company, its financial requirements and
other factors. Investors who anticipate the need of an immediate
income from their investment in the Company's Common Stock should
refrain from the purchase of the Company's securities.
13. No Business Opportunities. The Company was recently formed
for the purpose of acquiring interest in one or more business
opportunities believed by management to hold potential for profit.
The Company has not yet obtained, however, any interest in any
product, property or business and may not be able to acquire any
such interest upon terms favorable to the Company.
<PAGE> 14
14. Scarcity of and Competition for Merger or Acquisition
Prospects. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with and acquisitions
of small private entities. A large number of established and well
financed entities, including venture capital firms, are active in
mergers and acquisitions of private companies which may be desirable
target candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and
managerial capabilities than the Company, and consequently, the
Company will be at a competitive disadvantage in identifying possible
merger or acquisition candidates with numerous other small public
companies.
15. No Agreement for Business Combination or Other Transaction.
The Company has no arrangement, agreement or understanding with
respect to engaging in a merger with, or acquisition of, any entity
private or public. There can be no assurance the Company will be
successful in identifying and evaluating suitable merger or
acquisition candidates or in concluding a merger or acquisition
transaction. Management has not identified any specific business
within an industry for evaluation by the Company. There is no
assurance the Company will be able to negotiate a merger or
acquisition on terms favorable to the Company.
16. No Agreement to Vote Shares. Present Officers, Directors
and principal stockholders have not agreed to vote their respective
shares of Common Stock in accordance with the vote of the majority of
all non-affiliated future stockholders of the Company with respect to
any business combination.
17. Lack of Market Research or Marketing Organization. The
Company has neither conducted nor has the Company engaged other
entities to conduct market research such that management has
assurance market demand exists for the transactions contemplated by
the Company. Moreover, the Company does not have and does not plan
to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition of the type contemplated by
the Company, there is no assurance the Company will be successful in
completing any such transaction.
18. Impracticability of Exhaustive Investigation. The
Company's limited funds and the lack of full-time management will
likely make it impracticable to conduct a complete and exhaustive
investigation and analysis of a business opportunity before the
Company commits its capital or other resources thereto. Therefore,
management decisions will likely be made without detailed feasibility
studies, independent analysis, market surveys and the like which, if
the Company had more funds available to it, would be desirable. The
Company will be particularly dependent in making decisions upon
information provided by the promoter, owner, sponsor, or others
associated with the business opportunity seeking the Company's
participation. There are numerous individuals, publicly held
companies, and privately held companies seeking merger and
acquisition prospects. There is significant competition among such
groups for attractive merger and acquisition prospects. However, the
<PAGE> 15
number of suitable and attractive prospects is limited and the
Company may find a scarcity of suitable companies with audited
financial statements seeking merger partners of the type and size of
the Company.
18. Possible Lack of Diversification. The Company may be
unable to diversify its business activities, which creates the
possibility of a total loss to the Company and its shareholders
should an acquisition by the Company prove to be unprofitable. The
Company's failure or inability to diversify its activities into a
number of areas may subject the Company to economic fluctuations
within a particular business or industry and, therefore, increase the
risks associated with the Company's operations.
19. The Company May Pay a Finder's Fee. In connection with a
merger/acquisition, the Company may issue "restricted" shares of the
Company's Common Stock to finders. A finder's fee will not be paid,
however, to any officer, director, shareholder or other affiliated
party. At the present time, there are no plans to pay any finder's
fees.
20. Issuance of Additional Shares. Approximately 24,023,800
shares of Common Stock or 96.10% of the 25,000,000 authorized shares
of Common Stock of the Company remain unissued. The Board of
Directors has the power to issue such shares subject to shareholder
approval and may do so in an exchange offer or a stock for stock
exchange agreement. The Company may also issue additional shares of
Common Stock pursuant to a plan and agreement of merger with a
private corporation. Although the Company presently has no
commitments, contracts or intentions to issue any additional shares
to other persons, the Company may in the future attempt to issue
shares to acquire products, properties or businesses, or for other
corporate purposes.
21. Creation of Subsidiary Entities. The Company will not
engage in the creation of subsidiary entities with a view to
distributing their securities to the shareholders of the Company.
22. Regulation. Although the Company will be subject to
regulation under the Securities Act of 1933 and the Securities
Exchange Act of 1934, management believes the Company will not be
subject to regulation under the Investment Company Act of 1940
insofar as the Company will not be engaged in the business of
investing or trading in securities. In the event the Company engages
in business combinations which result in the Company holding passive
investment interests in a number of entities, the Company could be
subject to regulation under the Investment Company Act of 1940. In
such event, the Company will be required to register as an investment
company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination
from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940, and consequently,
any violation of such Act will subject the Company to material
adverse consequences.
<PAGE> 16
23. Probable Change in Control and Management. Mergers or
acquisitions involving the issuance of the Company's Common Stock
will in all likelihood result in shareholders of a target company
obtaining a controlling interest in the Company. Any such merger or
acquisition candidate may require management of the Company to sell
or transfer all or a portion of the Company's Common Stock held by
them, although management would make no such requirement as a
condition precedent of an acquisition. See "Proposed Business." The
resulting change in control of the Company could result in removal of
present Officers and Directors of the Company and a corresponding
reduction in their participation in the future affairs of the
Company. While management has no present intention to dispose of its
ownership interest in the Company, it is impossible to predict the
extent to which management will participate in the future affairs of
the Company following the completion of a merger or acquisition.
24. Competition. The Company will have numerous competitors
and potential competitors, many of whom will have considerably
greater financial and personal resources than the Company. There is
no assurance that the Company will be successful in obtaining
suitable investments. The Company will be competing with numerous
other entities, most all of which are larger, well established
companies with greater assets and financial reserves than the Company
will possess.
25. Lack of Public Market for Securities. At present, no
market exists for the Company's securities and there is no assurance
that a regular trading market will develop and if developed, that it
will be sustained. A market for the securities cannot develop until
a merger or acquisition has been concluded. A purchaser of stock
may, therefore, be unable to resell the securities offered herein
should he or she desire to do so. Furthermore, it is unlikely that
a lending institution will accept the Company's securities as pledged
collateral for loans unless a regular trading market develops.
26. No Cumulative Voting and Preemptive Rights and Control.
There are no preemptive rights in connection with the Company's
Common Stock. Cumulative voting in the election of Directors is not
allowed. Accordingly, the holders of a majority of the shares of
Common Stock, present in person or by proxy, will be able to elect
all of the Company's Board of Directors.
27. Limited Participation of Officers and Directors in
Management Decisions. Each of the Officers and Directors has
full-time employment and will be available to participate in
management decisions on a part-time or as-needed basis only. The
amount of time which Officers and Directors are able to devote to
Company business may be inadequate in which to properly attend to
Company business.
<PAGE> 17
28. No Marketmaker. There is no assurance that
Company's securities will be traded on the "Bulletin Board" or in the
"Pink Sheets" maintained by members of the National Association of
Securities Dealers, Inc. ("NASD"). The Company has no agreement with
any member of the NASD to act as a marketmaker for the Company's
securities. Although management intends to contact several
broker/dealers concerning their possible participation as
marketmakers in the Company's securities following the conclusion of
a merger or acquisition, there is no assurance management will be
successful in obtaining a marketmaker. If the Company is
unsuccessful in obtaining one or more marketmakers, the trading level
and/or price of the Company's securities will be materially adversely
affected.
ITEM 2. FINANCIAL INFORMATION.
SELECTED CONSOLIDATED FINANCIAL DATA
The selected financial data presented below has been derived
from the financial statements of the Company, which financial
statements have been examined by Larry Legel, CPA, independent
certified public accountant, as indicated in his report included
elsewhere herein.
The following table summarized certain financial information and
should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the
Financial Statements and related notes included elsewhere in this
Form 10-SB. For the reasons set forth in this Form 10-SB registration
statement the information shown below may not be indicative of the
Company's future results of operations.
Statement of Loss and Accumulate Deficit Data:
TO BE SUPPLIED BY THE ACCOUNTING FIRM.
<PAGE> 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITIONS
Results of Operations - (February 23, 1996) through December 31,
1998.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7. There
have been no operations since incorporation.
Liquidity and Capital Resources.
The Company issued 895,000 shares of its Common Stock to
officers, directors and others. The Company has no operating history
and no material assets. The Company has $34 in cash as of December
31, 1998.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company has no assets.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth as of February 28, 1999, the
Common Stock ownership of each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common
Stock, each director individually and all officers and directors of
the Company as a group. Each person has sole voting and investment
power with respect to the shares of Common Stock shown, and all
ownership is of record and beneficial.
Name and address Number of Percent
of owner Shares Position of Class
- -------------------------------------------------------------------
Earnest Mathis, Jr. [1] 298,334 President and a 30.56%
26 W. Dry Creek Circle member of the
Suite 600 Board of Directors
Littleton, CO 80120
Gary J. McAdam [2] 298,333 Secretary/Treasurer 30.56%
14 Red Tail Drive and a member of the
Highlands Ranch, CO 80126 Board of Directors
Gary A. Agron [3] 298,333 Member of the Board 30.56%
5445 DTC Parkway of Directors
Suite 520
Englewood, CO 80111
All officers and 895,000 91.68%
directors as a
group (3 persons)
<PAGE> 18
[1] The 298,334 shares are held in the name of Mathis Family
Partners, a Colorado Limited Partnership of which Mr. Mathis is
the general partner.
[2] The 298,333 shares are held in the name of GM/CM Family
Partners, Ltd., a family limited partnership of which Mr. McAdam
is the general partner.
[3] Includes 41,200 shares held by Mr. Agron's wife and 123,063
shares held by a family limited partnership of which Mr. Agron
is the general partner.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
Officers and Directors.
The officers and directors of the Company are as follows:
Name Age Position
Earnest Mathis Jr. 39 President and a member of the Board
of Directors
Gary J. McAdam 46 Secretary/Treasurer and a member of
the Board of Directors
Gary A. Agron 54 Member of the Board of Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or until
they resign or have been removed from office.
Earnest Mathis Jr. - President and a member of the Board of
Directors.
Since inception, Mr. Mathis has been a founder, the President
and a member of the Board of Directors of the Company. From January
1987 to the present, Mr. Mathis has been president and a member of
the Board of Directors of Inverness Investments, a privately held
financial consulting company in Denver, Colorado. From February 1998
to the present, Mr. Mathis has served as manager of Amerigolf, LLC,
a golf course development company. From January 1997 to the present,
Mr. Mathis has served as president of Integrated Medical Services,
Inc. (IMS). IMS is a wholly owned subsidiary which transports and
processes medical waste from small and large generators of medical
waste. In March 1999, IMS sold 100% of its assets to publicly held
Stericycle, Inc. Mr. Mathis attended Denver University where he
studied finance and since 1992, has been a member of the Denver
Society of Securities Analysts.
<PAGE> 19
Gary J. McAdam - Secretary/Treasurer and a member of the Board of
Directors.
Since inception, Mr. McAdam has been a founder, the
Secretary/Treasurer and a member of the Board of Directors of the
Company. From November 1979 to the present, Mr. McAdam has served as
President and a member of the Board of Directors of Growth Venture,
Inc., a financial consulting firm specializing in venture capital,
mergers and acquisitions. From September 1998 to the present, Mr.
McAdam has served as Secretary and a member of the Board of Directors
of International Cavitation Technologies, Inc. International
Cavitation Technologies is a reclamation technology company. Mr.
McAdam graduated from the University of Denver with a Bachelor of
Arts degree in 1973.
Gary A. Agron - Member of the Board of Directors.
Since inception, Mr. Agron has been a founder and a member of
the Board of Directors. Since 1978, Mr. Agron has served as a member
of the Board of Directors of Xedar Corporation, a Colorado
corporation, Xedar is a publicly-held contract developer of high
technology products. Since 1989, Mr. Agron has served as a member of
the Board of Directors of U.S. Pawn, Inc., a Colorado corporation.
U.S. Pawn is a publicly-held pawnshop operator. Since March 1996,
Mr. Agron has served as a member of the Board of Directors of Meadow
Valley Corporation, a Nevada corporation. Meadow Valley Corporation
is a publicly-held heavy construction contractor. Since 1969, Mr.
Agron has been involved in the private practice of law in Denver,
Colorado. Mr. Agron graduated from the University of Colorado with
a Bachelor of Arts degree in 1966 and from the University of Colorado
Law School in 1969.
There are no family relationship between any director or
executive office and any other director or executive officer.
There are no agreements or understandings for any officer or
director to resign at the request of another person and that none of
the officers or directors are acting on behalf of or will act at the
direction of any other person. The officers and directors may
resign, however, at the time of the acquisition or merger at the
request of the management of the acquisition candidate.
The activities of each Officer and Director will be material to
the operation of the Company. No other person's activities will be
material to the operation of the Company. There are no promoters of
the Company, other than its Officers and Directors.
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's officers or directors currently receives
any salary from the Company. The Company does not anticipate
entering into employment agreements with any of its officers or
directors in the near future. Directors do not receive compensation
for their services as directors and are not reimbursed for expenses
incurred in attending board meetings.
<PAGE> 20
Other than consulting fees and finder's fees which may be paid
to unaffiliated third parties, no other individuals will receive any
salaries or fees from the Company. The Company's officers and
directors will not receive finder's fees, consulting fees or
salaries. Officers, directors and/or principal shareholders may
receive cash or stock from the sale of their shares of the Company's
stock to the Company's merger/acquisition candidate or principals of
the merger/acquisition candidate.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company was incorporated on February 23, 1996. In February
1996, the Company issued a total of 895,000 shares of Common Stock to
the Company's Officer, Directors, and one director's wife.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS.
No market exists for the Company's securities and there is no
assurance that a regular trading market will develop, or if
developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities
referred to herein should he or she desire to do so. Furthermore, it
is unlikely that a lending institution will accept the Company's
securities as pledged collateral for loans unless a regular trading
market develops.
There are no plans, proposals, arrangements or understandings
with any person with regard to the development of a trading market in
any of the Company's securities.
As of February 28, 1999, the Company has 235 holders of record
of its Common Stock.
The Company has not paid any dividends since it is inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
Blue Sky Considerations.
The laws of some states prohibit the resale of securities issued
by "blank check" or "shell" corporations. The Company may be
considered a "blank check" or "shell" corporation for the purpose of
state securities laws. Accordingly, it is possible that current
shareholders may be unable to resell their securities in other
states. The Company is unaware which particular states prohibit such
resales, other than Idaho and Indiana.
<PAGE> 21
The Commission has suggested that the Company take steps to
prohibit further transfer of the securities distributed to current
shareholders, unless the Company is assured that the further transfer
would not violate the securities laws of the fifty states. The
Company believes that the Commission has no authority to cause the
Company to place restrictions on the securities it previously
distributed and which it currently does not own. Such action by the
Company would legally be construed as a unilateral modification of a
fully executed contract and would be considered as a breach thereof.
Further, the Company believes that such action by the Commission
would be a usurpation of the authority granted it by Congress.
Further, because each state has a series of exempt securities
transaction predicated upon the particular facts of each transaction,
it is impossible to determine if a contemplated transaction by an
existing shareholder would possibly violate the securities laws of
any particular state.
In the event a current shareholder or broker/dealer resells its
securities in a state where such resale is prohibited, the Company
believes that the seller thereof may be liable criminally or civilly
under that particular state's laws. The Company believes that it
will not be liable for such improper secondary sales.
Existing shareholders should exercise caution in the resale of
their shares of common stock in light of the foregoing.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company was incorporated on February 23, 1996. In February
1996, the Company issued a total of 895,000 shares of Common Stock to
the Company's officers and directors and an officer's wife. The
foregoing shares were issued pursuant to Section 4(2) of the
Securities Act of 1933, as amended (the "Act").
On April 1996, the Company issued 81,200 shares of Common Stock,
to friends and business associates of the Company's officers and
directors of the Company. The distribution was only made to
"accredited investors" as that term is defined in Reg. 501 of the
Act. No commissions of other form of remuneration was paid to anyone
in connection with the distribution.
ITEM 11. DESCRIPTION OF THE COMPANY'S SECURITIES TO BE
REGISTERED.
COMMON STOCK
The authorized Common Stock of the Company consists of
25,000,000 shares, of common stock, no par value per share. All
shares have equal voting rights and are not assessable. Voting
rights are not cumulative and, therefore, the holders of more than
50% of the Common Stock could, if they chose to do so, elect all of
the directors of the Company.
<PAGE> 22
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for
any securities of the Company and have no right to require the
Company to redeem or purchase their shares. The shares of Common
Stock presently outstanding are fully paid and nonassessable.
PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of
preferred stock, no par value. The preferred stock may be issued in
series from time to time with such designation, rights, preferences
and limitations as the Board of Directors of the Company may
determine be resolution. The rights, preferences and limitations of
separate series of preferred stock may differ with respect to such
matters as may be determined by the Board of Directors, including,
without limitation, the rate of dividends, method and nature of
payment of dividends, terms of redemption, amounts payable on
liquidation, sinking fund provisions (if any), conversion rights (if
any) and voting rights. No preferred stock has been issued by the
Company.
DIVIDENDS
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is
contemplated in the foreseeable future.
TRANSFER AGENT
Corporate Stock Transfer, Inc., 370 Seventeenth Street, Suite
2350, Denver, Colorado 80202, is the Company's transfer agent.
ISSUANCE OF ADDITIONAL SECURITIES
The Company has not considered and does not know, at the present
time, of circumstances which may result in the issuance to
management, promoters or their affiliates or associates of securities
of the Company, other than the possible issuance of securities to a
finder of the acquisition/merger candidate. The Company will not,
however, issue securities to a finder who is an Officer, Director or
affiliate of the Company. Currently, there are no agreements nor
have there been any discussions with anyone to pay a finder's fee in
cash or securities.
<PAGE> 23
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 7-3-10(o) of the Colorado Revised Statutes and certain
provisions of the Company's Articles of Incorporation under certain
circumstances provide for indemnification of the Company's Officers,
Directors and controlling persons against liabilities which they may
incur in such capacities. A summary of the circumstances in which
such indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a
party, if that person's actions were in good faith, were believed to
be in the Company's best interest, and were not unlawful. Unless
such person is successful upon the merits in such an action,
indemnification may be awarded only after a determination by
independent decision of the Board of Directors, by legal counsel, or
by a vote of the shareholders, that the applicable standard of
conduct was met by the person to be indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with respect to
such actions, indemnification is granted only with respect to
expenses actually incurred in connection with the defense or
settlement of the action. In such actions, the person to be
indemnified must have acted in good faith and in a manner believed to
have been in the Company's best interest, and have not been adjudged
liable for negligence or misconduct.
Indemnification may also be granted pursuant to the terms of
agreements which may be entered in the future or pursuant to a vote
of shareholders or Directors. The statutory provision cited above
and the Company's Articles of Incorporation also grant the power to
the Company to purchase and maintain insurance which protects its
Officers and Directors against any liabilities incurred in connection
with their service in such a position, and such a policy may be
obtained by the Company.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements are included on Pages F-1 through F-6
herein.
<PAGE> 24
LARRY LEGEL, CPA
5100 NORTH FEDERAL HIGHWAY, #409
FORT LAUDERDALE, FL 33308
(954) 493-8900
INDEPENDENT AUDITOR'S REPORT
Stockholders
Zedik Enterprises, Inc.
(a Development Stage Enterprise)
Englewood, Colorado
I have audited the accompanying balance sheet of Zedik Enterprises,
Inc. (a Development Stage Enterprise) as of December 31, 1998 and
1997, and the related statements of operations, changes in
stockholders' equity, and cash flows for the periods from February
23, 1996 (date of inception) through December 31, 1998. These
financial statements are the responsibility of the Company's
management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing
standards. Those standards require that I 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. I believe that my audits provide a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present
fairly, the financial position of Zedik Enterprises, Inc. as of
December 31, 1998 and 1997, and the results of its operations and its
cash flows for the periods February 23, 1996 (date of inception) to
December 31, 1998, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. The continuation of the
Company's business is dependent upon its ability to maintain adequate
financing arrangements and ultimately, upon future profitable
operations. These matters raise substantial doubt about its ability
to continue as a going concern. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
LARRY LEGEL
Certified Public Accountant
March 24, 1999
F-1
<PAGE> 25
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
AS OF DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
A S S E T S
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 34 $ 81
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES: $ -0- $ -0-
--------- --------
STOCKHOLDERS' EQUITY:
Common stock, no par value,
25,000,000 shares authorized
976,200 shares issued and
outstanding 2,602 2,602
Retained earnings (deficit
accumulated during the
development stage) (2,568) (2,521)
--------- -------
Total stockholders' equity 34 81
--------- -------
TOTAL $ 34 $ 81
========= =======
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE> 26
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
December 31, December 31, From
1998 1997 Inception
<S> <C> <C> <C>
REVENUES $ -0- $ -0- $ 0-
EXPENSES 47 46 2,568
---------- --------- -------
LOSS BEFORE TAXES 47 46 2,568
PROVISION FOR
INCOME TAXES -0- -0- -0-
---------- --------- -------
NET LOSS $ 47 $ 46 $ 2,568
========== ========= =======
NET LOSS PER SHARE $ .00 $ .00
========== =========
Weighted average number
of common shares
outstanding 976,200 976 200
========== =========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-3
<PAGE> 27
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
Common Stock
No. of No Earnings
Shares Par Value (Deficit) TOTAL
<S> <C> <C> <C> <C>
February 23, 1996 -
initial issue 895,000 $ 1,790 $ 1,790
Issuance of common
stock for no cash
on April 15, 1996 81,200 812 812
Net loss for period
ended December 31, 1996 (2,475) (2,475)
------- ------- -------- --------
Balance -
December 31, 1996 976,200 2,602 (2,475) 127
Net loss for period ended
December 31, 1997 (46) (46)
------- ------- -------- --------
Balance
December 31, 1997 976,200 2,602 (2,521) 81
Net loss for period
ended December 31, 1998 (47) (47)
------- ------- -------- --------
Balance
December 31, 1998 976,200 $ 2,602 $ (2,568) $ 34
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 28
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
<TABLE>
<CAPTION>
For the For the
Year Ended Year Ended
December 31, December 31, From
1998 1997 Inception
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Payment of expenses $ 47 $ 46 $ 1,756
------ ------ --------
Cash disbursed for
operating activities 47 46 1,756
------ ------ --------
Net cash flow provided
by (used in)operating
activities (47) (46) (1,756)
------ ------ --------
CASH FLOWS FROM INVESTING
ACTIVITIES: -0- -0- -0-
------ ------ --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from issuance
of stock -0- -0- 1,790
------ ------ --------
Net cash flow provided
by financing
activities -0- -0- 1,790
------ ------ --------
NET INCREASE (DECREASE)
IN CASH (47) (46) 34
BEGINNING OF PERIOD -
Cash and cash
equivalents 81 127 -0-
------ ------ --------
END OF PERIOD -
Cash and cash
equivalents $ 34 $ 81 $ 34
====== ====== ========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-5
<PAGE> 29
ZEDIK ENTERPRISES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
FOR THE PERIODS FROM FEBRUARY 23, 1996 (FROM INCEPTION)
THROUGH DECEMBER 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND OTHER MATTERS
Zedik Enterprises, Inc. was incorporated under the laws of the State
of Colorado on February 23, 1996. Since its inception, the Company
has been in the development stage and has conducted no business. The
Company's only activities to date have been the initial issuance of
common stock, and the completion of a private placement dated April
15, 1996. (See Note 3).
At the organization of the Company, 895,000 shares of common stock
were purchased for $1,790
Use of Estimates The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that effect certain
reported amounts and disclosures. Accordingly, actual results could
differ from those estimates.
NOTE 2 - PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of no par value
preferred stock which may be issued in one or more series at the
discretion of the Board of Directors.
NOTE 3 - PRIVATE PLACEMENT
The Company, under a private placement dated April 15, 1996,
describes the intended distribution by the Company of 105,000 shares
of common stock up to 300 individuals, each of whom will receive 350
shares at no cost. The purpose was to allow the Company to become
widely held, thereby allowing it the opportunity to merge in the
future with a privately held Company seeking a larger stockholder
base. 81,200 shares were accepted under the subscription agreements.
F-6
<PAGE> 30
ITEM 14. DISAGREEMENTS WITH ACCOUNTANTS, AND ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
EXHIBITS
Exhibit No. Description
3.1 Articles of Incorporation.
3.2 Bylaws of the Company.
4.1 Specimen Stock Certificate.
27 Financial Data Schedule
<PAGE>
<PAGE> 31
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Denver, Colorado, on this 15th day of
April, 1999.
ZEDIK ENTERPRISES, INC.
BY: /s/ Earnest Mathis, Jr.
Earnest Mathis, Jr., President
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Earnest Mathis, Jr., as true
and lawful attorney-in-fact and agent, with full power of
substitution, for his and in his name, place and stead, in any and
all capacities, to sign any and all amendment (including
post-effective amendments) to this registration statement, and to
file the same, therewith, with the Securities and Exchange
Commission, and to make any and all state securities law or blue sky
filings, granting unto said attorney-in-fact and agent, full power
and authority to do and perform each and every act and thing
requisite or necessary to be done in about the premises, as fully to
all intents and purposes as he might or could do in person, hereby
ratifying the confirming all that said attorney-in-fact and agent, or
any substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10 Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:
Signature Title Date
/s/ Earnest Mathis, Jr.
Earnest Mathis Jr. President and a member 04/15/99
of the Board of Directors
/s/ Gary J. McAdam
Gary J. McAdam Secretary/Treasurer 04/15/99
and member of the
Board of Directors
/s/ Gary A. Agron
Gary A. Agron Member of the Board 04/15/99
of Directors
<PAGE> 32
ARTICLES OF INCORPORATION
OF
ZEDIK ENTERPRISES, INC.
The undersigned, who, if a natural person, is eighteen years of
age or older, hereby establishes a corporation pursuant to the
Colorado Business Corporation Act as amended and adopts the following
Articles of Incorporation:
FIRST: The name of the corporation is ZEDIK ENTERPRISES, INC.
SECOND: The corporation shall have and may exercise all of the
rights, powers and privileges now or hereafter conferred upon
corporations organized under the laws of Colorado. In addition, the
corporation may do everything necessary, suitable or proper for the
accomplishment of any of its corporate purposes. The corporation may
conduct part or all of its business in any part of Colorado, the
United States or the world and may hold, purchase mortgage, lease and
convey real and personal property in any of such places.
THIRD: (a) The aggregate number of common shares which the
corporation shall have authority to issue is 25,000,000 shares of
Common Stock. The shares of this class of Common Stock shall have
unlimited voting rights and shall constitute the sole voting group of
the corporation, except to the extent any additional voting group or
groups may hereafter be established in accordance with the Colorado
Business Corporation Act. The shares of this class shall also be
entitled to receive the net assets of the corporation upon
dissolution.
(b) Each shareholder of record shall have one vote for each
share of stock standing in his name on the books of the corporation
and entitled to vote, except that in the election of directors each
shareholder shall have as many votes for each share held by him as
there are directors to be elected and for whose election the
shareholder has a right to vote. Cumulative voting shall not be
permitted in the election of directors or otherwise. Preemptive
rights to purchase additional shares of stock are denied.
(c) Unless otherwise ordered by a court of competent
jurisdiction, at all meetings of shareholders one-third of the shares
of a voting group entitled to vote at such meeting, represented in
person or by proxy, shall constitute a quorum of that voting group.
Unless otherwise required by law, a majority vote of those
shareholders represented in person or by proxy will be sufficient to
take any corporate action.
<PAGE> 33
(d) The corporation shall have the authority to issue 10,000,000
shares of Preferred Stock, which may be issued in one or more series
at the discretion of the board of directors. In establishing a
series, the board of directors shall give to it a distinctive
designation so as to distinguish it from the shares of all other
series and classes, shall fix the number of shares in such series,
and the preferences, rights and restrictions thereof. All shares of
any one series shall be alike in every particular except as otherwise
provided by these Articles of Incorporation or the Colorado Business
Corporation Code.
(1) Dividends. Dividends in cash, property or shares shall
be paid upon the Preferred Stock for any year on a cumulative or
noncumulative basis as determined by a resolution of the board
of directors prior to the issuance of such Preferred Stock, to
the extent earned surplus for each such year is available, in an
amount as determined by a resolution of the board of directors.
Such Preferred Stock dividends shall be paid pro rata to holders
of Preferred Stock as determined by a resolution of the board of
directors prior to the issuance of such Preferred Stock. No
other dividend shall be paid on the Preferred Stock.
Dividends in cash, property or shares of the corporation
may be paid upon the Common Stock, as and when declared by the
board of directors, out of funds of the corporation to the
extent and in the manner permitted by law, except that no Common
Stock dividend shall be paid for any year unless the holders of
Preferred Stock, if any, shall receive the maximum allowable
Preferred Stock dividend for such year.
(2) Distribution in Liquidation. Upon any liquidation,
dissolution or winding up of the corporation, and after paying
or adequately providing for the payment of all its obligations,
the remainder of the assets of the corporation shall be
distributed, either in cash or in kind, first pro rata to the
holders of the Preferred Stock until an amount to be determined
by a resolution of the board of directors prior to issuance of
such Preferred Stock has been distributed per share, and, then,
the remainder pro rata to the holders of the Common Stock.
(3) Redemption. The Preferred Stock may be redeemed in
whole or in part as determined by a resolution of the board of
directors prior to the issuance of such Preferred Stock, upon
prior notice to the holders of record of the Preferred Stock,
published, mailed and given in such manner and form and on such
other terms and conditions as may be prescribed by the Bylaws or
by resolution of the board of directors, by payment in cash or
Common Stock for each share of the Preferred Stock to be
redeemed, as determined by a resolution of the board of
<PAGE> 34
directors prior to the issuance of such Preferred Stock. Common
Stock used to redeem Preferred Stock shall be valued as
determined by a resolution of the board of directors prior to
the issuance of such Preferred Stock. Any rights to or arising
from fractional shares shall be treated as rights to or arising
from one share. No such purchase or retirement shall be made if
the capital of the corporation would be impaired thereby.
FOURTH: The number of directors of the corporation shall be
fixed by the bylaws, or if the bylaws fail to fix such a number, then
by resolution adopted from time to time by the board of directors,
provided that the number of directors shall not be less than three
nor more than nine. Three directors shall constitute the initial
board of directors. The following persons are elected to serve as the
corporation's initial directors until the first annual meeting of
shareholders or until their successors are duly elected and
qualified:
Name Address
Earnest Mathis, Jr. 14 Red Tail Road
Highlands Ranch, Colorado 80126
Gary McAdam 14 Red Tail Road
Highlands Ranch, Colorado 80126
Gary A. Agron 5445 DTC Parkway, Suite 520
Englewood, Colorado 80111
FIFTH: The street address of the initial registered office of
the corporation is 4 W. Dry Creek Circle, Suite 140, Littleton,
Colorado 80120. The name of the initial registered agent of the
corporation at such address is Earnest Mathis, Jr.
SIXTH: The address of the initial principal office of the
corporation is 4 W. Dry Creek Circle, Suite 140, Littleton, Colorado
80120.
SEVENTH: The following provisions are inserted for the
management of the business and for. the conduct of the affairs of the
corporation, and the same are in furtherance of and not in limitation
or exclusion of the powers conferred by law.
(a) Conflicting Interest Transactions. As used in this
paragraph, "conflicting interest transaction" means any of the
following: (i) a loan or other assistance by the corporation to a
director of the corporation or to an entity in which a director of
the corporation is a director or officer or has a financial interest;
(ii) a guaranty by the corporation of an obligation of a director of
<PAGE> 35
the corporation or of an obligation of an entity in which a director
of the corporation is a director or officer or has a financial
interest; or (iii) a contract or transaction between the corporation
and a director of the corporation or between the corporation and an
entity in which a director of the corporation is a director or
officer or has a financial interest. No conflicting
interest transaction shall be void or voidable, be enjoined, be set
aside, or give rise to an award of damages or other sanctions in a
proceeding by a shareholder or by or in the right of the corporation,
solely because the conflicting interest transaction involve's a,
director of the corporation or an entity in which a director of the
corporation is a director or officer or has a financial interest, or
solely because the director is present at or participates in the
meeting of the corporation's board of directors or of the committee
of the board of directors which authorizes, approves or ratifies a
conflicting interest transaction, or solely because the director's
vote is counted for such purpose if: (A) the material facts as to the
director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the board of
directors or the committee, and the board of directors or committee
in good faith authorizes, approves or ratifies the conflicting
interest transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors are
less than a quorum; or (B) the material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the shareholders entitled
to vote, thereon, and the conflicting interest transaction is
specifically authorized, approved or ratified in good faith by a vote
of the shareholders; or (C) a conflicting interest transaction is
fair as to the corporation as of the time it is authorized, approved
or ratified by the board of directors, a committee thereof, or the
shareholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of
directors or of a committee which authorizes, approves or ratifies
the conflicting interest transaction.
(b) Loans and Guaranties for the Benefit of Directors.
Neither the board of directors nor any committee thereof shall
authorize a loan by the corporation to a director of the corporation
or to an entity in which a director of the corporation is a director
or officer or has a financial interest, or a guaranty by the
corporation of an obligation of a director of the corporation or of
an obligation of an entity in which a director of the corporation is
a director or officer or has a financial interest, until at least ten
days after written notice of the proposed authorization of the loan
or guaranty has been given to the shareholders who would be entitled
to vote thereon if the issue of the loan or guaranty were submitted
to a vote of the shareholders. The requirements of this paragraph (b)
are in addition to, and not in substitution for, the provisions of
paragraph (a) of SEVENTH.
<PAGE> 36
(c) Indemnification. The corporation shall indemnify, to
the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of the corporation
against any claim, liability or expense arising against or incurred
by such person made party to a proceeding because he is or was a
director, officer, agent, fiduciary or employee of the corporation or
because he is or was serving another entity or employee benefit plan
as a director, officer, partner, trustee, employee, fiduciary or
agent at the corporation's request. The corporation shall further
have the authority to the maximum extent permitted by law to purchase
and maintain insurance providing such indemnification.
(d) Limitation on Director's Liability. No director of this
corporation shall have any personal liability for monetary damages to
the corporation or its shareholders' for breach of his fiduciary duty
as a director, except that this provision shall not eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for: (i) any breach of the
director's duty of loyalty to the corporation or its shareholders;
(ii) acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) voting for or
assenting to a distribution in violation of Colorado Revised Statutes
subsection 7106-401 or the articles of incorporation if it is
established that the director did not perform his duties in
compliance with Colorado, Revised Statutes subsection 7-108-401,
provided that the personal liability of a director in this
circumstance shall be limited to the amount of the distribution which
exceeds what could have been distributed without violation of
Colorado Revised Statutes subsection 7106-401 or the articles of
incorporation; or (iv) any transaction from which the director
directly or indirectly derives an improper personal benefit. Nothing
contained herein will be construed to deprive any director of his
right to all defenses ordinarily available to a director nor will
anything herein be construed to deprive any director of any right he
may have for contribution from any other director or other person.
(e) Negation of Equitable Interests in Shares or Rights. Unless
a person is recognized as a shareholder through procedures
established by the corporation pursuant to Colorado Revised Statutes
subsection 7-107-204 or any similar law, the corporation shall be
entitled to treat the registered holder of any shares of the
corporation as the owner thereof for all purposes permitted by the
Colorado Business Corporation Act, including without limitation all
rights deriving from such shares, and the corporation shall not be
bound to recognize any equitable or other claim to, or interest in,
such shares or rights deriving from such shares on the part of any
other person unless and until including without limitation, a
purchaser, assignee or transferee of such shares, unless and until
such other person becomes the registered holder of such shares or is
<PAGE> 37
recognized as such, whether or not the corporation shall have either
actual or constructive notice of the claimed interest of such other
person. By way of example and not of limitation, until such other
person has become the registered holder of such shares or is
recognized pursuant to Colorado Revised Statutes subsection 7107-204
or any similar applicable law, he shall not be entitled: (i) to
receive notice of the meetings of the shareholders; (ii) to vote at
such meetings; (iii) to examine a list of the shareholders; (iv) to
be paid dividends or other distributions payable to shareholders; or
(v) to own, enjoy and exercise any other rights deriving from such
shares against the corporation. Nothing contained herein will be
construed to deprive any beneficial shareholder, as defined in
Colorado Revised Statutes subsection 7-113-101(l), of any right he
may have pursuant to Article 113 of the Colorado Business Corporation
Act or any subsequent law.
(f) Merger With or Acquisition of Another Entity. Inasmuch
as the corporation has been formed to merge with or to acquire
another business entity, it shall not be necessary for the
corporation to obtain shareholder approval for such a transaction.
Any such determination shall be at the discretion of the
corporation's board of directors.
EIGHTH: The name and address of the incorporator is:
Earnest Mathis, Jr.
4 W. Dry Creek Circle, Suite 140
Littleton, Colorado 80120
DATED the 22nd day of February, 1996.
/s/ Earnest Mathis, Jr.
Incorporator
Earnest Mathis, Jr. hereby consents to the appointment as the
initial registered agent for the Corporation.
/s/ Earnest Mathis, Jr.
Initial Registered Agent
<PAGE> 38
BYLAWS
OF
ZEDIK ENTERPRISES, INC.
ARTICLE I
Offices
The principal office of the corporation shall be designated from time
to time by the corporation and may be within or outside of Colorado.
The corporation may have such other offices, either within or outside
Colorado, as the board of directors may designate or as the business
of the corporation may require from time to time.
The registered office of the corporation required by the Colorado
Business Corporation Act to be maintained in Colorado may be, but
need not be, identical with the principal office, and the address of
the registered office may be changed from time to time by the board
of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held each year on a date and at a time fixed by
the board of directors of the corporation (or by the president in the
absence of action by the board of directors), beginning with the year
1997, for the purpose of electing directors and for the transaction
of such other business as may come before the meeting. If the
election of directors is not held on the day fixed as provided herein
for any annual meeting of the shareholders, or any adjournment
thereof, the board of directors shall cause the election to be held
at a special meeting of the shareholders as soon thereafter as it may
conveniently be held.
A shareholder may apply to the district court in the county in
Colorado where the corporation's principal office is located or, if
the corporation has no principal office in Colorado, to the district
court of the county in which the corporation's registered office is
located to seek an order that a shareholder meeting be held (i) if an
annual meeting was not held within six months after the close of the
corporation's most recently ended fiscal year or fifteen months after
its last annual meeting, whichever is earlier, or (ii) if the
shareholder participated in a proper call of or proper demand for a
special meeting and notice of the special meeting was not given
within thirty days after the date of the call or the date the last of
the demands necessary to require calling of the meeting was received
by the corporation pursuant to C.R.S. subsection 7-107-102(l)(b), or
the special meeting was not held in accordance with the notice.
Section 2. Special Meetings. Unless otherwise prescribed by
statute, special meetings of the shareholders may be called for any
purpose by the president or by the board of directors. The president
shall call a special meeting of the shareholders if the corporation
receives one or more written demands for the meeting, stating the
purpose or purposes for which it is to be held, signed and dated by
holders of shares representing at least ten percent of all the votes
entitled to be cast on any issue proposed to be considered at the
meeting.
<PAGE> 39
Section 3. Place of Meeting. The board of directors may
designate any place, either within or outside Colorado, as the place
for any annual meeting or any special meeting called by the board of
directors. A waiver of notice signed by all shareholders entitled to
vote at a meeting may designate any place, either within or outside
Colorado, as the place for such meeting. If no designation is made,
or if a special meeting is called other than by the board, the place
of meeting shall be the principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the place,
date, and hour of the meeting shall be given not less than ten nor
more than sixty days before the date of the meeting, except that (i)
if the number of authorized shares is to be increased, at least
thirty days' notice shall be given, or (ii) any other longer notice
period is required by the Colorado Business Corporation Act. The
secretary shall be required to give such notice only to shareholders
entitled to vote at the meeting except as otherwise required by the
Colorado Business Corporation Act.
Notice of a special meeting shall include a description of the
purpose or purposes of the meeting. Notice of an annual meeting need
not include a description of the purpose or purposes of the meeting
except the purpose or purposes shall be stated with respect to (i) an
amendment to the articles of incorporation of the corporation, (ii)
a merger or share exchange in which the corporation is a party and,
with respect to a share exchange, in which the corporation's shares
will be acquired, (iii) a sale, lease, exchange or other disposition,
other than in the usual and regular course of business, of all or
substantially all of the property of the corporation or of another
entity which this corporation controls, in each case with or without
the goodwill, (iv) a dissolution of the corporation, (v) restatement
of the articles of incorporation, or (vi) any other purpose for which
a statement of purpose is required by the Colorado Business
Corporation Act. Notice shall be given personally or by mail, private
carrier, telegraph, teletype, electronically transmitted facsimile or
other form of wire or wireless communication by or at the direction
of the president, the secretary, or the officer or persons calling
the meeting, to each shareholder of record entitled to vote at such
meeting. If mailed and if in a comprehensible form, such notice shall
be deemed to be given and effective when deposited in the United
States mail, properly addressed to the shareholder at his address as
it appears in the corporation's current record of shareholders, with
first class postage prepaid. If notice is given other than by mail,
and provided that such notice is in a comprehensible form, the notice
is given and effective on the date actually received by the
shareholder.
If requested by the person or persons lawfully calling such
meeting, the secretary shall give notice thereof at corporate
expense. No notice need be sent to any shareholder if three
successive notices mailed to the last known address of such
shareholder have been returned as undeliverable until such time as
another address for such shareholder is made known to the corporation
by such shareholder. In order to be entitled to receive notice of any
meeting, a shareholder shall advise the corporation in writing of any
change in such shareholder's mailing address as shown on the
corporation's books and records.
<PAGE> 40
When a meeting is adjourned to another date, time or place,
notice need not be given of the new date, time or place if the new
date, time or place of such meeting is announced before adjournment
at the meeting at which the adjournment is taken. At the adjourned
meeting the corporation may transact any business which may have been
transacted at the original meeting. If the adjournment is for more
than 120 days, or if a new record date is fixed for the adjourned
meeting, a new notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting as of the new
record date.
A shareholder may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such shareholder.
Such waiver shall be delivered to the corporation for filing with the
corporate records, but this delivery and filing shall not be
conditions to the effectiveness of the waiver. Further, by attending
a meeting either in person or by proxy, a shareholder waives
objection to lack of notice or defective notice of the meeting unless
the shareholder objects at the beginning of the meeting to the
holding of the meeting or the transaction of business at the meeting
because of lack of notice or defective notice. By attending the
meeting, the shareholder also waives any objection to consideration
at the meeting of a particular matter not within the purpose or
purposes described in the meeting notice unless the shareholder
objects to considering the matter when it is presented.
Section 5. Fixing of Record Date. For the purpose of determining
shareholders entitled to (i) notice of or vote at any meeting of
shareholders or any adjournment thereof, (ii) receive distributions
or share dividends, (iii) demand a special meeting, or (iv) make a
determination of shareholders for any other proper purpose, the board
of directors may fix a future date as the record date for any such
determination of shareholders, such date in any case to be not more
than seventy days, and, in case of a meeting of shareholders, not
less than ten days, prior to the date on which the particular action
requiring such determination of shareholders is to be taken. If no
record date is fixed by the directors, the record date shall be the
day before the notice of the meeting is given to shareholders, or the
date on which the resolution of the board of directors providing for
a distribution is adopted, as the case may be. When a determination
of shareholders entitled to vote at any meeting of shareholders is
made as provided in this section, such determination shall apply to
any adjournment thereof unless the board of directors fixes a new
record date, which it must do if the meeting is adjourned to a date
more than 120 days after the date fixed for the original meeting.
Unless otherwise specified when the record date is fixed, the time of
day for such determination shall be as of the corporation's close of
business on the record date.
Notwithstanding the above, the record date for determining the
shareholders entitled to take action without a meeting or entitled to
be given notice of action so taken shall be the date a writing upon
which the action is taken is first received by the corporation. The
record date for determining shareholders entitled to demand a special
meeting shall be the date of the earliest of h the meeting is called.
Section 6. Voting Lists. After a record date is fixed for a
shareholders' meeting, the secretary shall make, at the earlier of
ten days before such meeting or two business days after notice of the
meeting has been given, a complete list of the shareholders entitled
to be given notice of such meeting or any adjournment thereof. The
list shall be arranged by voting groups and within each voting group
<PAGE> 41
by class or series of shares, shall be in alphabetical order within
each class or series, and shall show the address of and the number of
shares of each class or series held by each shareholder. For the
period beginning the earlier of ten days prior to the meeting or two
business days after notice of the meeting is given and continuing
through the meeting and any adjournment thereof, this list shall be
kept on file at the principal office of the corporation, or at a
place (which shall be identified in the notice) in the city where the
meeting will be held. Such list shall be available for inspection on
written demand by any shareholder (including for the purpose of this
Section 6 any holder of voting trust certificates) or his agent or
attorney during regular business hours and during the period
available for inspection. The original stock transfer books shall be
prima facie evidence as to who are the shareholders entitled to
examine such list or transfer books or to vote at any meeting of
shareholders.
Any shareholder, his agent or attorney may copy the list during
regular business hours and during the period it is available for
inspection, provided (i) the shareholder has been a shareholder for
at least three months immediately preceding the demand or holds at
least five percent of all outstanding shares of any class of shares
as of the date of the demand, (ii) the demand is made in good faith
and for a purpose reasonably related to the demanding shareholders'
interest as a shareholder, (iii) the shareholder describes with
reasonable particularity the purpose and the records the shareholder
desires to described purpose, and (v) the shareholder pays a
reasonable charge covering the costs of labor and material for such
copies, not to exceed the estimated cost of production and
reproduction.
Section 7. Recognition Procedure for Beneficial Owners. The
Board of Director may adopt by resolution a procedure whereby a
shareholder of the corporation may certify in writing to the
corporation that all or a portion of the shares registered in the
name of such shareholder are held for the account of a specified
person or persons. The resolution may set forth (i) the types of
nominees to which it applies, (ii) the rights or privileges that the
corporation will recognize in a beneficial owner, which may include
rights and privileges other than voting, (iii) the form of
certification and the information to be contained therein, (iv) if
the certification is with respect to a record date, the time within
which the certification must be received by the corporation, (v) the
period for which the nominee's use of the procedure is effective, and
(vi) such other provisions with respect to the procedure as the board
deems necessary or desirable. Upon receipt by the by the corporation
of a certificate complying with the procedure established by the
board of directors, the persons specified in the certification shall
be deemed, for the purpose or purposes set forth in the
certification, to be the registered holders of the number of shares
specified in place of the shareholder making the certification.
Section 8. Quorum and Manner of Acting. A majority of the votes
entitled to be cast on a matter by a voting group represented in
person or by proxy, shall constitute a quorum of that voting group
for action on the matter. If less than a majority of such votes are
represented at a meeting, a majority of the votes so represented may
adjourn the meeting from time to time without further notice, for a
period not to exceed 120 days for any one adjournment. If a quorum is
present at such adjourned meeting, any business may be transacted
which might have been transacted at the meeting as originally
noticed. The shareholders present at a duly organized meeting may
<PAGE> 42
continue to transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, unless
the meeting is adjourned and a new record date is set for the
adjourned meeting.
If a quorum exists, action on a matter other than the election
of directors by a voting group is approved if the votes cast within
the voting group favoring the action exceed the votes cast within the
voting group opposing action, unless the vote of a greater number or
voting by classes is required by law or the articles of
incorporation.
Section 9. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his duly authorized
attorney-in-fact. A shareholder may also appoint a proxy by
transmitting or authorizing the transmission of a telegram, teletype,
or other electronic transmission providing a written statement of the
appointment to the proxy, a proxy solicitor, proxy support service
organization, or other person duly authorized by the proxy to receive
appointments as agent for the proxy, or to the corporation. The
transmitted appointment shall set forth or be transmitted with
written evidence from which it can be determined that the shareholder
transmitted or authorized the transmission of the appointment. The
proxy appointment form or similar writing shall be filed with the
secretary of the corporation before or, at the time of the meeting.
The appointment of a proxy is effective when received by the
corporation and is valid for eleven months unless a different period
is expressly provided in the appointment form or similar writing.
Any complete copy, including an electronically transmitted
facsimile, of an appointment of a proxy may be substituted for or
used in lieu of the original appointment for any purpose for which
the original appointment could be used.
Revocation of a proxy does not affect the right of the
corporation to accept the proxy's authority unless (i) the
corporation had notice that the appointment was coupled with an
interest and notice that such interest is extinguished is received by
the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment, or
(ii) other notice of the revocation of the appointment is received by
the secretary or other officer or agent authorized to tabulate votes
before the proxy exercises his authority under the appointment. Other
notice of revocation may, in the discretion of the corporation, be
deemed to include the appearance at a shareholders' meeting of the
shareholder who granted the proxy and his voting in person on any
matter subject to a vote at such meeting.
The death or incapacity of the shareholder appointing a proxy
does not affect the right of the corporation to accept the proxy's
authority unless notice of the death or incapacity is received by the
secretary or other officer or agent authorized to tabulate votes
before the proxy exercises
The corporation shall not be required to recognize an
appointment made irrevocable if it has received a writing revoking
the appointment signed by the shareholder (including a shareholder
who is a successor to the shareholder who granted the proxy) either
personally or by his attorney-in-fact, notwithstanding that the
revocation may be a breach of an obligation of the shareholder to
another person not to revoke the appointment.
<PAGE> 43
Subject to Section 11 and any express limitation on the proxy's
authority appearing on the appointment form, the corporation is
entitled to accept the proxy's vote or other action as that of the
shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote, except in the
election of directors, and each fractional share shall be entitled to
a corresponding fractional vote on each matter submitted to a vote at
a meeting of shareholders, except to the extent that the voting
rights of the shares of any class or classes are limited or denied by
the articles of incorporation permitted by the Colorado Business
Corporation Act. Cumulative voting shall not be permitted in the
election of directors or for any other purpose. Each record bolder of
stock shall be entitled to vote in the election of directors and
shall have as many votes for each of the shares owned by him as there
are directors to be elected and for whose election he has the right
to vote.
At each election of directors, that number of candidates
equaling the number of directors to be elected, having the highest
number of votes cast in favor of their election, shall be elected
to the board of directors.
Except as otherwise ordered by a court of competent jurisdiction
upon a finding that the purpose of this Section would not be in
violated in the circumstances presented to the court, the shares of
the corporation are not entitled to be voted if they are owned,
directly or indirectly, by a second corporation, domestic or foreign,
and the first corporation owns, directly or indirectly, a majority of
the shares entitled to vote for directors of the second corporation
except to the extent the second corporation holds the shares in a
fiduciary capacity.
Redeemable shares are not entitled to be voted after notice of
redemption is mailed to the holders and a sum sufficient to redeem
the shares has been deposited with a bank, trust company or other
financial institution under an irrevocable obligation to pay the
holders the redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes. If the name
signed on a vote, consent, waiver, proxy appointment, or proxy
appointment revocation corresponds to the name of a shareholder, the
corporation, if acting in good faith, is entitled to accept the vote,
consent, waiver, proxy appointment or proxy appointment revocation
and give it effect as the act of the shareholder. If the name signed
on a vote, consent, waiver, proxy appointment or proxy appointment
revocation does not correspond to the name of a shareholder, the
corporation, if acting in good faith, is nevertheless entitled to
accept the vote, consent, waiver, proxy appointment or proxy
appointment revocation and to give it effect as the act of the
shareholder if.
(1) the shareholder is an entity and the name signed purports
to be that of an officer or agent of the entity;
(2) the name signed purports to be that of an administrator,
executor, guardian or conservator representing the
shareholder and, if the corporation requests, evidence of
fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
<PAGE> 44
(3) the name signed purports to be that of a receiver or
trustee in bankruptcy of the shareholder and, if the
corporation requests, evidence of this status acceptable to
the corporation has been presented with respect to the
vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(4) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the shareholder
and, if the corporation requests, evidence acceptable to
the corporation of the signatory's authority to sign for
the shareholder has been presented with respect to the
vote, consent, waiver, proxy appointment or proxy
appointment revocation;
(5) two or more persons are the shareholder as co-tenants or
fiduciaries and the name signed purports to be the name of
at least one of the co-tenants or fiduciaries, and the
person signing appears to be acting on behalf of all the
co-tenants or fiduciaries; or
(6) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is otherwise
proper under rules established by the corporation that are
not inconsistent with this Section 11.
The corporation is entitled to reject a vote, consent, waiver,
proxy appointment or proxy appointment revocation if the secretary or
other officer or agent authorized to tabulate votes, acting in good
faith, has reasonable basis for doubt about the validity of the
signature on it or about the signatory's authority to sign for the
shareholder.
Neither the corporation nor its officers nor any agent who
accepts or rejects a vote, Consent, waiver, proxy appointment or
proxy appointment revocation in good faith and in accordance with the
standards of this Section is liable in damages for the consequences
of the acceptance or rejection.
Section 12. Informal Action by Shareholders. Any action required
or permitted to be taken at a meeting of the shareholders may be
taken without a meeting if a written consent (or counterparts
thereof) that sets forth the action so taken is signed by all of the
shareholders entitled to vote with respect to the subject matter
thereof and received by the corporation. Such consent shall have the
same force and effect as a unanimous vote of the shareholders and may
be stated as such in any document. Action taken under this Section 12
is effective as of the date the last writing necessary to effect the
action is received by the corporation, unless all of the writings
specify a different effective date, in which case such specified date
shall be the effective date for such action. If any shareholder
revokes his consent as provided for herein prior to what would
otherwise be the effective date, the action proposed in the consent
shall be invalid. The record date for determining shareholders
entitled to take action without a meeting is the date the corporation
first receives a writing upon which the action is taken.
Any shareholder who has signed a writing describing and
consenting to action taken pursuant to this Section 12 may revoke
such consent by a writing signed by the shareholder describing the
action and stating that the shareholder's prior consent thereto is
revoked, if such writing is received by the corporation before the
effectiveness of the action.
<PAGE> 45
Section 13. Meetings by Telecommunication. Any or all of the
shareholders may participate in an annual or special shareholders'
meeting by, or the meeting may be conducted through the use of, any
means of communication by which all persons participating in the
meeting may hear each other during the meeting. A shareholder
participating in a meeting by this means is deemed to be present in
person at the meeting.
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and affairs
of the corporation shall be managed under the direction of, its board
of directors, except as otherwise provided in the Colorado Business
Corporation Act or the articles of incorporation.
Section 2. Number, Qualifications and Tenure. The number of
directors of the corporation shall be fixed from time to time by the
board of directors, within a range of no less than one or more than
nine, but no decrease in the number of directors shall have the
effect of shortening the term of any incumbent director. A director
shall be a natural person who is eighteen years of age or older. A
director need not be a resident of Colorado or a shareholder of the
corporation.
Directors shall be elected at each annual meeting of
shareholders. Each director shall hold office until the next annual
meeting of shareholders following his election and thereafter until
his successor shaft have been elected and qualified. Directors shall
be removed in the manner provided by the Colorado Business
Corporation Act. Any director may be removed by the shareholders of
the voting group that elected the director, with or without cause, at
a meeting called for that purpose. The notice of the meeting shall
state that the purpose or one of the purposes of the meeting is
removal of the director. A director may be removed only if the number
of votes cast in favor of removal exceeds the number of votes cast
against removal.
Section 3. Vacancies. Any director may resign at any time by
giving written notice to the secretary. Such resignation shall take
effect at the time the notice is received by the secretary unless the
notice specifies a later effective date. Unless otherwise specified
in the notice of resignation, the corporation's acceptance of such
resignation shall not be necessary to make it effective. Any vacancy
on the board of directors may be filled by the affirmative vote of a
majority of the shareholders at a special meeting called for that
purpose or by the board of directors. If the directors remaining in
office constitute fewer than a quorum of the board, the directors may
fill the vacancy by the affirmative vote of a majority of all the
directors remain in office. If elected by the directors, the director
shall hold office until the next annual shareholders' meeting at
which directors are elected. If elected by the shareholders, the
director shall hold office for the unexpired term of his predecessor
in office; except that, if the director's predecessor was elected by
the directors to fill a vacancy, the director elected by the
shareholders shall hold office for the unexpired term of the last
predecessor elected by the shareholders.
<PAGE> 46
Section 4. Regular Meetings. A regular meeting of the board of
directors shall be held without notice immediately after and at the
same place as the annual meeting of shareholders. The board of
directors may provide by resolution the time and place, either within
or outside Colorado, for the holding of additional regular meetings
without other notice.
Section 5. Special Meetings. Special meetings of the board of
directors may be called by or at the request of the president or any
one (1) of the directors. The person or persons authorized to call
special meetings of the board of directors may fix any place, either
within or outside Colorado, as the place for holding any special
meeting of the board of directors called by them, provided that no
meeting shall be called outside the State of Colorado unless a
majority of the board of directors has so authorized.
Section 6. Notice. Notice of the date, time and place of any
special meeting shall be given to each director at least two days
prior to the meeting by written notice either personally delivered or
mailed to each director at his business address, or by notice
transmitted by private courier, telegraph, telex, electronically
transmitted facsimile or other form of wire or wireless
communication. If mailed, such notice shall be deemed to be given and
to be effective on the earlier of (i) five days after such notice is
deposited in the United States mail, properly addressed, with first
class postage prepaid, or (ii) the date shown on the return receipt,
if mailed by registered or certified mail return receipt requested,
provided that the return receipt is signed by the director to whom
the notice is addressed. If notice is given by telex, electronically
transmitted facsimile or other similar form of wire or wireless
communication, such notice shall be deemed to be given and to be
effective when sent, and with respect to a telegram, such notice
shall be deemed to be given and to be effective when the telegram is
delivered to the telegraph company. If a director has designated in
writing one or more reasonable addresses or facsimile numbers for
delivery of notice to him, notice sent by mail, telegraph, telex,
electronically transmitted facsimile or other form of wire or
wireless communication shall not be deemed to have been given or to
be effective unless sent to such addresses or facsimile numbers, as
the case may be.
A director may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such director.
Such waiver shall be delivered to the secretary for filing with the
corporate records, but such delivery and filing shall not be
conditions to the effectiveness of the waiver. Further, a director's
attendance at or participation in a meeting waives any required
notice to him of the meeting unless at the beginning of the meeting,
or promptly upon his later arrival, the director objects to holding
the meeting or transacting business at the meeting because of lack of
notice or defective notice and does not thereafter vote for or assent
to action taken at the meeting. Neither the business to be transacted
at, nor the purpose of, any regular or special meeting of the board
of directors need be specified in the notice or waiver of notice of
such meeting.
Section 7. Quorum. A majority of the number of directors fixed
by the board of directors pursuant to Article III, Section 2 or, if
no number is fixed, a majority of the number in office immediately
before the meeting begins, shall constitute a quorum for the
transaction of business at any meeting of the board of directors.
<PAGE> 47
Section 8. Manner of Acting. The act of the majority of the
directors present at a meeting at which a quorum is present shall be
the act of the board of directors.
Section 9. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the following.
his expenses, if any, of attendance at meetings, a fixed sum for
attendance at each meeting, a stated salary as director, or such
other compensation as the corporation and the director may reasonably
agree upon. No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation
therefor.
Section 10. Presumption of Assent. A director of the corporation
who is present at a meeting of the board of directors or committee of
the board at which action on any corporate matter is taken shall be
presumed to have assented to all action taken at the meeting unless
(i) the director objects at the beginning of the meeting, or promptly
upon his arrival, to the holding of the meeting or the transaction of
business at the meeting and does not thereafter vote for or assent to
any action taken at the meeting, (ii) the director contemporaneously
requests that his dissent or abstention as to any specific action
taken be entered in the minutes of the meeting, or (iii) the director
causes written notice of his dissent or abstention as to any specific
action to be received by the presiding officer of the meeting before
its adjournment or by the secretary promptly after the adjournment of
the meeting. A director may dissent to a specific action at a
meeting, while assenting to others. The right to dissent to a
specific action taken at a meeting of the board of directors or a
committee of the board shall not be available to a director who voted
in favor of such action.
Section 11. Committees. By resolution adopted by a majority of
all the directors in office when the action is taken, the board of
directors may designate from among its members an executive committee
and one or more other committees, and appoint one or more members of
the board of directors to serve on them. To the extent provided in
the resolution, each committee shall have all the authority of the
board of directors, except that no such committee shall have the
authority to (i) authorize distributions, (ii) approve or propose to
shareholders actions or proposals required by the Colorado Business
Corporation Act to be approved by shareholders, (iii) fill vacancies
on the board of directors or any committee thereof, (iv) amend
articles of incorporation, (v) adopt, amend or repeal the bylaws,
(vi) approve a plan of merger not requiring shareholder approval,
(vii) authorize or approve the reacquisition. of shares unless
pursuant to a formula or method prescribed by the board of directors,
or (viii) authorize or approve the issuance or sale of shares, or
contract for the sale of shares or determine the designations and
relative rights, preferences and limitations of a class or series of
shares, except that the board of directors may authorize a committee
or officer to do so within limits specifically prescribed by the
board of directors. The committee shall then have full power within
the limits set by the board of directors to adopt any final
resolution setting forth all preferences, limitations and relative
rights of such class or series and to authorize an amendment of the
articles of incorporation stating the preferences, limitations and
relative rights of a class or series for filing with the Secretary of
State under the Colorado Business Corporation Act.
<PAGE> 48
Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern
meetings, notice, waiver of notice, quorum, voting requirements and
action without a meeting of the board of directors, shall apply to
committees and their members appointed under this Section 11.
Neither the designation of any such committee, the delegation of
authority to such committee, nor any action by such committee
pursuant to its authority shall alone constitute compliance by any
member of the board of directors or a member of the committee in
question with his responsibility to conform to the standard of care
set forth in Article III Section 14 of these bylaws.
Section 12. Informal Action by Directors. Any action required or
permitted to be taken at a meeting of the directors or any committee
designated by the board of directors may be taken without a meeting
if a written consent (or counterparts thereof) that sets forth the
action so taken is signed by all. of the directors entitled to vote
with respect to the action taken. Such consent shall have the same
force and effect as a unanimous vote of the directors or committee
members and may be stated as such in any document. Unless the consent
specifies a different effective time or date, action taken under this
Section 12 is effective at the time or date the last director signs
a writing describing the action taken, unless, before such time, any
director has revoked his consent by a writing signed by the director
and received by the president or the secretary of the corporation.
Section 13. Telephonic Meetings. The board of directors may
permit any director (or any member of a committee designated by the
board) to participate in a regular or special meeting of the board of
directors or a committee thereof through the use of any means of
communication by which all directors participating in the meeting can
hear each other during the meeting. A director participating in a
meeting in this manner is deemed to be present in person at the
meeting.
Section 14. Standard of Care. A director shall perform his
duties as a director, including without limitation. his duties as a
member of any committee of the board, in good faith, in a mariner he
reasonably believes to be in the best interests of the corporation,
and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances. in performing his duties,
a director shall be entitled to rely on information, opinions,
reports or statements, including financial statements and other
financial data, in each case prepared or presented by the persons
herein designated. However, he shall not be considered to be acting
in good faith if he has knowledge concerning the matter in question
that would cause such reliance to be unwarranted. A director shall
not be liable to the corporation or its shareholders for any action
he takes or omits to take as a director if, in connection with such
action or omission, he performs his duties in compliance with this
Section 14.
The designated persons on whom a director is entitled to rely
are (i) one or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the
matters presented, (ii) legal counsel, public accountant, or other
person as to matters which the director reasonably believes to be
within such person's professional or expert competence, or (iii) a
committee of the board of directors on which the director does not
serve if the director reasonably believes the committee merits
confidence.
<PAGE> 49
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation may be a
president, a secretary and a treasurer, and may also include one or
more vice presidents, each of which officer shall be appointed by the
board of directors and shall be a natural person eighteen years of
age or older. One person may hold more than one office. The board of
directors or an officer or officers so authorized by the board may
appoint such other officers, assistant officers, committees and
agents, including a chairman of the board, assistant secretaries and
assistant treasurers, as they may consider necessary, Except as
expressly prescribed by these bylaws, the board of directors or the
officer or officers authorized by the board shall from time to time
determine the procedure for the appointment of officers, their
authority and duties and their compensation, provided that the board
of directors may change the authority, duties and compensation of any
officer who is not appointed by the board.
Section 2. Appointment and Term of Office. The officers of the
corporation to be appointed by the board of directors shall be
appointed at each annual meeting of the board held after each annual
meeting of the shareholders. If the appointment of officers is not
made at such meeting or if an officer or officers are to be appointed
by another officer or officers of the corporation, such appointments
shall be made as determined by the board of directors or the
appointing person or persons. Each officer shall hold office until
the first of the following occurs: his successor shall have been duly
appointed and qualified, his death, his resignation, or his removal
in the manner provided in Section 3.
Section 3. Resignation and Removal. An officer may resign at any
time by giving written notice of resignation to the president,
secretary or other person who appoints such officer. The resignation
is effective when the notice is received by the corporation unless
the notice specifies a later effective date.
Any officer or agent may be removed at any time with or without
cause by the board of directors or an officer or officers authorized
by the board. Such removal does not affect the contract rights, if
any, of the corporation or of the person so removed. The appointment
of an officer or agent shall not in itself create contract rights.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board of directors, or by the officer
or officers authorized by the board, for the unexpired portion of the
officer's term. If an officer resigns and his resignation is made
effective at a later date, the board of directors, or officer or
officers authorized by the board, may permit the officer to remain in
office until the effective date and may fill the pending vacancy
before the effective date if the board of directors or officer or
officers authorized by the board provide that the successor shall not
take office until the effective date. In the alternative, the board
of directors, or officer or officers authorized by the board of
directors, may remove the officer at any time before the effective
date and may fill the resulting vacancy.
Section 5. President. The president or any other officer
appointed by the president to do so, shall preside at all meetings of
shareholders and all meetings of the board of directors unless the
board of directors has appointed a chairman, vice chairman, or other
officer of the board and has authorized such person to preside at
<PAGE> 50
meetings of the board of directors. Subject to the direction and
supervision of the board of directors, the president shall be the
chief executive officer of the corporation, and shall have general
and active control of its affairs and business and general
supervision of its officers, agents and employees. Unless otherwise
directed by the board of directors, the president shall attend in
person or by substitute appointed by him, or shall execute on behalf
of the corporation written instruments appointing a proxy or proxies
to represent the corporation, at all meetings of the stockholders of
any other corporation in which the corporation holds any stock. On
behalf of the corporation, the president may in person or by
substitute or by proxy execute written waivers of notice and consents
with respect to any such meetings. At all such meetings and
otherwise, the president, in person or by substitute or proxy, may
vote the stock held by the corporation, execute, written consents and
other instruments with respect to such stock, and exercise any and
all rights and powers incident to the ownership of said stock,
subject to the instructions, if any, of the board of directors. The
president shall have custody of the treasurer's bond, if any. The
president shall have such additional authority and duties as are
appropriate and customary for the office of president and chief
executive officer, except as the same may be expanded or limited by
the board of directors from time to time.
Section 6. Vice Presidents. The vice presidents shall assist the
president and shall perform such duties as may be assigned to them by
the president or by the board of directors. In the absence of the
president, the vice president, if any (or, if more than one, the vice
presidents in the order designated by the board of directors, or if
the board makes no such designation, then the vice president
designated by the president, or if neither the board nor the
president makes any such designation, the senior vice president as
determined by first election to that office), shall have the powers
and perform the duties of the president.
Section 7. Secretary The secretary shall (i) prepare and
maintain as permanent records the minutes of the proceedings of the
shareholders and the board of directors, a record of all actions
taken by the shareholders or board of directors without a meeting, a
record of all actions taken by a committee of the board of directors
in place of the board of directors on behalf of the corporation, and
a record of all waivers of notice of meetings of shareholders and of
the board of directors or any committee thereof, (ii) see that all
notices are duly given in accordance with the provisions of these
bylaws and as required by law, (iii) serve as custodian of the
corporate records and of the seal of the corporation and affix the
seal to all documents when authorized by the board of directors, (iv)
keep at the corporation's registered office or principal place of
business a record containing the names and addresses of all
shareholders in a form that permits preparation of a list of
shareholders arranged by voting group and by class or series of
shares within each voting group, that is alphabetical within each
class or series and that shows the address of, and the number of
shares of each class or series held by, each shareholder, unless such
a record shall be kept at the office of the corporation's transfer
agent or registrar, (v) maintain at the corporation's principal
office the originals or copies of the corporation's articles of
incorporation bylaws, minutes of all shareholders' meetings and
records of all action taken by shareholders without a meeting for the
past three years, all written communications within the past three
years to shareholders as a group or to the holders of any class or
series of shares as a group, a list of the names and business
<PAGE> 51
addresses of the current directors and officers, a copy of the
corporation's most recent corporate report filed with the Secretary
of State, and financial statements showing in reasonable detail the
corporation's assets and liabilities and results of operations for
the last three years, (vi) have general charge of the stock transfer
books of the corporation, unless the corporation has a transfer
agent, (vii) authenticate records of the corporation, and (viii) in
general, perform all duties incident to the office of secretary and
such other duties as from time to time may be assigned to him by the
president or by the board of directors. Assistant secretaries, if
any, shall have the same duties and powers, subject to supervision by
the secretary. The directors and/or shareholders may however
respectively designate a person other than the secretary or assistant
secretary to keep the minutes of their respective meetings.
Any books, records, or minutes of the corporation may be in
written form or in any form capable of being converted into written
form within a reasonable time.
Any books, records, or minutes of the corporation may be in written
form or in any form capable of being converted into written form
within a reasonable time.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and
other personal property of the corporation and shall deposit the
same in accordance with the instructions of the board of directors.
Subject to the limits imposed by the board of directors, he shall
receive and give receipts and acquittances for money paid in on
account of the corporation, and shall pay out of the corporation's
funds on hand all bills, payrolls and other just debts of the
corporation of whatever nature upon maturity. He shall perform all
other duties incident to the office of the treasurer and, upon
request of the board, shall make such reports to it as may be
required at any time. He shall, if required by the board, give the
corporation a bond in such sums and with such sureties as shall be
satisfactory to the board, conditioned upon the faithful
performance of his duties and for the restoration to the
corporation of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control
belonging to the corporation. He shall have such other powers and
perform such other duties as may from time to time be prescribed by
the board of directors or the president. The assistant treasurers,
if any, shall have the same powers and duties, subject to the
supervision of the treasurer.
The treasurer shall also be the principal accounting officer of
the corporation. He shall prescribe and maintain the methods and
systems of accounting to be followed, keep complete books and records
of account as required by the Colorado Business Corporation Act,
prepare and file all local, state and federal tax returns, prescribe
and maintain an adequate system of internal audit and prepare and
furnish to the president and the board of directors statements of
account showing the financial position of the corporation and the
results of its operations.
<PAGE> 52
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be
authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by
certificates shall have no effect on the rights and obligations of
shareholders. If the shares are represented by certificates, such
shares shall be represented by consecutively numbered certificates
signed, either manually or by facsimile, in the name of the
corporation by the president. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall
have ceased to be such officer before such certificate is issued,
such certificate may nonetheless be issued by the corporation with
the same effect as if he were such officer at the date of its issue.
All certificates shall be consecutively numbered, and the names of
the owners, the number of shares, and the date of issue shall be
entered on the books of the corporation. Each certificate
representing shares shall state upon its face:
(1) That the corporation is organized under the laws of
Colorado;
(2) The name of the person to whom issued;
(3) The number and class of the shares and the designation of
the series, if any, that the certificate represents;
(4) The par value, if any, of each share represented by the
certificate;
(5) Any restrictions imposed by the corporation upon the
transfer of the shares represented by the certificate
If shares are not represented by certificates, within a
reasonable time following the issue or transfer of such shares, the
corporation shall send the shareholder a complete written statement
of all of the information required to provided to holders of
uncertificated shares by the Colorado Business Corporation Act.
Section 2. Consideration Shares. Certificated or uncertificated
shares shall not be issued until the shares represented thereby are
fully paid. The board of directors may authorize the issuance of
shares for consideration consisting of any tangible or intangible
property or benefit to the corporation, including cash, promissory
notes, services performed or other securities of the corporation.
Future services shall not constitute payment or partial payment for
shares of the corporation. The promissory note of subscriber or an
affiliate of a subscriber shall not constitute payment or partial
payment for shares of the corporation unless the note is negotiable
and is secured by collateral, other than the shares being purchased,
baying a fair market value at least equal to the principal amount of
the note. For purposes of this Section 2, "promissory note" means a
negotiable instrument on which there is an obligation to pay
independent of collateral and does not include a non-recourse note.
Section 3. Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of
directors may direct the issuance of a new certificate in lieu
thereof upon such terms and condition I conditions in conformity with
law as the board may prescribe. The board of directors may in its
<PAGE> 53
discretion require an affidavit of lost certificate and/or a bond in
such form and amount and with such as it may determine before issuing
a new certificate.
Section 4. Transfer of Shares. Upon surrender to the corporation
or to a transfer agent of the corporation of a certificate of stock
duly endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, and receipt of such documentary
stamps as may be required by law and evidence of! compliance with all
applicable securities laws and other restrictions, the corporation
shall issue a new certificate to the person entitled thereto, and
cancel the old certificate. Every such transfer of stock shall be
entered on the stock books of the corporation which shall be kept at
its principal office or by the person and at the place designated by
the board of directors.
Except as otherwise expressly provided in Article H, Sections 7
and 11, and except for the assertion of dissenters' rights to the
extent provided in Article 113 of the Colorado Business Corporation
Act, the corporation shall be entitled to treat the registered holder
of any shares of the corporation as the owner thereof for all
purposes, and the corporation shall not be bound to recognize any
equitable or other claim to, or interest in, such shares or rights
deriving from such shares on the part of any person other than the
registered holder, including without limitation any purchaser,
assignee or transferee of such shares or rights deriving from such
shares, unless and until such other person becomes the registered
holder of such shares, whether or not the corporation shall have
either actual or constructive notice of the claimed interest of such
other person.
Section 5. Transfer Agent, Registrars and Paying Agents. The
board may at its discretion appoint one or more transfer agents,
registrars and agents for making payment upon any class of stock,
bond, debenture or other security of the corporation. Such agents and
registrars may be located either within or outside Colorado. They
shall have such rights and duties and shall be entitled to such
compensation as may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VI, a
"Proper Person" means any person (including the estate or personal
representative of a director) 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, and whether formal or informal, by reason of the fact
that he is or was a director, officer, employee, fiduciary or agent
of the corporation, or is or was serving at the request of the
corporation as a director, officer, partner, trustee, employee,
fiduciary or agent of any foreign or domestic profit or nonprofit
corporation or of any partnership, joint venture, trust, profit or
- -nonprofit unincorporated association, limited liability company, or
other enterprise or employee benefit plan. The corporation shall
indemnify any Proper Person against reasonably incurred expenses
(including attorneys' fees), judgments, penalties, fines (including
any excise tax assessed with respect to an employee benefit plan) and
amounts paid in settlement reasonably incurred by him in connection
with such action, suit or proceeding if it is determined by the
groups set forth in Section 4 of this Article that he conducted
himself in good faith and that he reasonably believed (i) in the case
<PAGE> 54
of conduct in his official capacity with the corporation, that his
conduct was in the corporation's best interests, or (ii) in all other
cases (except criminal cases), that his conduct was at least not
opposed to the corporation's best interests, or (iii) in the case of
any criminal proceeding, that he had no reasonable cause to believe
his conduct was unlawful. Official capacity means, when used with
respect to a director, the office of director and, when used with
respect to any other Proper Person, the office in a corporation held
by the officer or the employment, fiduciary or agency relationship
undertaken by the employee, fiduciary, or agent on behalf of the
corporation. Official capacity does not include service for any other
domestic or foreign corporation or other person or employee benefit
plan.
A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests
of the participants in or beneficiaries of the plan is conduct that
satisfies the requirement in (ii) of this Section 1 - A director's
conduct with respect to an employee benefit plan for a purpose that
the director did not reasonably believe to be in the interests of the
participants in or beneficiaries of the plan shall be deemed not to
satisfy the requirement of this section that he conduct himself in
good faith.
No indemnification shall be made under this Article VI to a
Proper Person with respect to any claim, issue or matter in
connection with a proceeding by or in the right of a corporation in
which the Proper Person was adjudged liable to the corporation or in
connection with any proceeding charging that the Proper Person
derived an improper personal benefit, whether or not involving action
in an official capacity, in which he was adjudged liable on the basis
that he derived an improper personal benefit, Further,
indemnification under this section in connection with a proceeding
brought by or in the right of the corporation shall be limited to
reasonable expenses, including attorneys' fees, incurred in
connection with the proceeding .
Section 2. Right to Indemnification. The corporation shall
indemnify any Proper Person who was wholly successful, on the merits
or otherwise, in defense of any action, suit, or proceeding as to
which he was entitled to indemnification under Section I of this
Article VI against expenses (including attorneys' fees) reasonably
incurred by him in connection with the proceeding without the
necessity of any action by the corporation other than the
determination in good faith that the defense has been wholly
successful.
Section 3. Effect of Termination of Action. The termination of
any action, suit or proceeding by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent shall
not of itself create a presumption that the person seeking
indemnification did not meet the standards of conduct described in
Section I of this Article VI. Entry of a judgment by consent as part
of a settlement shall not be deemed an adjudication of liability, as
described in Section 2 of this Article VI.
Section 4. Groups Authorized to Make Indemnification
Determination. Except where there is a right to indemnification as
set forth in Sections I or 2 of this Article or where indemnification
is ordered by a court in Section 5, any indemnification shall be made
by the corporation only as determined in the specific case by a
proper group that indemnification of the Proper Person is permissible
<PAGE> 55
under the circumstances because he has met the applicable standards
of conduct set forth in Section 1 of this Article. This determination
shall be made by the board of directors by a majority vote of those
present at a meeting at which a quorum is present, which quorum shall
consist of directors not parties to the proceeding ("Quorum"). If a
Quorum cannot be obtained, the determination shall be made by a
majority vote of a committee of the board of directors designated by
the board, which committee shall consist of two or more directors not
parties to the proceeding, except that directors who are parties to
the proceeding may participate in the designation of directors for
the committee. If a Quorum of the board of directors cannot be
obtained and the committee cannot be established, or even if a Quorum
is obtained or the committee is designated and a majority of the
directors constituting such Quorum or committee so directs, the
determination shall be made by (i) independent legal counsel selected
by a vote of the board of directors or the committee in the manner
specified in this Section 4 or, if a Quorum of the full board
directors cannot be obtained and a committee cannot be established,
by independent legal of directors selected by a majority vote of the
full board (including directors who are parties to the action) or
(ii) a vote of the shareholders.
Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that indemnification
or advance of expenses is permissible except that, if the
determination that indemnification or advance of expenses is
permissible is made by independent legal counsel, authorization of
indemnification and advance of expenses shall be made by the body
that selected such counsel.
Section 5. Court-Ordered Indemnification. Any Proper Person may
apply for indemnification to the court conducting the proceeding or
to another court of competent jurisdiction for mandatory
indemnification under Section 2 of this Article, including
indemnification for reasonable expenses incurred to obtain
court-ordered indemnification. If a court determines that the Proper
Person is entitled to indemnification under Section 2 of this
Article, the court shall all order indemnification, including the
Proper Person's reasonable expenses incurred to obtain court-
ordered indemnification. If the court determines that such Proper
Person is fairly and reasonably entitled to indemnification in view
of all the relevant circumstances, whether or not he met the
standards of conduct set forth in Section I of this Article or was
adjudged liable in the proceeding, the court may order such
indemnification as the court deems proper except that if the Proper
Person has been adjudged liable, indemnification shall be limited to
reasonable expenses incurred in connection with the proceeding and
reasonable expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses (including
attorneys' fees) incurred in defending an action, action, suit or
proceeding as described in Section 1 may be paid by the corporation
to any Proper Person in advance of the final disposition of such
action, suit or proceeding upon receipt of (i) a written affirmation
of such Proper Person's good faith belief that he has met the
standards of conduct prescribed by Section 1 of this Article VI, (ii)
a written undertaking, executed personally or on the Proper Person's
behalf, to repay such advances if it is ultimately determined that he
did not meet the prescribed standards of conduct (the undertaking
shall be an unlimited I general obligation of the Proper Person but
need not be secured and may be accepted without reference to
financial ability to make repayment), and (iii) a determination is
<PAGE> 56
made by the proper group (as described in Section 4 of this Article
VI) that the facts as then known to the group would not preclude
indemnification, Determination and authorization of payments shall be
We in the same manner specified in Section 4 of this Article VI.
Section 7. Additional Indemnification to Certain Persons Other
Than Directors. In addition to the indemnification provided to
officers, employees, fiduciaries or agents because of their status as
Proper Persons under this Article, the corporation may also indemnify
and advance expenses to them if they are not directors Of the
corporation to a greater extent than is provided in these bylaws, if
not inconsistent with public policy, and if provided for by general
or specific action of its board of directors or shareholders or by
contract.
Section 8. Witness Expenses. The sections of this Article VI do
not limit the corporation's authority to pay or reimburse expenses
incurred by a director in connection with an appearance as a witness
in a proceeding at a time when he has not been made or named as a
defendant or respondent in the proceeding.
Section 9. Report to Shareholders. Any indemnification of or
advance of expenses to a director in accordance with this Article VI,
if arising out of a proceeding by or on behalf of the corporation,
shall be reported in writing to the shareholders with or before the
notice of the next shareholders' meeting. If the next shareholder
action is taken without a meeting at the instigation of the board of
directors, such notice shall be given to the shareholders at or
before the time the first shareholder signs a writing consenting to
such action.
ARTICLE VII
Provision of Insurance
Section 1. Provision of Insurance By action of the board of
directors, notwithstanding any interest of the directors in the
action, the corporation may purchase and maintain insurance, in such
scope and amounts as the board of directors deems appropriate, on
behalf of any person who is or was a director, officer, employee,
fiduciary or agent of the corporation, or who, while a director,
officer, employee, fiduciary or agent of the corporation, is or was
serving at the request of the corporation as a director, officer,
partner, trustee, employee, fiduciary or agent of any other foreign
or domestic profit or nonprofit corporation or of any partnership,
joint venture, trust, profit or nonprofit unincorporated association,
limited liability company, other enterprise or employee benefit plan,
against any liability asserted against, or incurred by, him in that
capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of Article VI or applicable law. Any
such insurance may be procured from any insurance company designated
by the board of directors of the corporation, whether such insurance
company is formed under the laws of Colorado or any other
jurisdiction of the United States or elsewhere, including any
insurance company in which the corporation has an equity interest or
any other interest, through stock ownership or otherwise.
<PAGE> 57
ARTICLE VIII
Miscellaneous
Section 1. Seal. The board of directors may adopt a corporate
seal, which shall contain the name of the corporation and the words,
"Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation shall
be as established by the board of directors.
Section 3. Amendments. The board of directors shall have power,
to the maximum extent permitted by the Colorado Business Corporation
Act, to make, amend and repeal the bylaws of the corporation a any
regular or special meeting of the board unless the shareholders, in
making, amending or repealing a particular bylaw, expressly provide
that the directors may not amend or repeal such bylaw. The
shareholders also shall have the power to make, amend or repeal the
bylaws of the corporation at any annual meeting or at any special
meeting called for that purpose.
Section 4. Receipt of Notices by the Corporation. Notices,
shareholder writings consenting to action, and other documents or
writings shall be deemed to have been received by the corporation w
they are actually received: (1) at the registered office of the
corporation in Colorado; (2) at principal office of the corporation
(as that office is designated in the most recent document filed by
the corporation with the secretary of state for Colorado designating
a principal office) addressed to the attention of the secretary of
the corporation; (3) by the secretary of the corporation wherever the
secretary may be found; or (4) by any other person authorized from
time to time by the board of directors or the president to receive
such writings, wherever such person is found.
Section 5. Gender. The masculine gender is used in these bylaws
as a matter of convenience only and shall be interpreted to include
the feminine and neuter genders as the circumstances indicate.
Section 6. Conflicts. In the event of any irreconcilable
conflict between these bylaws and either the corpora ion's articles
of incorporation or applicable law, the latter shall control.
Section 7. Definitions. Except as otherwise specifically
provided in these bylaws, all terms used in these bylaws shall have
the same definition as in the Colorado Business Corporation Act.
<PAGE> 58
EXHIBIT 3.1
NUMBER SHARES
ZEDIK ENTERPRISES, INC.
Incorporated under the laws of the State of Colorado
Authorized 25,000,000 Common Shares, no par value
This Certifies that
is the owner of
Fully Paid and non-assessable Shares of Common Stock, no par value
of
Zedik Enterprises, Inc.
transferable only on the books of this Corporation in person or by
attorney upon surrender of this Certificate properly endorsed.
This Certificate is not valid unless countersigned by the transfer
agent and registrar.
IN WITNESS WHEREOF, the said Corporation has caused this
Certificate to be endorsed by the facsimile signatures of its duly
authorized officers and to be sealed with the facsimile seal of the
Corporation.
Dated
____________________ Seal _________________________
Secretary President
<PAGE> 59
ZEDIK ENTERPRISES, INC.
Corporate Stock Transfer, Inc.
Transfer Fee: ______ per certificate
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as
tenants in common
UNIF GIFT MIN ACT - __________(Cust.) Custodian for ________(Minor)
Under Uniform Gifts to Minors
Act of ____________________ (State)
Additional abbreviations may also be used though not in the above
list.
For the value received _____________ hereby sell, assign and
transfer until
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE
[ ]
Please print or type name and address of assignee
________________________________________
________________________________________
________________________________________ Shares
of the Common Stock represented by the within Certificate and do
hereby irrevocably constitue and appoint
_______________________________________
_______________________________________
Attorney to transfer the said stock on the books of the within
named Corporation, with full power of substitution in the premises.
Dated _____________ 19____
SIGNATURE GUARANTEED: x__________________________________
x__________________________________
<PAGE> 60
THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THIS CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. THE
SIGNATURE(E) MUST BE BUARANTEE4D BY AN ELIGIBLE GUARANTOR
INSTITUTION (Banks, Stockbroker, Savings and Loan Association and
Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE
MEDALLION PROGRAM PURSUANT TO RULE 17Ad-15 UNDER THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at December 31, 1998 Audited
and the Consolidated Statement of Income for the twelve months ended
December 31, 1998 Audited and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 34
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 34
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 34
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 2,602
<OTHER-SE> (2,568)
<TOTAL-LIABILITY-AND-EQUITY> 34
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 47
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (47)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (47)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
