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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10SB
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
MIZAR ENERGY COMPANY
(Exact name of registrant as specific in its charter)
Colorado 33-0231238
(State of Incorporation) (I.R.S. Employer
Identification No.)
5459 South Iris Street
Littleton, Colorado 80123
(Address of executive offices.) (Zip Code)
Registrant's telephone number: (303) 932-9998
Copies to: Conrad C. Lysiak, Esq.
West 601 First Avenue
Suite 503
Spokane, Washington 99201
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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ITEM 1. DESCRIPTION OF BUSINESS.
The Business
MIZAR ENERGY COMPANY (the "Company") is a development stage
enterprise formed under the laws of the State of Colorado on
December 11, 1996, for the purpose of buying, selling, leasing
and operating oil and gas properties.
The Company subsequently acquired one oil and gas lease
located in Barton County, Kansas covering 160 acres, more or
less. In April 1998, the Company sold its only oil and gas
lease, however, the Company kept an approximate 2% overriding
royalty interest in the lease along with all surface equipment.
Selection of Additional Target Areas for Acquisition
The Company's future proposed plans call for it to consider
several factors in choosing additional properties for acquisition
and development. First, the Company considers those regions in
which one or more of its management or other technical personnel
have field of experience. The Company's initial acquisition is
located in Kansas. The Company anticipates acquiring additional
leases in Colorado. At the present time the Company has not
targeted any additional oil and gas leases for acquisition. The
Company intends to acquire the oil and gas leases from other
existing oil companies that are brought to the attention of
Company's management.
The Company will determine which leases it is interested in
acquiring based upon the analysis of technical and production
data, on site verification of well equipment and production
capability, and verification of ownership of lease hold rights.
The Company anticipates that it will take from four to six months
to acquire the initial leasehold interests. Further, the Company
intends upon diversifying its production portfolio with respect
to both reservoir production characteristics and to market
access. The Company believes that the overall effect of these
two unrelated characteristics is to significantly lower the
overall risk of the Company strategy.
Geological and Geophysical Techniques
The Company may employ detailed geological interpretation
combined with advanced seismic exploration techniques to identify
the most promising leases. Geological interpretation is based
upon data recovered from existing oil and gas wells in an area
and other sources. Such information is either purchased from the
company that drilled the wells or becomes public knowledge
through state agencies after a period of years. Through analysis
of rock types, fossils and the electrical and chemical
characteristics of rocks from existing wells, the Company can
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construct a picture of rock layers in the area. Further, the
Company will have access to the logs from the existing operating
wells which will allow the Company to extrapolate a decline curve
and make an estimation of the number of recoverable barrels of
oil existing beneath a particular lease. The Company has not
purchased, leased, or entered into any agreements to purchase or
lease any of the equipment necessary to conduct the geological or
geophysical testing.
Market for Oil and Gas Production
The market for oil and gas production is regulated by both
the state and federal governments. The overall market is mature
and with the exception of gas, all producers in a producing
region will receive the same price. The major oil companies will
purchase all crude oil offered for sale at posted field prices.
There are price adjustments for quality difference from the Bench
Mark. Oil sales are normally contracted with a gatherer who will
pick-up the oil at the well site. In some instances there may be
deductions for transportation from the well head to the sales
point. At this time the majority of crude oil purchasers do not
charge transportation fees, unless the well is outside their
service area. The oil gatherer will usually handle all check
disbursements to both the working interest and royalty owners.
The Company will be a working interest owner. By being a working
interest owner, the Company is responsible for the payment of its
proportionate share of the operating expenses of the well.
Royalty owners and over-riding royalty owners receive a
percentage of gross oil production for the particular lease and
are not obligated in any manner whatsoever to pay for the cost of
operating the lease. Therefore, the Company, in most instances,
will be paying the expenses for the oil and gas revenues paid to
the royalty and over-riding royalty interest.
Gas sales are by contract. The gas purchaser will pay the
well operator 100% of the sales proceeds on or about the 25th of
each and every month for the previous months sales. The operator
is responsible for all checks and distributions to the working
interest and royalty owners. There is no standard price for gas.
Prices will fluctuate with the seasons and the general market
conditions. It is the Company's intention to utilize this market
when ever possible in order to maximize revenues. The Company
does not anticipate any significant change in the manner
production is purchased, however, no assurance can be given at
this time that such changes will not occur.
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Acquisition of Leases
The principal activity for the Company will be the
acquisition of producing oil and gas leases. The acquisition
process may be lengthy because of the amount of investigation
which will be required prior to submitting a bid to a major oil
company. Verification of each property and the overall
acquisition process can be divided into three phases, as follows:
Phase 1. Field identification. In some instances the
seller will have a formal divestiture department that will
provide a sales catalog of leases which will be available for
sale. Review of the technical filings made to the states along
with a review of the regional geological relationships, released
well data and the production history for each lease will be
utilized. In addition a review of the proprietary technical data
in the sellers office will be made and calculation of a bid price
for the field.
Phase 2. Submission of the Bid. Each bid will be made
subject to further verification of production capacity, equipment
condition and status, and title.
Phase 3. Closing. Final price negotiation will take place.
Cash transfer and issuance of title opinions. Tank gauging and
execution of transfer orders.
After closing has occurred, the newly acquired property will
be turned over to the Company's for possible work-overs or
operational changes which will in the Company estimation increase
each well's production.
In connection with the acquisition of an oil and gas lease
for work-over operations, the Company is able to assume 100%
ownership of the working-interest and surface production
equipment facilities with only minor expenses. In exchange for
an assignment of the lease, the Company agrees to assume the
obligation to plug and abandon the well in the event the Company
determines that reworking operations are either too expensive or
will not result in production in paying quantities. The cost of
plugging a well can run from $500 to $15,000, depending on the
condition of the well. The Company believes that the obligation
to plug an existing well will in no way jeopardize its
operations, and in the long run is economically worth the risk
involved compared with the possibility of acquiring existing
production. Utilizing these systems the Company will be able to
acquire oil and gas leases from large and small oil and gas firms
with little costs. The Company also believes that it may be able
to plug the wells in question, at no cost to the Company, in
exchange for the production tubing and casing which will be
removed during the plugging process.
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Several major oil companies have recently placed numerous
oil and gas properties out for competitive bidding. The Company
currently does not have sufficient revenues or funds available to
it to make a bid for such properties. The Company anticipates
initially attempting to acquire properties located in the eastern
part of the state of Colorado. At the present time, the Company
has not identified any specific oil and gas leases which it
intends to acquire.
Competition
The oil and gas industry is highly competitive. The Company
competitors and potential competitors include major oil companies
and independent producers of varying sizes of which are engaged
in the acquisition of producing properties and the exploration
and development of prospects. Most of the Company's competitors
have greater financial, personnel and other resources than does
the Company and therefore have a greater leverage to use in
acquiring prospects, hiring personnel and marketing oil and gas.
Accordingly, a high degree of competition in these areas is
expected to continue. See "Risk Factors - Competition."
Governmental Regulation
The production and sale of oil and gas is subject to
regulation by state, federal and local authorities. In most
areas there are statutory provisions regulating the production of
oil and natural gas under which administrative agencies may set
allowable rates of production and promulgate rules in connection
with the operation and production of such wells, ascertain and
determine the reasonable market demand of oil and gas, and adjust
allowable rates with respect thereto.
The sale of liquid hydrocarbons was subject to federal
regulation under the Energy Policy and Conservation Act of 1975
which amended various acts, including the Emergency Petroleum
Allocation Act of 1973. These regulations and controls included
mandatory restrictions upon the prices at which most domestic
crude oil and various petroleum products could be sold. All
price controls and restrictions on the sale of crude oil at the
wellhead have been withdrawn. It is possible, however, that such
controls may be reimposed in the future but when, if ever, such
reimposition might occur and the effect thereof on the Company
cannot be predicted.
The sale of certain categories of natural gas in interstate
commerce is subject to regulation under the Natural Gas Act and
the Natural Gas Policy Act of 1978 ("NGPA"). Under the NGPA, a
comprehensive set of statutory ceiling prices applies to all
first sales of natural gas unless the gas is specifically exempt
from regulation (i.e., unless the gas is "deregulated").
Administration and enforcement of the NGPA ceiling prices are
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delegated to the FERC. In June 1986, the FERC issued Order No.
451, which, in general, is designed to provide a higher NGPA
ceiling price for certain vintages of old gas. It is possible,
though unlikely, that the Company may in the future acquire
significant amounts of natural gas subject to NGPA price
regulations and/or FERC Order No. 451. The recently enacted
Natural Gas Wellhead Decontrol Act of 1989 provides for the
phasing out of all price regulations under the NGPA by January 1,
1993.
Company's Office
The Company's offices are located at 5459 South Iris Street,
Littleton, Colorado 80123. This is the home of the Company's
president, Philip J. Davis. The Company uses Mr. Davis's home on
a rent free basis.
Employees
The Company is a development stage company and currently has
no employees other than its Officers and Directors. See
"Management." Management of the Company expects to hire
additional employees as needed.
Risk Factors
1. No Operating History and Revenues. The Company being
formed is in the development stage, and is subject to all the
risks inherent in the creation of a new business. Since the
Company is a new venture, it has no record of operations and
there is nothing at this time upon which to base an assumption
that the Company's plans will prove successful.
2. Volatility of Oil and Gas Markets. While in the past
few years, the price of oil and gas has stabilized, there is no
assurance that in the future prices for oil and gas production
may become volatile in the future.
3. Availability of Suitable Prospects or Producing
Properties. Competition for prospects and producing properties
is intense. The Company will be competing with a number of other
potential purchasers of prospects and producing properties, most
of which will have greater financial resources than the Company.
Due to the state of the oil and gas industry, the bidding for
prospects has become particularly intense with different bidders
evaluating potential acquisitions with difference product pricing
parameters and other criteria that result in widely divergent bid
prices. See "Business - Competition." The presence in the
market of bidders willing to pay prices higher than are supported
by the Company's evaluation criteria could further limit the
ability of the Company to acquire prospects and low or uncertain
prices for properties can cause potential sellers to withhold or
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withdraw properties from the market. In this environment, there
can be no assurance that there will be a sufficient number of
suitable prospects available for acquisition by the Company or
that the Company can sell prospectus or obtain financing for or
participants to join in the development of prospects.
4. Title to Properties. It is customary in the oil and gas
industry that upon acquiring an interest in a property, that only
a preliminary title investigation be done at that time. If the
title to the prospects should prove to be defective, the Company
could lose the costs of acquisition, or incur substantial costs
for curative title work.
5. Shut-in Wells and Curtailed Production. Production from
gas wells in many geographic areas of the United States has been
curtailed or shut-in for considerable periods of time due to a
lack of market demand, and such curtailments may continue for a
considerable period of time in the future. There may be an
excess supply of gas in areas where the Company's operations will
be conducted. In such event, it is possible that there will be
no market or a very limited market for the Company's prospects.
6. Operating and Environmental Hazards. Hazards incident
to the operation of oil and gas properties, such as accidental
leakage of petroleum liquids and other unforeseen conditions, may
be encountered by the Company if it participates in developing a
well and, on occasion, substantial liabilities to third parties
or governmental entities may be incurred. It is anticipated that
customary insurance coverage will be obtained, but the Company
could be subject to liability for pollution and other damages or
may lose substantial portions of prospects or producing
properties due to hazards which cannot be insured against or
which have not been insured against due to prohibitive premium
costs or for other reasons. Governmental regulations relating to
environmental matters could also increase the cost of doing
business or require alteration or cessation of operations in
certain areas. See "Business - Government Regulations."
7. Uninsured Risks. The Company may not be insured against
all losses or liabilities which may arise from operations, either
because such insurance is unavailable or because the Company has
elected not to purchase such insurance due to high premium costs
or other reasons.
8. Federal and State Taxation. Federal and state income
tax laws are of particular significance to the oil and gas
industry. The "windfall profits tax" adopted in 1980 reduces the
profits which may be realized by the Company in the production of
crude oil. Recent legislation has eroded previous benefits to
oil and gas producers, and any subsequent legislation may
continue this trend. The states in which the Company may conduct
oil and gas activities also impose taxes upon the production of
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oil and gas located within such states. There can be no
assurance that the tax laws will not be changed or interpreted in
the future in a manner which adversely affects the Company.
9. Government Regulation. The oil and gas business is
subject to substantial governmental regulation, including the
power to limit the rates at which oil and gas are produced and to
fix the prices at which oil and gas are sold. It cannot be
accurately predicted whether additional legislation or regulation
will be enacted or become effective.
10. Writedowns and Limits on Accuracy of Reserve Estimates.
Oil and gas reserve estimates are necessarily inexact and involve
matters of subjective engineering judgment. In addition, any
estimates of future net revenues and the present value of such
revenues are based on price and cost assumptions provided by the
Company as its best estimate. These estimates may not prove to
have been correct over time. A further decline in oil and gas
prices may require the Company to write down the value of its oil
and gas reserves.
11. Need for Subsequent Funding. The Company believes it
will need to raise additional funds to acquire additional oil and
gas leases. The Company's continued operations therefore will
depend upon the availability of cash flow, if any, from its
operations or its ability to raise additional funds through bank
borrowings or equity or debt financing. There is no assurance
that the Company will be able to obtain additional funding when
needed, or that such funding, if available, can be obtained on
terms acceptable to the Company. If the Company cannot obtain
needed funds, it may be forced to curtail or cease its
activities. See "Business."
12. Need for Additional Key Personnel. At the present, the
Company employs no full time employees. The success of the
Company's proposed business will depend, in part, upon the
ability to attract and retain qualified employees. The Company
believes that it will be able to attract competent employees, but
no assurance can be given that the Company will be successful in
this regard. If the Company is unable to engage and retain the
necessary personnel, its business would be materially and
adversely affected. See "Business."
13. Reliance Upon Directors and Officers. The Company is
wholly dependent, at the present, upon the personal efforts and
abilities of its Officers who will exercise control over the day
to day affairs of the Company, and upon its Directors, all of
whom are engaged in other activities, and will devote limited
time to the Company's activities. The President and Secretary
will devote 20% of their time to the operation of the day to day
affairs of the Company. Accordingly, while the Company may
solicit business through its Officers, there can be no assurance
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as to the volume of business, if any, which the Company may
succeed in obtaining, nor that its proposed operations will prove
to be profitable. See "Business" and "Management."
14. Issuance of Additional Shares. Approximately
23,569,300 shares of Common Stock or 93.2% of the 25,000,000
authorized shares of Common Stock of the Company are unissued.
The Board of Directors has the power to issue such shares,
subject to shareholder approval, in some instances. The Company
may also issue additional shares of Common Stock pursuant to a
plan and agreement of merger with a private corporation.
Although the Company presently has no commitments, contracts or
intentions to issue any additional shares to other persons, the
Company may in the future attempt to issue shares to acquire
products, equipment or properties, or for other corporate
purposes. Any additional issuance by the Company, from its
authorized but unissued shares, would have the effect of diluting
the interest of shareholders. See "Description of Securities."
15. Non-Arms's Length Transaction. The number of shares of
Common Stock issued to present shareholders of the Company for
cash was arbitrarily determined and may not be considered the
product of arm's length transactions. See "Principal
Shareholders."
16. Indemnification of Officers and Directors for
Securities Liabilities. The Company's Articles of Incorporation
provide that the Company will indemnify any Director, Officer,
agent and/or employee as to those liabilities and on those terms
and conditions as are specified in the Colorado Business
Corporation Act. Further, the Company may purchase and maintain
insurance on behalf of any such persons whether or not the
corporation would have the power to indemnify such person against
the liability insured against. The foregoing could result in
substantial expenditures by the Company and prevent any recovery
from such Officers, Directors, agents and employees for losses
incurred by the Company as a result of their actions. Further,
the Company has been advised that in the opinion of the
Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as
amended, and is, therefore, unenforceable.
17. Competition. The Company believes that it will have
competitors and potential competitors, many of whom may have
considerably greater financial and other resources than the
Company. See "Business - Competition."
18. Cumulative Voting, Preemptive Rights and Control.
There are no preemptive rights in connection with the Company's
Common Stock. Shareholders may be further diluted in their
percentage ownership of the Company in the event additional
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shares are issued by the Company in the future. Cumulative
voting in the election of Directors is not provided for.
Accordingly, the holders of a majority of the shares of Common
Stock, present in person or by proxy, will be able to elect all
of the Company's Board of Directors. See "Description of the
Securities."
19. No Dividends Anticipated. At the present time the
Company does not anticipate paying dividends, cash or otherwise,
on its Common Stock in the foreseeable future. Future dividends
will depend on earnings, if any, of the Company, its financial
requirements and other factors. See "Dividend Policy."
20. Nature of Oil and Gas Exploration. The search for oil
and gas has historically been marked by unprofitable efforts
resulting not only from the drilling of dry holes, but also from
wells which, though productive, will not produce oil or gas in
sufficient quantities to return a profit. Liabilities in excess
of insurance coverage could possibly be incurred by the Company
as a result of a blow-out, fire, personal injury or other
casualty. Pollution which might be caused by the Company's
operations could also result in liabilities and restrictions on
the Company's activities. If properties are proven productive,
there is no assurance such production can be sold at the most
favorable rates or in optimum quantities. The oil and gas
industry is highly competitive and includes a number of large
well-established companies which possess substantially greater
resources than the Company. To the extent the Company acts as
the unit operator of its oil and gas wells, it can be expected to
make substantial advancements on behalf of other joint owners of
the property. There is no assurance that such joint owner
advancements will be collectible. See "Business."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
Selected Consolidated Financial Data
The selected financial data presented below has been derived
from the financial statements of the Company. The following
table summarizes certain financial information and should be read
in conjunction with "Plan of Operation" and the Financial
Statements and related notes included elsewhere in this
Registration Statement. The information shown below may not be
indicative of the Company's future results of operations.
<PAGE> 11 September 30, December 31,
1998 1997
Sales $ - $ -
Total Operating Expenses 10,312 6,402
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Net Loss $ (10,312) $ 6,402
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Net loss per common share $ (0.01) $ *
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* Less than $0.01 per share.
Plan of Operation
The following discussion should be read in conjunction with
the consolidated financial statements and notes thereto.
The Company is considered to be in the development stage as
defined in Statement of Financial Accounting Standards No. 7.
There have been no operations since incorporation.
The Company's future proposed plan calls for it to consider
and acquire oil and gas leases for acquisition or development.
See "Business."
The Company believes it can satisfy is cash requirements for
the next twelve months as it relates to its current
administrative and start-up costs. Although it is anticipated
that the Company may require additional funding over the next
twelve months to acquire and/or develop future oil and gas
properties.
The Company's future proposed plans call for it to consider
several factors in choosing additional properties for acquisition
and development. First, the Company considers those regions in
which one or more of its management or other technical personal
have field of experience. The Company's initial acquisition is
located in Kansas. The Company anticipates acquiring additional
leases in Colorado. At the present time the Company has not
targeted any additional oil and gas leases for acquisition. The
Company intends to acquire the oil and gas leases from other
existing oil companies that are brought to the attention of
Company's management.
The Company owns the surface equipment from its initial
acquisition in Kansas. To date the Company has sold one pumping
unit for $3,500 in cash. The remaining equipment is currently
for sale.
The Company is a development stage company and currently has
no employees other than its Officers and Directors. See
"Management." Management of the Company expects to hire
additional employees as needed.
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Liquidity and Capital Resources.
The Company sold 1,400,000 shares of its Common Stock to
officers and directors for $30,000 in cash. The Company also
completed a private placement of 30,700 shares in June 1998 for
$30,700 in cash. A portion of the foregoing was used for
organizational matters and the purchase of one oil and gas lease.
See "Business." The Company has no operating history. The
Company has approximately $19,000 in cash as of September 30,
1998, which the Company intends to use for working capital and to
purchase additional oil and gas leases.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company owns an undivided 2.00% overriding royalty
interest in one oil and gas lease located in Barton County,
Kansas covering 160 acres, more or less. A brief description of
the lease is as follows:
Lease Name: N. J. Weber
Field: Kraft - Prusia
County: Barton
State: Kansas
Legal Description: SE/4 Section 11, T16S, R12W
Spacing: 160 acres on 20 acre spacing
Overriding Royalty Interest: 2.00%
Operator: Scavenger Oil Company
Number of Wells: 4(5 others plugged and
abandoned)
Production Formation: Arbuckle
Date of First Production: 1944
Cost of Drilling and Completion: $95,000 - $110,000
Crude Oil Purchaser: NCRA
Gas Purchaser: Not Applicable-no gas
production
The foregoing lease currently does not produce any oil or
gas. The last production from the lease was in 1995. At that
time the lease was producing three barrels of oil per day.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of
each person known by the Company to be the beneficial owner of
five percent or more of the Company's Common Stock, each director
individually and all officers and directors of the Company as a
group. Each person has sole voting and investment power with
respect to the shares of Common Stock shown, and all ownership is
of record and beneficial.
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Name and Number of
address of owner Shares Position Percent
Philip J. Davis 700,000 President, Treasurer and 48.93%
5459 South Iris Street a member of the Board of
Littleton, CO 80123 Director
John C. Lee 700,000 Secretary and a member 48.93%
5410 East Long Place of the Board of Directors
Littleton, CO 80122
All officers and 1,400,000 97.85%
directors as a
group (2 persons)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
Philip J. Davis 42 President, Treasurer and a
member of the Board of
Directors
John C. Lee 42 Secretary and a member of the
Board of Directors
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or
until they resign or have been removed from office.
Philip J. Davis - President, Treasurer and a member of the Board
of Directors
Mr. Davis is a founder, President, Treasurer and a member of
the Board of Directors of the Company. From December 1992 to the
present, Mr. Davis is a self-employed consultant. On January 27,
1992, the District Business Conduct Committee of the National
Association of Securities Dealers, Inc. rendered a decision
against Mr. Davis finding that Mr. Davis charged unfair and
fraudulent markups in connection with the sale of securities.
Further, the District Business Conduct Committee found that Mr.
Davis failed to establish and implement written supervisory
procedures to detect and prevent the markup violations. Mr.
Davis was censured, fined $30,133.97, suspended from the National
Association of Securities Dealers for one year and required to
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requalify by examination prior to becoming associated with any
member of the National Association of Securities Dealers, Inc.
Further, Mr. Davis was assessed the costs of the action in the
amount of $908.00. Mr. Davis appealed the foregoing decision to
the Securities and Exchange Commission (the "Commission") and on
November 12, 1993 the foregoing sanctions were affirmed by the
Commission. The suspensions referred to above began on March 21,
1994 and will conclude at the close of business on March 21,
1995. In October 1992, Mr. Davis filed for protection under
Chapter XIII of the United States Bankruptcy Act. In July 1994,
the action was voluntarily dismissed by the Bankruptcy Court. On
December 2, 1994, Mr. Davis filed a petition for bankruptcy
pursuant to Chapter VII of the United States Bankruptcy Act. Mr.
Davis was granted a discharge in March 1995. From May 1991 to
November 1995, Mr. Davis was Secretary/Treasurer and a member of
the Board of Directors of Kapalua Acquisitions, Inc., a Colorado
corporation, which was formed for the purpose of acquiring or
merging with an existing operating entity. Kapalua's Common
Stock began trading on the Bulletin Board, operated by the
National Association of Securities Dealers, Inc., in November
1995. From November 1994 to November 1995, Mr. Davis was
President of Kapalua Acquisitions, Inc. Mr. Davis resigned his
positions as an officer and director of Kapalua Acquisitions,
Inc., on November 17, 1995, when it completed a reverse
acquisition with Startech Corporation, a Connecticut corporation
engaged in the business of waste disposal. From August 1996 to
the present, Mr. Davis has been the President and a member of the
Board of Directors of Medical Management Systems, Inc., a
Colorado corporation. Medical Management is a shell corporation.
From May 1991 to November 1995, Mr. Davis was Secretary/Treasurer
and a member of the Board of Directors of Paia Acquisitions,
Inc., a Colorado corporation. Paia's Common Stock began trading
on the Bulletin Board operated by the National Association of
Securities Dealers, Inc., in January 1996. In November 1995,
Paia acquired all of the issued and outstanding shares of common
stock of Consolidated Financial Management, Inc. d/b/a Banc-Pro,
an Arizona corporation in exchange for 3,900,000 post reverse-
split restricted shares of common of Paia and 845,000 preferred
shares of Paia. Mr. Davis resigned as an officer and director of
Paia in November 1995. From May 1991 to November 1995, Mr. Davis
was Secretary/Treasurer of Lahaina Acquisitions, Inc., a Colorado
corporation which was formed for the purpose of acquiring or
merging with an existing operating entity. Lahaina's Common
Stock began trading on the Bulletin Board, operated by the
National Association of Securities Dealers, Inc., in August 1996.
In November 1995, Mr. Davis resigned from the foregoing positions
to assume the Presidency of Lahaina Acquisitions, Inc. Mr. Davis
resigned the foregoing position on May 27, 1997, when he sold his
interest in Lahaina Acquisitions, Inc. to third parties. Mr.
Davis also resigned his position as a Director of Lahaina
Acquisitions, Inc. on the same date, a position he held since May
1991. Mr. Davis will devote approximately 20% of his time to the
Company.
<PAGE> 15
John C. Lee - Secretary and a member of the Board of Directors
Mr. Lee is Secretary and a member of the Board of Directors
of the Company. Mr. Lee has held the foregoing positions since
inception of the Company. Since November 1992, Mr. Lee been
engaged in the practice of investing his personal funds in
securities. Since August 1996, Mr. Lee has been the Secretary
and a member of the Board of Directors of Medical Management
Systems, Inc., a Colorado corporation. Medical Management is a
shell corporation. From November 1995 to May 1997, Mr. Lee was
Secretary and a member of the Board of Directors of Lahaina
Acquisitions, Inc., a Colorado corporation, which was formed for
the purpose of acquiring or merging with an existing operating
entity. Lahaina's Common Stock began trading on the Bulletin
Board, operated by the National Association of Securities
Dealers, Inc., in August 1996. On May 27, 1997, Mr. Lee resigned
the foregoing positions when he sold his interest in Lahaina
Acquisitions, Inc. to third parties. From November 1994 to
November 1995, Mr. Lee was Vice President and a member of the
Board of Directors of Kapalua Acquisitions, Inc., a Colorado
corporation. Kapalua's Common Stock began trading on the
Bulletin Board, operated by the National Association of
Securities Dealers, Inc., in November 1995. Mr. Lee resigned his
positions, on November 5, 1995, as an officer and director when
it completed a reverse acquisition with Startech Corporation, a
Connecticut corporation engaged in the business of waste
disposal. Mr. Lee will devote approximately 20% of his time to
the operation of the Company.
ITEM 6. EXECUTIVE COMPENSATION.
The Company anticipates entering into employment agreements
with its officers in the near future, the terms of which are
undecided at the present time. Directors do not receive
compensation for their services as directors and are not
reimbursed for expenses incurred in attending board meetings.
The Company did not paid any salaries in 1996, has not paid any
salaries in 1997, and will not initiate the payment of salaries
until it becomes profitable to do so.
<PAGE> 16
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On December 20, 1996, the Company issued 1,400,000 shares of
Common Stock to the following individuals and corporations in
consideration of the payment of $0.02143 per share in cash.
Name Total Consideration Shares Acquired
Philip J. Davis $ 15,000.00 700,000
5459 South Iris Street
Littleton, Colorado 80123
John C. Lee $ 15,000.00 700,000
5410 East Long Place
Littleton, Colorado 80122
In June 1998, the Company completed a private placement and
sold 30,700 shares of Common Stock to 48 persons in consideration
of $30,700 in cash.
During the quarter ended September 30, 1998, the Company
paid $5,000 of the $10,423 owed to two officers of the Company.
The Company still owes $5,423 on a interest free basis.
ITEM 8. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of
25,000,000 shares of no par value Common Stock. All shares have
equal voting rights and are not assessable. Voting rights are
not cumulative and, therefore, the holders of more than 50% of
the Common Stock could, if they chose to do so, elect all of the
directors of the Company.
Upon liquidation, dissolution or winding up of the Company,
the assets of the Company, after the payment of liabilities, will
be distributed pro rata to the holders of the Common Stock. The
holders of the Common Stock do not have preemptive rights to
subscribe for any securities of the Company and have no right to
require the Company to redeem or purchase their shares. The
shares of Common Stock presently outstanding are fully paid and
nonassessable.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of
Preferred Stock, no par value, per share. The Preferred Stock
may be issued in series from time to time with such designation,
rights, preferences and limitations as the Board of Directors of
the Company may determined by resolution. The rights,
preferences and limitations of separate series of Preferred Stock
<PAGE> 17
may differ with respect to such matters as may be determined by
the Board of Directors, including, without limitation, the rate
of dividends, method and nature of payment of dividends, terms of
redemption, amounts payable on liquidation, sinking fund
provisions (if any), conversion rights (if any), and voting
rights. No Preferred Stock has been issued by the Company.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of
the Company, out of funds legally available therefore. No
dividend has been paid on the Common Stock since inception, and
none is contemplated in the foreseeable future.
Transfer Agent
The Company's transfer agent is Corporate Stock Transfer,
370 17th Street, Suite 2350, Denver, Colorado 80202 and the
telephone number is (303) 595-3300.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
No market exists for the Company's securities and there
is no assurance that a regular trading market will develop, or if
developed, that it will be sustained. A shareholder in all
likelihood, therefore, will be unable to resell the securities
referred to herein should he or she desire to do so.
Furthermore, it is unlikely that a lending institution will
accept the Company's securities as pledged collateral for loans
unless a regular trading market develops.
There are no plans, proposals, arrangements or
understandings with any person with regard to the development of
a trading market in any of the Company's securities.
As of September 30, 1998, the Company has 50 holders of
record of its Common Stock and no shares of its Preferred Stock
have been issued.
The Company has not paid any dividends since it is inception
and does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
<PAGE> 18
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any litigation and to its
knowledge, no action, suit or proceedings against it has been
threatened by any person.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 1,430,700 shares of Common Stock issued and
outstanding as of September 30, 1998. Of the 1,430,700 shares of
the Company's Common Stock 30,700 are freely tradeable and
1,400,000 thereof, can only be resold in compliance with Reg. 144
adopted under the Securities Act of 1933, as amended.
In December 1996, the Company sold 1,400,000 Shares to its
officers and directors in consideration of $30,000, in cash,
pursuant to Section 4(2) of the Securities Act of 1933 (the
"Act"), as amended. No commissions were paid to any persons in
connection with such sales, no advertising of any nature was made
in connection with the sale of said shares and all Company
information was made available to said purchasers. Accordingly,
the Company believes that the aforementioned transactions were
exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933, as amended.
On July 8, 1997, the Company filed a Form D with the
Securities and Exchange Commission and the States of Colorado and
New York. In June 1998, the Company completed this private
placement of its shares of Common Stock pursuant to Reg. 504,
selling 30,700 shares of Common Stock at an offering price of
$1.00 per share. The net proceeds of the offering to the Company
was $30,700. Further, no commissions were paid to any persons in
connection with such sales, no advertising of any nature was made
in connection with the sale of said shares, all Company
information was made available to said purchasers, and said
purchasers were required to execute a subscription agreement
restating the aforementioned, among other things. Accordingly,
the Company believes that the aforementioned transactions were
exempt from registration pursuant to Section 504 of the
Securities Act of 1933, as amended.
<PAGE> 19
In general, under Rule 144 as currently in effect a person
(or persons whose Shares are aggregated), who has beneficially
owned Shares privately acquired directly or indirectly from the
Company or from an affiliate, for at least one year, or who is an
affiliate, is entitled to sell within any three month period a
number of such Shares that does not exceed the greater of 1% of
the then outstanding shares of the Company's Common Stock or the
average weekly trading volume in the Company's Common Stock
during the four calendar weeks, immediately preceding such sale.
Sales under Rule 144 are also subject to certain manner of sale
provisions, notice requirements and the availability of current
public information about the Company. A person (or persons whose
Shares are aggregated) who is not deemed to have been an
affiliate at any time during the 90 day preceding a sale, and who
has beneficially owned Restricted Shares for at least two years,
is entitled to sell all such Shares under Rule 144 without regard
to the volume limitations, current public information
requirements, manner of sale provisions or notice requirements.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Colorado Revised Statutes and certain provisions of the
Company's Articles of Incorporation under certain circumstances
provide for indemnification of the Company's Officers, Directors
and controlling persons against liabilities which they may incur
in such capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the
Company's Articles of Incorporation and to the statutory
provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments
arising in connection with a legal proceeding to which such
person is a party, if that person's actions were in good faith,
were believed to be in the Company's best interest, and were not
unlawful. Unless such person is successful upon the merits in
such an action, indemnification may be awarded only after a
determination by independent decision of the Board of Directors,
by legal counsel, or by a vote of the shareholders, that the
applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is
generally the same as those set forth above; however, with
respect to such actions, indemnification is granted only with
respect to expenses actually incurred in connection with the
defense or settlement of the action. In such actions, the person
to be indemnified must have acted in good faith and in a manner
believed to have been in the Company's best interest, and have
not been adjudged liable for negligence or misconduct.
<PAGE> 20
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
TABLE OF CONTENTS
Page
Independent Auditors' Report F-2
Balance Sheet F-3
Statement of Operations F-4
Statement of Changes in Shareholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7 - F-8
<PAGE> 21
INDEPENDENT AUDITORS' REPORT
To the Shareholders
Mizar Energy Company
(A Company in the Development Stage)
We have audited the accompanying balance sheet of Mizar Energy
Company (a Company in the Development Stage) as of December 31,
1997, and the related statements of operations, changes in
shareholders' equity, and cash flows for the period from
inception (December 11, 1996) through December 31, 1997. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based upon our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining on a test basis evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion the financial statements referred to above present
fairly, in all material respects, the financial position of Mizar
Energy Company (a Company in the Development Stage) as of
December 31, 1997, and the results of its operations and its cash
flows for the period from inception (December 11, 1996) through
December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ Spicer, Jeffries & Co.
Denver, Colorado
August 24, 1998
F-2
<PAGE> 22
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
BALANCE SHEET
DECEMBER 31, 1997
ASSETS
<TABLE>
<S> <C>
CURRENT ASSET - CASH $ 4,057
OIL AND GAS PROPERTIES (Note 1) 17,876
OTHER ASSETS:
Deferred offering costs (Note 1) 15,831
Organization costs, net of
accumulated amortization of $89 357
---------
$ 38,121
=========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITY - DUE TO
SHAREHOLDERS (Note 2) $ 10,423
SHAREHOLDERS' EQUITY: (Note 2)
Preferred stock, no par value,
10,000,000 shares authorized;
no shares issued and outstanding -
Common stock, no par value,
25,000,000 shares authorized;
1,404,100 shares issued and
outstanding 34,100
Deficit accumulated during the
development stage (6,402)
---------
Total shareholders' equity 27,698
---------
$ 38,121
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE> 23
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF OPERATIONS
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
REVENUE $ -
EXPENSES:
Lease operating costs 5,382
General and administrative 1,020
---------
NET LOSS $ (6,402)
=========
NET LOSS PER COMMON SHARE (Note 1) $ *
=========
WEIGHTED AVERAGE SHARES OUTSTANDING (Note 1) 1,400,470
=========
* Less than $.01 per share
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE> 24
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated
during the
Common Stock Development
Shares Amount Stage
<S> <C> <C> <C>
INCEPTION,
December 11, 1996 - $ - $ -
Issuance of common stock,
December 20, 1996 1,400,000 30,000 -
Issuance of common stock,
November 5, 1997 1,800 1,800 -
Issuance of common stock,
November 12, 1997 900 900 -
Issuance of common stock,
December 12, 1997 1,400 1,400 -
Net loss - - (6,402)
--------- --------- --------
BALANCES,
December 31, 1997 1,404,100 $ 34,100 $ (6,402)
========= ========= ========
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE> 25
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
STATEMENT OF CASH FLOWS
PERIOD FROM INCEPTION (DECEMBER 11, 1996)
THROUGH DECEMBER 31, 1997
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,402)
Adjustments to reconcile net
loss to net cash used
in operating activities:
Amortization 89
---------
Net cash used in operating activities (6,313)
---------
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of oil and gas properties (17,876)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 34,100
Deferred offering costs (15,831)
Organization costs (446)
Proceeds from shareholder loan 10,423
---------
Net cash provided by financing activities 28,246
---------
NET INCREASE IN CASH 4,057
CASH, at beginning of period -
---------
CASH, at end of period $ 4,057
=========
</TABLE>
The accompanying notes are an integral part of this statement.
F-6
<PAGE> 26
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business
Mizar Energy Company (the "Company") was incorporated in the
state of Colorado on December 11, 1996, and had no previous
operations. Activities through December 31, 1997 include
organization of the Company and the raising of equity capital.
The Company plans to be engaged in the business of acquiring,
developing, and operating oil and gas properties.
Oil and Gas Properties
The Company has acquired oil and gas mineral leases. At this
time, the properties are not producing. The Company has not
determined the amount of proved oil and gas reserves associated
with the property. The Company has adopted the successful
efforts method of accounting for its properties. Oil and gas
leases acquired are recorded at cost. A reserve has not been
provided for detriments at this time.
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amount of cash, receivables, and payables
approximates fair value.
Deferred Offering Costs
Deferred offering costs represent costs incurred in connection
with the proposed private offering. In the event that such
offering is successful, costs incurred and additional costs
incurred subsequent will be charged against the proceeds of the
offering. If the offering is not successful, the costs will be
charged to operations.
Organization Costs
Organization costs are amortized over a period of sixty months.
Cash Flows
For purposes of reporting cash flows, cash includes those
investments which are short-term in nature (three months or less
to original maturity), are readily convertible to cash, and
represent insignificant risk of changes in value.
F-7
<PAGE> 27
MIZAR ENERGY COMPANY
(A Company in the Development Stage)
NOTES TO FINANCIAL STATEMENTS
(Concluded)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Concluded)
Long-Lived Assets
The Company adopted the provisions of SFAS 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of, in its financial statements for the year ended
December 31, 1997. The adoption of SFAS 121 had no material
effect on the Company's financial statements. The Company
reviews its long-lived assets for impairment to determine if the
carrying amount of the asset is recoverable.
Net Loss Per Share of Common Stock
Net loss per share of common stock is based on the weighted
average number of shares of common stock outstanding.
NOTE 2 - SHAREHOLDERS' EQUITY AND RELATED PARTY TRANSACTIONS
The Company has the authority to issue 10,000,000 shares of
preferred stock no par value and 25,000,000 shares of common
stock no par value. The Company issued 1,400,000 shares of
common stock to its founders for $30,000 in December, 1996, and
4,100 shares of common stock in connection with a private
offering for $4,100 in November and December, 1997.
For the year ended December 31, 1997, two of the Company's major
shareholders advanced $10,423 to the Company. In addition, the
Company is provided office space on a rent-free basis from one of
these shareholders.
NOTE 3 - INCOME TAXES
At December 31, 1997, the Company has a net operating loss
carryforward for income tax purposes of approximately $6,400
available to offset future income taxes, expiring in 2012.
NOTE 4 - SUBSEQUENT EVENTS
In April 1998, the Company sold, subject to an overriding royalty
interest, its rights in the oil and gas properties reflected on
the balance sheet at December 31, 1997.
In addition, the Company completed its private offering as
mentioned in Note 2 by selling an additional 26,600 shares.
F-8
<PAGE> 28
MIZAR ENERGY COMPANY
(A Development Stage Company)
BALANCE SHEET
September 30,1998 (Unaudited)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
CURRENT ASSETS
Cash $ 18,538
OIL AND GAS PROPERTIES 14,750
OTHER ASSETS
Organization costs, net of
accumulated amortization of $156 290
---------
$ 33,578
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Due to shareholders 5,423
Stockholders' Equity
Preferred stock, 10,000,000 shares authorized,
no par value; none issued and outstanding -
Common stock, 25,000,000 shares authorized,
no par value; 1,430,700 shares issued and
outstanding 44,869
Accumulated deficit (16,714)
---------
Total Stockholders' Equity 28,155
---------
Total Liabilities and Stockholders' Equity $ 33,578
=========
</TABLE>
<PAGE> 29
MIZAR ENERGY COMPANY
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 1998 and 1997
and For the Period From Inception (December 11, 1996) as a
Development Stage Company to September 30, 1998
<TABLE>
<CAPTION>
From
Inception of
Three Three Nine Nine Development
Months Months Months Months Stage to
1998 1997 1998 1997 09/30/98
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
EXPENSES
Lease operating
costs 500 3,232 2,780 5,382 8,162
General and
administrative 4,239 44 7,532 834 8,552
-------- -------- -------- -------- ---------
4,739 3,276 10,312 6,216 16,714
NET LOSS $ (4,739) $ (3,276) $(10,312) $ (6,216) $ (16,714)
======== ======== ======== ======== =========
</TABLE>
<PAGE> 30
MIZAR ENERGY COMPANY
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 1998 and 1997
and For the Period From Inception (December 11, 1996) as a
Development Stage Company to September 30, 1998
<TABLE>
<CAPTION>
From Inception
of Development
Stage Company
1998 1997 to 09/30/98
(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net loss $ (10,312) $ (6,216) $ (16,714)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Amortization 67 64 156
--------- --------- ---------
Net cash used by
operating activities (10,245) (6,152) (16,558)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of oil and
gas properties - (14,276) (17,876)
Sale of oil and gas properties 3,126 - 3,126
--------- --------- ---------
Net cash provided (used)
by investing activities 3,126 (14,276) (14,750)
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties 10,423 10,423
Repayments to related parties (5,000) (5,000)
Issuance of common stock 26,600 60,700
Deferred offering costs (15,831) (15,831)
Organization costs (446)
--------- --------- ---------
Net cash provided by
financing activities 21,600 (5,408) 49,846
--------- --------- ---------
NET INCREASE (DECREASE)
IN CASH 14,481 (25,836) 18,538
CASH, beginning of period 4,057 25,954 -
--------- --------- ---------
CASH, end of period $ 18,538 $ 118 $ 18,538
========= ========= =========
</TABLE>
<PAGE> 31
MIZAR ENERGY COMPANY
NOTES TO FINANCIAL STATEMENTS
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Business
Mizar Energy Company (the "Company") was incorporated in the
state of Colorado on December 11, 1996 and had no previous
operations. The Company plans to be engaged in the business of
acquiring, developing and operating oil and gas properties. The
Company is currently in the development stage.
Oil and Gas Properties
The Company has acquired oil and gas mineral leases. In April
1998, the Company sold its working interest in the leases for
overriding royalty interests, with no cash or other consideration
changing hands. The Company retained all surface equipment in the
transaction.
Oil and gas leases are recorded at cost.
In August 1998, the Company sold a portion of the surface
equipment for net proceeds, after the cost of sale, of $3,126,
which has been recorded as a reduction of the cost of the leases.
Private Stock Offering
In June 1998, the Company completed a private offering of its
common stock. Under terms of the offering, the Company issued
30,700 shares at $1.00 per share. After offering costs of
$15,831, net proceeds to the Company amounted to $14,869.
<PAGE>
<PAGE> 32
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit No. Description
3.1 Articles of Incorporation.
3.2 Bylaws.
4.1 * Specimen Stock Certificate.
10.1 Oil and gas lease.
10.2 Contract for sale of lease.
27 Financial Data Schedule
* Filed via Form SE.
<PAGE> 33
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Form 10SB Registration Statement has been signed by
the following persons in the capacities and on the dates
indicated:
Signatures Title Date
/s/ Philip J. Davis
Philip J. Davis President, Treasurer and October 19, 1998
Member of the Board of
Directors
/s/ John C. Lee
John C. Lee Secretary and member October 19, 1998
of the Board of Directors
<PAGE> 34 EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
MIZAR ENERGY COMPANY
The undersigned, who, if a natural person, is eighteen years
of age or older, hereby establishes a corporation pursuant to the
Colorado Business Corporation Act as amended and adopts the
following Articles of Incorporation:
ARTICLE I
Name
The name of the corporation is: MIZAR ENERGY COMPANY
ARTICLE II
Purposes and Powers
The corporation shall have and may exercise all of the
rights, powers and privileges now or hereafter conferred upon
corporations organized under the laws of Colorado. In addition,
the corporation may do everything necessary, suitable or proper
for the accomplishment of any of its corporate purposes. The
corporation may conduct part or all of its business in any part
of Colorado, the United States or the world and may hold,
purchase, mortgage, lease and convey real and personal property
in any of such places.
ARTICLE III
Capital Stock
A. Authorized Shares of Common Stock. The aggregate
number of common shares which the corporation shall have
authority to issue is 25,000,000 shares of Common Stock. The
shares of this class of Common Stock shall have unlimited voting
rights and shall constitute the sole voting group of the
corporation, except to the extent any additional voting group or
groups may hereafter be established in accordance with the
Colorado Business Corporation Act. The shares of this class
shall also be entitled to receive the net assets of the
corporation upon dissolution.
B. Voting Rights; Denial of Preemptive Rights. Each
shareholder of record shall have one vote for each share of stock
standing in his name on the books of the corporation and entitled
to vote, except that in the election of directors each
shareholder shall have as many votes for each share held by him
as there are directors to be elected and for whose election the
shareholder has a right to vote. Cumulative voting shall not be
permitted in the election of directors or otherwise. Preemptive
rights to purchase additional shares of stock are denied.
<PAGE> 35
C. Authorized Shares of Preferred Stock. The corporation
shall have the authority to issue 10,000,000 shares of Preferred
Stock, which may be issued in one or more series at the
discretion of the board of directors. In establishing a series,
the board of directors shall give to it a distinctive designation
so as to distinguish it from the shares of all other series and
classes, shall fix the number of shares in such series, and the
preferences, rights and restrictions thereof. All shares of any
one series shall be alike in every particular except as otherwise
provided by these Articles of Incorporation or the Colorado
Business Corporation Code.
ARTICLE IV
Initial Board of Directors
The number of directors of the corporation shall be fixed by
the bylaws, or if the bylaws fail to fix such a number, then by
resolution adopted from time to time by the board of directors,
provided that the number of directors shall not be less than one.
Two directors shall constitute the initial board of directors.
The following persons are elected to serve as the corporation's
initial directors until the first annual meeting of shareholders
or until their successors are duly elected and qualified:
Name Address
Philip J. Davis 5459 South Iris Street
Littleton, Colorado 80123
John C. Lee 5410 East Long Place
Littleton, Colorado 80122
ARTICLE V
Registered Office and Registered Agent
The street address of the initial registered office of the
corporation is 5459 South Iris Street, Littleton, Colorado 80123.
The name of the initial registered agent of the corporation at
such address is Philip J. Davis.
ARTICLE VI
Principal Office
The address of the initial principal office of the
corporation is 5459 South Iris Street, Littleton, Colorado 80123.
<PAGE> 36
ARTICLE VII
Management of the Business
The following provisions are inserted for the management of
the business and for the conduct of the affairs of the
corporation, and the same are in furtherance of and not in
limitation or exclusion of the powers conferred by law.
A. Conflicting Interest Transactions. As used in this
paragraph, "conflicting interest transaction" means any of the
following: (i) a loan or other assistance by the corporation to
a director of the corporation or to an entity in which a director
of the corporation is a director or officer or has a financial
interest; (ii) a guaranty by the corporation of an obligation of
a director of the corporation or of an obligation of an entity in
which a director of the corporation is a director or officer or
has a financial interest; or (iii) a contract or transaction
between the corporation and a director of the corporation or
between the corporation and an entity in which a director of the
corporation is a director or officer or has a financial interest.
No conflicting interest transaction shall be void or voidable, be
enjoined, be set aside, or give rise to an award of damages or
other sanctions in a proceeding by a shareholder or by or in the
right of the corporation, solely because the conflicting interest
transaction involves a director of the corporation or an entity
in which a director of the corporation is a director or officer
or has a financial interest, or solely because the director is
present at or participates in the meeting of the corporation's
board of directors or of the committee of the board of directors
which authorizes, approves or ratifies a conflicting interest
transaction, or solely because the director's vote is counted for
such purpose if: (A) the material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the board of directors
or the committee, and the board of directors or committee in good
faith authorizes, approves or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors
are less than a quorum; or (B) the material facts as to the
director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the
shareholders entitled to vote thereon, and the conflicting
interest transaction is specifically authorized, approved or
ratified in good faith by a vote of the shareholders; or (C) a
conflicting interest transaction is fair as to the corporation as
of the time it is authorized, approved or ratified by the board
of directors, a committee thereof, or the shareholders. Common
or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of
a committee which authorizes, approves or ratifies the
conflicting interest transaction.
<PAGE> 37
B. Indemnification. The corporation shall indemnify, to
the maximum extent permitted by law, any person who is or was a
director, officer, agent, fiduciary or employee of the
corporation against any claim, liability or expense arising
against or incurred by such person made party to a proceeding
because he is or was a director, officer, agent, fiduciary or
employee of the corporation or because he is or was serving
another entity or employee benefit plan as a director, officer,
partner, trustee, employee, fiduciary or agent at the
corporation's request. The corporation shall further have the
authority to the maximum extent permitted by law to purchase and
maintain insurance providing such indemnification.
C. Limitation on Director's Liability. No director of
this corporation shall have any personal liability for monetary
damages to the corporation or its shareholders for breach of his
fiduciary duty as a director, except that this provision shall
not eliminate or limit the personal liability of a director to
the corporation or its shareholders for monetary damages for:
(i) any breach of the director's duty of loyalty to the
corporation or its shareholders; (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law; (iii) voting for or assenting to a distribution
in violation of Colorado Revised Statutes Section 7-106-401 or
the articles of incorporation if it is established that the
director did not perform his duties in compliance with Colorado
Revised Statutes Section 7-108-401, provided that the personal
liability of a director in this circumstance shall be limited to
the amount of the distribution which exceeds what could have been
distributed without violation of Colorado Revised Statutes
Section 7-106-401 or the articles of incorporation; or (iv) any
transaction from which the director directly or indirectly
derives an improper personal benefit. Nothing contained herein
will be construed to deprive any director of his right to all
defenses ordinarily available to a director nor will anything
herein be construed to deprive any director of any right he may
have for contribution from any other director or other person.
D. Negation of Equitable Interests in Shares or Rights.
Unless a person is recognized as a shareholder through procedures
established by the corporation pursuant to Colorado Revised
Statutes Section 7-107-204 or any similar law, the corporation
shall be entitled to treat the registered holder of any shares of
the corporation as the owner thereof for all purposes permitted
by the Colorado Business Corporation Act, including without
limitation all rights deriving from such shares, and the
corporation shall not be bound to recognize any equitable or
other claim to, or interest in, such shares or rights deriving
from such shares on the part of any other person including
without limitation, a purchaser, assignee or transferee of such
shares, unless and until such other person becomes the registered
holder of such shares or is recognized as such, whether or not
<PAGE> 38
the corporation shall have either actual or constructive notice
of the claimed interest of such other person. By way of example
and not of limitation, until such other person has become the
registered holder of such shares or is recognized pursuant to
Colorado Revised Statutes Sectino 7-107-204 or any similar
applicable law, he shall not be entitled: (i) to receive notice
of the meetings of the shareholders; (ii) to vote at such
meetings; (iii) to examine a list of the shareholders; (iv) to be
paid dividends or other distributions payable to shareholders; or
(v) to own, enjoy and exercise any other rights deriving from
such shares against the corporation. Nothing contained herein
will be construed to deprive any beneficial shareholder, as
defined in Colorado Revised Statutes Section 7-113-101(1), of any
right he may have pursuant to Article 113 of the Colorado
Business Corporation Act or any subsequent law.
ARTICLE VIII
Incorporator
The name and address of the incorporator is:
Michael J. Tauger, Esq.
5445 DTC Parkway, Suite 520
Englewood, Colorado 80111
DATED the _____ day of December, 1996.
__________________________________
Incorporator
Philip J. Davis hereby consents to the appointment as the
initial registered agent for the Corporation.
__________________________________
Initial Registered Agent
<PAGE> 40 EXHIBIT 3.2
BYLAWS
OF
MIZAR ENERGY COMPANY,
a Colorado corporation
Table of Contents
Article Page
I. Offices . . . . . . . . . . 1
II. Shareholders . . . . . . . . . 1
III. Board of Directors . . . . . . . . 8
IV. Officers and Agents . . . . . . . . 12
V. Stock . . . . . . . . . . 15
VI. Indemnification of Certain Persons . . . . . 17
VII. Provision of Insurance . . . . . . . 20
VIII. Miscellaneous . . . . . . . . 20
Effective: December __, 1996
<PAGE> 41
BYLAWS
OF
MIZAR ENERGY COMPANY
ARTICLE I
Offices
The principal office of the corporation shall be designated
from time to time by the corporation and may be within or outside
of Colorado.
The corporation may have such other offices, either within
or outside Colorado, as the board of directors may designate or
as the business of the corporation may require from time to time.
The registered office of the corporation required by the
Colorado Business Corporation Act to be maintained in Colorado
may be, but need not be, identical with the principal office, and
the address of the registered office may be changed from time to
time by the board of directors.
ARTICLE II
Shareholders
Section 1. Annual Meeting. The annual meeting of the
shareholders shall be held during the month of October of each
year on a date and at a time fixed by the board of directors of
the corporation (or by the president in the absence of action by
the board of directors), beginning with the year 1997, for the
purpose of electing directors and for the transaction of such
other business as may come before the meeting. If the election
of directors is not held on the day fixed as provided herein for
any annual meeting of the shareholders, or any adjournment
thereof, the board of directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter
as it may conveniently be held.
A shareholder may apply to the district court in the county
in Colorado where the corporation's principal office is located
or, if the corporation has no principal office in Colorado, to
the district court of the county in which the corporation's
registered office is located to seek an order that a shareholder
meeting be held (i) if an annual meeting was not held within six
months after the close of the corporation's most recently ended
fiscal year or fifteen months after its last annual meeting,
whichever is earlier, or (ii) if the shareholder participated in
a proper call of or proper demand for a special meeting and
notice of the special meeting was not given within thirty days
after the date of the call or the date the last of the demands
necessary to require calling of the meeting was received by the
corporation pursuant to C.R.S. Section 7-107-102(1)(b), or the
special meeting was not held in accordance with the notice.
<PAGE> 42
Section 2. Special Meetings. Unless otherwise prescribed
by statute, special meetings of the shareholders may be called
for any purpose by the president or by the board of directors.
The president shall call a special meeting of the shareholders if
the corporation receives one or more written demands for the
meeting, stating the purpose or purposes for which it is to be
held, signed and dated by holders of shares representing at least
ten percent of all the votes entitled to be cast on any issue
proposed to be considered at the meeting.
Section 3. Place of Meeting. The board of directors may
designate any place, either within or outside Colorado, as the
place for any annual meeting or any special meeting called by the
board of directors. A waiver of notice signed by all
shareholders entitled to vote at a meeting may designate any
place, either within or outside Colorado, as the place for such
meeting. If no designation is made, or if a special meeting is
called other than by the board, the place of meeting shall be the
principal office of the corporation.
Section 4. Notice of Meeting. Written notice stating the
place, date, and hour of the meeting shall be given not less than
ten nor more than sixty days before the date of the meeting,
except that (i) if the number of authorized shares is to be
increased, at least thirty days' notice shall be given, or (ii)
any other longer notice period is required by the Colorado
Business Corporation Act. The secretary shall be required to
give such notice only to shareholders entitled to vote at the
meeting except as otherwise required by the Colorado Business
Corporation Act.
Notice of a special meeting shall include a description of
the purpose or purposes of the meeting. Notice of an annual
meeting need not include a description of the purpose or purposes
of the meeting except the purpose or purposes shall be stated
with respect to (i) an amendment to the articles of incorporation
of the corporation, (ii) a merger or share exchange in which the
corporation is a party and, with respect to a share exchange, in
which the corporation's shares will be acquired, (iii) a sale,
lease, exchange or other disposition, other than in the usual and
regular course of business, of all or substantially all of the
property of the corporation or of another entity which this
corporation controls, in each case with or without the goodwill,
(iv) a dissolution of the corporation, (v) restatement of the
articles of incorporation, or (vi) any other purpose for which a
statement of purpose is required by the Colorado Business
Corporation Act. Notice shall be given personally or by mail,
private carrier, telegraph, teletype, electronically transmitted
facsimile or other form of wire or wireless communication by or
at the direction of the president, the secretary, or the officer
or persons calling the meeting, to each shareholder of record
entitled to vote at such meeting. If mailed and if in a
<PAGE> 43
comprehensible form, such notice shall be deemed to be given and
effective when deposited in the United States mail, properly
addressed to the shareholder at his address as it appears in the
corporation's current record of shareholders, with first class
postage prepaid. If notice is given other than by mail, and
provided that such notice is in a comprehensible form, the notice
is given and effective on the date actually received by the
shareholder.
If requested by the person or persons lawfully calling such
meeting, the secretary shall give notice thereof at corporate
expense. No notice need be sent to any shareholder if three
successive notices mailed to the last known address of such
shareholder have been returned as undeliverable until such time
as another address for such shareholder is made known to the
corporation by such shareholder. In order to be entitled to
receive notice of any meeting, a shareholder shall advise the
corporation in writing of any change in such shareholder's
mailing address as shown on the corporation's books and records.
When a meeting is adjourned to another date, time or place,
notice need not be given of the new date, time or place if the
new date, time or place of such meeting is announced before
adjournment at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business
which may have been transacted at the original meeting. If the
adjournment is for more than 120 days, or if a new record date is
fixed for the adjourned meeting, a new notice of the adjourned
meeting shall be given to each shareholder of record entitled to
vote at the meeting as of the new record date.
A shareholder may waive notice of a meeting before or after
the time and date of the meeting by a writing signed by such
shareholder. Such waiver shall be delivered to the corporation
for filing with the corporate records, but this delivery and
filing shall not be conditions to the effectiveness of the
waiver. Further, by attending a meeting either in person or by
proxy, a shareholder waives objection to lack of notice or
defective notice of the meeting unless the shareholder objects at
the beginning of the meeting to the holding of the meeting or the
transaction of business at the meeting because of lack of notice
or defective notice. By attending the meeting, the shareholder
also waives any objection to consideration at the meeting of a
particular matter not within the purpose or purposes described in
the meeting notice unless the shareholder objects to considering
the matter when it is presented.
Section 5. Fixing of Record Date. For the purpose of
determining shareholders entitled to (i) notice of or vote at any
meeting of shareholders or any adjournment thereof, (ii) receive
distributions or share dividends, (iii) demand a special meeting,
or (iv) make a determination of shareholders for any other proper
<PAGE> 44
purpose, the board of directors may fix a future date as the
record date for any such determination of shareholders, such date
in any case to be not more than seventy days, and, in case of a
meeting of shareholders, not less than ten days, prior to the
date on which the particular action requiring such determination
of shareholders is to be taken. If no record date is fixed by
the directors, the record date shall be the day before the notice
of the meeting is given to shareholders, or the date on which the
resolution of the board of directors providing for a distribution
is adopted, as the case may be. When a determination of
shareholders entitled to vote at any meeting of shareholders is
made as provided in this section, such determination shall apply
to any adjournment thereof unless the board of directors fixes a
new record date, which it must do if the meeting is adjourned to
a date more than 120 days after the date fixed for the original
meeting. Unless otherwise specified when the record date is
fixed, the time of day for such determination shall be as of the
corporation's close of business on the record date.
Notwithstanding the above, the record date for determining
the shareholders entitled to take action without a meeting or
entitled to be given notice of action so taken shall be the date
a writing upon which the action is taken is first received by the
corporation. The record date for determining shareholders
entitled to demand a special meeting shall be the date of the
earliest of any of the demands pursuant to which the meeting is
called.
Section 6. Voting Lists. After a record date is fixed for
a shareholders' meeting, the secretary shall make, at the earlier
of ten days before such meeting or two business days after notice
of the meeting has been given, a complete list of the
shareholders entitled to be given notice of such meeting or any
adjournment thereof. The list shall be arranged by voting groups
and within each voting group by class or series of shares, shall
be in alphabetical order within each class or series, and shall
show the address of and the number of shares of each class or
series held by each shareholder. For the period beginning the
earlier of ten days prior to the meeting or two business days
after notice of the meeting is given and continuing through the
meeting and any adjournment thereof, this list shall be kept on
file at the principal office of the corporation, or at a place
(which shall be identified in the notice) in the city where the
meeting will be held. Such list shall be available for
inspection on written demand by any shareholder (including for
the purpose of this Section 6 any holder of voting trust
certificates) or his agent or attorney during regular business
hours and during the period available for inspection. The
original stock transfer books shall be prima facie evidence as to
who are the shareholders entitled to examine such list or
transfer books or to vote at any meeting of shareholders.
<PAGE> 45
Any shareholder, his agent or attorney may copy the list
during regular business hours and during the period it is
available for inspection, provided (i) the shareholder has been a
shareholder for at least three months immediately preceding the
demand or holds at least five percent of all outstanding shares
of any class of shares as of the date of the demand, (ii) the
demand is made in good faith and for a purpose reasonably related
to the demanding shareholder's interest as a shareholder, (iii)
the shareholder describes with reasonable particularity the
purpose and the records the shareholder desires to inspect, (iv)
the records are directly connected with the described purpose,
and (v) the shareholder pays a reasonable charge covering the
costs of labor and material for such copies, not to exceed the
estimated cost of production and reproduction.
Section 7. Recognition Procedure for Beneficial Owners.
The board of directors may adopt by resolution a procedure
whereby a shareholder of the corporation may certify in writing
to the corporation that all or a portion of the shares registered
in the name of such shareholder are held for the account of a
specified person or persons. The resolution may set forth (i)
the types of nominees to which it applies, (ii) the rights or
privileges that the corporation will recognize in a beneficial
owner, which may include rights and privileges other than voting,
(iii) the form of certification and the information to be
contained therein, (iv) if the certification is with respect to a
record date, the time within which the certification must be
received by the corporation, (v) the period for which the
nominee's use of the procedure is effective, and (vi) such other
provisions with respect to the procedure as the board deems
necessary or desirable. Upon receipt by the corporation of a
certificate complying with the procedure established by the board
of directors, the persons specified in the certification shall be
deemed, for the purpose or purposes set forth in the
certification, to be the registered holders of the number of
shares specified in place of the shareholder making the
certification.
Section 8. Quorum and Manner of Acting. A majority of the
votes entitled to be cast on a matter by a voting group
represented in person or by proxy, shall constitute a quorum of
that voting group for action on the matter. If less than a
majority of such votes are represented at a meeting, a majority
of the votes so represented may adjourn the meeting from time to
time without further notice, for a period not to exceed 120 days
for any one adjournment. If a quorum is present at such
adjourned meeting, any business may be transacted which might
have been transacted at the meeting as originally noticed. The
shareholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the
withdrawal of enough shareholders to leave less than a quorum,
unless the meeting is adjourned and a new record date is set for
the adjourned meeting.
<PAGE> 46
If a quorum exists, action on a matter other than the
election of directors by a voting group is approved if the votes
cast within the voting group favoring the action exceed the votes
cast within the voting group opposing the action, unless the vote
of a greater number or voting by classes is required by law or
the articles of incorporation.
Section 9. Proxies. At all meetings of shareholders, a
shareholder may vote by proxy by signing an appointment form or
similar writing, either personally or by his duly authorized
attorney-in-fact. A shareholder may also appoint a proxy by
transmitting or authorizing the transmission of a telegram,
teletype, or other electronic transmission providing a written
statement of the appointment to the proxy, a proxy solicitor,
proxy support service organization, or other person duly
authorized by the proxy to receive appointments as agent for the
proxy, or to the corporation. The transmitted appointment shall
set forth or be transmitted with written evidence from which it
can be determined that the shareholder transmitted or authorized
the transmission of the appointment. The proxy appointment form
or similar writing shall be filed with the secretary of the
corporation before or at the time of the meeting. The
appointment of a proxy is effective when received by the
corporation and is valid for eleven months unless a different
period is expressly provided in the appointment form or similar
writing.
Any complete copy, including an electronically transmitted
facsimile, of an appointment of a proxy may be substituted for or
used in lieu of the original appointment for any purpose for
which the original appointment could be used.
Revocation of a proxy does not affect the right of the
corporation to accept the proxy's authority unless (i) the
corporation had notice that the appointment was coupled with an
interest and notice that such interest is extinguished is
received by the secretary or other officer or agent authorized to
tabulate votes before the proxy exercises his authority under the
appointment, or (ii) other notice of the revocation of the
appointment is received by the secretary or other officer or
agent authorized to tabulate votes before the proxy exercises his
authority under the appointment. Other notice of revocation may,
in the discretion of the corporation, be deemed to include the
appearance at a shareholders' meeting of the shareholder who
granted the proxy and his voting in person on any matter subject
to a vote at such meeting.
The death or incapacity of the shareholder appointing a
proxy does not affect the right of the corporation to accept the
proxy's authority unless notice of the death or incapacity is
received by the secretary or other officer or agent authorized to
tabulate votes before the proxy exercises his authority under the
appointment.
<PAGE> 47
The corporation shall not be required to recognize an
appointment made irrevocable if it has received a writing
revoking the appointment signed by the shareholder (including a
shareholder who is a successor to the shareholder who granted the
proxy) either personally or by his attorney-in-fact,
notwithstanding that the revocation may be a breach of an
obligation of the shareholder to another person not to revoke the
appointment.
Subject to Section 11 and any express limitation on the
proxy's authority appearing on the appointment form, the
corporation is entitled to accept the proxy's vote or other
action as that of the shareholder making the appointment.
Section 10. Voting of Shares. Each outstanding share,
regardless of class, shall be entitled to one vote, except in the
election of directors, and each fractional share shall be
entitled to a corresponding fractional vote on each matter
submitted to a vote at a meeting of shareholders, except to the
extent that the voting rights of the shares of any class or
classes are limited or denied by the articles of incorporation as
permitted by the Colorado Business Corporation Code. Cumulative
voting shall not be permitted in the election of directors or for
any other purpose. Each record holder of stock shall be entitled
to vote in the election of directors and shall have as many votes
for each of the shares owned by him as there are directors to be
elected and for whose election he has the right to vote.
At each election of directors, that number of candidates
equaling the number of directors to be elected, having the
highest number of votes cast in favor of their election, shall be
elected to the board of directors.
Except as otherwise ordered by a court of competent
jurisdiction upon a finding that the purpose of this Section
would not be violated in the circumstances presented to the
court, the shares of the corporation are not entitled to be voted
if they are owned, directly or indirectly, by a second
corporation, domestic or foreign, and the first corporation owns,
directly or indirectly, a majority of the shares entitled to vote
for directors of the second corporation except to the extent the
second corporation holds the shares in a fiduciary capacity.
Redeemable shares are not entitled to be voted after notice
of redemption is mailed to the holders and a sum sufficient to
redeem the shares has been deposited with a bank, trust company
or other financial institution under an irrevocable obligation to
pay the holders the redemption price on surrender of the shares.
Section 11. Corporation's Acceptance of Votes. If the name
signed on a vote, consent, waiver, proxy appointment, or proxy
appointment revocation corresponds to the name of a shareholder,
<PAGE> 48
the corporation, if acting in good faith, is entitled to accept
the vote, consent, waiver, proxy appointment or proxy appointment
revocation and give it effect as the act of the shareholder. If
the name signed on a vote, consent, waiver, proxy appointment or
proxy appointment revocation does not correspond to the name of a
shareholder, the corporation, if acting in good faith, is
nevertheless entitled to accept the vote, consent, waiver, proxy
appointment or proxy appointment revocation and to give it effect
as the act of the shareholder if:
(i) the shareholder is an entity and the name signed
purports to be that of an officer or agent of the
entity;
(ii) the name signed purports to be that of an
administrator, executor, guardian or conservator
representing the shareholder and, if the
corporation requests, evidence of fiduciary status
acceptable to the corporation has been presented
with respect to the vote, consent, waiver, proxy
appointment or proxy appointment revocation;
(iii) the name signed purports to be that of a receiver
or trustee in bankruptcy of the shareholder and,
if the corporation requests, evidence of this
status acceptable to the corporation has been
presented with respect to the vote, consent,
waiver, proxy appointment or proxy appointment
revocation;
(iv) the name signed purports to be that of a pledgee,
beneficial owner or attorney-in-fact of the
shareholder and, if the corporation requests,
evidence acceptable to the corporation of the
signatory's authority to sign for the shareholder
has been presented with respect to the vote,
consent, waiver, proxy appointment or proxy
appointment revocation;
(v) two or more persons are the shareholder as co-
tenants or fiduciaries and the name signed
purports to be the name of at least one of the co-
tenants or fiduciaries, and the person signing
appears to be acting on behalf of all the co-
tenants or fiduciaries; or
(vi) the acceptance of the vote, consent, waiver, proxy
appointment or proxy appointment revocation is
otherwise proper under rules established by the
corporation that are not inconsistent with this
Section 11.
<PAGE> 49
The corporation is entitled to reject a vote, consent,
waiver, proxy appointment or proxy appointment revocation if the
secretary or other officer or agent authorized to tabulate votes,
acting in good faith, has reasonable basis for doubt about the
validity of the signature on it or about the signatory's
authority to sign for the shareholder.
Neither the corporation nor its officers nor any agent who
accepts or rejects a vote, consent, waiver, proxy appointment or
proxy appointment revocation in good faith and in accordance with
the standards of this Section is liable in damages for the
consequences of the acceptance or rejection.
Section 12. Informal Action by Shareholders. Any action
required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if a written consent
(or counterparts thereof) that sets forth the action so taken is
signed by all of the shareholders entitled to vote with respect
to the subject matter thereof and received by the corporation.
Such consent shall have the same force and effect as a unanimous
vote of the shareholders and may be stated as such in any
document. Action taken under this Section 12 is effective as of
the date the last writing necessary to effect the action is
received by the corporation, unless all of the writings specify a
different effective date, in which case such specified date shall
be the effective date for such action. If any shareholder
revokes his consent as provided for herein prior to what would
otherwise be the effective date, the action proposed in the
consent shall be invalid. The record date for determining
shareholders entitled to take action without a meeting is the
date the corporation first receives a writing upon which the
action is taken.
Any shareholder who has signed a writing describing and
consenting to action taken pursuant to this Section 12 may revoke
such consent by a writing signed by the shareholder describing
the action and stating that the shareholder's prior consent
thereto is revoked, if such writing is received by the
corporation before the effectiveness of the action.
Section 13. Meetings by Telecommunication. Any or all of
the shareholders may participate in an annual or special
shareholders' meeting by, or the meeting may be conducted through
the use of, any means of communication by which all persons
participating in the meeting may hear each other during the
meeting. A shareholder participating in a meeting by this means
is deemed to be present in person at the meeting.
<PAGE> 50
ARTICLE III
Board of Directors
Section 1. General Powers. All corporate powers shall be
exercised by or under the authority of, and the business and
affairs of the corporation shall be managed under the direction
of, its board of directors, except as otherwise provided in the
Colorado Business Corporation Act or the articles of
incorporation.
Section 2. Number, Qualifications and Tenure. The number
of directors of the corporation shall be fixed from time to time
by the board of directors, within a range of no less than one or
more than seven, but no decrease in the number of directors shall
have the effect of shortening the term of any incumbent director.
A director shall be a natural person who is eighteen years of age
or older. A director need not be a resident of Colorado or a
shareholder of the corporation.
Directors shall be elected at each annual meeting of
shareholders. Each director shall hold office until the next
annual meeting of shareholders following his election and
thereafter until his successor shall have been elected and
qualified. Directors shall be removed in the manner provided by
the Colorado Business Corporation Act. Any director may be
removed by the shareholders of the voting group that elected the
director, with or without cause, at a meeting called for that
purpose. The notice of the meeting shall state that the purpose
or one of the purposes of the meeting is removal of the director.
A director may be removed only if the number of votes cast in
favor of removal exceeds the number of votes cast against
removal.
Section 3. Vacancies. Any director may resign at any time
by giving written notice to the secretary. Such resignation
shall take effect at the time the notice is received by the
secretary unless the notice specifies a later effective date.
Unless otherwise specified in the notice of resignation, the
corporation's acceptance of such resignation shall not be
necessary to make it effective. Any vacancy on the board of
directors may be filled by the affirmative vote of a majority of
the shareholders at a special meeting called for that purpose or
by the board of directors. If the directors remaining in office
constitute fewer than a quorum of the board, the directors may
fill the vacancy by the affirmative vote of a majority of all the
directors remaining in office. If elected by the directors, the
director shall hold office until the next annual shareholders'
meeting at which directors are elected. If elected by the
shareholders, the director shall hold office for the unexpired
term of his predecessor in office; except that, if the director's
<PAGE> 51
predecessor was elected by the directors to fill a vacancy, the
director elected by the shareholders shall hold office for the
unexpired term of the last predecessor elected by the
shareholders.
Section 4. Regular Meetings. A regular meeting of the
board of directors shall be held without notice immediately after
and at the same place as the annual meeting of shareholders. The
board of directors may provide by resolution the time and place,
either within or outside Colorado, for the holding of additional
regular meetings without other notice.
Section 5. Special Meetings. Special meetings of the board
of directors may be called by or at the request of the president
or any one (1) of the directors. The person or persons
authorized to call special meetings of the board of directors may
fix any place, either within or outside Colorado, as the place
for holding any special meeting of the board of directors called
by them, provided that no meeting shall be called outside the
State of Colorado unless a majority of the board of directors has
so authorized.
Section 6. Notice. Notice of the date, time and place of
any special meeting shall be given to each director at least two
days prior to the meeting by written notice either personally
delivered or mailed to each director at his business address, or
by notice transmitted by private courier, telegraph, telex,
electronically transmitted facsimile or other form of wire or
wireless communication. If mailed, such notice shall be deemed
to be given and to be effective on the earlier of (i) five days
after such notice is deposited in the United States mail,
properly addressed, with first class postage prepaid, or (ii) the
date shown on the return receipt, if mailed by registered or
certified mail return receipt requested, provided that the return
receipt is signed by the director to whom the notice is
addressed. If notice is given by telex, electronically
transmitted facsimile or other similar form of wire or wireless
communication, such notice shall be deemed to be given and to be
effective when sent, and with respect to a telegram, such notice
shall be deemed to be given and to be effective when the telegram
is delivered to the telegraph company. If a director has
designated in writing one or more reasonable addresses or
facsimile numbers for delivery of notice to him, notice sent by
mail, telegraph, telex, electronically transmitted facsimile or
other form of wire or wireless communication shall not be deemed
to have been given or to be effective unless sent to such
addresses or facsimile numbers, as the case may be.
A director may waive notice of a meeting before or after the
time and date of the meeting by a writing signed by such
director. Such waiver shall be delivered to the secretary for
filing with the corporate records, but such delivery and filing
<PAGE> 52
shall not be conditions to the effectiveness of the waiver.
Further, a director's attendance at or participation in a meeting
waives any required notice to him of the meeting unless at the
beginning of the meeting, or promptly upon his later arrival, the
director objects to holding the meeting or transacting business
at the meeting because of lack of notice or defective notice and
does not thereafter vote for or assent to action taken at the
meeting. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the board of
directors need be specified in the notice or waiver of notice of
such meeting.
Section 7. Quorum. A majority of the number of directors
fixed by the board of directors pursuant to Article III, Section
2 or, if no number is fixed, a majority of the number in office
immediately before the meeting begins, shall constitute a quorum
for the transaction of business at any meeting of the board of
directors.
Section 8. Manner of Acting. The act of the majority of
the directors present at a meeting at which a quorum is present
shall be the act of the board of directors.
Section 9. Compensation. By resolution of the board of
directors, any director may be paid any one or more of the
following: his expenses, if any, of attendance at meetings, a
fixed sum for attendance at each meeting, a stated salary as
director, or such other compensation as the corporation and the
director may reasonably agree upon. No such payment shall
preclude any director from serving the corporation in any other
capacity and receiving compensation therefor.
Section 10. Presumption of Assent. A director of the
corporation who is present at a meeting of the board of directors
or committee of the board at which action on any corporate matter
is taken shall be presumed to have assented to all action taken
at the meeting unless (i) the director objects at the beginning
of the meeting, or promptly upon his arrival, to the holding of
the meeting or the transaction of business at the meeting and
does not thereafter vote for or assent to any action taken at the
meeting, (ii) the director contemporaneously requests that his
dissent or abstention as to any specific action taken be entered
in the minutes of the meeting, or (iii) the director causes
written notice of his dissent or abstention as to any specific
action to be received by the presiding officer of the meeting
before its adjournment or by the secretary promptly after the
adjournment of the meeting. A director may dissent to a specific
action at a meeting, while assenting to others. The right to
dissent to a specific action taken at a meeting of the board of
directors or a committee of the board shall not be available to a
director who voted in favor of such action.
<PAGE> 53
Section 11. Committees. By resolution adopted by a
majority of all the directors in office when the action is taken,
the board of directors may designate from among its members an
executive committee and one or more other committees, and appoint
one or more members of the board of directors to serve on them.
To the extent provided in the resolution, each committee shall
have all the authority of the board of directors, except that no
such committee shall have the authority to (i) authorize
distributions, (ii) approve or propose to shareholders actions or
proposals required by the Colorado Business Corporation Act to be
approved by shareholders, (iii) fill vacancies on the board of
directors or any committee thereof, (iv) amend articles of
incorporation, (v) adopt, amend or repeal the bylaws, (vi)
approve a plan of merger not requiring shareholder approval,
(vii) authorize or approve the reacquisition of shares unless
pursuant to a formula or method prescribed by the board of
directors, or (viii) authorize or approve the issuance or sale of
shares, or contract for the sale of shares or determine the
designations and relative rights, preferences and limitations of
a class or series of shares, except that the board of directors
may authorize a committee or officer to do so within limits
specifically prescribed by the board of directors. The committee
shall then have full power within the limits set by the board of
directors to adopt any final resolution setting forth all
preferences, limitations and relative rights of such class or
series and to authorize an amendment of the articles of
incorporation stating the preferences, limitations and relative
rights of a class or series for filing with the Secretary of
State under the Colorado Business Corporation Act.
Sections 4, 5, 6, 7, 8 or 12 of Article III, which govern
meetings, notice, waiver of notice, quorum, voting requirements
and action without a meeting of the board of directors, shall
apply to committees and their members appointed under this
Section 11.
Neither the designation of any such committee, the
delegation of authority to such committee, nor any action by such
committee pursuant to its authority shall alone constitute
compliance by any member of the board of directors or a member of
the committee in question with his responsibility to conform to
the standard of care set forth in Article III, Section 14 of
these bylaws.
Section 12. Informal Action by Directors. Any action
required or permitted to be taken at a meeting of the directors
or any committee designated by the board of directors may be
taken without a meeting if a written consent (or counterparts
thereof) that sets forth the action so taken is signed by all of
the directors entitled to vote with respect to the action taken.
Such consent shall have the same force and effect as a unanimous
vote of the directors or committee members and may be stated as
<PAGE> 54
such in any document. Unless the consent specifies a different
effective time or date, action taken under this Section 12 is
effective at the time or date the last director signs a writing
describing the action taken, unless, before such time, any
director has revoked his consent by a writing signed by the
director and received by the president or the secretary of the
corporation.
Section 13. Telephonic Meetings. The board of directors
may permit any director (or any member of a committee designated
by the board) to participate in a regular or special meeting of
the board of directors or a committee thereof through the use of
any means of communication by which all directors participating
in the meeting can hear each other during the meeting. A
director participating in a meeting in this manner is deemed to
be present in person at the meeting.
Section 14. Standard of Care. A director shall perform his
duties as a director, including without limitation his duties as
a member of any committee of the board, in good faith, in a
manner he reasonably believes to be in the best interests of the
corporation, and with the care an ordinarily prudent person in a
like position would exercise under similar circumstances. In
performing his duties, a director shall be entitled to rely on
information, opinions, reports or statements, including financial
statements and other financial data, in each case prepared or
presented by the persons herein designated. However, he shall
not be considered to be acting in good faith if he has knowledge
concerning the matter in question that would cause such reliance
to be unwarranted. A director shall not be liable to the
corporation or its shareholders for any action he takes or omits
to take as a director if, in connection with such action or
omission, he performs his duties in compliance with this Section
14.
The designated persons on whom a director is entitled to
rely are (i) one or more officers or employees of the corporation
whom the director reasonably believes to be reliable and
competent in the matters presented, (ii) legal counsel, public
accountant, or other person as to matters which the director
reasonably believes to be within such person's professional or
expert competence, or (iii) a committee of the board of directors
on which the director does not serve if the director reasonably
believes the committee merits confidence.
ARTICLE IV
Officers and Agents
Section 1. General. The officers of the corporation shall
be a president, a secretary and a treasurer, and may also include
one or more vice presidents, each of which officer shall be
appointed by the board of directors and shall be a natural person
<PAGE> 55
eighteen years of age or older. One person may hold more than
one office. The board of directors or an officer or officers so
authorized by the board may appoint such other officers,
assistant officers, committees and agents, including a chairman
of the board, assistant secretaries and assistant treasurers, as
they may consider necessary. Except as expressly prescribed by
these bylaws, the board of directors or the officer or officers
authorized by the board shall from time to time determine the
procedure for the appointment of officers, their authority and
duties and their compensation, provided that the board of
directors may change the authority, duties and compensation of
any officer who is not appointed by the board.
Section 2. Appointment and Term of Office. The officers of
the corporation to be appointed by the board of directors shall
be appointed at each annual meeting of the board held after each
annual meeting of the shareholders. If the appointment of
officers is not made at such meeting or if an officer or officers
are to be appointed by another officer or officers of the
corporation, such appointments shall be made as determined by the
board of directors or the appointing person or persons. Each
officer shall hold office until the first of the following
occurs: his successor shall have been duly appointed and
qualified, his death, his resignation, or his removal in the
manner provided in Section 3.
Section 3. Resignation and Removal. An officer may resign
at any time by giving written notice of resignation to the
president, secretary or other person who appoints such officer.
The resignation is effective when the notice is received by the
corporation unless the notice specifies a later effective date.
Any officer or agent may be removed at any time with or
without cause by the board of directors or an officer or officers
authorized by the board. Such removal does not affect the
contract rights, if any, of the corporation or of the person so
removed. The appointment of an officer or agent shall not in
itself create contract rights.
Section 4. Vacancies. A vacancy in any office, however
occurring, may be filled by the board of directors, or by the
officer or officers authorized by the board, for the unexpired
portion of the officer's term. If an officer resigns and his
resignation is made effective at a later date, the board of
directors, or officer or officers authorized by the board, may
permit the officer to remain in office until the effective date
and may fill the pending vacancy before the effective date if the
board of directors or officer or officers authorized by the board
provide that the successor shall not take office until the
effective date. In the alternative, the board of directors, or
officer or officers authorized by the board of directors, may
remove the officer at any time before the effective date and may
fill the resulting vacancy.
<PAGE> 56
Section 5. President. The president shall preside at all
meetings of shareholders and all meetings of the board of
directors unless the board of directors has appointed a chairman,
vice chairman, or other officer of the board and has authorized
such person to preside at meetings of the board of directors.
Subject to the direction and supervision of the board of
directors, the president shall be the chief executive officer of
the corporation, and shall have general and active control of its
affairs and business and general supervision of its officers,
agents and employees. Unless otherwise directed by the board of
directors, the president shall attend in person or by substitute
appointed by him, or shall execute on behalf of the corporation
written instruments appointing a proxy or proxies to represent
the corporation, at all meetings of the stockholders of any other
corporation in which the corporation holds any stock. On behalf
of the corporation, the president may in person or by substitute
or by proxy execute written waivers of notice and consents with
respect to any such meetings. At all such meetings and
otherwise, the president, in person or by substitute or proxy,
may vote the stock held by the corporation, execute written
consents and other instruments with respect to such stock, and
exercise any and all rights and powers incident to the ownership
of said stock, subject to the instructions, if any, of the board
of directors. The president shall have custody of the
treasurer's bond, if any. The president shall have such
additional authority and duties as are appropriate and customary
for the office of president and chief executive officer, except
as the same may be expanded or limited by the board of directors
from time to time.
Section 6. Vice Presidents. The vice presidents shall
assist the president and shall perform such duties as may be
assigned to them by the president or by the board of directors.
In the absence of the president, the vice president, if any (or,
if more than one, the vice presidents in the order designated by
the board of directors, or if the board makes no such
designation, then the vice president designated by the president,
or if neither the board nor the president makes any such
designation, the senior vice president as determined by first
election to that office), shall have the powers and perform the
duties of the president.
Section 7. Secretary. The secretary shall (i) prepare and
maintain as permanent records the minutes of the proceedings of
the shareholders and the board of directors, a record of all
actions taken by the shareholders or board of directors without a
meeting, a record of all actions taken by a committee of the
board of directors in place of the board of directors on behalf
of the corporation, and a record of all waivers of notice of
meetings of shareholders and of the board of directors or any
committee thereof, (ii) see that all notices are duly given in
accordance with the provisions of these bylaws and as required by
<PAGE> 57
law, (iii) serve as custodian of the corporate records and of the
seal of the corporation and affix the seal to all documents when
authorized by the board of directors, (iv) keep at the
corporation's registered office or principal place of business a
record containing the names and addresses of all shareholders in
a form that permits preparation of a list of shareholders
arranged by voting group and by class or series of shares within
each voting group, that is alphabetical within each class or
series and that shows the address of, and the number of shares of
each class or series held by, each shareholder, unless such a
record shall be kept at the office of the corporation's transfer
agent or registrar, (v) maintain at the corporation's principal
office the originals or copies of the corporation's articles of
incorporation, bylaws, minutes of all shareholders' meetings and
records of all action taken by shareholders without a meeting for
the past three years, all written communications within the past
three years to shareholders as a group or to the holders of any
class or series of shares as a group, a list of the names and
business addresses of the current directors and officers, a copy
of the corporation's most recent corporate report filed with the
Secretary of State, and financial statements showing in
reasonable detail the corporation's assets and liabilities and
results of operations for the last three years, (vi) have general
charge of the stock transfer books of the corporation, unless the
corporation has a transfer agent, (vii) authenticate records of
the corporation, and (viii) in general, perform all duties
incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the
board of directors. Assistant secretaries, if any, shall have
the same duties and powers, subject to supervision by the
secretary. The directors and/or shareholders may however
respectively designate a person other than the secretary or
assistant secretary to keep the minutes of their respective
meetings.
Any books, records, or minutes of the corporation may be in
written form or in any form capable of being converted into
written form within a reasonable time.
Section 8. Treasurer. The treasurer shall be the principal
financial officer of the corporation, shall have the care and
custody of all funds, securities, evidences of indebtedness and
other personal property of the corporation and shall deposit the
same in accordance with the instructions of the board of
directors. Subject to the limits imposed by the board of
directors, he shall receive and give receipts and acquittances
for money paid in on account of the corporation, and shall pay
out of the corporation's funds on hand all bills, payrolls and
other just debts of the corporation of whatever nature upon
maturity. He shall perform all other duties incident to the
office of the treasurer and, upon request of the board, shall
make such reports to it as may be required at any time. He
<PAGE> 58
shall, if required by the board, give the corporation a bond in
such sums and with such sureties as shall be satisfactory to the
board, conditioned upon the faithful performance of his duties
and for the restoration to the corporation of all books, papers,
vouchers, money and other property of whatever kind in his
possession or under his control belonging to the corporation. He
shall have such other powers and perform such other duties as may
from time to time be prescribed by the board of directors or the
president. The assistant treasurers, if any, shall have the same
powers and duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer
of the corporation. He shall prescribe and maintain the methods
and systems of accounting to be followed, keep complete books and
records of account as required by the Colorado Business
Corporation Act, prepare and file all local, state and federal
tax returns, prescribe and maintain an adequate system of
internal audit and prepare and furnish to the president and the
board of directors statements of account showing the financial
position of the corporation and the results of its operations.
ARTICLE V
Stock
Section 1. Certificates. The board of directors shall be
authorized to issue any of its classes of shares with or without
certificates. The fact that the shares are not represented by
certificates shall have no effect on the rights and obligations
of shareholders. If the shares are-represented by certificates,
such shares shall be represented by consecutively numbered
certificates signed, either manually or by facsimile, in the name
of the corporation by the president. In case any officer who has
signed or whose facsimile signature has been placed upon such
certificate shall have ceased to be such officer before such
certificate is issued, such certificate may nonetheless be issued
by the corporation with the same effect as if he were such
officer at the date of its issue. All certificates shall be
consecutively numbered, and the names of the owners, the number
of shares, and the date of issue shall be entered on the books of
the corporation. Each certificate representing shares shall
state upon its face:
(i) That the corporation is organized under the laws
of Colorado;
(ii) The name of the person to whom issued;
(iii) The number and class of the shares and the
designation of the series, if any, that the
certificate represents;
<PAGE> 59
(iv) The par value, if any, of each share represented
by the certificate;
(v) Any restrictions imposed by the corporation upon
the transfer of the shares represented by the
certificate.
If shares are not represented by certificates, within a
reasonable time following the issue or transfer of such shares,
the corporation shall send the shareholder a complete written
statement of all of the information required to be provided to
holders of uncertificated shares by the Colorado Business
Corporation Act.
Section 2. Consideration for Shares. Certificated or
uncertificated shares shall not be issued until the shares
represented thereby are fully paid. The board of directors may
authorize the issuance of shares for consideration consisting of
any tangible or intangible property or benefit to the
corporation, including cash, promissory notes, services performed
or other securities of the corporation. Future services shall
not constitute payment or partial payment for shares of the
corporation. The promissory note of a subscriber or an affiliate
of a subscriber shall not constitute payment or partial payment
for shares of the corporation unless the note is negotiable and
is secured by collateral, other than the shares being purchased,
having a fair market value at least equal to the principal amount
of the note. For purposes of this Section 2, "promissory note"
means a negotiable instrument on which there is an obligation to
pay independent of collateral and does not include a non-recourse
note.
Section 3. Lost Certificates. In case of the alleged loss,
destruction or mutilation of a certificate of stock, the board of
directors may direct the issuance of a new certificate in lieu
thereof upon such terms and conditions in conformity with law as
the board may prescribe. The board of directors may in its
discretion require an affidavit of lost certificate and/or a bond
in such form and amount and with such surety as it may determine
before issuing a new certificate.
Section 4. Transfer of Shares. Upon surrender to the
corporation or to a transfer agent of the corporation of a
certificate of stock duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, and
receipt of such documentary stamps as may be required by law and
evidence of compliance with all applicable securities laws and
other restrictions, the corporation shall issue a new certificate
to the person entitled thereto, and cancel the old certificate.
Every such transfer of stock shall be entered on the stock books
of the corporation which shall be kept at its principal office or
by the person and at the place designated by the board of
directors.
<PAGE> 60
Except as otherwise expressly provided in Article II,
Sections 7 and 11, and except for the assertion of dissenters'
rights to the extent provided in Article 113 of the Colorado
Business Corporation Act, the corporation shall be entitled to
treat the registered holder of any shares of the corporation as
the owner thereof for all purposes, and the corporation shall not
be bound to recognize any equitable or other claim to, or
interest in, such shares or rights deriving from such shares on
the part of any person other than the registered holder,
including without limitation any purchaser, assignee or
transferee of such shares or rights deriving from such shares,
unless and until such other person becomes the registered holder
of such shares, whether or not the corporation shall have either
actual or constructive notice of the claimed interest of such
other person.
Section 5. Transfer Agent, Registrars and Paying Agents.
The board may at its discretion appoint one or more transfer
agents, registrars and agents for making payment upon any class
of stock, bond, debenture or other security of the corporation.
Such agents and registrars may be located either within or
outside Colorado. They shall have such rights and duties and
shall be entitled to such compensation as may be agreed.
ARTICLE VI
Indemnification of Certain Persons
Section 1. Indemnification. For purposes of Article VI, a
"Proper Person" means any person (including the estate or
personal representative of a director) who was or is a party or
is threatened to be made a party to any threatened, pending, or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, and whether formal or informal,
by reason of the fact that he is or was a director, officer,
employee, fiduciary or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer,
partner, trustee, employee, fiduciary or agent of any foreign or
domestic profit or nonprofit corporation or of any partnership,
joint venture, trust, profit or nonprofit unincorporated
association, limited liability company, or other enterprise or
employee benefit plan. The corporation shall indemnify any
Proper Person against reasonably incurred expenses (including
attorneys' fees), judgments, penalties, fines (including any
excise tax assessed with respect to an employee benefit plan) and
amounts paid in settlement reasonably incurred by him in
connection with such action, suit or proceeding if it is
determined by the groups set forth in Section 4 of this Article
that he conducted himself in good faith and that he reasonably
believed (i) in the case of conduct in his official capacity with
the corporation, that his conduct was in the corporation's best
interests, or (ii) in all other cases (except criminal cases),
that his conduct was at least not opposed to the corporation's
<PAGE> 61
best interests, or (iii) in the case of any criminal proceeding,
that he had no reasonable cause to believe his conduct was
unlawful. Official capacity means, when used with respect to a
director, the office of director and, when used with respect to
any other Proper Person, the office in a corporation held by the
officer or the employment, fiduciary or agency relationship
undertaken by the employee, fiduciary, or agent on behalf of the
corporation. Official capacity does not include service for any
other domestic or foreign corporation or other person or employee
benefit plan.
A director's conduct with respect to an employee benefit
plan for a purpose the director reasonably believed to be in the
interests of the participants in or beneficiaries of the plan is
conduct that satisfies the requirement in (ii) of this Section 1.
A director's conduct with respect to an employee benefit plan for
a purpose that the director did not reasonably believe to be in
the interests of the participants in or beneficiaries of the plan
shall be deemed not to satisfy the requirement of this section
that he conduct himself in good faith.
No indemnification shall be made under this Article VI to a
Proper Person with respect to any claim, issue or matter in
connection with a proceeding by or in the right of a corporation
in which the Proper Person was adjudged liable to the corporation
or in connection with any proceeding charging that the Proper
Person derived an improper personal benefit, whether or not
involving action in an official capacity, in which he was
adjudged liable on the basis that he derived an improper personal
benefit. Further, indemnification under this section in
connection with a proceeding brought by or in the right of the
corporation shall be limited to reasonable expenses, including
attorneys' fees, incurred in connection with the proceeding.
Section 2. Right to Indemnification. The corporation shall
indemnify any Proper Person who was wholly successful, on the
merits or otherwise, in defense of any action, suit, or
proceeding as to which he was entitled to indemnification under
Section 1 of this Article VI against expenses (including
attorneys' fees) reasonably incurred by him in connection with
the proceeding without the necessity of any action by the
corporation other than the determination in good faith that the
defense has been wholly successful.
Section 3. Effect of Termination of Action. The
termination of any action, suit or proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or
its equivalent shall not of itself create a presumption that the
person seeking indemnification did not meet the standards of
conduct described in Section 1 of this Article VI. Entry of a
judgment by consent as part of a settlement shall not be deemed
an adjudication of liability, as described in Section 2 of this
Article VI.
<PAGE> 62
Section 4. Groups Authorized to Make Indemnification
Determination. Except where there is a right to indemnification
as set forth in Sections 1 or 2 of this Article or where
indemnification is ordered by a court in Section 5, any
indemnification shall be made by the corporation only as
determined in the specific case by a proper group that
indemnification of the Proper Person is permissible under the
circumstances because he has met the applicable standards of
conduct set forth in Section 1 of this Article. This
determination shall be made by the board of directors by a
majority vote of those present at a meeting at which a quorum is
present, which quorum shall consist of directors not parties to
the proceeding ("Quorum"). If a Quorum cannot be obtained, the
determination shall be made by a majority vote of a committee of
the board of directors designated by the board, which committee
shall consist of two or more directors not parties to the
proceeding, except that directors who are parties to the
proceeding may participate in the designation of directors for
the committee. If a Quorum of the board of directors cannot be
obtained and the committee cannot be established, or even if a
Quorum is obtained or the committee is designated and a majority
of the directors constituting such Quorum or committee so
directs, the determination shall be made by (i) independent legal
counsel selected by a vote of the board of directors or the
committee in the manner specified in this Section 4 or, if a
Quorum of the full board of directors cannot be obtained and a
committee cannot be established, by independent legal counsel
selected by a majority vote of the full board (including
directors who are parties to the action) or (ii) a vote of the
shareholders.
Authorization of indemnification and advance of expenses
shall be made in the same manner as the determination that
indemnification or advance of expenses is permissible except
that, if the determination that indemnification or advance of
expenses is permissible is made by independent legal counsel,
authorization of indemnification and advance of expenses shall be
made by the body that selected such counsel.
Section 5. Court-Ordered Indemnification. Any Proper
Person may apply for indemnification to the court conducting the
proceeding or to another court of competent jurisdiction for
mandatory indemnification under Section 2 of this Article,
including indemnification for reasonable expenses incurred to
obtain court-ordered indemnification. If a court determines that
the Proper Person is entitled to indemnification under Section 2
of this Article, the court shall order indemnification, including
the Proper Person's reasonable expenses incurred to obtain court-
ordered indemnification. If the court determines that such
Proper Person is fairly and reasonably entitled to
indemnification in view of all the relevant circumstances,
whether or not he met the standards of conduct set forth in
<PAGE> 63
Section 1 of this Article or was adjudged liable in the
proceeding, the court may order such indemnification as the court
deems proper except that if the Proper Person has been adjudged
liable, indemnification shall be limited to reasonable expenses
incurred in connection with the proceeding and reasonable
expenses incurred to obtain court-ordered indemnification.
Section 6. Advance of Expenses. Reasonable expenses
(including attorneys' fees) incurred in defending an action, suit
or proceeding as described in Section 1 may be paid by the
corporation to any Proper Person in advance of the final
disposition of such action, suit or proceeding upon receipt of
(i) a written affirmation of such Proper Person's good faith
belief that he has met the standards of conduct prescribed by
Section 1 of this Article VI, (ii) a written undertaking,
executed personally or on the Proper Person's behalf, to repay
such advances if it is ultimately determined that he did not meet
the prescribed standards of conduct (the undertaking shall be an
unlimited general obligation of the Proper Person but need not be
secured and may be accepted without reference to financial
ability to make repayment), and (iii) a determination is made by
the proper group (as described in Section 4 of this Article VI)
that the facts as then known to the group would not preclude
indemnification. Determination and authorization of payments
shall be made in the same manner specified in Section 4 of this
Article VI.
Section 7. Additional Indemnification to Certain Persons
Other Than Directors. In addition to the indemnification
provided to officers, employees, fiduciaries or agents because of
their status as Proper Persons under this Article, the
corporation may also indemnify and advance expenses to them if
they are not directors of the corporation to a greater extent
than is provided in these bylaws, if not inconsistent with public
policy, and if provided for by general or specific action of its
board of directors or shareholders or by contract.
Section 8. Witness Expenses. The sections of this Article
VI do not limit the corporation's authority to pay or reimburse
expenses incurred by a director in connection with an appearance
as a witness in a proceeding at a time when he has not been made
or named as a defendant or respondent in the proceeding.
Section 9. Report to Shareholders. Any indemnification of
or advance of expenses to a director in accordance with this
Article VI, if arising out of a proceeding by or on behalf of the
corporation, shall be reported in writing to the shareholders
with or before the notice of the next shareholders' meeting. If
the next shareholder action is taken without a meeting at the
instigation of the board of directors, such notice shall be given
to the shareholders at or before the time the first shareholder
signs a writing consenting to such action.
<PAGE> 64
ARTICLE VII
Section 1. Provision of Insurance. By action of the board
of directors, notwithstanding any interest of the directors in
the action, the corporation may purchase and maintain insurance,
in such scope and amounts as the board of directors deems
appropriate, on behalf of any person who is or was a director,
officer, employee, fiduciary or agent of the corporation, or who,
while a director, officer, employee, fiduciary or agent of the
corporation, is or was serving at the request of the corporation
as a director, officer, partner, trustee, employee, fiduciary or
agent of any other foreign or domestic profit or nonprofit
corporation or of any partnership, joint venture, trust, profit
or nonprofit unincorporated association, limited liability
company, other enterprise or employee benefit plan, against any
liability asserted against, or incurred by, him in that capacity
or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such
liability under the provisions of Article VI or applicable law.
Any such insurance may be procured from any insurance company
designated by the board of directors of the corporation, whether
such insurance company is formed under the laws of Colorado or
any other jurisdiction of the United States or elsewhere,
including any insurance company in which the corporation has an
equity interest or any other interest, through stock ownership or
otherwise.
ARTICLE VIII
Miscellaneous
Section 1. Seal. The board of directors may adopt a
corporate seal, which shall be circular in form and shall contain
the name of the corporation and the words, "Seal, Colorado."
Section 2. Fiscal Year. The fiscal year of the corporation
shall be as established by the board of directors.
Section 3. Amendments. The board of directors shall have
power, to the maximum extent permitted by the Colorado Business
Corporation Act, to make, amend and repeal the bylaws of the
corporation at any regular or special meeting of the board unless
the shareholders, in making, amending or repealing a particular
bylaw, expressly provide that the directors may not amend or
repeal such bylaw. The shareholders also shall have the power to
make, amend or repeal the bylaws of the corporation at any annual
meeting or at any special meeting called for that purpose.
Section 4. Receipt of Notices by the Corporation. Notices,
shareholder writings consenting to action, and other documents or
writings shall be deemed to have been received by the corporation
when they are actually received: (1) at the registered office of
the corporation in Colorado; (2) at the principal office of the
<PAGE> 65
corporation (as that office is designated in the most recent
document filed by the corporation with the secretary of state for
Colorado designating a principal office) addressed to the
attention of the secretary of the corporation; (3) by the
secretary of the corporation wherever the secretary may be found;
or (4) by any other person authorized from time to time by the
board of directors or the president to receive such writings,
wherever such person is found.
Section 5. Gender. The masculine gender is used in these
bylaws as a matter of convenience only and shall be interpreted
to include the feminine and neuter genders as the circumstances
indicate.
Section 6. Conflicts. In the event of any irreconcilable
conflict between these bylaws and either the corporation's
articles of incorporation or applicable law, the latter shall
control.
Section 7. Definitions. Except as otherwise specifically
provided in these bylaws, all terms used in these bylaws shall
have the same definition as in the Colorado Business Corporation
Act.
<PAGE> 67 EXHIBIT 10.1
OIL AND GAS LEASE
AGREEMENT, made and entered into January 15, 1998, by and
Frances Bieberle, a/k/a Frances Weber Bieberle, surviving Trustee
of the Bieberle Revocable Trust, Clarence J. Bieberle and JoAnn
K. Bieberle, husband and wife, individually and as Co-Trustees
of the Clarence H. Bieberle Revocable Trust and as Co-Trustees
of the JoAnn Bieberle Revocable Trust, Party of the first part,
hereinafter called lessor (whether one or more) and Mizar Energy
Company, Party of the second part, hereinafter called lessee.
WITNESSETH, that the said lessor, for and in consideration
of Ten and more Dollars, cash in had paid, receipt of which is
hereby acknowledged, and of the covenants and agreements
hereinafter contained on the part of lessee to be paid, kept and
performed, has granted, demised, leased and let and by these
present does grant, demise, lease and let unto said lessee, for
the sole and only purpose of mining and operating oil and gas,
and laying pipe lines, and building tanks, power stations and
structures thereon to produce, save and take care of said
products, all that certain tract of land, "together with any
reversionary rights therein," situated in the County of Barton,
State of Kansas, described as follows, to wit:
TOWNSHIP 16 SOUTH - RANGE 12 WEST
Section 11: Southeast Quarter (SE/4)
and containing 160 acres, more or less.
It is agreed that this lease shall remain in full force for
a term of one year from this date, and as long thereafter as oil
or gas, or either of them, is produced form said land by the
lessee, or the premises are being developed or operated.
In consideration of the premises the said less covenants and
agrees:
1st. To deliver to the credit of lessor, free of cost, in
the pipe line to which he may connect his wells, the equal one-
eighth (1/8th) part of all oil produced and saved from the leased
premises.
2nd. The less shall pay to lessor for gas produced from any
oil well and used by the lessee for the manufacture of gasoline
or any other product as royalty 1/8th of the market value of such
gas at the mouth of the well' if said gas is sold by the lessee,
then as royalty 1/8th of the sale thereof at the mouth of the
well. The lessee shall pay lessor as royalty 1/8th of the
proceeds from the sale of gas as such at the mount of the well
where gas only is found and where such gas is not sold of used,
lessee shall pay or tender annually at the end of each yearly
period during which such gas is not sold or used as royalty, an
<PAGE> 68
amount equal to the delay rental provided in the next succeeding
paragraph hereof, and while said royalty is so paid or tendered
this lease shall be held as a producing lease under the above
term paragraph hereof' the lessor to have gas free of charge from
any gas well on the leased premises for stoves and inside lights
in the principal dwellinghouse on said land by making his own
connections with the well, the use of such gas to be at the
lessor's sole risk and expense.
If no well be commenced on said land on or before January
15, 1999, this lease shall terminate as to both parties.
If said lessor owns a less interest in the above described
land than the entire and undivided fee simple estate therein,
then the royalties and rentals herein provided shall be paid the
lessor only in the proportion which his interest bears to the
whole and undivided fee. However, such rental shall be increased
at the next succeeding rental anniversary after any reversion
occurs to cover the interest so acquired.
Less shall have the right to use, free of cost, gas, oil,
and water produced on said land for its operation thereon, except
water from wells of lessor.
When requested by lessor, lessee shall bury his pipe lines
below plow depth.
No well shall be drilled neared than 200 feet to the house
or barn now on said premises, without the written consent of
lessor.
Lessee shall pay for damages caused by its operations on
said land.
Lessee shall have the right at any time to remove all
machinery and fixtures placed on said premises, including the
right to draw and remove casing.
If the lessee shall commence to drill a well within the term
of this lease or any extension thereof, the lessee shall have the
right to drill such well to completion with reasonable diligence
and dispatch, and if oil or gas, or either of them, be found in
paying quantities, this lease shall continue and be in full force
with the like effect as if such well had been completed within
the term of years herein first mentioned.
If the estate of either party herto is transferred, and the
privilege of transferring in whole or in part is expressly
allowed, or if the rights hereunder of either party hereto are
vested by descent or devise, the covenants hereof shall extend to
and be binding on the heirs, devises, executors, administrators,
successors, or assigns, but no change in the ownership of said
<PAGE> 69
land or of any right hereunder shall be binding on the lessee
until after lessee has been furnished with the original or a
certified copy thereof of any transfer by lessor or with a
certified copy of the will of lessor together with a transcript
of the probate thereof or, in the event lessor dies intestate and
his/her estate is being administered, with a transcript of the
administration proceedings or, in the event of the death of
lessor and no administration being had on the estate, with an
instrument satisfactory to lessee executed by lessor's heirs
authorizing payment or o deposit or tender for deposit to their
credit as hereinbefore provided, at least thirty days before said
rentals and royalties are payable or due, and it is hereby agreed
in the event this lease shall be assigned as a part or as to
parts of the above described lands and the assigned or assignees
of such part of parts shall fail or make default in the payment
of the proportionate part of the rents due from him/her or them,
such default shall not operate to defeat or affect this lease in
so far as it covers a part of parts of said lands upon which the
said less or any assignee thereof shall made due payments of said
rentals. In case lessee assigns this lease, in whole or in part,
lessee shall be relieved of all obligations with respect to the
assigned portion or portions arising subsequent to the date of
assignment. If the leased premises are now or hereafter owned in
severalty or in separate tracts, the premises, nevertheless, may
be developed and operated as an entirety, and the royalties shall
be paid to each separate owner in the proportion that the acreage
owned by him/her bears to the entire leased area. There shall be
no obligation on the part of the lessee to offset wells on
separate tracts into which the land covered by this lease may
hereafter be divided by sale, devise, or otherwise, or to furnish
separate measuring or receiving tanks for the oil produced from
such separate tracts.
Lessor agrees that the lessee shall have the right at any
time to redeem for lessor by payment, any mortgages, taxes or
other liens on the above described lands, in the event of default
of payment by lessor, and be subrogated to the rights of the
holder thereof and may reimburse itself from any rental or
royalties accruing hereunder.
The terms, covenants and conditions hereof shall run with
said land and herewith and shall be binding upon the parties
hereto, their heirs, administrators, devisees, executors,
successors and assigns; however, all express or implied covenants
of this lease shall be subject to all Federal and State Laws,
Executive Orders, Rules or Regulations, and this lease shall not
be terminated, in whole or in part, nor less held liable for
failure to comply therewith, if compliance is prevented by, or if
such failure is the result of, any such Law, Order, Rule or
Regulation.
<PAGE> 70
Lessee assumes responsibility for ultimate plugging of the
three open holes on subject acreage and restoration of premises
which shall be accomplished not later than January 15, 1999.
Lessee acknowledges that a salt water disposal well is located on
the subject acreage and if it is not utilized in the production
of oil and gas under this lease, it will be plugged by Lessee not
later than January 15, 1999.
This lease is subject to a 1/16th of 7/8th Overriding
Royalty Interest reserved, to be credited to Clarence J.
Bieberle.
IN WITNESS WHEREOF, this instrument is executed as of the
date first above written.
LESSOR
/s/ Frances Bieberle, a/k/a Frances Weber Bieberle,
surviving Trustee of the Bieberle Revocable Trust
/s/ Clarence J. Bieberle individually and as Co-trustee of the
Clarence J. Bieberle Revocable Trust and as Co-trustee of the
JoAnn Bieberle Revocable Trust
/s/ JoAnn K. Bieberle, individually and as Co-trustee of the
Clarence J. Bieberle Revocable Trust and as Co-trustee of the
JoAnn Bieberle Revocable Trust
Direct x
State of Kansas ) Invert
) ss. Indexed
Barton Co. ) Num x
Cross
This instrument was filed for records on the 30th day of
March, A.D., 1998, at 10:05 o'clock a.m. and duly recorded in
book 571 of General Records, Page 145, Fee $8.00.
/s/ Marcia G. Johnson
Register of Deeds
STATE OF KANSAS )
) ss. Acknowledgement for individual
County of Barton ) (KS, OK, CO)
Before me, the undersigned, a Notary Public, within and for
said county and state, on this 12th day of March, 1998,
personally appeared Frances Bieberle, a/k/a/ Frances Weber
Bieberle, surviving Trustee of the Bieberle Revocable Trust to me
personally known to be the identical person who executed the
within and foregoing instrument and acknowledged to me that she
executed the same as her free and voluntary act and deed for the
uses and purposes therein set forth.
<PAGE> 71
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal the day and year least above written.
My Commission Expires /s/ Joann Koriel
7/23/98 Notary Public
STATE OF KANSAS )
) ss. Acknowledgement for individual
County of Barton ) (KS, OK, CO)
Before me, the undersigned, a Notary Public, within and for
said county and state, on this 12th day of March, 1998,
personally appeared Clarence J. Bieberle and JoAnn K. Bieberle,
husband and wife, individually and as Co-Trustees of the Clarence
J. Bieberle Revocable Trust and as Co-trustees of the JoAnn
Bieberle Revocable Trust to me personally known to be the
identical persons who executed the within and foregoing
instrument and acknowledged to me that they executed the same as
their free and voluntary act and deed for the uses and purposes
therein set forth.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal the day and year least above written.
My Commission Expires /s/ Joann Koriel
7/23/98 Notary Public
<PAGE> 73 EXHIBIT 10.2
ASSIGNMENT OF OIL AND GAS LEASES
CONVEYANCE AND BILL OF SALE
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
KNOWN ALL MEN BY THESE PRESENTS:
THAT MIZAR ENERGY COMPANY having an address at 5459
South Iris Street, Littleton, Colorado 80123, hereinafter
referred to as "Assignor," in consideration of Ten Dollars
($10.00) and other good and valuable consideration to it in hand
paid, the receipt of which is hereby acknowledged, does hereby
grant, convey, sell, assign and transfer unto Infinity Oil & Gas,
Inc., having an address at 730 17th Street, Suite 250, Denver,
Colorado 80202, hereinafter referred to as "Assignee," all of
Assignor's right, title and interest in and to the oil and gas
leases, contracts, wells lying in Barton County, Kansas,
described in Exhibit "A" attached hereto and made a part hereof,
together with the rights incident thereto, the personal property
thereon, appurtenant thereto, or used or obtained in connection
with said oil and gas leases, contracts, wells and lands, but
reserving unto the Assignor all royalty interest in the lease
between the Landowner royalty and a lease net revenue of Eighty
Percent (80%).
This Assignment is subject to all of the terms and the
express and implied covenants and conditions of the lease(s)
described on the attached Exhibit "A."
This Assignment is made without warranty, either
express or implied, but is made with full transfer and
subrogation of rights and actions of warranty which Assignor may
have as to the interest assigned.
TO HAVE AND TO HOLD unto Assignee, its successors and
assigns subject to the provisions hereof.
EXECUTED and effective this 2nd day of April, 1998.
ATTEST: MIZAR ENERGY COMPANY
BY: __________________________ BY: /s/ Philip J. Davis,
President
<PAGE> 74
ACKNOWLEDGEMENT
STATE OF COLORADO )
) ss.
COUNTY OF DENVER )
On this 2nd day of April, A.D. 1998, before me, the
undersigned, a Notary Public in and for the county and state
aforesaid, personally appeared Philip J. Davis to me known to be
the identical person who signed the name of the maker thereof to
the within and foregoing instrument as its President and
acknowledged to me that he executed the same as his free and
voluntary act and deed, and as the free and voluntary act and
deed of said corporation, for the uses and purposes therein set
forth.
Given under my hand and seal the day and year lease
above written.
My Commission Expires /s/ Joy Jareske
January 8, 2001 Notary Public
EXHIBIT "A"
Attached to and made part of that Assignment of Oil and
Gas Leases, Conveyance and Bill of Sale by and between Mizar
Energy Company, as Assignor, and Infinity Oil & Gas, Inc., as
Assignee, dated April 2, 1998.
LEASES
Lessors:
Francis Bieberle, a/k/a Francis Weber Bieberle
surviving Trustee of the Bieberle Trust, Clarence H.
Bieberle and JoAnne K. Bieberle, husband and wife,
individually and as Co-Trustees of the Clarence H.
Bieberle Revocable Trust and as Co-Trustees of the
JoAnne Bieberle Revocable Trust.
Lessee:
Mizar Energy Company
Book/Page:
Dated:
January 15, 1998
<PAGE> 75
Description:
Township 16 South, Range 12 West
Section 11: Southeast Quarter (SE/4)
160 Acres, more or less, all lying within Barton County,
Kansas
WELLS
Any and all wellbores, casing lying within the wellbores,
production pipelines and water disposal pipeline. The Assignor
specifically reserves unto itself all other surface equipment
including pumpjacks and tanks. All lying within the boundaries
of that shown above.
CONTRACTS
Any and all contracts associated to the Lease and wells,
including but not limited to that Grant for Salt Water Disposal
recorded at Book 462, Page 182, of the General Records maintained
by the Registrar of Deeds of Barton County, Kansas, that
Assignment of the pipeline dated May 25, 1990 and any and all
other contracts assigned into Assignor by virtue of that
Assignment and Bill of Sale dated February 1, 1986, recorded in
Book 566, Page 207 of the General Records maintained by the
Registrar of Deed of Barton County, Kansas and that Assignment of
Oil and Gas Lease dated January 10, 1997 recorded in Book 567,
Page 307 of the General Records maintained by the Registrar of
Deeds of Barton County, Kansas.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Condition for the year ended December 31, 1997 and
for September 30, 1998 (Unaudited) and the Statement of Income for the year
ended December 31, 1997 and the nine month period ended September 30, 1998
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 SEP-30-1998
<PERIOD-END> DEC-31-1997 DEC-31-1998
<CASH> 4,057 18,538
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,057 18,538
<PP&E> 34,064 15,040
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 38,121 33,574
<CURRENT-LIABILITIES> 10,423 5,423
<BONDS> 0 0
0 0
0 0
<COMMON> 34,100 44,869
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 38,121 33,578
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 6,402 10,312
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (6,402) (10,312)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (6,402) (10,312)
<EPS-PRIMARY> 0 (0.01)
<EPS-DILUTED> 0 (0.01)
</TABLE>
