U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB-A1
Registration Statement on Form 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES OF SMALL
BUSINESS ISSUERS
MICRO-HYDRO POWER, INC.
(Name of Small Business Issuer as specified in its charter)
UTAH 87-0369035
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) ID. No.)
N/A
(SEC File No.)
5525 South 900 East, Suite 110
Salt Lake City, Utah 84117
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(Address of Principal Executive Office)
Issuer's Telephone Number, including Area Code: (801) 262-8844
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act:
$0.00001 par value common stock
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Title of Class
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DOCUMENTS INCORPORATED BY REFERENCE: See the Exhibit Index herein.
PART I
Item 1. Description of Business.
Business Development.
Micro-Hydro Power, Inc. (the "Company") was organized under the laws of the
State of Utah on September 23, 1980, under the name "Surety Gold, Inc." The
Company was incorporated for the primary purpose of investing in all phases of
the natural resource mining industry.
The Company was initially authorized to issue a total of 30,000,000 shares
of common stock having a par value of ($0.00001) per share, with fully-paid
stock not to be liable for further call or assessment. Copies of the Company's
initial Articles of Incorporation and current Bylaws are attached as exhibits
and are incorporated herein by this reference. See the Exhibit Index, Part III.
At the Company's inception, the Board of Directors authorized the issuance
of 4,559,022 "unregistered" and "restricted" shares of its common stock to
directors, executive officers and persons who may be deemed to have been
promoters or founders of the Company for the total consideration of $21,578.68.
On November 10, 1980, the Company filed with the Secretary of State of the
State of Utah an Article of Amendment to the Articles of Incorporation which
changed the name of the Company to Micro-Hydro Power, Inc. The date of the
adoption of the amendment by the shareholders was October 13, 1980; at the time,
there were 4,559,022 shares of stock outstanding in the company, with no classes
or series, all of such stock being denominated as common voting stock. All of
said shares were voted in favor of the amendment, being 4,559,022 shares voting
in the affirmative. The Amendment did not provide for an exchange,
reclassification or cancellation of issued shares or a change in the amount of
stated capital. A copy of the Article of Amendment to the Articles of
Incorporation is attached as an exhibit and are incorporated herein by this
reference. See the Exhibit Index, Part III.
Beginning December 8, 1980, and pursuant to an exemption provided in
Section 3(a)(11) of the Securities Act of 1933, as amended (the "1933 Act"), and
Section 61-1-10 of the Utah Uniform Securities Act, the Company publicly offered
and sold an aggregate total of 10,000,000 shares of its common stock to public
investors who were residents of the State of Utah, at a price of one cent
($0.01) per share. The offering was completed on December 8, 1981, with the
Company receiving aggregate gross proceeds of $100,000, before payment of legal,
accounting and printing expenses. A copy of the Offering Circular that the
Company used in connection with this offering is attached as an exhibit to this
Registration Statement and is incorporated herein by this reference. See the
Exhibit Index, Part III.
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Following the completion of its public offering, the Company entered into
two phases of business activity: the research, development, sale, manufacture,
distribution, maintenance, and operation of micro-hydro power units which
consist of water-powered electrical generating machines, and the engagement in
all aspects of the natural resource mining industry. These operations were
unsuccessful and the Company ceased business operations and was involuntarily
dissolved in the State of Utah in November of 1988. On July 18, 1995, the Third
Judicial District Court in and for Salt Lake County, State of Utah, ordered that
the involuntary dissolution of Micro-Hydro Power, Inc., a Utah corporation, be
set aside and that the Department of Commerce, Division of Corporations and
Commercial Code of the State of Utah reinstate said company in the State of
Utah, effective as of November 1, 1988. The Company has not been involved in any
business operations since its reinstatement except for the filing of documents
with the State of Utah in order to keep the Company in good standing.
On May 22, 1996, acting without a meeting pursuant to Section 16-10a-821 of
the Utah Revised Business Corporation Act, the Board of Directors of the Company
unanimously resolved to adopt new Bylaws. In addition to providing the Company
with updated Bylaws, the new Bylaws exempted the Company from the provisions of
the Utah Control Shares Acquisitions Act (Section 61-6-1 et seq., Utah Code
Annotated) (the "Acquisitions Act"). The Board members approving the adoption of
new Bylaws were Jeff Jenson, Thomas J. Howells and Kathleen L. Morrison. A copy
of the Bylaws of the Company is attached as an exhibit to this Registration
Statement and is incorporated herein by this reference. See the Exhibit Index,
Part III.
The Acquisitions Act, which applies only to certain types of publicly-held
corporations, provides that "control shares" acquired under certain
circumstances shall have the same voting rights as they had before the
acquisition only to the extent that the stockholders of the corporation have
approved such rights. The Acquisitions Act also gives dissenter's rights to the
stockholders in the event that full voting rights are accorded to shares
acquired in a "control share acquisition" and the acquiring person has acquired
"control shares" with at least a majority of all voting power. Section 61-6-6
permits a corporation's articles of incorporation or bylaws to provide for an
exemption from the Acquisitions Act. The net effect of the Company's exemption
from the Acquisitions Act is to remove the need for stockholder approval of
acquisitions of controlling interests in the Company. Upon the effectiveness of
this Registration Statement, the Company will still be subject to the provisions
of Regulation 14A of the Securities and Exchange Commission, regarding proxy
solicitations. However, these provisions deal with the nature and extent of
disclosure required when a matter is to be voted on, but not whether a matter is
to be voted on; accordingly, Regulation 14A in no way negates the effect of the
exemption from the Acquisitions Act. See the heading "Need for any Governmental
Approval of Principal Products or Services" under the caption "Business,"
herein.
On September 20, 1996, the Company filed with the Secretary of State of the
State of Utah Articles of Amendment to its Articles of Incorporation, which
reverse split the Company's 30,000,000 shares of $0.00001 par value common stock
on a basis of one share for every 100 shares issued and outstanding on July 23,
1996 [effective date of reverse split], while retaining the authorized shares at
30,000,000 and the par value at $0.00001 per share, with appropriate adjustments
being made in the additional paid in capital and stated capital accounts of the
corporation, resulting in a total of 300,010 shares of $0.00001 par value common
voting stock being issued and outstanding; provided, however, that no
stockholder's holding shall be reduced
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to less than 100 shares as a result of the reverse split; and provided,
however, further, the 100 share minimum shall be as determined by the President,
whether on a stockholder or per certificate basis. The amendment adopting the
reverse split of the Company's common stock was adopted by the stockholders at a
meeting held July 23, 1996, at which time, 15,123,100 of the Company's
30,000,000 issued and outstanding shares of common stock voted in favor of the
reverse split, with none opposing and none abstaining. A copy of the Articles of
Amendment to the Articles of Incorporation effecting these changes is attached
as an exhibit to this Registration Statement on Form 10-SB, and is incorporated
herein by this reference. See the Exhibit Index, Part III.
Business.
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The Company has had no business operations since approximately November
1988. To the extent that the Company intends to continue to seek the acquisition
of assets, property or business that may benefit the Company and its
stockholders, the Company is essentially a "blank check" company. Because the
Company has no assets, conducts no business and has no employees,
management anticipates that any such acquisition would require the Company to
issue shares of its common stock as the sole consideration for the acquisition.
This may result in substantial dilution of the shares of current stockholders.
The Company's Board of Directors shall make the final determination whether to
complete any such acquisition; the approval of stockholders will not be sought
unless required by applicable laws, rules and regulations, the Company's
Articles of Incorporation or Bylaws, or by contract. The Company makes no
assurance that any future enterprise will be profitable or successful.
The Company's auditor, Mantyla, McReynolds & Associates, have expressed the
"going concern" opinion in the audited financials for the year ending December
31, 1995. The auditor states: "The accompanying financial statements have been
prepared assuming that Micro-Hydro Power, Inc. will continue as a going concern.
As discussed in note 2 to the financial statements, the Company has accumulated
losses from operations, has no assets, and has a net working capital deficiency
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 2. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty." The Independent Auditors' Report is incorporated
herein by reference to this Registration Statement.
The Company is not currently engaging in any substantive business activity
and has no plans to engage in any such activity in the foreseeable future. In
its present form, the Company may be deemed to be a vehicle to acquire or merge
with a business or company. The Company does not intend to restrict its search
to any particular business or industry, and the areas in which it will seek out
acquisitions, reorganizations or mergers may include, but will not be limited
to, the fields of high technology, manufacturing, natural resources, service,
research and development, communications, transportation, insurance, brokerage,
finance and all medically related fields, among others. The Company recognizes
that because of its total lack of resources, the number of suitable potential
business ventures which may be available to it will be extremely limited, and
may be restricted to entities who desire to avoid what these entities may deem
to be the adverse factors related to an initial public offering ("IPO"). The
most prevalent of these factors include substantial time requirements, legal and
accounting costs, the inability to obtain an underwriter who is willing to
publicly offer and sell shares, the lack of or the inability to obtain the
required financial statements for such an undertaking, limitations on the amount
of dilution public investors will suffer to the benefit of the stockholders of
any such entities, along with other conditions or requirements imposed by
various federal and state securities laws, rules and regulations. Any of these
types of entities, regardless of their prospects, would require the Company to
issue a substantial number of shares of its common stock to complete any such
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acquisition, reorganization or merger, usually amounting to between 80 and
95 percent of the outstanding shares of the Company following the completion of
any such transaction; accordingly, investments in any such private entity, if
available, would be much more favorable than any investment in the Company.
Management intends to consider a number of factors prior to making any
decision as to whether to participate in any specific business endeavor, none of
which may be determinative or provide any assurance of success. These may
include, but will not be limited to an analysis of the quality of the entity's
management personnel; the anticipated acceptability of any new products or
marketing concepts; the merit of technological changes; its present financial
condition, projected growth potential and available technical, financial and
managerial resources; its working capital, history of operations and future
prospects; the nature of its present and expected competition; the quality and
experience of its management services and the depth of its management; its
potential for further research, development or exploration; risk factors
specifically related to its business operations; its potential for growth,
expansion and profit; the perceived public recognition or acceptance of its
products, services, trademarks and name identification; and numerous other
factors which are difficult, if not impossible, to properly analyze without
referring to any objective criteria.
Regardless, the results of operations of any specific entity may not
necessarily be indicative of what may occur in the future, by reason of changing
market strategies, plant or product expansion, changes in product emphasis,
future management personnel and changes in innumerable other factors. Further,
in the case of a new business venture or one that is in a research and
development mode, the risks will be substantial, and there will be no objective
criteria to examine the effectiveness or the abilities of its management or its
business objectives. Also, a firm market for its products or services may yet
need to be established, and with no past track record, the profitability of any
such entity will be unproven and cannot be predicted with any certainty.
Management will attempt to meet personally with management and key
personnel of the entity sponsoring any business opportunity afforded to the
Company, visit and inspect material facilities, obtain independent analysis or
verification of information provided and gathered, check references of
management and key personnel and conduct other reasonably prudent measures
calculated to ensure a reasonably thorough review of any particular business
opportunity; however, since the Company has no current assets or cash reserves,
these activities may be limited, and if undertaken, the cost and expense thereof
will be advanced by management, and may further dilute the interest of the
stockholders of the Company.
The Company is unable to predict the time as to when and if it may actually
participate in any specific business endeavor. The Company anticipates that
proposed business ventures will be made available to it through personal
contacts of directors, executive officers and principal stockholders,
professional advisors, broker dealers in securities, venture capital personnel,
members of the financial community and others who may present unsolicited
proposals. In certain cases, the Company may agree to pay a finder's fee or to
otherwise compensate the persons who submit a potential business endeavor in
which the Company eventually participates.
There are no actual or proposed limitations, regarding payment, of a finder
fee or other form of compensation to persons who submit a potential business
endeavor in which the Company participates. Payment of finders fees would be
capped by the going market rate of such transactions of this type.
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Such persons may include the Company's directors, executive officers,
beneficial owners or their affiliates. In this event, such fees may become a
factor in negotiations regarding a potential acquisition and, accordingly, may
present a conflict of interest for such individuals. See the caption "Conflicts
of Interest; Related Party Transactions," below.
Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business or
company in which the Company's executive officers, directors, beneficial owners
or their affiliates may have an ownership interest. Current Company policy does
not prohibit such transactions. Because no such transaction is currently
contemplated, it is impossible to estimate the potential pecuniary benefits to
these persons.
Although it currently has no plans to do so, depending on the nature and
extent of services rendered, the Company may compensate members of management in
the future for services that they may perform for the Company. Because the
Company currently has virtually no resources, and is unlikely to have any
appreciable resources until it has completed a merger or acquisition, management
expects that any such compensation would take the form of an issuance of the
Company's stock to these persons; this would have the effect of further diluting
the holdings of the Company's other stockholders.
Further, substantial fees are often paid in connection with the completion
of these types of acquisitions, reorganizations or mergers, ranging from a small
amount to as much as $250,000. These fees are usually divided among promoters or
founders, after deduction of legal, accounting and other related expenses, and
it is not unusual for a portion of these fees to be paid to members of
management or to principal stockholders as consideration for their agreement to
retire a portion of the shares of common stock owned by them. Such fees may
become a factor in negotiations regarding any potential acquisition by the
Company and, accordingly, may present a conflict of interest for such
individuals. See the caption "Conflicts of Interest; Related Party
Transactions."
Involvement in Other "Blank Check" Companies.
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Quinton Hamilton is the President and Director of the Company. Other than
the Company, Mr. Hamilton is Secretary, Treasurer and Director of Olympus MTM
Corporation, a Utah corporation in good standing. At this time, Olympus MTM
Corporation may be deemed to be a "blank check" company. Other than Olympus MTM
Corporation, Mr. Hamilton has been neither an officer, director or affiliate of
any "blank check" companies in the past 10 years.
Thomas J. Howells is Vice-President and Director of the Company. Other than
the Company, Mr. Howells was Secretary, Treasurer and Director of Ro-Mac Gold,
Ltd., a Nevada corporation, from January 1996 until its reorganization in
October, 1996. Ro-Mac Gold, Ltd., may be deemed to have been a "blank check"
company until its reorganization. Ro-Mac acquired all of the outstanding
securities of Phoenix Associates, Ltd., a Covington, Louisiana based Louisiana
corporation ("Phoenix Associates"). Phoenix Associates became a wholly-owned
subsidiary of the Company. Mr. Howells was also President and Director of React
Systems, Inc., a Nevada Corporation from April 1995 to September 1995. During
this period, React Systems, Inc., may have been deemed to be a "blank check"
company. Mr. Howells is currently an officer and director of Intercontinental
Strategic Minerals, a Utah corporation in good standing.
<PAGE>
From November, 1993, until its reorganization in April, 1995, Kathleen L.
Morrison, who is a Director and the Secretary/Treasurer of the Company, was a
director and the Secretary/Treasurer of Westcott Financial Corporation, a
Delaware corporation, now known as "Entertainment Technologies & Programs, Inc."
("ETPI"). ETPI is publicly-held and may be deemed to have been a "blank check"
company until its reorganization in April 1995. Mrs. Morrison was also the
Secretary/Treasurer of Onasco Companies, Inc., a Utah corporation, now known as
"Tengasco, Inc.," ("TNGO"), from January 1995 until its reorganization in July,
1995. Onasco acquired certain oil and gas leases and related equipment and
assets of Industrial Resources, Corporation, a Kentucky corporation ("IRC").
Tengasco, Inc., is publicly held and may be deemed to have been a "blank check"
company until its reorganization. From July 1995, until its reorganization in
September, 1996, Kathleen L. Morrison, was a director and the
Secretary/Treasurer of Mason Oil Company, Inc., a Utah corporation, ("MSNO").
Mrs. Morrison is currently President and Director of Seafoods Plus, Inc., a Utah
Corporation in good standing.
No current director or executive officer has been involved in any initial
public offering involving the securities of a "blank check" company in the
ten-year period immediately preceding the date of this Registration Statement.
Risk Factors.
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The Company's auditor, Mantyla, McReynolds & Associates, have expressed the
"going concern" opinion in the audited financials for the year ending December
31, 1995. The auditor states: "The accompanying financial statements have been
prepared assuming that Micro-Hydro Power, Inc. will continue as a going concern.
As discussed in note 2 to the financial statements, the Company has accumulated
losses from operations, has no assets, and has a net working capital deficiency
that raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in note 2. The
financial statements do not include any adjustment that might result from the
outcome of this uncertainty." The Independent Auditors' Report is incorporated
herein by reference to this Registration Statement.
In any business venture, there are substantial risks specific to the
particular enterprise and which cannot be ascertained until a potential
acquisition, reorganization or merger candidate has been identified; however, at
a minimum, the Company's present and proposed business operations will be highly
speculative and subject to the same types of risks inherent in any new or
unproven venture, and will include those types of risk factors outlined below
and in the initial Offering Circular of the Company, a copy of which is attached
as an exhibit to this Registration Statement on Form 10-SB. See the Exhibit
Index, Part III.
Limited Assets; No Source of Revenue. The Company has no assets and has had
no revenue in either of its two most recent calendar years or to the date
hereof. Nor will the Company receive any revenues until it completes an
acquisition, reorganization or merger, at the earliest. The Company can provide
no assurance that any acquired business will produce any material revenues for
the Company or its stockholders or that any such business will operate on a
profitable basis.
Discretionary Use of Proceeds; "Blank Check" Company. Because the Company
is not currently engaged in any substantive business activities, as well as
management's broad discretion with respect to the acquisition of assets,
property or business, the Company may be deemed to be a "blank check" company.
Although management intends to apply substantially all of the proceeds that it
may receive through the issuance of stock or debt to a suitable acquisition,
subject to the criteria identified above, such proceeds will not otherwise be
designated for any more specific purpose. The Company can provide no assurance
that any allocation of such proceeds will allow it to achieve its business
objectives.
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Absence of Substantive Disclosure Relating to Prospective Acquisitions.
Because the Company has not yet identified any assets, property or business that
it may potentially acquire, potential investors in the Company will have
virtually no substantive information upon which to base a decision whether or
not to invest in the Company. Potential investors would have access to
significantly more information if the Company had already identified a potential
acquisition or if the acquisition target had made an offering of its securities
directly to the public. The Company can provide no assurance that any investment
in the Company will not ultimately prove to be less favorable than such a direct
investment.
Unspecified Industry and Acquired Business; Unascertainable Risks. To date,
the Company has not identified any particular industry or business in which to
concentrate its acquisition efforts. Accordingly, prospective investors
currently have no basis to evaluate the comparative risks and merits of
investing in the industry or business in which the Company may invest. To the
extent that the Company may acquire a business in a highly risky industry, the
Company will become subject to those risks. Similarly, if the Company acquires a
financially unstable business or a business that is in the early stages of
development, the Company will become subject to the numerous risks to which such
businesses are subject. Although management intends to consider the risks
inherent in any industry and business in which it may become involved, there can
be no assurance that it will correctly assess such risks.
Uncertain Structure of Acquisition. Management has had no preliminary
contact or discussions regarding, and there are no present plans, proposals or
arrangements to acquire any specific assets, property or business. Accordingly,
it is unclear whether such an acquisition would take the form of an exchange of
capital stock, a merger or an asset acquisition. However, because the Company
has extremely limited resources as of the date of this Registration Statement,
management expects that any such acquisition would take the form of an exchange
of capital stock. See Part I, Item 2 of this Registration Statement.
State Restrictions on "Blank Check" Companies. A total of 36 states
prohibit or substantially restrict the registration and sale of "blank check"
companies within their borders. Additionally, 36 states use "merit review
powers" to exclude securities offerings from their borders in an effort to
screen out offerings of highly dubious quality. See Paragraph 8221, NASAA
Reports, CCH Topical Law Reports, 1990. The Company intends to comply fully with
all state securities laws, and plans to take the steps necessary to ensure that
any future offering of its securities is limited to those states in which such
offerings are allowed. However, these legal restrictions may have a material
adverse impact on the Company's ability to raise capital because potential
purchasers of the Company's securities must be residents of states that permit
the purchase of such securities. These restrictions may also limit or prohibit
stockholders from reselling shares of the Company's common stock within the
borders of regulating states.
By regulation or policy statement, eight states (Idaho, Maryland, Missouri,
Nevada, New Mexico, Pennsylvania, Utah and Washington), some of which are
included in the group of 36
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states mentioned above, place various restrictions on the sale or resale of
equity securities of "blank check" or "blind pool" companies. These restrictions
include, but are not limited to, heightened disclosure requirements, exclusion
from "manual listing" registration exemptions for secondary trading privileges
and outright prohibition of public offerings of such companies.
In most jurisdictions, "blank check" and "blind pool" companies are not
eligible for participation in the Small Corporate Offering Registration ("SCOR")
program, which permits an issuer to notify the Securities and Exchange
Commission of certain offerings registered in such states by filing a Form D
under Regulation D of the Securities and Exchange Commission. All states (with
the exception of Alabama, Delaware, Florida, Hawaii, Illinois, Minnesota,
Nebraska and New York) have adopted some form of SCOR. States participating in
the SCOR program also allow applications for registration of securities by
qualification by filing a Form U-7 with the states' securities commissions.
Nevertheless, the Company does not anticipate making any SCOR offering or other
public offering in the foreseeable future, even in any jurisdiction where it may
be eligible for participation in SCOR despite its status as a "blank check" or
"blind pool" company.
The net effect of the above-referenced laws, rules and regulations will be
to place significant restrictions on the Company's ability to register, offer
and sell and/or to develop a secondary market for shares of the Company's common
stock in virtually every jurisdiction in the United States.
Management to Devote Insignificant Time to Activities of the Company.
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Members of the Company's management are not required to devote their full
time to the affairs of the Company. Because of their time commitments, as well
as the fact that the Company has no business operations, the members of
management anticipate that they will devote an insignificant amount of time to
the activities of the Company, at least until such time as the Company has
identified a suitable acquisition target. There are no arrangements, agreements
or understandings between non-management shareholders and management under
which non-management shareholders may directly participate in or influence the
management of the Company's affairs. However, two of the officers and directors:
Thomas J. Howells, Vice President and Director; and Kathleen Morrison,
Secretary/Treasurer and Director; are both employed by Jenson Services,
consultant and shareholder of the Company. Management exercises its independent
judgement in all matters. Jenson Services, Inc. a non-management shareholder
will excercise its voting rights to continue to elect the current directors to
the Company's board.
Conflicts of Interest; Related Party Transactions.
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Although the Company has not identified any potential acquisition target,
the possibility exists that the Company may acquire or merge with a business or
company in which the Company's executive officers, directors, beneficial owners
or their affiliates may have an ownership interest. Such a transaction may occur
if management deems it to be in the best interests of the Company and its
stockholders, after consideration of the above referenced factors. A transaction
of this nature would present a conflict of interest to those parties with a
managerial position and/or an ownership interest in both the Company and the
acquired entity, and may compromise management's fiduciary duties to the
Company's stockholders. An independent appraisal of the acquired company may or
may not be obtained in the event a related party transaction is contemplated.
Furthermore, because management and/or beneficial owners of the Company's common
stock may be eligible for finder's fees or other compensation related to
potential acquisitions by the Company, such compensation may become a factor in
negotiations regarding such potential acquisitions. With regard to the order of
priority for the presentation of business opportunities to management and
shareholders of the Company and the other "blank check" companies with which the
Company's officers and directors are affiliated; Quinton Hamilton, the Company's
President and Director, is also an officer and director of Olympus M.T.M. which
is not presently a candidate for a business opportunity. Thomas J. Howells, the
Company's Vice President and Director is also a director of Intercontinental
Strategic Minerals, Inc. which is not presently a candidate for a business
opportunity. All other positions held in blank check companies by officers and
directors have resigned. As a consultant, Jenson Services provides a checklist
of material facts on a companies available for a merger and then leaves the
ultimate decision up to the private company.
There is no single shareholder which controls a majority of the shares of
the Company's outstanding common stock. However, Jenson Services, Inc., and Hugh
Lambert and Sharon Lambert do control approximately thirty four percent (34%)
and seventeen percent (17%), respectively, of the Company's outstanding common
stock.
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No Market for Common Stock; No Market for Shares.
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The Company's common stock is not currently listed on the OTC Bulletin
Board of the National Association of Securities Dealers, Inc. (the "NASD"), and
has not been listed on the on the aforementioned market for the previous three
years. Therefore, there is currently no "established trading market" for such
shares; there can be no assurance that such a market will ever develop or be
maintained. Any future market price for shares of common stock of the Company is
likely to be very volatile, and numerous factors beyond the control of the
Company may have a significant effect. In addition, the stock markets generally
have experienced, and continue to experience, extreme price and volume
fluctuations which have affected the market price of many small capital
companies and which have often been unrelated to the operating performance of
these companies. These broad market fluctuations, as well as general economic
and political conditions, may adversely affect the market price of the Company's
common stock in any market that may develop. There have been no preliminary
discussions or understanding between the Company (or anyone acting on its
behalf) and any market maker regarding the participation of any such market
maker in the future trading market. The Company will request Jenson Services,
Inc., consultant to the Company, to assist in obtaining a market maker and
broker-dealer to act as a market maker for the Company's securities after an
acquisition or merger has been undertaken.
Risks of "Penny Stock." The Company's common stock may be deemed to be
"penny stock" as that term is defined in Reg. Section 240.3a51-1 of the
Securities and Exchange Commission. Penny stocks are stocks (i) with a price of
less than five dollars per share; (ii) that are not traded on a "recognized"
national exchange; (iii) whose prices are not quoted on the NASDAQ automated
quotation system (NASDAQ-listed stocks must still meet requirement (i) above);
or (iv) is an issuer with net tangible assets less than $2,000,000 (if the
issuer has been in continuous operation for at least three years) or $5,000,000
(if in continuous operation for less than three years), or with average revenues
of less than $6,000,000 for the last three years.
There has been no "established public market" for the Company's common
stock during the past three years. At such time as the Company completes a
merger or acquisition transaction, if at all, it may attempt to qualify for
listing on either NASDAQ or a national securities exchange. However, at least
initially, any trading in its common stock will most likely be conducted in the
over-the-counter market in the "pink sheets" or the OTC Bulletin Board of the
National Association of Securities Dealers, Inc. (the "NASD").
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account. Potential investors in the Company's
common stock are urged to obtain and read such disclosure carefully before
purchasing any shares that are deemed to be "penny stock."
Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker-dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker-dealer to (i) obtain from the investor
information concerning his or her financial situation, investment
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experience and investment objectives; (ii) reasonably determine, based on
that information, that transactions in penny stocks are suitable for the
investor and that the investor has sufficient knowledge and experience as to be
reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for investors in the Company's common stock to resell their shares to
third parties or to otherwise dispose of them.
Principal Products and Services.
- --------------------------------
The limited business operations of the Company, as now contemplated,
involve those of a "blank check" company. The only activity to be conducted by
the Company is to maintain its good standing in the State of Utah and to seek
out and investigate the acquisition of any viable business opportunity by
purchase and exchange for securities of the Company or pursuant to a
reorganization or merger through which securities of the Company will be issued
or exchanged.
Distribution Methods of the Products or Services.
- -------------------------------------------------
Management will seek out and investigate business opportunities through
every reasonably available fashion, including personal contacts, professionals,
securities broker dealers, venture capital personnel, members of the financial
community and others who may present unsolicited proposals; the Company may also
advertise its availability as a vehicle to bring a company to the public market
through a "reverse" reorganization or merger.
Status of any Publicly Announced New Product or Service.
- --------------------------------------------------------
None; not applicable.
Competitive Business Conditions.
- ---------------------------------------
There are literally thousands of "blank check" companies engaged in
endeavors similar to those engaged in by the Company; many of these companies
have substantial current assets and cash reserves. Competitors also include
thousands of other publicly-held companies whose business operations have proven
unsuccessful, and whose only viable business opportunity is that of providing a
publicly-held vehicle through which a private entity may have access to the
public capital markets. There is no reasonable way to predict the competitive
position of the Company or any other entity in the strata of these endeavors;
however, the Company, having no assets and no cash reserves, will no doubt be at
a competitive disadvantage in competing with entities which have recently
completed IPO's, have cash resources and have limited operating histories when
compared with the history and past failures of the Company.
<PAGE>
Sources and Availability of Raw Materials and Names of Principal Suppliers.
- --------------------------------------------------------------------------------
None; not applicable.
Dependence on One or a Few Major Customers.
- --------------------------------------------------------
None; not applicable.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
or Labor Contracts.
- --------------------------------------------------------------------------------
None; not applicable.
Need for any Governmental Approval of Principal Products or Services.
- --------------------------------------------------------------------------------
On the effectiveness of the Company's Registration Statement on Form 10-SB,
the Company will be subject to Regulation 14A regarding proxy solicitations
promulgated by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended (the "1934 Act"). Section 14(a) of the 1934 Act
requires all companies with securities registered pursuant to Section 12(g)
thereof to comply with the rules and regulations of the Securities and Exchange
Commission regarding proxy solicitations outlined in Regulation 14A. Matters
submitted to stockholders of the Company at a special or annual meeting thereof
or pursuant to a written consent shall require the Company to provide its
stockholders with the information outlined in Schedules 14A or 14C of Regulation
14; preliminary copies of this information must be submitted to the Securities
and Exchange Commission at least 10 days prior to the date that definitive
copies of this information are forwarded to stockholders.
Management intends to conduct a full evaluation of the worthiness of any
business proposal presented to it; nonetheless, it believes this process may
provide additional time within which to evaluate any business proposal presented
to it, and may eliminate proposals from entities not willing to undergo the
public and agency scrutiny involved in providing and filing information required
under Regulation 14. Management recognizes that this filing process may deter
other potential business venturers by reason of their inability to predict the
timeliness of their potential acquisition, reorganization or merger due to the
uncertainty related to the time involved in reviewing Regulation 14A filings by
the Securities and Exchange Commission; however, acquisitions or reorganizations
not requiring stockholder approval may be completed by management, in its sole
discretion, with the submission by management of an Information Statement
pursuant to Regulation 14C outlining any remedial proposals attendant to any
such acquisition or reorganization, including changing the name of the Company
or increasing or decreasing the number of authorized or outstanding shares of
the Company's common stock.
<PAGE>
Costs associated with filings required by the Company under Section 12(g)
of the 1934 Act and Regulation 14A of the Securities and Exchange Commission
will have to be advanced by management, the Company's principal stockholders or
any potential business venturer, and may further dilute the interest of the
public stockholders. In the case of a merger requiring prior stockholder
approval and the submission of financial statements of the Company and other
party or parties to the merger, legal and accounting costs will be significantly
higher.
Effect of Existing or Probable Governmental Regulations on Business.
- -------------------------------------------------------------------------------
Since the Company was initially incorporated, federal and state securities
laws, rules and regulations have made the participation in or the conducting of
an IPO substantially easier for certain small and developmental stage companies,
reducing the time constraints previously involved, the legal and accounting
costs and the financial periods required to be included in the financial
statements. Rule 504 of Regulation D of the Securities and Exchange Commission
no longer requires the filing of a Registration Statement with any state or
territory as a condition to its use; however, this Rule is no longer available
to "blank check" companies. Accordingly, because the Company is presently deemed
to be a "blank check" company, this method of raising funds is foreclosed to it.
Rule 504 is also not available to "reporting issuers," which the Company will
become on the effectiveness of this Registration Statement.
The integrated disclosure system for small business issuers adopted by the
Securities and Exchange Commission in Release No. 34-30968 and effective as of
August 13, 1992, substantially modified the information and financial
requirements of a "Small Business Issuer," defined to be an issuer that has
revenues of less than $25 million; is a U.S. or Canadian issuer; is not an
investment company; and if a majority owned subsidiary, the parent is also a
small business issuer; provided, however, an entity is not a small business
issuer if it has a public float (the aggregate market value of the issuer's
outstanding securities held by non-affiliates) of $25 million or more.
A number of state securities commissions have adopted the use of Form U-7
for SCOR, which also substantially simplifies the registration process for
IPO's; Form U-7 is primarily used in connection with offerings conducted
pursuant to Rule 504 of the Securities and Exchange Commission, but is not
limited to this use. To the extent that Rule 504 and the use of SCOR are
unavailable to the Company due to its status as a "blank check" company, the use
of Form U-7 will also be unavailable in this regard.
The Securities and Exchange Commission, state securities commissions and
the North American Securities Administrators Association, Inc., ("NASAA") have
expressed an interest in adopting policies that will streamline the registration
process and make it easier for a small business issuer to have access to the
public capital markets. The present laws, rules and regulations designed to
promote availability for the small business issuer to these capital markets and
similar laws, rules and regulations that may be adopted in the future will
substantially limit the demand for "blank check" companies like the Company, and
may make the use of these companies obsolete.
<PAGE>
Research and Development.
- ---------------------------------
None; not applicable.
Cost and Effects of Compliance with Environmental Laws.
- ---------------------------------------------------------------------
None; not applicable. However, environmental laws, rules and regulations
may have an adverse effect on any business venture viewed by the Company as an
attractive acquisition, reorganization or merger candidate, and these factors
may further limit the number of potential candidates available to the Company
for acquisition, reorganization or merger.
Number of Employees.
- --------------------------
None.
Item 2. Management's Discussion and Analysis or Plan of Operation.
- -------------------------------------------------------------------------------
Plan of Operation.
- ---------------------
The Company has not engaged in any material operations or had any revenues
from operations during the last two calendar years. The Company's plan of
operation for the next 12 months is to maintain its good standing in the State
of Utah and to continue to seek the acquisition of assets, property or business
that may benefit the Company and its stockholders. Because the Company has no
virtually resources, management anticipates that to achieve any such
acquisition, the Company will be required to issue shares of its common stock as
the sole consideration for such acquisition.
During the next 12 months, the Company's only foreseeable cash requirements
will relate to maintaining the Company in good standing or the payment of
expenses associated with reviewing or investigating any potential business
venture, which may be advanced by management or principal stockholders as loans
to the Company. Because the Company has not identified any such venture as of
the date of this Registration Statement, it is impossible to predict the amount
of any such loan. However, any such loan will not exceed $25,000 and will be on
terms no less favorable to the Company than would be available from a commercial
lender in an arm's length transaction. As of the date of this Registration
Statement, the Company has not begun seeking any specific acquisition.
Because the Company is not currently making any offering of its securities,
and does not anticipate making any such offering in the foreseeable future,
management does not believe that Rule 419 promulgated by the Securities and
Exchange Commission under the Securities Act of
<PAGE>
1933, as amended, concerning offerings by blank check companies, will have
any effect on the Company or any activities in which it may engage in the
foreseeable future.
Item 3. Description of Property.
- -------------------------------------
The Company has virtually no assets, property or business; its principal
executive office address and telephone number are the business office address
and telephone number of its Vice- President, Thomas J. Howells and are provided
at no cost. Because the Company has no business, its activities have been
limited to keeping itself in good standing in the State of Utah and, recently,
with preparing this Registration Statement and the accompanying financial
statements. These activities have consumed an insignificant amount of
management's time; accordingly, the costs to Mr. Howells of providing the use of
his office and telephone have been minimal.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
- --------------------------------------------------------------------------------
Security Ownership of Certain Beneficial Owners.
The following table sets forth the shareholdings of those persons who own
more than five percent of the Company's common stock as of November 1, 1996:
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ----------------- ------------------------- --------
<S> <C> <C>
Jenson Services, Inc. ** 104,128 34.70%
1787 E. Fort Union #106
Salt Lake City, Utah
84121
Hubert Lambert and
Sharon Lambert* 45,455 15.15%
1670 E. Hidden Valley Club Dr.
Sandy, Utah 84092
Sharon Lambert* 1,400 0.48%
1670 E. Hidden Valley Club Dr.
Sandy, Utah 84092 --------- -----
150,983 50.33%
</TABLE>
*Mr. and Mrs. Lambert are husband and wife. Accordingly, the shares held by
Mrs. Lambert may be deemed to be beneficially owned by Mr. Lambert.
**Benefical ownership of stock held by Jenson Services: Duane S. Jenson is
a 100% equity owner of Jenson Services, Inc.
Attribution is not reflected in the above table.
<PAGE>
Security Ownership of Management.
- ---------------------------------
The following table sets forth the shareholdings of the Company's directors
and executive officers as of November 1, 1996:
<TABLE>
<CAPTION>
Number Percentage
Name and Address of Shares Beneficially Owned of Class
- ---------------------- ---------------------------- ----------
<S> <C> <C>
Quinton Hamilton
2100 East Bengal Blvd. #H304 0 0
Salt Lake City, Utah 84121
Thomas J. Howells*
1787 East Ft. Union Blvd., #106 0 0
Salt Lake City, Utah 84121
Kathleen L. Morrison*
1787 East Ft. Union Blvd., #106 0 0
Salt Lake City, Utah 84121
All directors and executive 0 0
officers as a group (3)
</TABLE>
See Item 5, Part I, below, for information concerning the offices or other
capacities in which the foregoing persons serve with the Company.
*Thomas J. Howells is also employed by Jenson Services, Inc. Kathleen
Morrison is also an employee and director of Jenson Services.
Changes in Control.
- -------------------
There are no present arrangements or pledges of the Company's securities
which may result in a change in control of the Company.
<PAGE>
Item 5. Directors, Executive Officers, Promoters and Control Persons.
- -------------------------------------------------------------------------------
Identification of Directors and Executive Officers.
- ---------------------------------------------------
The following table sets forth the names of all current directors and
executive officers of the Company. These persons will serve until the next
annual meeting of the stockholders held in May of each year or until their
successors are elected or appointed and qualified, or their prior resignation or
termination.
<TABLE>
<CAPTION>
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
- ------- ---------- --------------- ------------------
<S> <C> <C> <C>
Quinton Hamilton President 11-4-96 *
Director
Thomas J. Howells Vice President 7-23-96 *
Director
Kathleen L. Morrison Secretary/ 12-22-94 *
Treasurer
Director
</TABLE>
* These persons presently serve in the capacities indicated.
Business Experience.
- ------------------------
Quinton Hamilton, President and Director is 25 years old. Mr. Hamilton
attended the University of Utah from 1990 to 1995, at which time he graduated
with a B.A. Mr. Hamilton has been working as an account
representative/coordinator with the marketing firm of Scopes, Garcia and
Carlisle, located in Salt Lake City, Utah, for the past eighteen months.
Thomas J. Howells, Director and Vice President is 24 years old. Mr. Howells
has been working as an investment consultant with Jenson Services, Inc., which
is a consultant to and shareholder of the Company, for the past year. Mr.
Howells attended Westminster College of
<PAGE>
Salt Lake City from 1991 until 1995. Mr. Howells received a B.A. degree
from Westminster College 1993, at which time he entered the M.B.A. program. In
1994, Mr. Howells recieved a Reserve Forces Commission as a Second Lieutenant
with Military Intelligence.
Kathleen L. Morrison, Director and Secretary/Treasurer. Mrs. Morrison is 40
years old. For the past four years, she has been the office manager for two
persons, one of which is Jenson Services, Inc., which is a consultant to and
shareholder of the Company. For seven years, she was the editor of "Super
Group," a vertical market computer magazine targeting HP3000 users. Ms. Morrison
received a B.A. degree from Colorado State University in 1978.
Significant Employees.
- ----------------------
The Company has no employees who are not executive officers, but who are
expected to make a significant contribution to the Company's business.
Family Relationships.
- ---------------------
There are no family relationships between any directors or executive
officers of the Company, either by blood or by marriage.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, executive
officer or person nominated to become a director or an executive officer of the
Company:
(1) was a general partner or executive officer of any business against
which any bankruptcy petition was filed, either at the time of the bankruptcy or
two years prior to that time;
(2) was convicted in a criminal proceeding or named subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses);
(3) was subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) was found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
<PAGE>
Item 6. Executive Compensation.
- -------------------------------------
The following table sets forth the aggregate compensation paid by the
Company for services rendered during the periods indicated:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Name and Years or Other Restricted Option/ LTIP All
Principal Periods $ $ Annual Stock SAR's Payouts Other
Position Ended Salary Bonus Compen- Awards (#) ($) Compensa-
sation($) tion ($)
Quinton Hamilton 12/31/94 0 0 0 0 0 0 0
President, 12/31/95 0 0 0 0 0 0 0
Director 10/30/96 0 0 0 0 0 0 0
Thomas J. Howells 12/31/94 0 0 0 0 0 0 0
Vice Pres., 12/31/95 0 0 0 0 0 0 0
Director 10/30/96 0 0 0 0 0 0 0
Kathleen L. 12/31/94 0 0 0 0 0 0 0
Morrison 12/31/95 0 0 0 0 0 0 0
Sec./Treas., 10/30/96 0 0 0 0 0 0 0
Director
</TABLE>
No cash compensation, deferred compensation or long-term incentive plan
awards were issued or granted to the Company's management during the calendar
years ended December 31, 1995, or 1994, or the period ending on the date of this
Registration Statement. Further, no member of the Company's management has been
granted any option or stock appreciation right; accordingly, no tables relating
to such items have been included within this Item.
Compensation of Directors.
- --------------------------
There are no standard arrangements pursuant to which the Company's
directors are
<PAGE>
compensated for any services provided as director. No additional amounts
are payable to the Company's directors for committee participation or special
assignments.
There are no arrangements pursuant to which any of the Company's directors
was compensated during the Company's last completed calendar year for any
service provided as director.
Employment Contracts and Termination of Employment and Change-in-Control
Arrangements.
- --------------------------------------------------------------------------------
There are no employment contracts, compensatory plans or arrangements,
including payments to be received from the Company, with respect to any director
or executive officer of the Company which would in any way result in payments to
any such person because of his or her resignation, retirement or other
termination of employment with the Company or its subsidiaries, any change in
control of the Company, or a change in the person's responsibilities following a
change in control of the Company.
Item 7. Certain Relationships and Related Transactions.
- --------------------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
However, see Part 1, Item 1 and Part II, Item 4 of this Registration Statement.
Certain Business Relationships.
- -------------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
However, see Part I, Item I of this Registration Statement.
<PAGE>
Indebtedness of Management.
- ---------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any director or executive officer, or any
security holder who is known to the Company to own of record or beneficially
more than five percent of the Company's common stock, or any member of the
immediate family of any of the foregoing persons, had a material interest.
However, see Part I, Item 1 and Part II, Item IV of this Registration Statement.
Parents of the Issuer.
- ----------------------
Jenson Services and Hubert and Sharon Lambert, the principal stockholders,
may be deemed to be a parents of the Company. See Part I, Item IV of this
Registration Statement.
Transactions with Promoters.
- ----------------------------
There have been no material transactions, series of similar transactions,
currently proposed transactions, or series of similar transactions, to which the
Company or any of its subsidiaries was or is to be a party, in which the amount
involved exceeded $60,000 and in which any promoter or founder, or any member of
the immediate family of any of the foregoing persons, had a material interest.
However, on December 15, 1994, the Board of Directors of the Company resolved to
issue 8,645,578 pre-split "unregistered" and "restricted" shares of common stock
to Jenson Services, who is a consultant to the Company, in consideration of
$5,000.00 in consulting fees and expenses incurred by Jenson Services on behalf
of the Company. An arbitrary value was placed on the stock, since the par value
is $0.00001. See Part II, Item IV of this Registration Statement. Consulting
services performed by Jenson Services include but are not limited to assisting
the Company with advising; the compiling of due diligence, corrdinating with
CPA's to perform audits, filing annual reports, preparing this Submission under
Regulation S-B, deliberating the satisfaction of debts and assuring compliance
with all tax agencies, etc.
Item 8. Description of Securities.
- -----------------------------------
The Company has only one class of securities authorized, issued or
outstanding, that being capital stock of the Company consisting of 30,000,000
shares of authorized ($0.00001) par value common stock, of which a total of
300,010 post-split shares are currently issued and outstanding. The holders of
the Company's common stock are entitled to one vote per share on each matter
submitted to a vote at a meeting of stockholders. The shares of common stock do
not carry cumulative voting rights in the election of directors.
Stockholders of the Company have no pre-emptive rights to acquire
additional shares of common stock or other securities. The common stock is not
subject to redemption rights and carries no subscription or conversion rights.
In the event of liquidation of the Company, the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. All shares of the common stock now outstanding are fully paid and
non-assessable.
<PAGE>
There are no outstanding options, warrants or calls to purchase any of the
authorized securities of the Company. There is no provision in the Company's
Articles of Incorporation, as amended, or Bylaws, that would delay, defer, or
prevent a change in control of the Company.
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and
Other Stockholder Matters.
- -------------------------------------------
Market Information.
- -----------------------
The Company's common stock is not currently listed on the OTC Bulletin
Board of the NASD or any other recognized securities market. There has been no
trading symbol or "established trading market" for shares of the Company's
common stock during the last three quarters of 1996, or at any point in 1995 or
1994, and management does not expect any such market to develop unless and until
the Company completes an acquisition or merger. In any event, no assurance can
be given that any "established trading market" for the Company's common stock
will develop or be maintained. If such a market ever develops in the future, the
sale of "unregistered" and "restricted" shares of common stock pursuant to Rule
144 of the Securities and Exchange Commission by Jenson Services or Hubert or
Sharon Lambert may have a substantial adverse impact on any such public market.
See the caption "Business" of Part I, Item 1 of this Registration Statement.
Future sales of any of these securities or any securities of the Company
issued in any acquisition, reorganization or merger may have a future adverse
effect on any "public market" that may develop in the common stock of the
Company. See Part I, Item 1 of this Registration Statement.
Holders.
- --------
The number of record holders of the Company's common stock as of the date
of this Registration Statement is approximately 354.
Dividends.
- ----------
The Company has not declared any cash dividends with respect to its common
stock or its previously authorized preferred stock, and does not intend to
declare dividends in the foreseeable
<PAGE>
future. The future dividend policy of the Company cannot be ascertained
with any certainty, and if and until the Company completes any acquisition,
reorganization or merger, no such policy will be formulated. There are no
material restrictions limiting, or that are likely to limit, the Company's
ability to pay dividends on its common stock.
Item 2. Legal Proceedings.
- ---------------------------
The Company is not a party to any pending legal proceeding. No federal,
state or local governmental agency is presently contemplating any proceeding
against the Company. No director, executive officer or affiliate of the Company
or owner of record or beneficially of more than five percent of the Company's
common stock is a party adverse to the Company or has a material interest
adverse to the Company in any proceeding.
To date, Jenson Services, Inc. has provided all Company loans totalling
approximately $11,000. Management does not believe that the Company will incurr
an additional $14,000 worth of expenses before entering into a merger or
acquisition. If the Company does need additional funding, such funding will be
sought through an arms length transaction with a banking instituion.
Item 3. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
- -----------------------------------
Mantyla, McReynolds & Associates, Certified Public Accountants, of Salt
Lake City, Utah, audited the financial statements of the Company for the years
ended December 31, 1995 and 1994.
There were no disagreements between the Company and Mantyla, McReynolds &
Associates, whether resolved or not resolved, on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which, if not resolved, would have caused it to make reference to the
subject matter of the disagreement in connection with its reports.
The reports of Mantyla, McReynolds & Associates do not contain any adverse
opinion or disclaimer of opinion, and are not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the Company's two most recent calendar years, and since then,
Mantyla, McReynolds & Associates has not advised the Company that any of the
following exist or are applicable:
(1) That the internal controls necessary for the Company to develop
reliable financial statements do not exist, that information has come to their
attention that has led them to no longer be able to rely on management's
representations, or that has made them unwilling to be associated with the
financial statements prepared by management;
(2) That the Company needs to expand significantly the scope of its audit,
or that information has come to their attention that if further investigated may
materially impact the fairness or reliability of a previously issued audit
report or the underlying financial statements or any other financial
presentation, or cause them to be unwilling to rely with the Company's financial
statements for the foregoing reasons or any other reason; or
(3) That they have advised the Company that information has come to their
attention that they have concluded materially impacts the fairness or
reliability of either a previously issued audit report or the underlying
financial statements for the foregoing reasons or any other reason.
During the Company's two most recent calendar years and since then, the
Company has not consulted Mantyla, McReynolds & Associates regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements or any other financial presentation
whatsoever.
<PAGE>
Item 4. Recent Sales of Unregistered Securities.
- -------------------------------------------------
On December 8, 1994, the Company's Board of Directors unanimously voted to
issue 8,645,578 "unregistered" and "restricted" shares of pre-split common stock
to Jenson Services, Inc., in consideration of $5,000.00. these shares are
fully-paid and were issued to Jenson Services, Inc. on or about December 23,
1994.
Management believes that Jenson Services is an "accredited investor" as
that term is defined under applicable federal and state securities laws, rules
and regulations. Pursuant to Reg. 230.501(5) and Reg. 230.501(8) of the
Securities and Exchange Act, stating "Any natural person whose individual net
worth, or joint net worth with that person's spouse, at the time of his purchase
exceeds $1,000,000." and "Any entity in which all of the equity owners are
accredited investors.", respectively. Therefore Jenson Services is an
"Accredited Investor". Further, Jenson Services is a consultant to the Company
and had access to all material information regarding the Company prior to the
offer or sale of these securities. The offers and sales of these securities are
believed to have been exempt from the registration requirements of Section 5 of
the Securities Act of 1933 pursuant to Section 4(2) thereof, and from similar
states' securities laws, rules and regulations requiring the offer and sale of
securities by available state exemptions from such registration.
Item 5. Indemnification of Directors and Officers.
- ----------------------------------------------------------
Section 16-10a-902(1) of the Utah Revised Business Corporation Act
authorizes a Utah corporation to indemnify any director against liability
incurred in any proceeding if he or she acted in good faith and in a manner he
or she reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from indemnifying a
director in a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in a proceeding in which the
director was adjudged liable on the basis that he or she improperly received a
personal benefit. Otherwise, Section 16-10a-902(5) allows indemnification for
reasonable expenses incurred in connection with a proceeding by or in the right
of a corporation.
<PAGE>
Unless limited by the Articles of Incorporation, Section 16-10a-905
authorizes a director to apply for indemnification to the court conducting the
proceeding or another court of competent jurisdiction. Section 16-10a-907(1)
extends this right to officers of a corporation as well.
Unless limited by the Articles of Incorporation, Section 16-10a-903
requires that a corporation indemnify a director who was successful, on the
merits or otherwise, in defending any proceeding to which he or she was a party
against reasonable expenses incurred in connection therewith. Section
16-10a-907(1) extends this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may advance a director's
expenses incurred in defending any proceeding upon receipt of an undertaking and
a written affirmation of his or her good faith belief that he or she has met the
standard of conduct specified in Section 16-10a-902. Unless limited by the
Articles of Incorporation, Section 16- 10a-907(2) extends this protection to
officers, employees, fiduciaries and agents of a corporation as well.
Regardless of whether a director, officer, employee, fiduciary or agent has
the right to indemnity under the Utah Revised Business Corporation Act, Section
16-10a-908 allows the corporation to purchase and maintain insurance on his or
her behalf against liability resulting from his or her corporate role.
Article VIII of the Company's Bylaws provides for the mandatory
indemnification and reimbursement of any director or executive officer for
actions or omissions in such capacity, except for claims or liabilities arising
out of his or her own negligence or willful misconduct.
PART F/S
Index to Financial Statements
Report of Certified Public Accountants
Financial Statements
- --------------------
(i) Audited Financial Statements
dated December 31, 1995
--------------------------
Independent Auditors' Report
Balance Sheet, dated December 31, 1995
Statements of Stockholders' Deficit
for the years ended December 31, 1995
and 1994
<PAGE>
Statements of Operations for the
years ended December 31, 1995 and
1994
Statements of Cash Flows for the
years ended December 31, 1995 and
1994
Notes to Financial Statements
(ii) Unaudited Financial Statements
dated September 30, 1996
-----------------
Balance Sheet, dated
September 30, 1996
Statements of Operations
for the nine month period ended September 30, 1996
Statements of Cash Flows for the
nine month period ended September 30, 1996
PART III
Item 1. Index to Exhibits.
- -------------------------------
The following exhibits are filed as a part of this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
Number Description*
- ------ ------------
<S> <C>
3.1 Articles of Incorporation filed September 23, 1980
3.2 Articles of Amendment to Articles of
Incorporation, filed on November 10, 1980
<PAGE>
3.3 Articles of Amendment to Articles of
Incorporation, filed on September 20, 1996
3.4 Bylaws
3.5 Original Offering Circular
27 Financial Data Schedule
</TABLE>
* Summaries of all exhibits contained within this Registration
Statement are modified in their entirety by reference to these
Exhibits.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the Registrant has caused this Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
MICRO-HYDRO POWER, INC.
Date: 2/25/97 By /S/ Quinton Hamilton
------------------------
Quinton Hamilton, Director
and President
Date: 2/26/97 By /S/ Thomas J. Howells
------------------------
Thomas J. Howells,
Director and Vice
President
Date: 2/27/97 By /S/ Kathleen L. Morrison
---------------------------
Kathleen L. Morrison,
Director and
Secretary/Treasurer
<PAGE>
<PAGE>
MICRO-HYDRO POWER, INC.
FINANCIAL STATEMENTS
DECEMBER 31, 1995
[WITH INDEPENDENT AUDITORS REPORT]
<PAGE>
MICRO-HYDRO POWER, INC.
TABLE OF CONTENTS
Page
Independent Auditors' Report 1
Balance Sheet - December 31, 1995 2
Statements of Operations for the
years ended December 31, 1995 and
December 31, 1994 3
Statements of Stockholders' Deficit for
the years ended December 31, 1995 and
December 31, 1994 4
Statements of Cash Flows for the
years ended December 31, 1995 and
December 31, 1994 5
Notes to Financial Statements 6-7
<PAGE>
MANTYLA, McREYNOLDS
AND ASSOCIATES, C.P.A's
A Professional
Corporation
Donald G. Mantyla,
C.P.A.
Kim G. McReynolds,
C.P.A.
James C. Oveson,
C.P.A.
S. Andrew Trumbo,
C.P.A, Randall H.
Gray, C.P.A.
Independent Auditors' Report
The Board of Directors and Shareholders
Micro-Hydro Power, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Micro-Hydro Power, Inc. as of
December 31, 1995, and the related statements of operations, stockholders,
deficit, and cash flows for the years ended December 31, 1995 and December 31,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Micro- Hydro Power, Inc. as of
December 31, 1995, and the results of their operations and their cash flows for
the years ended December 31,
<PAGE>
1995 and December 31, 1994 in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that
Micro-Hydro Power, Inc. will continue as a going concern. As discussed in note 2
to the financial statements, the Company has accumulated losses from operations,
has no assets, and has a net working capital deficiency that raise substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are also described in note 2. The financial statements
do not include any adjustment that might result from the outcome of this
uncertainty.
/S/MANTYLA, McREYNOLDS &
ASSOCIATES
MANTYLA, McREYNOLDS &
ASSOCIATES
Salt Lake City, Utah
March 22, 1996
<PAGE>
<TABLE>
<CAPTION>
MICRO-HYDRO POWER, INC.
BALANCE SHEET
December 31, 1995
ASSETS
<S> <C>
Assets $ 0
-----------------
Total Assets $ 0
=================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities:
Income taxes payable $ 764
Accounts Payable 2,619
Stockholder loan - Note 4 2,064
-----------------
Total Liabilities 3,383
Stockholders' Deficit:
Common Stock, $.00001 par value;
authorized 30,000,000 shares; issued
and outstanding 30,000,000 shares 300
Additional paid in capital 163,679
Accumulated Deficit (169,426)
-----------------
Total Stockholders' Deficit (5,447)
Total Liabilities and
Stockholders Deficit $ (5,447)
=================
See accompanying notes to financial statements
2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MICRO-HYDRO POWER, INC.
STATEMENT OF OPERATIONS
For the Years Ended December 31, 1995 and December 31, 1994
1995 1994
<S> <C> <C>
REVENUE
Revenues from operations $ 0 $ 0
----------------- -----------------
Total Revenue 0 0
General and Administrative Expenses 2,064 5,000
----------------- -----------------
Net Income Before Taxes (2,064) (5,000)
Income taxes 100 100
----------------- -----------------
Net Income $ (2,164) $ (5,100)
================= =================
Loss per share $ (0.01$ (0.01)
================= =================
Weighted Average Shares Outstanding 30,000,000 22,074,885
================= =================
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
MICRO-HYDRO POWER, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the Years Ended December 31, 1995 and December 31, 1994
<TABLE>
<CAPTION>
Additional Net
Common Paid in Accumulated Stockholders'
Stock Capital Deficit Deficit
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $ 214 $ 158,765 $ (162,162) $ (3,183)
Issuance of 8,645,578 shares of
to a Consultant to complete a
redomicile and reorganization
of the Company, and related
expenses advanced to date 86 4,914 5,000
Net loss for the year ended
December 31, 1994 (5,100) (5,100)
-------------- -------------- -------------- --------------
Balance, December 31, 1994 $ 300 $ 163,679 $ (167,262) $ (3,283)
Net Loss for the year ended
December 31, 1995 (2,164) (2,164)
-------------- -------------- -------------- --------------
Balance, December 31, 1995 $ 300 $ 163,679 $ (169,426) $ (5,447)
============== ============== ============== ==============
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
MICRO-HYDRO POWER, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash Flows Provide by/ (Used for)
Operating Activities:
Net Loss $ (2,164) $ (5,100)
Adjustments to reconcile net income
to net cash used for operating
activities:
Issuance of common stock as
payment for consultant services
rendered and expenses incurred 0 5,000
Increase in taxes payable 100 100
---------------- ---------------
Net Cash Used for Operating
Activities (2,064) 0
Cash Flows From Financing Activities:
Proceeds from stockholder loan 2,064 0
---------------- ---------------
Net Increase In Cash 0 0
Beginning Cash 0 0
---------------- ---------------
Ending Cash $ 0 $ 0
================ ===============
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest $ 0 $ 0
================ ===============
Taxes $ 0 $ 0
================ ===============
</TABLE>
See accompanying notes to financial statements
5
<PAGE>
MICRO-HYDRO POWER, INC.
Notes to Financial Statements
December 31, 1995
Note 1 Organization and Summary of Significant Accounting
Policies
(a) Organization
Micro-Hydro Power, Inc. (Company) incorporated under the laws of
the State of Utah in 1980. The Company was dissolved November,
1988 and reinstated by Court Order on or about October 20, 1995.
The Company was originally organized primarily for the research,
development, sale, manufacture, distribution, maintenance, and
operation of micro-hydro power units which consist of
water-powered electrical generating machines.
(b) Income Taxes
Effective April 1, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 109 (the
Statement), "Accounting for Income Taxes." The Statement requires
an asset and liability approach for financial accounting and
reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the
financial reporting bases and tax bases of the Company's assets
and liabilities at enacted tax rates expected to be in effect
when such amounts are realized or settled. The cumulative effect
of this change in accounting for income taxes as of December 31,
1995 is $0 due to the valuation allowance established as
described below.
(c) Net Loss Per Common Share
Net loss per common share is based on the weighted average number
of shares outstanding.
(d) Statement of Cash Flows
For purposes of the statements of cash flows, the Company
considers cash on deposit in the bank to be cash. The
Company has $0 cash at December 31, 1995.
6
<PAGE>
MICRO-HYDRO POWER, INC.
Notes to Financial Statements
December 31, 1995
[continued]
Note 2 Liquidity
The Company has accumulated losses through December 31, 1995
amounting to $169,426, has no assets, has a net working capital
deficiency of $5,447 at December 31, 1995, and does not
anticipate generating sufficient cash flows from operations to
meet the Company's cash requirements. These factors raise
substantial doubt about the Company's ability to continue as a
going concern.
Management plans include finding a well-capitalized merger
candidate to recommence its operations. The financial statements
do not include any adjustments that might result from the outcome
of this uncertainty.
Note 3 Income Taxes
The Company adopted Statement No. 109 as of April 1,
1993. Prior years' financial statements have not been
restated to apply the provisions of Statement No. 109.
No provision has been made in the financial statements
for income taxes because the Company has accumulated
substantial losses from operations.
The tax effects of temporary differences that give rise to
significant portions of the deferred tax asset at December 31,
1995 have no impact on the financial position of the Company. A
valuation allowance is provided when it is more likely than not
that some portion of the deferred tax asset will not be realized.
Because of the lack of taxable earnings history, the Company has
established a valuation allowance for all future deductible
temporary differences.
<PAGE>
Note 4 Stockholder Loan
During the year, a stockholder of the Company advanced funds
totaling $2,064 for payment of operating expenses. This unsecured
loan bears no interest and is due on demand.
7
<PAGE>
MICRO-HYDRO POWER, INC.
BALANCE SHEETS
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
9/30/96 12/31/95
--------------- ---------------
[Unaudited]
<S> <C> <C>
ASSETS
Current Assets 0 0
Total Current Assets 0 0
--------------- ---------------
TOTAL ASSETS $ 0 $ 0
=============== ===============
LIABILITIES & EQUITY
LIABILITIES
Current Liabilities
Loans from stockholders $ 5,150 2,064
Income taxes payable 764 764
Accounts payable 2,619 2,619
--------------- ---------------
Total Current Liabilities 8,533 5,447
--------------- ---------------
TOTAL LIABILITIES 8,533 5,447
EQUITY
Common Stock 3 300
Paid-in Capital 163,976 163,679
Accumulated Deficit (172,512) (169,426)
--------------- ---------------
TOTAL EQUITY (8,533) (5,447)
--------------- ---------------
TOTAL LIABILITIES & EQUITY $ 0 $ 0
=============== ===============
</TABLE>
<PAGE>
MICRO-HYDRO POWER, INC.
STATEMENTS OF OPERATIONS
For the Nine-Month Periods Ended September 30, 1996 and 1995
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
9/30/96 9/30/95
----------------- -----------------
[Unaudited] [Unaudited]
<S> <C> <C>
REVENUE
Income $ 0 $ 0
----------------- -----------------
NET REVENUE 0 0
OPERATING EXPENSES
Office Expenses 539 85
Professional Fees 2,447 172
Franchise Fees 100 742
----------------- -----------------
TOTAL OPERATING EXPENSES 3,086 999
----------------- -----------------
NET INCOME/(LOSS) $ (3,086) $ (999)
================= =================
NET LOSS PER SHARE $ (0.01$ (0.01)
================= =================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 22,280,147 30,000,000
================= =================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MICRO-HYDRO POWER, INC.
STATEMENTS OF CASH FLOWS
For the Nine-Month Periods Ended September 30, 1996 and 1995
Nine Months Nine Months
Ended Ended
9/30/96 9/30/95
----------------- ------------------
[Unaudited] [Unaudited]
<S> <C> <C>
Cash Flows Used For Operating Activities
- ------------------------------------------------------
Net Loss $ (3,086) $ (999)
----------------- ------------------
Net Cash Used For Operating Activities (3,086) (999)
Cash Flows Provided by Financing Activities
- -----------------------------------------------------
Proceeds from stockholder loan 3,086 999
----------------- ------------------
Net Proceeds from stockholder Loans 3,086 999
----------------- ------------------
Net Increase In Cash 0 0
Beginning Cash Balance 0 0
----------------- ------------------
Ending Cash Balance $ 0 $ 0
================= ==================
</TABLE>
ARTICLES OF INCORPORATION
OF
SURETY GOLD, INC.
We, the undersigned, natural persons of the age of twenty-one or
more, acting as incorporators of a corporation under the Utah Business
Corporation Act, (hereinafter called the "Act"), adopt the following Articles of
Incorporation for such corporation:
ARTICLE I
Name
The name of the corporation (hereinafter called the "Cor poration")
is SURETY GOLD, INC.
ARTICLE II
Period of Duration The period of duration
of the Corporation is perpetual.
ARTICLE III
Purpose
The purposes for which the Corporation is organized are:
Section 1: To engage in all phases of the natural resource
mining industry.
Section 2: To engage in any other lawful business authorized by Title 16
of the Utah Code.
Section 3: To subscribe for, purchase or otherwise acquire,
<PAGE>
underwrite, obtain an interest in, own, hold, pledge, hypothecate, mortgage,
assign, deposit, create trusts with respect thereto, to well, exchange or
otherwise dispose of and generally deal in and with property and securities of
every kind and description of any government, state, territory, district,
municipality or other political or government division or subdivision, body
politic, corporation, association, partnership, firm, trustee, syndicate,
individual, combination, organization or unity, wheresoever located in or
organized under the laws in any geographical location whatsoever including,
without limiting the generality of the foregoing, stock, shares, voting trust
certificates, bonds, mortgages, debentures, notes, land trust certificates,
warrants, rights, scripts, further payments or assessments, to exercise any and
all rights, powers and privileges of individual ownership or interest in respect
to any such securities, including the right to vote thereon, and otherwise act
with respect thereto.
Section 4: To carry on and conduct a general business, to act and
appoint others to act as general agent, special agent, broker, factor,
manufacturer's agent, purchasing agent, sales agent, distributing agent,
representative and commission merchant for individuals, firms, associations and
corporations, and the distribution, delivery, purchase and sale of goods, wares,
merchandise, property, commodities and articles of commerce of
<PAGE>
every kind and description, and in selling, promoting the sale of, advertising
and introducing, and contracting for the sale, introduction, advertisement and
use of services of all kinds relating to any and all kinds of businesses for any
and all purposes.
Section 5: To specifically act as a franchise agent for the sale and
service of all types of commodities.
Section 6: To acquire by purchase, exchange or otherwise, all or any
part of any interest in the properties, assets, business and good will of any
one or more persons, firms, associations or corporations heretofore or hereafter
engaged in any business for which a corporation may now or hereafter be
organized under the laws of this state, to pay for the same in cash, property of
its own or other securities to hold, operate, organize, liquidate, sell,
purchase on contracts, trust deeds or mortgages, or in any manner dispose of for
a whole, or any part thereof, and in connection there-with, to assume or
guarantee performances of any liabilities, obligations or contracts of such
persons, firms, associations or other corporations, and to conduct the whole or
any part of any business so acquired.
Section 7: To borrow or raise monies for any of the purposes of the
Corporation from time to time without limit as to amount, to draw, make, accept,
endorse, guarantee, execute and
<PAGE>
issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures
and other negotiable and non-negotiable instruments and other evidences of
indebtedness, and to secure the payment thereof and of the interest thereon by
mortgage on, or pledge, conveyance or assignment, in trust of the whole or any
part of the assets of the corporation, real, personal or mixed, including
contract rights, whether at the time owned or thereafter required.
Section 8: To acquire property by purchase of property at tax
sales, or to assume mortgages, trust deeds, or to acquire land by real estate
contracts, and to acquire real property in any other manner prescribed by law
and authorized under the laws of the State of Utah or any other state in the
United States.
Section 9: To lend and advance monies or give credit for corporate
purposes with or without requiring interest or any security for the payment
thereof.
Section 10: To purchase, take, receive or otherwise acquire, hold,
own, pledge, transfer or otherwise dispose of shares of its own capital stock;
but any purchase of its own shares of stock, whether direct or indirect, shall
be made only to the extent of unreserved and unrestricted capital surplus
available therefor, if permitted by the Utah Corporation Act and other
applicable law and these Articles of Incorporation.
<PAGE>
Section 11: To become a party to any lawful arrangement
for sharing of profits, or to any union of interest, reciprocal concession,
partnership, syndicate, entity or any governmental, municipal or public
authority, domestic or foreign, in carrying on of any business which the
corporation is authorized to carry on, or any business or transaction deemed
necessary, convenient or incidental to the carrying out of any other purpose of
the corporation.
Section 12: To organize and create for the benefit of its employees
a duly qualified profit sharing or penson plan.
Section 13: To such extent as a corporation organized under the
Business Corporation Act of the State of Utah may now or here after lawfully do,
to do either as principal or agent, and either alone or in connection with other
corporations, firms or individuals, all and everything necessary, suitable,
convenient or proper for, in connection with or incident to the accomplishment
of any other purposes, or the attainment of any one or more of the objects
herein enumerated or designed, directly or indirectly, to promote the interest
of this Corporation or to enhance the value of its properties, and in general to
do any and all things, and exercise any and all powers, rights, privileges which
a corporation may now or may hereafter be organized to do or to exercise under
the Business Corporation Act of the State of Utah, or under any act amendatory
thereof, supplemental thereto or substituted in the stead thereof.
Section 14: The foregoing clauses shall be construed as powers as
well as objects and purposes; and the matters in each clause shall, unless
otherwise expressly provided, be in no way limited by reference to or inference
from the terms of any other clause or section but shall be regarded as
independent projects, purposes and powers; and the enumeration of specific
objects, purposes and powers shall not be construed to limit or restrict in any
manner the meaning of the general terms or the general powers of the
corporation, nor shall the expression of one thing be deemed to exclude another
not expressed, although it be of like nature.
<PAGE>
ARTICLE IV
Authorized Shares
This Corporation is authorized to issue one class of common stock.
The total authorized common stock of this Corporation shall be Thirty Million
(30,000,000) shares of $0.00001 par value per share. These shares shall bear
voting rights and share equally in distribution of profits of the Corporation.
ARTICLE V
Pre-Emptive Rights
No stockholder of the Corporation shall, because of owner ship of
stock, have a pre-emptive or other right to purchase, sub scribe for or take
part of any stock, or any part of the notes, de bentures, bonds or other
securities convertible into or carrying options for warrants to purchase stock
of the Corporation issued, optioned or sold by it after its incorporation,
except as may be otherwise stated in these Articles of Incorporation. Any part
of the capital stock and any part of the notes, debentures, bonds or other
securities convertible into or carrying options or warrants to purchase stock of
the Corporation authorized by these Articles of Incorporation or by an amended
certificate duly filed, may at any time be issued, optioned for sale and sold or
disposed of by the Corporation, pursuant to resolution of its Board of
Directors, to such persons and upon such terms as may to such Board seem
proper, without first offering such stock or securities or any part thereof to
existing stockholders.
<PAGE>
ARTICLE VI
Commencement of Business This Corporation shall not commence business until
at least One Thousand ($1,000.00) Dollars has been received by it as
consideration for the issuance of shares.
ARTICLE VII
Voting of Shares
Each outstanding share of the common stock of the Corpora tion shall
be entitled to one vote on each matter submitted to a vote at a meeting of the
stockholders. At each election for direc tors every shareholder entitled to vote
at such election shall have the right to vote in person or by proxy the number
of shares owned by him or it for as many persons as there are directors to be
elected and for whose election he or it has a right to vote, but to shareholders
shall have no right whatsoever to accumulate his or its votes with regard to
such election.
ARTICLE VIII
Provisions for Regulation of the
Internal Affairs of the Corporation
Section 1: Meetings of Shareholders. All meetings of the
shareholders of the Corporation shall be held at such place, either
<PAGE>
within or without the State of Utah, as may be provided in the Bylaws of the
Corporation. In the absence of any such provision, all such meetings shall be
held at the registered office of the corporation.
Section 2: Quorum of Shareholders. Unless otherwise provided in the
Act or other applicable law, a majority of the shares of the common stock of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of the shareholders of the Corporation.
Section 3: Meetings of Directors. Meetings of the Board of Directors
of the Corporation, whether regular or special, may be held either within or
without the State of Utah, and upon such notice as may be prescribed in the
Bylaws of the Corporation.
Section 4: Quorum of Directors. The number of Directors of the
Corporation which shall constitute a quorum for the transaction of business at
any meeting of the Board of Directors shall be fixed in the Bylaws of the
Corporation.
Section 5: Designation of Committees by the Board of Directors. The
Board of Directors may, by a resolution or resolutions passed by a majority of
the whole Board, designate a committee or committees consisting of not less than
three (3) directors which committee or committees, to the extent provided in
such resolution or resolutions, shall have and may exercise all the
<PAGE>
authority so provided, but the designations of such committees and the
delegation thereto for such authority shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed upon it or by
him by law.
Section 6: Bylaws of the Corporation. The initial Bylaws of the
Corporation shall be adopted by its Board of Directors; thereafter, unless
otherwise provided in the Act, Bylaws of the Corporation may be adopted, amended
or repealed, either by the shareholders or by the Board of Directors, except
that (a) no Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors, and (b) no Bylaws shall be adopted by the
Directors which shall require more than a majority of the shareholders for a
quorum at a meeting of the shareholders of the Corporation, or more than a
majority of the votes cast to constitute action by the shareholders, except
where higher percentages are required by laws. The Bylaws may contain any
provisions for the regulation and management of the affairs of the Corporation
not inconsistent with the Act, other applicable laws and these Articles of
Incorporation.
Section 7: Vacancy in the Board of Directors. Any vacancy occurring
in the Board of Directors may be filled by affirmative vote of a majority of the
remaining directors, though less than a quorum of the Board of Directors. A
director elected to fill a
<PAGE>
vacancy shall be elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors shall also be filled by the Board of Directors such appointment to be
until the next annual meeting or a special meeting of the shareholders called
for the purpose of electing a director to the office so created.
Section 8: Shareholders of Record. The name and address of each
shareholder of record of the capital stock of the Corporation as they appear in
the stock records of the Corporation shall be conclusive evidence as to who are
the shareholders who are entitled to receive notice of any meetings of the
shareholders, to vote at such meetings, to examine a complete list of the
shareholders who may be entitled to vote at such meetings, to own, enjoy and
exercise any other rights and privileges which are based upon the ownership of
these shares of common stock of the Corporation.
Section 9: Books and Records. The Corporation shall keep complete
and correct books and records of account and shall keep minutes of the
proceedings of its shareholders' and Board of Direc tors' meetings and shall
keep at its registered office or principal place of business or at the office of
its transfer agent or registrar, a record of its shareholders, giving names and
addresses of all shareholders and the number of shares of the Corporation held
by each. No shareholder shall have the right to inspect any
<PAGE>
such books and records except as conferred by the Act or other applicable law,
unless authorized to do so by resolution or resolutions of the shareholders or
the Board of Directors.
Section 10: Working Capital. The Board of Directors of the
Corporation shall have the power from time to time to fix and de termine and to
vary the amount which is to be reserved by the Corporation as working capital;
and before the payment of any dividends or the making of any distribution of
profits, it may set aside out of net profits or earned surplus of the
Corporation, such sums or sum as it may from time to time in its absolute
discretion deem to be proper, whether as a reserve fund to meet contingencies or
for the equalizing of dividends, or the repairing or maintenance of any property
of the Corporation, or for an addition to stated capital, capital surplus,
earned surplus or for any corporate purpose which the Board of Directors shall
deem to be in the best interests of the Corporation, subject only to such
limitations as the Bylaws of the Corporation may from time to time impose.
Section 11: Compensation of Directors. The Board of Directors of the
Corporation may, provided the Bylaws of the Corporation so provide, make
provision for reasonable compensation to its members for their services as
directors and establish the basis and conditions upon which such compensations
shall be paid. Any director of the Corporation may also serve the Corporation in
<PAGE>
any other capacity and receive proper compensation therefor.
Section 12: Qualification of Directors. The Directors of
this Corporation need not be stockholders.
Section 13: Number of Directors. The exact number of
directors
may from time to time be specified by the Bylaws at not less than three (3) or
more than nine (9). When the Bylaws do not specify the exact number of
directors, the number of directors shall be three (3).
Section 14: Reliance Upon Others. A director shall be fully
protected in relying in good faith upon the books of accounts relevant to the
existence and amount of surplus or other funds from which dividends might be
declared and paid.
Section 15: Reliance Upon Others - Prudent Conduct. No person shall
be liable to the Corporation for any loss or damage suffered by it on account of
any action taken or omitted to be taken by him as a director or officer of the
Corporation in good faith if such person (a) exercised or used the same degree
of care and skill as a prudent man would have exercised or used under the
circumstances in the conduct of his own affairs, or (b) took or omitted to
take-such action in reliance upon advice of counsel for the Corporation or upon
statements made or information furnished by officers or employees of the
Corporation which he had reasonable
<PAGE>
grounds to believe, or upon a financial statement of the Corporation prepared by
an officer or employee of the Corporation in charge of its accounts, or
certified by a public accountant or firm of public accountants.
Section 16: Contracts with Interested Directors Disclosure and
Voting. A director of the Corporation shall not in the absence of fraud be
disqualified by his office from dealing with or contracting with the
Corporation, either as a vendor, purchaser or otherwise, so long as such
transaction shall not conflict with his obligations and duties to the
Corporation as a corporate officer; nor in the absence of fraud shall, insofar
as permitted by the Act or any other applicable statute, any transaction or
contract of the Corporation be void or voidable or affected by reason of the
fact that any director or any firm of which a director is a member, or any
corporation of which any director is an officer, director or stockholder is in
any way interested in such transaction or contract; provided that at the meeting
of the Board of Directors or of a committee thereof, having authority in the
premises to authorize or confirm such contract or transaction, the interest of
such director, firm or corporation is disclosed or made known, and there shall
be present a quorum of the Board of Directors or of the directors constituting
such committee and the contract or transaction shall be approved by a majority
of
<PAGE>
such quorum which majority shall consist of directors not so interested or
connected. Nor shall any director be liable to account to the Corporation for
any profit realized by him from or through any such transaction or contract of
the Corporation, ratified or approved as herein provided, by reason of the fact
that he or any firm of which he is a member or any corporation of which he is a
stockholder, director or officer was interested in such transaction or contract.
Directors so interested may be counted when present at meet ings of the
board of Directors or of such committee for the purpose of determining the
existence of a quorum. Each and every person who is or may become a director of
the Corporation is hereby relived from any liability that might otherwise exist
from those contracting with the Corporation for the benefit of himself or any
firm, association or corporation in which he may be in any way interested. Any
contract, transaction or act of the Corporation or of the Board of Directors or
of any committee which shall be ratified by a majority in interest of a quorum
of the shareholders having voting power shall be as valid and binding as though
ratified by each and every stockholder of the Corporation; but this shall not be
constituted as requiring the submission of any contract to the shareholders for
approval. This section shall not be construed to abborgate duty of an officer
within the scope of
<PAGE>
his employment to present to the Corporation all such reasonable opportunities
which the Corporation would be entitled to take advantage of within the scope of
its then current business purposes or within the scope of these Articles of
Incorporation as applied to its then existing relevant situation; and no
director or officer or committee member of any committee established pursuant to
these Articles shall, while serving in such capacity, discover an opportunity
which is reasonable within the scope and framework of the activity of the
Corporation and take personal benefit or gain from that discovery by
hypothecating the opportunity to the Corporation in exchange for stock or
consideration above or beyond the normal compensation to which he would be
entitled within the scope and framework of his employment contract. The
foregoing provision shall not be construed to prevent the Board of Directors at
a duly constituted meeting from declaring a bonus to any such officer or
director which is fairly and reasonably related to the benefit initiating a
transaction whereby the Corporation shall directly take advantage of any such
corporate opportunity.
Section 17: Ratification of Act of Directors. The directors may submit
any contract or transaction for approval at any annual meeting of the
shareholders or at any special meeting of the stock holders called for that
purpose; and any contract or transaction so approved by a majority vote of a
quorum of the stockholders at such
<PAGE>
meeting shall be binding upon the Corporation and all its stockholders, whether
or not the contract or transaction would otherwise be subject to attack because
of the interest of any of the directors of the Corporation or for any other
reason.
Section 18: The Corporation may in its Bylaws make any other provisions
or requirements for the management of the business of the Corporation provided
the same are not inconsistent with the provisions of these Articles of
Incorporation or contrary to the laws of the State of Utah or of the United
States.
Section 19: The Corporation may issue and sell its authorized shares
without par value from time to time in the absence of fraud in the transaction
for such considerations as may from time to time be fixed by the Board of
Directors, and sell and dispose of any stocks having a par value for such
consideration permitted by law, as the Board of Directors may from time to time
determine without other authority, consent or vote of the stockholders of the
Cor poration or any class or classes.
Section 20: Amendments to these Articles of Incorporation. The
Corporation reserves the right to amend, alter or repeal or to add any
provisions to these Articles of Incorporation in any manner now or hereafter
prescribed by law or to vote exceptions thereto at a duly constituted
shareholders meeting called for that purpose.
<PAGE>
Section 21: Assistant Treasurer. The Assistant Treasurer of the
Corporation shall be corporate counsel whose sole responsibility other than
legal duties, shall be to file the annual report.
ARTICLE IX
Initial Registered Office and Initial Registered Agent
Section 1: The address of the initial registered office of the
Corporation is 1220 Continental Bank Building Salt Lake City, Utah 84101.
Section 2: The name of the initial registered agent at that address
is Lowell V. Summerhays.
ARTICLE X
Directors
Section 1: Initial Board of Directors. The initial Board of Directors of
the Corporation shall consist of three (3) members, and their respective names
and addresses are:
<TABLE>
<CAPTION>
<C> <C>
NAME ADDRESS
Brent H. Meikle 608 Wasatch
Boulevard
Smithfield, Utah
84335
J. Alan Hawkes 4010 South 601 East
Salt Lake City, Utah
84107
Melvin S. Mullikin 631 West 5465 South
Salt Lake City, Utah
84107
</TABLE>
<PAGE>
which directors shall hold office until the first meeting of the shareholders of
the Corporation and until their successors shall have been elected and
qualified.
Section 2: Subsequent Board of Directors. At the first meeting of the
stockholders of the Corporation and at each annual meeting thereafter, the
shareholders shall elect directors to hold office until the next succeeding
annual meeting of the shareholders. Each director so elected shall hold office
for the term of which he is elected or until his successor shall have been
elected and qualified. Directors need not be residents of the State of Utah or
shareholders of the Corporation.
ARTICLE XI
Incorporators
The name and address of each incorporator is:
<TABLE>
<CAPTION>
<C> <C>
NAME ADDRESS
Brent H. Meikle 608 Wasatch Boulevard
Smithfield, Utah 84335
J. Alan Hawkes 4010 South 601 East
Salt Lake City, Utah 84107
Melvin S. Mullikin 631 West 5465 South
Salt Lake City, Utah 84107
</TABLE>
ARTICLE XII
Liability of Directors, Officers, Committeemen
and Incorporators, Records, Books and Accounts
It is the intention of the incorporators, present shareholders and
<PAGE>
future shareholders and all present and future officers of the Corporation that
a full and adequate set of records, books and accounts be kept with respect to
all phases of corporate activities and particularly with respect to the economic
activities of the Coroporation. Any directors, officers, committeemen, present
or future, and the incorporators of this corporation shall by virtue of their
agreement to act in such capacity, become liable for a failure to keep proper
books, records and statements of account as heretofore specified, and it shall
be presumed that if such books, records and accounts are not kept that any loss
accruing to the Corporation shall be as a direct failure to keep such records
and books of account.
It is assumed and intended that any person acquiring stock in this
corporation shall do so in reliance upon the representation and fact that such
books, accounts and records have been kept, are being kept and shall in the
future be kept with respect to all phases of activity in this corporation. All
officers, directors, committeemen and incorporators agree that they shall be
jointly and severally liable for such failure to keep books, records, and
accounts as heretofore specified during the period of time which they are in
office with respect to incorporators, their liabilities shall flow for a period
of time consisting of the first four (4) months of operation of the Corporation.
This Article is included in these Articles of Incorporation because it is the
intention of the incorporators, officers, directors and stockholders that such
books, records and accounts be kept and it is their opinion that the failure to
<PAGE>
keep such books will likely lead to a financial failure of the Corporation and
lead to other related liabilities and it is also their opinion that the keeping
of such records, books and accounts shall materially enhance the possibilities
that the Corporation shall function on a profitable basis. Adequate books,
records and accounts for the purpose of this Article shall be those books,
records and accounts which a reasonably prudent certified public accountant
would recommend for a corporation of like size, purpose and function. In the
event that anyone shall claim liability in this regard, he shall first submit
his claim to the Board of Directors of the Corporation in writing and allege
such failure with specificity. The person complaining under the terms of this
Article shall submit the name of a certified public accountant whom he has
chosen as an arbitrator for the purpose of determining whether or not adequate
books and records of account have been kept according to the foregoing
definition. The Board of Directors shall appoint a certified public accountant
for such purpose within ten (10) days after the submission in writing by the
complaining party, and the certified public accountant so chosen shall choose a
third certified public accountant and these three shall expeditiously proceed to
arbitrate the questions as to whether or not adequate books and records of
accounts have been kept during the period complained of and if not, the amount
of loss which was accrued during that period of time. If, for any reason, the
foregoing procedure fails to reach a result or conclusion within a reasonable
period of time after a good faith attempt by the
<PAGE>
parties concerned, then the aggrieved party (either the Board of Directors or
the complaining party) shall have the right to institute immediate action in a
court of appropriate jurisdiction to enforce his rights under the provisions of
this Article.
ARTICLE XIII
1244 Stock
The stock issued in this corporation shall be deemed to be 1244 stock in
that:
A. The stock is being issued pursuant to a plan and shall be issued
within a period of time no later than two years after the date of the
plan.
B. The corporation is a small business corporation.
C. No portion of a prior stock offering is outstanding.
D. The stock is being offered in exchange for money or other property.
E. The corporation is and will derive more than fifty percent (50%) of
its aggregate gross receipts from sources other than royalties, rents,
dividends, interest, annuities, and sales or exchange of stock or
securities. DATED this 28 day of August, 1980.
/S/ Brent H. Meikle
Brent H. Meikle
/S/ J. Alan Hawkes
J. Alan Hawkes
<PAGE>
/S/ Melvin S. Mullikin
Melvin S. Mullikin
STATE OF UTAH
SS.
COUNTY OF SALT LAKE
BRENT H. MEIKLE, J. ALAN HAWKES, MELVIN S. MULLIKIN being first
duly sworn, deposed and declared to me, the undersigned notary public,
that they signed the foregoing document as Incorporators and that the
statements contained therein are the truth to the best of their
knowledge.
IN WITNESS WHEREOF, I have hereunto set my seal this 28 day of August,
1980.
/S/ Notary Public
NOTARY PUBLIC
Residing at /S/Salt Lake City Ut
Commission Expires: /S/6/7/81
ARTICLES OF AMENDMENT
TO-THE
ARTICLES OF INCORPORATION
OF
SURETY GOLD, INC.
Surety Gold, Inc., a corporation duly authorized and incorporated
under the laws of the State of Utah, having been incorporated on the 23rd day of
September, 1980, and now desiring to change its name from Surety Gold, Inc. to
Micro-Hydro Power, Inc., does now therefore hereby adopt the following Articles
of Amendment to the Articles of Incorporation pursuant to Utah Code Annotated
ss.16-10-57:
(a) The name of the corporation is Surety Gold, Inc.
(b) The amendment so adopted is that Article I, which
presently reads:
Name
The name of the corporation (hereinafter called the Corporation)
is SURETY GOLD, INC., shall be changed to read:
Name
The name of the corporation (hereinafter called the Corporation)
is MICRO-HYDRO POWER, INC.
(c) The date of the adoption of the amendment by the
shareholders was October 13, 1980.
(d) The number of shares outstanding at the time was
4,559,022 shares, with no classes or series, all of such stock being
denominated as common voting stock.
<PAGE>
(f) The Amendment does not provide for an exchange,
reclassification or cancellation of issued shares.
(g) The amendment does not provide for a change in the amount
of stated capital.
DATED this 31st day of October, 1980.
/S/ Melvin S. Mullikin
Melvin S. Mullikin
President
/S/ Richard Kunz
Richard Kunz
Secretary
STATE OF UTAH
SS.
COUNTY OF SALT LAKE
MELVIN S. MULLIKIN and RICHARD KUNZ, being first duly sworn,
deposed and declared to me, the undersigned notary public, that they signed the
foregoing document as President and Secretary, and that the statements contained
therein are the truth to the best of their knowledge.
IN WITNESS WHEREOF, I have hereunto set my seal this 31st day of
October, 1980.
/S/ Notary Public
Notary Pubic
Residing at Salt Lake City, Utah
Commission Expires: 9-15-84
<PAGE>
VERIFICATION
I, J. ALAN HAWKS, being Vice-President of the Corporation, do
hereby verify that the foregoing Articles of Amendment were duly adopted
as set forth and that the signatures affixed are the true signatures of
the President and Secretary
DATED this 31st day of October, 1980.
/S/ J. Alan Hawks
J. Alan Hawks
Vice-President
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION OF
MICRO-HYDRO POWER, INC.
Pursuant to the provisions of Section 16-IOa-1006 of the Utah
Revised Business Corporation Act, the undersigned corporation hereby adopts the
following Articles of Amendment to its Articles of Incorporation.
FIRST: The name of the corporation is Micro-Hydro Power,
Inc.
SECOND: The following amendment to the Articles of
Incorporation of Micro-Hydro Power, Inc. were duly adopted by the
stockholders of the corporation at a meeting held July
23, 1996, in the manner prescribed by the Utah Revised Business
Corporation Act, to-wit:
Reverse split as set forth in Paragraph Third below.
THIRD: This amendment does not provide for any exchange,
reclassification or cancellation of issued shares; however, pursuant to the
resolution adopted by the stockholders of the corporation at the meeting held
July 23, 1996, the 30,000,000 $0.00001 par value common voting shares issued and
outstanding were reverse split on a basis of 100 for one, retaining the
authorized shares at 30,000,000 and retaining the par value at $0.00001 per
share, with appropriate adjustments being made in the additional paid in capital
and stated capital accounts of the corporation, and resulting in a total of
300,000 shares of $0.00001 par value common voting stock being issued and
outstanding; provided, however, that no stockholder's holdings shall be reduced
to less than 100 shares as a result of the reverse split; and provided, however,
further, the 100 share minimum shall be as determined by the President, whether
on a stockholder or per certificate basis.
FOURTH: The amendment adopting the reverse split of the
corporation's common stock was adopted by the stockholders at a meeting
held July 23, 1996.
FIFTH: This amendment was not adopted by the incorporators
or the Board of Directors without stockholder action.
<PAGE>
SIXTH: (a) The designation and number of outstanding
shares of each class entitled to vote thereon as a class were as
follows, to-wit:
<TABLE>
<CAPTION>
<C> <C>
CLASS NUMBER OF SHARES
Common 30,000,000
</TABLE>
(b) The number of shares voted for such amendment was 15,123,100, with none
opposing and none abstaining.
IN WITNESS WHEREOF, the undersigned President and Secretary,
having been thereunto duly authorized, have executed the foregoing Articles of
Amendment for the corporation under the penalties of perjury this 12th day of
September, 1996.
MICRO-HYDRO POWER, INC.
By/S/ Jeffery D. Jenson
Jeffrey D. Jenson, President
Attest:
/S/Kathleen L. Morrison
Kathleen L. Morrison, Secretary
2
BYLAWS
OF MICRO-HYDRO POWER, INC.
ARTICLE I OFFICES
Section 1.01 Location of Office. The corporation may maintain such offices
within or without the State of Utah as the Board of Directors may from time to
time designate or require.
Section 1.02 Principal Office. The address of the principal office of the
corporation shall be at the address of the registered office of the corporation
as so designated in the office of the Lieutenant Governor/Secretary of State of
the state of incorporation, or at such other address as the Board of Directors
shall from time to time determine.
ARTICLE II
SHAREHOLDERS
Section 2.0 Annual Meeting. The annual meeting of the shareholders shall be
held in May of each year or at such other time designated by the Board of
Directors and as is provided for in the notice of the meeting, 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 shall not be held on the day
designated for the annual meeting of the shareholders, or at 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 may be convenient.
Section 2.02 Special Meetings. Special meetings of the shareholders may be
called at any time by the chairman of the board, the president, or by the Board
of Directors, or in their absence or disability, by any vice president, and
shall be called by the president or, in his or her absence or disability, by a
vice president or by the secretary on the written request of the holders of not
less than one-tenth of all the shares entitled to vote at the meeting, such
written request to state the purpose or purposes of the meeting and to be
delivered to the president, each vice-president, or secretary. In case of
failure to call such meeting within 60 days after such request, such shareholder
or shareholders may call the same.
Section 2.03 Place of Meetings. The Board of Directors may designate any
place, either within or without the state of incorporation, as the place of
meeting for any annual meeting or for 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 without the state of
incorporation, as the place for the holding of such meeting. If no designation
is made, or if a special meeting be otherwise called, the place of meeting shall
be at the principal office of the corporation.
Section 2.04 Notice of Meetings. The secretary or assistant secretary, if
any, shall cause notice of the time, place, and purpose or purposes of all
meetings of the shareholders (whether annual or special), to be mailed at least
ten (10) days, but not more than fifty (50) days, prior to the meeting, to each
shareholder of record entitled to vote.
<PAGE>
Section 2.05 Waiver of Notice. Any shareholder may waive notice of any
meeting of shareholders (however called or noticed, whether or not called or
noticed and whether before, during, or after the meeting), by signing a written
waiver of notice or a consent to the holding of such meeting, or an approval of
the minutes thereof. Attendance at a meeting, in person or by proxy, shall
constitute waiver of all defects of call or notice regardless of whether waiver,
consent, or approval is signed or any objections are made. All such waivers,
consents, or approvals shall be made a part of the minutes of the meeting.
Section 2.06 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any annual meeting of
shareholders or any adjournment thereof, or shareholders entitled to receive
payment of any dividend or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors of the corporation may provide
that the share transfer books shall be closed, for the purpose of determining
shareholders entitled to notice of or to vote at such meeting, but not for a
period exceeding fifty (50) days. If the share transfer books are closed for the
purpose of determining shareholders entitled to notice of or to vote at such
meeting, such books shall be closed for at least ten (10) days immediately
preceding such meeting.
In lieu of closing the share transfer books, the Board of Directors may fix
in advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than fifty (50) and, in case of a meeting
of shareholders, not less than ten (10) days prior to the date on which the
particular action requiring such determination of shareholders is to be taken.
If the share transfer books are not closed and no record date is fixed for the
determination of shareholders entitled to notice of or to vote at a meeting or
to receive payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the Board of Directors declaring
such dividend is adopted, as the case may be, shall be the record date for such
determination of shareholders. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this Section,
such determination shall apply to any adjournment thereof. Failure to comply
with this Section shall not affect the validity of any action taken at a meeting
of shareholders.
Section 2.07 Voting Lists. The officer or agent of the corporation having
charge of the share transfer books for shares of the corporation shall make, at
least ten (10) days before each meeting of the shareholders, a complete list of
the shareholders entitled to vote at such meeting or any adjournment thereof,
arranged in alphabetical order, with the address of, and the number of shares
held by each, which list, for a period of ten (10) days prior to such meeting,
shall be kept on file at the registered office of the corporation and shall be
subject to inspection by any shareholder during the whole time of the meeting.
The original share transfer book shall be prima facia evidence as to the
shareholders who are entitled to examine such list or transfer books, or to vote
at any meeting of shareholders.
Section 2.08 Quorum. One-half of the total voting power of the outstanding
shares of the corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum at a meeting of the shareholders. If a quorum is
present, the affirmative vote of the majority of the voting power represented by
shares at the meeting and entitled to vote on the subject shall constitute
action by the shareholders, unless the vote of a greater number or voting by
classes is required by the laws of the state of incorporation of the corporation
or the Articles of Incorporation. If less than one-half of the outstanding
voting power is represented at a meeting, a majority of the voting power
represented by shares so present may adjourn the meeting from time to time
without further notice. At such adjourned meeting at which a quorum shall be
<PAGE>
present or represented, any business may be transacted which might have
been transacted at the meeting as originally noticed.
Section 2.09 Voting of Shares. Each outstanding share of the corporation
entitled to vote shall be entitled to one vote on each matter submitted to vote
at a meeting of shareholders, except to the extent that the voting rights of the
shares of any class or series of stock are determined and specified as greater
or lesser than one vote per share in the manner provided by the Articles of
Incorporation.
Section 2.10 Proxies. At each meeting of the shareholders, each shareholder
entitled to vote shall be entitled to vote in person or by proxy; provided,
however, that the right to vote by proxy shall exist only in case the instrument
authorizing such proxy to act shall have been executed in writing by the
registered holder or holders of such shares, as the case may be, as shown on the
share transfer of the corporation or by his or her or her attorney thereunto
duly authorized in writing. Such instrument authorizing a proxy to act shall be
delivered at the beginning of such meeting to the secretary of the corporation
or to such other officer or person who may, in the absence of the secretary, be
acting as secretary of the meeting. In the event that any such instrument shall
designate two or more persons to act as proxies, a majority of such persons
present at the meeting, or if only one be present, that one shall (unless the
instrument shall otherwise provide) have all of the powers conferred by the
instrument on all persons so designated. Persons holding stock in a fiduciary
capacity shall be entitled to vote the shares so held and the persons whose
shares are pledged shall be entitled to vote, unless in the transfer by the
pledge or on the books of the corporation he or she shall have expressly
empowered the pledgee to vote thereon, in which case the pledgee, or his or her
proxy, may represent such shares and vote thereon.
Section 2.11 Written Consent to Action by Shareholders. Any action required
to be taken at a meeting of the shareholders, or any other action which may be
taken at a meeting of the shareholders, may be taken without a meeting, if a
consent in writing, setting forth the action so taken, shall be signed by all of
the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
Section 3.01 General Powers. The property, affairs, and business of the
corporation shall be managed by its Board of Directors. The Board of Directors
may exercise all the powers of the corporation whether derived from law or the
Articles of Incorporation, except such powers as are by statute, by the Articles
of Incorporation or by these Bylaws, vested solely in the shareholders of the
corporation.
Section 3.02 Number, Term, and Qualifications. The Board of Directors shall
consist of three to nine persons. Increases or decreases to said number may be
made, within the numbers authorized by the Articles of Incorporation, as the
Board of Directors shall from time to time determine by amendment to these
Bylaws. An increase or a decrease in the number of the members of the Board of
Directors may also be made upon amendment to these Bylaws by a majority vote of
all of the shareholders, and the number of directors to be so increased or
decreased shall be fixed upon a majority vote of all of the shareholders of the
corporation. Each director shall hold office until the next annual meeting of
shareholders of the corporation and until his or her successor shall have been
elected and shall have qualified. Directors need not be residents of the state
of incorporation or shareholders of the corporation.
<PAGE>
Section 3.03 Classification of Directors. In lieu of electing the entire
number of directors annually, the Board of Directors may provide that the
directors be divided into either two or three classes, each class to be as
nearly equal in number as possible, the term of office of the directors of the
first class to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second annual meeting after
their election, and that of the third class, if any, to expire at the third
annual meeting after their election. At each annual meeting after such
classification, the number of directors equal to the number of the class whose
term expires at the time of such meeting shall be elected to hold office until
the second succeeding annual meeting, if there be two classes, or until the
third succeeding annual meeting, if there be three classes.
Section 3.04 Regular Meetings. A regular meeting of the Board of Directors
shall be held without other notice than this Bylaw immediately following, 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 without the state
of incorporation, for the holding of additional regular meetings without other
notice than such resolution.
Section 3.05 Special Meetings. Special meetings of the Board of Directors
may be called by or at the request of the president, vice president, or any two
directors. The person or persons authorized to call special meetings of the
Board of Directors may fix any place, either within or without the state of
incorporation, as the place for holding any special meeting of the Board of
Directors called by them.
Section 3.06 Meetings by Telephone Conference Call. Members of the Board of
Directors may participate in a meeting of the Board of Directors or a committee
of the Board of Directors by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
Section shall constitute presence in person at such meeting.
Section 3.07 Notice. Notice of any special meeting shall be given at least
ten (10) days prior thereto by written notice delivered personally or mailed to
each director at his or her regular business address or residence, or by
telegram. If mailed, such notice shall be deemed to be delivered when deposited
in the United States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered when the
telegram is delivered to the telegraph company. Any director may waive notice of
any meeting. Attendance of a director at a meeting shall constitute a waiver of
notice of such meeting, except where a director attends a meeting solely for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
Section 3.08 Quorum. A majority of the number of directors shall constitute
a quorum for the transaction of business or any meeting of the Board of
Directors, but if less than a majority is present at a meeting, a majority of
the directors present may adjourn the meeting from time to time without further
notice.
Section 3.09 Manner of Acting. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the Board
of Directors, and the individual directors shall have no power as such.
Section 3.10 Vacancies and Newly Created Directorship. If any vacancies
shall occur in the Board of Directors by reason of death, resignation or
otherwise, or if the number of directors shall be increased, the directors then
in office shall continue to act and such vacancies or newly created
directorships shall be filled
<PAGE>
by a vote of the directors then in office, though less than a quorum, in any way
approved by the meeting. Any directorship to be filled by reason of removal of
one or more directors by the shareholders may be filled by election by the
shareholders at the meeting at which the director or directors are removed.
Section 3.11 Compensation. By resolution of the Board of Directors, the
directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors, and may be paid a fixed sum for attendance at each
meeting of the Board of Directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 3.12 Presumption of Assent. A director of the corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his or her dissent shall be entered in the minutes of the meeting, unless he or
she shall file his or her written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof, or shall forward
such dissent by registered or certified mail to the secretary of the corporation
immediately after the adjournment of the meeting. Such right to dissent shall
not apply to a director who voted in favor of such action.
Section 3.13 Resignations. A director may resign at any time by delivering
a written resignation to either the president, a vice president, the secretary,
or assistant secretary, if any. The resignation shall become effective on its
acceptance by the Board of Directors; provided, that if the board has not acted
thereon within ten days (10) from the date presented, the resignation shall be
deemed accepted.
Section 3.14 Written Consent to Action by Directors. Any action required to
be taken at a meeting of the directors of the corporation or any other action
which may be taken at a meeting of the directors or of a committee, may be taken
without a meeting, if a consent in writing, setting forth the action so taken,
shall be signed by all of the directors, or all of the members of the committee,
as the case may be. Such consent shall have the same legal effect as a unanimous
vote of all the directors or members of the committee.
Section 3.15 Removal. At a meeting expressly called for that purpose, one
or more directors may be removed by a vote of a majority of the shares of
outstanding stock of the corporation entitled to vote at an election of
directors.
ARTICLE IV
OFFICERS
Section 4.01 Number. The officers of the corporation shall be a president,
one or more vice-presidents, as shall be determined by resolution of the Board
of Directors, a secretary, a treasurer, and such other officers as may be
appointed by the Board of Directors. The Board of Directors may elect, but shall
not be required to elect, a chairman of the board and the Board of Directors may
appoint a general manager.
Section 4.02 Election, Term of Office, and Qualifications. The officers
shall be chosen by the Board of Directors annually at its annual meeting. In the
event of failure to choose officers at an annual meeting of the Board of
Directors, officers may be chosen at any regular or special meeting of the Board
of Directors. Each such officer (whether chosen at an annual meeting of the
Board of Directors to fill a vacancy or otherwise)
<PAGE>
shall hold his or her office until the next ensuing annual meeting of the Board
of Directors and until his or her successor shall have been chosen and
qualified, or until his or her death, or until his or her resignation or removal
in the manner provided in these Bylaws. Any one person may hold any two or more
of such offices, except that the president shall not also be the secretary. No
person holding two or more offices shall act in or execute any instrument in the
capacity of more than one office. The chairman of the board, if any, shall be
and remain a director of the corporation during the term of his or her office.
No other officer need be a director.
Section 4.03 Subordinate Officers, Etc. The Board of Directors from time to
time may appoint such other officers or agents as it may deem advisable, each of
whom shall have such title, hold office for such period, have such authority,
and perform such duties as the Board of Directors from time to time may
determine. The Board of Directors from time to time may delegate to any officer
or agent the power to appoint any such subordinate officer or agents and to
prescribe their respective titles, terms of office, authorities, and duties.
Subordinate officers need not be shareholders or directors.
Section 4.04 Resignations. Any officer may resign at any time by delivering
a written resignation to the Board of Directors, the president, or the
secretary. Unless otherwise specified therein, such resignation shall take
effect on delivery.
Section 4.05 Removal. Any officer may be removed from office at any special
meeting of the Board of Directors called for that purpose or at a regular
meeting, by vote of a majority of the directors, with or without cause. Any
officer or agent appointed in accordance with the provisions of Section 4.03
hereof may also be removed, either with or without cause, by any officer on whom
such power of removal shall have been conferred by the Board of Directors.
Section 4.06 Vacancies and Newly Created Offices. If any vacancy shall
occur in any office by reason of death, resignation, removal, disqualification,
or any other cause, or if a new office shall be created, then such vacancies or
newly created offices may be filled by the Board of Directors at a regular or
special meeting.
Section 4.07 The Chairman of the Board. The Chairman of the Board, if there
be such an officer, shall have the following powers and duties:
(a) He or she shall preside at all shareholders' meetings;
(b) He or she shall preside at all meetings of the Board of Directors; and
(c) He or she shall be a member of the executive committee, if any.
Section 4.08 The President. The president shall have the following powers
and duties:
(a) If no general manager has been appointed, he or she shall be the chief
executive officer of the corporation, and, subject to the direction of the Board
of Directors, shall have general charge of the business, affairs, and property
of the corporation and general supervision over its officers, employees, and
agents;
<PAGE>
(b) If no chairman of the board has been chosen, or if such officer is absent or
disabled, he or she shall preside at meetings of the shareholders and Board of
Directors;
(c) He or she shall be a member of the executive committee, if any;
(d) He or she shall be empowered to sign certificates representing shares of the
corporation, the issuance of which shall have been authorized by the Board of
Directors; and
(e) He or she shall have all power and shall perform all duties normally
incident to the office of a president of a corporation, and shall exercise such
other powers and perform such other duties as from time to time may be assigned
to him or her by the Board of Directors.
Section 4.10 The Secretary. The secretary shall have the following powers
and duties:
(a) He or she shall keep or cause to be kept a record of all of the proceedings
of the meetings of the shareholders and of the Board of Directors in books
provided for that purpose;
(b) He or she shall cause all notices to be duly given in accordance with
the provisions of these Bylaws and as required by statute;
(c) He or she shall be the custodian of the records and of the seal of the
corporation, and shall cause such seal (or a facsimile thereof) to be affixed to
all certificates representing shares of the corporation prior to the issuance
thereof and to all instruments, the execution of which on behalf of the
corporation under its seal shall have been duly authorized in accordance with
these Bylaws, and when so affixed, he or she may attest the same;
(d) He or she shall assume responsibility that the books, reports, statements,
certificates, and other documents and records required by statute are properly
kept and filed;
(e) He or she shall have charge of the share books of the corporation and cause
the share transfer books to be kept in such manner as to show at any time the
amount of the shares of the corporation of each class issued and outstanding,
the manner in which and the time when such stock was paid for, the names
alphabetically arranged and the addresses of the holders of record thereof, the
number of shares held by each holder and time when each became such holder or
record; and he or she shall exhibit at all reasonable times to any director,
upon application, the original or duplicate share register. He or she shall
cause the share book referred to in Section 6.04 hereof to be kept and exhibited
at the principal office of the corporation, or at such other place as the Board
of Directors shall determine, in the manner and for the purposes provided in
such Section;
(f) He or she shall be empowered to sign certificates representing shares of the
corporation, the issuance of which shall have been authorized by the Board of
Directors; and
(g) He or she shall perform in general all duties incident to the office of
secretary and such other duties as are given to him or her by these Bylaws or as
from time to time may be assigned to him or her by the Board of Directors or the
president.
<PAGE>
Section 4.11 The Treasurer. The treasurer shall have the following powers
and duties:
(a) He or she shall have charge and supervision over and be responsible for
the monies, securities, receipts, and disbursements of the corporation;
(b) He or she shall cause the monies and other valuable effects of the
corporation to be deposited in the name and to the credit of the corporation in
such banks or trust companies or with such banks or other depositories as shall
be selected in accordance with Section 5.03 hereof;
(c) He or she shall cause the monies of the corporation to be disbursed by
checks or drafts (signed as provided in Section 5.04 hereof) drawn on the
authorized depositories of the corporation, and cause to be taken and preserved
property vouchers for all monies disbursed;
(d) He or she shall render to the Board of Directors or the president, whenever
requested, a statement of the financial condition of the corporation and of all
of this transactions as treasurer, and render a full financial report at the
annual meeting of the shareholders, if called upon to do so;
(e) He or she shall cause to be kept correct books of account of all the
business and transactions of the corporation and exhibit such books to any
director on request during business hours;
(f) He or she shall be empowered from time to time to require from all officers
or agents of the corporation reports or statements given such information as he
or she may desire with respect to any and all financial transactions of the
corporation; and
(g) He or she shall perform in general all duties incident to the office of
treasurer and such other duties as are given to him or her by these Bylaws or as
from time to time may be assigned to him or her by the Board of Directors or the
president.
Section 4.12 General Manager. The Board of Directors may employ and appoint
a general manager who may, or may not, be one of the officers or directors of
the corporation. The general manager, if any, shall have the following powers
and duties;
(a) He or she shall be the chief executive officer of the corporation and,
subject to the directions of the Board of Directors, shall have general charge
of the business affairs and property of the corporation and general supervision
over its officers, employees, and agents;
(b) He or she shall be charged with the exclusive management of the business of
the corporation and of all of its dealings, but at all times be subject to the
control of the Board of Directors;
(c) Subject to the approval of the Board of Directors or the executive
committee, if any, he or she shall employ all employees of the corporation, or
delegate such employment to subordinate officers, and shall have authority to
discharge any person so employed; and
(d) He or she shall make a report to the president and directors as often as
required, setting forth the results of the operations under his or her charge,
together with suggestions looking toward improvement and
<PAGE>
betterment of the condition of the corporation, and shall perform such other
duties as the Board of Directors may require.
Section 4.13 Salaries. The salaries and other compensation of the officers
of the corporation shall be fixed from time to time by the Board of Directors,
except that the Board of Directors may delegate to any person or group of
persons the power to fix the salaries or other compensation of any subordinate
officers or agents appointed in accordance with the provisions of Section 4.03
hereof. No officer shall be prevented from receiving any such salary or
compensation by reason of the fact that he or she is also a director of the
corporation.
Section 4.14 Surety Bonds. In case the Board of Directors shall so require,
any officer or agent of the corporation shall execute to the corporation a bond
in such sums and with such surety or sureties as the Board of Directors may
direct, conditioned upon the faithful performance of his or her duties to the
corporation, including responsibility for negligence and for the accounting of
all property, monies, or securities of the corporation which may come into his
or her hands.
ARTICLE V
EXECUTION OF INSTRUMENTS, BORROWING OF MONEY,
AND DEPOSIT OF CORPORATE FUNDS
Section 5.01 Execution of Instruments. Subject to any limitation contained
in the Articles of Incorporation or these Bylaws, the president or any vice
president or the general manager, if any, may, in the name and on behalf of the
corporation, execute and deliver any contract or other instrument authorized in
writing by the Board of Directors. The Board of Directors may, subject to any
limitation contained in the Articles of Incorporation or in these Bylaws,
authorize in writing any officer or agent to execute and deliver any contract or
other instrument in the name and on behalf of the corporation; any such
authorization may be general or confined to specific instances.
Section 5.02 Loans. No loans or advances shall be contracted on behalf of
the corporation, no negotiable paper or other evidence of its obligation under
any loan or advance shall be issued in its name, and no property of the
corporation shall be mortgaged, pledged, hypothecated, transferred, or conveyed
as security for the payment of any loan, advance, indebtedness, or liability of
the corporation, unless and except as authorized by the Board of Directors. Any
such authorization may be general or confined to specific instances.
Section 5.03 Deposits. All monies of the corporation not otherwise employed
shall be deposited from time to time to its credit in such banks and or trust
companies or with such bankers or other depositories as the Board of Directors
may select, or as from time to time may be selected by any officer or agent
authorized to do so by the Board of Directors.
Section 5.04 Checks, Drafts, Etc. All notes, drafts, acceptances, checks,
endorsements, and, evidences of indebtedness of the corporation, subject to the
provisions of these Bylaws, shall be signed by such officer or officers or such
agent or agents of the corporation and in such manner as the Board of Directors
from time to time may determine. Endorsements for deposit to the credit of the
corporation in any of its duly authorized depositories shall be in such manner
as the Board of Directors from time to time may determine.
<PAGE>
Section 5.05 Bonds and Debentures. Every bond or debenture issued by the
corporation shall be evidenced by an appropriate instrument which shall be
signed by the president or vice president and by the secretary and sealed with
the seal of the corporation. The seal may be a facsimile, engraved or printed.
where such bond or debenture is authenticated with the manual signature of an
authorized officer of the corporation or other trustee designated by the
indenture of trust or other agreement under which such security is issued, the
signature of any of the corporation's officers named thereon may be a facsimile.
In case any officer who signed, or whose facsimile signature has been used on
any such bond or debenture, should cease to be an officer of the corporation for
any reason before the same has been delivered by the corporation, such bond or
debenture may nevertheless be adopted by the corporation and issued and
delivered as through the person who signed it or whose facsimile signature has
been used thereon had not ceased to be such officer.
Section 5.06 Sale, Transfer, Etc. of Securities. Sales, transfers,
endorsements, and assignments of stocks, bonds, and other securities owned by or
standing in the name of the corporation, and the execution and delivery on
behalf of the corporation of any and all instruments in writing incident to any
such sale, transfer, endorsement, or assignment, shall be effected by the
president, or by any vice president, together with the secretary, or by an
officer or agent thereunto authorized by the Board of Directors.
Section 5.07 Proxies. Proxies to vote with respect to shares of other
corporations owned by or standing in the name of the corporation shall be
executed and delivered on behalf of the corporation by the president or any vice
president and the secretary or assistant secretary of the corporation, or by any
officer or agent thereunder authorized by the Board of Directors.
ARTICLE VI
CAPITAL SHARES
Section 6.01 Share Certificates. Every holder of shares in the corporation
shall be entitled to have a certificate, signed by the president or any vice
president, and the secretary or assistant secretary, and sealed with the seal
(which may be a facsimile, engraved or printed) of the corporation, certifying
the number and kind, class or series of shares owned by him or her in the
corporation; provided, however, that where such a certificate is countersigned
by (a) a transfer agent or an assistant transfer agent, or (b) registered by a
registrar, the signature of any such president, vice president, secretary, or
assistant secretary may be a facsimile. In case any officer who shall have
signed, or whose facsimile signature or signatures shall have been used on any
such certificate, shall cease to be officer of the corporation, for any reason,
before the delivery of such certificate by the corporation, such certificate may
nevertheless be adopted by the corporation and be issued and delivered as though
the person who signed it, or whose facsimile signature or signatures shall have
been used thereon, has not ceased to be such officer. Certificates representing
shares of the corporation shall be in such form as provided by the statutes of
the state of incorporation. There shall be entered on the share books of the
corporation at the time of issuance of each share, the number of the certificate
issued, the name and address of the person owning the shares represented
thereby, the number and kind, class or series of such shares, and the date of
issuance thereof. Every certificate exchanged or returned to the corporation
shall be marked "Canceled" with the date of cancellation.
Section 6.02 Transfer of Shares. Transfers of shares of the corporation
shall be made on the books of the corporation by the holder of record thereof,
or by his or her attorney thereunto duly authorized by a power of attorney duly
executed in writing and filed with the secretary of the corporation or any of
its transfer agents,
<PAGE>
and on surrender of the certificate or certificates, properly endorsed or
accompanied by proper instruments or transfer, representing such shares. Except
as provided by law, the corporation and transfer agents and registrars, if any,
shall be entitled to treat the holder of record of any stock as the absolute
owner thereof for all purposes, and accordingly, shall not be bound to recognize
any legal, equitable, or other claim to or interest in such shares on the part
of any other person whether or not it or they shall have express or other notice
thereof.
Section 6.03 Regulations. Subject to the provisions of this Article VI and
of the Articles of Incorporation, the Board of Directors may make such rules and
regulations as they may deem expedient concerning the issuance, transfer,
redemption, and registration of certificates for shares of the corporation.
Section 6.04 Maintenance of Stock Ledger at Principal Place of Business. A
share book (or books where more than one kind, class, or series or stock is
outstanding) shall be kept at the principal place of business of the
corporation, or at such other place as the Board of Directors shall determine,
containing the names, alphabetically arranged, of original shareholders of the
corporation, their addresses, their interest, the amount paid on their shares,
and all transfers thereof and the number and class of shares held by each. Such
share books shall at all reasonable hours be subject to inspection by persons
entitled by law to inspect the same.
Section 6.05 Transfer Agents and Registrars. The Board of Directors may
appoint one or more transfer agents and one or more registrars with respect to
the certificates representing shares of the corporation, and may require all
such certificates to bear the signature of either or both. The Board of
Directors may from time to time define the respective duties of such transfer
agents and registrars. No certificate for shares shall be valid until
countersigned by a transfer agent, if at the date appearing thereon the
corporation had a transfer agent for such shares, and until registered by a
registrar, if at such date the corporation had a registrar for such shares.
Section 6.06 Closing of Transfer Books and Fixing of Record Date.
(a) The Board of Directors shall have power to close the share books of the
corporation for a period of not to exceed fifty (50) days preceding the date of
any meeting of shareholders, or the date for payment of any dividend, or the
date for the allotment of rights, or capital shares shall go into effect, or a
date in connection with obtaining the consent of shareholder for any purpose.
(b) In lieu of closing the share transfer books as aforesaid, the Board of
Directors may fix in advance a date, not exceeding fifty (50) days preceding the
date of any meeting of shareholders, or the date for the payment of any
dividend, or the date for the allotment of rights, or the date when any change
or conversion or exchange of capital shares shall go into effect, or a date in
connection with obtaining any such consent, as a record date for the
determination of the shareholders entitled to a notice of, and to vote at, any
such meeting and any adjournment thereof, or entitled to receive payment of any
such dividend, or to any such allotment of rights, or exercise the rights in
respect of any such change, conversion or exchange of capital stock, or to give
such consent.
(c) If the share transfer books shall be closed or a record date set for the
purpose of determining shareholders entitled to notice of or to vote at a
meeting of shareholders, such books shall be closed for, or such record date
shall be, at least ten (10) days immediately preceding such meeting.
<PAGE>
Section 6.07 Lost or Destroyed Certificates. The corporation may issue a
new certificate for shares of the corporation in place of any certificate
theretofore issued by it, alleged to have been lost or destroyed, and the Board
of Directors may, in its discretion, require the owner of the lost or destroyed
certificate or his or her legal representatives, to give the corporation a bond
in such form and amount as the Board of Directors may direct, and with such
surety or sureties as may be satisfactory to the board, to indemnify the
corporation and its transfer agents and registrars, if any, against any claims
that may be made against it or any such transfer agent or registrar on account
of the issuance of such new certificate. A new certificate may be issued without
requiring any bond when, in the judgement of the Board of Directors, it is
proper to do so.
Section 6.08 No Limitation on Voting Rights; Limitation on Dissenter's
Rights. To the extent permissible under the applicable law of any jurisdiction
to which the corporation may become subject by reason of the conduct of
business, the ownership of assets, the residence of shareholders, the location
of offices or facilities, or any other item, the corporation elects not to be
governed by the provisions of any statute that (i) limits, restricts, modifies,
suspends, terminates, or otherwise affects the rights of any shareholder to cast
one vote for each share of common stock registered in the name of such
shareholder on the books of the corporation, without regard to whether such
shares were acquired directly from the corporation or from any other person and
without regard to whether such shareholder has the power to exercise or direct
the exercise of voting power over any specific fraction of the shares of the
corporation or from any other person and without regard to whether such
shareholder has the power to exercise or direct the exercise of voting power
over any specific fraction of the shares of common stock of the corporation
issued and outstanding or (ii) grants to any shareholder the right to have his
or her stock redeemed or purchased by the corporation or any other shareholder
on the acquisition by any person or group of persons of shares of the
corporation. In particular, to the extent permitted under the laws of the state
of incorporation, the corporation elects not to be governed by any such
provision, including the provisions of the Utah Control Shares Acquisition Act,
Section 61-6-1 et seq., of the Utah Code Annotated, as amended, or any statute
of similar effect or tenor.
ARTICLE VII
EXECUTIVE COMMITTEE AND OTHER COMMITTEES
Section 7.01 How Constituted. The Board of Directors may designate an
executive committee and such other committees as the Board of Directors may deem
appropriate, each of which committees shall consist of two or more directors.
Members of the executive committee and of any such other committees shall be
designated annually at the annual meeting of the Board of Directors; provided,
however, that at any time the Board of Directors may abolish or reconstitute the
executive committee or any other committee. Each member of the executive
committee and of any other committee shall hold office until his or her
successor shall have been designated or until his or her resignation or removal
in the manner provided in these Bylaws.
Section 7.02 Powers. During the intervals between meetings of the Board of
Directors, the executive committee shall have and may exercise all powers of the
Board of Directors in the management of the business and affairs of the
corporation, except for the power to fill vacancies in the Board of Directors or
to amend these Bylaws, and except for such powers as by law may not be delegated
by the Board of Directors to an executive committee.
Section 7.03 Proceedings. The executive committee, and such other
committees as may be designated hereunder by the Board of Directors, may fix its
own presiding and recording officer or officers, and may
<PAGE>
meet at such place or places, at such time or times and on such notice (or
without notice) as it shall determine from time to time. It will keep a record
of its proceedings and shall report such proceedings to the Board of Directors
at the meeting of the Board of Directors next following.
Section 7.04 Quorum and Manner of Acting. At all meetings of the executive
committee, and of such other committees as may be designated hereunder by the
Board of Directors, the presence of members constituting a majority of the total
authorized membership of the committee shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the members present at any meeting at which a quorum is present shall be the
act of such committee. The members of the executive committee, and of such other
committees as may be designated hereunder by the Board of Directors, shall act
only as a committee and the individual members thereof shall have not powers as
such.
Section 7.05 Resignations. Any member of the executive committee, and of
such other committees as may be designated hereunder by the Board of Directors,
may resign at any time by delivering a written resignation to either the
president, the secretary, or assistant secretary, or to the presiding officer of
the committee of which he or she is a member, if any shall have been appointed
and shall be in office. Unless otherwise specified herein, such resignation
shall take effect on delivery.
Section 7.06 Removal. The Board of Directors may at any time remove any
member of the executive committee or of any other committee designated by it
hereunder either for or without cause.
Section 7.07 Vacancies. If any vacancies shall occur in the executive
committee or any other committee designated by the Board of Directors hereunder,
by reason of disqualification, death, resignation, removal, or otherwise, the
remaining members shall, until the filling of such vacancy, constitute the then
total authorized membership of the committee and, provided that two or more
members are remaining, continue to act. Such vacancy may be filled at any
meeting of the Board of Directors.
Section 7.07 Compensation. The Board of Directors may allow a fixed sum and
expenses of attendance to any member of the executive committee, or of any other
committee designated by it hereunder, who is not an active salaried employee of
the corporation for attendance at each meeting of said committee.
ARTICLE VIII
INDEMNIFICATION, INSURANCE, AND
OFFICER AND DIRECTOR CONTRACTS
Section 8.01 Indemnification: Third Party Actions. shall have the power to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending, or completed action, or suit by or in the right of
the corporation to procure a judgement in its favor by reason of the fact that
he or she is or was a director, officer, employee, or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees) judgments, fines,
and amounts paid in settlement actually and reasonably incurred by him or her in
connection with any such action, suit or proceeding, if he or she acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interest of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. The termination of any action, suit, or
<PAGE>
proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, he or she had reasonable
cause to believe that his or her conduct was unlawful.
Section 8.02 Indemnification: Corporate Actions. The corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action or suit by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection with the
defense or settlement of such action or suit, if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification shall be made
in respect of any claim, issue, or matter as to which such a person shall have
been adjudged to be liable for negligence or misconduct in the performance of
his or her duty to the corporation, unless and only to the extent that the court
in which the action or suit was brought shall determine on application that,
despite the adjudication of liability but in view of all circumstances of the
case, the person is fairly and reasonably entitled to indemnity for such
expenses as the court deems proper.
Section 8.03 Determination. To the extent that a director, officer,
employee, or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit, or proceeding referred to in Sections
8.01 and 8.02 hereof, or in defense of any claim, issue, or matter therein, he
or she shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith. Any
other indemnification under Sections 8.01 and 8.02 hereof, shall be made to the
corporation upon a determination that indemnification of the officer, director,
employee, or agent is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 8.01 and 8.02 hereof. Such
determination shall be made either (i) by the Board of Directors by a majority
of a quorum consisting of directors who were not parties to such action, suit,
or proceeding; or (ii) by independent legal counsel on a written opinion; or
(iii) by the shareholders by a majority vote of a quorum of shareholders at any
meeting duly called for such purpose.
Section 8.04 General Indemnification. The indemnification provided by this
Section shall not be deemed exclusive of any other indemnification granted under
any provision of any statute, in the corporation's Articles of Incorporation,
these Bylaws, agreement, vote of shareholders or disinterested directors, or
otherwise, both as to action in his or her official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent, and shall inure to
the benefit of the heirs and legal representatives of such a person.
Section 8.05 Advances. Expenses incurred in defending a civil or criminal
action, suit or proceeding as contemplated in this Section may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding upon a majority vote of a quorum of the Board of Directors and upon
receipt of an undertaking by or on behalf of the director, officers, employee,
or agent to repay such amount or amounts unless if it is ultimately determined
that he or she is to be indemnified by the corporation as authorized by this
<PAGE>
Section 8.06 Scope of Indemnification. The indemnification authorized by
this Section shall apply to all present and future directors, officers,
employees, and agents of the corporation and shall continue as to such persons
who cease to be directors, officers, employees, or agents of the corporation,
and shall inure to the benefit of the heirs, executors, and administrators of
all such persons and shall be in addition to all other indemnification permitted
by law.
8.07 Insurance. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise against any liability asserted against him
or her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against any such liability and under the laws of the state
of incorporation, as the same may hereafter be amended or modified.
ARTICLE IX
FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
Board of Directors.
ARTICLE X
DIVIDENDS
The Board of Directors may from time to time declare, and the corporation
may pay, dividends on its outstanding shares in the manner and on the terms and
conditions provided by the Articles of Incorporation and these Bylaws.
ARTICLE XI
AMENDMENTS
All Bylaws of the corporation, whether adopted by the Board of Directors or
the shareholders, shall be subject to amendment, alteration, or repeal, and new
Bylaws may be made, except that;
(a) No Bylaws adopted or amended by the shareholders shall be altered or
repealed by the Board of Directors;
(b) No Bylaws shall be adopted by the Board of Directors which shall require
more than a majority of the voting shares for a quorum at a meeting of
shareholders, or more than a majority of the votes cast to constitute action by
the shareholders, except where higher percentages are required by law; provided,
however that (I) if any Bylaw regulating an impending election of directors is
adopted or amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors, the Bylaws so adopted or amended or repealed, together with a concise
statement of the changes made; and (ii) no amendment, alteration or repeal of
this Article XI shall be made except by the shareholders.
CERTIFICATE OF SECRETARY
The undersigned does hereby certify that he or she is the secretary of
Micro-Hydro Power, Inc., a corporation duly organized and existing under and by
virtue of the laws of the State of Utah; that the above and foregoing bylaws of
said corporation were duly and regularly adopted as such by the Board of
Directors of the corporation at a meeting of the Board of Directors, which was
duly and regularly held on the 5TH day of May, 1996 and that the above and
foregoing Bylaws are now in full force and effect.
DATED this 5TH day of May, 1996.
/S/ Kathleen L. Morrison
Kathleen L. Morrison
Secretary
OFFERING CIRCULAR
MICRO-HYDRO POWER, INC.
515 South 700 East #3J
Salt Lake City, Utah 84101
(INCORPORATED UNDER THE LAWS OF UTAH, SEPTEMBER 23, 1980)
10,000,000 Shares Common Stock
($0.00001 par value, non-assessable, Voting)
OFFERING PRICE $0.01 PER SHARE,
OFFERED EXCLUSIVELY TO BONA FIDE UTAH RESIDENTS
THESE SECURITIES ARE OFFERED AS A SPECULATION
AND INVOLVE A HIGH DEGREE OF RISK
<TABLE>
<CAPTION>
10,000,000 Shares PRICE TO SALES (15%) PROCEEDS TO
PUBLIC OFFERING PUBLIC (1) COMMISSION THE COMPANY
($0.00001 par value (2) (3)
non-assessable,
Voting)
<S> <C> <C> <C>
Per Share $.01 $.0015 $.00085
Maximum Offering $100,000.00 $15,000.00 $85,000.00
Minimum Offering (4) $45,000.00 $6,700.00 $38,250,00
</TABLE>
THESE SECURITIES HAVE BEEN REGISTERED WITH THE UTAH SECURITIES COMMISSION
BECAUSE SUCH SECURITIES ARE BELIEVED TO BE SUBJECT TO REGISTRATION, BUT
REGISTRATION IN NO SENSE INDICATES A RECOMMENDATION OR ENDORSEMENT BY THE
COMMISSION OF ANY SECURITY, FIRM, CORPORATION OR INDIVIDUAL. THE COMMISSION DOES
NOT PASS UPON THE MERITS OF THE SECURITIES OR THE ACCURACY OF THIS OFFERING
CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL
<PAGE>
UNDERWRITER TRANSFER AGENT
Western Capital & Securities American Registrar &
57 West Second South Transfer Company, Inc.
Salt Lake City, Utah 84101 Salt Lake City, Utah 84111
EFFECTIVE DATE OF THIS OFFERING /S/DECEMBER 8, 1980
<PAGE>
INDEX
Page
Company History and Purpose ------------------------ 3
Proposed Business Activity ------------------------ 3
Speculative and Risk Factors ------------------------ 4
Dilution -------------------------------------------- 5
Use of Proceeds ----------------------------------- 6
Management and Initial Shareholders --------------- 7
Stock Issuance -------------------------------------- 11
Transactions with Management and Promoters ---------- 12
Remuneration --------------------------------------- 13
Certain Contraracts ------------------------------- 14
Options, Warrants or Calls ------------------------ 14
Annual Reports ------------------------------------- 14
Plan of Distribution and Terms of the Offering ----- 14
Legal and Accounting ------------------------------ 16
<PAGE>
Litigation ----------------------------------------- 16
Additional Information ----------------------------- 17
Access to Books and Records
of the Corporation by Shareholders ----------------- 17
Liability of Directors ----------------------------- 18
Corporation's Year-End Date ---------------------- 20
Change in Management Purpose or Control ------------ 20
Certified Audit (Exhibit "A") ---------------- 22
Stock Purchase Agreement (Exhibit "B") -------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE U.S. SECURITIES AND
EXCHANGE COMMISSION BECAUSE THEY ARE BELIEVED TO BE EXEMPT FROM REGISTRATION
UNDER SECTION 3(a)(11) OF THE SECURITIES ACT OF 1933, AS A PART OF AN ISSUE
OFFERED AND SOLD ONLY TO PERSONS RESIDENT WITH A SINGLE STATE, BY A COMPANY
ORGANIZED AND OPERATING WITHIN SUCH STATE. THESE SECURITIES ARE TO BE OFFERED
AND SOLD ONLY TO BONA FIDE UTAH RESIDENTS THROUGH THE PURCHASE AGREEMENT HEREIN,
AND ANY SALE TO ANY OTHER PERSON MAY CAUSE THE CLAIMED EXEMPTION TO BE LOST. IF
THE ULTIMATE DISTRIBUTION OF THIS ISSUE IS NOT AN OFFERING AND SALE WHOLLY
WITHIN THE STATE OF UTAH TO BONA FIDE RESIDENTS, AND UNLESS SUCH ULTIMATE
DISTRIBUTION COMES TO REST WITHIN UTAH, THE CLAIMED EXEMPTION MAY BE LOST AND A
CONTINGENT LIABILITY CREATED THEREBY. THIS IS NOT AN OFFER NOR A SOLICITATION OF
AN OFFER IN, NOR TO ANY PERSON A RESIDENT OF ANY STATE OTHER THAN THE STATE OF
UTAH
(1) The offering price of $0.01 per share was arbitrarily established and has
absolutely no relation to issuer's asset values, earnings or past market value.
It must not be concluded that the stock has any certain value, or could be
resold at purchase price. There is no assurance that any market for the stock
may develop at any future time.
(2)Shares are offered by the Company through its agent, Western Capital &
Securities, and the agent's sales activity is on a best-efforts basis. Unless
the minimum is sold by 120 days from the effective date of this Offering
Circular, no commission will be paid. There is no assurance
<PAGE>
that any or all the shares will be sold. Agent will pay his own day-to-
day sales expenses.
(3) Proceeds to the Company are stated before deduction of expenses related to
the offering, which the Company will pay estimated at $4,000.00 including
printing, filing fees, accounting and legal.
(4) Funds from public sales will be deposited by the agent with Union Bank,
Escrow Agent, until there is a $45,000.00 balance in the escrow account. If less
is received from public sales by 120 days from the effective date of this
Offering Circular, all purchase monies will be refunded to purchasers without
any deduction or interest thereon.
NO SALESMAN, DEALER OR ANY OTHER PERSONS AUTHORIZED BY THE COMPANY TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS
OFFERING CIRCULAR IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN, AND IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE COMPANY'S AGENT.
COMPANY HISTORY AND PURPOSE
Micro-Hydro Power, Inc., hereinafter the "Company" was incorporated
under the laws of the State of Utah on September 23, 1980. The present principal
office of the Company is located at 515 South 700 East #3J, Salt Lake City, Utah
84102, which it leases for $300.00 per month from an independent party. The
Company will also work at micro- hydro power construction and installation
sites, and may also operate at its mine sites on property to be acquired
assuming that acquisitions actually are accomplished. The Company has no
operating history and has not engaged in any business of any type or nature
whatsoever. Addi tionally, the Company has no income and must be deemed to be in
the promotional stage only.
The Company was organized for two primary purposes, set forth as
follows:
1. For the research, development, sale, manufacture, distribution,
maintenance, and operation of micro-hydro power units which consist of
water-powered electrical generating machines.
<PAGE>
2. To engage in the acquisition of natural resource leases in the
areas including but not limited to oil, gas, coal, gold, uranium, silver,
mercury and related minerals, and to also engage in the operation of the
acquired interests and to market the products derived from the acquired
properties.
3. In addition to the foregoing, the Company may
engage in any legitimate business it feels has profit potential.
PROPOSED BUSINESS ACTIVITIES
The Company reserves the right to invest in any project whatsoever,
and the offering comprehended hereby may to that extent be deemed to be a "blind
pool". However, see "Use of Proceeds" wherein it is explained and designated
that the net proceeds will be used approximately 90% for the development of the
micro-hydro phase of the business, and 10% for the mining phase of the Company's
business. The Company intends in its initial phases to develop the micro-hydro
unit, primarily within the State of Utah. In subsequent business activities
anticipated to occur after the first year's operation, it is hoped that
substantial business operations can be commenced in locations outside the State
of Utah.
-3-
SPECULATIVE AND RISK FACTORS
The securities offered hereby are subject to the risks
inherent in new ventures and are highly speculative. Prospective
investors should consider the following.
(1) The Company has no operating history or earnings,
and is in its promotional stage.
(2) Substantially all of the financial risks of the Company's
proposed business activities will be borne by public investors.
<PAGE>
(3) Whether the Company can undertake its proposed business
activities is totally dependent upon the success of this offering of which no
assurance can be given.
(4) Even if this offering is a success, no assurance can be given
that the contemplated business activities of the Company will prove successful
or profitable, or that the Company will be able to generate adequate cash flow
to continue its proposed business activities.
(5) The Company's proposed business activities will center in
highly competitive fields. Since the Company's competitive position in the
mining industry is totally insignificant, it may not be able to effectively
compete with other larger companies engaged in similar endeavors. The Company
will be competing with numerous other entities, mostly of which are larger, well
established companies with greater assets and financial reserves than the
Company will possess. The Company is unable to estimate the effect which any
such competition will have on its proposed business activities, but the effects
thereof would certainly be a substantial detriment to the Company.
(6) The offering price of the Company's stock has been
arbitrarily determined and bears no relationship to book value, earnings or
other established criteria of value. There is no present market for the
Company's stock, and there is no assurance that the offering will result in the
formation of an established market for the Company's stock.
(7) All of the Company's officers and directors except the
President have other full-time business or professional pursuits, and they will
not devote full time to the business affairs of the Company.
(8) None of the Company's's officers or directors have
significant experience or expertise in the micro-hydro power industry or in the
mining industry.
-4-
(9) The Company's proposed business activities will be subject to the
regulation of various federal, state and county governmental agencies, and the
cost of complying with the laws and regulations of any such governmental
agencies may prove prohibitive.
<PAGE>
(10) With respect to the mining business proposed by the Company,
the Company has not made any final determination as of the date of this Offering
Circular as to what prospective venture to engage in. Any improper determination
as to which project to engage in may cause the Company to render decisions which
would involve it in non-profitable activities without the opportunity for the
stockholders to play a part in this determination, and result in a loss of part
or all of the investor's capital. The proposed business activities, i.e., the
mining industry or micro-hydro power industry, involve extremely high degrees of
risk.
(11) The Board of Directors shall have the sole right to determine
the type of mining project engaged in.
DILUTION
If this offering is fully sold, and no assurance can be given that
such will be the case, then and in that case, pub1ic investors will 10,000,000
shares of the Company's common voting stock then issued and outstanding, for
which they will have paid cash in the amount of $100,000.00, and the present
stockholders (officers, directors and promoters) will own 4,559,022 shares
(31.3%) of the common voting stock of the Company issued and outstanding, for
which they will have paid in cash $12,013.68, and $9,565.00 in design rights
value. (See "Transactions with Management" and "Financial Statements", herein.)
As of the date of this Offering Circular, the Company has 4,559,022
shares of its common voting stock of a par value of $0.00001) per share issued
and outstanding, with a net tangible asset value of approximately $0.004732 per
share. Assuming this offering is fully sold, of which there can be no assurance,
immediately following the offering, the common voting stock of the Company will
have a net tangible asset value of approximately $0.007045 per share. Thus, the
present stockholders (officers, directors, and promoters) will experience a
substantial increase in the value of their shares of approximately $0.002313 per
share and conversely, the public investors will experience an immediate
substantial decrease in the value of their shares of approximately $0.002955 per
share. Thus, the public will suffer a dilution of 29.557% from public offering
price of one cent $0.01 per share.
<PAGE>
-5-
The above computations are based upon the sale of 10,000,000 shares
offered hereby, as to which no assurance can be given. The sale of less than all
10,000,000 shares will result in an additional dilution to the public investors
beyond that stated above.
USE OF PROCEEDS
If all 10,000,000 shares offered hereby are sold, of which there
can be no assurance, and assuming that all shares will be sold, the proceeds
shall be allocated for the purposes, in the amounts and in the order of priority
indicated herein; however, the Company reserves the right to reassess and
reassign priorities and applications as good business practices require, in a
manner not inconsistent with the Company's proposed business activities as
described under the caption, "Company History and Purpose".
Description of Expenditures:
<TABLE>
<CAPTION>
Maximum Minimum
<S> <C> <C>
Gross $100,000.00 $ 45,000.00
Commission 15,000.00 6,750.00
Other Expenses 4,000.00 4,000.00
Net $ 81,000.00 $ 34,250.00
----------- -----------
Rent ($300/mo) $ 1,800.00 (6 mos) $ 900.00 (3 mos)
Secretary (300/mo) 1,800.00 (6 mos) 900.00 (3 mos)
Miscellaneous Office
Expenses (100/mo) 600.00 (6 mos) 300.00 (3 mos)
Water Rights Acquisition 34,560.00 14,467.00
Costs of Construction includ-
<PAGE>
ing Inventory and Sales 26,880.00 11,253.00
Miscellaneous Expenses 7,680.00 3,215.00
Research and Development
including Travel Expenses 7,680.00 3,215.00
TOTAL $ 81,000.00 $ 34,250.00
</TABLE>
MANAGEMENT AND INITIAL SHAREHOLDERS
There are presently seven (7) stockholders who own all the Company's
issued and outstanding shares of common voting stock. These stock certificates
bear a legend restricting transfer and sale. The following tabulation indicates
the ownership of these shares of common stock, the consideration paid to the
Company, and information concerning Officers, Directors and Shareholders of the
Company.
<TABLE>
<CAPTION>
Consideration
Position and Present No of %Owned if Paid to Issuer Per
Annual Shares Owned Offering is for Shares Share
Name and Resi- Age Remuneration Percentage Completed Shown Payment
dential Address
<S> <C> <C> <C> <C> <C> <C>
Mel Mullinen 45 President & 1,753,468 12.0439% $4,500.00 $0.00257
531 W. 5465 S. Chief Operat-
Salt Lake City, UT ing Officer 38.462%
84107 $48,000.00/yr
Thomas E. Redd 46 Chairman of 911,804 06.2628% $ 9.11804 $0.00001
Box 184 Board & Chief
Moab, UT 84532 Executive
Officer
$24,000/yr*
Brent H. Meikle 30 Financial 490,973 03.3723% $3,750.00 $0.00764
608 Wasatch Blvd. Vice-President
Smithfield, UT Part-time- 10.769%
84335 Salary TBD
Richard Bunker 47 Director
Warm Creek Ranch
Gandy, Ut 84728 455,902 03.1310% $9,565,00** $0.02098
and
Richard Kunz 45 Secretary/ 10.000%
1420 W. 5770 S. Treasurer
Salt Lake City, UT Part-time-
84107 Salary TBD
Alan Hawks 26 Marketing 490,973 0.3723% $3,750.00 $0.00764
410 S. 601 E. Vice-President
Salt Lake City, UT Part-time- 10.769%
84107 Salary TBD
Richard Packham 50 Stockholder 455,902 03.131% $ 4.55902 $0.00001
Total Shares Outstanding 4,559,022 31.313% $21,578.68
100%
</TABLE>
*Thomas E. Redd has agreed to expend 50% of his time with the Company. It may be
necessary for him to spend more of his time with the Company, and should the
demand arise, and Mr. Redd agree to do so, he will be paid proportionately more
depending upon the percentage of his time that he spends.
**Refer to page 12 for explanation.
No Officer, Director or Promoter, except the President, will devote a
substantial amount of time in conducting the business operations of the Company.
Time will be devoted to the Company by Officers and Directors on an "as needed"
basis. The President will devote full time to the corporation.
<PAGE>
The following table sets forth the capitalization of the Company as of the
date of this Offering Circular and adjusted to reflect the issuance of all
shares offered hereby:
<TABLE>
<CAPTION>
Class of Shares Outstanding Amount to be Outstanding
stock Authorized Shares if Shares are Sold(Note1)
<S> <C> <C> <C>
Common 30,000,000 4,559,022 14,559,022
Stock ($0.00001
($0.00001
par value)
</TABLE>
(1) No assurance can be given that any number of the shares
offered by means of this Offering Circular will be sold.
The following sets forth individual resumes of the Officers and
Directors of the Company:
Mel Mullikin
Born in 0tto, Wyoming in 1935. His family later moved to Salt Lake City,
Utah, where he graduated from South High School in 1954. Soon after graduation,
he enlisted in the U.S. Army Infantry Special Services stationed in Fairbanks,
Alaska until 1959. In 1960 he started working for Hercules as an Industrial
X-Ray Specialist in the Quality Control Center. For approximately one year he
worked on missiles at Cape Kennedy in Quality Control testing materials. In 1963
Mr. Mullikin started his own business known as Universal Testing where he worked
for the next 18 years. During this time, MPM Products, a company specializing in
the sales and installation of x-ray equipment was started. He has four children
and resides in Murray, Utah.
-8-
Thomas E. Redd
Thomas E. Redd is the President of Wasatch Financial
Corporation which has its principal place of business in
Blanding, Utah. That corporation is in good standing with the
Secretary of State's office as of the date of this prospectus.
Mr. Redd is involved in the development of real property in Moab,
Utah, and was previously an authorized Ford Dealer. Mr. Redd
intends to devote one-half of his time to the Company, but will
<PAGE>
substantially involved in his other business activities
concurrently with the services which he intends to render to the
issuer. Mr. Redd is residing, at the present time in Moab, Utah
with his wife and two children. Mr. Redd is a high school
graduate and has taken sales training courses, the Ford Dealer's
courses, and has attended the University of Utah.
Brent H. Meikle
Mr. Meikle, age 30, was born in Logan, Utah. He graduated from
Sky View High School in 1968 and from Utah State University in 1975 with a
degree in accounting. Upon graduation, he immediately went to work for Duane
Barker and Associates CPA'S, a local firm in Logan, Utah. During his
employment for this company, he spent a year serving as Controller for an
interstate trucking company, International Contract Carriers, located in
Houston, Texas. After the system and controls were established with this
company, he again devoted his full attention to public accounting. In August
of 1977 he earned his CPA in the State of Utah. At that time, he, along with
another CPA, took over ownership of Duane Barker and Associates CPA'S. The
practice began to specialize in income tax and consulting for small
businesses. In 1979, Mr. Meikle and his partner sold their CPA practice and
started their own firm as Financial and Business Consultants. He currently
lives in Smithfield, Utah with his wife and four children.
-9-
Alan Hawks
Mr. Hawks, age 26, was born in Montpelier, Idaho, graduated from
Bear Lake High School in 1972, and then later in 1974 from LDS Business College
with a degree in accounting and business management. Upon graduation, he went to
work for Jerry's Welding and Construction as office manager, then in 1975
attended Rick's College in Rexburg, Idaho. From 1975 through, 1977, he was on a
mission for the LDS Church in Pennsylvania.
<PAGE>
Upon returning, he became self-employed as a financial consultant. He is
currently a partner in the firm of Surety Resource Corporation, and also
Vice-President of Westex, a precious metal and diamond brokerage company based
in Salt Lake. He is single and resides in Salt Lake City, Utah.
Richard L. Kunz
Richard L. Kunz is 45 years old and a Utah native. He
has been involved in the construction field for the past 27 years
and a licensed contractor and realtor. He has been the President
of his own company, Gracious Living, Inc., since 1972. He is
also the principal owner of Richard L. Kunz Construction Company.
Mr. Kunz has participated in the construction of many
residential and apartment projects throughout the Salt Lake area
and is a member of the National Builders Association and the
Greater Salt Lake Homebuilders Association. Although Mr. Kunz
has attended various seminars relating to the oil and gas
business, he has no practical experience in the acquisition,
development and sale of oil and gas properties. Mr. Kunz
graduated from high school in Salt Lake City, Utah.
Richard Bunker
Mr. Bunker was born in Fillmore, Utah on October 10, 1933. He is
married to Edith Scott and resides at Gandy, Utah at a ranch which he operates
there, together with his family. He also owns a home in Salt Lake City, Utah and
resides part of the time in Salt Lake City, Utah. Mr. Bunker has been active in
the printing industry, and has obtained several patents on printing process
equipment. He is presently self-employed in the printing industry. He is a high
school graduate and attended the University of Utah from 1952 to 1955.
STOCK ISSUANCE
1. Mel Mullikin has purchased 38.462% of the Company's
stock, and owns 1,753,468 shares for which he paid $4,500.00 or
$0.00257 per share. Mr. Mullikin is the President of the
Company, and was sold this stock at this rate as a promotional
consideration, part of which was an inducement for him to become
President of the Company, and render his efforts to the Company in this regard.
<PAGE>
2. Thomas E. Redd is the owner of 911,804 shares of
stock of the Company, which as of this point and prior to public
sale, constitutes 20% of the outstanding stock of the
Company. Mr. Redd paid $9.11804 for that stock, or $0.00001 per
share.
3. Brent Meikle is the owner of 490,973 shares of
the stock of the Company, which as of this point and prior to
public sale constitutes 10.769% of the outstanding stock of the
Company. Mr. Meikle paid $3,750.00 for that stock, or $0.00764
per share.
4. Alan Hawks is the owner of 490,973 shares of the
stock of the Company, which as of this point and prior to public
sale constitutes 10.769% of the outstanding stock of the Company.
Mr. Hawks paid $3,750.00 for that stock, or $0.00764 per share.
5. Richard Bunker and Richard Kunz are the owners of 455,902 shares
of the stock of the Company, which as of this point and prior to public sale
constitutes 10% of the outstanding stock of the Company. They paid $9,565.00 for
that stock, or $0.02098 per share.
6. Richard Packham is the owner of 455,902 shares of the
stock of the Company, which as of this point and prior to public
sale constitutes 10% of the outstanding stock of the Company.
Mr. Packham paid $4.55902 for that stock, or $0.00001 per share.
TRANSACTIONS WITH MANAGEMENT AND PROMOTERS
A. Issuance of Shares.
Certain transactions have occurred between the Company and its
Officers, Directors and Promoters. These transactions have not been negotiated
at "arms length" as the parties to these transactions acted individually as well
as Officers and Directors of the Company. Shares of stock have been issued to
seven individuals in exchange for consideration other than at the rate of one
cent per share which will be paid by the public. Those transactions are
summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
Name Number of Shares Amount Paid
<S> <C> <C>
Mell Mullikin 1,753,463 $4,500.($0.00257/Share)
Alan Hawk 490,973 $3,750.($0.00764/Share)
Brent Meikle 490,973 $3,750.($0.00764/Share)
Thomas E. Redd 911,804 $ 9.11804($0.00001/Share)
Richard Bunker/Richard Kunz 455,902 $9,565.($0.02093/Share)*
Richard Packham 455,902 $ 4.55902($0.00001/ Share)
4,559,022 $21,578.68
</TABLE>
These Shares of common voting stock were issued as fully paid and
non-assessable.
B. The Micro-Hydro Power System Contract.
Richard Bunker and Richard Kunz have heretofore entered into a
contract with the Company whereby they have received 455,902 shares of stock and
royalty interest. The contract provides for payment to Bunker and Kunz
designated in the contract as Designers of the following consideration:
3. Hardware Royalties. The Designers shall receive an
amount equal to 5% of the gross sales price on all sales of
hardware items by MHP to its customers, which proceeds shall be
accounted for and paid to the Designers on a quarterly basis
- -------------------
* The $9,565.00 represents an appraisal of the value of design rights and
potentially patentable inventions and distribution plans and leases conveyed to
the Company by Richard Bunker and Richard Kunz for which they have received the
stated number of shares of stock plus royalty interests (see Section B, The
Micro-Hydro Power System Contract) and does not represent an amount of cash paid
for stock. The rest of the items above represent actual cash paid.
-12-
<PAGE>
that accounting shall be made for the first, second, third and
fourth quarters of each calendar year within thirty (30) days
after the end of said quarter, with the accounting to be mailed
within said 30-day period together with a check to the Designers
at such address as the Designers shall designate.
4. Power Royalties. The Designers Shall receive 10% of all
power received by MHP from any of its customers, or 10% of the
proceeds thereof, whichever is more, or at the election the
Designers to be accounted for and paid over in the same manner as
provided in the next proceeding paragraph.
C. Anticipated Benefits of Management, Incorporators, or Holders of 10%
or more of the Company Stock.
It is not anticipated that any relatives, associates, or affiliates
of any management member, incorporator, or holder of 10% or more of any of the
Company stock will receive any benefit directly or indirectly from the Company's
transactions.
REMUNERATION
The President and Chief Operating Officer of the Company, Mel
Mullikin, will devote full-time to the Company, and will receive a salary of
$4,000.00 per month, none of which will be paid out of the Proceeds of the
offering at a salary to be payable only in the event that funds exclusive of the
offering proceeds are available for the payment thereof. The Chairman of the
Board and Chief Executive Officer, Thomas E. Redd, will devote one-half time to
the Company, and will receive a salary of $2,000.00 per month. He may at a
subsequent date become employed full-time for the Company as the need may arise,
and in that event, would receive a salary of $4,000.00 per month, none of which
will be paid out of the proceeds of the offering at a salary to be payable only
in the event that funds exclusive of the offering proceeds are available for the
payment thereof. Other than the forgoing, none of the Officers, Directors or
Promoters will devote full-time or a substantial amount of time to the Company
in its business operations, and no compensation is presently being paid or
accruing to the benefit of any other such person. No compensation will be paid
to any of the Officers, Directors or Promoters of the Company out of the
proceeds of the offering (see "Use of Proceeds").
-13-
CERTAIN CONTRACTS
<PAGE>
On September 26, 1980, the Board of Directors of the Company
adopted a resolution appointing the American Registrar and Transfer Company,
Inc., a Utah corporation, as the transfer and registrar agent for the Company
OPTIONS, WARRANTS OR CALLS
There are no issued or outstanding options, warrants or calls
entitling any person to purchase any shares of common voting stock of the
Company; however, the Company may adopt a plan in the future pursuant to which
options, warrants or calls would be made available to Officers, Directors and
key personnel as an incentive to attract and maintain their services on behalf
of the Company. Presently, the Company has no agreement or understanding,
express or implied, with anyone concerning such options, warrants, or calls, and
any such plan will first be submitted to the stockholders of the Company for
their approval and will be subject to their approval.
ANNUAL REPORTS
The Company will supply to the Utah State Securities Commission
and to the shareholders of record financial statements within 30 days subsequent
to its year-end prepared in accordance with generally accepted accounting
standards which shall include an itemization and explanation of the use of
corporate funds consistent with the Use of Proceeds section heretofore set
forth, and annual reports including a statement of profit and loss and a balance
sheet.
PLAN OF DISTRIBUTION AND TERMS OF THE OFFERING
The Company has entered into a "best efforts" Agent's Agreement
with Western Capital & Securities:
The Agreement provides in part:
the Agent will use his "best efforts" to sell the shares
of common voting stock offered by means of this offering
circular to bona fide residents of the State of Utah only;
The Agent has not made any commitment to purchase any of
the shares offered hereby;
The Agent is entitled to receive a fifteen percent (15%)
sales commission on the sale of the shares of common
voting stock offered hereby which is equivalent to $0.0015
per share for each share sold, subject however to the sale
of a minimum of 4,500,000 shares.
The foregoing is a summary only and does net purport to set out
completely all terms of the Agreement between the Company and the Agent. (See
"Additional Information" herein.)
Terms of the Offering
The shares of common voting stock offered by means of this
Offering Circular are offered for cash and to bona fide residents of the State
of Utah only. As required by the Utah Securities Commission, the Company has
agreed to provide and has provided for escrow and impound of the proceed of the
initial portion of the offering (4,500,000 - $45,000.00). All payments for the
shares of common voting stock purchased are to be made by cash, check or money
order payable to:
Union Bank
Escrow Account #10-01114-6
Should Fewer than 4,500,000 shares of common voting stock Offered
hereby be sold by the time of expiration of one hundred twenty (120) days of the
effective date hereof, the entire amount paid into the escrow account by each
public investor will be refunded in full by the bank directly to each public
investor, without any deduction therefrom or interest thereon. Should 4,500,000
shares of common voting stock actually be sold within one hundred twenty (120)
days from the effective date hereof, the bank will advise the Utah Securities
Commission and upon approval of the Commission, the bank will pay all of the
gross case proceeds to the Company. Thereafter, should less than the balance of
this offering (4,500,000 - $45,000-00) be fully sold, no provision has been made
for impound, escrow or return of any funds to the public investor.
Each public investor who purchases any of the shares of common
voting stock offered hereby shall be required to execute a Stock Purchase
Agreement which requires that the Purchaser represent, warrants and agree as
follows:
1. "... the Purchaser(s)(or any designate) is a bona fide
resident of the State of Utah, and that if it should be determined that
the purchaser(s) is not a bona fide resident of the State of Utah at the
time of offer, sale and issuance of stock certificates representing such
shares of common voting stock, the purchase covered by this Stock
Purchase Agreement shall be null and void;..."
-15-
Each public investor must consent to the imprinting of a legend on each
stock certificate representing any of the shares of common voting stock offered
hereby which shall state as follows:
THESE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED IN
RELIANCE ON THE SECTION 3(a)(11) (INTRASTATE) EXEMPTION FROM THE
SECURITIES ACT 0F 1933. THE SHARES MAY ONLY BE SOLD TO BONA FIDE
RESIDENTS OF THE STATE OF UTAH DURING A NINE (9) MONTH PERIOD
COMMENCING WITH THE DATE OF THE LAST SALE UNDER THE INTRASTATE
0FFERING OF THE ISSUER.
A copy of the Stock Purchase Agreement is attached hereto and incorporated by
reference.
LEGAL AND ACCOUNTING
Lowell V. Summerhays, Attorney at Law, of the firm of Robinson,
Guyon, Summerhays & Barnes, which firm's address is 1220 Continental Bank
Building, Salt Lake City, Utah 84101, has furnished the Company with a legal
opinion authenticating the legality of the shares proposed to be offered herein.
In accordance with Utah Code Annotated ss.71-1-10, (the Utah Uniform Securities
Act) counsel has provided a written legal opinion which is annexed as an exhibit
to the Registration Statement on file with the Utah Securities Commission, which
opinion provides in part that the securities, when sold, will be legally issued,
fully paid, and non-assessable.
The certified public accountant for the Company is Daniel L.
Anderson, CPA, P.O. Box 41, 225 West 100 South, Providence, Utah, who has
prepared the accompanying audited financial statement.
LITIGATION
To the best knowledge of the Company, its officers, Directors and
Promoters, neither the Company nor any of its Officers, Directors or Promoters
are parties to any material legal proceedings or litigation and no such legal
proceeding or litigation is contemplated as of the date of this Offering
Circular.
-16-
<PAGE>
ADDITIONAL INFORMATION
The Company has filed with the Utah Securities Commission an
application for Registration with respect to the securities offered hereby. The
application contains certain information which investors may wish to review.
Copies of all such documents filed with the Commission are matters of public
record and may be inspected by any interested party at the address of the
Securities Commission.
Statements contained in this Offering Circular as to the contents
of any contract or documents described herein are not necessarily complete, and
where such contract or document is an exhibit to the application on file with
the Utah Securities Commission, each such statement is qualified in all respects
by the provisions of such exhibits, to which reference is hereby made for the
full statement of the provisions thereof.
Any and all amendments to the prospectus will be promptly filed
with the Commission and distributed to the purchasers of the offering.
ACCESS TO BOOKS AND RECORDS OF CORPORATION
BY SHAREHOLDERS
The Company will keep correct and complete books and records of
account, and will keep minutes of the proceedings of the stockholders meetings
and board of directors of meetings, and will keep at its registered office or
principal place of business or at the office of its transfer agent or registrar
a record of its shareholders, giving the names and addresses of all shareholders
and the number of shares held by each.
Any person who is a shareholder of record may upon written demand
stating the purpose thereof have the right to examine in person or by agent or
attorney at any reasonable time or times, for any proper purpose the foregoing
referred to books and records of accounts, minutes and records of shareholders
and stockholders ledger, and to make extracts therefrom.
<PAGE>
Upon written request of any shareholder of the Company, the
Company will mail to the shareholder its most recent annual or quarterly
financial statements, showing in reasonable detail its assets and liabilities,
and the results of this operation.
-17-
LIABILITY OF DIRECTORS
Should anyone consider becoming a director in the corporation or
electing a director of their choice, they should consider the liabilities
imposed upon a director by Utah Code Ann. 16-10-44 which is set forth as
follows:
16-10-44. Liability of directors in certain cases. - In
addition to any other liabilities imposed by law upon-
directors of a corporation:
(a) Directors of a corporation who vote for or assent to the
declaration of any dividend or other distribution of the assets of a
corporation to its shareholders contrary to the provisions of this
act or contrary to any restrictions contained in the articles of
incorporation, shall be jointly and severally liable to the
corporation for the amount of such dividend which is paid or the
value of such assets which are distributed in excess of the amount
of such dividend or distribution which could have been paid or
distributed without a violation of the provisions of this act or the
restrictions in the articles incorporation.
(b) Directors of a corporation who vote for or assent to the
purchase of its own shares contrary to the provisions of this act
shall be jointly and severally liable to the corporation for the
amount of consideration paid for such shares which is in excess of
the maximum amount which could have been paid therefor without a
violation of the provisions of this act.
(c) The directors of a corporation who vote for or assent to any
distribution of assets of a corporation to its shareholders during
the liquidation of the corporation without the payment and discharge
of, or making adequate provision for, all known debts, obligations,
and liabilities of the corporation shall be jointly and severally
liable to the corporation for the value of
<PAGE>
such assets which are distributed., to the extent that such debts,
obligations, and liabilities of the corporation are not there after
paid and discharged.
(d) The directors of a corporation who vote for or assent to the
making of any loan secured by shares of the corporatton, shall be
jointly for the and severally liable to the corporation for the
amount of such loan until the repayment thereof.
(e) If a corporation shall commence business before it has
received at least one thousand dollars as consideration for the
issuance of shares, the directors who assent thereto shall be
jointly and severally liable to the corporation for such part of one
thousand dollars as shall not have been received before commencing
business, but such liability shall be terminated when the
corporation has actually received one thousand dollars as
consideration for the issuance of shares.
A director of a corporation who is present at a meeting of its
board of directors at which action on any corporate matter is taken
shall be presumed to have assented to the action taken unless his
dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting
as the secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in
favor of such action.
A director shall not be liable under subparagraphs (a) , and (b)
or (c) of this section if he relied and acted in good faith upon
financial statements of the corporation represented to him to be
correct by the president or the officer of such corporation having
charge of its books of account, or stated in a written report by an
independent public or certified public accountant or firm of such
accountants fairly to reflect the financial condition of such
corporation, nor shall he be so liable if in good faith in
determining the amount available far any such dividend or
distribution he considered the assets to be of their book value.
-19-
<PAGE>
Any director against whom a claim shall be asserted under or
pursuant to this section for the payment of a dividend or other
distribution of assets of a corporation and who shall be held liable
thereon, shall be entitled to contribution from the shareholders who
accepted or received any such dividend or assets, knowing such
dividend or distribution to have been made in violation of this act,
in proportion to the amounts received by them respectively.
Any director against whom a claim shall be asserted under or
pursuant to this section shall be entitled to contribution from the
other directors who voted for or assented to the action upon which the
claim is asserted.
CORPORATION'S YEAR-END DATE
The corporation has a calendar fiscal year which runs from January 1st
to December 31st of each year. Therefore, the Company's fiscal year end
financial statement will be provided as of an effective date of December 31,
1980.
CHANGE IN MANAGEMENT PURPOSE OR CONTROL
In the event that any change occurs in the management, purpose or
control of the Company, or any material or adverse condition affecting the
corporation occurs, a statement to this effect shall be promptly provided to the
Utah State Securities Commission, the market makers, and the stockholders. The
initial shareholders (see "Management and Initial Shareholders") have been
issued restricted stock. Each certificate which has been issued as referred to
in that section of the prospectus, has had the following legend stamped upon the
face thereof:
The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may not
be sold or otherwise transferred unless a compliance with the
registration provisions of such Act has been made or unless
availability of an exemption from such registration provisions has
been established, or unless sold pursuant to Rule 144 under the
Securities Act of 1933.
-20-
<PAGE>
No other stock has been issued by the corporation and no other stock will be
issued prior to the completion of the public offering other than those shares
required to be issued to the public who purchased pursuant to the offering
proposed hereby. Thereafter, it is contemplated that any restricted shares will
be issued in accordance with normal corporate procedure and all applicable state
and federal laws.
-21-
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