1997
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street N.W.
Washington, D.C. 20549
_______________
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER
0-0000
AMQUEST International, Ltd.
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(Exact Name Of Registrant As Specified In Its Charter)
NEVADA 65-067-0779
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(State Or Other Jurisdiction (I.R.S. Employee
Of Incorporation Or Identification
Organization) Number)
4901 NW 17th Way
Suite 405 Ft. Lauderdale, FL 33309
(954) 772-9541 Fax: (954) 772-3112
Attention: David A. Morgenstern, President
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(Address, Including Zip Code, And
Telephone Number, Including Area Code,
Of Registrant's Principal Executive Offices)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which each
to be so registered class is to be registered
----------------------- ---------------------------------------
Not Applicable Not Applicable
Securities Registered Pursuant to Section 12(g) of the Act:
Common Shares $.001 par value
---------------------------------------
Title of each class to be so registered
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Table of Contents
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Item 1. Business 3-12
Item 2. Financial Information - Management's Discussion and Financial Analysis 12-23
Item 3. Properties 24
Item 4. Security Ownership of Certain Beneficial Owners and Management 24-25
Item 5. Directors and Executive Officers of the Company 25-27
Item 6. Executive Compensation - Other Compensation - Stock Option Plan 29-30
Item 7. Certain Relationships and Related Transactions 30-31
Item 8. Legal Proceedings 31
Item 9. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters 32
Item 10. Recent Sales of Unregistered Securities 33-35
Item 11. Description of Registrant's Securities to be Registered 35-38
Item 12. Indemnification of Directors and Officers 38-39
Item 13. Financial Statements and Supplementary 39
Item 14. Changes in and Disagreements With Accountants on Accounting and Financial
Disclosure 39
Item 15. Exhibits, Consolidated Financial Statement, and Financial Statement Schedules
A. 1. Financial Statements, Notes and Schedules 40-54
B. Signature Page 55
C. Documents Filed as Part of the Report
3. Articles of Incorporation and by-laws 55-84
4. Instruments Defining The Rights Of Security Holders 85-137
5. Legal Opinion 142-143
16. Auditor's Letter 144-145
22. Subsidiaries of the Registrant - Articles of Incorporation 146
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ITEM 1. BUSINESS
GENERAL OVERVIEW
Amquest International, Ltd., ("the Company") (b.b.OTC:AMQI), is a Corporation
organized under the laws of the State of Nevada. The Company was incorporated as
Comstock South America on March 8, 1988. On August 12, 1994, the Company changed
its name to International Medical Ventures, Ltd. and then to International
Mergitech Ventures, Ltd. on July 31, 1995. From January through November, 1995,
it traded at very low volume on the Bulletin Board, OTC symbol IMVT (low $2.85
high $5.00). In order to reflect a revised business purpose, the Company changed
its name to Amquest International, Ltd on January 29, 1996. On May 5, 1996, the
Company filed a revised 15c2-11 Registration and began trading as AMQI on June
10, 1996 (1996 low $31/2; high $77/8). At December 31, 1996, the Company
achieved a Total Shareholders' equity of approximately $285,072,526, which is a
Net Tangible Book Value of $7.62 per Common Share based upon 37,415,000 Common
Shares outstanding.
The Company has actively pursued acquisition candidates to implement it's
business objectives and it has a very specific business plan. The initial phases
of this plan are underway and are detailed throughout this Report. For instance,
the Company has commenced operations in its investment banking segment and in
1996, it recorded approximately $9,594,413 in unrealized income from these
investment activities. (See "Financial Statements"). Further, It has developed a
series of proprietary products to be offered into the mortgage lending and
consumer credit services industries. While these products work efficiently in
virtual reality models on the computer as research projects, they are untested
in the open market at large. The Company intends to operate as a financial
services and investment holding corporation that will initially perform
investment banking and business advisory services. It plans to then expand into
mortgage and consumer credit lending, predominantly through mergers and
acquisitions, and then into asset management. Through December 31, 1996, the
Company's operations were limited to research and development of its business
products, the formulation of its future strategies, and consulting. The Company,
through its subsidiary, Amquest Advisors, LLC., will manage the Company's
multi-portfolio mutual fund, Amquest Matrix Funds, Inc., registered on August
28, 1996, due to be effective shortly.
The Company's business strategy is founded on the supposition that the
crossroads where homes are bought and sold is an underutilized intersection for
commerce. To the Company, this premise means that there are more financial
services that can be marketed as part of the residential real estate sale and
closing process than those currently being targeted by operating companies. The
Company's series of financial services products are intended to enable borrowers
to build their retirement savings while they are repaying their loans. The
Company calls this system "Investment Lending," a term coined by the Company.
Investment Lending involves embedding investment products (such as mutual funds
and life insurance) inside the borrower's normal loan and debt payments. The
borrower's savings is thereafter built as they repay. Management's strategic
premise for developing these products is that, by doing so, it can capture a
certain niche of the home mortgage market, targeting the $100,000 to $124,000
bracket, which is statistically the average residential home sale in most US
metropolitan areas.
By closing and servicing loans with capital that it raises itself, and by
redistributing portions of loan cash flow into Company-directed investment
programs, the Company believes it can achieve consistent earnings growth. The
objective of Investment Lending is to lower the effective interest rate paid by
borrowers. Under this system, payments made on loans (homes, autos, etc.), which
normally consist of principal and interest, would also include a portion of the
payment being redistributed into investment products which directly benefit the
borrower. Investment Lending is a value-added savings system that might be
considered similar to Social Programs in that the borrower as beneficiary does
not have to be convinced or sold on the reasons why contributions should be made
to retirement. Borrowers, in general, pay no more than what they would pay in
interest and principal on a similar loan. Since the Company redistributes its
interest income to benefit the borrower, the borrower has minimal exposure. To
the borrower, they are paying routine interest. To the Company, this is cash
flow to invest. At the end of the loan, because the Company has shared its
investment income with the borrower, instead of just charging interest, the
borrower has something more to show for the money paid than just the product
bought. Borrowers have, in theory, "Money Now and More Later," a marketing phase
coined by the Company.
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BUSINESS DEVELOPMENT AND STRATEGY
On January 15, 1996, the Company established a multi-year goal to raise two or
more billion in equity capital through the offering of its' corporate
securities. This strategic initiative was established by Management to posture
the Company squarely into the mortgage banking and consumer credit industries
through the development of subsidiaries. The Company plans to also function as
an investment holding company. In 1996, it initiated the registration and
management of its own mutual funds, and it intends to market its own
private-label, collateralized securities in the future to raise additional
capital for its lending operations that are in the planning stages. Management's
goal is to bundle realty and mortgage operations with certain aspects of
consumer credit services, and then, by adding certain investment and insurance
services to these lending operations, it believes it can create a new marketing
approach that could provide the Company with a competitive advantage. At the
filing date of this Report, many of these management's goals are now in various
stages of completion and further development. The Company plans: 1) to continue
to pursue growth through the exchange of corporate securities for fixed or
liquid assets; 2) to sell additional registered and unregistered corporate
securities, in the form of debt and equity instruments and raise additional
capital, and; 3) to acquire profit-producing companies.
The Company has incorporated two subsidiaries: These are:
1. Homevest Mortgage Corporation. This is the Company's Mortgage Services
segment, ("Homevest"), which was incorporated in the State of Delaware on
September 27, 1996. The Company plans for Homevest to consist of mortgage
merchant banking, including purchasing and selling residential mortgage loans
and residential mortgage servicing rights; offering brokerage, consulting and
analytical services to other financial services companies and financial
institutions; servicing residential mortgage portfolios for investors;
originating residential mortgages; and providing real estate brokerage and
sales disposition services.
(a) The Company considers the Homevest mortgage as being in the final stages
of development and it plans to offer this product at fixed rates of
interest that are designed to fall below effective interest rates
offered by conventional mortgage lenders. This is achieved by having the
borrower pay the same monthly payment as for a conventional loan at 8.5%
interest, but the payment stream is redistributed in such a manner that
a portion of the interest allocation becomes a cash surplus available to
invest. This amount would be invested into the Company's mutual funds
and life insurance products for the direct benefit of the mortgagee.
(b) The Company believes that its Investment Lending system provide it with
a diversified revenue stream, which in theory, could decrease its
dependence upon interest income and also make the Company's lending
practices less susceptible to interest rate float.
2. Amquest Advisors, LLC. The Company's Investment Services segment, through
Amquest Advisors, LLC., was incorporated in the State of Delaware on August
5, 1996, and consists of investment banking, asset management, brokerage and
other financial services provided through future subsidiaries and indirect
affiliates, including Sun Consolidated Securities, Inc., a registered
NASD/SIPC broker dealer.
To date, the Company has also implemented its business strategy though the
establishment and development of two (2) affiliate entities for the receipt of
capital and assets under management for investment. Neither of these entities
are subsidiaries of the Company. They are:
1. The Amquest Matrix Funds, Inc., a mutual fund ("The Fund") incorporated in
the State of Maryland, on July 18, 1996. On August 28, 1996, the Company
registered The Fund with the Securities and Exchange Commission. It is a
multi-portfolio mutual fund registered under the Investment Company Act of
1940, managed by Amquest Advisors, LLC, a wholly-owned subsidiary of the
Company. The Company engaged Tocqueville Asset Management, Inc., New York,
New York, as the sub-advisor for The Fund, and Firstar Trust Co., Milwaukee,
Wisconsin, as The Fund's custodial administrator. This registration is in the
final stages of requirements prior to becoming effective.
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2. The Amquest Matrix Trust, Ltd. is an international business corporation,
("The Trust"), incorporated on October 30, 1996, in the Commonwealth of the
Bahamas. This entity was formed for the specific purpose of maintaining
capital and assets under management offshore. The company plans to make
application in the Bahamas to sell its mutual funds internationally through
this entity, presumably on the Luxembourg (or other) Stock Exchange. The
Trust is managed by Amquest Advisors, LLC.
The Company also plans to incorporate a Consumer Finance Services segment, which
it has tentatively called Amquest Credit Industries, Inc. ("Amcredit"), a
to-be-formed corporation. Management intends for its Amcredit operations to
include consumer lending (secured and unsecured personal loans, real
estate-secured loans and consumer goods financing), and credit card, debit card
and credit-related insurance services. The Company plans to deploy its
Investment Lending system into consumer credit in order to benefit the borrower
(discounted interest rates), as well as the Company as the lender (higher
earnings).
PROPOSED ACQUISITIONS
During the period from November, 1995 through March, 1997, the Company proposed
various preliminary letters of intent in order to further its business
objectives. Such letters included acquisitions, joint ventures, corporate
alliances, asset purchase transactions, and the sale of its corporate
securities. As of the date of this Report, none of these past transactions have
closed, and no further negotiations with such parties are underway or
contemplated. For this reason, no discussion of such proposals are included
herein.
On April 1, 1997, the Company proposed certain final terms to acquire a specific
realty franchise operation, the name of, and city of location, cannot be
disclosed until the purchase contract is signed.
Management believes the salient facts of regarding this transaction is that the
acquisition is a high profile national franchise operation which has been rated
in industry publications as one of the nation's largest brokerage firms, in the
top five in both average annual growth in transaction sides, and average annual
growth in sold volume, 1991-1995. Management anticipates this acquisition would
bring approximately 600 selling agents into the Company, generating
approximately $1.5 billion (over 9,200 transactions) in closed residential sales
annual volume. The two principals of the target acquisition, as majority
shareholders, will receive a total consideration of $6,770,000.
The proposed terms offer $2,170,000 in cash ($2,000,000 to the senior principal,
$170,000 to junior principal), plus $2,000,000 in the form of a secured
corporate note, payable over the course of five (5) years to the senior
principal, plus a face value equivalent of $2,000,000 and $600,000,
respectively, to the senior and junior principal, in Common Shares issued at the
market price average over the five previous trading days prior to closing. Both
of these individuals have agreed to sign two (2) year employment contracts, as
did two (2) other professionals associated with the transaction, one a title
attorney, and the other a licensed real estate professional, who are considered
additions to management. While the fundamentals of the transaction have been
agreed to in a signed letter of intent, such instrument is non-binding on the
parties. The Company plans to announce the name and the final terms of the
transaction on the date that the purchase agreement is signed, which is expected
to be prior to April 14, 1997. However, like any pending transaction, it may
never close, or even if it does, the terms may be different that those
highlighted above. Such changes may be material.
Regarding future proposed acquisitions, if any, the Company has established a
rigorous criteria for evaluating acquisition candidates, understanding the risks
associated with such activities. The Company wants to limit exposure to losses
or liabilities whenever possible. The Company has developed its own criteria and
will continue to develop criteria to solicit and obtain favorable acquisition
candidates. While the following list is not in any specific order of importance,
management will consider, among others, such factors as 1. Cost of acquisition
of the target company; 2. Revenue and Earnings track record; 3. The diversity,
experience and strength of present management; 4. Quality of operating
personnel; 5. Potential for growth; 6. Cost of expansion in geographic and
national arena; 7. Corporate culture and competitiveness with other similar
businesses; and 8. Geographic location.
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The Company is reluctant to prematurely risk its assets without the prospect for
considerable gain. The cost, expenses and potential for liability associated
with acquiring operating companies previously owned by others is significant.
The Company intends to seek, investigate, and if such investigation is
satisfactory, acquire controlling interest in acquisition candidates that will
serve to further its business objectives. In considering such candidates, the
Company will not restrict its search to any specific geographic location, even
though geographic location will be one of several factors considered.
In applying the above criteria, management will analyze all available
information relevant to the acquisition and make its decision based upon the
above factors and others available at the time of the potential acquisition.
Management may meet personally with management of the target acquisition, key
personnel, and visit and inspect on location, retain independent advisors,
attorneys, accountants, consultants and specialists for verification of
information, and take other necessary investigative measures to the meet the
Company's due diligence requirements. The Company is unable to predict with
absolute certainty when it may complete any proposed acquisitions.
Material Product Research.
The Company has entered into, and it is contemplated that the Company may in the
future enter into transactions with management, directors and affiliates which,
even though may involve conflicts of interest, are believed to be fair and
equitable transactions in the best interest of the Company
During 1996, the Company issued 1,000,000 shares of common stock collectively to
Caveat Enterprises, Inc. and its owner, Mr. John Cavaiuolo, Chairman of the
Board of the Company, and also 400,000 to Montgomery, Smith & Associates, Inc.,
a bank management consulting firm, operated by Mr. Cavaiuolo, Mr. Bruce S.
Eagelson and Mr. James Krupinski, who are also Directors of the Company. These
consultants will continue to provide future services to be rendered to the
Company when its Investment Lending products are marketed. (See Items 6 and Item
7 of this Report).
The Company has also utilized the services of Kinsman Merchant & Associates,
Inc. (KMA) to do various research and to provide on-going consulting services.
(See Principal Shareholder below). KMA and its key management person and
controlling shareholder, David A. Morgenstern, President and Managing Director
of KMA, and other KMA partners and staff, have served as the prominent operating
management of the Company since its reformative stages beginning in February,
1995. KMA continues to provide extensive research in order to create proprietary
strategies, methods and services, as well as research-backed, computer generated
virtual reality models. This research has been used to refine the financial
assumptions related to the Company's projected operating results for years 1
through 5 and the development of investment lending as a concept and as a group
of financial services products. The focus of this on-going research is how
certain legislative, political, social and economic trends within the real
estate, collection and venture capital industries will affect development and
implementation of the Company's products and services. (See Items 6 and Item 7
of this Report).
KMA's contributions include on-going refinement of products and training tools
to bundle the services of the Company, so that first and foremost, the products
and operating methods are in compliance with the Real Estate Settlement
Procedures Act (RESPA), the Fair Debt Collection Practices Act (FDCPA), the
Securities Act of 1933, the Securities Exchange Act of 1934 (collectively the
"ACT"), and the Investment Company Act of 1940, in addition to insurance
licensing and other selling and borrowing compliance laws. KMA further did
research studies and reports for the following:
i). Costs of Management, including assignments and compensation consistent
with the industry standards for residential real estate sales,
mortgage financing, collection and venture capital and compensation
structure for each;
ii). Business risks in these industries and their growth markets, including
trend analysis, uncertainties and the pitfalls to success;
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iii). Capital Market Research which interfaced its acquisition plans with stock
market trends and the potential stock price growth of the Company's
publicly traded equity securities;
iv). Investor Relations, including informative marketing materials, publishing
and printing costs, and;
v). Budget and operational analysis and cash management, including software
research, on operating a multinational corporation in many diverse market
facets.
With respect to the Amquest Matrix Funds, Inc. KMA provided research
consisting of the following:
i). advantages of beginning the fund as a three (3) fund portfolio fund
and expanding it over time to become potentially a broader portfolio
family of funds, including international investments, to provide a
broader asset allocation investment capacity;
ii). research into the feasibility of replicating The Fund
internationally in several different foreign markets, and the
capacity to retain professional, independent money managers for each
of the individual portfolios, providing day-to-day supervision and
management; and the requirements for independent review, supervision
and administration of The Fund, in accordance with investment
objectives and policies of each of the portfolio's focus on
diversified asset allocation.
Neither Montgomery, Smith & Associates, Inc., nor Kinsman, Merchant &
Associates, Inc. operate under the terms of any formal consulting agreements,
but rather, since the controlling principles of these firms are either officers,
directors, shareholders, or insider controlling shareholders of the Company,
each individual performs services on ongoing basis, either as compensated for
shares previously issued to them, or on the basis of expenses and salaries for
staff paid only.
PRINCIPLE SHAREHOLDER.
On February 5, 1995, Kinsman, Merchant & Associates, Inc., ("KMA") purchased the
Company from Associates Consulting Group, Dallas, Texas. At that time, the
Company was known as "International Medical Ventures. Ltd., organized by
non-related parties as a medical properties holding company (doctor's practices,
diagnostic equipment, etc.) but it never commenced revenue-producing operations.
On July 31, 1995, the Company charged its name to International Mergitech
Ventures, Ltd., and it traded publicly (OTCbb: IMVT), through November, 1995
(low $2.85; high $5.00). KMA paid additional consideration to non-related third
parties for: a) the Control Block of 19,000,000 Common Shares and b) 10,000
Series "D" Preferred Shares (the full issuance of this Class) whereby these
Preferred Shares control 50% of the authorized voting rights of the Company
(collectively these Common and Preferred Shares are referred to as the "Control
Block"). KMA paid $2,825,000 for the Control Block, whereby of this amount,
$1,900,000 was paid for the 19,000,000 Common Shares and $925,000 was paid for
the 10,000 Series "D" Preferred Shares. By December 31, 1996, KMA conveyed
approximately 3,150,000 Shares to third parties. On February 5, 1997, these
19,000,000 Shares became free trading, subject to restrictions on transfer or
sale under Rule 144 of the Securities Act of 1933. (See also Item 4 of this
Report.)
CHANGE IN AUTHORIZED SHARES.
After careful consideration, on October 1, 1996 the Company's Board of Directors
approved the amendment of the Company's original Articles of Incorporation,
dated March 8, 1988, to increase the number of authorized Shares from One
Hundred Million (100,000,000) to Five Hundred Million (500,000,000), par value
$.001 per Common Share.
The Board of Directors further voted to increase the authority to issue Three
Hundred Million (300,000,000) Shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 Shares; Series "B": 100,000,000
Shares; Series "C": 99,990,000 Shares; and Series "D": 10,000 Shares, as
opposed to the level prior to October 1, 1996 being Thirty Million
(30,000,000) Shares of Preferred Stock, par value $.001, in four (4) Series:
Series "A": 10,000,000 Shares; Series "B": 10,000,000 Shares; Series "C":
9,990,000 Shares; and Series "D": 10,000 Shares. The Articles of
Incorporation were so amended to reflect these increases in the authority to
offer corporate securities.
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CHANGE IN FISCAL YEAR.
After careful consideration, on December 1, 1996, the Company's Board of
Directors voted to change the Company's fiscal year end from July 31, to a
calendar year end, December 31. Accordingly, the Company revised previous years'
financial statements to reflect this change for comparative purposes.
CUSIP NUMBERS
The Company's securities are identifiable under the Standard & Poor's CUSIP
number system:
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Description CUSIP Number Preferred Shares CUSIP Number
- --------------------------------------------------------------------------------
Common Shares: 032149 10 6 Series "A" 032149 20 5
Series "B" 032149 30 4
Series "A1A" Units 032149 60 1 Series "C" 032149 40 3
Class A Warrants 032149 11 4 Series "D" 032149 50 2
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(See Also Item 9 of this Report)
REVENUE.
At December 31, 1996, the Company achieved no gross revenues from its operations
of investment banking and consulting services. The Company plans to acquire
revenue through mergers and acquisitions with presently operating companies in
the financial services and related industries and through the expansion of its
consulting services. Homevest Mortgage Corporation and Amquest Advisors, LLC,
the Company's two (2) wholly-owned subsidiaries, had no transactions from
inception through December 31, 1996. The Company plans to form other
subsidiaries in the future as may be required to absorb revenue producing
acquisitions.
DEPENDENCE OF A SEGMENT OR A SINGLE CONSUMER.
The Company has not begun Investment Lending operations. However, the Company
does not expect to be dependent on a single customer once these operations
begin. As a result, the Company does not foresee the loss of a single customer
or account having a materially adverse effect on the Company.
PATENTS, TRADEMARKS, SERVICE MARKS, FRANCHISES, AND CONCESSIONS.
The Company intends to apply for copyright of Amquest, Homequest, Homevest and
Amcredit, as well as for trademarks or service marks of its logo identification
for the Company and subsidiaries.
BACKLOG OF ORDERS.
There is no backlog of orders with respect to the Company or its subsidiaries.
SEASONAL NATURE OF BUSINESS.
While the Mortgage Industry has some change from quarter to quarter in terms of
closed residential sales, the Company does not expect that seasonality will have
a material impact on its business.
GOVERNMENT CONTRACTS.
There are no portions of the Company's business which are subject to
re-negotiation or termination of government contracts.
EMPLOYEES.
The Company currently has three full time employees, all of which are members of
management. David Morgenstern, John Cavaiuolo and Bernadette Stevens are
committed to full time employment with the Company. While not employees, the
Company depends upon the management and staff support of approximately 22
persons from Montgomery, Smith & Associates, Inc. and Kinsman, Merchant &
Associates, Inc., collectively, for banking business management consulting and
investment banking services. (See Item 6 and 7 of this Report). The Company will
require numerous highly skilled employees, in research, development, production,
sales and management. The Company's continued success will depend, in part, on
its ability to retain and attract such employees. It will be necessary for the
Company to obtain employees for itself, as well as its subsidiaries, in order to
effectively complete its strategic plan and there is no guarantee that the
Company will be able to do so.
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FOREIGN OPERATIONS.
The Company plans to eventually have significant foreign and international
operations. At present, this plan has been implemented by minimal operations in
Brazil and the Bahamas. These beginning operations, while not revenue producing,
have proven sufficient to permit on-going negotiations and certain conclusive
results in regards to the sale of the Company's registration-exempt and
unregistered securities to private institutional investors.
For instance, such activities supported the process that was involved in the
purchase of certain Judicial Bonds ("Treasury Credits"), full faith and credit
instruments of the Federal Republic of Brazil, exchanged for the Company's
corporate securities. (See also Financial Data in this Report). This event was
managed through the securities brokerage firm of Corretora Souza Barros Cambio E
Titulos, S.A., Sao Paulo, Brazil and company representatives in Brazil,
specifically an attorney, and certain advisors and consultants. (See also
"Series A1A Units" and "Capital Resources" below.) In this connection, the
Company also utilized the services of two unrelated foreign investment
syndicating companies, namely, Geneva Ventures, Ltd., operated by Danish
nationals, and Acajou Holdings, Ltd., operated by Spanish nationals. Such
foreign companies, and transactions involving the purchase of foreign government
debt securities, among other transactions, are subject to laws and regulations
of their resident jurisdictions. Accordingly, there are many situations which
could negatively impact the Company's capacity to continue relations with such
foreign corporations, or to engage in such foreign transactions, the extent or
circumstances of which cannot fully be known.
The Company plans to expand its foreign operations for the purpose of accessing
global capital markets for the placement of its corporate securities and for the
planned sale of its private label asset-backed, or mortgage-backed securities,
and for the sale of its bond issues. Significantly all of its assets acquired
thus far have been the result of such start-up investment holding operations in
foreign countries. To further accomplish this, the Company plans to open a
network of licensed brokerage offices in such foreign lands in order to fortify
its capacity to raise capital and manage assets. It intends to continue its
research and to study the laws and regulations governing multinational
corporations who undertake such activities, including, but not limited to: i)
the requirements under foreign law to market or to replicate its Investment
Lending system; ii) the requirements to sell or replicate its mutual funds, and
iii) the regulations governing the trading of its securities on foreign country
stock market exchanges. There can be no assurance that the Company will be
successful in its efforts to become a multinational corporation, in spite of the
significant capital expenditures already made in this endeavor, or that it will
be able to sustain the significant ongoing expenses and costs associated with
operating simultaneously in many nations. (See also "Concentration of Foreign
Transactions").
CONCENTRATION OF FOREIGN TRANSACTIONS.
The Company, even in its formative stages, intentionally developed strategies to
access foreign capital and assets under management. The Company made inquiries
on the Internet and used various other methods to locate foreign-based entities
that would be interested in US dollar-denominated securities. In addition to
common stock, the Company designed corporate securities that would mimic its
planned mutual funds, having features for both growth and income, whereby
portions of the capital so raised would be placed as cash reserves for the
Company into its mutual funds, when effective. Further, the Company introduced
potential investors to its innovative, development stage, financial services
products that, if the Company were properly funded, such products could be
brought to market and thereby such investors might possibly achieve significant
gains. In essence, the Company was willing to give up substantial equity to be
able to access such capital sources. Management devised this plan with the
understanding that operating a financial services company requires billions of
dollars of capital and borrowings, and that the credentials to be in the
financial, asset management, and investment services industries were vast,
including the need for securities brokerage contacts, big bank references, and a
seasoned management team with a broad scope of successful operating experience.
Management believes the development of the Company is both massive and
ambitious. It will require on-going capital now and well into the future. The
Company seeks foreign investors, whether individuals or institutions, that look
more towards long term gains on such investments, as opposed to short term
income, to which the present domestic investor has become accustomed.
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The Company seeks foreign capital markets in which it can sell or exchange its
corporate securities. In this connection, by December 31, 1996, over fifty (50%)
percent of the Company's total issued and outstanding securities, with
consideration given to the issuance of both common and preferred shares, were
exchanged for foreign-source assets and capital.
The Company believes that its strength will come from being able to continually
source investment capital from a global network of providers, and from many
different countries. However, these sources may experience social economic or
political problems at the same time, and if such an event occurred, it could
adversely effect the Company. At this time, almost all of the Company's capital
and assets reside offshore, either in the Federal Republic of Brazil or in the
Commonwealth of the Bahamas. While these countries have a certain current level
of economic, political and social stability, their relationships with the United
States and companies therefrom are still subject to change, based upon what
these countries perceive to be the best for their own citizens. Also, unrest in
such countries is not without possibility, and such conditions could adversely
effect these transactions.
In the case of the Company's primary asset, an approximate $256 million in
Judicial Bonds (the "Credits"), which are debt securities of the Federal
Republic of Brazil, such instruments cannot leave Brazil in their present form
and therefore must be sold outright or used as collateral for bank letters of
credit issued inside Brazil. Further, the owners of the Credits accepted an
irrevocable letter of payment issued by a bank in the Bahamas which issued the
letter of payment in exchange for the Company's corporate securities. The bank's
obligation, as a custodian, is to liquidate the Company's equity securities in
the open marketplace and pay the proceeds over to owners of the Credits. If, for
any reason the stock market does not support this orderly sell off, the bank
would have to pay any deficiency from its own sources. In such instance, the
bank would prevail upon the Company to share the equity margin it has in the
Credits to lessen the bank's exposure to having to reduce its capital, and also
the Company's exposure to a sell off of its securities in a declining market.
Conversely, the Company believes it has a sufficient margin between the price it
paid for the bank's letter of payment and the present market value of the
Credits to still achieve gains even if it had to share its margin in the Credits
with the bank, in order to protect itself from any adverse sell off of its
securities. However, there is no guarantee that this margin will in fact be
sufficient. This transaction is dependent upon the laws of at least three
disparate, distinct and unrelated countries, the consequences of a default on
the part of any of the parties, including the Federal Republic of Brazil on the
Credits themselves, cannot be fully known. There can be no assurance that this
transaction, among others the company has undertaken or will undertake in the
future, including the purchase of foreign government and corporate-issued
securities, will result in a positive cash flow, or that, if problems do develop
between the disparities of international law, that such challenges will be
successfully resolved, to the benefit of the Company and its shareholders. (See
Financial Data in this Report),
WORKING CAPITAL REQUIREMENTS.
There are several strategic events that were set into motion throughout 1995 and
1996 that were designed to have the Company reach a goal of $50 million or more
in revenue by December 31, 1997. Significant working capital will be required to
fulfill this goal and the Company plans to utilize its assets to obtain bank
letters of credit and to sell assets and additional securities in furtherance of
its goals. Working capital requirements for the Company are subject to
adjustments and such changes will be dependent upon many factors. These include,
among others, the hiring key personnel, developing marketing materials,
increased administrative expenses, other mergers and acquisitions, as well as
the Company's long term expansion plans into international markets, among future
expense which by nature cannot fully be predicted, will impact the Company's
working capital requirements. Further, the costs associated with developing,
building and opening Homevest Centers (or other similar facilities) in order to
market is financial services operations, is also expected to be substantial.
Developing and marketing private label investment instruments to raise
additional capital for Mortgage Origination and to write Mortgages for its own
account (as an investor) has significant costs. To enter into the business of
funding mortgages from capital raised directly by the Company, and to commence
the Homevest and Amcredit lending activities, will arguably run into the
billions of dollars necessary to carry on such operations, where the costs and
expenses to raise such capital would be borne by the Company.
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The Company's growth plan is very ambitious. For instance, the Company plans to
reach a level of financial services and mortgage underwriting by December 31,
2001 sufficient to reach a gross revenue level of over $1 billion. In order to
accomplish this aggressive plan, management believes that it will need in excess
of $250 million or more of additional capital for its acquisition of revenue
producing entities and for marketing its products. Further, Management believes
it will require in excess of $100 million in the form of cash reserves to be
invested into The Amquest Matrix Funds, in order to create what the Company
believes will be a stable and consistent earnings floor. The availability of
continuing working capital is therefore either a boon or a constraint on growth
and liquidity. For this reason, among others, the Company plans to continuously
market its' instrument instruments at such a volume as to raise capital
sufficient to accommodate the directives of its strategy, and the mandates it
has set forth in its highly specific business plan. These actions can be either
dilutive, and therefore impact earnings per share calculations, or non-dilutive,
to current shareholders. Should such instruments impart debt upon the Company,
increases in its liabilities could be substantial. There is no guarantee the
Company will be able to meet its capital requirements for operations. For
instance, currently, the Company has minimal operating history and it does not
yet produce revenue. These factors have proven to have a great impact on the
Company's liquidity because lenders consider these factors as more significant
than the collateral value of assets to be pledged in granting loans or letters
of credit to the Company. Accordingly, the Management considers gaining revenue
through acquisition as its current paramount goal.
COMPETITION AND OTHER FACTORS.
Various entities may compete directly with the Company for any or all of its
services. The Company will compete with these enterprises on the basis of price
and quality of services offered. Most of these entities will have been in
existence longer than the Company and may have greater financial and marketing
resources. Further, these experienced entities may be able to devote greater
resources to securing market share. They may have greater expertise in the
promotion and sale of their services. Each subsidiary upon which the Company's
success and strategy is planned is subject to competition. Amcredit and Homevest
will face competition from large mortgage or banking institutions. There is no
assurance that these institutions will not consolidate or merge, and integrate
the structure which the Company has planned thereby creating competition for the
future. In addition, the mortgage and financing industry is highly competitive.
Amcredit and Homevest will be competing with mortgage bankers and other
financial institutions to offer financial services and products as well as
competitive lending rates. There are no assurances that the Company's will be
able to proceed with their reinvestment strategy and compete with other industry
participants. The Amquest Matrix Funds, Inc. ("The Fund") will face competition
from over 7,000 Mutual Funds, where almost all of them have longer operating
histories and investment track records in comparison to The Funds.
FEDERAL, STATE AND LOCAL REGULATION.
The business that the Company contemplates undertaking is highly regulated and
its Investment Lending products are, in many aspects, original, proprietary, and
unique. While the Company has attempted to research the capacity to sell bundled
financial services as copyrighted "products," and it has generated studies that
indicate it can do so in full compliance with existing regulations and statues,
there is very few, if any, applicable tests of law or fact that support or
challenge the marketing of value-added products that are designed to provide
"gains to the consumer styled as a redistribution of interest charges." Although
the Company believes that Investment Lending will be in compliance with
applicable statutes and regulations, there can be no assurance that the Company
will always be able to remain in compliance. It is unlikely that the Company
will exclusively market the Homevest mortgage. It will therefore be subject to
eligibility criteria for residential mortgage loan requirements, and, in some
instances, fixing of maximum interest rates and fees. It will be subject to the
Federal National Mortgage Association (Fannie Mae), the Federal Home Loan
Mortgage Corporation (Freddie Mac), the Department of Veterans Affairs (VA), the
Federal Housing Administration (FHA), each of which have individual regulation
and loan criteria. The Real Estate Settlement Procedures Act (RESPA), which
governs the rules for the closing of the real estate transaction required by the
lender and is designed to protect the consumer, has been almost entirely revised
in 1996. Although the Company believes that the essential elements of the new
RESPA can be complied with, there is very little if any case law yet to support
or challenge the Company's theory of operation. In addition, all of the
Company's contemplated operations will be subject to the Equal Credit
Opportunity Act, Right to Financial Privacy Act, as well as various State and
Federal Insurance Laws. State regulations prohibiting discrimination, referral
fees and credit settlement costs, may also be applicable to the operations of
the Company.
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Relative to the Amquest Matrix Funds, these will be subject to the regulations
set forth in the Investment Company Act of 1940, which requires registration of
investment companies and sets forth substantive requirements relating to the
functioning of such companies. Further, The Fund will be subject to the
disclosure requirements established by the Securities and Exchange Commission.
The Company intends to apply ongoing efforts for its subsidiaries which meet the
needs of its clients and that also comply with Local, State and Federal Laws.
Although the Company believes that it is currently in compliance with applicable
statutes and regulations, there can be no assurance that the Company will always
be able to remain in compliance. The failure to comply with such statutes and
regulations would have a material adverse effect upon the Company's operations.
Changes in existing laws and enforcement may also have a materially adverse
effect. In addition, as the Company expands its operations into various
jurisdictions, additional compliance may be required which may have more
stringent regulatory requirements. The failure to comply with any of the said
regulations could result in a rescission or a voiding of loan agreements, the
loss of approved status, loan repurchases and/or indemnification, class action
suits by Debtors, and various administrative enforcement actions.
ITEM 2. FINANCIAL INFORMATION
The selected financial information presented below under the caption "Summary of
Consolidated Financial Statements" has been derived from the audited financial
statements of the Company, and should be read only in connection with those
statements, which are included herein in Item 15: Exhibits. The selected
financial information provided has been examined by independent Certified Public
Accountants. Paid in Capital has been provided by the Company's founders and by
fund-raising activities. The Company's operations, except for certain
acquisitions, are currently confined to its capital raising activities, business
and investing banking consulting, and to the development of its subsidiary
operations.
SUMMARY OF CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994, 1995, and 1996 (See Item 15:
"Financial Statements")
<TABLE>
<CAPTION>
December 31,
------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Total Revenue $ --- $ --- $ ---
Net Income (2,403) (20,068) (6,386)
Net Income Per Share (.00) (.00) (.00)
Dividends per share --- --- ---
Shareholders' Equity 197 2,825,139 285,072,526
Shareholders' Equity Per Share .00 $.13 $7.62
Number of full-time employees --- --- 3
Number of shares outstanding at year end 2,505,000 21,505,000 37,415,000
</TABLE>
________________________________________________________________________________
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
This Section, including the information incorporated herein by reference,
contains forward-looking statements within the meaning of Section 27(a) of the
Securities Act and Section 21(e) of the Securities and Exchange Act of 1934,
including statements regarding, among other things, (i) the Company's growth and
strategies, which are expressed as management's opinions concerning certain
future economic trends, (ii) anticipated changes in the Company's business and
demographics, and (iii) the Company's ability to market certain financial
services. Forward-looking statements are based upon the Company's expectations
and are subject to a number of risks and uncertainties, many of which are beyond
the Company's control. This Section should be read in conjunction with the
preceding "Summary of Consolidated Financial Statements." Additionally, the
Company's Financial Statements and the notes thereto, as well as other data
included in this Report, should be read and analyzed in combination with the
analysis below.
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OVERVIEW.
As of the date of this Report, the Company is in some respects emerging from a
development stage company and implementing it's specific business plan, in some
respects. For instance, on August 28, 1996, the Company registered with the
Securities and Exchange Commission, the Amquest Matrix Funds Inc., a mutual fund
managed by Amquest Advisors, a wholly owned subsidiary of the Company. This
mutual fund family is in the final stages of requirements to become effective.
The Company, if successful, will institute several marketing plans that can
bring funds under management into its mutual funds. While the Company and its
two subsidiaries have generated no revenues from operations during the 1996
fiscal period, the Company plans to expand its investment banking services and
to begin revenue producing operations in its subsidiaries through acquisitions,
within the next twelve months.
RESULTS OF OPERATIONS, FINANCIAL CONDITION AND LIQUIDITY.
All references to "Notes" are to the "Notes to Consolidated Financial
Statements" contained in this Report. At December 31, 1996, the Company had cash
and cash equivalents of $1,479,190 and note receivable of $239,128. The Company
further had deferred consulting fees in the amount of $1,250,000. The Company
plans to use said consulting services for the implementation of it's operations.
As of December 31, 1996, the Company had total current assets of $284,646,649.
The source of both short and long term liquidity is expected to be derived
primarily from the sale of the Company's securities until such time as the
Company is able to put it's subsidiaries into operation. (See Capital Resources
Below).There is no assurance that the Company will be successful in obtaining
additional capital or achieving profitable operations. The Company's operations
as of the date of this Report have been limited to consulting and management
services which have produced no revenues. The Company has sought acquisition
targets to fulfill its business plan and has established its two subsidiaries,
Amquest Advisors, LLC and Homevest Mortgage Corporation. The Company also plans
to establish it's consumer credit offspring though the establishment of a
to-be-formed corporation, currently named Amquest Credit Industries, Inc.
SHORT-TERM LIQUIDITY.
The Company has attempted to eliminate the major variables occurring as the
result of industry trends and has designed and implemented strategies to take
advantage of industry weaknesses that have arisen from these trends. It believes
that its capacity to analyze and adapt to change will enable it to overcome many
of the uncertainties that may result from such trends. This notwithstanding, the
cost of its capital funds, the effects of interest rates, and the increasing
scope of its operating expenses are effecting the Company's short term liquidity
and will continue to do so. The Company has attempted to create liquidity by
building net worth through the exchange of its equity securities for certain
other negotiable securities, notably, Brazilian Judicial Bonds (See "Capital
Resources Below and Sale of Exempt and Unregistered Securities" in Item 1 of
this Report). In as much as the Company can continue to market its own equity
and debt securities, it will be able to positively influence its short term
liquidity. Further, the Company's business plan in full operation should provide
revenues from many profit centers and thereby reduce its' dependence on interest
income or one source of revenue. In spite of progress made thus far, management
believes the Company's liquidity has been impacted by the conventional banking
system's wait-and-see policy toward development stage and start-up companies.
At December 31, 1996, since no significant opportunity has been lost by the
holding of versus the selling of portions of Brazilian Judicial Bonds, the
Company has chosen to continue to present itself to its lenders in an on-going
evaluation of progress such that by establishing a solid track record, the
Company believes that its liquidity requirements will be fulfilled favorably
through the development of positive banking relationships. Management sees the
determinative factor in holding any investment in assets as whether selling them
to gain working capital, to acquire companies, and to expand revenue producing
operations is more productive for the Company than holding them. Management
continues to contemplate this equation as the need for short term liquidity
increases. As the Company implements its business plan, its short term liquidity
needs will most certainly increase due to the commensurate increase in operating
costs of the Company and its subsidiaries. Such increase will be the result of
numerous factors many of which cannot be predicted or identified prior to full
operations. The hiring of key personnel and setting up locations for
subsidiaries is expected to substantially increase the short term liquidity
needs of the Company.
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<PAGE>
LONG-TERM LIQUIDITY.
The Company will incur substantial expense in maintaining its compliance with
Federal, State and Local regulations. It intends to file an S-1 Registration to
register both Common Shares and Preferred Shares, Warrants, and potentially
other kinds of Investment Instruments. There can be no assurance that the
contemplated public offering of the Company's Common and Preferred Shares will
raise sufficient capital to cover long-term liquidity requirements. Long-term
liquidity is also dependent on revenues generated from acquired companies, and
additional infusions of capital and debt financing to fortify the Company's
planned consumer credit operations. It is anticipated that the long term
liquidity will be achieved from revenues generated by corporate acquisitions and
business expansion in related industries. These include residential real estate
sales, mortgage financing, insurance sales and marketing of the Company's
proprietary debt products and investment services. There is considerable cost
associated with bringing these projects through to fruition. Long term liquidity
is dependent upon revenues from these and other areas coming online as projected
by the management of the Company. The receipt of such revenues can not be
predicted with certainty.
CAPITAL RESOURCES.
The Company's capital raising activities have been limited to exchanges and
sales of its securities as described in this Report. The Company has attempted
to create capital and liquidity by building net worth through the exchange of
its restricted equity securities for certain other unregistered liquid
securities, namely Brazilian Treasury Credits (See "Recent Sales of Unregistered
Securities" in Item 10 and "Description of Registrant's Securities to be
Registered" in Item 11 of this Report).
In July, 1996, the Company retained Acajou Holdings, Ltd., ("Acajou") an
investment banking firm from Madrid, Spain, and Geneva World Ventures, Inc., a
US subsidiary of Geneva Ventures, Ltd., a Gibraltar (UK) global investment
syndicate ("Geneva"). Acajou and Geneva, on behalf of the Company, began
negotiations with a brokerage firm in Brazil, namely, Corretora Souza Barros
Cambio E Titulos, S.A., to acquire certain Brazilian Judicial Bonds (the
"Credits"), offered for sale by the Familia Ribas. The Credits are convertible
into TDA-E Bonds, and are, by definition, adjudicated government senior debt
obligations (full faith and credit) of Federal Republic of Brazil. These
electronic instruments are recorded and identified as "Precatorio No. 12.995
Registrio No. 95.03.059979-2." In these negotiations, effective September 12,
1996, the Familia Ribas agreed to sell the Credits to the Company in exchange
for an irrevocable Letter of Payment as issued by a bank acceptable to them.
Understanding these requirements, the Company signed an agreement with Geneva
Ventures, Ltd., on July 12, 1996, to exchange 4,400,000 Common Shares for
certain negotiable securities,which were also conveyed to Americas International
Bank Corporation, Ltd. (AIBC), along with 4,000,000 Restricted Common Shares and
Five Hundred (500) AMQUEST International, Ltd. Series "A1A" Units to acquire the
irrevocable Letter of Payment. On July 16, 1996, Acajou Holdings, Ltd. agreed to
receive 4,750,000 common shares in connection with the transaction. The Credits
mature from 1/11/1999 through 01/11/2004, at a Face Value of $411,070,383.50
Reals or $404,205,508.00 in US Dollars, based upon an exchange rate of $.9833.
The Company has recorded the Credits at 61% of Face Value, or $246,565,359.80,
and the Credits appreciate at the rate of 1.5% per month until such time as they
are converted into TDA-E Bonds. At December 31, 1996, while the exchange rate
became less favorable to the Company ($.9625 opposed to $.9833 when acquired),
the Face Value increased to $436,295,121.50 Reals ($419,934,054.40 USD),
yielding a December 31, 1996, market value of $256,159,773.10 USD. The Company
reflects the increase in value of $9,594,413.30 USD as Unrealized Income, a
separate component in Shareholders' Equity, as required by FAS 52.
COMPETITION.
The financial services industry is highly competitive and highly regulated. The
Company believes that the principal competitive factors affecting the success of
the Company will depend greatly upon the development of techniques and standards
for evaluating creditworthiness of individuals and receivable management. The
Company believes that it can compete effectively by developing receivable
administration, collection procedures and establishing criteria for the
evaluation of the credit of potential borrowers and financial services
consumers.
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INFLATION AND OTHER FACTORS AFFECTING GROWTH AND PROFITABILITY.
The Company and its subsidiaries will be susceptible to interest rate
fluctuations. Higher rates tend to reduce the demand for real estate loans. In
addition, inflation in future periods is likely to have an adverse impact on
interest rates. High interest rates may increase the cost of borrowed funds to
real estate developers, which will serve to have a substantial impact on the
price of homes to prospective purchasers and thus reduce the volume residential
sales. The mortgage industry and consumer borrowing are also adversely
influenced by a decline in economic conditions. In times of recession or
economic contractions, Borrowers may default and the demand for new loans may be
reduced thereby. A significant contraction in real estate sales could have an
adverse effect on the Company's loan generation ability and its earnings. This
in turn would have an effect on the profit realized from the Amquest Matrix
Funds, Inc. since a portion of the payments to Homevest and Amcredit are
invested into the Amquest Matrix Funds, Inc.
The Company has little or no control as to the demand for its services and
changing prices would have a material effect on the future profitability of the
Company. Further, there is no guarantee that the Company will be able to obtain
additional financing on favorable terms or at all. The Company is directly
affected by trends in business finance, government regulation, and investor
sentiment, as well as by interest rate changes and currency volatility. The
Company's business activities are subject to varying degrees of risk depending
upon the nature of the activity and the extent to which it places its capital at
risk. These risk areas are mortgage financing, investment banking, consumer debt
purchasing and related transactions.
Management believes that on-going capital raising activities for investment
directed by the Company are likely to create revenue performance and liquidity.
There can be no assurance that the Company will be able to obtain additional
equity or debt financing presently or in the future. Further, expenses
associated with the development of the Company's operations will be borne
entirely by the Company, as well as most other expansion projects or other
acquisitions.
These expenses include the development of information management software and
solutions and public relations, as well as advertising, marketing and media
presentations. Liquidity will also be affected by various executive compensation
contracts and the hiring of key personnel. These costs will negatively impact
the liquidity of the Company. The Management plans to closely monitor
expenditures as they relate to company expenses and corresponding revenues.
BUSINESS STRATEGY: LACK OF OPERATING REVENUES.
The Company's strategy is to: 1) Acquire profitable, revenue-producing mortgage
operations, realty, title, insurance, investment management and finance
companies, including certain banks, as operating investments; 2) Invest
liquidity into the Amquest Matrix Funds, Inc., a portfolio mutual fund that
Amquest has formulated, for the purpose of diversifying its shareholder's
capital; 3) Open accounts, lend money and extend credit to corporations,
individuals and to its own shareholders, functioning as a global merchant trust
and as a credit union "without walls;" 4) Market its insurance, financial,
mortgage and mutual fund products to its shareholders and to its global
accounts; and 5) Incubate emerging growth companies both domestically and
internationally with advise and capital, to enhance the day-to-day business
operation of its financial services enterprise.
PLANNED SUBSIDIARIES.
The Company structure was designed to interlock its realty-driven lending
operations with its credit and investment related services. This structure
provides a vehicle for the Company to "capture" a customer on a long term basis
and fulfill that customers borrowing and investment needs throughout the
customer's borrowing and investing life. Homevest Mortgage Corporation
("Homevest"), plans to operate as a licensed mortgage bank that utilizes the
market for buying and selling residential real estate for further commerce.
Homevest expects to use the Company's financial services products to provide
investment diversity to its mortgage borrowers by applying a portion of their
mortgage payments to an insurance product and a mutual fund investment. The
Company see this as a departure from the typical mortgage payment which is
applied solely to principal and interest.
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The Company plans to market it's products by a licensed real estate professional
who will potentially have three (3) additional licenses, including registered
investment advisor, mortgage broker and insurance sales. The strategic mandate
for Homevest Mortgage Corporation ("Homevest"), the Company's mortgage lending
subsidiary, is to control all of the financial services - both the investment
side and the borrowing requirements - needed by persons who meet at the
intersection of buying and selling homes. The Company believes that this new
"investment lending" perspective means that more persons will be able to
purchase a home. The individual's credit record (the number of closing points,
insurance required, length of mortgage and the interest rate) will be the only
distinctions made between one loan and the next. Homevest intends to provide a
series of products that will encompass all aspects of the real estate closing
transaction and beyond, meeting customer credit needs as well, and thereby
eliminate as many of the other entities normally involved home closing equation
- - such as independent realtors, relocators, title agencies and mortgage
originators - as it is feasibly able to do.
Amquest Credit Industries, Inc., ("Amcredit"), a to be formed subsidiary, which,
in addition to secured and unsecured credit cards, plans to market investment
advice to persons or entities regarding unpaid consumer debt, in addition to
ordinary consumer credit lending. Amcredit plans to focus on amnesty and credit
restoration as opposed to typical collection agency tactics which often include
fear and intimidation. Certain co-investment products have been developed which
are capable of rebuilding an individual's financial capacity. The Company's
investment products will be offered for equal or less cost than if the
individual or entity was merely paying back unpaid debt through the collection
process. Management believes in the 21st century, ownership of everything from
cars and homes to personal items will look a great deal like leasing as opposed
to actual ownership. Management believes Amquest Credit Industries, Inc.
("Amcredit"), the Company's consumer credit subsidiary, will be ahead of
schedule in transforming the global financing scene to this new reality. The
Company anticipates consumer credit, investment planning, and equity lending,
will be part of the new "parabank" industry that will operate with the support
of the commercial banking system but on its fringe.
In response to the general stasis of future financial uncertainty, stability
will be fortified by the conversion of lending instruments from the banking
environment to the sale of securities traded on the world exchanges as a
universal currency. Items, including homes to televisions, bought by an
individual will be one of thousands of numbered entries under the leased-asset
section of a publicly-traded, collateral-backed security that will ultimately be
merely one of thousands of securities that are collectively invested in a mutual
fund structure. Foreclosure on a single house, car or item will have little
impact on lenders. Management believes that they will be the possession of
"controlled-risk pools" like such policies are called under insurance treaties
today. Who possesses an asset at a particular time will be less important as
will the identity of the borrower due to the issuing of risk associated with the
pool. Who the borrower is will be of less importance.
Amquest Advisors, LLC, which is the Registered Investment Advisor of the Amquest
Matrix Funds, Inc., ("The Fund"), a mutual fund registered under the Investment
Company Act of 1940, plans to market the three (3) portfolio (Income, Growth,
and Total Return) plus two (2) private label Portfolio Funds, Money Market and
Governments, to Amcredit and Homevest consumers, among sales through
conventional brokerage channels. In Homevest and Amcredit, the strategy is to
discount their financing program's interest revenue and shift the savings
achieved to an investment which benefits the consumer. This "investing of these
savings" into The Fund is intended to simultaneously enhance the consumer's
financial capacity to borrow, buy or save, as well as generate earnings for the
Company.
The Company intends to invest its surplus into The Fund. In 1996, more than 50%
of all monies invested in Mutual Funds came from IRAs, up from 36% in 1995. The
AMQuest Matrix Funds, Inc. ("the FUND"), intends to expand the capacity for
persons who buy homes through Homevest to invest directly into a mutual fund as
part and parcel of their monthly loan payments. The FUND is a mutual fund
registered under the Investment Company Act of 1940. It has three (3) portfolios
(Income, Growth, and Total Return) plus two (2) private label Portico Funds,
namely Money Market and Governments.
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<PAGE>
Amcredit and Homevest plan to discount their financing program's interest
revenue and shift the savings achieved to an investment which benefits the
consumer. This "investing of these savings" into The Fund is intended to
simultaneously enhance the consumer's financial capacity to borrow, buy or save,
as well as generate earnings for the Company. The Company also intends to invest
in The Fund.
On or before April 15, 1997, the Company proposes to close on the purchase of a
significant, $1.5 Billion gross closed residential sales organization, with
profitable revenues of approximately $50 Million. The two principals, as
majority shareholders, will receive a total consideration of $6,770,000, whereby
an equivalent of $2,170,000 in cash ($2,000,000 to the senior principal,
$170,000 to junior principal), a $2,000,000 on secured corporate note, payable
over the course of five years (5) years (to the senior principal), plus a face
value equivalent of $2,000,000 and $600,000, respectively, to the senior and
junior principal, as Common Shares issued at the market price average over the
five previous trading days. Both of these gentlemen have agreed to sign three
(3) year employment contracts, as did two (2) other professionals associated
with the transaction, one a title attorney, and the other a licensed real estate
professional, who are considered additions to management. Although negotiations
have continued in earnest, there is not assurance that this transaction will
even close or if closure occurs, be profitable.
ASSET AND LIABILITY MANAGEMENT.
The Company's prime directive is to structure its' operations so that the
majority of its revenues and earnings will be derived from non-interest income.
This directive will take time to achieve, since the Company's focus is on
mortgage and consumer credit lending, and it will have to operate more in the
conventional lending arena than in its newly designed "Investment Lending" arena
until such time the market and the capital to support its Homevest (and other)
products comes to a sufficient level of fruition. The portion of the Company's
revenues and net income that will be derived from net interest income will
require considerable analysis and technologies to fortify profitability. The
Company will strive to manage its interest-earning assets and interest-bearing
liabilities to generate what management believes to be an appropriate
contribution from net interest income. Asset and Liability Management seeks to
control the variability of the Company's performance due to changes in interest
rates and minimize the effects of these conditions. The Company will continually
attempt to achieve an appropriate relationship between rate-sensitive assets and
rate-sensitive liabilities by increasing the ratio of equity-driven capital to
interest-sensitive capital at all times. The Company plans to respond to
interest rate volatility by developing and implementing Asset and Liability
Management strategies designed to increase its non-interest income and improve
the match between interest-earning assets and interest-bearing liabilities.
These planned strategies include:
a) Utilizing mortgage servicing rights as a source of non-interest income and as
a countermeasure against the decline in the value of conventional mortgage loans
during a rising interest rate environment. Increases in interest rates tend to
increase the value of mortgage servicing rights because of the resulting
decrease in prepayment rates on the underlying loans; while expanding the
issuance of the fully assumable Homevest mortgage products over conventional
mortgages inherently tends to discourage such prepayments that serve to reduce
the value of mortgage serving rights.
b) Utilizing the multiple rollover of its Mortgage Origination Certificates
(MOC) such that the interest cost paid on these one year instruments declines by
the number of times the capital is used and re-paid by the Company's take-out
instruments, the Mortgage Pass-Through (MPT) Certificates. The function of the
MOCs and their subsequent sixty (60) day roll mimics the sale of mortgages into
the Freddie Mac/Fannie Mae/Ginnie Mae pools and serves to significantly lower
the Company's effective interest rates paid on its MOC short-term Bonds.
c) Increasing the non-interest bearing custodial escrow balances related to the
Company's mortgage servicing rights; Increasing focus on lines of business that
are less interest rate sensitive, such as the sale of investment instruments,
acquisitions, venture capital transactions, brokerage and asset management
activities, and bundled (value-added) real estate sales;
17
<PAGE>
d) Maintaining a wholesale loan origination operation. Wholesale originations
provide a form of hedge against the balance of mortgage loan servicing rights.
In a decreasing interest rate environment, the value of the servicing portfolio
tends to decrease due to increased prepayments of the underlying loans. During
this same period, however, the volume of loan originations generally increases;
e) Originating and purchasing adjustable rate mortgages and selling newly
originated fixed rate residential mortgages in the secondary market through the
issuance and sale of MPTs;
f) Increasing emphasis on the origination of consumer loan products, which tend
to have higher interest rates with shorter loan maturities than residential
mortgage loans; and Increasing retail deposits, which are less susceptible to
changes in interest rates than other funding sources.
CURRENT AND FUTURE TRENDS.
For Homevest: Real estate, title closing, mortgage segments: (1) the development
of deeper discount (or no) commission transactions, eliminating seller's side
(or buyer's side) commissions, (designed to minimize the costs to both (or
either) Buyer and Seller), and enhancing the availability of homes to potential
buyers through discounted (very low cost) MLS listings; (2) combining
commissions and closing services costs into one price, then discounting the
entire amount as a single fee (designed to equalize the reduction in sales
commissions); (3) technological, "superhighway" availability of sellers, buyers
and mortgages, which sell access, network selling and buying, as well as homes
sales; and (4) selling enhancements, (such as fully pre-approved mortgages prior
to house hunting), rebates to buyers or sellers; 100% plus loans with no income
check, 1/2 point (or zero point) mortgage loans, and special insurance products
that cover payments in cases of failing health and disability, in addition to
life insurance products, amongst others.
For Amcredit: Capital recovery, credit restoration, refinancing: (1) commercial
banks lending more to financing companies for the purposes of servicing
sub-prime borrowers on a one-step removed basis than directly to the borrowers
themselves; (2) co-label credit cards, and expansion of the duel secured credit
card or debit card system; (3) stiffer legislation (backlash) to protect debtors
from unreasonable intrusion and permanent "credit wrecking" by credit grantors;
(4) wrap around lending (equity lines), including many new forms of
collateral-backed lending vs. customer-backed lending.
Management believes that a trend has developed whereby financial institutions
have began selling discounted consumer debt to third parties such as the
Company. This is partially the result of changes in the financial regulatory
requirements of such entities. One method used by these financial institutions
to enhance their current financial condition is to charge-off non-performing
loans or other delinquent credit accounts. Typically accounts sold by the
originating creditors are sold in large blocks within various ranges. The
Company will value each block by analyzing such information as the debtors
credit history and likelihood of collecting any of the accounts within the
Block. Even if a small amount of the total outstanding principal balances of
most of the Blocks will be collected, the Company intends to acquire the Block
at a highly reduced rate from the Block's total principal amount. With proper
analysis and servicing, the Company believes it will make a return on its
investment.
For Amquest Matrix Funds, Inc.: (1) Pension funds investing more and more
retirement dollars into mutual funds (currently representing more than half
(2.14 trillion of the 4.1 trillion dollars presently invested in 7,000+ mutual
funds); (2) pension funds now investing only portions of their dollar in single
funds, giving rise to the creation of a greater number of variations of funds
into "families"; (3) multi-fund mutual funds being designed to create still
broader diversity and spread-risk investing; and (4) the upturn stabilization of
the stock market at large as the U.S. economy becomes globally healthier.
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<PAGE>
Numerous uncertainties include: (1) whether large mortgage (or banking)
corporations will consolidate or merge, and integrate into realty
agent-supported formats, thereby eliminating office performance declines and
agent attrition, (2) whether new, emerging technologies will replace the current
traditional method of personal real estate, mortgage, financing, borrowing and
lending representation, with various aspects being managed by video, interactive
television, or computer-links, where such methods tend to be less expensive,
faster and provide more detailed data and information, (3) whether quality
(relationship-driven) demand for services can perform in a market dominated by
quantity (price-driven) demand sales techniques; (4) whether a fresh, new niche
market where high integrity, fair pricing and win-win techniques prevail; or (5)
whether the U.S. stock markets (and the international markets) can permanently
support the immense, single responsibility to permanently fund, stabilize and
advance, the US (and world) economies.
SEASONALITY.
While the Mortgage Industry has some change from quarter to quarter in terms of
closed residential sales, the Company does not expect that seasonality will have
a material impact on its business.
ADDITIONAL RISK FACTORS
LIMITED OPERATING HISTORY.
The Company has a limited operating history under its existing corporate
structure upon which prospective investors may base an evaluation of its
performance. The Company was formed in 1988, but it was not until 1995-96 that,
during its development stages, that industry research and initial capitalization
of the corporation was accomplished. Through December 31, 1996, capitalization
has brought forth the possibility of operating the corporation as a combined
consulting, mortgage, consumer credit and investment financial services company.
The Company will be subject to all of the risks inherent in the establishment of
a new business enterprise, including the need for additional financing, lack of
operating revenues and uncertainty of market acceptance of its products. At the
date of this filing, it has produced minimal revenues by the rendering of
consulting services, which has been the nature of its operations since
inception, and the formation of three new corporations, including Homevest
Mortgage Corporation, AMQUEST Advisors, LLC, the registered investment advisor
for The AMQUEST Matrix Funds, Inc., a Maryland registration mutual fund.
The Company has in the past, and it continues to engage in, negotiations
regarding acquisitions of operating, revenue producing companies. These
negotiations, as of the date of this Report, have not yet reached closure. There
can be no assurance that the Company will not encounter significant difficulties
in integrating operations acquired or commenced in the future. Thus, in most
respects, the Company is in its development stages. However, its investing
banking services segment has commenced consulting operations.
This segment, to date, has not produced any revenues.
CONCENTRATION OF OWNERSHIP.
The current stockholders of the Company beneficially own 37,415,000, which
represents 100% of the total issued and outstanding Common Stock. The Company's
executive officers, directors, and their affiliates beneficially own
approximately 17,250,000 or 46% of the total issued and outstanding Common
Stock. Consequently, The Company's executive officers, directors, and their
affiliates will be able to determine the outcome of certain corporate actions
requiring stockholder approval, and will be able to elect the Board of Directors
of the Company. Such concentration of ownership may have the effect of
preventing a change in control of the Company. (See Item 4 and |tem 11 of this
Report).
19
<PAGE>
CONCENTRATION OF FOREIGN TRANSACTIONS.
The Company, even in its formative stages, intentionally developed strategies to
access foreign capital. The Company made inquiries on the Internet and used
various other methods, to locate foreign-based entities that would be interested
in US dollar-denominated securities. In addition to common stock, the Company
designed corporate securities that would mimic its planned mutual funds, having
features for both growth and income, whereby portions of the capital so raised
would be placed as cash reserves for the Company into its mutual funds, when
effective. Further, the Company introduced potential investors to its
innovative, development stage, financial services products that, if the Company
were properly funded, such products could be brought to market and thereby such
investors might possibly achieve significant gains. In essence, the Company was
willing to give up substantial equity to be able to access such capital sources.
Management devised this plan with the understanding that operating a financial
services company requires billions of dollars of capital and borrowings, and
that the credentials to be in the financial, asset management, and investment
services industries were vast, including the need for securities brokerage
contacts, big bank references, and a seasoned management team with a broad scope
of successful operating experience.
Management believes the development of the Company is both massive and
ambitious. It will require on-going capital now and well into the future. The
Company seeks foreign investors, whether individuals or institutions, that look
more towards long term gains on such investments, as opposed to short term
income, to which the present domestic investor has become accustomed. The
Company seeks foreign capital markets in which it can sell or exchange its
corporate securities. In this connection, by December 31, 1996, over fifty (50%)
percent of the Company's total issued and outstanding securities, with
consideration given to the issuance of both common and preferred shares, were
exchanged for foreign-source assets and capital. The Company believes that its
strength will come from being able to continually source investment capital from
a global network of providers, and from many different countries. However, these
sources may experience social economic or political problems at the same time,
and if such an event occurred, it could adversely effect the Company. At this
time, almost all of the Company's capital and assets reside offshore, either in
the Federal Republic of Brazil or in the Commonwealth of the Bahamas. While
these countries have a certain current level of economic, political and social
stability, their relationships with the United States and companies therefrom
are still subject to change, based upon what these countries perceive to be the
best for their own citizens. Also, unrest in such countries is not without
possibility, and such conditions could adversely effect these transactions.
In the case of the Company's primary asset, an approximate $246 million in
Judicial Bonds (the "Credits"), which are debt securities of the Federal
Republic of Brazil, such instruments cannot leave Brazil in their present form
and therefore must be sold outright or used as collateral for bank letters of
credit issued inside Brazil. Further, the owners of the Credits accepted an
irrevocable letter of payment issued by a bank in the Bahamas which issued the
letter of payment in exchange for the Company's corporate securities. The bank's
obligation, as a custodian, is to liquidate the Company's equity securities in
the open marketplace and pay the proceeds over to owners of the Credits. If, for
any reason the stock market does not support this orderly sell off, the bank
would have to pay any deficiency from its own sources. In such instance, the
bank would prevail upon the Company to share the equity margin it has in the
Credits to lessen the bank's exposure to having to reduce its capital, and also
the Company's exposure to a sell off of its securities in a declining market.
Conversely, the Company believes it has a sufficient margin between the price it
paid for the bank's letter of payment and the present market value of the
Credits to still achieve gains even if it had to share its margin in the Credits
with the bank, in order to protect itself from any adverse sell off of its
securities. However, there is no guarantee that this margin will in fact be
sufficient. This transaction is dependent upon the laws of at least three
disparate, distinct and unrelated countries, the consequences of a default on
the part of any of the parties, including the Federal Republic of Brazil on the
Credits themselves, cannot be fully known. There can be no assurance that this
transaction, among others the company has undertaken or will undertake in the
future, including the purchase of foreign government and corporate-issued
securities, will result in a positive cash flow, or that, if problems do develop
between the disparities of international law, that such challenges will be
successfully resolved, to the benefit of the Company and its shareholders. (See
Financial Data in this Report),
20
<PAGE>
NEW PARTICIPANT IN BUSINESS LINES; MANAGEMENT OF GROWTH.
The Company must manage the development of new business lines in which the
Company has not previously participated. Although the Company's strategy is to
acquire on-going businesses and to retain senior management of the entities that
the Company acquires, each new business line, including start-up operations,
requires the investment of additional capital and the significant involvement of
the present senior management of the Company. Positive results are uncertain. To
acquire operating businesses that will mesh together, both from the standpoint
of corporate culture and from the integration of disparate management, and then
to simultaneously develop a new line of business and integrate it with these
previously operating companies, will require the development of an
infrastructure that is both time consuming and expensive.
There can be no assurance that the Company will successfully achieve these
objectives. In addition to entering into new lines of business beyond mortgage
lending, including consumer credit services (AMCREDIT, a to-be-formed
corporation) and asset management (AMQUEST MATRIX FUNDS), the Company's business
strategy also envisions expansion into the sale of private label investment
instruments, including short-, mid-, and long- term bonds, commercial paper,
collateral-backed securities, convertible preferred stock, etc., among others.
There can be no assurance that any rapid expansion would not unduly burden the
Company's infrastructure or that the Company's senior management could
successfully oversee such expansion.
REQUIREMENTS FOR ADDITIONAL CAPITAL.
The Company's capital requirements in connection with its development and
marketing of it's services are expected by Management to be significant. The
Company is not currently generating any operating revenues, even though it has
marketed its investment banking services and it plans to gain revenue through
acquisitions. Until such time as an acquisition is accomplished, the Company
will be materially dependent upon the net proceeds from the sale of its
corporate securities, including those offered hereunder, to defray the costs of
its ongoing activities.
The Company believes that the net proceeds of the Offering will be sufficient to
finance the Company's working capital requirements for a period of up to three
years following the completion of this Offering. The expansion and operation of
the Company's business beyond such 36 month period may be dependent upon its
ability to obtain additional financing. There can be no assurance that
additional financing will be available on terms acceptable to the Company, if at
all. Furthermore, any additional equity financing may be dilutive to
stockholders and debt financing, if available, will likely include restrictive
covenants, including financial maintenance.
INDEMNIFICATION OF DIRECTORS.
The Company's Certificate of Incorporation provides that a Director of the
Company will not be personally liable to the Company or its stockholders for
monetary damages for breach of the fiduciary duty of care as a director,
including breaches which constitute gross negligence, subject to certain
limitations imposed by the Nevada Corporation Law. Thus under certain
circumstances, neither the Company nor the stockholders will be able to recover
damages even if directors take actions which harm the Company. (See
"Management-Indemnification of Director and Officers and Related Matters.")
COMPETITION.
The industries in which the Company competes are highly competitive. When the
Company faces direct competition, there can be no assurance that the Company
will be able to compete effectively. In addition, in regards to HOMEVEST
operations, traditional, conventional, and 100% commission real estate sales
organizations and brokerages, as well as mortgage origination and mortgage
lending companies, will compete with the Company in one or more categories and
may expand more aggressively in marketing a broader range of services, provide
more convenience, have stronger marketing and distribution channels and more
aggressive pricing, primarily in the form of prevailing interest rates. In
regards to AMCREDIT operations, other collection agency and/or skip trace
enterprises working in concert to collect non-performing debt, will compete with
the Company in one or more categories and may expand more aggressively in
marketing a broader range of services.
21
<PAGE>
In regards to the AMQUEST MATRIX FUNDS, INC. (the "FUND") at this time, there
are more than 7,000 mutual funds in existence, where almost all of them have
much longer operating histories and investment track records of greater
significance than the FUND. In all these business categories, enterprises may
compete more directly with the Company for all of its services. Most of the
Company's competitors have been in business longer or have greater financial or
marketing resources and than the Company and may be able to devote greater
resources to the promotion and sale of their products.
Because the Company intends to have greater emphasis on mortgage banking
activities, the Company's capacity to be competitive will be particularly
affected by fluctuations in interest rates. During periods of rising rates, the
Company's competitors, who will have locked in lower borrowing costs, may have a
competitive advantage. During periods of declining rates, competitors who may
solicit the Company's customers to refinance their loans may cause a decline in
the Company's revenues. During economic slowdowns or recessions, credit-impaired
borrowers may have new financial difficulties and may be receptive to offers by
the Company's competitors.
GEOGRAPHIC CONSIDERATIONS.
The Company's portfolio of residential mortgage loans may be vulnerable in
certain geographic areas. The Company's results of operations and financial
condition are dependent upon general trends in the markets in which
concentrations exist and, more specifically, their respective residential real
estate markets. Some areas have experienced economic slowdown over the last
several years, which has been accompanied by a sustained decline in the real
estate market. Such a decline may adversely affect the values of properties
securing the Company's loans, such that the principal balances of such loans,
together with any primary financing on the mortgaged properties, may equal or
exceed the value of the mortgaged properties, making the Company's ability to
recover losses in the event of a borrower's default extremely unlikely.
Also, there are uninsured disasters that may adversely impact borrowers' ability
to repay loans made by the Company and the value of collateral underlying such
loans, which could have a material adverse effect on the Company's results of
operations and financial condition.
DELINQUENCY, FORECLOSURE AND CREDIT RISKS MORTGAGE LOAN PORTFOLIO.
The Company has developed mortgage loan products that are untested in the
market. The Company plans to develop loan portfolios that will exclusively
include these "Homevest" mortgages which are specifically designed to offer a
loan program and underwriting standard that the Company considers unique and
proprietary. Accordingly, many of these Homevest portfolios will likely include
loans that develop payment delinquencies.
As a part of the Company's business strategy, mortgage loans with varying
degrees of current delinquencies will be removed from its portfolios, and
borrowers will be invited to refinance their loans under different terms to
avoid forecloses and losses. This strategy has not been tested and there can be
no assurance that the Company will not suffer financially even with its attempts
to avoid foreclosures and losses by the application of various new and untried
refinancing methods.
Also, the Company plans to develop loan portfolios that will include loans that
were originated by numerous lenders throughout the United States under various
loan programs and underwriting standards. Many of the loan portfolios will
likely include loans that have had payment delinquencies in the past or, to a
lesser extent, are delinquent at the time of the purchase. As a part of the
Company's business strategy, portfolios of mortgage loans with varying degrees
of current and past delinquencies will be purchased at discounts. Although the
Company plans to perform extensive due diligence procedures at the time these
loans are purchased, the risk of continuing or recurrent delinquency remains.
The Company will assume substantially all risk of loss associated with its loan
portfolio in the case of foreclosure. This risk includes the cost of the
foreclosure, the loss of interest, and the potential loss of principal to the
extent that the value of the underlying collateral is not sufficient to cover
the Company's investment in the loan.
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<PAGE>
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS.
The Company's financial results are subject to significant quarterly
fluctuations as a result of, among other things, the variance in the number and
magnitude of purchases and sales of mortgage loans and/or mortgage servicing
rights consummated by the Company from time to time. In addition, a portion of
the Company's revenues are derived from brokerage fees, the timing and receipt
of which are unpredictable. The Company's results of operations for any
particular quarter may in the future not necessarily be indicative of the
results that may be achieved for any succeeding quarter or for the full fiscal
year.
POSSIBLE VOLATILITY OF MARKET PRICES.
The stock market may experience significant price and volume fluctuations that
may be unrelated to the operating performance of specific companies.
Announcements of new technologies, policies, and procedures and regulations of
various government entities, State and Federal, may effect the Company's
financial results and thus have a significant impact on the trading prices of
the Company's securities.
NO DIVIDENDS.
To date, no dividends have been declared or paid on the Company's Common Stock,
and the Company does not anticipate declaring or paying any dividends in the
foreseeable future. It intends to reinvest profits, if any, into the
implementation of its business plan, the development of its subsidiaries and
future operations.
DEPENDENCE ON KEY PERSONNEL.
The success of the Company is dependent on the services and efforts of its
existing key management. While the Company believes that it could find
replacements for its executive officers, the loss of their services could have
an adverse effect on the Company's financial condition or results of operations.
The Company may enter into employment agreements with certain of its key
management personnel, which agreements could include two-year non-competition
provisions. The Company's success and plans for future growth will also depend
on its ability to attract and retain additional skilled personnel. There can be
no assurance that experienced and qualified management level personnel will be
available to the Company in the future on terms satisfactory to the Company. The
Company does not maintain key-man life insurance on any of its executive
officers.
ABSENCE OF PUBLIC MARKET, ABSENCE OF UNDERWRITER.
Prior to this Offering, there has been a minimal public market for the Company's
Common Shares. Consequently, the secondary public offering price will be
determined through negotiations between the Company and potential Underwriters.
The offering price presented herein, $12.50 per Common Share, is an arbitrary
assumption presented by management, based upon an approximate 1.6 times book
value per Share initial offering price. Because the Company has no revenue, a
calculation based upon a multiple of net earnings per Share is not possible.
(For a discussion of factors considered in establishing the public offering
price, also see Item 5). As yet, the Company has not engaged an Underwriter and
it is possible that no level of negotiation with prospective Underwriters will
prove to be successful. There can be no assurance that the Company will be able
to engage an Underwriter, or that if it does, an active trading market will
develop after the offering or, if one is so developed, that such a market will
be sustained.
POSSIBLE VOLATILITY OF STOCK PRICE.
The market price for the Common Shares may be significantly affected by such
factors as quarter-to-quarter variations in the Company's results of operations,
which may be due to, among other things, the variance in the number and
magnitude of purchases and sales of mortgage loans and/or servicing rights
consummated by the Company from period to period, as well as by news
announcements or changes in general market or industry conditions. There can be
no assurance that the Common Shares purchased in this Offering may be later sold
at or in excess of the price paid. (See "Management's Discussion and Analysis of
Financial Condition and Results of Operations.")
LACK OF COMMITMENTS AND ORDERS.
There are currently no commitments for any of the Company's products or
services.
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ITEM 3. PROPERTIES.
The Company owns approximately 4 acres (18 residential home building lots) of
prime undeveloped real estate in the rapidly developing sector of Collier
County, Florida, and 2 other such building lots in St. Lucie County, Florida. At
December 31, 1996 these lands approximated $200,000 at cost and are reflected on
the Company's financial statements as "Real Property" under Fixed Assets.
The executive and administrative offices of Amquest International, Ltd. are
currently located at 4901 NW 17th Way, Suite 405, Ft. Lauderdale, Florida 33309.
The lease on this premises is in the name of Kinsman, Merchant & Associates,
Inc., (KMA) and while the Company has no sublease, the KMA lease extends through
January 1999. The current annual rent portion on the space that Amquest is
obligated to pay on the approximate 4,700 square feet, aggregates approximately
$75,000. The Company believes that this current space arrangement is adequate
for now, but it is making preliminary inquiries concerning space available for
future expansion, upon acceptable terms.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN 5% OR MORE BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the Security Ownership of Certain Beneficial
Owners and Management who own 5% or more of the Company's issued and outstanding
shares:
<TABLE>
<CAPTION>
Common Shares Percent Preferred Shares
------------- ------- ----------------
<S> <C> <C> <C> <C>
Mr. David A. Morgenstern, as controlling shareholder 14,423,500 38.6% ("D") 10,000
of Kinsman, Merchant & Associates, Inc.
Dr. Erling I. Pedersen, as controlling shareholder 17.2% -----
of Geneva Ventures, Ltd., et al. 6,400,000
Mr. Jose' Luis Mateos Garcia and Mr. Sabastian
Martinez Alcalde, as controlling shareholders of 4,750,000 12.7% -----
Acajou Holdings, Ltd.
</TABLE>
Kinsman, Merchant & Associates, Inc. ("KMA") paid $2,825,000 for 19,000,000
common shares (the "Control Block") and then disbursed 1,150,000 of these common
shares for $115,000 to Addison, Price Gaines, Inc., a non-affiliate, and
2,000,000 common shares for $1,500,000 to Geneva World Ventures, Inc., a Florida
corporation, which is the US subsidiary of Geneva Ventures, Ltd., also
non-affiliates. KMA owns 42.4% of the Company's total issued and outstanding
shares, and Mr. David A. Morgenstern, the President and Managing Director of the
Company, owns 91% of the common stock of KMA.
Accordingly, Mr. Morgenstern owns a total of 14,423,500 common shares of the
Company, or 38.6% of its currently issued and outstanding common shares, and
also the 10,000 Series "D" Preferred Shares which control 50% of the voting
rights of the Company's authorized shares. In every aspect therefore, Mr.
Morgenstern is the controlling shareholder of the Company.
In the case of Geneva Ventures, Ltd., a Gibraltar tax-exempt corporation, it
owns a total of 6,400,000 common shares, when counting the shares owned by its
US subsidiary, Geneva World Ventures, Ltd., or 17.2% of the Company's issued and
outstanding common shares. These two companies, which are both non-affiliates of
the Company, are owned by Dr. Erling Pedersen, a Danish national.
Acajou Holdings, Ltd., a Gibraltar corporation, is also a non-affiliate of
the Company, which owns a total of 4,750,000 common shares, or 12.7% of the
Company's issued and outstanding shares. Acajou Holdings, Ltd. is owned and
controlled by Mr. Jose' Luis Mateos Garcia and Mr. Sabastian Martinez
Alcalde, Spanish nationals, who are unrelated parties to the Company.
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<PAGE>
NET TANGIBLE BOOK VALUE PER SHARE
At December 31, 1996, the Company's Net shareholder equity was approximated
$285,072,526 with 37,415,000 Common Shares issued and outstanding, yielding a
Net Tangible Book Value per Share of approximately $7.62. With consideration
given to the potential dilution upon conversion of the 10,000,000 Series "A"
Preferred Shares to Common Shares at $25.00 per Share, there would then be
approximately 47,415,000 Common Shares issued & outstanding, which would provide
a pro forma Net Tangible Book Value of approximately $6.00 per Share. On
February 5, 1997 the aggregate trading price of the Company's stock approximated
at Bid; $5.00 and Asked; $5.50 per Share, or approximately 69% of the Net
Tangible Book Value.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Officers and Directors. Pursuant to the Bylaws, each Director shall serve until
the annual meeting of the stockholders, or until his successor is elected and
qualified. It is the intent of the Company to support the election of a majority
of "outside" Directors at such meeting. The Company's basic philosophy mandates
the inclusion of Directors who will be representative of management, employees
and the minority shareholders of the Company. Directors may only be removed for
"cause". The term of office of each officer of the Company is at the pleasure of
the Company's Board.
The principal Executive Officers and Directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE CURRENT POSITION TERM(S) OF OFFICE
- ---- --- ---------------- -----------------
<S> <C> <C> <C>
Mr. John Cavaiuolo 67 Chairman of the Board Since June 21,1996 to Present
Mr. David A. Morgenstern 48 President; Managing Director Since February 1, 1996 to Present
Ms. Bernadette Stevens 38 Secretary Since April 1, 1996 to Present
Mr. Bruce S. Eagleson 63 Director Since June 21, 1996 to Present
Mr. James M. Krupinski 64 Director Since June 21, 1996 to Present
</TABLE>
BOARD OF DIRECTORS. The Board of Directors has primary responsibility for
adopting and reviewing the implementation of the business plan of the Company,
supervising the operations for confirmation of strategic decisions, and review
of officers' and executive management's performance of specific business
functions. This notwithstanding, in the Company's By-Laws, as amended, "The
Executive Committee to the Board" has significant control over the Directors and
the Board at large. Accordingly, The Executive Committee to the Board, which is
not subject to general election as the Board of Directors are, are also not
subject to removal, except for cause, including malfeasance, criminal action,
health or death, and therefore effectively controls the Company.
The Board, at the direction of the Executive Committee, is responsible for
monitoring all management and from time to time are called upon to revise the
strategic and operational plans of the Company. Directors receive no
compensation or fees for their services rendered in such capacity. The following
persons listed below have been retained to provide services as directors until
the qualification and election of his/her successor. All holders of Common Stock
will have the right to vote for the Directors of the Company.
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<PAGE>
RESUMES
Mr. John Cavaiuolo, 67, is the Chairman of the Board and potential President of
AMQUEST Credit Industries, Inc., the to be formed, capital recovery and credit
restoration subsidiary of the Company. Mr. Cavaiuolo, a seasoned executive with
an extensive background in the Financial Services Industry, has held a variety
of senior line management and senior staff positions in banking, credit,
information, and consulting. His breadth of experience cuts across several
disciplines: profit center management, credit cycle management technology,
distribution, production management, crisis management information and strategy
formulation.
Mr. Cavaiuolo's business skills include organizational planning and analysis,
business planning and analysis, re-engineering, production planning and
development, strategic planning, cost containment and control, and crisis
management. He also has an array of technical skills in systems planning, design
and development information systems design and integration, computer and
communications technology, product development, project management, control and
implementation. In the Credit arena his skills include detailed knowledge of
credit products, i.e., lines of credit, credit cards, mortgage loans, equity
source, student loans, installment, SBA and secured loans. It also Includes
account acquisition, credit scoring, collections, credit operations and
servicing.
From 1994 to present, Mr. Cavaiuolo is a partner and Director of Montgomery,
Smith & Associates - New York, NY. This is a consulting firm that focuses on the
Financial Services Industry with emphasis on Business Strategies, Market
Analysis, Product Development, Organizational Structure, Re-engineering,
Technology Support, Crisis Management, Outsourcing and Information Technology.
His duties include sourcing clients, supervising projects, presenting clients to
clients, preparing reports, and supervising implementations.
From 1993-1994, Mr. Cavaiuolo served as Regional Director for Citicorp Mortgage,
Inc., Stanford, CT. He managed the mortgage acquisition and processing for the
North East Region. This was a crisis management assignment to restructure an
activity that was out of control from a processing, cost quality and service
standpoint. In one year, a turn around was achieved permitting Citicorp to begin
expanding the mortgage business.
From 1989-1993, Mr. Cavaiuolo served as Managing Director for Citicorp Point of
Sale, Stamford, CT. Citicorp POS was an information company that collected
consumer purchasing data from supermarkets using cash register receipts. This
data, which was collected from one thousand stores encompassing six million
households, was used to develop new information products that were sold to
retailers, manufacturers, and other third parties. Mr. Cavaiuolo managed the
operations and technology for this business which included data centers,
research and development, media development, printing and distribution, card
issuance, customer service, product dictionary development and maintenance, and
store operations and systems. His major accomplishments included converting an
out-of-control activity into a structured, process-driven, predictable
operation. He also improved financial performance/product quality while reducing
costs and reduced data acquisition costs from $14M to $2M per store.
From 1985-1989, Mr. Cavaiuolo served as Executive Director of Operations and
Technology for Citibank, Consumer Banking Group, New York, NY. As senior staff
to Group Head he managed a variety of strategic projects which resulted in
substantial savings to the Corporation. His major accomplishments included
rationalizing the systems development and product development activities which
resulted in the discontinuance of a major development effort and integration of
duplicate development activities; he identified a $300 million cost imbalance in
the Consumer Bank and developed a strategy for the phased consolidation of
various activities and systems and the development of a common product set; he
re-engineered the activities of the Northeast Consumer Bank which included
identifying $200 million in opportunities through productivity improvements and
consolidation of activities and business units; he assumed control and managed
the implementation of the second generation ATM project after the project
experienced technical, cost and delivery problems; and he managed the
implementation of Project Delta (a study rationalizing the corporate staff)
which resulted in savings of $40 million to the Corporation.
26
<PAGE>
From 1980-1984, Mr. Cavaiuolo served as Business Manager for Citicorp Retail
Services, Inc., Melville, NY. P&L was responsible for four business units
providing private label credit card services to specialty merchants, department
stores and small independent merchants. The business generated $800 million in
credit sales and $400 million in receivables from ten million cardholders. His
major accomplishments included restructuring an unprofitable business, i.e.,
reducing infrastructure, consolidating business units, improving productivity,
renegotiating unprofitable contracts and increasing revenue so as to make the
business profitable.
From 1975-1979, Mr. Cavaiuolo served as Division Head for Citibank, New York
Banking Group, New York, NY. He managed the operations of the NY Consumer Sank
(1400 staff, three million accounts). This included the back office production
base consumer credit and mortgage operations data processing, systems and
product development, and front end branch systems. His major accomplishments
included bringing a high degree of automation to the branch and hack office
activities, and restructuring the back office by decentralizing operating
activities into regional centers.
From 1970-1975, Mr. Cavaiuolo Served as Division Head for Citibank Processing
Division, New York, NY. He managed the Check Processing production base
including the data processing and Systems development activities. This division
had a total staff or 2,400, serviced 3 million accounts and processed 2.5
million checks daily. His major accomplishments included applying production
management techniques and state-of-the art technology to Check Processing
operations. These innovations resulted in maintaining costs flat for five years
while absorbing volume increases and improving service.
From 1960-1969, Mr. Cavaiuolo served as Director of Systems Development for
Citibank, Research & Development, New York, NY. He managed the major second
generation systems development efforts including Commercial Loans, Consumer
Credit, Item Processing, Internal Accounting, Customer Accounting, Personal
Trust and Securities accounting, Corporate Stock transfer, Travelers Check
Information and Accounting, Foreign Exchange accounting, Mortgage, Letter of
Credit, and Domestic and Foreign Payments systems. Mr. Cavaiuolo's other
experiences include a variety of management and staff jobs in the area of
systems organization planning, internal consulting and, early on in his career,
jobs in systems design, programming, and operations. Mr. Cavaiuolo was educated
in Business Management at Saint Johns University in Brooklyn, NY and completed
graduate work in Marketing, Finance and Business Strategies at New York
University and the Harvard Business School.
Mr. David A. Morgenstern, 48, since February 1, 1996, is President; Managing
Director of Amquest International, Ltd. and is Chairman of the Executive
Committee. He served as Secretary from February 1, 1996 to March 31, 1996. In
addition, Mr. Morgenstern was also Managing Director of Kinsman, Merchant &
Associates, Inc. (KMA), 1994 to December 1, 1996 when Kinsman was acquired by
Company. On the Advisory Counsel, Mr. Morgenstern serves as the "Senior
Advisor." From 1984 to 1993, Mr. Morgenstern owned The Culinary Group, Inc.
Pompano Beach, Florida, a food/restaurant industry consulting firm. Mr.
Morgenstern CAD-drafted and designed food preparation facilities as both an
employee of, and as a consultant to, various clients in the hospitality,
restaurant and natural foods industries, where he created recipes, menus, and
operational techniques for new theme or facility expansion.
From 1978 to 1983 Mr. Morgenstern served as Chief Executive Officer of Financial
Reserve Corporation, ("FRC"), Atlanta, Georgia; a vertically integrated energy
resources and investment firm. He was responsible for sales and finance. In
1986, while an officer of FRC, Mr. Morgenstern was found guilty resulting from a
1981 violation of Section 18 USC ss.ss. 371,2, 656, 2314 & 4205(a) in the East
District of Tennessee; re: Docket #CR-3-86-07, notably, a misapplication of bank
funds. The circumstances surrounding this violation included, in part, actions
taken with the full knowledge of the bank's senior vice president and
shareholder. Upon approval by the bank officer, FRC received loans through the
issuance of same-bank-drawn cashiers checks. Mr. Morgenstern served
approximately 18.5 months at FPC Eglin AFB. None of these charges had anything
to do with KMA, its Affiliates, its business operations, its involvement with
Amquest International, Ltd., or any of any investment banking, capital funding
or financing sources.
27
<PAGE>
From 1972 to 1978 Mr. Morgenstern was the Vice President - Corporate Executive
Chef for Fables, Incorporated, in Cincinnati, Ohio, a real estate holdings
corporation with various stores and restaurants located in the historic district
of Mt. Adams. Mr. Morgenstern is a Certified Executive Chef ("CEC"), and a
professional designation of the American Culinary Federation("ACF"). He is
classically trained, an international gold medal winner, and an expert in many
cuisines, especially nutrition-based dietetics. He is also Certified in
Nutrition and is a Certified Professional Food Manager ("CPFM"), a State of
Florida licensing designation and is also a Competent Toastmaster ("CTM"). Mr.
Morgenstern was educated at Aiken High School, 1966, Cincinnati, Ohio; Miami
University; Oxford, Ohio; Luxembourg City, Luxembourg, 1971; Chemistry; English
Literature. Emmaus Bible College, 1989-90; (48-unit correspondence course) ACF
Educational Institute; Executive Chef Certification, 1985.
Ms. Bernadette Stevens, 38, has been the Secretary of the Company since April
1, 1996. She also served as Executive Director of Kinsman Merchant &
Associates, Inc. since March, 1996 to December 1, 1996. In this position she
is responsible for investor relations and new project development. Ms.
Stevens currently maintains certification as Series 7 and Series 63
securities licenses. Ms. Stevens was the Associate Producer for Tricom
Pictures, Inc. from April, 1995 through March, 1996 where she developed and
produced television segments for National Television Series, ("In The Money"
and "Strategic Business Report") and generated sponsorship funding. From 1992
through 1995, Ms. Stevens was the Vice President of Investments for Gruntal &
Company, Inc. where she managed a $20 million asset portfolio, conducted the
training of new brokers and supervised the administrative staff for the
divisional group.
From 1988-1992, Ms. Stevens was the Vice-President of Investments for Paine
Webber Group, Inc. where she coordinated Initial Public Offering Allocations
for Regional Retail Brokers and was the Pension and Hedge Fund Coordinator
for Local Branches.
From 1985 through 1988, Ms. Stevens was the Vice-President of Investments,
Oppenheimer Group, Inc. where she coordinated the Regional Arbitrage
Department as well as leading the office in equity asset sales for 3 years.
OTHER DIRECTORS WHO ARE NOT OFFICERS OF THE COMPANY
The following persons who are principles of Montgomery, Smith & Associates, Inc.
(MSA) also serve as Directors on the Board of the Company:
Bruce S. Eagleson, 63, Managing Director of MSA, is also a Director on the Board
of the Company. He has an extensive background in the financial services
industry, with over 30 years experience in operations which began upon
graduation from college. Mr. Eagleson's career in banking expanded over the
years to include MIS, administrative support, logistics and product and market
development. He advanced through Citibank, going to Chemical Bank to take charge
of DP operations, cash management, municipal services and branch administration
and he retired as senior executive vice president of First Fidelity Bank. Mr.
Eagleson completed his undergraduate studies at Hofstra College and did his
graduate work at the Harvard Business School, specializing in computer
resources.
James M. Krupinski, 64, Director of MSA, is also a Director on the Board of the
Company. He is a seasoned information technology executive having spent over 30
years in successive management within the financial services industry. He has
established a successful record in the areas of application development, data
processing and back office operations. Mr. Krupinski has held senior MIS
management positions with American Express, Citicorp, Carteret Savings Bank and
Bank One. As senior Vice President and CIO of Bank One, he was responsible for
all information services including, strategic planning, product development, R&D
and merger and acquisition. As Citibank's director of technical services he was
responsible for private label credit card, micro computer development, branch
automation, Citibank ATM design and all voice and data telecommunications. His
business experience also covers Central and Northern Europe. He completed his
undergraduate work in economics at Saint Peter's College and served in the U.S.
Army Signal Corp. retiring with the rank of Colonel, USAR. He earned an MBA in
finance at Fairleigh Dickerson University.
28
<PAGE>
ITEM 6. EXECUTIVE COMPENSATION - OTHER COMPENSATION - STOCK OPTION PLAN
As of the date of this report no officer or director is compensated directly by
the Company (See also Item 5 of this Report).
NON-EMPLOYEE DIRECTORS AND ADVISORY BOARD MEMBERS
The Company currently pays each non-employee director of Amquest a $3,750
quarterly retainer and a fee of $1,000 ($250 if such director's attendance is
via teleconference) for each meeting of the Board of Directors of the Company
that he attends. The Company also reimburses each director for ordinary and
necessary travel expenses related to such director's attendance at Board of
Directors and committee meetings. Non-employee directors are also eligible for
stock option grants under the 1996 Stock Option Plan. (See "Stock Option Plan.")
Each Advisory Board Member ("Advisory Director") of the Company is paid a $2,500
quarterly retainer and a fee of $1,000 ($250 if such advisory director's
attendance is via teleconference) for each meeting of the Board of Directors of
the Company that he attends. The Company also reimburses each Advisory Director
for ordinary and necessary travel expenses related to such advisory director's
attendance at Board of Directors meetings. Advisory directors are also eligible
for stock option grants under the 1996 Stock Option Plan. (See " Stock Option
Plan.")
EXECUTIVE COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1996, the Company had no compensation committee or other committee of the
Board of Directors performing similar functions. Decisions concerning executive
compensation for 1995 and 1996 were made by the Board of Directors of Amquest
International, Ltd., substantially limited in terms of approval to Mr.
Morgenstern and Ms. Stevens whom were and continue to be executive officers of
the Company and participated in deliberations of the Board of Directors
regarding executive officer compensation. The Board of Directors of the Company
has established an Executive Committee to handle compensation issues for
executive officers of the Company in the future. Mr. Morgenstern also currently
serves on the Executive Committee regarding compensation as well as all other
committees of the Board of Directors that may performing similar decisions or
functions.
STOCK OPTION PLAN
The 1996 Option Plan was adopted by the Board of Directors in May, 1996. The
Board of Directors and shareholders have approved and reserved for issuance an
aggregate of 2,000,000 shares of the Common Stock under the 1996 Option Plan,
subject to further adjustment upon the occurrence of certain specified
capitalization events. The 1996 Option Plan is intended to encourage ownership
of the Common Stock by officers and other employees and consultants to the
Company, to encourage their continued employment with the Company and to provide
them with additional incentives to promote the success of the Company. The 1996
Option Plan became effective as of September 1, 1996 and will terminate on
August 31, 2005, but such termination will not affect any outstanding options
previously granted. The 1996 Option Plan provides that the Compensation and
Stock Option Committee of the Board of Directors may grant options and otherwise
administer the 1996 Option Plan. Options granted under the 1996 Option Plan may
be: (i) incentive stock options; (ii) IRA-qualified stock options; or (iii) a
combination of the foregoing. In the 1996 Option Plan, the exercise price for
incentive stock options and, unless otherwise determined by the Compensation and
Stock Option Committee, the exercise price for non-qualified options granted
under the Option Plan must be at least 85% of the fair market value of the
Common Stock on the date of the grant; provided, however, in the event that an
incentive stock option is granted to an employee who owns more than 10% of the
total combined voting power of all classes of stock of the Company or, if
applicable, a subsidiary or Company corporation of the Company, the exercise
price per share for such incentive stock options cannot be less than 110% of the
fair market value of the Common Stock on the date of such grant. The exercise
price of options granted under the 1996 Option Plan is payable in cash, or at
the discretion of the Compensation and Stock Option Committee, in whole or in
part, in shares of the Common Stock, valued at their fair market value at the
date of exercise; provided, however, that the Company may establish "cashless
exercise" procedures, subject to applicable laws, rules and regulations,
pursuant to which a holder of an option may exercise an option and arrange for a
simultaneous sale of the underlying Common Stock, with the exercise price being
paid from the Compensation and Stock Option Committee on the date of grant.
29
<PAGE>
Options expire on dates determined by the Compensation and Stock Option
Committee, in its sole discretion, but not later than ten years from the date of
grant. In the event of an Unusual Corporate Event (as defined in the 1996 Option
Plan), the Compensation and Stock Option Committee, in its discretion, may elect
to terminate any outstanding options, effective ninety (90) days after such
Unusual Corporate Event. In such event, the vesting of such options would be
accelerated. The 1996 Option Plan may be amended at any time by the Board of
Directors, but no amendment can be made without the approval of the Company's
stockholders if stockholder approval is required under Section 422 of the Code
or Rule 16b-3 under the Securities and Exchange Act. No amendment to the 1996
Option Plan may impair the rights or obligations of the holder of any option
granted under the 1996 Option Plan without his or her consent.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BUSINESS ADVISORY FIRMS.
The Company has entered into, and it is contemplated that the Company may in the
future enter into transactions with management, directors and affiliates which,
even though may involve conflicts of interest, are believed to be fair and
equitable transactions in the best interest of the Company. These transactions
consist if the following:
1. The Company has retained certain business advisory firms which form an
Advisory Council to the Board of Directors (the "Council."). All of the
members of the Advisory Council are "Affiliates" of the Company. For
instance, Mr. Morgenstern, President and Ms. Stevens, Secretary, are,
respectively, the Managing Director and Executive Director of Kinsman,
Merchant & Associates, Inc. ("KMA"), the Company's investment banker, where
Mr. David Morgenstern owns a 10% interest in KMA and Ms. Stevens also owns an
equity stake in KMA. Mr. John Cavaiuolo, Chairman, is also the Executive
Director of Montgomery, Smith & Associates, Inc., consultants to management.
2. Kinsman, Merchant & Associates, Inc. ("KMA")
KMA is a group of associates with a diverse practice in comprehensive analysis,
mergers, acquisitions, capital financing, debtor-in-possession management, and
research projects. At present, KMA will continue its services to the Company on
an on-going basis.
KMA essentially created the Company's corporate structure, its overall business
plan and strategies for capital funding. KMA developed the various
research-backed reports for the Company, including: Projected Operating Results,
for Year 1 through 5; Costs of Management, including assignments and
compensation; Overcoming Business Risks," including the analysis of trends,
uncertainties, pitfalls to success; and Capital Market Research, which
interfaces stock market trends with the potential stock price (investment)
growth. KMA is paid fees for: a) research, preparation and completion of the
corporate offering materials; b) corporate copyrights and other proprietary
materials; c) investor relations, including publishing and printing; d) on-going
public relations or advertising; e) day-to-day business advisory and analytical
support; f) budgetary research and operational analysis; and g) certain cash
management services. Fees charged by KMA are both "project-priced" and hourly,
where such hourly charges range from $35 per hour to $250 per hour, plus
expenses.
All outside consulting and professional services, including accounting, audit,
legal, or other third party professional services required are billed by KMA to
the Company without surcharge, or such services may be billed directly to the
Company by the provider. At all times, the relationship of KMA to the Company is
as an independent contractor, and no partnership or joint venture between KMA
and the Company is implied. KMA also does not render legal advice to the Company
and no services rendered by KMA are to be construed as such. The Company has
retained its own Counsel to advise it as to the matters contained in this
Offering.
30
<PAGE>
Some of the recommendations made by KMA thus far concerning the formulation of
THE AMQUEST MATRIX FUNDS, INC., as a mutual fund (the "Trust") include: a) that
the Trust become a ten (10) portfolio family of funds to provide a broader asset
allocation investment capacity; b) that the Trust become a family of funds that
invests in other mutual funds through a sub-advisor structure, as well as single
issues; c) that the Trust retain professional, independent money managers for
each of the individual portfolios; d) that these independent managers provide
day-to-day supervision and management as to the investment and reinvestment of
each of the specific Fund's assets; and e) that these independent managers
continuously review, supervise and administer each of the specific Fund's
investment programs in accordance with investment objectives and policies that
tend to further diversify asset allocation.
3. Montgomery, Smith & Associates, Inc.
Montgomery, Smith & Associates, Inc. (MSA), New York, New York, is a Consultants
to Management firm founded by former banking executives. All of the following
principles also serve as Directors on the Board of the Company. Its mission is
to provide industry and technological expertise to financial services providers
and to their affiliated groups. Mr. Cavaiuolo, who is a Director of MSA, is
Chairman of the Board of the Company. In addition to Mr. Cavaiuolo, Mr. Bruce S.
Engelson, Managing Director of MSA, and Mr. James M. Krupinski, Director, serve
on the Advisory Council as "Banking Executive Advisors" to the Board of
Directors and the Executive Committee. Under the terms of an Agreement, dated
April 17, 1996, as ratified by the Board of Directors on May 10, 1996, MSA
provides services to the Company. In exchange for a two-year services
commitment, including full time compensation for Mr. Cavaiuolo as the Company's
Chairman of the Board, the Company agreed to exchange eighty (80) Series "A"
Units (containing a total of 400,000 Common Shares, and 400,000 Class A Warrants
exercisable over a period of four (4) years at $7.50 per Share, in lieu of
$1,000,000 in fees, excluding normal and customary expenses, which are reflected
in the Company's financial reports as "Prepaid Expenses." (See "Financial
Statements"). MSA has fortified the Company's credibility as a competent,
experienced provider of banking-style services. MSA's general goal associated
with its contract services is to have the Company's management a) be better able
to undertake challenging and complex projects; b) achieve more tangible and
lasting bottom line results; c) improve resource allocation, product
preparation, and processing efficiencies and; d) enhance the application of
information technologies. MSA's method is to reinforce Management's strengths
and talents through collaboration. The Consulting Contract provides for MSA to
be responsible for implementation of a) Outsourcing; b) Image Technology; c)
File Documentation; d) Credit Products; e) Business Strategies; f) LAN
Implementation; g) System Design & Conversion; and in certain instances; h)
appointment of additional Board Members; and i) Acquisitions and & Sales. At all
times, the relationship of MSA to the Company is as an independent contractor,
and no partnership or joint venture between MSA and the Company is implied. MSA
also does not render legal advice to the Company and no services rendered by MSA
are to be intended as such.
4. Advisory Counsel.
For the long term, the Company intends to maintain an Advisory Council, which
would function as advisers to the Executive Committee of the Board of Directors,
and thereby retain consistent advice and research consultants, these being
either firms or individuals, which will be distinguished by high achievement and
corporate executive leadership skills in various industries and financial
undertakings worldwide. Each such advisor and/or consultant will be an expert in
one of the Company's market focus areas, for the purpose of having the Company
receive diverse, authoritative and knowledgeable advice from several different
groups of operating executives.
ITEM 8. LEGAL PROCEEDINGS
The Company is not aware of any pending or threatened legal proceedings as of
the date of this Filing. However, the Company may, from time to time, be subject
to legal proceedings arising from its undertakings in the ordinary course of
business.
31
<PAGE>
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
TRADING MARKET. The Company's Common Shares have actively traded on the OTC
bulletin board since June 10, 1996 under the assigned Symbol: AMQI. In 1996, the
annual low was $31/2 per Share and the Annual high $77/8 per Share. In regards
to the trading of the Company's common shares, In the following table reflects
the ending quarterly volume and closing price on the last trading day's
bid/ask/close, relative to the each quarter, as recorded on the NASDAQ quotation
system, (Source: America Online:CauseMol; Information is presumed to be
accurate, but not guaranteed), and then, the volume and closing price on Monday,
March 24, 1997, and then, for March 25 through March 31, 1997, a four-day
downturn trading period when the stock market as a whole dropped approximately
300 points:
COMMON STOCK QUARTERLY VOLUME AND CLOSE STATISTICS
- --------------------------------------------------------------------------------
Quarterly Results, through Volume Bid/Low Ask/High Close
- --------------------------------------------------------------------------------
July 1, 1996 125,400 6 1/2 6 6 7/16
September 30, 1996 237,700 6 3/4 6 6 3/4
December 31, 1996 460,900 4 7/8 6 6
March 24, 1997 5,277,700 5 1/8 5 9/16 5 3/16
March 25 through March 31,
1997 229,800 4 4 4
- -------------------------------------------------------------------------------
Holders. On the date of this filing, there are 37,415,000 Common Shares
outstanding, held amongst approximately 830 holders, 1,360,000 Class A Warrants,
exercisable at $7.50 per Share through July 31, 2000, 10,000,000 Series "A"
Preferred Shares convertible to Common Shares after August 30, 1998 at $25.00
per Share, and 10,000 Series "D" Preferred Shares outstanding, $.001 par value,
whereby this Series of Preferred Shares controls 50% of the voting rights of the
Company's authorized Shares. The following chart shows the general disbursement
of these Shares:
<TABLE>
<CAPTION>
- --------------------------------------------------- ---------------- ---------- ---------------- -----------------
ISSUED AND OUTSTANDING SECURITIES Common Shares Percent Preferred Shares Class A/Warrants
- ------------------------------------------------------------------------------------------------------------------
EXEMPT AND UNREGISTERED SECURITIES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Acajou Holdings, Ltd. 4,750,000 12.7%
Addison. Price, Gaines, Inc. 1,150,000 3.1%
Americas International Bank Corporation, Ltd. 4,000,000 10.7% ("A")10,000,000
Caveat Enterprises, Inc. 1,000,000 2.7%
Geneva Ventures, Ltd. 4,400,000 11.8%
Geneva World Ventures, Inc. 2,000,000 5.4%
Kinsman, Merchant & Associates, Inc. 15,850,000 42.4% ("D") 10,000
Montgomery, Smith & Associates, Inc. 400,000 1.1%
Series "A" Unit Holders 1,360,000 3.6% 1,360,000 (W)
---------- ----- --------------- -------------
Unregistered Securities Subtotal 34,910,000 93.3% (All)10,010,000 1,360,000 (W)
========== ==== =============== =============
- --------------------------------------------------- ---------------- ---------- ---------------- -----------------
Common Shares Percent Preferred Shares Class A/Warrants
- ------------------------------------------------------------------------------------------------------------------
WIDELY-HELD TRADING SECURITIES
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total Widely Held Trading Securities 2,505,000 6.7%
Total Issued and Outstanding, ---------- ----- --------------- -------------
at December 31, 1996. 37,415,000 100.00% (All)10,010,000 1,360,000 (W)
========== ==== =============== =============
</TABLE>
(See "Security Ownership of Certain Beneficial Owners and Management.")
Dividends. To date, no dividends have been declared or paid on the Common Stock,
and the Company does not anticipate declaring or paying any dividends in the
foreseeable future, but rather intends to reinvest profits, if any, in it's
business
32
<PAGE>
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth information as of December 31, 1996, regarding all
sales of unregistered securities of the Registrant during the past three years.
In connection with each of these transactions, the Shares were sold to a limited
number of persons management believes, such persons were provided access to all
relevant information regarding the Registrant and/or represented to the
Registrant that they were "sophisticated" investors, and such persons
represented to the Registrant that the Shares were purchased for investment
purposes only and not with a view toward distribution. Each such issuance was
made in reliance on exemption from registration. (See also Risk Factors in Item
2 of this Report).
SERIES "A" UNIT FOUNDER'S OFFERING
Beginning in February 1996, the Company offered for sale Series "A" Units
("Units") at $12,500 per Unit in a transaction exempt from registration pursuant
to Regulation D of the Securities Act of 1933 (the "ACT"). Each of the Series
"A" Units contain 5,000 Common Shares and 5,000 Class "A" Warrants exercisable
into Common Shares at $7.50. The Warrants are detachable from the Common Shares
and have an exercise period of four (4) years from the date of issuance. The
Company can redeem them $.10 per Class "A" Warrant upon thirty (30) days written
notice, whereby the Holder may exercise any of Class "A" Warrants called during
this thirty-day period prior to them being redeemed. The following table
reflects the results of the selling Two Hundred seventy-two (272) Series "A"
Units ("Units") at $12,500 per Unit for gross proceeds of approximately
$3,400,000. Net proceeds, after the payment of expenses of approximately
$748,000 aggregated approximately $2,652,000:
<TABLE>
<CAPTION>
GENERAL DESCRIPTION # OF UNITS GROSS OFFERING PROCEEDS COMMON SHARES CLASS "A" WARRANTS
- ------------------- ---------- ----------------------- ------------- ------------------
<S> <C> <C> <C> <C>
Series "A" Unit Holders 272 $ 3,400,000 1,360,000 1,360,000
Total Costs 748,000
--- ------------- ---------- ---------
Net Proceeds 272 $ 2,652,000 1,360,000 1,360,000
=== ============= ========= =========
</TABLE>
None of the AMQUEST securities conveyed in the Series "A" Unit Founder's
Offering have been registered under the ACT and bear a legend referring to the
restrictions on transfer imposed thereby.
SERIES "A1A" UNITS
In order to attract non-US institutional investors (as such term is defined by
the Securities and Exchange Commission, "SEC"), to purchase the Company's equity
securities, the Company designed a new kind of investment instrument called
AMQUEST "Series "A" Preferred Shares Certificates" (the "Certificates").
On July 1, 1996, the Company began offering these Certificates and by October,
1996, formalized the name of the Program to be the AMQUEST "PREFERRED GROWTH
SERIES PROGRAM (the "Program") through the sale and issuance of Series "A1A"
Units to non-US institutional investors only. The Certificates are unregistered
securities designed to function like micro mutual funds, in that they would
mimic the planned portfolios of the Company's AMQUEST MATRIX FUNDS, INC.
The following is a further description of each Series "A1A" Units (the "Unit"):
1. Each Unit contains 20,000 Series "A" Preferred Shares, which are convertible,
at the Option of the Holder on or after August 30, 1999, on a 1:1 basis to
AMQUEST Common Shares. The Series "A" Preferred Shares are redeemable if not
previously converted to Common Shares, on August 30, 2006, for $50.00 per
share, representing a Face Value at redemption of One Million ($1,000,000
USD) Dollars.
2. Each Unit contains one (1) Fixed Income Coupon (the "Coupon") which provides
a fixed rate of return on an assumed $500,000 purchase price per Unit, which
is 50% of Redemption Face Value. This Coupon has a two (2) year maximum term,
with a Face Value of $80,000, issued in the form of 8,000 Common Shares held
in the Holder's Managed Account in the AMQUEST MATRIX TRUST, INC. (THE
"TRUST). Registering the 8,000 common shares for the benefit of supporting
the payment of the Coupon would be the Company's obligation.
33
<PAGE>
3. The Coupon would be paid in four (4) quarterly installments, whereby the
first Coupon payment of $20,000 would be made at the end of Year Two's second
quarter, and then each quarter thereafter, through to the end of the first
quarter of Year Three following the purchase. All or part of the Coupon
payments are reinvested into the Program so that the Coupon is paid from the
gains achieved by trading the 8,000 common shares over the course of the two
(2) years, and by reinvesting these proceeds for the benefit of the investor
until such time as the entire $80,000 to pay the Coupon is generated.
In July, 1996, the Company retained Acajou Holdings, Ltd., ("Acajou") an
investment banking firm from Madrid, Spain, and Geneva World Ventures, Inc., a
US subsidiary of Geneva Ventures, Ltd., a Gibraltar (UK) global investment
syndicate ("Geneva"). Acajou and Geneva, on behalf of the Company, began
negotiations with a brokerage firm in Brazil, namely, Corretora Souza Barros
Cambio E Titulos, S.A., to acquire certain Brazilian Judicial Bonds (the
"Credits"), offered for sale by the Familia Ribas. The Credits are convertible
into TDA-E Bonds, and are, by definition, adjudicated government senior debt
obligations (full faith and credit) of Federal Republic of Brazil. These
electronic instruments are recorded and identified as "Precatorio No. 12.995
Registrio No. 95.03.059979-2."
In these negotiations, effective September 12, 1996, the Familia Ribas agreed to
sell the Credits to the Company in exchange for an irrevocable Letter of Payment
as issued by a bank acceptable to them. Understanding these requirements, the
Company signed an agreement with Geneva Ventures, Ltd., on July 12, 1996, to
exchange 4,400,000 Common Shares for certain negotiable securities, which were
also conveyed to Americas International Bank Corporation, Ltd. (AIBC), along
with 4,000,000 Restricted Common Shares and Five Hundred (500) AMQUEST
International, Ltd. Series "A1A" Units to acquire the irrevocable Letter of
Payment. On July 16, 1996, Acajou Holdings, Ltd. agreed to receive 4,750,000
common shares in connection with the transaction.
The Credits mature from 1/11/1999 through 01/11/2004, at a Face Value of
$411,070,383.50 Reals or $404,205,508.00 in US Dollars, based upon an exchange
rate of $.9833. The Company has recorded the Credits at 61% of Face Value, or
$246,565,359.80, and the Credits appreciate at the rate of 1.5% per month until
such time as they are converted into TDA-E Bonds. At December 31, 1996, while
the exchange rate became less favorable to the Company ($.9625 opposed to $.9833
when acquired), the Face Value increased to $436,295,121.50 Reals
($419,934,054.40 USD), yielding a December 31, 1996, market value of
$256,159,773.10 USD. The Company reflects the increase in value of $9,594,413.30
USD as Unrealized Income, a separate component in Shareholders' Equity, as
required by FAS 52.
DEBENTURE UNITS
The Company opened an offering of convertible debt securities on March 14, 1997,
whereby it plans to offer for sale up to One Hundred Debenture Units, exempt and
unregistered securities, (the "Offering"), at $100,000 per Unit, in order to
raise ten million ($10,000,000 USD) dollars or more in gross proceeds, less fees
and expenses associated with the Offering. The Offering proposes the following,
as each Debenture Unit contains: 1. A two-year term, 6% Convertible Subordinated
Debenture, purchased at par, which has limited redemption rights for the
Company, and 2. Five thousand (5,000) detachable, two-year Class A Warrants,
which are exercisable into common shares at the rate of $7.50 per share.
The Features of the Debenture Units include:
i. Dividend Payment. The six (6%) percent dividend is payable in cash or common
stock, at the Company's option, quarterly after issuance, or at the time of
conversion or redemption; ii. Conversion Rights: The holder may convert an
equivalent of $50,000 of the Debenture into common stock after 90 days, and then
$50,000 after 120 days, at the rate of 80% of the previous five-day average
trailing closing bid price, prior to the receipt date of the holder's Notice of
Conversion. At any time after one (1) year, the Company has the Option to
require conversion at 80% of the then previous five-day average closing bid
price, prior to the date of the Company's conversion call; and iii. Redemption
Rights: If the five-day trailing closing bid price preceding the date of the
Holder's Conversion Notice is below $2.50 per share, upon receipt of the
Holder's conversion notice, the Company may elect, in lieu of conversion, to
redeem the Debenture for cash at 115% of its face value plus accrued interest.
34
<PAGE>
The Company has engaged Newport Capital Partners, Inc., Newport Rhode Island
("Newport"), a referral service utilized by offshore fund managers, to locate,
on a non-exclusive basis, certain investors who may be interested in the
purchase of these securities, as offered by the Company. In this connection, the
Company reserves the right to pay commissions as are customary in the industry
to brokers or such in like transactions. Through March 21, 1997, the Company has
received $890,000 in net proceeds from the sale of ten (10) Debenture Units.
ITEM 11. SECURITIES TO BE REGISTERED.
The Company is authorized to issue Five Hundred Million (500,000,000) shares of
Common Stock, $.001 par value per share ("Common Stock"), One Hundred Million
(100,000,000) shares of Preferred Stock at par value $0.001 per share. The
preferred stock is divided incrementally into Series "A", Series "B", Series "C"
and Series "D" preferred shares, which have all the same rights and privileges
except voting rights as expressly set forth below under Paragraph heading
Preferred Shares. The Company is also authorized to issue five million
(5,000,000) Class A Warrants, Five thousand (5,000) Series "A1A" Units, one
thousand (1,000) Debenture Units.
COMMON STOCK
At April 7, 1997 there were approximately eight hundred thirty (830) holders of
a total of 37,415,000 Common Stock outstanding, all of which are validly issued,
fully paid and non-assessable.
VOTING RIGHTS
Each share of Common Stock entitles the holder thereof to one (1) vote, either
in person or by proxy, at meetings of shareholders. The holders are not
permitted to vote their shares cumulatively. The voting rights of the holders of
the Common Stock are subject to the rights of the outstanding series Preferred
shares which control, as a class, voting control of fifty percent (50%) of the
Company. Accordingly, the holder of the Series D Preferred Shares currently
issued and outstanding control fifty percent (50%) of the total voting rights
and, thus, can elect all of the directors of the Company. (See Preferred Shares
below).
DIVIDEND POLICY
All shares of Common Stock are entitle to participate in distribution of
dividends, when and as declared by the Company's Board of Directors out of the
funds legally available therefore and subject however, to the rights of the
preferred shareholders. Any such dividends may be paid in cash, property or
additional shares of Common Stock. Since inception, the Company has not paid any
dividends. The Company anticipates that any earnings, will be retained for
development of the Company's business strategy. The Company does not foresee
that any dividends will be declared in the foreseeable future. Any such future
dividends would be dependent upon the discretion of the Board of Directors and
will be dependent upon various factors, some of which include, future earnings,
costs of operations, operating and financial condition of the Company and the
overall condition of the Company taking into consideration future costs of
acquisitions and development both nationally and internationally.
PREFERRED STOCK.
The Board of Directors has the authority, without action by the Shareholders to
create one or more series of preferred stock and to determine the dividend
rates, dividend rights, rights and terms of redemption , liquidation
preferences, conversion and voting rights of any such series as well as the
number of shares constituting such series and the designation thereof and the
price therefore.
Currently, the Company has issued two (2) of the four (4) authorized Series of
Preferred Shares, the Series D and the Series A which are both described below.
35
<PAGE>
SERIES D PREFERRED SHARES.
There are currently ten thousand (10,000) Shares of Series D Preferred Shares
outstanding owned by one person, Mr. David A. Morgenstern, the President of the
Company (See also Item 4, 5 and 7 of this report). By virtue of this ownership,
Mr. Morgenstern owns fifty percent (50%) of the voting stock of the Company. In
addition, Mr. Morgenstern owns thirty-eight point six percent (38.6%) of the
issued and outstanding Common Shares giving him voting control as the
controlling shareholder of the Company. The current ownership of the Series D
Preferred Stock may have the effect of delaying, deferring or preventing a
change of control of the company, making removal of present management more
difficult, or resulting in restrictions upon payment of dividends and other
distributions to holders of Common Stock or adversely affecting the Common
Stocks market price. In addition, additional issuance of the Series D Preferred
Stock and well as the current issued Series D Preferred Stock could adversely
affect, the voting rights of the existing Shareholders.
SERIES A PREFERRED SHARES.
There are currently ten million (10,000,000) Series "A" Preferred Shares
outstanding owned by one entity. Each Unit contains twenty thousand (20,000)
Series "A" Preferred Shares, CUSIP #032149 20 5, which are convertible, at the
Option of the Holder on or after August 30, 1999 on a 1:1 basis to Amquest
Common Shares. The Series "A" Preferred Shares are redeemable, if not previously
converted to Common Shares, on August 30, 2006, for $50.00 per Share, or
$1,000,000 USD. The Series "A" Preferred Shares have no voting rights.
CLASS A WARRANTS.
One million three hundred sixty thousand (1,360,000) Class A Warrants,
exercisable at $7.50 per share, were issued under the Company's Series "A" Units
Founders' Program. The Warrants have an exercise period of two (2) to four (4)
years from their date of issuance, principally from January, 1998 through
December, 2000. The Company can redeem the Warrants for $.10 per Class "A"
Warrant if not previously redeemed upon thirty (30) days written notice, where
the Holder may exercise any of Class "A" Warrants called during this thirty-day
prior to such redemption.
SERIES "A1A" UNITS.
A total of Five Hundred (500) Series "A1A" Units have been issued by the
Company. These Units contain:
a) Each Unit contains twenty thousand (20,000) Series "A" Preferred Shares,
which are convertible, at the Option of the Holder on or after August 30, 1999
on a 1:1 basis to Amquest Common Shares. The Series "A" Preferred Shares are
redeemable, if not previously converted to Common Stock, on August 30, 2006, for
$50.00 per Share, or $1,000,000 USD.
b) Each Unit also contains one (1) Fixed Income Coupon (the "Coupon") which
provides a fixed rate of return on an assumed $500,000 purchase price per
Unit, which is 50% of Redemption Face Value. This coupon has a two (2) year
maximum term, with a Face Value of $80,000, issued in the form of eight
thousand (8,000) Common Shares which are held in the Holder's Managed Account
in the Amquest Matrix Trust, Inc. (The "Trust"). Registering the 8,000
Common Shares for the benefit of supporting the payment of the Coupon is the
Company's obligation.
c) The Coupon is to be paid on four (4) quarterly installments, whereby the
first Coupon payment of $20,000 would be made at the end of the Year Two's
second quarter, and then each quarter thereafter, through to the end of the
first quarter of Year Three following the purchase. All or part of the Coupon
payments are reinvested into the Program so that the Coupon is paid from the
gains achieved by trading the eight thousand (8,000) Common Shares over the
course of the two (2) years, and by reinvesting these proceeds until the entire
$80,000 to pay the Coupon is generated for the investor's benefit.
Managed Account Subscription.
The salient distinction of the Series "A1A" Unit is its Managed Account
Subscription ( the "Account"). Participation in the Program is limited to those
institutions willing to open a mandatory, four-year duration investment account,
the term of which is renewable thereafter in one (1) year increments. These
Accounts will be in The Amquest Matrix Trust, Ltd. (the "Trust"), managed by
Amquest Advisors, LLC, a Registered Investment Advisor under the United States
Investment Company Act of 1940.
36
<PAGE>
In accordance with the Program, the Company splits the proceeds of each Unit
into two (2) parts: a) fifty percent (50%) placed as capital reserves into The
Amquest Matrix Funds, Inc., a registered mutual fund series, for diversified
asset management, until such time as the Company's Common Stock trading price
exceeds $15.00 per Share. The purpose of the Managed Account is twofold: 1) to
gradually shift the investor's capital from an investment in a single equity,
namely Amquest corporate securities, to fifty percent (50%) of the initial
principal and the gains thereon being placed into the Amquest Matrix Funds, the
Company's mutual funds, and 2) to protect the Company from sell off typical to
Regulation S transactions. This method, which management believes operates as a
reinvestment engine for the benefit of the investor, is managed by the Amquest
Matrix Trust, Ltd. (Bahamas), (the "Trust"), a separate custodial fiduciary
operating for the benefit of the Company but as a Third Party Administrator
(TPA). The purpose of the Trust is twofold: 1) to serve the institutional
investor by providing a diversified "Total Return" portfolio while providing
significant limitations on the open market trading for a period of four (4)
years in such a manner that the Company's Common Share price cannot be adversely
affected, and 2) to have the discretion to invest a portion of the capital
directly into the Company's Bond (Debt Equity) Instruments or other such
investments which serve to protect principal. In the Preferred Growth Series
Program, the Company reserves the right to make adjustments in the percentages
in the issuance of the common portion provided versus the number of convertible
Series "A" Preferred Shares, issued in the Units, for the purposes of
customizing the investment objectives of these institutions. This
notwithstanding, the total number of Shares, whether they are Common Shares of
Series "A" Preferred Shares, as conveyed in each Series "A1A" Unit remains the
same, or a total of twenty eight thousand (28,000) Shares per Series "A1A" Unit.
DEBENTURE UNITS.
There are currently ten (10) debentures outstanding amongst four (4) holders.
Each Debenture Unit contains: 1. A two-year term, six percent (6%) Convertible
Subordinated Debenture, purchased at par, which has limited redemption rights
for the Company, and 2. Five thousand (5,000) detachable, two-year Class A
Warrants, which are exercisable into common shares at the rate of $7.50 per
share.
The Features of the Debenture Units include:
(i) Dividend Payment. The six (6%) percent dividend is payable in cash or common
stock, at the Company's option, quarterly after issuance, or at the time of
conversion or redemption; (ii) Conversion Rights: The holder may convert an
equivalent of $50,000 of the Debenture into common stock after ninety (90) days,
and then $50,000 after one hundred twenty (120) days, at the rate of eight
percent (80%) of the previous five-day average trailing closing bid price, prior
to the receipt date of the holder's Notice of Conversion. At any time after one
(1) year, the Company has the Option to require conversion at eighty percent
(80%) of the then previous five-day average closing bid price, prior to the date
of the Company's conversion call; and (iii) Redemption Rights: If the five-day
trailing closing bid price preceding the date of the Holder's Conversion Notice
is below $2.50 per share, upon receipt of the Holder's conversion notice, the
Company may elect, in lieu of conversion, to redeem the Debenture for cash at
one hundred fifteen percent (115%) of its face value plus accrued interest.
STOCK OPTION PLAN.
The Company's 1996 Option Plan (the "Plan") was adopted by the Board of
Directors in May, 1996. The Board of Directors and shareholders have approved
and reserved for issuance an aggregate of two million (2,000,000) shares of the
Common Stock under the Plan, subject to further adjustment upon the occurrence
of certain specified capitalization events. The Plan is intended to encourage
ownership of the Common Stock by officers and other employees and consultants to
the Company, and to provide them with additional incentives to promote the
success of the Company. The Plan became effective as of September 1, 1996 and
will terminate of August 31, 2005, but such termination will not affect any
outstanding options previously granted. The Plan provides that the Compensation
and Stock Option Committee of the Board of Directors may grant options and
otherwise administer the Plan.
37
<PAGE>
Options granted under the 1996 Option Plan may be: (1) incentive stock options;
(ii) IRA-qualified stock options; or (iii) a combination of the foregoing. In
the 1996 Option Plan, the exercise price for incentive stock options and, unless
otherwise determined by the Compensation and Stock Option Committee, the
exercise price for non-qualified options granted under the Option Plan must be
at least eighty-five (85%) of the fair market value of the Common Stock on the
date of the grant; provided, however, in the event that an incentive stock
option is granted to an employee who owns more that ten percent (10%) of the
total combined voting power of all classes of stock of the Company or, if
applicable, a subsidiary or Company corporation of the Company, the exercise
price per share for such incentive stock options cannot be less than one hundred
ten percent (110%) of the fair market value of the Common Stock on the date of
such grant. The exercise price of options granted under the 1996 Option Plan is
payable in cash, or at the discretion of the Compensation and Stock Option
Committee, in whole or in part, in shares of the Common Stock, valued at their
fair market value at the date of exercise; provided, however, that the Company
may establish "cashless exercise" procedures, subject to applicable laws, rules
and regulations, pursuant to which a holder of an option may exercise an option
and arrange for a simultaneous sale of the underlying Common Stock, with the
exercise price being paid from the Compensation and Stock Option Committee on
the date of grant. Options expire on dates determined by the Compensation and
Stock Option Committee, in its sole discretion, but not later than ten (10)
years from the date of grant. In the event of an Unusual Corporate Event (as
defined in the 1996 Option Plan), the Compensation and Stock Option Committee,
in its discretion, may elect to terminate any outstanding options, effective
ninety (90) days after such Unusual Corporate Event. In such event, the vesting
of such options would be accelerated. The 1996 Option Plan may be amended at any
time by the Board of Directors, but no amendment can be made without the
approval of the Company's stockholders if stockholder approval is required under
Section 422 of the Code or Rule 16b-3 under Securities and Exchange Act. No
amendment to the 1996 Option Plan may impair the rights or obligations of the
holder of the holder of any option granted under the 1996 Option Plan without
his or her consent.
TRANSFER AGENT.
The Transfer Agent of the Company is Signature Stock Transfer, Inc. 14675 Midway
Road Suite 221, Dallas, Texas 75244.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) The Articles of Incorporation of the Registrant, together with its By-laws,
provide that the Registrant shall indemnify officers and directors, and may
indemnify its other employees and agents, to the fullest extent permitted by
applicable law.
(b) The laws of the State of Nevada permit, and in some cases require,
corporations to indemnify officers, directors, agents and employees who have
been a party to, or are threatened to be made a party to, litigation against
judgments, fines, settlements and reasonable expenses under certain
circumstances.
The Registrant has also adopted provisions in its Articles of Incorporation that
limit the liability of its directors to the fullest extent permitted by the laws
of the State of Nevada. Under the Registrant's Articles of Incorporation, and as
permitted by the laws of the State of Nevada, a director is not liable to the
Registrant or its shareholders for damages for breach of fiduciary duty. Such
limitation of liability does not affect liability for (i) breach of the
director's duty of loyalty, (ii) acts or omissions not in good faith or which
involve intention misconduct or a knowing violation of the law, (iii) any
transaction from which the director directly or indirectly derived an improper
personal benefit, or (iv) the payment of any unlawful distribution.
38
<PAGE>
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Not required.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Management of the Company knows of no past disagreements between Hersch &
Associates, PC, or Winter, Scheifley & Associates, P.C., on any matter of
accounting principles or practices, financial statement disclosure or auditing,
scope or procedure. The Company has retained Sidney Abusch to audit its
financial statements for the fiscal year ended December 31, 1996.
39
<PAGE>
ITEM 15. Exhibits, Consolidated Financial Statements, and Financial Statement
Schedules
A. 1. Financial Statements, Notes and Schedules
SIDNEY ABUSCH (LETTERHEAD GOES HERE)
CERTIFIED PUBLIC ACCOUNTANT
FINANCIAL AND BUSINESS MANAGEMENT
MEMBER OF:
American Institute of CPA'S
NY State Society of CPA'S
FL Institute of CPA'S
CA Society of CPA'S
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
AMQUEST INTERNATIONAL LTD.
We have audited the accompanying consolidated balance sheets of AMQUEST
INTERNATIONAL, LTD. (b.b. OTC - Symbol: AMQI) as of December 31, 1994, 1995 and
1996, and the related consolidated statements of operations and cash flows for
the years then ended and stockholders' equity since inception, March 8, 1988
through December 31, 1996. 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 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 AMQUEST INTERNATIONAL, LTD. As
of December 31, 1994, 1995 and 1996 and the related consolidated statements of
operations and cash flows for the years then ended and stockholders' equity
since inception, March 8, 1988 through December 31, 1996 in conformity with
generally accepted accounting principles.
Hudson, Florida
March 12, 1997
12121 Little Road Suite 244 Hudson, Florida 34667
TELEPHONE: (813) 841-6525 FACSIMILE: (813) 841-9705
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<PAGE>
AMQUEST INTERNATIONAL, LTD.
Consolidated Balance Sheets
As of December 31,
ASSETS
1994 1995 1996
---- ------- ------------
CURRENT ASSETS
Cash and Cash Equivalents $197 $ 139 $ 1,479,190
Negotiable Securities Available for Sale -- -- 281,678,331
Note Receivable -- -- 239,128
Deferred Consulting Fees -- -- 1,250,000
---- ------- ------------
TOTAL CURRENT ASSETS 197 139 284,646,649
OTHER ASSETS
Deposits -- 17,000 17,000
Organizational Expense -- -- 408,877
---- ------- ------------
TOTAL OTHER ASSETS -- 17,000 425,877
---- ------- ------------
TOTAL ASSETS $197 $17,139 $285,072,526
==== ======= ============
The accompanying notes are an integral part of these financial statements
41
<PAGE>
AMQUEST INTERNATIONAL, LTD.
Consolidated Balance Sheets
As of December 31,
LIABILITIES AND STOCKHOLDERS EQUITY
<TABLE>
<CAPTION>
1994 1995 1996
----------- ------------- ------------
<S> <C> <C> <C>
Commitments and Contingencies (See Note 10)
STOCKHOLDERS EQUITY
COMMON STOCK
Total Authorized (1994): 100,000,000 Shares; where
there are 2,505,000 Issued & Outstanding; Par Value $ 2,505 - -
$.001 per share.
Total Authorized (1995): 100,000,000 Shares; where
there are 21,505,000 Issued & Outstanding; Par Value - $ 21,505 -
$.001 per share.
Total Authorized (1996): 500,000,000 Shares; where
there are 37,415,000 Issued & Outstanding; Par Value - - $ 37,415
$.001 per share.
PREFERRED STOCK
Total Authorized (1994): 100,000,000 Shares in Four
Series: 30,000,000 Series "A;" 30,000,000 Series
"B;" 29,990,000 Series "C;" and 10,000 Series "D;" - - -
none Issued & Outstanding; Par Value $.001 per
share.
Total Authorized (1995): 100,000,000 Shares in Four
Series: 30,000,000 Series "A;" 30,000,000 Series
"B;" 29,990,000 Series "C;" and 10,000 Series "D;" 10
10,000 Series "D" Preferred Shares Issued &
Outstanding; Par Value $.001 per share. - -
Total Authorized (1996): 300,000,000 Shares in Four
Series: 100,000,000 Series "A;" 100,000,000 Series 10,010
"B;" 99,990,000 Series "C;" and 10,000 Series "D;"
with 10,000,000 Convertible Series "A" Preferred
Shares, and 10,000 Series "D" Preferred Shares, -
Issued & Outstanding, each with a Par Value $.001. -
UNREALIZED INCOME - - 9,594,413
PAID IN CAPITAL 5,303 23,303 275,464,753
Deficit Accumulated During The Development Stage
( 7,611) ( 27,679) ( 34,065)
----------- ------------- ------------
TOTAL SHAREHOLDERS' EQUITY $ 197 $ 17,139 $ 285,072,526
=========== ============= =============
The accompanying notes are an integral part of these financial statements
</TABLE>
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<PAGE>
AMQUEST INTERNATIONAL, LTD.
Consolidated Statements of Income
For the years ended December 31,
1994 1995 1996
----------- ------------ ------------
REVENUE $ 0 $ 0 $ 0
----------- ------------ ------------
TOTAL REVENUE $ 0 $ 0 $ 0
=========== ============ ============
EXPENSES
General & Administrative 2,403 20,068 6,386
TOTAL EXPENSES 2,403 20,068 6,386
----------- ------------ ------------
NET (LOSS) INCOME BEFORE TAXES (2,403) (20,068) (6,386)
----------- ------------ ------------
Provision For Income Taxes -- -- --
----------- ------------ ------------
NET (LOSS) INCOME $ (2,403) $ (20,068) $ (6,386)
=========== ============ ============
Weighted Average Number of
Common Shares outstanding 2,505,000 21,505,000 37,415,000
=========== ============ ============
Earnings (Loss) per Common Share $ (.00) $ (.00) $ (.00)
=========== ============ ============
The accompanying notes are an integral part of these financial statements.
43
<PAGE>
AMQUEST INTERNATIONAL, LTD.
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity - Common Shares
For the period from March 8, 1988 (inception) through December 31, 1996
Note: This Statement of Changes in Stockholders' Equity is continued on the following page for Preferred Shares
COMMON SHARES
Deficit
Accumulated receivable
Common Stock During for
------------- ----------- paid in Development common
Shares Amount Capital Stage stock Total
- ------------------------------- ------------- ----------- --------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, 12/31/88 - $ 0 $ 0 $ 0 $ 0 $ 0
Shares issued at inception
for receivable at $.001/share 2,452,925 2,453 147 - (2,600) -
Net loss for the year - 0 0 0 0 0
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/89 2,452,925 2,452 147 0 (2,600) 0
Net loss for the year - - - 0 0 0
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/90 2,452,925 2,452 147 0 (2,600) 0
Shares issued for services
at $.10 per share 52,075 52 5,156 - - 5,208
Net loss for the year - - - - - (5,208)
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/91 2,505,000 2,505 5,303 - (2,600) -
Net loss for the year - - - (5,208) - -
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/92 2,505,000 2,505 5,303 (5,208) (2,600) -
Net loss for the year - - - - - -
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/93 2,505,000 2,505 5,303 (5,208) (2,600) -
Payment of receivable for
common stock - - - - 2,600 2,600
Net loss for the year - - - (2,403) - (2,403)
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/94 2,505,000 2,505 5,303 (7,611) 0 197
Shares issued to Officer
for services at $.001 per
share 19,000,000 19,000 1,000 - - 20,000
Contribution for Deposits - - 17,000 - - 17,000
---------- -------- ----------- ----------- ------------ ------------
Net loss for the year - - - (20,068) - (20,068)
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/95 21,505,000 21,505 23,303 (27,679) 0 17,129
Common Shares issued in
exchange for capital/assets 15,910,000 15,910 80,886,090 - - 80,902,000
Net loss for the year - - - (6,386) - (6,386)
---------- -------- ----------- ----------- ------------ ------------
Balance, 12/31/96 37,415,000 $ 37,415 $80,909,393 $ (34,065) $ 0 $ 80,912,743
========== ======== =========== =========== ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
44
<PAGE>
AMQUEST INTERNATIONAL, LTD.
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity - Preferred Shares
For the period from March 8, 1988 (inception) through December 31, 1996
Note: This Page is Page Two of the Statement of Changes in Stockholders' Equity.
PREFERRED SHARES
Issued & Outstanding
Balance December 31, Preferred Receivable
Stock Paid for
------------- ---------- In Unrealized common
Shares Amount Capital Income Stock Total
--------- ---------- ------- --------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
1988 - $ 0 $ 0 $ 0 $ 0 $ 0
1989 - $ 0 $ 0 $ 0 $ 0 $ 0
1990 - $ 0 $ 0 $ 0 $ 0 $ 0
1991 - $ 0 $ 0 $ 0 $ 0 $ 0
1992 - $ 0 $ 0 $ 0 $ 0 $ 0
1993 - $ 0 $ 0 $ 0 $ 0 $ 0
1994 - $ 0 $ 0 $ 0 $ 0 $ 0
Preferred "D" Shares issued
to affiliate for services at
$.001 per share 10,000 $ 10 - - - $ 10
---------- ---------- ------- --------- ---------- -------
Balance, 12/31/95 10,000 $ 10 - - - $ 10
---------- ---------- ------- --------- ---------- -------
- -
Preferred "A" Shares issued
in Preferred Growth Series
Program at $.001 per share. 10,000,000 $ 10,000 194,555,360 9,594,413 - 204,159,773
---------- --------- ----------- --------- ---------- -----------
Balance, 12/31/96 10,000,000 $ 10,000 $194,555,360 $9,594,413 - $204,159,773
========== ========== ============ ========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
Consolidated Statement of Stockholders' Equity - December 31, 1996
Deficit
Issued and Accumulated
Balance, Shareholders' Outstanding Paid During
Equity, December 31,1996 Shares In Development Unrealized
Total Amount Capital Stage Income Total
----- ------ ------- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Common Shares 37,415,000 $ 37,415 $ 80,908,393 $ ( 34,065) - $ 80,912,743
Preferred "A" Shares 10,000,000 10,000 194,555,360 - 9,594,413 204,159,773
Preferred "D" Shares 10,000,000 10 - - - 10
---------- -------- -------------- ----------- ---------- ------------
Balance, 12/31/96 48,785,000 $ 47,415 $ 275,464,753 $ ( 34,065) $9,594,413 $285,072,526
========== ======== ============== ==== ====== ========== ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
45
<PAGE>
AMQUEST INTERNATIONAL, LTD.
Consolidated Statements of Cash Flows
For the years ended December 31,
<TABLE>
<CAPTION>
1994 1995 1996
----------- -------- -------------
<S> <C> <C> <C>
Net Cash Flow from Operating Activities:
Net Income (loss) $ (2,403) $(20,068) $ (6,386)
Adjustments to Reconcile Net Income (loss) To Net Cash
Provided (Used) by Operating Activities:
Increase in Note Receivable -- -- 239,128
Increase in Negotiable Securities -- -- 281,678,331
Increase in Other Assets -- (17,000) 408,877
Increase in Deferred Consulting Fees 1,250,000
----------- -------- -------------
Net Cash (Used) By Operating Activities (2,403) (37,068) 283,582,722
----------- -------- -------------
Cash Flow from Financing Activities:
Net proceeds from the Issuance of Common stock 2,600 19,000 15,910
Net proceeds from the Contributions to Paid In Capital -- 18,000 275,441,450
Net proceeds from the issuance of
Series "D" Preferred Stock -- 10 10,000
Unrealized Income 9,594,413
----------- -------- -------------
Net Cash provided by Financing Activities 2,600 37,010 285,061,773
----------- -------- -------------
Increase (Decrease) In Cash And Cash Equivalents: 197 (58) 1,479,051
----------- -------- -------------
Cash and cash equivalents, beginning of year -- 197 139
----------- -------- -------------
Cash and cash equivalents, end of year $ 197 $ 139 $ 1,479,190
=========== ======== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
46
<PAGE>
AMQUEST INTERNATIONAL, LTD.
Notes to the Financial Statements
For the years ended December 31, 1994, 1995, and 1996
Note 1. Organization and Ownership
GENERAL. AMQUEST International, Ltd. (OTCbb: AMQI), incorporated in Nevada as
Comstock South America on March 8, 1988, (the "Company") changed its name in
January, 1996 from International Mergitech Ventures, Ltd. (OTCbb: IMVT). The
Company is organized as a financial holdings and investment corporation. It
currently has, two (2) subsidiaries, HOMEVEST Mortgage Corporation, ("HOMEVEST")
an integrated, realty-driven, licensed mortgage bank and AMQUEST Advisors, Inc.,
the Registered Investment Advisor for the AMQUEST Matrix Funds, Inc., which is a
highly simplified mutual fund vehicle registered with the Securities and
Exchange Commission on August 29, 1996. The Company has developed enhancements
to change the way certain financial services are provided. By blending aspects
of the financial services necessary to transact real estate sales, mortgage,
debt collection and venture capital investments, the Company created a new
series of consumer credit and mortgage products. These will be offered at
effective interest rates below those offered by conventional sub-prime lenders,
but the monthly payment amount is generally the same as conventional loans. The
surplus cash that is created in the payments, that is, that portion that is not
devoted to interest, will be invested into the Company's mutual funds and life
insurance products for the direct benefit of the debtor. This method provides
the Company with revenue diversity, thereby decreasing its dependence upon
interest rate float. The Company plans to market bundled financial services as a
single transaction sale and thereby intends to provide both persons and emerging
growth companies with increased financial capacity by investing a portion of
their payment dollars typically paid out as interest to lenders.
BUSINESS DEVELOPMENT. On January 15, 1996, the Company established a two year
plan to raise Two billion dollars or more in equity capital through the offering
of its corporate securities. This strategic initiative was established to place
the Company into the mortgage banking and consumer credit industries, while
having the parent company be an investment holding company. To accomplish this,
management established a highly specific business plan that uniquely combined
elements from the realty/mortgage, consumer credit, securities trading,
investment advisory and insurance services industries into bundled products that
would be marketed in such a way as to bring assets under management into its own
mutual funds. At December 31, 1996, many of these goals are in various stages of
completion. The Company plans to continue to pursue growth through the exchange
of corporate securities for other negotiable securities and assets, to sell
additional registered and unregistered corporate securities, in the form of debt
and equity instruments, to raise additional capital, and acquire
profit-producing companies.
On May 5, 1996, the Company filed a revised 15c2-11 Registration and began
trading as AMQI on June 10, 1996 (1996 low $31/2; high $77/8). At December 31,
1996, the Company has achieved a total shareholders equity of approximately
$285,072,526 which is a Net Book Value of $7.62 per common share. As the result
of its capitalization activities, the Company established the first of two (2)
entities for the receipt of capital and assets under management for investments.
These are:
1. On August 28, 1996, the Company registered with the Securities and Exchange
Commission, The AMQUEST MATRIX FUNDS, INC., a mutual fund (the "FUND"),
managed by AMQUEST ADVISORS, LLC, a wholly-owned subsidiary of the Company.
The Company engaged the TOCQUEVILLE ASSET MANAGEMENT, INC., New York, New
York, the sub-advisor for the FUND, and FIRSTAR TRUST CO., Milwaukee,
Wisconsin, the FUND'S custodial administrator.
2. On October 30, 1996, the second entity was formed for the purposes of
maintaining capital and assets under management off-shore. The Company formed
AMQUEST MATRIX TRUST, LTD., an international business corporation in the
Commonwealth of the Bahamas, which is managed by AMQUEST ADVISORS, LLC.
47
<PAGE>
SIGNIFICANT CHANGES.
CHANGE IN AUTHORIZED SHARES. On October 1, 1996, the Company's Board of
Directors amended the Company's original Articles of Incorporation, dated March
8, 1988 as amended, concerning the further issuance of securities, such that its
authority to issue One Hundred Million (100,000,000) Common Shares was increased
to have the authority to issue an aggregate of Five Hundred Million
(500,000,000) Common Shares, par value $.001 per Common Share.
The Board of Directors further voted to increase the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares as
opposed to the level prior to October 1, 1996 being Thirty Million
(30,000,000) shares of Preferred Stock, par value $.001, in four (4) Series:
Series "A": 10,000,000 shares; Series "B": 10,000,000 shares; Series "C":
9,990,000 shares; and Series "D": 10,000 shares. The Articles of
Incorporation were so amended to reflect these increases in authority.
CHANGE IN FISCAL YEAR. On December 1, 1996, the Company's Board of Directors
voted to change the Company's fiscal year from July 31, to a calendar year,
ending December 31. Previous years financial statements have been revised to
include this change for comparative purposes.
Note 2. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP). Conformity with GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities in
the Company's consolidated balance sheet at December 31, 1996, the end of its
fiscal year, and in the reported amounts of revenues and expenses in the
consolidated statements of income during the fiscal year ended December 31,
1996. Significant accounting policies under GAAP are:
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries, HOMEVEST, and AMQUEST ADVISORS, LLC. All
inter-company accounts and transactions have been eliminated. These newly formed
subsidiaries have had no transactions from inception through December 31, 1996.
INVESTMENTS
In 1996, the Company adopted Financial Accounting Standards Board Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Pursuant to SFAS No. 115,
investments in equity and debt securities designated as available for sale are
carried at market value rather than the previous method, which was at the lower
of amortized cost or market value. Further, any resulting unrealized gain or
loss is to be reflected as a separate component of shareholders' equity, net of
applicable deferred income taxes, if any.
The Company considers all long-term investments to be available for sale. Cash
equivalents represent amounts deposited in money market funds and investments
with a maturity at time of purchase of three months or less. Investments in
equity or debt securities designated as available for sale are carried at market
value. Any resulting unrealized gain or loss is reflected as a separate
component of shareholders' equity net of applicable deferred income taxes. All
of the Company's long-term investments are classified as available for sale.
Bond discounts are amortized on the effective yield method over the remaining
terms of the securities acquired. For mortgage-backed securities and any other
holdings for which a prepayment risk may be significant, assumptions regarding
prepayments are evaluated periodically and revised as necessary.
Any adjustments required due to the resultant change in effective yields are
recognized in current income. Short-term investments, which are those
investments with a maturity of more than three (3) months but less than one year
at time of purchase, are carried at market value, which approximates cost.
Realized gains or losses on sale of investments are determined on the basis of
specific identification. Investment income is recorded as earned.
48
<PAGE>
EARNINGS PER COMMON SHARE
Earnings per common share is determined by dividing net income by the weighted
average number of common shares outstanding.
NOTE 3: RECENT ACCOUNTING PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets to be Disposed of. This statement, effective for
fiscal years beginning after December 15, 1995, requires a company to assess
impairment of "assets held or used" and "assets to be disposed of." Whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable, the related undiscounted cash flows are compared to the
asset's book value. If the sum of the undiscounted cash flows is less than the
book value, a loss is recorded based upon the excess of the book value over the
fair value of the asset. Assets to be disposed of are recorded at fair value
less cost to sell and are not depreciated while held. The adoption of this
pronouncement in 1996 did not have a material effect on the Company's
consolidated financial statements.
In October 1995, the FASB issued Statement of Financial Accounting Standards No.
123, Stock-Based Compensation ("FAS 123"), which encourages the use of the fair
value method of accounting for all employee stock options. The fair value method
includes measuring the value of the stock option at grant date and amortizing
this value over the service period of the award.
The Company chose not to adopt FAS 123 for its 1996 consolidated financial
statements, because the "intrinsic value method" as prescribed by Accounting
Principles Bulletin ("APB") No. 25, "Accounting for Stock issued to Employees"
will also be allowed. This method requires that compensation cost be measured as
the excess of the quoted market price of the stock, at the grant date or other
measurement date, over the amount an employee must pay to acquire the stock. FAS
123 is effective for fiscal years beginning after December 15, 1995. The Company
intends to apply the recognition and measurement provisions of APB No. 25 to all
employee stock options and similar equity instruments awarded after December 31,
1995.
In June 1996, the FASB issued Statement of Financial Accounting Standards No.
125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities ("FAS 125"). This statement provides accounting
and reporting standards for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities and it is effective for all occurrences of the
above after the date of December 31, 1996.
Transactions covered by FAS 125 include securitizations, sales of partial
interests in financial assets, repurchase agreements, securities lending,
pledges of collateral, loan syndications and participations, sales of
receivables with recourse, servicing of mortgages and other loans, and
in-substance defeasances. The statement uses a "financial components" approach
that focuses on control to determine the proper accounting for financial asset
transfers. Under that approach, after financial assets are transferred, an
entity would recognize on the balance sheet all assets it controls and
liabilities it has incurred. It would remove from the balance sheet those assets
it no longer controls and liabilities it has satisfied.
If the entity has surrendered control over the transferred assets, the
transaction would be considered a sale. Control is considered surrendered only
if the assets are isolated from the transferor; the transferee has the right to
pledge or exchange the assets or is a qualifying special-purpose entity; and the
transferor does not maintain effective control over the assets through an
agreement to repurchase or redeem them. If those conditions do not exist, the
transfer would be accounted for as a secured borrowing.
At December 31, 1996, the Company had not yet determined the impact of FAS 125
on its consolidated financial statements.
49
<PAGE>
NOTE 4: CAPITALIZATION
SALE OF UNREGISTERED SECURITIES
SERIES "A" UNIT FOUNDER'S OFFERING
Beginning in February 1996, the Company offered for sale Series "A" Units
("Units") at $12,500 per Unit in a transaction exempt from registration pursuant
to Regulation D of the Securities Act of 1933 (the "ACT"). Each of the Series
"A" Units contain 5,000 Common Shares and 5,000 Class "A" Warrants exercisable
into Common Shares at $7.50. The Warrants are detachable from the Common Shares
and have an exercise period of four (4) years from the date of issuance. The
Company can redeem them $.10 per Class "A" Warrant upon thirty (30) days written
notice, where the Holder may exercise any of Class "A" Warrants called during
this thirty-day period prior to them being redeemed. Through December 31, 1996,
the Company resold seven (7) of the original Series "A" Units that were sold,
and refunded $87,500 to non-accredited investors. The following table reflects
the results of the selling Two Hundred seventy-two (272) Series "A" Units
("Units") at $12,500 per Unit for gross proceeds of approximately $3,400,000.
Net proceeds, after the payment of commissions, fees and expenses of
approximately $748,000 aggregated approximately $2,652,000:
# OF GROSS OFFERING COMMON CLASS "A"
GENERAL DESCRIPTION UNITS PROCEEDS SHARES WARRANTS
- ------------------- ----- -------------- --------- ---------
Series "A" Unit Holders 272 $ 3,400,000 1,360,000 1,360,000
Total Costs 748,000
--- ------------ --------- ---------
Net Proceeds 272 $ 2,652,000 1,360,000 1,360,000
=== ============= ========= =========
None of the AMQUEST securities conveyed in the Series "A" Unit Founder's
Offering have been registered under the ACT and bear a legend referring to the
restrictions on transfer imposed thereby.
SERIES "A1A" UNITS (ALSO SEE NOTE 5: INVESTMENTS)
In order to attract non-US institutional investors (as such term is defined by
the Securities and Exchange Commission, "SEC"), to purchase the Company's equity
securities, the Company designed a new kind of investment instrument called
AMQUEST "Series "A" Preferred Shares Certificates" (the "Certificates").
On July 1, 1996, the Company began offering these Certificates and by October,
1996, formalized the name of the Program to be the AMQUEST "PREFERRED GROWTH
SERIES PROGRAM (the "Program") through the sale and issuance of Series "A1A"
Units to non-US institutional investors only. The Certificates are unregistered
securities designed to function like micro mutual funds, in that they would
mimic the planned portfolios of the Company's AMQUEST MATRIX FUNDS, INC. The
following is a further description of each Series "A1A" Units (the "Unit"):
1. Each Unit contains 20,000 Series "A" Preferred Shares, which are convertible,
at the Option of the Holder on or after August 30, 1999, on a 1:1 basis to
AMQUEST Common Shares. The Series "A" Preferred Shares are redeemable if not
previously converted to Common Shares, on August 30, 2006, for $50.00 per
share, representing a Face Value at redemption of One Million ($1,000,000
USD) Dollars.
2. Each Unit contains one (1) Fixed Income Coupon (the "Coupon") which provides
a fixed rate of return on an assumed $500,000 purchase price per Unit, which
is 50% of Redemption Face Value. This Coupon has a two (2) year maximum term,
with a Face Value of $80,000, issued in the form of 8,000 Common Shares held
in the Holder's Managed Account in the AMQUEST MATRIX TRUST, INC. (THE
"TRUST). Registering the 8,000 common shares for the benefit of supporting
the payment of the Coupon would be the Company's obligation. The Coupon would
be paid in four (4) quarterly installments, whereby the first Coupon payment
of $20,000 would be made at the end of Year Two's second quarter, and then
each quarter thereafter, through to the end of the first quarter of Year
Three following the purchase. All or part of the Coupon payments are
reinvested into the Program so that the Coupon is paid from the gains
achieved by trading the 8,000 common shares over the course of the two (2)
years, and by reinvesting these proceeds for the benefit of the investor
until such time as the entire $80,000 to pay the Coupon is generated.
50
<PAGE>
In July, 1996, the Company retained Acajou Holdings, Ltd., ("Acajou") an
investment banking firm from Madrid, Spain, and Geneva World Ventures, Inc., a
US subsidiary of Geneva Ventures, Ltd., a Gibraltar (UK) global investment
syndicate ("Geneva"). Acajou and Geneva, on behalf of the Company, began
negotiations with a brokerage firm in Brazil, namely, Corretora Souza Barros
Cambio E Titulos, S.A., to acquire certain Brazilian Treasury Credits (the
"Credits"), offered for sale by the Familia Ribas. The Credits are convertible
into TDA-E Bonds, and are, by definition, adjudicated government senior debt
obligations (full faith and credit) of Federal Republic of Brazil. These
electronic instruments are recorded and identified as "Precatorio No. 12.995
Registrio No. 95.03.059979-2."
In these negotiations, effective September 12, 1996, the Familia Ribas agreed to
sell the Credits to the Company in exchange for an irrevocable Letter of Payment
as issued by a bank acceptable to them. Understanding these requirements, the
Company signed an agreement with Geneva Ventures, Ltd., on July 12, 1996, to
exchange 4,400,000 Common Shares for certain negotiable securities, which were
also conveyed to Americas International Bank Corporation, Ltd. (AIBC), along
with 4,000,000 Restricted Common Shares and Five Hundred (500) AMQUEST
International, Ltd. Series "A1A" Units to acquire the irrevocable Letter of
Payment. On July 16, 1996, Acajou Holdings, Ltd. agreed to receive 4,750,000
common shares in connection with the transaction.
The Credits mature from 1/11/1999 through 01/11/2004, at a Face Value of
$411,070,383.50 Reals or $404,205,508.00 in US Dollars, based upon an exchange
rate of $.9833. The Company has recorded the Credits at 61% of Face Value, or
$246,565,359.80, and the Credits appreciate at the rate of 1.5% per month until
such time as they are converted into TDA-E Bonds. At December 31, 1996, while
the exchange rate became less favorable to the Company ($.9625 opposed to $.9833
when acquired), the Face Value increased to $436,295,121.50 Reals
($419,934,054.40 USD), yielding a December 31, 1996, market value of
$256,159,773.10 USD. The Company reflects the increase in value of $9,594,413.30
USD as Unrealized Income, a separate component in Shareholders' Equity, as
required by FAS 52.
Note 5. Investments (ALSO SEE Note 4: CAPITALIZATION)
At December 31, 1996, the following represented the Company's investments:
<TABLE>
<CAPTION>
<S> <C> <C>
Cash and Cash Equivalents
Cash in Banks $ 1,479,190
Negotiable Securities Available for Sale
Precatorio Rights, convertible into Brazilian TDA-E Bonds,
Face Value, $436,295,121.50, Maturity Dates, January 11, 1999
and January 11, 2004, market value at December 31, 1996, of
$256,159,773.10 USD, plus $25 million in negotiable securities
provided for Letter of Payment. 281,159,773.
Corporate Stocks and Bonds 518,558. 281,678,331
------------- --------------
Total $ 283,157,521
=============
</TABLE>
Note 6: Deferred Consulting Fees.
Deferred consulting fees comprise those expenses that are related to the
production of future business. During 1996, the Company issued 1,400,000 shares
of Common stock to various consultants for future services to be rendered when
the new products of the Company are marketed. These fees will be expensed as
incurred.
Note 7: Other Assets.
The Company considers its refundable earnest money as "Deposits." At such times
as it leases offices, equipment or vehicles and deposits are required, these
will also be considered Deposits. Organization Expense includes licensing,
regulatory and registration fees for the Company and it's Subsidiaries.
51
<PAGE>
Note 8: Note Receivable.
On December 20, 1996, the Company formalized moneys owed by Kinsman, Merchant
and Associates, Inc., the Company's major shareholder, in a demand note bearing
no interest, with the principal due by June 30, 1997.
Note 9: Shareholders' Equity.
At December 31, 1996, the Company reflects the following description of the
disposition on the issuance its common, Series "A" and "D" Preferred Shares, and
Class A Warrants, as follows:
<TABLE>
<CAPTION>
Class A
Common Shares Percent Preferred Shares /Warrants
------------- ------ ---------------- ----------
<S> <C> <C> <C> <C>
EXEMPT AND UNREGISTERED SECURITIES
Acajou Holdings, Ltd. 4,750,000 12.7%
Addison. Price, Gaines, Inc. 1,150,000 3.1%
Americas International Bank Corporation, Ltd. 4,000,000 10.7% ("A"),10,000,000
Caveat Enterprises, Inc. 1,000,000 2.7%
Geneva Ventures, Ltd. 4,400,000 11.8%
Geneva World Ventures, Inc. 2,000,000 5.4%
Kinsman, Merchant & Associates, Inc. 15,850,000 42.4% ("D") 10,000
Montgomery, Smith & Associates, Inc. 400,000 1.1%
Series "A" Unit Holders 1,360,000 3.6% 1,360,000 (W)
---------- ----- ---------- ---------
Unregistered Securities Subtotal 34,910,000 93.3% (All) 10,000,000 1,360,000 (W)
========== ==== ========== =========
WIDELY-HELD TRADING SECURITIES
Total Widely Held Trading Securities 2,505,000 6.7%
---------- ----- ---------- ---------
Total Issued and Outstanding,
at December 31, 1996 37,415,000 100.00% (All) 10,010,000 1,360,000 (W)
========== ====== ========== =========
Footnotes
1. Kinsman, Merchant & Associates, Inc. ("KMA") paid $2,825,000 for the 19,000,000 control block on
shares and then disbursed 1,150,000 of these shares for $115,000 to Addison, Price Gaines, Inc.
and 2,000,000 shares to Geneva World Ventures, Inc., who paid $1,500,000 for these shares.
2. Montgomery, Smith & Associates, Inc. and Caveat Enterprises, Inc. have agreed to exchange
$1,250,000 in future consulting services for these 1,400,000 shares. The issuance of these
shares is subject to the various conditions of performance.
</TABLE>
NOTE 9: 1996 IRA-QUALIFIED AND INCENTIVE STOCK OPTION PLAN
The 1996 Option Plan was adopted by the Board of Directors in May, 1996. The
Board of Directors and shareholders have approved and reserved for issuance an
aggregate of 2,000,000 shares of the Common Stock under the 1996 Option Plan,
subject to further adjustment upon the occurrence of certain specified
capitalization events. The 1996 Option Plan is intended to encourage ownership
of the Common Stock by officers and other employees and consultants to the
Company, to encourage their continued employment with the Company and to provide
them with additional incentives to promote the success of the Company. The 1996
Option Plan will become effective as of September 1, 1996 and will terminate on
August 31, 2005, but such termination will not affect any outstanding options
previously granted. The 1996 Option Plan provides that the Compensation and
Stock Option Committee of the Board of Directors may grant options and otherwise
administer the 1996 Option Plan.
52
<PAGE>
Options granted under the 1996 Option Plan may be: (i) incentive stock options;
(ii) IRA-qualified stock options; or (iii) a combination of the foregoing. In
the 1996 Option Plan, the exercise price for incentive stock options and, unless
otherwise determined by the Compensation and Stock Option Committee, the
exercise price for non-qualified options granted under the Option Plan must be
at least 85% of the fair market value of the Common Stock on the date of the
grant; provided, however, in the event that an incentive stock option is granted
to an employee who owns more than 10% of the total combined voting power of all
classes of stock of the Company or, if applicable, a subsidiary or Company
corporation of the Company, the exercise price per share for such incentive
stock options cannot be less than 110% of the fair market value of the Common
Stock on the date of such grant.
The exercise price of options granted under the 1996 Option Plan is payable in
cash or, at the discretion of the Compensation and Stock Option Committee, in
whole or in part, in shares of the Common Stock, valued at their fair market
value at the date of exercise; provided, however, that the Company may establish
"cashless exercise" procedures, subject to applicable laws, rules and
regulations, pursuant to which a holder of an option may exercise an option and
arrange for a simultaneous sale of the underlying Common Stock, with the
exercise price being paid from the proceeds of such sale. Options may be
exercised at such times as are determined by the Compensation and Stock Option
Committee on the date of grant.
Options expire on dates determined by the Compensation and Stock Option
Committee, in its sole discretion, but not later than ten years from the date of
grant. In the event of an Unusual Corporate Event (as defined in the 1996 Option
Plan), the Compensation and Stock Option Committee, in its discretion, may elect
to terminate any outstanding options, effective ninety (90) days after such
Unusual Corporate Event. In such event, the vesting of such options would be
accelerated. The 1996 Option Plan may be amended at any time by the Board of
Directors, but no amendment can be made without the approval of the Company's
stockholders if stockholder approval is required under Section 422 of the Code
or Rule 16b-3 under the Securities and Exchange Act. No amendment to the 1996
Option Plan may impair the rights or obligations of the holder of any option
granted under the 1996 Option Plan without his or her consent.
NOTE 10: SUBSEQUENT EVENTS.
DEBENTURE UNITS
The Company opened an offering of convertible debt securities on March 14, 1997,
whereby it plans to offer for sale up to One Hundred Debenture Units, exempt and
unregistered securities, (the "Offering"), at $100,000 per Unit, in order to
raise ten million ($10,000,000 USD) dollars or more in gross proceeds, less fees
and expenses associated with the Offering.
The Offering proposes the following, as each Debenture Unit contains:
1. A two-year term, 6% Convertible Subordinated Debenture, purchased at par,
which has limited redemption rights for the Company, and;
2. Five thousand (5,000) detachable, two-year Class A Warrants, which are
exercisable into common shares at the rate of $7.50 per share.
FEATURES:
i. Dividend Payment. The six (6%) percent dividend is payable in cash or
common stock, at the Company's option, quarterly after issuance, or at the
time of conversion or redemption.
ii. Conversion Rights: The holder may convert an equivalent of $50,000 of the
Debenture into common stock after 90 days, and then $50,000 after 120
days, at the rate of 80% of the previous five-day average trailing closing
bid price, prior to the receipt date of the holder's Notice of Conversion.
At any time after one (1) year, the Company has the Option to require
conversion at 80% of the then previous five-day average closing bid price,
prior to the date of the Company's conversion call.
53
<PAGE>
iii. Redemption Rights: If the five-day trailing closing bid price preceding
the date of the Holder's Conversion Notice is below $2.50 per share, upon
receipt of the Holder's conversion notice, the Company may elect, in lieu
of conversion, to redeem the Debenture for cash at 115% of its face value
plus accrued interest.
The Company has engaged Newport Capital Partners, Inc., Newport Rhode Island
("Newport"), a referral service utilized by offshore fund managers, to locate,
on a non-exclusive basis, certain investors who may be interested in the
purchase of these securities, as offered by the Company. In this connection, the
Company reserves the right to pay commissions as are customary in the industry
to brokers or such in like transactions.
Through March 21, 1997, the Company has received $890,000 in net proceeds from
the sale of ten (10) Debenture Units.
THE REMAINDER OF THIS PAGE IS LEFT INENTIONALLY BLANK
54
<PAGE>
Signature Page
Pursuant to the requirement of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, as amended, the Registrant, AMQUEST INTERNATIONAL, LTD.,
has duly caused this report to be signed in its behalf by its president and
chief executive officer who was duly authorized by the directors of the
Registrant to provide such signature.
AMQUEST INTERNATIONAL, LTD.
David A. Morgenstern
--------------------------------------
By: David A. Morgenstern
Its: President, Managinging Director
Dated this 7th day of April, 1997.
55
ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, AND FINANCIAL STATEMENT
SCHEDULES
B. Documents Filed as Part of the Report
3. ARTICLES OF INCORPORATION
________________________________________________________________________________
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
AMQUEST INTERNATIONAL, LTD.
The undersigned, being the President of AMQUEST INTERNATIONAL, LTD., a Nevada
Corporation, hereby certifies that by unanimous vote of the Board of Directors
and majority vote of the stockholders at meetings held on October 1, 1996, it
was agreed that this CERTIFICATE AMENDING ARTICLES OF INCORPORATION be filed.
The undersigned further certifies that the original Articles of Incorporation
of Amquest International, Ltd., formerly Comstock South America, were filed with
the Secretary of State of Nevada on the 8th day of March, 1988. The undersigned
further certifies that Article Four of the original Articles of Incorporation
filed on the 8th day of March, 1988,
herein is amended to read as follows:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The Corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less than par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the Corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
The undersigned hereby certifies that he has on this 21st day of January, 1997,
executed this certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
David A. Morgenstern,
-------------------------------------
David A. Morgenstern, President
56
<PAGE>
STATE OF FLORIDA
COUNTY OF BROWARD:
On this 21th day of January, 1997, before me, the undersigned Notary Public in
and for the State of Florida, personally appeared David A. Morgenstern,
personally known to me to be the person and officer whose name is subscribed to
the foregoing Certificate Amending Articles of Incorporation and acknowledged to
me that he executed the same.
Notary Public
57
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
INTERNATIONAL MERGITECH VENTURES, LTD.
The undersigned, being the President and Secretary of International Mergitech
Ventures, Ltd., a Nevada Corporation, hereby certifies that by majority vote of
the Board of Directors and majority vote of the stockholders at a meeting held
on January 29, 1996, it was agreed that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed.
The undersigned further certifies that the original Articles of Incorporation of
International Mergitech Ventures, Ltd., formerly Comstock South America, were
filed with the Secretary of State of Nevada on the 8th day of March, 1988. The
undersigned further certifies that Article One of the original Articles of
Incorporation filed on the 8th day of March 1988, herein is amended to read as
follows:
ARTICLE I
---------
NAME
The name of the corporation is AMQUEST INTERNATIONAL, LTD.
The undersigned hereby certifies that he has on this 29th day of January, 1996,
executed this Certificate Amending the Original Articles of Incorporation of
International Mergitech Ventures, Ltd. heretofore filed with the Secretary of
State of Nevada on March 8, 1988.
Robert Alvarez
----------------------------------------
Robert Alvarez, President
Robert Alvarez
----------------------------------------
Robert Alvarez, Secretary
STATE OF FLORIDA
COUNTY OF BROWARD:
On this 29th day of January, 1996, before me, the undersigned Notary Public in
and for the State of Florida, personally appeared Robert Alvarez, personally
known to me to be the person and officer whose name is subscribed to the
foregoing Certificate Amending Articles of Incorporation and acknowledged to me
that he executed the same.
Notary Public
58
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
COMSTOCK SOUTH AMERICA
The undersigned, being the President and Secretary of COMSTOCK SOUTH AMERICA a
Nevada Corporation, hereby certifies that by majority vote of the Board of
Directors and majority vote of the stockholders at a meeting held on June 29,
1994, it was agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed.
The undersigned further certifies that the original Articles of Incorporation of
COMSTOCK SOUTH AMERICA, were filed with the Secretary of State of Nevada on the
8th day of March, 1988. The undersigned further certifies that the first
paragraph of Article Four of the original Articles of Incorporation filed on the
8th day of March, 1988, herein is amended to read as follows:
ARTICLE FOUR. [CAPITAL STOCK].
------------
The Corporation shall have authority to issue an aggregate of ONE HUNDRED
MILLION (100,000,000) shares par value ONE MILL ($0.001) per share, for a total
capitalization of $100,000.
The undersigned hereby certifies that she has on this 29th day of June, 1994,
executed this Certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
J.L. Davis
----------------------------------------
President
J.L. Davis
----------------------------------------
Secretary
STATE OF TEXAS
)SS:
COUNTY OF COLLIN
On this13th day of July, 1994, before me, the undersigned, a notary Public in
and for the county of Collin, State of Texas personally appeared: J.L Davis,
Known to me to be the person (s) whose name (s) are subscribed to the foregoing
Certificate Amending Articles of Incorporation and acknowledged to me that they
executed the same.
CHERYL D. ANDERSON
NOTARY PUBLIC
STATE OF TEXAS
My Commission Expires 10-15-94
Notary Public
59
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
COMSTOCK SOUTH AMERICA
The undersigned, being the President and Secretary of Comstock South America, a
Nevada Corporation, hereby certifies that by unanimous vote of the Board of
Directors and majority vote of the stockholders at a meeting held on August 12,
1994, it was agreed by unanimous vote that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed. ] The undersigned further certifies that the original
Articles of Incorporation of Comstock South America, were filed with the
Secretary of State of Nevada on the 8th day of March, 1988. The undersigned
further certifies that Article One of the original Articles of Incorporation
filed on the 8th day of March, 1988, herein is amended to read as follows:
ARTICLE ONE. [NAME]
-----------
The name of the Corporation is INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned further certifies that Article Four of the original Articles of
Incorporation filed on the 8th day of March, 1988, herein is amended to read as
follows:
ARTICLE FOUR. [CAPITAL STOCK].
------------
The amount of authorized capital stock of the Corporation is one hundred million
(100,000,000) shares of common stock and thirty million (30,000,000) shares of
preferred stock.
The aggregate number of shares of common stock which this Corporation shall have
authority to issue shall be one hundred million (l00,000,000) shares at par
value of one-tenth of one cent ($0.001) per share. The common stock of the
corporation that is issued and outstanding shall be entitled to vote fifty (50%)
percent of the shareholder voting rights. Each shareholder of common stock shall
be entitled to one vote for each share of common stock held.
The aggregate number of shares of preferred stock which this Corporation shall
have authority to issue shall be thirty million (30,000,000) shares at par value
of one tenth of one-cent ($0.001) per share. The preferred stock shall be
divided into Series "A", series "B", Series "C" and Series "D" preferred stock,
which shall have all the same rights and privileges except voting rights as
expressly set forth below:
(a) Series A preferred shares, which shall consist of ten million (10, 000,
000) shares, shall have no voting rights.
(b) Series B preferred shares which shall consist of ten million (10, 000,
000) shares, shall have no voting rights.
(c) Series C preferred shares, which shall consist of nine million nine
hundred and ninety thousand(9,990,000) shares shall have no voting rights.
(d) Series D preferred shares, which shall consist of ten thousand (10,000)
shares, shall be entitled to vote fifty (50%) percent of the stockholder
voting rights. Each holder of preferred stock, Series D, shall be entitled
to one vote for each share of preferred stock, Series D, held.
(e) Authorized stock may be issued from time to tine without action by the
stockholders for such consideration as may be fixed from time to time by
the Board of Directors, and shares so issued, the consideration for which
have been paid or delivered, shall be deemed fully paid stock and the
holder of such shares shall not be liable for any further payment thereon.
60
<PAGE>
The capital stock of this Corporation, after the amount of the subscription
price or par value has been paid in, shall not be subject to assessment to pay
debts of the corporation and no paid up stock and no stock issued as fully paid
shall ever be assessable or assessed and the Articles of Incorporation shall not
be amended in this particular.
The undersigned hereby certifies that she has on this 12th day of August, 1994,
executed this Certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
J.L. Davis
----------------------------------------
President
J.L. Davis
----------------------------------------
Secretary
STATE OF TEXAS
)SS:
COUNTY OF COLLIN
On this12th day of August, before me, the undersigned, a notary Public in and
for the county of Collin, State of Texas personally appeared: J.L Davis, Known
to me to be the person (s) whose name (s) are subscribed to the foregoing
Certificate Amending Articles of Incorporation and acknowledged to me that they
executed the same.
CHERYL D. ANDERSON
NOTARY PUBLIC
STATE OF TEXAS
My Commission Expires 10-15-94
Notary Public
61
<PAGE>
CERTIFICATE AMENDING ARTICLES OF INCORPORATION
OF
INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned, being the President and Secretary of International Medical
Ventures, Ltd., a Nevada Corporation, hereby certifies that by unanimous vote of
the Board of Directors and unanimous vote of the stockholders at a meeting held
on July 31, 1995, it was agreed that this CERTIFICATE AMENDING ARTICLES OF
INCORPORATION be filed.
The undersigned further certifies that the original Articles of Incorporation of
International Medical Ventures, Ltd., formerly Comstock South America, were
filed with the Secretary of State of Nevada on the 8th day of March, 1988. The
undersigned further certifies that Article I of the original Articles of
Incorporation filed on the 8th day of March, 1988, herein is amended to read as
follows:
ARTICLE I
---------
NAME
The name of the corporation is INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned hereby certifies that he has on this 31st day of July ,1995,
executed this certificate Amending the original Articles of Incorporation
heretofore filed with the Secretary of State of Nevada.
Robert Alvarez
----------------------------------------
Robert Alvarez, President
Robert Alvarez
----------------------------------------
Robert Alvarez, Secretary
STATE OF FLORIDA
COUNTY OF BROWARD:
On this 31st day of July, 1995, before me, the undersigned Notary Public in and
for the State of Florida, personally appeared Robert Alvarez, personally known
to me to be the person and officer whose name is subscribed to the foregoing
Certificate Amending Articles of Incorporation and acknowledged to me that he
executed the same.
Notary Public
62
<PAGE>
ARTICLES OF INCORPORATION
OF
COMSTOCK SOUTH AMERICA
We, the undersigned, have voluntarily associated ourselves together for the
purpose of forming a corporation under the laws of the State of Nevada relating
to private corporations, as to that end do hereby adopt articles of
incorporation as follows:
ARTICLE ONE. [NAME]. The name of the corporation is:
COMSTOCK SOUTH AMERICA
ARTICLE TWO. [LOCATION]. The address of the corporation's principal office is
1701 West Charleston Boulevard, Suite 440, in the City of Las Vegas, County
of Clark, State of Nevada. The initial agent for service of process at that
address is Jody Scott.
ARTICLE THREE. [PURPOSES]. The purposes for which the corporation is
organized are to engage in any activity or business not in conflict with the
laws of the State of Nevada or of the United States of America, and without
limiting the generality of the foregoing, specifically:
I. [OMNIBUS]. To have and to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and
all acts amendatory thereof and supplemental thereto.
II. [MINING]. To carry on the business of mining, milling, concentrating,
converting, smelting, exchanging and otherwise producing and dealing in
uranium, zinc, lead, gold, silver, copper, brass, iron, steel, coal, and in
all kinds of ores, metals, and minerals, oils, petroleum, natural gas,
hydrocarbons, acids and chemicals, and in the products and byproducts of
every kind and description and by whatsoever process, the same can be or
may be produced; to purchase, lease, option, locate, or otherwise dispose
of, pledge, mortgage, deed in trust, hypothecate, and deal in mines, mining
claims, mineral lands, coal lands, water and water rights, and other
property, both real and personal, and to carryon as principals, agents
commission merchants or consignees, the business of mining, milling,
excavating, converting, smelting, treating, refining, buying, selling,
exchanging, manufacturing, and dealing, in the above specified products or
any of them and of materials used in the manufacture of each, and any and
all of such articles and to carry on as such principals, agents, commission
merchants, or consignees any other business which in the judgment of the
Board of Directors of the corporation may be conveniently conducted in
conjunction with any of the matters aforesaid.
III. [SMELTING AND REFINING]. To engage in the erection and operation of a
smelting and refining works, and to carry on the business of concentrating,
converting, smelting, refining, treating, preparing for market, and
otherwise producing lead, zinc, and all other kinds of metals and minerals,
and generally to engage in the business of refining, buying, selling,
exchanging, and otherwise dealing in and with, at wholesale or retail, all
metals and mineral products and byproducts of every kind and description
any by whatsoever process the same can be or may hereafter by produced.
IV. [MINING CLAIMS]. To acquire by purchase or exchange, or in any other
manner, in the United States or in a foreign countries, mining claims,
grounds, or lodes, mining and mineral rights, concessions or grants, or any
interest therein, and to sell, exchange, lease, or in any other manner to
dispose of the whole or any part thereof or any interest therein when
desirable.
63
<PAGE>
V. [OIL WELLS]. To engage in the leasing of lands believed to contain
petroleum, oils, and gas; the improving, mortgaging, leasing, assigning,
and otherwise disposing of the same; the prospecting, drilling, pumping,
piping, storing, refining, and selling, both at wholesale and retail, of
oils and gas; the buying, otherwise acquiring, selling, and otherwise
disposing of any and all real estate and personal property for use in the
business of the company; the construction of any and all buildings, pipe
lines, pumping stations, and storage tanks, and any and all other buildings
required in carrying on the business of the company; the acting as trustee
for holders of oil lands in the receiving and disbursement of funds to be
used in drilling for the common benefit of the land holders; and the doing
of any and every act or thing, proper, necessary, and incidental to the
general purpose of this company.
VI. [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct and carry on its business
or any branch thereof in any state or territory of the United States or in
a foreign country in conformity with the laws of each state, territory, or
foreign country, and to have and maintain in any state, territory, or
foreign country a business office, plant, store or other facility.
VII. [PURPOSES TO BE CONSTRUED AS POWERS]. The purpose specified herein shall be
construed both as purposes and powers and shall be in no wise limited or
restricted by reference to, or inference from, the terms of any other
clause in this or any other article, but the purposes and powers specified
in each of the clauses herein shall be regarded as independent purposes and
powers, and the enumeration of specific purposes and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or of the general powers of the corporation; nor shall the expression of
the one thing be deemed to exclude another, although it be of like nature
not expressed.
ARTICLE FOUR. [CAPITAL STOCK]. The corporation shall have authority to issue
an aggregate of ONE HUNDRED MILLION (100,000,000) shares, par value ONE CENT
($0.001) per share, for a total capitalization of $100,000.
The holders of shares of capital stock of the corporation shall not be entitled
to pre-emptive or preferential rights to subscribe to any unissued stock or any
other securities which the corporation may now or hereafter be authorized to
issue.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all shareholders
meeting called for the purpose of electing a Board of Directors.
ARTICLE FIVE. [DIRECTORS]. The affairs of the corporation shall be governed
by a Board of Directors of not less than three (3) persons. The name and
addresses of members of the first Board of Directors are:
NAME AND ADDRESS TITLE
Michael Berryman
3184 Clan Alpine Drive Sparks, NV 89431 President and Director
Bill R. Presley
428 Idaho St. Boise, ID 83702 Vice President and Director
Allen A. Fecht
38 St. Lawrence Ave. Reno, NV 89509 Secretary-Treasurer and Director
64
<PAGE>
ARTICLE SIX. [OFFICERS AND DIRECTORS PERSONAL LIABILITY]. Included, a
provision eliminating the personal liability of a director or officer of the
corporation or its stockholders for damages for breach of a fiduciary duty as
a director or officer; but such a provision cannot eliminate the liability of
a director or officer for any acts of omissions which involve internal
misconduct, fraud or a known violation of the law; or the payment of a
dividend in violation of the Nevada revised statues section 78.300.
ARTICLE SEVEN. [INCORPORATORS]. The name and address of each incorporator of
the corporation is as follows:
NAME ADDRESS
Jody Scott 2037 Ballard Drive
Las Vegas, Nevada 89104
ARTICLE EIGHT. [PERIOD OF EXISTENCE]. The period of existence of the
corporation shall be perpetual.
ARTICLE NINE. [ASSESSMENT OF STOCK]. The capital stock of the corporation,
after the amount of the subscription price or par value has been paid in,
shall not be subject to pay debts of the corporation, and no paid up stock
issued as fully paid up shall ever be assessable or assessed.
ARTICLE TEN. [BY-LAWS]. The initial By-Laws of the corporation shall be
adopted by its board of Directors. The power to alter, amend, or repeal the
By-Laws, or to adopt new By-Laws, shall be vested in the Board of Directors,
except as otherwise may be specifically provided in the By-Laws.
ARTICLE ELEVEN. [STOCKHOLDERS' MEETING]. Meetings of stockholders shall be held
a such place within or without the State of Nevada as may be provided by the
By-Laws of the corporation. Special meetings of the stockholders may be called
by the President or any other executive officer of the corporation, the Board of
Directors, or any member thereof, or by the record holder or holders of at least
ten per cent (10%) of all shares entitled to vote at the meeting. Any action
otherwise required to be taken at a meeting of stockholders, except election of
directors, may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by stockholders having at least a majority
of the voting power.
ARTICLE TWELVE. [CONTRACTS OF CORPORATION]. No contract or other transaction
between the corporation and any other corporation stock of such other
corporation is owned by this corporation, and no act of this corporation shall
in any way be affected or invalidated by the fact that any of the directors of
this corporation are pecuniary or otherwise interested in, or are directors or
officers of such other corporation. Any director of this corporation,
individually, or any firm of which such director may be a member, may be a party
to, or may be pecuniary or otherwise interested in any contract or transaction
of the corporation; or a majority thereof; and any director of this corporation,
who is also a director or officer of such other corporation who is so
interested, may be counted in determining the existence of a quorum at any
meeting of the Board of Directors of this corporation that shall authorize such
contract or transaction, and may vote thereat to authorize such contract or
transaction, with like force and effect as if he were not such director or
officer of such other corporation or not so interested.
I the undersigned, being the original incorporator for the purpose of forming a
corporation to do business both within and without the State of Nevada, and in
pursuance of the General Corporation Law of the State of Nevada, effective March
31, 1925 and as subsequently amended do make and file this certificate, hereby
declaring and certifying that the facts herein above stated are true.
65
<PAGE>
This 5th day of March, 1988.
Jody Scott
- --------------------------------
Jody Scott
STATE OF NEVADA )
: ss.
COUNTY OF CLARK )
On the 5th day of March, 1988, before me, the undersigned a Notary Public,
personally appeared JODY SCOTT known to me to be the person described in and who
executed the foregoing instrument, and who acknowledged to me that she executed
the same freely and voluntarily and for the uses and purposes therein mentioned.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed by official seal
this 5th day of March, 1988.
- --------------------------------
Notary Public
Residing in Las Vegas, Nevada
66
<PAGE>
AMQUEST INTERNATIONAL, LTD.
(A Nevada Corporation)
AMENDED BYLAWS
ARTICLE ONE: NAME AND OFFICES
AMQUEST INTERNATIONAL, LTD.
(A Nevada Corporation)
AMENDED BYLAWS
ARTICLE ONE: NAME AND OFFICES
1.01 NAME. The name of the Corporation is AMQUEST INTERNATIONAL, LTD. (formerly
"International Mergitech (Medical) Ventures, Ltd.," whose predecessor was
"Comstock Stock America," incorporated on March 8, 1988, hereinafter referred to
as the "Corporation."
1.02 REGISTERED OFFICE AND AGENT. The Corporation shall establish, designate and
maintain a registered office and agent in the State of Nevada. The registered
office of the Corporation shall be at 502 East John Street, Room E, Carson City,
Nevada 89706. The name of the registered agent at such address is The
Prentice-Hall Corporation System, Nevada, Inc..
1.03 CHANGE OF REGISTERED OFFICE OR AGENT. The Corporation may change its
registered office or change its registered agent, or both, by following the
procedure set forth in Nevada Revised Statutes 78.095 and/or 78.110. Any such
change shall constitute an amendment to these Bylaws.
1.04 OTHER OFFICES. The Corporation may have offices at such places both within
and without the State of Nevada as the Board of Directors may from time to time
determine or the business of the Corporation may require.
ARTICLE TWO: SHAREHOLDERS
2.01 PLACE OF MEETINGS. All meetings of the Shareholders for the election of
Directors and for any other purpose may be held at such time and place, within
or without the State of Nevada, as stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
2.02 ANNUAL MEETING. An annual meeting of the Shareholders for the election of
Directors and for the transaction of such other business as may properly come
before the meeting shall be held each year on the first Monday in January,
beginning in 1996, or such other date as may be selected by the Board of
Directors from time to time. At the meeting, the Shareholders shall elect
Directors and transact such other business as may properly be brought before the
meeting.
2.03 SPECIAL MEETING. Special meetings of the Shareholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Articles of
Incorporation, or by these Bylaws, may be called by the President, the
Secretary, the Board of Directors, or the holders of not less than one tenth of
all the shares entitled to vote at the meeting. Business transacted at a special
meeting shall be confined to the subjects stated in the notice of the meeting.
BYLAWS -- PAGE 1
67
<PAGE>
2.04 NOTICE. Written or printed notice stating the place, day and hour of the
meeting and, in case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten nor more than sixty days
before the date of the meeting, either personally or by mail, by or at the
direction of the person calling the meeting, to each Shareholder of record
entitled to vote at the meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail addressed to the Shareholder
at his address as it appears on the stock transfer books of the Corporation,
with postage thereon prepaid.
2.05 VOTING LIST. At least ten days before each meeting of Shareholders a
complete list of the Shareholders entitled to vote at such meeting, arranged in
alphabetical order and setting forth the address of each and the number of
voting shares held by each, shall be prepared by the Officer or agent having
charge of the stock transfer books. Such list, for a period of ten 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 at any time during usual
business hours. Such list shall also be produced and kept open at the time and
place of the meeting during the whole time thereof, and shall be subject to the
inspection of any Shareholder during the whole time of the meeting.
2.06 QUORUM. The holders of a majority of the shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum at all meetings of the Shareholders for
the transaction of business except as otherwise provided by statute, by the
Articles of Incorporation or by these Bylaws. If a quorum is not present or
represented at a meeting of the Shareholders, the Shareholders entitled to vote
thereat, present in person or by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum is present or represented. At such adjourned meeting at which a quorum
is present or represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
2.07 MAJORITY VOTE: WITHDRAWAL OF QUORUM. When a quorum is present at any
meeting, the vote of the holders of a majority of the shares having voting
power, present in person or represented by proxy, shall decide any question
brought before such meeting, unless the question is one upon which, by express
provision of the statutes or of the Articles of Incorporation or of these
Bylaws, a different vote is required, in which case such express provision shall
govern and control the decision of such question. The Shareholders present at a
duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough Shareholders to leave less than a
quorum.
2.08 METHOD OF VOTING. Each outstanding share, regardless of class, shall be
entitled to one vote on each matter subject to a vote at a meeting of
Shareholders, except to the extent that the voting rights of the shares of any
class or classes are limited or denied by the Articles of Incorporation. The
Board of Directors may, in the future, at their discretion, direct that voting
be cumulative, according to any plan adopted by the Board. At any meeting of the
Shareholders, every Shareholder having the right to vote may vote either in
person or by proxy executed in writing by the Shareholder or by his duly
authorized attorney-in-fact.
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2.08 METHOD OF VOTING.(continued) No proxy shall be valid after eleven months
from the date of its execution, unless otherwise provided in the proxy. Each
proxy shall be revocable unless expressly provided therein to be irrevocable or
unless otherwise made irrevocable by law. Each proxy shall be filed with the
Secretary of the Corporation prior to, or at the time of, the meeting. Voting
for Directors shall be in accordance with Section 3.06 of these Bylaws. Any vote
may be taken viva voce or by show of hands unless someone entitled to vote
objects, in which case written ballots shall be used. Cumulative voting is not
prohibited.
2.09 RECORD DATE: CLOSING TRANSFER BOOKS. The Board of Directors may fix in
advance a record date for the purpose of determining Shareholders entitled to
notice of, or to vote at, a meeting of Shareholders, such record date to be not
less than ten nor more than sixty days prior to such meeting; or the Board of
Directors may close the stock transfer books for such purpose for a period of
not less than ten nor more than sixty days prior to such meeting. In the absence
of any action by the Board of Directors, the date upon which the notice of the
meeting is mailed shall be the record date.
2.10 ACTION WITHOUT MEETING. Any action required to be taken at any annual or
special meeting of Shareholders or any action which may be taken at any annual
or special meeting of Shareholders, may be taken without a meeting, without
prior notice, and without a vote, if a consent or consents in writing, setting
forth the action so taken, is signed by the holder or holders of shares having
not less than the minimum number of votes that would be necessary to take such
action at a meeting at which the holders of all shares entitled to vote on the
action were present and voted.
Such consent or consents shall have the same force and effect as the requisite
vote of the Shareholders at a meeting. The signed consent or consents, or a copy
or copies thereof, shall be placed in the minute book of the Corporation. Such
consents may be signed in multiple counterparts, each of which shall constitute
an original for all purposes, and all of which together shall constitute the
requisite written consent or consents of the Shareholders, if applicable. A
telegram, telex, cablegram, or similar transaction by a Shareholder, or a
photographic, photostatic, facsimile or similar reproduction of a writing signed
by a Shareholder, shall be regarded as signed by the Shareholder for purposes of
this Section 2.10.
2.11 ORDER OF BUSINESS AT MEETINGS. The order of business at annual meetings,
and so far as practicable at other meetings of Shareholders, shall be as follows
unless changed by the Board of Directors:
(a) Call to order
(b) Proof of due notice of meeting
(c) Determination of quorum and examination of proxies
(d) Announcement of availability of voting list (See Bylaw 2.05)
(e) Announcement of distribution of annual reports (See Bylaw 8.03)
(f) Reading and disposing of minutes of last meeting of Shareholders
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2.11 ORDER OF BUSINESS AT MEETINGS (CONTINUED)
(g) Reports of Officers and committees
(h) Appointment of voting inspectors
(i) Unfinished business
(j) New business
(k) Nomination of Directors
(l) Opening of polls for voting
(m) Recess
(n) Reconvening; closing of polls
(o) Report of voting inspectors
(p) Other business
(q) Adjournment
ARTICLE THREE: DIRECTORS
3.01 MANAGEMENT. The business and affairs of the Corporation shall be managed by
the Board of Directors, which may exercise all such powers of the Corporation
and do all such lawful acts and things as are not, by statute or by the Articles
of Incorporation or by these Bylaws, directed or required to be exercised or
done by the Shareholders.
3.02 NUMBER; QUALIFICATION; ELECTION; TERM. The Board of Directors shall consist
of not less than one member nor more than five members; provided however, the
Board of Directors in effect as of the date of effectiveness of these Bylaws
consists of one member. A Director need not be a Shareholder or resident of any
particular state or country. The Directors shall be elected at the annual
meeting of the Shareholders, except as provided in Bylaw 3.03 and 3.05. Each
Director elected shall hold office until his successor is elected and qualified.
Each person elected as a Director shall be deemed to have qualified unless he
states his refusal to serve shortly after being notified of his election.
3.03 CHANGE IN NUMBER. The number of Directors may be increased or decreased
from time to time by amendment to the Bylaws, but no decrease shall have the
effect of shortening the term of any incumbent Director. Any directorship to be
filled by reason of an increase in the number of Directors shall be filled by
the Board of Directors for a term of office continuing only until the next
election of one or more Directors by the Shareholders; provided that the Board
of Directors may not fill more than two such directorships during the period
between any two successive annual meetings of Shareholders.
3.04 REMOVAL. Any Director may be removed either for or without cause at any
special or annual meeting of Shareholders by the affirmative vote of a majority,
in number of shares, of the Shareholders present in person or by proxy at such
meeting and entitled to vote for the election of such Director if notice of
intention to act upon such matter is given in the notice calling such meeting.
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3.05 VACANCIES. Any unfilled directorship position, or any vacancy occurring in
the Board of Directors (by death, resignation, removal or otherwise), shall be
filled by an 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 vacancy shall be elected for the unexpired term
of his predecessor in office, except that a vacancy occurring due to an
increase in the number of Directors shall be filled in accordance with
Section 3.03 of these Bylaws.
3.06 ELECTION OF DIRECTORS. Directors shall be elected by majority vote.
3.07 PLACE OF MEETING. Meetings of the Board of Directors, regular or special,
may be held either within or without the State of Nevada.
3.08 FIRST MEETING. The first meeting of each newly elected Board of Directors
shall be held without further notice immediately following the annual meeting of
Shareholders, and at the same place, unless the Directors change such time or
place by unanimous vote.
3.09 REQULAR MEETINGS. Regular meetings of the Board of Directors may be held
without notice at such time and place as determined by the Board of Directors.
3.10 SPECIAL MEETINGS. Special meetings of the Board of Directors may be called
by the President or by any Director on three days notice to each Director, given
either personally or by mail or by telegram. Except as otherwise expressly
provided by statute, or by the Articles of Incorporation, or by these Bylaws,
neither the business to be transacted at, nor the purpose of, any special
meeting of the Board of Directors need be specified in a notice or waiver of
notice.
3.11 MAJORITY VOTE. At all meetings of the Board of Directors, a majority of the
number of Directors then elected and qualified shall constitute a quorum for the
transaction of business. The act of a majority of the Directors present at any
meeting at which a quorum is present shall be the act of the Board of Directors,
except as otherwise specifically provided by statute or by the Articles of
Incorporation or by these Bylaws.
If a quorum is not present at a meeting of the Board of Directors, the
Directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
Each Director who is present at a meeting will be deemed to have assented
to any action taken at such meeting unless his dissent to the action is entered
in the minutes of the meeting, or unless he files his written dissent thereto
with the Secretary of the meeting or forwards such dissent by registered mail to
the Secretary of the Corporation immediately after such meeting.
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3.12 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 of 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. Members of any executive, special or standing
committees established by the Board of Directors, may, by resolution of the
Board of Directors, be allowed like compensation and expenses for attending
committee meetings.
3.13 PROCEDURE. The Board of Directors shall keep regular minutes of its
proceedings. The minutes shall be placed in the minute book of the
Corporation.
3.14 INTERESTED DIRECTORS. OFFICERS AND SHAREHOLDERS.
(a) If Paragraph (b) is satisfied, no contract or other transaction
between the Corporation and any of its Directors, Officers or Shareholders (or
any corporation or firm in which any of them are directly or indirectly
interested) shall be invalid solely because of such relationship or because of
the presence of such Director, Officer or Shareholder at the meeting authorizing
such contract or transaction, or his participation in such meeting or
authorization.
(b) Paragraph (a) shall apply only if:
(1) The material facts of the relationship or interest of each such
Director, Officer or Shareholder are known or disclosed:
(A) To the Board of Directors and it nevertheless authorizes or
ratifies the contract or transaction by a majority of the Directors present,
each such interested Director to be counted in determining whether a quorum is
present but not in calculating the majority necessary to carry the vote; or
(B) To the Shareholders and they nevertheless authorize or
ratify the contract or transaction by a majority of the shares present, each
such interested person to be counted for a quorum and voting purposes; or
(2) The contract or transaction is fair to the Corporation as of the
time it is authorized or ratified by the Board of Directors, a committee of the
Board or the Shareholders.
(c) This provision shall not be construed to invalidate a contract or
transaction which would be valid in the absence of this provision.
3.15 CERTAIN OFFICERS. The President shall be elected from among the
members of the Board of Directors.
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3.16 ACTION WITHOUT MEETING. Any action required or permitted to be taken at a
meeting of the Board of Directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all members of the
Board of Directors. Such consent shall have the same force and effect as
unanimous vote of the Board of Directors at a meeting. The signed consent, or a
signed copy thereof, shall be placed in the minute book of the Corporation. Such
consents may be signed in multiple counterparts, each of which shall constitute
an original for all purposes, and all of which together shall constitute the
unanimous written consent of the Directors.
ARTICLE FOUR: EXECUTIVE COMMITTEE
4.01 DESIGNATION. The Board of Directors may, by resolution adopted by a
majority of the whole Board, designate an Executive Committee.
4.02 NUMBER; QUALIFICATION; TERM. The Executive Committee shall consist of one
or more Directors and two or more shareholders whereby such each shareholders
holdings must aggregate a minimum of 1,000,000 Capital Shares in the
Corporation, who represent the interests of the Corporation and the Board of
Directors. The Executive Committee shall serve as the oversight body for all
matters brought before the Board of Directors. The Term of service for the
Executive Committee shall be for five (5) years or in accordance with the
Corporation's Voting Trust Agreement.
4.03 AUTHORITY. The Executive Committee shall have, and may exercise, authority
over the Board of Directors in the management of the business and affairs of the
Corporation, except where action by the full Board of Directors is required by
statute or by the Articles of Incorporation, and shall have the power to
authorize the seal of the Corporation to be affixed to all papers which may
require it. Further, the Executive Committee shall have authority to: amend the
Articles of Incorporation; approve a plan of merger or consolidation; recommend
to the Shareholders the sale, lease, or exchange of all or substantially all of
the property and assets of the Corporation other than in the usual and regular
course of its business; recommend to the Shareholders the voluntary dissolution
of the Corporation; amend, alter, or repeal the Bylaws of the Corporation or
adopt new Bylaws for the Corporation; fill any vacancy in the Board of Directors
or any other corporate committee; fix the compensation of any member of any
corporate committee; alter or repeal any resolution of the Board of Directors;
declare a dividend; or authorize the issuance of shares of the Corporation. Each
Director shall be deemed to have assented to any action of the Executive
Committee unless, within seven days after receiving actual or constructive
notice of such action, he delivers his written dissent thereto to the Secretary
of the Corporation.
4.04 CHANGE IN NUMBER. The number of Executive Committee members may be
increased or decreased (but not below three) from time to time by resolution
adopted by a majority of the Executive Committee.
4.05 REMOVAL. No member of the Executive Committee may be removed, except by the
Board of Directors by the affirmative vote of a majority of the Board of
Directors if in its judgment, and with the unanimous concurrence of the
remaining Executive Committee members, that the best interests of the
Corporation will be served thereby.
4.06 VACANCIES. A vacancy occurring in the Executive Committee (by death,
resignation, removal or otherwise) shall be filled by the Board of Directors in
the manner provided for original designation in Section 4.01 above.
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4.07 MEETINGS. Time, place and notice, if any, of Executive Committee
meetings shall be as determined by the Executive Committee.
4.08 QUORUM: MAJORITY VOTE. At meetings of the Executive Committee, a majority
of the members shall constitute a quorum for the transaction of business. The
act of a majority of the members present at any meeting at which a quorum is
present shall be the act of the Executive Committee, except as otherwise
specifically provided by statute or by the Articles of Incorporation or by these
Bylaws. If a quorum is not present at a meeting of the Executive Committee, the
members present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
4.09 COMPENSATION. By resolution of the Board of Directors, the members of the
Executive Committee may be paid their expenses, if any, of attendance at each
meeting of the Executive Committee and may be paid a fixed sum for attendance at
each meeting of the Executive Committee or a stated salary as a member thereof.
No such payment shall preclude any member from serving the Corporation in any
other capacity and receiving compensation therefor.
4.10 PROCEDURE. The Executive Committee shall keep regular minutes of its
proceedings and report the same to the Board of Directors when required. The
minutes of the proceedings of the Executive Committee shall be placed in the
minute book of the Corporation.
4.11 ACTION WITHOUT MEETING. Any action required or permitted to be taken at a
meeting of the Executive Committee may be taken without a meeting if a consent
in writing, setting forth the action so taken, is signed by all the members of
the Executive Committee. Such consent shall have the same force and effect as a
unanimous vote at a meeting. The signed consent, or a signed copy thereof, shall
be placed in the minute book. Such consents may be signed in multiple
counterparts, each of which shall constitute an original for all purposes, and
all of which together shall constitute the unanimous written consent of the
Directors.
4.12 RESPONSIBILITY. The designation of an Executive Committee and the
delegation of authority to it shall not operate to relieve the Board of
Directors, or any member thereof, of any responsibility imposed by law.
ARTICLE FIVE: NOTICE
5.01 METHOD. Whenever by statute or the Articles of Incorporation or these
Bylaws notice is required to be given to any Director or Shareholder and no
provision is made as to how such notice shall be given, it shall not be
construed to mean personal notice, but any such notice may be given:
(a) in writing, by mail, postage prepaid, addressed to such Director or
Shareholder at such address as appears on the books of the Corporation; or
(b) by any other method permitted by law.
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5.01 METHOD. (CONTINUED) Any notice required or permitted to be given by mail
shall be deemed to be given at the time it is deposited in the United States
mail.
5.02 WAIVER. Whenever, by statute or the Articles of Incorporation or these
Bylaws, notice is required to be given to a Shareholder or Director, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated in such notice, shall be equivalent to
the giving of such notice. Attendance of a Director at a meeting shall
constitute a waiver of notice of such meeting except where a Director attends
for the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called or convened.
5.03 TELEPHONE MEETINGS. Shareholders, Directors, or members of any committee,
may hold any meeting of such Shareholders, Directors, or committee by means of
conference telephone or similar communications equipment which permits all
persons participating in the meeting to hear each other. Actions taken at such
meeting shall have the same force and effect as a vote at a meeting in person.
The Secretary shall prepare a memorandum of the actions taken at conference
telephone meetings.
ARTICLE SIX: OFFICERS AND AGENTS
6.01 NUMBER: QUALIFICATION; ELECTION: TERM.
(a) The Corporation shall have:
(1) A Chairman of the Board (should the Board of Directors so
choose to select), a President, a Vice-President, a Secretary
and a Treasurer, and
(2) Such other Officers (including one or more Vice-Presidents, and
assistant Officers and agents) as the Board of Directors
authorizes from time to time.
(b) No Officer or agent need be a Shareholder, a Director or a resident of
Nevada except as provided in Sections 3.15 and 4.02 of these Bylaws.
(c) Officers named in Section 6.01(a)(1) above shall be elected by the
Board of Directors on the expiration of an Officer's term or whenever a vacancy
exists. Officers and agents named in Section 6.01 (a)(2) may be elected by the
Board of Directors at any meeting.
(d) Unless otherwise specified by the Board at the time of election or
appointment, or in an employment contract approved by the Board, each Officer's
and agent's term shall end at the first meeting of Directors after the next
annual meeting of Shareholders. He shall serve until the end of his term or, if
earlier, his death, resignation or removal.
(e) Any two or more offices may be held by the same person.
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6.02 REMOVAL AND RESIGNATION. Any Officer or agent elected or appointed by the
Board of Directors may be removed with or without cause by a majority of the
Directors at any regular or special meeting of the Board of Directors. Any
Officer may resign at any time by giving written notice to the Board of
Directors or to the President or Secretary.
Any such resignation shall take effect upon receipt of such notice if no date is
specified in the notice, or, if a later date is specified in the notice, upon
such later date; and unless otherwise specified in the notice, the acceptance of
such resignation shall not be necessary to make it effective. The removal of any
Officer or agent shall be without prejudice to the contract rights, if any, of
the person so removed. Election or appointment of an Officer or agent shall not
of itself create contract rights.
6.03 VACANCIES. Any vacancy occurring in any office of the Corporation (by
death, resignation, removal or otherwise) may be filled by the Board of
Directors.
6.04 AUTHORITY. Officers shall have full authority to perform all duties in the
management of the Corporation as are provided in these Bylaws or as may be
determined by resolution of the Board of Directors from time to time not
inconsistent with these Bylaws.
6.05 COMPENSATION. The compensation of Officers and agents shall be fixed
from time to time by the Board of Directors.
6.06 CHAIRMAN OF THE BOARD. The Chairman of the Board, if any, shall preside at
all meetings of the Board of Directors and shall exercise and perform such other
powers and duties as may be assigned to him by the Board of Directors or
prescribed by the Bylaws.
6.07 EXECUTIVE POWERS. The Chairman of the Board, if any, and the President of
the Corporation respectively, shall, in the order of their seniority, unless
otherwise determined by the Board of Directors or otherwise are positions held
by the same person, have general and active management of the business and
affairs of the Corporation and shall see that all orders and resolutions of the
Board are carried into effect.
They shall perform such other duties and have such other authority and powers as
the Board of Directors may from time to time prescribe. Within this authority
and in the course of their respective duties the Chairman of the Board, if any,
and the President of the Corporation, respectively, shall have the general
authority to:
(a) CONDUCT MEETINGS. Preside at all meetings of the Shareholders
and at all meetings of the Board of Directors, and shall be ex officio
members of all the standing committees, including the Executive Committee, if
any.
(b) SIGN SHARE CERTIFICATES. Sign all certificates of stock of the
Corporation, in conjunction with the Secretary or Assistant Secretary, unless
otherwise ordered by the Board of Directors.
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6.07 EXECUTIVE POWERS. (CONTINUED).
(c) EXECUTE INSTRUMENTS. When authorized by the Board of Directors or
required by law, execute, in the name of the Corporation, deeds, conveyances,
notices, leases, checks, drafts, bills of exchange, warrants, promissory notes,
bonds, debentures, contracts, and other papers and instruments in writing, and
unless the Board of Directors orders otherwise by resolution, make such
contracts as the ordinary conduct of the Corporation's business requires.
(d) HIRE AND DISCHARGE EMPLOYEES. Subject to the approval of the Board of
Directors, appoint and remove, employ and discharge, and prescribe the duties
and fix the compensation of all agents, employees and clerks of the Corporation
other than the duly appointed Officers, and, subject to the direction of the
Board of Directors, control all of the Officers, agents and employees of the
Corporation.
6.08 VICE-PRESIDENTS. The Vice-Presidents, if any, in the order of their
seniority, unless otherwise determined by the Board of Directors, shall, in the
absence or disability of the President, perform the duties and have the
authority and exercise the powers of the President. They shall perform such
other duties and have such other authority and powers as the Board of Directors
may from time to time prescribe or as the senior Officers of the Corporation may
from time to time delegate.
6.09 SECRETARY. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the Shareholders and record all votes and minutes
of all proceedings in a book to be kept for that purpose, and shall perform like
duties for the Executive Committee when required. He shall:
(a) give, or cause to be given, notice of all meetings of the
Shareholders and special meetings of the Board of Directors;
(b) keep in safe custody the Seal of the Corporation and, when authorized
by the Board of Directors or the Executive Committee, affix the same to any
instrument requiring it, and when so affixed, it shall be attested by his
signature or by the signature of the Treasurer or an Assistant Secretary. He
shall be under the supervision of the senior Officers of the Corporation;
(c) perform such other duties and have such other authority and powers as
the Board of Directors may from time to time prescribe or as the senior Officers
of the Corporation may from time to time delegate.
6.10 ASSISTANT SECRETARIES. The Assistant Secretaries, if any, in the order of
their seniority, unless otherwise determined by the Board of Directors, shall,
in the absence or disability of the Secretary, perform the duties and have the
authority and exercise the powers of the Secretary. They shall perform such
other duties and have such other powers as the Board of Directors may from time
to time prescribe or as the senior Officers of the Corporation may from time to
time delegate.
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6.11 TREASURER. The Treasurer shall:
(a) have the custody of the corporate funds and securities and shall keep
full and accurate accounts of all income, expense, receipts and disbursement of
the Corporation and shall deposit all moneys and other valuable effects in the
name and to the credit of the Corporation in such depositories as may be
designated by the Board of Directors.
(b) disburse the funds of the Corporation as may be ordered by the
Board of Directors, taking proper vouchers for such disbursements,
and
(c) render to the senior Officers of the Corporation and Directors, at the
regular meeting of the Board, or whenever they may request it, accounts of all
his transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he shall:
(a) give the Corporation a bond in such form, in such sum, and with such
surety or sureties as satisfactory to the Board, for the faithful performance of
the duties of his office and for the restoration to the Corporation, in case of
his death, resignation, retirement or removal from office, of all books, paper,
vouchers, money and other property of whatever kind in his possession or under
his control belonging to the Corporation.
(b) perform such other duties and have such other authority and powers as the
Board of Directors may from time to time prescribe or as the senior Officers of
the Corporation may from time to time delegate.
6.12 ASSISTANT TREASURERS. The Assistant Treasurers, if any, in the order of
their seniority, unless otherwise determined by the Board of Directors, shall,
in the absence or disability of the Treasurer, perform the duties and exercise
the powers of the Treasurer. They shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe or as the
senior Officers of the Corporation may from time to time delegate.
ARTICLE SEVEN: CERTIFICATE AND TRANSFER REGULATIONS
7.01 CERTIFICATES. Certificates in such form as may be determined by the Board
of Directors shall be delivered, representing all shares to which Shareholders
are entitled. Certificates shall be consecutively numbered and shall be entered
in the books of the Corporation as they are issued. Each certificate shall state
on the face thereof that the Corporation is organized under the laws of the
State of Nevada, the holder's name, the number and class of shares, the par
value of such shares or a statement that such shares are without par value, and
such other matters as may be required by law.
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7.01 CERTIFICATES. (continued) They shall be signed by the President or a
vice-president and either the Secretary or Assistant Secretary or such other
Officer or Officers as the Board of Directors designates, and may be sealed with
the Seal of the Corporation or a facsimile thereof. If any certificate is
countersigned by a transfer agent, or an assistant transfer agent, or registered
by a registrar (either of which is other than the Corporation or an employee of
the Corporation), the signature of any such Officer may be a facsimile thereof.
7.02 ISSUANCE OF CERTIFICATES. Shares both treasury and authorized but unissued)
may be issued for such consideration (not less than par value) and to such
persons as the Board of Directors determines from time to time. Shares may not
be issued until the full amount of the consideration, fixed as provided by law,
has been paid. In addition, Shares shall not be issued or transferred until such
additional conditions and documentation as the Corporation (or its transfer
agent, as the case may be) shall reasonably require, including without
limitation, the delivery with the surrender of such stock certificate or
certificates of proper evidence of succession, assignment or other authority to
obtain transfer thereof, as the circumstances may require, and such legal
opinions with reference to the requested transfer as shall be required by the
Corporation (or its transfer agent) pursuant to the provisions of these Bylaws
and applicable law, shall have been satisfied.
7.03 LEGENDS ON CERTIFICATES.
(a) SHARES IN CLASSES OR SERIES. If the Corporation is authorized to issue
shares of more than one class, the certificates shall set forth, either on the
face or back of the certificate, a full or summary statement of all of the
designations, preferences, limitations and relative rights of the shares of such
class and, if the Corporation is authorized to issue any preferred or special
class in series, the variations in the relative rights and preferences of the
shares of each such series so far as the same have been fixed and determined,
and the authority of the Board of Directors to fix and determine the relative
rights and preferences of subsequent series. In lieu of providing such a
statement in full on the certificate, a statement on the face or back of the
certificate may provide that the Corporation will furnish such information to
any shareholder without charge upon written request to the Corporation at its
principal place of business or registered office and that copies of the
information are on file in the office of the Secretary of State.
(b) RESTRICTION ON TRANSFER. Any restrictions imposed by the Corporation
on the sale or other disposition of its shares and on the transfer thereof may
be copied at length or in summary form on the face, or so copied on the back and
referred to on the face, of each certificate representing shares to which the
restriction applies. The certificate may, however, state on the face or back
that such a restriction exists pursuant to a specified document and that the
Corporation will furnish a copy of the document to the holder of the certificate
without charge upon written request to the Corporation at its principal place of
business, or refer to such restriction in any other manner permitted by law.
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(c) PREEMPTIVE RIGHTS. Any preemptive rights of a Shareholder to acquire
unissued or treasury shares of the Corporation which are or may at any time be
limited or denied by the Articles of Incorporation may be set forth at length on
the face or back of the certificate representing shares subject thereto. In lieu
of providing such a statement in full on the certificate, a statement on the
face or back of the certificate may provide that the Corporation will furnish
such information to any Shareholder without charge upon written request to the
Corporation at its principal place of business and that a copy of such
information is on file in the office of the Secretary of State, or refer to such
denial of preemptive rights in any other manner permitted by law.
(d) UNREGISTERED SECURITIES. Any security of the Corporation, including,
among others, any certificate evidencing shares of the Common Stock or warrants
to purchase Common Stock of the Corporation, which is issued to any person
without registration under the Securities Act of 1933, as amended, or the
securities laws of any state, shall not be transferable until the Corporation
has been furnished with a legal opinion of counsel with reference thereto,
satisfactory in form and content to the Corporation and its counsel, if required
by the Corporation, to the effect that such sale, transfer or pledge does not
involve a violation of the Securities Act of 1933, as amended, or the securities
laws of any state having jurisdiction. The certificate representing the security
shall bear substantially the following legend:
"THIS CERTIFICATE HAS BEEN ACQUIRED PURSUANT TO AN INVESTMENT REPRESENTATION BY
THE HOLDER AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED OR DONATED, OR OTHERWISE
TRANSFERRED EXCEPT UPON THE ISSUANCE TO COMPANY OF A FAVORABLE OPINION BY ITS
COUNSEL AND THE SUBMISSION TO THE COMPANY OF OTHER EVIDENCE SATISFACTORY TO AND
AS REQUIRED BY COUNSEL TO THE COMPANY; THAT ANY SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR
BY REPURCHASE PURSUANT TO A TENDER UNDER THE TERMS OF THE FUND OFFERING CIRCULAR
AND THE INVESTMENT COMPANY ACT OF 1940 AND REGULATIONS PROMULGATED THEREUNDER."
7.04 PAYMENT OF SHARES.
(a) KIND. The consideration for the issuance of shares shall consist of
money paid, labor done (including services actually performed for the
Corporation) or property (tangible or intangible) actually received. Neither
promissory notes nor the promise of future services shall constitute payment for
shares.
(b) VALUATION. In the absence of fraud in the transaction, the
judgment of the Board of Directors as to the value of consideration
received shall be conclusive.
(c) EFFECT. When consideration, fixed as provided by law, has been paid,
the shares shall be deemed to have been issued and shall be considered fully
paid and nonassessable.
BYLAWS -- PAGE 14
80
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7.04 PAYMENT OF SHARES. (CONTINUED).
(d) ALLOCATION OF CONSIDERATION. The consideration received for shares
shall be allocated by the Board of Directors, in accordance with law, between
Stated Capital and Capital Surplus accounts.
7.05 SUBSCRIPTIONS. Unless otherwise provided in the subscription agreement,
subscriptions for shares shall be paid in full at such time or in such
installments and at such times as determined by the Board of Directors. Any call
made by the Board of Directors for payment on subscriptions shall be uniform as
to all shares of the same series. In case of default in the payment on any
installment or call when payment is due, the Corporation may proceed to collect
the amount due in the same manner as any debt due to the Corporation.
7.06 LIEN. For any indebtedness of a Shareholder to the Corporation, the
Corporation shall have a first and prior lien on all shares of its stock owned
by him and on all dividends or other distributions declared thereon.
7.07 LOST, STOLEN OR DESTROYED CERTIFICATES. The Corporation shall issue
a new certificate in place of any certificate for shares previously issued
if the registered owner of the certificate:
(a) CLAIM. Submits proof in affidavit form that it has been lost,
destroyed or wrongfully taken; and
(b) TIMELY REQUEST. Requests the issuance of a new certificate before
the Corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse claim; and
(c) BOND. Gives a bond in such form, and with such surety or sureties,
with fixed or open penalty, if the Corporation so requires, to indemnify the
Corporation (and its transfer agent and registrar, if any) against any claim
that may be made on account of the alleged loss, destruction, or theft of the
certificate; and
(d) OTHER REQUIREMENTS. Satisfies any other reasonable requirements
imposed by the Corporation.
When a certificate has been lost, apparently destroyed or wrongfully taken, and
the holder of record fails to notify the Corporation within a reasonable time
after he has notice of it, and the Corporation registers a transfer of the
shares represented by the certificate before receiving such notification, the
holder of record shall be precluded from making any claim against the
Corporation for the transfer or for a new certificate.
BYLAWS -- PAGE 15
81
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7.08 REGISTRATION OF TRANSFER. The Corporation shall register the transfer
of a certificate for shares presented to it for transfer if:
(a) ENDORSEMENT. The certificate is properly endorsed by the registered
owner or by his duly authorized attorney; and
(b) GUARANTY AND EFFECTIVENESS OF SIQNATURE. If required by the Corporation,
the signature of such person has been guaranteed by a national banking
association or member of the New York Stock Exchange, and reasonable assurance
is given that such endorsements are effective; and
(c) ADVERSE CLAIMS. The Corporation has no notice of an adverse claim or
has discharged any duty to inquire into such a claim; and
(d) COLLECTION OF TAXES. Any applicable law relating to the collection of
taxes has been complied with.
7.09 REGISTERED OWNER. Prior to due presentment for registration of transfer of
a certificate for shares, the Corporation may treat the registered owner or
holder of a written proxy from such registered owner as the person exclusively
entitled to vote, to receive notices and otherwise exercise all the rights and
powers of a Shareholder.
7.10 PREEMPTIVE RIGHTS. No Shareholder or other person shall have any preemptive
rights of any kind to acquire additional, unissued or treasury shares of the
Corporation, or securities of the Corporation convertible into, or carrying
rights to subscribe to or acquire, shares of any class or series of the
Corporation's capital stock, unless, and to the extent that, such rights may be
expressly granted by appropriate action.
ARTICLE EIGHT: GENERAL PROVISIONS
8.01 DIVIDENDS AND RESERVES.
(a) DECLARATION AND PAYMENT. Subject to statute and the Articles of
Incorporation, dividends may be declared by the Board of Directors at any
regular or special meeting and may be paid in cash, in property or in shares of
the Corporation. The declaration and payment shall be at the discretion of the
Board of Directors.
(b) RECORD DATE. The Board of Directors may fix in advance a record date
for the purpose of determining Shareholders entitled to receive payment of any
dividend, such record date to be not more than sixty days prior to the payment
date of such dividend, or the Board of Directors may close the stock transfer
books for such purpose for a period of not more than sixty days prior to the
payment date of such dividend. In the absence of any action by the Board of
Directors, the date upon which the Board of Directors adopts the resolution
declaring such dividend shall be the record date.
BYLAWS -- PAGE 16
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8.01 DIVIDENDS AND RESERVES (CONTINUED).
(c) RESERVES. By resolution, the Board of Directors may create such
reserve or reserves out of the Earned Surplus of the Corporation as the
Directors from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends, or to repair or maintain any property
of the Corporation, or for any other purpose they think beneficial to the
Corporation. The Directors may modify or abolish any such reserve in the manner
in which it was created.
8.02 BOOKS AND RECORDS. The Corporation shall keep correct and complete books
and records of account and shall keep minutes of the proceedings of its
Shareholders and Board of Directors, 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 the names and addresses of all
Shareholders and the number and class of the shares held by each.
8.03 ANNUAL REPORTS. The Board of Directors shall cause such reports to be
mailed to Shareholders as the Board of Directors deems to be necessary or
desirable from time to time.
8.04 CHECKS AND NOTES. All checks or demands for money and notes of the
Corporation shall be signed by such Officer or Officers or such other person or
persons as the Board of Directors designates from time to time.
8.05 FISCAL YEAR. The fiscal year of the Corporation shall be the calendar
year.
8.06 SEAL. The Corporation Seal (of which there may be one or more examples) may
contain the name of the Corporation and the name of the state of incorporation.
The Seal may be used by impressing it or reproducing a facsimile of it, or
otherwise. Absence of the Corporation Seal shall not affect the validity or
enforceability or any document or instrument.
8.07 INDEMNIFICATION.
(a) The Corporation shall have the right to indemnify, to purchase
indemnity insurance for, and to pay and advance expenses to, Directors, Officers
and other persons who are eligible for, or entitled to, such indemnification,
payments or advances, in accordance with and subject to the provisions of Nevada
Revised Statutes 78.751 and any amendments thereto, to the extent such
indemnification, payments or advances are either expressly required by such
provisions or are expressly authorized by the Board of Directors within the
scope of such provisions. The right of the Corporation to indemnify such persons
shall include, but not be limited to, the authority of the Corporation to enter
into written agreements for indemnification with such persons.
BYLAWS -- PAGE 17
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8.07 INDEMNIFICATION (CONTINUED).
(b) Subject to the provisions of Nevada Revised Statues 78.751 and any
amendments thereto, a Director of the Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for an act or omission in
the Director's capacity as a Director, except that this provision does not
eliminate or limit the liability of a Director to the extent the Director is
found liable for:
(1) a breach of the Director's duty of loyalty to the Corporation
or its shareholders;
(2) an act or omission not in good faith that constitutes a breach
of duty of the Director to the Corporation or an act or omission that involves
intentional misconduct or a knowing violation of the law;
(3) a transaction from which the Director received an improper
benefit, whether or not the benefit resulted from an action taken within the
scope of the Director's office; or
(4) an act or omission for which the liability of a Director is
expressly provided by an applicable statute.
8.08 AMENDMENT OF BYLAWS. These Bylaws may be altered, amended or repealed at
any meeting of the Board of Directors at which a quorum is present, by the
affirmative vote of a majority of the Directors present thereat, provided notice
of the proposed alteration, amendment, or repeal is contained in the notice of
such meeting.
8.09 CONSTRUCTION. Whenever the context so requires, the masculine shall include
the feminine and neuter, and the singular shall include the plural, and
conversely. If any portion of these Bylaws are ever finally determined to be
invalid or inoperative, then, so far as is reasonable and possible:
(a) The remainder of these Bylaws shall be valid and operative; and
(b) Effect shall be given to the intent manifested by the portion held
invalid or inoperative.
8.10 TABLE OF CONTENTS; HEADINGS. The table of contents and headings are
for organization, convenience and clarity. In interpreting these Bylaws,
they shall be subordinated in importance to the other written material.
Signed for Identification,
AMQUEST INTERNATIONAL, LTD.
A Nevada Corporation
/s/ David A. Morgenstern
- ----------------------
David A. Morgenstern
Its: President
April 29, 1996
BYLAWS - PAGE 18
84
ITEM 15. EXHIBITS, CONSOLIDATED FINANCIAL STATEMENTS, AND FINANCIAL STATEMENT
SCHEDULES
B. Documents Filed as Part of the Report
4. Instruments Defining The Rights Of Security Holders
________________________________________________________________________________
BOARD OF DIRECTORS' RESOLUTIONS
REGARDING THE ISSUANCE OF CORPORATE SECURITIES,
AND CHANGE IN FISCAL YEAR END
OF
AMQUEST INTERNATIONAL, LTD.
A special meeting of the Board of Directors of AMQUEST INTERNATIONAL, LTD.
was held at the following time, date and location, in order to approve certain
resolutions regarding the issuance of corporate securities:
Time: 9:AM
Date: October 2, 1996
Location: 4901 NW 17th Way, Suite 405, Fort Lauderdale, Florida 33309.
The President of the Corporation, Mr. David A. Morgenstern, called the
meeting or order, and Ms. Bernadette Stevens, acting as the Secretary of the
Corporation, took the minutes of the meeting.
The Secretary reported that there was present, in person holders of a
sufficient number of issued and outstanding common shares of the corporation
necessary to constitute a quorum and to transact business.
After a duly made and seconded motion, and after due deliberation, the
following resolutions were adopted by the affirmative vote of the holders of a
majority of the issued and outstanding shares of the common stock of the
corporation entitled to vote, and the Board of Directors:
RESOLVED, that Article Four of the Articles of Incorporation of the company
states the following:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less that par value.
There shall be no cumulative voting by shareholders.
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The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation have been,
throughout 1996, been authorized and empowered to issue the following
securities, relative to Article Four. (CAPITAL STOCK) of the Company's Articles
of Incorporation, as amended:
1. DEBENTURE UNITS
RESOLVED THAT, the Company intends to offer convertible debt securities, called
"Debenture Units," as exempt and unregistered securities.
Description of Debenture Units (the "Debenture Units"):
(a) They will not bear a CUSIP number.
(b) They will contain a two-year term, 6% Convertible Subordinated
Debenture, purchased at par, which has limited redemption rights for
the Company.
(c) They will contain five thousand (5,000) detachable, two-year Class A
Warrants, which are exercisable into common shares at the rate of
$7.50 per share.
(d) They will Each contain a Dividend Payment. The six (6%) percent
dividend is payable in cash or common stock, at the Company's
option, quarterly after issuance, or at the time of conversion or
redemption;
(e) They will have Conversion Rights: The holder may convert an
equivalent of $50,000 of the Debenture into common stock after 90
days, and then $50,000 after 120 days, at the rate of 80% of the
previous five-day average trailing closing bid price, prior to the
receipt date of the holder's Notice of Conversion.
(f) At any time after one (1) year, the Company has the Option to
require conversion at 80% of the then previous five-day average
closing bid price, prior to the date of the Company's conversion
call; and (iii) Redemption Rights: If the five-day trailing closing
bid price preceding the date of the Holder's Conversion Notice is
below $2.50 per share, upon receipt of the Holder's conversion
notice, the Company may elect, in lieu of conversion, to redeem the
Debenture for cash at 115% of its face value plus accrued interest.
RESOLVED THAT, the Company is, by majority vote of the Board of Directors,
authorized to issue up to One Thousand (1,000) Debenture Units, since October 1,
1996.
2. Series "B" Preferred Shares Certificates
RESOLVED THAT, the Company, in order to raise $200 million in capital for
targeted acquisitions and to further capitalize its mutual funds, The Amquest
Matrix Funds, Inc., plans sell in One Hundred Million (100,000,000) Series "B"
Preferred Shares.
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Description of the Series "B" Preferred Shares Certificates
(a) They will bear the CUSIP # 032149 30 4.
(b) They will be styled as exempt and unregistered redeemable
convertible equity securities.
(c) They will be issued in One Million (1,000,000) Share denomination
certificates.
(d) They will have a total redemption face value of $550 million.
(e) They will be issued as convertible securities, at the Option of the
Holder, on a 1:1 basis to Amquest Common Shares, at a price of
$18.50 per share.
(f) They will have a sales price based upon a mid-month, 10-day floating
average bid price of the Company's Common Stock.
(g) They will be offered at the original issue discount of 40,
redeemable in part or all by the Company on April 1, 2007 at par, or
at the Company's option, on April 1, 2002 at 52.
RESOLVED THAT, the Company is, by majority vote of the Board of Directors,
authorized to issue up to One Hundred (100) Series "B" Preferred Certificates,
since October 1, 1996.
RESOLVED THAT, the Company, by majority vote of the Board of Directors,
has under consideration changing the fiscal year end of the Company from July
31, to December 31. The decision to change the year end to December 31, is
hereby approved, unless voted to disapprove, effective December 1, 1996.
The vote on the above resolutions, the Secretary reported, showed that
over 66 2/3% percent of the issued and outstanding common shares of the
corporation entitled to vote had been cast in favor of the resolutions and that
non (0) shares of the issued and outstanding common shares of the corporation
entitled to vote had been voted against the resolutions.
The President then announced that the resolutions had been duly adopted by
the holders of a majority of the issued and outstanding common shares of the
corporation entitled to vote on the resolutions and that such majority was
sufficient to transact the business of the meeting.
There being no further business, upon a duly made and seconded motion the
meeting was adjourned.
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
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SHAREHOLDERS' RESOLUTION
APPROVING AMENDMENT TO ARTICLES OF INCORPORATION
OF
AMQUEST INTERNATIONAL, LTD.
WHEREAS, the Board of Directors of AMQUEST INTERNATIONAL, LTD., has
voted in favor of the resolutions as set forth below, and
WHEREAS, the majority of the shareholders of AMQUEST INTERNATIONAL, LTD.,
by this resolution do approve of the resolutions proposed by the directors and
set our below, it is hereby:
RESOLVED, that Article Four of the Articles of Incorporation is amended and now
provides that:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less than par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation are
authorized and empowered to enter into a banking relationship with Credit Suisse
of Zug, Switzerland for both Corporate and Safekeeping accounts.
FURTHER RESOLVED, that the resignation of Robert Alvarez as sole Director of the
company, effective February 1, 1996, was accepted on that date, but such was not
previously recorded.
FURTHER RESOLVED, that the sole Director of the Company, and Chairman of the
Executive Committee is David A. Morgenstern, since February 1, 1996, and the
further appointment of the following additional named individuals elected to
serve, effective June 21, 1996, as Directors of the Corporation shall be also:
John Cavaiuolo, Bruce S. Eagleson and James M. Krupinski.
FURTHER RESOLVED, that Ms. Bernadette Stevens is appointed to the Office of
Secretary from the date of April 1, 1996. From February 1, 1996 through
November 1, 1996, Mr. Jeffrey A. Vanderpol is appointed Assistant Secretary
with all rights accorded the Office of the Secretary when necessary to act in
the absence of the Ms. Stevens. Such was not previously recorded.
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FURTHER RESOLVED, that the resignation of Mr. Vanderpol as the Assistant
(Acting) Secretary of the Company will be effective November 1, 1996.
FURTHER RESOLVED, that the shareholders by this resolution do hereby authorize
and direct the Chairperson and Secretary of this meeting to make, execute and
acknowledge a sealed certificate of the Corporation setting out the above
resolution amending the Articles of Incorporation of the Corporation and to do
everything necessary for the certificate to be filed with the appropriate State
office.
FURTHER RESOLVED, that, once the amendment has been filed and recorded with the
appropriate State office, duplicate copies of the amendment as returned by the
appropriate State official shall be attached to the minutes of this meeting.
IN WITNESS THEREOF, I have affixed by name as acting Secretary OF
AMQUEST INTERNATIONAL, LTD. and have attached the seal of the corporation to
this Resolution.
Dated: October 1, 1996
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
(SEAL)
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BOARD OF DIRECTORS' RESOLUTION ADOPTING
AMENDMENT TO ARTICLES OF INCORPORATION
OF
AMQUEST INTERNATIONAL, LTD.
WHEREAS, the shareholders of AMQUEST INTERNATIONAL, LTD. have given
their written consent authorization for the resolutions as set forth below,
and
WHEREAS, the written consent of the shareholders is now on file in the
Corporation's minute book, the Board of Directors of AMQUEST INTERNATIONAL, LTD,
has hereby:
RESOLVED, that Article Four of the Articles of Incorporation is amended
and now provides that:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less that par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation are
authorized and empowered to enter into a banking relationship with Americas
International Bank Corporation, Ltd. (Bahamas), Firstar Trust Company (USA),
Citibank (USA), Credit Suisse, Zug, Switzerland, ING Bank (Geneva and Zurich,
Switzerland) and ING Bank (Rio de Janeiro, Sao Paulo, Brazil), for both
Corporate and Safekeeping accounts.
FURTHER RESOLVED, that the resignation of Robert Alvarez as sole Director of the
company, effective February 1, 1996, was accepted on that date, but such was not
previously recorded.
FURTHER RESOLVED, that the sole Director of the Company, and Chairman of the
Executive Committee is David A. Morgenstern, since February 1, 1996, and the
further appointment of the following additional named individuals elected to
serve, effective June 21, 1996, as Directors of the Corporation shall be also:
John Cavaiuolo, Bruce S. Eagleson and James M. Krupinski.
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FURTHER RESOLVED, that Ms. Bernadette Stevens is appointed to the Office of
Secretary from the date of April 1, 1996. From February 1, 1996 through
November 1, 1996, Mr. Jeffrey A. Vanderpol is appointed Assistant Secretary
with all rights accorded the Office of the Secretary when necessary to act in
the absence of the Ms. Stevens. Such was not previously recorded,
FURTHER RESOLVED, that the resignation of Mr. Vanderpol as the Assistant
(Acting) Secretary of the Company will be effective November 1, 1996.
The undersigned, Bernadette Stevens, certifies that I am the duly
appointed Secretary of AMQUEST INTERNATIONAL, LTD. and that the above is a true
and correct copy of resolutions duly adopted at a meeting of the Board of
Directors thereof, convened and held in accordance with law and the Bylaws of
said Corporation on October 1, 1996, and that such resolutions are now in full
force and effect.
IN WITNESS THEREOF, I have affixed my name as acting Secretary of AMQUEST
INTERNATIONAL, LTD. and have attached the seal of the Corporation to this
Resolution.
Dated: October 1, 1996.
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
(SEAL)
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BOARD OF DIRECTORS' RESOLUTION
ADVISING OF AMENDMENT TO ARTICLES OF INCORPORATION
AMQUEST INTERNATIONAL, LTD.
By a duly made and seconded motion, a majority of the Directors of the
Board of Directors of AMQUEST INTERNATIONAL, LTD., a Nevada Corporation, voted
to adopt the following resolution:
RESOLVED, that the Board of Directors of AMQUEST INTERNATIONAL, LTD.
considers it in the best interests of the Corporation to amend Article Four of
the Articles of Incorporation to read as follows:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less that par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation are
authorized and empowered to enter into a banking relationship with Americas
International Bank Corporation, Ltd. (Bahamas), Firstar Trust Company (USA),
Citibank (USA), Credit Suisse, Zug, Switzerland, ING Bank (Geneva and Zurich,
Switzerland) and ING Bank (Rio de Janeiro, Sao Paulo, Brazil), for both
Corporate and Safekeeping accounts and with Credit Suisse of Zug, Switzerland
for both Corporate and Safekeeping accounts.
FURTHER RESOLVED, that the resignation of Robert Alvarez as sole Director of the
company, effective February 1, 1996, was accepted on that date, but such was not
previously recorded.
FURTHER RESOLVED, that the sole Director of the Company, and Chairman of the
Executive Committee is David A. Morgenstern, since February 1, 1996, and the
further appointment of the following additional named individuals elected to
serve, effective June 21, 1996, as Directors of the Corporation shall be also:
John Cavaiuolo, Bruce S. Eagleson and James M. Krupinski.
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FURTHER RESOLVED, that Ms. Bernadette Stevens is appointed to the Office of
Secretary from the date of April 1, 1996. From February 1, 1996 through
November 1, 1996, Mr. Jeffrey A. Vanderpol is appointed Assistant Secretary
with all rights accorded the Office of the Secretary when necessary to act in
the absence of the Ms. Stevens. Such was not previously recorded,
FURTHER RESOLVED, that the resignation of Mr. Vanderpol as the Assistant
(Acting) Secretary of the Company will be effective November 1, 1996.
And it is FURTHER RESOLVED, that the President of the Corporation call a
special meeting of the Corporation's shareholders, to be held at the principal
offices of the corporation on October 1, 1996 at 9 AM, to consider and vote upon
the above resolutions, and the President of the Corporation is hereby directed
to require the Secretary of the Corporation to give notice of the special
meeting to shareholders in accordance with the Articles and Bylaws of this
Corporation.
The undersigned, Bernadette Stevens, certifies that I am the duly
appointed Secretary of Amquest International, Ltd. and that the above is a true
and correct copy of a resolution duly adopted at a meeting of the Directors
thereof, convened and held in accordance with law and the Bylaws of said
Corporation on September 15, 1996 and that such resolution is now in full force
and effect.
IN WITNESS THEREOF, I have affixed my name as acting Secretary of AMQUEST
INTERNATIONAL, LTD. and have attached the seal of the Corporation to this
Resolution.
Dated: September 15, 1996.
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
(SEAL)
93
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AMQUEST INTERNATIONAL, LTD.
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDERS
IN LIEU OF ANNUAL MEETING
January 6, 1997
The undersigned, being the Majority Shareholders of AMQUEST INTERNATIONAL, LTD.,
a Nevada Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as o the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopts, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, the John Cavaiuolo, David Morgenstern, Bruce Eagleson and James
Krupinski are hereby elected to the Board of Directors of the Corporation, to
serve in such capacity until their successors are elected and qualified or until
their earlier death, resignation, retirement, disqualification or removal from
office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last meeting of
the Shareholders of the Corporation are hereby ratified, approved and adopted as
the acts of the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholders in Lieu of Annual
Meeting is executed as of the 6th day of January, 1997.
MAJORITY SHAREHOLDERS:
- -------------------------------------------------------------------------------
Name No. of Authorized % of Total
Shares Signature Outstanding Shares
- -------------------------------------------------------------------------------
Kinsman, Merchant & 15,850,000 42.4%
Associates, Inc.
Acajou Holdings, Ltd. (in 4,750,000 12.7%
AIBC Trust)
Geneva Ventures, Ltd. 6,400,000 17.1%
AIBC (Ribas Family Trust) 4,000,000 10.7%
---------- ------
Subtotal, Majority
Shareholders 31,000,000 82.90%
Total Current Outstanding 37,415,000 100.00%
========== ======
* also 10,000,000 Series "A" Preferred Shares
Executed on this, the 6th day of January, 1997.
94
<PAGE>
AMQUEST INTERNATIONAL, LTD.
(A Nevada Corporation)
CONSENT OF DIRECTORS IN LIEU OF ANNUAL MEETING
January 6, 1997
The undersigned, being all of the Directors of AMQUEST INTERNATIONAL, LTD., a
Nevada Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of call, notice of time, place, objets and
purposes of the annual meeting of the Directors of the Corporation and hereby
adopts, by this written consent pursuant to Nevada Revised Statutes 78.375, the
following Resolutions and each and every action effected thereby:
1. ELECTION OF OFFICERS. RESOLVED, that David Morgenstern be, and
hereby is, elected to the office of President, and be the Managing
Director of the Board, and Bernadette Stevens be, and hereby is,
elected to the offices of Secretary and Treasurer of the
Corporation, to serve in such positions until their successors are
elected and qualified or until their earlier death, resignation,
retirement, disqualification or removal from office.
2. RATIFICATION OF ACTIONS. FURTHER RESOLVED, that any and all actions
taken by the Officers of the Corporation for an on behalf of the
corporation since the last meeting of the Board of Directors of the
Corporation are hereby ratified, approved and adopted as the acts of
the Corporation.
IN WITNESS WHEREOF, this consent of Directors in Lieu of Annual Meeting is
executed this 6th day of January, 1997.
DIRECTORS:
s/s John Cavaiuolo
- -------------------------------------------------------
John Cavaiuolo, Chairman of the Board
s/s David A. Morgenstern
- -------------------------------------------------------
David Morgenstern, Managing Director of the Board
s/s Bruce Engleson
- -------------------------------------------------------
Bruce Eagleson, Director
s/s James Krupinski
- -------------------------------------------------------
James Krupinski, Director
RECTORS:
s/s John Cavaiuolo
- -------------------------------------------------------
John Cavaiuolo, Chairman of the Board
95
<PAGE>
BOARD OF DIRECTORS' RESOLUTIONS
REGARDING THE ISSUANCE OF CORPORATE SECURITIES
OF
AMQUEST INTERNATIONAL, LTD.
A special meeting of the Board of Directors of AMQUEST INTERNATIONAL,
LTD. was held at the following time, date and location:
Time: 9:AM
Date: July 2, 1996
Location: 4901 NW 17th Way, Suite 405, Fort Lauderdale, Florida 33309.
The President of the Corporation, Mr. David A. Morgenstern, called the
meeting or order, and Ms. Bernadette Stevens, acting as the Secretary of the
Corporation, took the minutes of the meeting.
The Secretary reported that there was present, in person holders of a
sufficient number of issued and outstanding common shares of the corporation
necessary to constitute a quorum and to transact business.
After a duly made and seconded motion, and after due deliberation, the
following resolutions were adopted by the affirmative vote of the holders of a
majority of the issued and outstanding shares of the common stock of the
corporation entitled to vote, and the Board of Directors:
RESOLVED, that Article Four of the Articles of Incorporation of the company
states the following:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of FIVE HUNDRED
MILLION (500,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a
total capitalization of $500,000, and an aggregate of Thirty Million
(30,000,000) shares of Preferred Stock, in four (4) Series: Series "A":
10,000,000 shares; Series "B": 10,000,000 shares; Series "C": 9,990,000
shares; and Series "D": 10,000 shares), to the authority to issue Three
Hundred Million (300,000,000) shares of Preferred Stock, par value $.001, in
four (4) Series: Series "A": 100,000,000 shares; Series "B": 100,000,000
shares; Series "C": 99,990,000 shares; and Series "D": 10,000 shares, holding
50% of the vote of the shareholders of the Company, par value ONE MIL
($0.001) for a total capitalization of $300,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less that par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation have been,
throughout 1996, been authorized and empowered to issue the following
securities, relative to Article Four. (CAPITAL STOCK) of the Company's Articles
of Incorporation, as amended:
96
<PAGE>
1. Preferred Growth Series Program
RESOLVED THAT, in order to further attract the investment capital of private
non-US institutional investors, as such term is defined by the Securities and
Exchange Commission, ("SEC"), who seek US dollar denominated securities in world
markets, the Company hereby defined as an investment instrument, called Series
"A1A" Units.
Description of Series "A1A" Units (the "Units"):
(a) They bear the CUSIP #032149 60 1 (the "Units").
(b) On July 1, 1996, the Company began offering these Units in foreign
markets, and by October, 1996, formalized their on-going sale under the
investment program name "Preferred Growth Series Program." (the
"Program").
(c) Each Unit contains 20,000 Series "A" Preferred Shares , CUSIP #032149 20
5, which are convertible, at the Option of the Holder on or after August
30, 1999 on a 1:1 basis to Amquest Common Shares. The Series "A" Preferred
Shares are redeemable, if not previously converted to Common Shares, on
August 30, 2006, for $50.00 per Share, or $1,000,000 USD.
(d) Each Unit also contains one (1) Fixed Income Coupon (the "Coupon") which
provides a fixed rate of return on an assumed $500,000 purchase price per
Unit, which is 50% of Redemption Face Value. This coupon has a two (2)
year maximum term, with a Face Value of $80,000, issued in the form of
8,000 Common Shares which are held in the Holder's Managed Account in the
Amquest Matrix Trust, Inc. (The "Trust"). Registering the 8,000 Common
Shares, CUSIP #032149 10 6, for the benefit of supporting the payment of
the Coupon is the Company's obligation. The Coupon is to be paid in four
(4) quarterly installments, whereby the first Coupon payment of $20,000
would be made at the end of Year Two's second quarter, and then each
quarter thereafter, through to the end of the first quarter of Year Three
following purchase.
All or part of the Coupon payments are reinvested into the Program so that the
Coupon is paid from the gains achieved by trading the 8,000 Common Shares over
the course of the two (2) years, and by reinvesting these proceeds until the
entire $80,000 to pay the Coupon is generated for the investor's benefit.
The Units are designed to individually function like micro mutual funds, so
that, by doing so, they would mimic the planned portfolios of the Company's
Amquest Matrix Funds, Inc. ("Growth, Income, and Total Return") in a single
asset allocation investment and thereby create a new marketing method for mutual
fund investments. This new marketing approach was designed to bring capital and
assets under management into the Company and into its mutual funds. The Unit
offers a blend of a redeemable or convertible equity investment that provides
"Growth" in principal over time, and it has a fixed income coupon that provides
on-going current "Income".
The salient distinction of the Series "A1A" Unit is its Managed Account
Subscription (the "Account"). Participation in the Program is limited to those
institutions willing to open mandatory, four-year duration investment account,
the term of which is renewable thereafter in one (1) year increments. These
Accounts are established in The Amquest Matrix Trust, Ltd. (The "Trust"),
managed by Amquest Advisors, LLC, a Registered Investment Advisor, under the
United States Investment Company Act of 1940. Capital raised from the sale of
the Units is invested through the use of a managed investment ("Total Return")
account whereby 50% of the funds raised in the Unit are allotted to the
Company's working capital requirements, including the payment of commissions and
offering expenses; while the other 50% must be held in reserve by the Company in
its mutual funds, The Amquest Matrix Funds, Inc, for diversified asset
management, until such time as the Company's Common Stock trading price exceeds
$15.00 per Share.
The purpose of the Managed Account is twofold: 1) to gradually shift the
investor's capital from an investment in a single equity, namely, Amquest
corporate securities, to 50% of the initial principal and the gains thereon
being placed into the Amquest Matrix Funds, the Company's mutual funds, and 2)
to protect the Company from sell off typical to Regulation S transactions.
97
<PAGE>
This method, which operates as a reinvestment engine for the benefit of the
investor, is managed by the Amquest Matrix Trust, Ltd. (Bahamas), (the "Trust"),
a separate custodial fiduciary operating for the benefit the Company but as a
Third Party Administrator (TPA). The purpose of the Trust is to serve the
institutional investor by providing a diversified "Total Return" portfolio while
providing significant limitations on the open market trading for a period of
four (4) years in such a manner that the Company's Common Share price cannot be
adversely effected. The Trust also has the discretion to invest a portion of the
capital directly into the Company's Bond (Debt Equity) Instruments or other such
investments which serve to protect principal.
The Series "A1A" Units have been, and will be issued, pursuant to Regulation S
(or other) exemptions from registration under the Securities Act of 1933 (the
"Act") and have not been registered. In the Program, the Company reserves the
right to make adjustments in the percentages in the issuance of the common
portion provided, versus the number convertible Series "A" Preferred Shares
issued, in the Units, for the purposes of customizing the investment objectives
of these institutions. This notwithstanding, the total number of Shares conveyed
in each Series "A1A" Unit remains the same, whether they are Common Shares or
Series "A" Preferred Shares, at 28,000 Shares per Series "A1A" Unit.
RESOLVED THAT, the Company is, by majority vote of the Board of Directors,
hereby authorized to issue up to Five Thousand (5,000) Series "A1A" Units, Five
Hundred (500) since July 1, 1996, and then the remainder, since October 2, 1996.
The vote on the above resolutions, the Secretary reported, showed that
over 66 2/3% percent of the issued and outstanding common shares of the
corporation entitled to vote had been cast in favor of the resolutions and that
non (0) shares of the issued and outstanding common shares o f the corporation
entitled to vote had been voted against the resolutions.
The President then announced that the resolutions had been duly adopted by
the holders of a majority of the issued and outstanding common shares of the
corporation entitled to vote on the resolutions and that such majority was
sufficient to transact the business of the meeting.
There being no further business, upon a duly made and seconded motion the
meeting was adjourned.
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
98
<PAGE>
BOARD OF DIRECTORS' RESOLUTIONS
REGARDING THE ISSUANCE OF CORPORATE SECURITIES
OF
AMQUEST INTERNATIONAL, LTD.
A special meeting of the Board of Directors of AMQUEST INTERNATIONAL, LTD.
was held at the following time, date and location, in order to approve certain
resolutions regarding the issuance of corporate securities:
Time: 9:AM
Date: January 30, 1996
Location: 4901 NW 17th Way, Suite 405, Fort Lauderdale, Florida 33309.
The President of the Corporation, Mr. David A. Morgenstern, called the
meeting or order, and Ms. Bernadette Stevens, acting as the Secretary of the
Corporation, took the minutes of the meeting.
The Secretary reported that there was present, in person holders of a
sufficient number of issued and outstanding common shares of the corporation
necessary to constitute a quorum and to transact business.
After a duly made and seconded motion, and after due deliberation, the
following resolutions were adopted by the affirmative vote of the holders of a
majority of the issued and outstanding shares of the common stock of the
corporation entitled to vote, and the Board of Directors:
RESOLVED, that Article Four of the Articles of Incorporation of the company
states the following:
ARTICLE FOUR. (CAPITAL STOCK).
The Corporation shall have authority to issue an aggregate of ONE HUNDRED
MILLION (100,000,000) shares of Common Stock holding 50% of the vote of the
shareholders of the Company, par value ONE MIL ($0.001) per share, for a total
capitalization of $100,000, and an aggregate of Thirty Million (30,000,000)
shares of Preferred Stock, in four (4) Series: Series "A": 10,000,000 shares;
Series "B": 10,000,000 shares; Series "C": 9,990,000 shares; and Series "D":
10,000 shares)., for a total capitalization of $30,000.
The corporation's capital stock may be issued and sold from time to time for
such consideration as may be fixed by the Board of Directors, provided that the
consideration so fixed is not less that par value.
There shall be no cumulative voting by shareholders.
The shareholders shall have no preemptive rights to acquire any shares of the
corporation.
The common stock of the corporation, after the amount of the subscription price
has been paid in, shall not be subject to assessment to pay the debts of the
corporation.
FURTHER RESOLVED, that the Officers and Directors of the Corporation have been,
throughout 1996, been authorized and empowered to issue the following
securities, relative to Article Four. (CAPITAL STOCK) of the Company's Articles
of Incorporation, as amended:
99
<PAGE>
1. SERIES "A" UNIT FOUNDER'S OFFERING.
RESOLVED THAT, beginning in January, 1996, the Company, offered for sale Series
"A" Units ("Units") at $12,500 per Unit, in a transaction exempt from
registration under Regulation D, of the Securities Act of 1933, as amended (the
"ACT"). Each of these Units contain 5,000 Common Shares and 5,000 Class A
Warrants.
Description of Class A Warrants (the "Warrants"):
(a) They bear the CUSIP # 032149 11 4.
(b) They are exercisable into Common Shares at $7.50 per common share.
(c) They are detachable from the Common Shares.
(d) They have an exercise period of up to four (4) years from the date
of their individual issuance.
(e) The Company can redeem them at $.10 per Class A Warrant upon thirty
(30) days written notice.
(f) The Holder may exercise any of the Class A Warrants called during
this thirty-day period prior to them being redeemed.
RESOLVED THAT, the Company is, by majority vote of the Board of Directors,
authorized to issue up to One Thousand (1,000) Series "A" Units, and up to Five
Million (5,000,000) Class A Warrants, as a separate security, since January 15,
1996. The Class A Warrants are being issued under the authority of the Board of
Directors to issue common stock under Article Four (CAPITAL STOCK).
The vote on the above resolutions, the Secretary reported, showed that
over 66 2/3% percent of the issued and outstanding common shares of the
corporation entitled to vote had been cast in favor of the resolutions and that
non (0) shares of the issued and outstanding common shares o f the corporation
entitled to vote had been voted against the resolutions.
The President then announced that the resolutions had been duly adopted by
the holders of a majority of the issued and outstanding common shares of the
corporation entitled to vote on the resolutions and that such majority was
sufficient to transact the business of the meeting.
There being no further business, upon a duly made and seconded motion the
meeting was adjourned.
Bernadette Stevens
------------------------
Bernadette Stevens
Secretary
100
<PAGE>
SHAREHOLDERS' RESOLUTION
APPROVING AMENDMENT TO ARTICLES OF INCORPORATION
INTERNATIONAL MERGITECH VENTURES, LTD.
WHEREAS, the Board of Directors of INTERNATIONAL MERGITECH VENTURES, LTD. has
voted in favor of the resolutions as set forth below, and
AS, the shareholders of INTERNATIONAL MERGITECH VENTURES, LTD. by this
resolution do approve of the resolutions proposed by the directors and set
out below, it is hereby:
RESOLVED, that Article One of the Articles of Incorporation is amended and now
provides that:
ARTICLE I
---------
NAME
The name of the corporation is AMQUEST INTERNATIONAL, LTD.
IT IS FURTHER RESOLVED, that the shareholders by this resolution do hereby
authorize and direct the Chairperson and Secretary of this meeting to make,
execute and acknowledge a sealed certificate of the Corporation setting out the
above resolution and to do everything necessary for the certificate to be filed
with the appropriate State office.
IT IS FURTHER RESOLVED, that, once the amendment has been filed and recorded
with the appropriate State office, duplicate copies of the amendment as returned
by the appropriate State official shall be attached to the minutes of this
meeting.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL
MERGITECH VENTURES, LTD. and have attached the seal of the Corporation to
this Resolution.
Dated: January 29, 1996.
- --------------------------------
Secretary
(SEAL)
101
<PAGE>
BOARD OF DIRECTORS' RESOLUTION ADOPTING
AMENDMENT TO ARTICLES OF INCORPORATION
INTERNATIONAL MERGITECH VENTURES, LTD.
WHEREAS, the shareholders of INTERNATIONAL MERGITECH VENTURES, LTD. have
given their written consent authorization for the resolution as set forth
below, and
WHEREAS, the written consent of the shareholders is now on file in the
Corporation's minute book, the Board of Directors of INTERNATIONAL MERGITECH
VENTURES, LTD. has hereby: RESOLVED, that Article One of the Articles of
Incorporation is amended and now provides that:
ARTICLE I
---------
NAME
The name of the corporation is AMQUEST INTERNATIONAL, LTD..
The undersigned, Robert Alvarez, certifies that I am the duly appointed
Secretary of INTERNATIONAL MERGITECH VENTURES, LTD. and that the above is a true
and correct copy of a resolution duly adopted at a meeting of the Board of
Directors thereof, convened and held in accordance with law and the Bylaws of
said Corporation on January 29, 1996, and that such resolution is now in full
force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL
MERGITECH VENTURES, LTD. and have attached the seal of the Corporation to
this Resolution.
Dated: January 29, 1996.
Robert Alvarez
- -------------------------------
Secretary
(SEAL)
102
<PAGE>
BOARD OF DIRECTORS' RESOLUTION
ADVISING OF AMENDMENT TO ARTICLES OF INCORPORATION
INTERNATIONAL MERGITECH VENTURES, LTD.
By a duly made and seconded motion, a majority of the directors of the Board of
Directors of INTERNATIONAL MERGITECH VENTURES, LID., voted to adopt the
following resolution:
RESOLVED, that the Board of Directors of International Mergitech Ventures,
Ltd. considers it in the best interests of the Corporation to amend Article
One of the Articles of Incorporation to read as follows:
ARTICLE I
---------
NAME
The name of the corporation is AMQUEST INTERNATIONAL, LTD.
And it is FURTHER RESOLVED, that the President of the Corporation call a special
meeting of the Corporation's shareholders, to be held at the principal offices
of the corporation on January 29, 1996 at 9AM to consider and vote upon the
above resolution, and to obtain the written consent for the above resolution of
stockholders holding at least a majority of the voting power of the issued and
outstanding stock, and the President of the Corporation is hereby directed to
require the Secretary of the Corporation to give notice of the special meeting
to shareholders in accordance with the Articles and Bylaws of this Corporation.
The undersigned, Robert Alvarez, certifies that I am the duly appointed
Secretary of INTERNATIONAL MERGITECH VENTURES, LTD. and that the above is a true
and correct copy of a resolution duly adopted at a special meeting of the
directors thereof, duly held and convened in accordance with law and the Bylaws
of said Corporation on January 14, 1996, and that such resolution is now in full
force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL
MERGITECH VENTURES, LTD. and have attached the seal of the Corporation to
this Resolution.
Dated: January 14, 1996.
Robert Alvarez
- --------------------------------
Secretary
(SEAL)
103
<PAGE>
INTERNATIONAL MERGITECH VENTURES, LTD.
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF ANNUAL MEETING
January 1, 1996
The undersigned, being all of the Directors of International Mergitech Ventures,
Ltd., a Nevada Corporation (the "Corporation"), hereby waive all statutory and
bylaw requirements as to the call, notice of time, place, objects and purposes
of the annual meeting of the directors of the Corporation and hereby adopt, by
this written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby
1. ELECTION OF OFFICERS. RESOLVED, that Robert Alverez be, and hereby is,
elected to the offices of President, Secretary, and Treasurer of the
Corporation, to serve in such positions until his successors are elected
and qualified or until his earlier death, resignation, retirement,
disqualification or removal from office.
2. RATIFICATION OF ACTIONS. FURTHER RESOLVED, that any and all actions taken
by the Officers of the Corporation, for an on behalf of the Corporation
since the last annual meeting of the Board of Directors of the Corporation
and hereby ratified, approved and adopted as the acts of the Corporation.
3. REPORT TO SHAREHOLDERS. The Board of Directors and Officers of the
Corporation reported that they have been advised by the Shareholders of
the Corporation that the control interest of the common capital stock of
the Corporation has been sold by Associates Consulting Group, a Nevada
Corporation, to Kinsman, Merchant & Associates, Inc., a Florida
Corporation, by Agreement between the two parties dated February 3, 1995.
It was further reported that a down payment has been received by
Associates Consulting Group, and that Mr. Robert Alvarez would continue to
serve as President, Secretary and Treasurer of the Corporation until all
of the payments to be made under the agreement of sale have been made, and
an escrow account has been established containing a portion of the shares
to secure payment of the balance of the purchase price.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed this 1st day of January, 1996.
- ----------------------------------------
BOARD OF DIRECTORS:
Robert Alvarez
- ----------------------------------------
Robert Alvarez
104
<PAGE>
INTERNATIONAL MERGITECH VENTURES, LTD.
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 1, 1996
The undersigned, having the proxy for the Majority Shareholder of International
Mergitech Ventures, Ltd., a Nevada Corporation (the 'Corporation"), hereby
waives all statutory and bylaw requirements as to the call, notice of time,
place, objects and purposes of the annual meeting of the Shareholders of the
Corporation and hereby adopts, by this written consent pursuant to Nevada
Revised Statutes 78.320(2) and 78.375, the following Resolutions and each and
every action effected thereby:
RESOLVED, that Robert Alvarez be, and hereby is, elected to the Board of
Directors of the Corporation, to serve in such capacity until his successor is
elected and qualified or until his earlier death, resignation, retirement,
disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
It was reported to the Shareholders of the Corporation that the control interest
of the common capital stock of the Corporation has been sold by Associate
Consulting Group, a Nevada Corporation, to Kinsman, Merchant & Associates, Inc.,
a Florida corporation, by Agreement between the two parties dated February 3,
1995. It was further reported that a down payment has been received by
Associates Consulting Group, and that Mr. Robert Alvarez would continue to serve
as President, Secretary and Treasurer of the Corporation until all of the
payments to be made under the agreement of sale have been made, and an escrow
account has been established containing a portion of the shares to secure
payment of the balance of the purchase price.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the 1st day of January, 1996.
MAJORITY SHAREHOLDER:
Robert Alvarez
- --------------------------------
Robert Alvarez
105
<PAGE>
BOARD OF DIRECTORS' RESOLUTION
Advising Of Amendment To Articles Of Incorporation
INTERNATIONAL MEDICAL VENTURES, LTD.
By a duly made and seconded motion, a majority of the directors of the Board of
Directors of INTERNATIONAL MEDICAL VENTURES, LTD., voted to adopt the following
resolution:
RESOLVED, that the Board of Directors of International Medical Ventures, Ltd.
considers it in the best interests of the Corporation to amend Article One of
the Articles of Incorporation to read as follows:
ARTICLE I
NAME
The name of the corporation is INTERNATIONAL MERGITECH VENTURES, LTD.
And it is FURTHER RESOLVED, that the President of the Corporation call a special
meeting of the Corporation's shareholders, to be held at the principal offices
of the corporation on July 31, 1995 at 9AM to consider and vote upon the above
resolution, and to obtain the written consent for the above resolution of
stockholders holding at least a majority of the voting power of the issued and
outstanding stock, and the President of the Corporation is hereby directed to
require the Secretary of the Corporation to give notice of the special meeting
to shareholders in accordance with the Articles and Bylaws of this Corporation.
The undersigned, Robert Alvarez, certifies that I am the duly appointed
Secretary of INTERNATIONAL MEDICAL VENTURES, LTD. and that the above is a true
and correct copy of a resolution duly adopted at a special meeting of the
directors thereof, duly held and convened in accordance with law and the Bylaws
of said Corporation on July 16, 1995, and that such resolution is now in full
force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL
MEDICAL VENTURES, LTD. and have attached the seal of the Corporation to this
Resolution.
Dated: July 16, 1995.
- --------------------------------
Secretary
(SEAL)
106
<PAGE>
SHAREHOLDERS' RESOLUTION
APPROVING AMENDMENT TO ARTICLES OF INCORPORATION
INTERNATIONAL MEDICAL VENTURES, LTD.
WHEREAS, the Board of Directors of INTERNATIONAL MEDICAL VENTURES, LTD. has
voted in favor of the resolutions as set forth below, and
WHEREAS, the shareholders of INTERNATIONAL MEDICAL VENTURES, LTD. by this
resolution do approve of the resolutions proposed by the directors and set
out below, it is hereby:
RESOLVED, that Article One of the Articles of Incorporation is amended and now
provides that:
ARTICLE I
NAME:
The name of the corporation is INTERNATIONAL MERGITECH VENTURES, LTD.
IT IS FURTHER RESOLVED, that the shareholders by this resolution do hereby
authorize and direct the Chairperson and Secretary of this meeting to make,
execute and acknowledge a sealed certificate of the Corporation setting out the
above resolution and to do everything necessary for the certificate to be filed
with the appropriate State office.
IT IS FURTHER RESOLVED, that, once the amendment has been filed and recorded
with the appropriate State office, duplicate copies of the amendment as returned
by the appropriate State official shall be attached to the minutes of this
meeting.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL
MEDICAL VENTURES, LTD. and have attached the seal of the Corporation to this
Resolution.
Dated: July 31, 1995.
Robert Alvarez
- --------------------------------
Secretary
(SEAL)
107
<PAGE>
BOARD OF DIRECTORS' RESOLUTION ADOPTING
AMENDMENT TO ARTICLES OF INCORPORATION
INTERNATIONAL MEDICAL VENTURES, LTD.
WHEREAS, the shareholders of INTERNATIONAL MEDICAL VENTURES, LTD. have given
their written consent authorization for the resolution as set forth below, and
WHEREAS, the written consent of the shareholders is now on file in the
Corporation's minute book, the Board of Directors of INTERNATIONAL MEDICAL
VENTURES, LTD. has hereby:
RESOLVED, that Article One of the Articles of Incorporation is amended and now
provides that:
ARTICLE I
---------
NAME
The name of the corporation is INTERNATIONAL MERGITECH VENTURES, LTD.
The undersigned, Robert Alvarez, certifies that I am the duly appointed
Secretary of INTERNATIONAL MEDICAL VENTURES, LTD. and that the above is a true
and correct copy of a resolution duly adopted at a meeting of the Board of
Directors thereof, convened and held in accordance with law and the Bylaws of
said Corporation on July 31, 1995, and that such resolution is now in full force
and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of INTERNATIONAL MEDICAL
VENTURES, LTD. and have attached the seal of the Corporation to this Resolution.
Dated: July 31, 1995.
- --------------------------------
Secretary
(SEAL)
108
<PAGE>
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF SPECIAL METING
INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned, being all of the Directors of International Medical Ventures,
Ltd., a Nevada Corporation (the "Corporation"), hereby waive all statutory and
bylaw requirements as to the call notice of time, place, objects and purposes of
the special meeting of the Directors of the Corporation and hereby adopt by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
RESOLVED, that the minutes of the Special Meetings of the Corporation's
Shareholders and Directors, dated August 12, 1994, are amended due to a
reporting error, to reflect the fact that the meetings were conducted by
teleconference between and among the participants of the meetings.
FURTHER RESOLVED, that the minutes of the Special Meetings of the Corporation's
Shareholders and Directors, dated October 14, 1994, are amended due to a
reporting error, to reflect the fact that the meetings were conducted by
teleconference between and among the participants of the meetings.
FURTHER RESOLVED, that the Consent of Majority Shareholder of the Corporation,
dated January 22, 1995, is amended due to a reporting error, to reflect the fact
that J.L. Davis was acting as President of the Corporation for the sole and
particular purpose of entering into that certain Agreement Granting Licensing
Rights In Exchange For Stock dated January 1995, which agreement shall become
null and void according to it's express terms on February 4, 1995 if not closed
by that date, having previously resigned her positions as a Director and Officer
of the Corporation effective October 14, 1994.
FURTHER RESOLVED, that the issuance from the treasury of the Corporation of
19,000,000 shares of the common capital stock of the Corporation is authorized,
for issuance to Associates Consulting Group, a Texas Corporation, in lieu of
payment to Associates Consulting Group of approximately $20,000.00 in expenses
paid out on behalf of the Corporation by Associates Consulting Group in
furtherance of the Corporations business objectives.
FURTHER RESOLVED, that the office of the Corporation are authorized and
empowered to direct the Corporation's transfer agent, by letter, to issue said
19,000,000 shares of the common capital stock of the Corporation to Associates
Consulting Group, as payment in full settlement of the $20,000.00 owed to it by
the Corporation.
IN WITNESS THEREOF, this Unanimous Consent of Directors is executed this 25th
day of January, 1995.
BOARD OF DIRECTORS:
Robert Alvarez
- --------------------------------
Robert Alvarez
109
<PAGE>
CONSENT OF MAJORITY SHAREHOLDER
INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned, being the Majority Shareholder of International Medical
Ventures, Ltd., a Nevada Corporation (the "Corporation"), hereby waives all
statutory and bylaw requirements as to the call, notice of time, place, objects
and purposes of this special meeting of the Shareholders of the Corporation and
hereby adopts, by this written consent pursuant to Nevada Revised Statutes
Sections 78.320 (2) and 78.375, the following Resolutions and each and every
action effected thereby:
RESOLVED, that the appointment as officers and directors of the Corporation
of Todd E. Levine, Marcia Levine, Walter P. Scholler and John R. Greer were
never accepted.
FURTHER RESOLVED, that Robert Alvarez is elected to the office of sole director
of the Corporation, effective of even date herewith, to serve until his death,
retirement, or resignation, or until his successors are chosen at the next
annual meeting of the shareholders of the Corporation.
FURTHER RESOLVED, that J.L. Davis, acting as President of the Corporation for
the limited purposes enumerated within this resolution, is hereby authorized and
empowered of even date herewith to enter into that certain Agreement Granting
Licensing Rights In Exchange For Stock between and among the Corporation,
Personal Blood Storage of Memphis, Inc. and Medical Ventures, Ltd. dated January
22, 1995, which agreement shall become void by it's terms without further action
of the Shareholders or Directors of the Corporation upon the failure of any
party to comply with the terms of the escrow agreement incorporated therein.
IN WITNESS WHEREOF, this Consent of Majority Shareholder is executed this 22nd
day of JANUARY, 1995.
Robert Alvarez
- --------------------------------
Robert Alvarez
Majority Shareholder
110
<PAGE>
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF SPECIAL MEETING
INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned, being all of the Directors of International Medical Ventures,
Ltd., a Nevada Corporation (the "Corporation"), hereby waive all statutory and
bylaw requirements as to the call, notice of time, place, objects and purposes
of the special meeting of the Directors of the Corporation and hereby adopt, by
this written consent pursuant to Nevada Revised Statutes 78.3 75, the following
Resolutions and each and every action effected thereby:
RESOLVED, that the appointment as officers and directors of the Corporation
of Todd E. Levine, Marcia Levine, Walter P. Scholler and John R. Greer were
never accepted.
FURTHER RESOLVED, that Robert Alvarez is elected to the office of sole director
of the Corporation, effective of even date herewith, to serve until his death,
retirement, or resignation, or until his successors are chosen at the next
annual meeting of the shareholders of the Corporation.
FURTHER RESOLVED, that J.L. Davis, acting as President of the Corporation, is
hereby authorized and empowered to enter into that certain Agreement Granting
Licensing Rights In Exchange For Stock between and among the Corporation,
Personal Blood Storage of Memphis, Inc. and Medical Ventures, Ltd. dated January
22, 1995, which agreement shall become void by it's terms without further action
of the Shareholders or Directors of the Corporation upon the failure of any
party to comply with the terms of the escrow agreement incorporated therein.
FURTHER RESOLVED, that the following persons are hereby elected to the positions
as set forth below, to serve until their death, disqualification, retirement, or
resignation, or until their successors are chosen at the next regular or special
meeting of the Board of Directors of the Corporation:
- ------------------------------------------------------------------------------
NAME POSITION BELD
- ------------------------------------------------------------------------------
Robert Alvarez President
Robert Alvarez Secretary
Robert Alvarez Treasurer
- ------------------------------------------------------------------------------
IN WITNESS THEREOF, this Unanimous Consent of Directors is executed this 22nd
day of January, 1995.
BOARD OF DIRECTORS:
Robert Alvarez
- --------------------------------
Robert Alvarez
111
<PAGE>
CONSENT OF MAJORITY SHAREHOLDER
INTERNATIONAL MEDICAL VENTURES, LTD.
The undersigned, having a proxy to vote the shares of the Majority Shareholder
of International Medical Ventures, Ltd., a Nevada Corporation (the
"Corporation"), hereby waives all statutory and bylaw requirements as to the
call, notice of time, place, objects and purposes of this special meeting of the
Shareholders of the Corporation and hereby adopts, by this written consent
pursuant to Nevada Revised Statutes Sections 78.320 (2) and 78.3 75, the
following Resolutions and each and every action effected thereby.
RESOLVED, that the minutes of the Special Meeting of the Corporation's
Shareholders and Directors, dated August 12, 1994, are amended due to a
reporting error, to reflect the fact that the meetings were conducted by
teleconference between and among the participants of the meetings.
FURTHER RESOLVED, that the minutes of the Special Meetings of the Corporations
Shareholders and Directors, dated October 14, 1994, are amended due to a
reporting error, to reflect the fact that the meetings were conducted by
teleconference between and among the participants of the meetings.
FURTHER RESOLVED, that the Consent of Majority Shareholder of the Corporation,
dated January 22, 1995, is amended due to a reporting error, to reflect the fact
that J.L. Davis was acting as President of the Corporation for the sole and
particular purpose of entering into that certain Agreement Licensing Rights In
Exchange For Stock dated January 22, 1995, which agreement shall become null and
void according to it's express terms on February 24, 1995 if not closed by that
date, having previously resigned her positions as a Director and Officer of the
Corporation effective October 14, 1994.
FURTHER RESOLVED, that the issuance from the treasury of the Corporation of
19,000,000 shares of the common capital stock of the Corporation is authorized,
for issuance to Associates Consulting Group, a Nevada Corporation, in lieu of
payment to Associates Consulting Group of approximately $20,000.00 in expenses
paid out on behalf of the Corporation by Associates Consulting Group in
furtherance of the Corporation's business objectives.
FURTHER RESOLVED, that the officers of the Corporation are authorized and
empowered to direct the Corporation's transfer agent, by letter, to issue said
19,000,000 shares of the common capital stock of the Corporation to Associates
Consulting Group, as payment in full settlement of the $20,000.00 owed to it by
the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder is executed this 25th
day of January, 1995.
Robert Alvarez
- --------------------------------
Robert Alvarez
Majority Shareholder
112
<PAGE>
SHAREHOLDERS' RESOLUTION
INTERNATIONAL MEDICAL VENTURES, LTD.
WHEREAS, the shareholders of International Medical Ventures, Ltd. by this
resolution do approve of the resolutions proposed by the directors of the
Corporation and set out below, it is hereby:
RESOLVED, that Todd E. Levine, Walter P. Schofler and John R. Greer are elected
to the office of director of the Corporation, effective of even date herewith,
to serve until their death, retirement, or resignation, or until their
successors are chosen at the next annual meeting of the shareholders of the
Corporation.
FURTHER RESOLVED, that the resignations of J.L. Davis and Harold Davis as
Directors of the Corporation are hereby accepted, effective of even date
herewith.
IN WITNESS THEREOF, I have affixed my name as Secretary of International Medical
Ventures, Ltd. and have attached the seal of the Corporation to this Resolution.
Dated: October 14, 1994.
J. L. Davis
- --------------------------------
Secretary
(SEAL)
113
<PAGE>
BOARD OF DIRECTORS' RESOLUTION ADOPTING
SHAREHOLDERS RESOLUTION AND ELECTING OFFICERS
INTERNATIONAL MEDICAL VENTURES, LTD.
AS, the shareholders of International Medical Ventures, Ltd. have given their
written consent authorization for the resolutions as set forth below, and
AS, the written consent of the shareholders is now on file in the Corporations
minute book, the Board of Directors of International Medical Ventures, Ltd. has
hereby:
RESOLVED, that Todd E. Levine, Walter P. Schofler and John R. Greer are elected
to the office of director of the Corporation, effective of even date herewith,
to serve until their death, retirement, or resignation, or until their
successors are chosen at the next annual meeting of the shareholders of the
Corporation.
FURTHER RESOLVED, that the resignations of J.L. Davis and Harold Davis as
Directors of the Corporation are hereby accepted, effective of even date
herewith.
FURTHER RESOLVED, that the following persons are hereby elected to the positions
as set forth below, to serve until their death, retirement, or resignation, or
until their successors are chosen at the next regular or special meeting of the
Board of Directors of the Corporation:
NAME POSITION HELD
Todd E. Levine President
Walter P. Scholler Executive Vice President
John R. Greer Vice President
Marcia L. Levine Secretary & Treasurer
The undersigned, J.L. Davis, certifies that I am the duly appointed Secretary of
International Medical Ventures, Ltd. and that the above is a true and correct
copy of resolutions duly adopted at a meeting of the Board of Directors thereof,
convened and held in accordance with law and the Bylaws of said Corporation on
October 14, 1994, and that such resolutions are now in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of International Medical
Ventures, Ltd. and have attached the seal of the Corporation to this Resolution.
Dated: October 14, 1994.
J. L. Davis
- --------------------------------
Secretary
(SEAL)
114
<PAGE>
SHAREHOLDERS' RESOLUTION
INTERNATIONAL MEDICAL VENTURES, LTD.
WHEREAS, the shareholders of International Medical Ventures, Ltd. by this
resolution do approve of the resolutions proposed by the directors of the
Corporation and set out below, it is hereby:
RESOLVED, that Todd E. Levine, Walter P. Schofler and John R. Greer are elected
to the office of director of the Corporation, effective of even date herewith,
to serve until their death, retirement, or resignation, or until their
successors are chosen at the next annual meeting of the shareholders of the
Corporation.
FURTHER RESOLVED, that the resignations of J.L. Davis and Harold Davis as
Directors of the Corporation are hereby accepted, effective of even date
herewith.
IN WITNESS THEREOF, I have affixed my name as Secretary of International Medical
ventures, Ltd. and have attached the seal of the Corporation to this Resolution.
Dated: October 14, 1994.
J.L.Davis
- --------------------------------
Secretary
(SEAL)
115
<PAGE>
BOARD OF DIRECTORS' RESOLUTION ADOPTING
SHAREHOLDERS RESOLUTION AND ELECTING OFFICERS
INTERNATIONAL MEDICAL VENTURES, LTD.
AS, the shareholders of International Medical Ventures, Ltd. have given their
written consent authorization for the resolutions as set forth below, and
AS, the written consent of the shareholders is now on file in the Corporations
minute book, the Board of Directors of International Medical Ventures, Ltd. has
hereby:
RESOLVED, that Todd E. Levine, Walter P. Schofler and John R. Greer are elected
to the office of director of the Corporation, effective of even date herewith,
to serve until their death, retirement, or resignation, or until their
successors are chosen at the next annual meeting of the shareholders of the
Corporation.
FURTHER RESOLVED, that the resignations of J.L. Davis and Harold Davis as
Directors of the Corporation are hereby accepted, effective of even date
herewith.
FURTHER RESOLVED, that the following persons are hereby elected to the positions
as set forth below, to serve until their death, retirement, or resignation, or
until their successors are chosen at the next regular or special meeting of the
Board of Directors of the Corporation:
NAME POSITION HELD
Todd E. Levine President
Walter P. Scholler Executive Vice President
John R. Greer Vice President
Marcia L. Levine Secretary & Treasurer
The undersigned, J.L. Davis, certifies that I am the duly appointed Secretary of
International Medical Ventures, Ltd. and that the above is a true and correct
copy of resolutions duly adopted at a meeting of the Board of Directors thereof,
convened and held in accordance with law and the Bylaws of said Corporation on
October 14, 1994, and that such resolutions are now in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of International Medical
Ventures, Ltd. and have attached the seal of the Corporation to this Resolution.
Dated: October 14, 1994.
J.L. Davis
- --------------------------------
Secretary
(SEAL)
116
<PAGE>
BOARD OF DIRECTORS' RESOLUTION
ADVISING OF SPECIAL MEETING OF SHAREHOLDERS
INTERNATIONAL MEDICAL VENTURES, LTD.
By a duly made and seconded motion, a majority of the directors of the Board of
Directors of International Medical Ventures, Ltd. voted to adopt the following
resolutions:
RESOLVED, that the President of the Corporation cal I a special meeting of the
Corporation's shareholders, to be held at the principal offices of the
corporation on October 14, 1994 at 9AM to elect new Directors of the
Corporation, and the President of the Corporation is hereby directed to require
the Secretary of the Corporation to give notice of the special meeting to
shareholders in accordance with the Articles and Bylaws of this Corporation.
The undersigned, J.L. Davis, certifies that I am the duly appointed Secretary of
International Medical Ventures, Ltd. and that the above is a true and correct
copy of a resolution duly adopted at a special meeting of the directors thereof,
duly held and convened in accordance with law and the Bylaws of said Corporation
on September 30, 1994, and that such resolution is now in fall force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of International Medical
Ventures, Ltd. and have attached the seal of the Corporation to this Resolution.
Dated: September 30, 1994.
J.L. Davis
- --------------------------------
Secretary
(SEAL)
117
<PAGE>
BOARD OF DIRECTORS' RESOLUTION ADOPTING
AMENDMENT TO ARTICLES OF INCORPORATION
COMSTOCK SOUTH AMERICA
AS, the shareholders of Comstock South America have given their written consent
authorization for the resolutions as set forth below, and
WHEREAS, the written consent of the shareholders is now on file in the
Corporation's minute book, the Board of Directors of Comstock South America has
hereby:
RESOLVED, that the Articles Of Incorporation of the Corporation are amended to
read as follows:
ARTICLE ONE. (NAME)
-----------
The name of the Corporation is INTERNATIONAL MEDICAL VENTURES, LTD.
ARTICLE FOUR. (CAPITAL STOCK).
------------
The amount of authorized capital stock of the Corporation is one hundred million
(100,000,000) shares of common stock and thirty million (30,000,000) shares of
preferred stock.
The aggregate number of shares of common stock which this Corporation shall have
authority to issue is one hundred million (100,000,000) shares at par value of
one-tenth of one cent ($0.001) per share. The common stock of the corporation
that is issued and outstanding shall be entitled to vote five (500%) percent of
the shareholder voting rights. Each shareholder of common stock shall be
entitled to one vote for each share of common stock held.
The aggregate number of shares of preferred stock which this Corporation shall
have authority to issue shall be thirty million (30,000,000) shares at par value
of one tenth of one cent ($0.001) per share. The preferred stock shall be
divided into Series "A", Series "B". Series "C", and Series "D" preferred stock,
which shall have all the same rights and privileges except voting rights as
expressly set forth below:
(a) Series A preferred shares, which shall consist of ten million (10,000,000)
shares, shall have no voting rights.
(b) Series B prefer-red shares, which shall consist of ten million
(10,000,000) shares, shall have no voting rights.
(c) Series C preferred shares, which shall consist of nine million nine
hundred and ninety thousand (9,990,000) shares, shall have no voting
rights.
(d) Series D preferred shares, which shall consist of ten thousand (10,000)
shares, shall be entitled to vote fifty (501%) percent of the stockholder
voting rights. Each holder of preferred stock, Series D, shall be entitled
to one vote for each share of preferred stock, Series D, held.
Authorized stock may be issued from time to time without action by the
stockholders for such consideration as may be fixed from time to time by the
Board of Directors, and shares so issued, the consideration for which have been
paid or delivered, shall be deemed fully paid stock and the holder of such
shares shall not be liable for any further payment thereon.
The capital stock of this Corporation, after the amount of the subscription
price or par value has been paid in, shall not be subject to assessment to pay
debts of the Corporation and no paid up stock and no stock issued as fully paid
shall ever be assessable or assessed and the Articles of Incorporation shall not
be amended in this particular.
118
<PAGE>
The undersigned, J.L. Davis, certifies that I am the duly appointed Secretary of
Comstock South America and that the above is a true and correct copy of
resolutions duly adopted at a meeting of the Board of Directors thereof,
convened and held in accordance with law and the Bylaws of said Corporation on
August 12, 1994, and that such resolutions are now in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of Comstock South
America and have attached the seal of the Corporation to this Resolution.
Dated: August 12, 1994.
J.L. Davis
- ----------------------------------------
Secretary
(SEAL)
119
<PAGE>
SHARE HOLDERS' RESOLUTION
APPROVING AMENDMENT TO ARTICLES OF INCORPORATION
COMSTOCK SOUTH AMERICA
WHEREAS, the Board of Directors of Comstock South America has voted in favor
of the resolutions as set forth below, and
WHEREAS, the shareholders of Comstock South America by this resolution do
approve of the resolutions proposed by the directors and set out below, it is
hereby:
RESOLVED, that the Articles of Incorporation of the Corporation are amended to
read as follows:
ARTICLE ONE. (NAME)
-----------
The name of the Corporation is INTERNATIONAL MEDICAL VENTURES, LTD.
ARTICLE FOUR. (CAPITAL STOCK).
------------
The amount of authorized capital stock of the Corporation is one hundred million
(100,000,000) shares of common stock and thirty million (30,000,000) shares of
preferred stock.
The aggregate number of shares of common stock which this Corporation shall have
authority to issue is one hundred million (100,000,000) shares at par value of
one-tenth of one cent ($0. 001) per share. The common stock of the corporation
that is issued and outstanding shall be entitled to vote fifty (50%) percent of
the shareholder voting rights. Each shareholder of common stock shall be
entitled to one vote for each share of common stock held.
The aggregate number of shares of preferred stock which this Corporation shall
have authority to issue shall be thirty million (30,000,000) shares at par value
of one tenth of one cent ($0.001) per share. The preferred stock shall be
divided into Series "A!', Series "B", Series "C", and Series "D" preferred
stock, which shall have all the same rights and privileges except voting rights
as expressly set forth below:
(a) Series A preferred shares, which shaft consist of ten million (IO, 000,
000) shares, shall have no voting rights.
(b) Series B preferred shares, which shall consist of ten million (10,000,000)
shares, shall have no voting rights.
(c) Series C preferred shares, which shall consist of nine million nine
hundred and ninety thousand (9,990,000) shares, shall have no voting
rights.
(d) Series D preferred shares, which shall consist of ten thousand (10,000)
shares, shall be entitled to vote fifty (500%) percent of the stockholder
voting rights. Each holder of preferred stock, Series D, shall be entitled
to one vote for each share of preferred stock, Series D, held.
Authorized stock may be issued from time to time without action by the
stockholders for such consideration as may be fixed from time to time by the
Board of Directors, and shares so issued, the consideration for which have been
paid or delivered, shall be deemed fully paid stock and the holder of such
shares shall not be liable for any further payment thereon.
The capital stock of this Corporation, after the amount of the subscription
price or par value has been paid in, shall not be subject to assessment to pay
debts of the Corporation and no paid up stock and no stock issued as fully paid
shall ever be assessable or assessed and the Articles of Incorporation shall not
be amended in this particular.
120
<PAGE>
IT IS FURTHER RESOLVED, that the shareholders by this resolution do hereby
authorize and direct the Chairperson and Secretary of this meeting to make,
execute and acknowledge a sealed certificate of the Corporation setting out the
above resolutions and to do everything necessary for the certificate to be filed
with the appropriate State office.
IT IS FURTHER RESOLVED, that, once the amendment has been filed and recorded
with the appropriate State office, duplicate copies of the amendment as returned
by the appropriate State official shall be attached to the minutes of this
meeting.
IN WITNESS OF, I have affixed my name as Secretary of Comstock South America and
have attached the seal of the Corporation to this Resolution.
Dated: August 12, 1994.
J.L.Davis
- ----------------------------------------
Secretary
(SEAL)
121
<PAGE>
BOARD OF DIRECTORS' RESOLUTION
ADVISING OF AMENDMENT TO ARTICLES OF INCORPORATION
COMSTOCK SOUTH AMERICA
By a duly made and seconded motion, a majority of the directors of the Board of
Directors of Comstock South America, voted to adopt the following resolutions:
RESOLVED, that the Board of Directors of Comstock South America considers it in
the best interests of the Corporation to amend Article One and Article Four of
the Articles of Incorporation to read as follows:
ARTICLE ONE. (NAME)
-----------
The name of the Corporation is INTERNATIONAL MEDICAL VENTURES, LTD.
ARTICLE FOUR. (CAPITAL STOCK).
------------
The amount of authorized capital stock of the Corporation is one hundred million
(100,000,000) shares of common stock and thirty million (30,000,000) shares of
preferred stock.
The aggregate number of shares of common stock which this Corporation shall have
authority to issue is one hundred million (100,000,000) shares at par value of
one-tenth of one cent ($0. 00 1) per share. The common stock of the corporation
that is issued and outstanding shall be entitled to vote fifty (50%) percent of
the shareholder voting rights. Each shareholder of common stock shall be
entitled to one vote for each share of common stock held.
The aggregate number of shares of preferred stock which this Corporation shall
have authority to issue shall be thirty million ( 30,000,000) shares at par
value of one tenth of one cent ($0.001) per share. The preferred stock shall be
divided into Series "A", Series "B", Series "C", and Series "D" preferred stock,
which shall have all the same rights and privileges except voting rights as
expressly set forth below:
(a) Series A preferred shares, which shall consist of ten million (10,000,000)
shares, shall have no voting rights.
(b) Series B preferred shares, which shall consist of ten million (10,000,000)
shares, shall have no voting rights.
(c) Series C preferred shares, which shall consist of nine million nine hundred
and ninety thousand (9,990,000) shares, shall have no voting rights.
(d) Series D preferred shares, which shall consist of ten thousand (10,000)
shares, shall be entitled to vote fifty (50%) percent of the stockholder voting
rights. Each holder of preferred stock, Series D, shall be entitled to one vote
for each share of preferred stock, Series D, held.
Authorized stock may be issued from time to time without action by the
stockholders for such consideration as may be fixed from time to time by the
Board of Directors, and shares so issued, the consideration for which have been
paid or delivered, shall be deemed fully paid stock and the holder of such
shares shall not be liable for any further payment thereon.
The capital stock of this Corporation, after the amount of the subscription
price or par value has been paid in, shall not be subject to assessment to pay
debts of the Corporation and no paid up stock and no stock issued as fully paid
shall ever be assessable or assessed and the Articles of Incorporation shall not
be amended in this particular.
122
<PAGE>
And it is FURTHER RESOLVED, that the President of the Corporation call a special
meeting of the Corporations shareholders, to be held at the principal offices of
the corporation on August 12, 1994 at 9AM to consider and vote upon the above
resolutions, and to obtain the written consent for the above resolutions of
stockholders holding at least a majority of the voting power of the issued and
outstanding stock, and the President of the Corporation is hereby directed to
require the Secretary of the Corporation to give notice of the special meeting
to shareholders in accordance with the Articles and Bylaws of this Corporation.
The undersigned, J.L. Davis, certifies that I am the duly appointed Secretary of
Comstock South America and that the above is a true and correct copy of a
resolution duly adopted at a special meeting of the directors thereof, duly held
and convened in accordance with law and the Bylaws of said Corporation on July
29, 1994, and that such resolution is now in full force and effect.
IN WITNESS THEREOF, I have affixed my name as Secretary of Comstock South
America and have attached the seal of the Corporation to this Resolution.
Dated: July 29, 1994.
J.L.Davis
- ----------------------------------------
Secretary
(SEAL)
123
<PAGE>
COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF SPECIAL MEETING
June 29, 1994
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of a
special meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
RESOLVED, that the Board of Directors of the Corporation recommend to the
shareholders of the Corporation that shareholder action be taken to amend the
Articles of Incorporation to- correctly state the par value of the Corporation's
shares of common stock at one mil ($0.001) per share.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the Corporation to effect the foregoing
resolution are hereby ratified, approved and adopted as the acts of the
Corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Special
Meeting is executed as of the 29th day of June, 1994.
BOARD OF DIRECTORS:
J.L. Davis
- --------------------------------
J.L. Davis
Harold A. Davis
- --------------------------------
Harold A. Davis
124
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COMSTOCK SOUTH AMERICA
(A Nevada corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF SPECIAL MEETING
June 29, 1994
The undersigned, being the Majority Shareholder of Comstock South America, a
Nevada Corporation (the "Corporation"), hereby waives all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of a
special meeting of the Shareholders of the Corporation and hereby adopts, by
this written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375,
the following Resolutions and each and every action effected thereby:
RESOLVED, that the majority shareholder if the corporation ratifies and approves
the proposed amendment to the Articles of Incorporation of the Corporation to
correctly state the par value of the Corporation's shares of common stock at one
mill ($0.001) per share.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors
and/or the officers of the Corporation to effect the foregoing resolution are
hereby ratified, approved and adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Special
Meeting is executed as of the 29th day of June, 1994.
MAJORITY SHAREHOLDER:
J.L. Davis
- --------------------
J.L. Davis
125
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 3, 1994
The undersigned, being all of, the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
1. REPORT TO SHAREHOLDERS. The Board of Directors and officers of the
Corporation reported that, at this time, they feel that they should seek
legal advice to determine what can be done to rectify the situation
regarding the distribution of shares of the Corporation's Common Stock as
a dividend to certain minority shareholders of American Pre-Paid Legal
Services, Inc., a Colorado corporation, which shares have not been
registered. The corporation has not yet raised sufficient funds to
register such shares. in addition, the Corporation has yet to find a
suitable candidate for merger or acquisition that has any type of mining
or other business. The Board of Directors of the Corporation believes that
it is in the best interest of the Corporation to pursue a merger into
another non-mining related company, in an uptrend type of business and
intends to pursue such a possibility vigorously.
2. ELECTION OF OFFICERS. RESOLVED, that J. L. Davis be, and she hereby is,
elected to the offices of President, Secretary and Treasurer of the
Corporation, to serve in such positions until her respective successors
are elected and qualified or until her earlier death, resignation,
retirement, disqualification or removal from off ice, Harold A. Davis
choosing at this time not to stand for re-election as President in order
that he might pursue other business interests.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the corporation since the last annual
meeting of the Board of Directors, of the Corporation are hereby ratified,
approved and adopted as the acts of the corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 3rd day of January, 1994.
BOARD OF DIRECTORS:
J.L. Davis
- ----------------------------------------
J.L. Davis
Harold A. Davis
- ----------------------------------------
Harold A. Davis
126
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COMSTOCK SOUTH AMERICA
(A Nevada corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 3, 1994
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that the majority shareholder of the Corporation ratifies and approves
the actions of the Corporation's Board of Directors in seeking legal advice
regarding registration of the Corporation's Common stock, and to consider ceding
control in a merger with a company not related to the mining industry, hopefully
with an uptrend operating company in-some other field.
FURTHER RESOLVED, that J.L. Davis and Harold A. Davis be, and each of them
hereby is, elected to the Board of Directors of the Corporation, each to serve
in such capacity until his successor is elected and qualified or until his
earlier death, resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the 3rd day of January, 1994.
MAJORITY SHAREHOLDER:
J.L. Davis
- --------------------------------
J.L. Davis
127
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COMSTOCK SOUTH AMERICA
(A Nevada corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 4, 1993
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation") , hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
1. Report to Shareholders. The Board o f Directors and Officers of the
Corporation reported that they are unable to commence any type of mining
operations of the Corporation until the necessary funds can be raised to
register the shares of Common Stock of the Corporation previously dividended to
the approximately 500 minority shareholders of American Pre-Paid Legal Services,
Inc., a Colorado Corporation, and a public market can be established for the
Corporation's shares. The Board of Directors believes that if the Corporation's
Stock is being publicly traded on an exchange, the Corporation may then be able
to carry out a private placement or otherwise secure additional financing. In
addition, it was reported that the Corporation has not yet acquired any Mexican
tailing piles nor platinum or other precious metal-bearing properties for the
purpose of commencing operations and/or production.
2. Election of officers. RESOLVED, that Harold A. Davis be, and he hereby is,
elected to the office of President of the Corporation, and that J.L. Davis be,
and she hereby is, elected to the offices of Secretary and Treasurer of the
Corporation, each to serve in such position until their respective successors
are elected and qualified or until their earlier death, resignation, retirement,
disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the c orporation since the last annual meeting
of the Board of Directors of the Corporation are hereby ratified, approved and
adopted as the acts of the corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 4th day of January, 1993.
BOARD OF DIRECTORS:
J.L. Davis
- ---------------------------------
J.L. Davis
Harold A. Davis
- ---------------------------------
Harold A. Davis
128
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COMSTOCK SOUTH AMERICA
(Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 4, 1993
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that the majority shareholder of the Corporation ratifies and approves
the actions of the Corporation's Board of Directors in continuing to work with
American Pre-Paid Legal Services, Inc., a Colorado corporation, to find the most
expeditious way to register the Corporation's Common Stock, and in continuing to
seek capital for the purchase of equipment for a tailings pile and/or piles
located in Mexico in order to commence production more quickly. The Corporation
is also pursuing claims containing precious metals of the platinum family and
other precious metal properties.
FURTHER RESOLVED, that J.L. Davis and Harold A. Davis be, and each of them
hereby is, elected to the Board of Directors of the Corporation, each to serve
in such capacity until his successor is elected and qualified or until his
earlier death, resignation, retirement disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the 4th day of January, 1993.
MAJORITY SHAREHOLDER:
J.L. Davis
- --------------------------------
J.L. Davis
129
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 6, 1992
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
1. REPORT TO SHAREHOLDERS. The Board of Directors and Officers of the
Corporation reported that they are continuing to seek the acquisition of mining
properties especially in the platinum family of precious metals, and/or mining
claims and/or tailing piles in Mexico and South America in addition, it was
reported that the Corporation has not yet raised sufficient funds to commence
any type of production or to register the shares of Common Stock earlier
dividended to approximately 500 minority shareholders of American Pre-Paid Legal
Services, Inc., a Colorado corporation. It was reported that it is imperative
that any required registration statements or other documents be filed before the
Corporation can trade shares publicly.
2 . ELECTION OF OFFICERS. RESOLVED, that Harold A. Davis be, and he hereby is,
elected to the off ice of President of the Corporation, and that J.L. Davis be,
and she hereby is, elected to the offices of Secretary and Treasurer of the
Corporation, each to serve in such position until their respective successors
are elected and qualified or until their earlier death, resignation, retirement,
disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the Corporation since the last annual meeting
of the Board of Directors of the Corporation are. hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 6th day of January, 1992.
BOARD OF DIRECTORS:
J.L. Davis
- ---------------------------------
J.L. Davis
Harold A. Davis
- ---------------------------------
Harold A. Davis
130
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 6, 1992
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation") , hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that the majority shareholder of the Corporation ratifies and approves
the continued efforts of the Board of Directors of the Corporation to seek
mining properties, especially in the platinum family of precious metals, and/or
mining claims and/or tailing operations for the Corporation.
ESOLVED, that J.L. Davis and Harold A. Davis be,, and each of them hereby is,
elected to the Board of Directors of the Corporation, each to serve in such
capacity until his successor is elected and qualified or until his earlier
death, resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the 6th day of January, 1992.
MAJORITY SHAREHOLDER:
J.L. Davis
- --------------------------------
J.L. Davis
131
<PAGE>
COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 7, 1991
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation") , hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that after pursuing several different publicly held, and OTC-traded
companies, the majority shareholder of the Corporation ratifies and approves the
actions of the Corporation's Board of Directors in forming a relationship with
American Pre-Paid Legal Services, Inc., a Colorado corporation, to render
business assistance to the Corporation.
RESOLVED, that J.L. Davis and Harold A. Davis be, and each of them hereby is,
elected to the Board of Directors of the Corporation, each to serve in such
capacity until his successor is elected and qualified or until his earlier
death, resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratif ied, approved
and adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the 7th day of January, 1991.
MAJORITY SHAREHOLDER:
J.L. Davis
- ---------------------------------
J.L. Davis
132
<PAGE>
COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 7, 1991
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
1. Report to Shareholders. The Board of Directors and Officers of the
Corporation reported that, after pursuing several different public
OTC-traded companies, they have located a publicly-held company, American
Pre-Paid Legal Services, Inc., a Colorado corporation, which has shown
interest in helping the Corporation locate a possible merger or
acquisition candidate and in otherwise assisting the Corporation in its
endeavors, and that the of f icers and Directors plan to continue to seek
other corporations which would be suitable candidates for merger with, or
acquisition by, the Corporation. In addition, it was reported that the
Corporation has not yet raised sufficient funds to commence the
contemplated initial public offering of the Corporation's common stock.
2. Election of officers. RESOLVED, that Harold A. Davis be, and he hereby is,
elected to the office of President of the Corporation, and that J.L. Davis
be, and she hereby is, elected to the offices of Secretary and Treasurer
of the Corporation, each to serve in such position until their respective
successors are elected and qualified or until their earlier death,
resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED that any and all actions taken by the Officers of the
Corporation for and on behalf of the corporation since the last annual
meeting of the Board of Directors of the Corporation are hereby ratified,
approved and adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 7th day of January, 1991.
BOARD OF DIRECTORS:
J.L. Davis
- ----------------------------------------
J.L. Davis
Harold A. Davis
- ----------------------------------------
Harold A. Davis
133
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS IN LIEU OF SPECIAL
MEETING OF DIRECTORS
January 7, l99l
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects, and purposes of a
special meeting of the Directors of the Corporation and hereby adopt, by this
written Consent, pursuant to Nevada Revised Statutes 78.375, the following
resolutions and each and every action effected thereby:
WHEREAS, the Board of Directors of the Corporation deems it to be advisable and
in the best interest of the Corporation to pursue at this time acquisition of
old mines, tailing piles and/or milling operations and also to pursue operations
related to the platinum family of precious metals. In addition, the Corporation
is evaluating Mexico and South America as to potential mining claims for the
purpose of commencing some type of platinum and other precious metals mining
enterprises; and
WHEREAS, the Board of Directors of the Corporation also deems it to be advisable
and in the best interest of the Corporation to evaluate other businesses for
possible acquisition by the Corporation; and
WHEREAS, after pursuing several possible public company merger or acquisition
partners, the Board of Directors of the Corporation deems it to be advisable and
in the best interest of the Corporation for the Corporation to engage the
assistance of certain financial consulting personnel of American Pre-Paid Legal
Services, Inc., a Colorado Corporation ("American Pre-Paid"), for the purpose of
assisting the Corporation in finding a suitable merger partner and/or to merge
the Corporation with American Pre-Paid, so that the Corporation would become a
public company by reverse merger, which could assist the corporation in
acquiring an operation business in exchange for stock, and to offer to American
Pre-Paid, in advance, its fees of $5,207.50 in the form of 52,075 shares of the
Corporation's Common Stock at an agreed value of $0.10 per share, to be
distributed to the minority shareholders of American Pre-Paid; and
WHEREAS, the Corporation has so far, after pursuing several public OTC-traded
companies, not been able to find on its own a suitable candidate public company
for merger or acquisition, after a great deal of effort by its Directors,
officers and shareholders, and
WHEREAS, the Corporation's Board of Directors believes that the Corporation's
goals are best served by the Corporation becoming a public company, but not
having the funds needed to do an initial public offering, and the Corporation
owing American Pre-Paid certain fees for its efforts to locate a merger or
acquisition candidate on behalf of the Corporation, the Corporation has offered,
and American Pre-Paid has agreed to accept, shares of Common Stock of the
Corporation as payment for its shareholders as a dividend, and agreeing that the
Corporation will register such shares, and will pay all expenses of such
registration, by filing such registration statements as may be required by the
U.S. Securities and Exchange commission or any other federal or state regulatory
authorities;
NOW, THEREFORE, BE IT RESOLVED, that the Corporation hereby issue to American
Pre-Paid shares of the Corporation f s common stock, in payment for American
PrePaid's services to the Corporation, in the amount of one share of Common
Stock for every 100 shares of the Common Stock of American Pre-Paid issued and
outstanding, or a total of 30,250 shares of Common Stock of the Corporation; and
134
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FURTHER RESOLVED, that due to potential existence of numerous small odd lots of
shares of the Common Stock of the Corporation to be held by the shareholders of
American Pre-Paid, and in order to insure that all shares of Common Stock of the
Corporation will be held in whole lots of not less than 100 shares each, that a
total of 52,075 shares of Common Stock of the Corporation be issued to American
Pre-Paid for distribution to its shareholders as described above (including the
30,250 shares described above), and that all of such shares shall be deemed to
be issued, outstanding, fully paid and non-assessable shares of Common Stock of
the Corporation; and
FURTHER RESOLVED, that the officers of the Corporation be, and they hereby are,
authorized and directed to issue such stock certificates, and to do such other
things, as may be necessary or advisable to carry out the purposes of the
foregoing resolutions.
IN WITNESS WHEREOF this Unanimous Consent of Directors in Lieu of Special
meeting is executed to be effective as of January 7, 1991.
BOARD OF DIRECTORS:
J.L. Davis
- ----------------------------------------
J.L. Davis
Harold A. Davis
- ----------------------------------------
Harold A. Davis
135
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COMSTOCK SOUTH AMERICA
(A Nevada corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 1, 1990
The undersigned, being all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375 RESOLVED, the
following Resolutions and each and every action effected thereby:
RESOLVED, that Harold A. Davis be, and he hereby is, elected to the office of
President of the Corporation, and that J. L. Davis be, and she hereby is,
elected to the offices of Secretary and Treasurer of the Corporation, each to
serve in such position until their respective successors are elected and
qualified or until their earlier death, resignation, retirement,
disqualification or removal from office.
FURTHER RESOLVED, that the Board of Directors of the Corporation has elected to
issue, if found to be necessary,, additional shares of the Common Stock of the
corporation, in amounts to be determined at the discretion of the Board of
Directors, to individuals, who can offer their assistance in pursuing an
operating company as a merger or acquisition partner for the Corporation; and
that the Corporation pursue negotiations with Mr. Raymond Derr regarding
possible initiation of several large tailings operations in Mexico by the
Corporation.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the corporation since the last 'annual meeting
of the Board of Directors of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 1st day of January, 1990.
BOARD OF DIRECTORS:\
J.L. Davis
- ----------------------------------------
J.L. Davis
Harold A. Davis
- ----------------------------------------
Harold A. Davis
136
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 1, 1990
The undersigned, being the Majority Shareholder of Comstock South America, a
Nevada Corporation (the "Corporation"), hereby waives all statutory and bylaw
requirements as to the call, notice of time,, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopts, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that J.L. Davis and Harold A. Davis be, and each of them hereby is,
elected to the Board of Directors of the Corporation, each to serve in such
capacity until his successor is elected and qualified or until his earlier
death, resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Consent of Majority Shareholder in Lieu of Annual
Meeting is executed as of the ist day of January, 1990.
MAJORITY SHAREHOLDER:
J.L. Davis
- ------------------------
J.L. Davis
137
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
UNANIMOUS CONSENT OF DIRECTORS
IN LIEU OF ANNUAL MEETING
January 2, 1989
The undersigned, being- all of the Directors of Comstock South America, a Nevada
Corporation (the "Corporation"), hereby waive all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Directors of the Corporation and hereby adopt, by this
written consent pursuant to Nevada Revised Statutes 78.375, the following
Resolutions and each and every action effected thereby:
RESOLVED, that Harold A. Davis be, and he hereby is, elected to the office of
President of the Corporation, and that J.L. Davis be, and she hereby is, elected
to the offices of Secretary and Treasurer of the Corporation, each to serve in
such. position until their respective successors are elected and qualified or
until their earlier death, resignation, retirement, disqualification or removal
from office.
FURTHER RESOLVED, that any and all actions taken by the Officers of the
Corporation for and on behalf of the Corporation since the last annual meeting
of the Board of Directors of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation.
IN WITNESS WHEREOF, this Unanimous Consent of Directors in Lieu of Annual
Meeting is executed as of the 2nd day of January, 1989.
BOARD OF DIRECTORS:
J.L. Davis
- ----------------------------------------
J.L. Davis
Harold A. Davis
- ----------------------------------------
Harold A. Davis
138
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
CONSENT OF MAJORITY SHAREHOLDER
IN LIEU OF ANNUAL MEETING
January 2, 1989
The undersigned, being the Majority Shareholder of Comstock South America, a
Nevada Corporation (the "Corporation"), hereby waives all statutory and bylaw
requirements as to the call, notice of time, place, objects and purposes of the
annual meeting of the Shareholders of the Corporation and hereby adopts, by this
written consent pursuant to Nevada Revised Statutes 78.320(2) and 78.375, the
following Resolutions and each and every action effected thereby:
RESOLVED, that J.L. Davis and Harold A. Davis be, and each of them hereby is,
elected to the Board of Directors of the Corporation, each to serve in such
capacity until his successor is elected and qualified or until his earlier
death, resignation, retirement, disqualification or removal from office.
FURTHER RESOLVED, that any and all actions taken by the Board of Directors of
the Corporation for and on behalf of the Corporation since the last annual
meeting of the Shareholders of the Corporation are hereby ratified, approved and
adopted as the acts of the Corporation. IN WITNESS WHEREOF, this Consent of
Majority Shareholder in Lieu of Annual Meeting is executed as of the 2nd day of
January, 1989.
MAJORITY SHAREHOLDERS:
J.L. Davis
- --------------------------------
J.L. Davis
139
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COMSTOCK SOUTH AMERICA
(A Nevada Corporation)
CONSENT OF SOLE DIRECTOR IN LIEU OF
ORGANIZATIONAL MEETING OF DIRECTORS
November 10, 1988
The undersigned, being the sole Director of Comstock South America, a Nevada
Corporation (the "Corporation") , hereby waives all statutory and bylaw
requirements as to- the call, notice of time, place, objects and purposes of the
initial meeting of the Directors of the Corporation and does hereby adopt, by
this written consent pursuant to Nevada Revised Statutes 78.375, the following
resolutions and each and every action effected thereby:
1. CONVENING OF MEETING. The organizational meeting of the initial Board of
Directors of the corporation was held effective as of November 10, 1988.
The initial Directors of the Corporation, Michael Berryman, Bill R.
Presley and Allen A. Fecht, were named to be the initial Directors in the
Articles of Incorporation of the Corporation. Each initial Director has
declined to accept the office of Director of the Corporation, and the
Incorporator of the Corporation has named J.L. Davis to be the sole
Director of the Corporation.
2. PURPOSE OF THE CORPORATION. The sole Director of the Corporation stated
for the record that the specific purpose of the Corporation is to engage
in the mining business, specifically production from old mines and from
tailings from previous mining and milling operations, especially from the
platinum family of precious metals, and to acquire platinum-producing
properties in Mexico and South America by purchase and/or lease from
individuals and/or government agencies.
3. ARTICLES OF INCORPORATION. WHEREAS, the Articles of Incorporation of the
Corporation having been filed in the office of the Secretary of State of
Nevada on March 8, 1988, and a Certificate of Incorporation having been
issued that same day;
RESOLVED, that the Articles of Incorporation of the corporation, as
approved by the Secretary of State of Nevada, be, and the same hereby are,
approved, ratified, and adopted, and the Secretary of the Corporation be,
and she is hereby authorized to insert a file marked copy of such Articles
of Incorporation in the Minute Book of the Corporation as -part of the
official Corporate Records of the Corporation.
4. BYLAWS. WHEREAS, a form of Bylaws has been presented to the initial
Director for approval for the purpose of regulating and managing the
affairs of the Corporation;
RESOLVED, that the Bylaws submitted to and reviewed by the Director of the
Corporation be, and the same hereby are, approved, ratified and adopted as
the Bylaws of the Corporation; and that the Secretary be, and she is
hereby instructed to cause the same to be inserted in the Minute Book of
the Corporation as a part of the official Corporate Records of the
Corporation.
5. MINUTE BOOK. WHEREAS, the Director of the Corporation has obtained a
Minute Bock for the Corporation containing a copy of the Articles of
Incorporation and Bylaws previously approved, to be used for the purpose
of maintaining the Corporate books and records of the Corporation;
RESOLVED, that; (i) the Minute Book presented to the meeting be, and the
same is hereby, approved and adopted as the Minute Book of the Corporation
and the actions of the Secretary in inserting therein the Articles of
Incorporation, and the Certificate of Incorporation and the Bylaws are
hereby ratified and approved; and (ii) the Secretary is instructed to
authenticate the Minute Book, and to retain custody of it, and to insert
therein, the Minutes of this meeting and of other proceedings of the
Shareholders and Directors as the same may occur and be formally
documented.
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6. SEAL. WHEREAS, the Director of the corporation has obtained a form of
Corporate Seal designed in accordance with the Bylaws of the
corporation;
RESOLVED, that the Corporate Seal, an impression of which appears on the
margin of these minutes, be, and the same is hereby, approved and adopted
as the Corporate Seal of the Corporation.
[SEAL]
7. CERTIFICATES. WHEREAS, the Director of the Corporation has obtained a form
of Stock Certificate designed in accordance with the Bylaws of the
Corporation to be used to represent shares to be issued by the
Corporation;
RESOLVED, that the form of Stock Certificate obtained by the Director of
the Corporation be, and it is hereby, approved and adopted as the form of
Stock Certificate of the Corporation, a specimen example of which is
attached to this consent as Exhibit "All and incorporated by reference
herein; and that the same be ke t and maintained at the registered office
of the Corporation, or otherwise as the Board of Directors may from time
to time determine.
8. ELECTION OF OFFICERS. RESOLVED, that Harold A. Davis be, and he hereby is,
elected to the office of President of the Corporation, and that J.L. Davis
be.- and she hereby is, elected to the offices of Secretary and Treasurer
of the Corporation, each to serve in such positions until their respective
successors are elected and qualified or until their earlier death,
resignation, retirement, disqualification, or removal from office.
9. ISSUANCE OF INITIAL SHARES. WHEREAS, the Corporation has received an offer
to purchase shares of its Common Stock for the following consideration:
OFFERER NO. OF SHARES CONSIDERATION
------- ------------- -------------
J.L. Davis 2,452,925 Cash and/or Labor done and necessary to
the Corporation of the value of $2,600.00
RESOLVED, that the foregoing offer to purchase shares of the Corporation's
Common Stock is accepted and that the foregoing shares of the
Corporation's authorized Common stock be Issued for the consideration set
forth above, consisting of money paid, labor done and necessary to the
Corporation, or property actually received and valued as above In the
judgment of the Board of Directors, and of the $2,600.00 received, all
shall be designated as Stated capital or the Corporation.
IN WITNESS WHEREOF, this Consent of sole Director in Lieu of Organizational
Meeting is executed to be effective as of November 10, l988.
SOLE DIRECTOR:
J.L. Davis
- --------------------------------
J.L. Davis
141
OPINION RE: LEGALITY
Number 5. Legal Opinion
Law Offices of Brenda A. Hamilton, P.A.
555 South Federal Highway Number 400
Boca Raton, Florida 33432
March 31, 1997
Amquest International Ltd. Inc.
RE: Opinion of counsel
To Whom It May Concern:
You have requested that we render an opinion to you with respect to the
legality of the issuance of an aggregate of 37,415,000 shares of Common Stock of
Amquest International Ltd., herein after "the Company".
In connection with the foregoing, we have examined copies of those certain
Articles of Incorporation as amended and the By-Laws of the Company, the
Resolutions of the Board of Directors of the Company, and other agreements we
have deemed necessary or relevant as a basis for the opinions set forth herein.
In making such an examination, we have assumed the genuineness of all
signatures on all original documents and the conformity to original documents of
all copies submitted to us as conformed, photostat or other copies. As to
matters of fact material to such opinions, we have, when relevant facts were not
independently established, relied upon statements and certificates provided to
us.
Based upon the foregoing we are of the opinion that: The Company is a
corporation validly existing and in good standing under the laws of the
State of Nevada, with all requisite corporate power and authority to carry
on the business in which it is engaged.
The 37,415,000 shares of Capital Stock of the Company currently
outstanding is validly issued, and assuming receipt by the Company of the
consideration described in various documentation, are fully paid and
non-assessable.
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We hereby consent to the use of this opinion as an exhibit to the Form 10
of the Company dated April 7, 1997.
By giving the foregoing consent we do not admit that we come with the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933.
The opinion expressed herein are for the sole benefit of and may be relied
upon be the Company and are not to be used, circulated, quoted or otherwise
referred to in any transaction other than those described herein.
Very Truly Yours,
Brenda Lee Hamilton
Brenda Lee Hamilton, Esquire
BLH:lm
143
ITEM 16. Auditor's letter.
SIDNEY ABUSCH
CERTIFIED PUBLIC ACCOUNTANT
FINANCIAL AND BUSINESS MANAGEMENT
MEMBER OF:
American Institute of CPA'S
NY State Society of CPA'S
FL Institute of CPA'S
CA Society of CPA'S
TO THE REGISTRAR:
(1) We are the independent public accountants with respect to the Company
within the meaning of the Act and the applicable rules and regulations
thereunder, and the answer to Item 14 of the Registration Statement on Form
10K, insofar as it relates to them, is correct.
(2) In our opinion, the financial statements of the Company included in this
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the rules and regulations
thereunder.
(3) We have not audited any financial statements of the Company as of any date
or for any period prior to December 31, 1994; although we have conducted an
audit for the fiscal years ended December 31, 1994, 1995 and 1996, the
purpose (and therefore the scope) of this audit was to enable us to express
our opinion on the financial statements as of December 31, 1996, and for
the fiscal year then ended.
(4) For purposes of this letter, we have read the minutes of meetings of the
stockholders and Board of Directors as set forth in the Company's minute
books as of December 31, 1996, officials of the Company having advised us
that the minutes of all such meetings through that date were set forth
therein, and have carried out other procedures to December 31, 1996.
(5) Nothing came to our attention as a result of the foregoing procedures that
caused us to believe that:
(a) The financial statements described herein, as included in the
Registration Statement, do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the rules and regulations thereunder or are not in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
statements; or
(b) At March 12, 1997, there was any change in the capital stock or
increase in long-term debt of the Company, as compared with amounts
shown in the December 31, 1996, balance sheet, with the exception of
the issuance of the Debenture Units as described in Item 10:
Subsequent Events, of the financial statements, as included in the
Registration Statement,.
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(6) Company officials have advised us that no financial statements, as of any
date or for any period subsequent to December 31, 1996, are available;
accordingly, the procedures carried out by us after December 31, 1996,
have, of necessity, been even more limited than those with respect to the
periods referred to above. We have made inquiries of certain Company
officials who have responsibility for financial and accounting matters
regarding whether (a) there was any change at March 12, 1997, in the
capital stock or long-term debt of the Company, or any decreases in
consolidated total assets or stockholders' equity as compared with amounts
shown on the December 31, 1996 audited balance sheet included in the
Registration Statement, with the exception of the issuance of the Debenture
Units as described in Item 10: Subsequent Events, of the financial
statements, as included in the Registration Statement, or (b) for the
period from January 1, 1997 to March 12, 1997, there were any decreases, as
compared with the corresponding period in the preceding year, in the total
or per share amounts of net earnings. On the basis of these inquiries and
our reading of the minutes as described in 4 above, nothing came to our
attention that caused us to believe that there was any such change or
decrease except in all instances for changes or decreases that the
Registration Statement discloses have occurred or may occur.
(7) In addition to the procedures referred to in 4, 5 and 6 above, we have
carried out certain specified procedures, not constituting an audit, with
respect to certain amounts, percentages, numerical data and financial
information appearing in the Registration Statement, which have previously
been specified by the representatives of the Company, and which are
specified in our letter, and have compared certain of such items with, and
have found such amounts, percentages, numerical data and financial
information to be in agreement with, the accounting, financial and other
records of the Company.
Sidney Abusch
Certified Public Accountant
Hudson, Florida
March 12, 1997
12121 Little Road Suite 244 Hudson, Florida 34667
TELEPHONE: (813) 841-6525 FACSIMILE: (813) 841-9705
145
NUMBER 22. SUBSIDIARIES OF THE REGISTRANT.
SUBSIDIARIES FORMED BY THE REGISTRANT:
THE COMPANY HAS INCORPORATED TWO SUBSIDIARIES: THESE ARE:
1. Homevest Mortgage Corporation. This is the Company's Mortgage Services
segment, ("Homevest"), which was incorporated in the State of Delaware on
September 27, 1996.
2. Amquest Advisors, LLC. The Company's Investment Services segment, through
Amquest Advisors, LLC., was incorporated in the State of Delaware on
August 5, 1996, and consists of investment banking, asset management,
brokerage and other financial services provided through future
subsidiaries and indirect affiliates, including Sun Consolidated
Securities, Inc., a registered NASD/SIPC broker dealer.
AFFILIATES FORMED BY THE REGISTRANT WHICH ARE NOT SUBSIDIARIES
The Company has implemented its business strategy by establishing two affiliate
entities which are not subsidiaries for the receipt of capital and assets under
management for investment. They are:
1. The Amquest Matrix Funds, Inc., a mutual fund ("The Fund") incorporated in
the State of Maryland, on July 18, 1996. The Fund is a multi-portfolio
mutual fund registered under the Investment Company Act of 1940, managed
by Amquest Advisors, LLC, a wholly-owned subsidiary of the Company.
2. The Amquest Matrix Trust, Ltd. is an international business corporation,
("The Trust"), incorporated on October 30, 1996, in the Commonwealth of
the Bahamas. This entity was formed for the specific purpose of
maintaining capital and assets under management offshore. The Trust is
managed by Amquest Advisors, LLC. , a wholly-owned subsidiary of the
Company.
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