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As filed with the Securities and Exchange Commission on September 30, 1997
Registration No. 333-__________________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TRUETRAKS, INC.
(Name of Small Business Issuer as specified in its charter)
Delaware 4000 41-1869713
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification
Number)
TRUETRAKS, INCORPORATED.
1408 Kit Carson Drive
Gallup, New Mexico 87301
(612) 928-0953
(Address and Telephone Number of Principal Executive Offices and Address of
Principal Place of Business or Intended Principal Place of Business.)
Michael Hall
Coordinator
3925 Excelsior Blvd. #5
St. Louis Park, MN. 55416
(612) 928-0953
(Name, Address and Telephone Number of Agent for Service)
Copies to:
R. John Bartz, Esq.
Bartz & Bartz
Southdale Office Centre
6750 France Avenue South, Suite 350
Edina, MN. 55435
(612) 920-3959 (612) 920 6494 (Fax)
Approximate Date of proposed Sale to the Public: As soon as practicable
after the effective date of the Registration Statement.
If any of the Securities being registered in this form are to be offered,
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective registration statement for the same offering. []
If this form is a post effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Each Class of Amount To Offering Price Aggregate Offering Amount of
Securities To be Registered Be Registered Per Unit(1) Price (1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock
$.05 par value 200,000 $6.50 $1,300,000 $429.00
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Total $1,300,000 $429.00
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(1) Estimated pursuant to Rule 457(a) under the Securities Act of 1933, as
amended, solely for purposes of computing the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Prospectus SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 30, 1997
TRUETRAKS, INCORPORATED
1408 KIT CARSON DRIVE GALLUP, NEW MEXICO 87301 (888) 722-6900
200,000 SHARES (MAXIMUM OFFERING)
100,000 SHARES (MINIMUM OFFERING)
COMMON STOCK (PAR VALUE $.05)
$6.50 PER SHARE
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All of the shares of Common Stock offered hereby are being sold by
TrueTraks, Incorporated (the "Company"). Prior to this Offering there has been
no public market for the Common Stock. See "Underwriting" for a discussion of
factors considered in determining the initial public offering price. This
Offering is being made by TrueTraks, Inc. on a "best efforts" basis. See
"Underwriting." All funds received by the Company with respect to the first
100,000 shares which may be sold will be deposited with FIRSTAR BANK of
Minnesota N.A. Trust Division, St. Paul, MN., as Escrow Agent, pending the
effective date of the Prospectus. There can be no assurance that the minimum
number of shares will be sold. If 100,000 shares are not sold within one hundred
eighty days (180 days) following commencement of the public offering, the
Offering will automatically terminate and all funds paid for shares will be
returned to the purchasers without deductions and without interest. See
"Introductory Statement - Risk Factors" and "Underwriting".
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE PURCHASED BY INVESTORS
WHO CANNOT AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS"
BEGINNING ON PAGE 7 AND "DILUTION ON PAGE 12"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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Price to Underwriting Proceeds to
Public Commissions (1) The Company(2)
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Per Share . . . . . . . . . . . $ 6.50 $ 0 $ 6.50
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Total Minimum (100,000 shares) $ 650,000 $ 0 $ 650,000
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Total Maximum (200,000 shares) $ 1,300,000 $ 0 $ 1,300,000
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(1) The Company will Self-Underwrite this offering: (i) This offering will be
sold by the Directors & Officers of the Company. (ii) The Officers will
place all of their 144 Stock, in its entirety, in the Escrow Account held
by the Transfer Agent for a period of one year. See "Underwriting" and
"Transfer Agent."
(2) The Company has prepaid the offering expenses ($155,000) which include fees
for filing, printing, legal, accounting and other miscellaneous items.
The shares of Common Stock are offered, subject to sale, by the Company. It
is expected that certificates for such shares will be ready for delivery in
Gallup, New Mexico upon completion of the offering.
THE DATE OF THIS PROSPECTUS IS Xxxxx XX, 1997
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AVAILABLE INFORMATION
The Company is not currently subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As a
result of this Offering, the Company will become subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and, in accordance therewith, will file periodic reports, proxy and
information statements and other information with the Securities and Exchange
Commission (the "Commission"). The Company intends to furnish its stockholders
with annual reports containing audited financial statements and such other
periodic reports as the Company deems appropriate or as may be required by law.
The Company has filed with the Commission in Washington, DC, a Registration
Statement on Form SB-2 under the Securities Act of 1933, as amended (the "Act")
with respect to the securities offered hereby as permitted by the rules and
regulations of the Commission. This Prospectus omits certain information
contained in the Registration Statement. For further information with respect to
the Company and the securities offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedule thereto. Statements made in
this Prospectus as to the contents of any contract or other document are not
necessarily complete, and in each such instance reference is made to the copy of
such contract or other document filed as an exhibit to such Registration
Statement, or to such other document, each such statement being qualified in all
respects by such reference. The Registration Statement and exhibits may be
inspected without charge and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street NW, Washington, DC
20549, and at the following Regional Offices of the Commission: Midwest Regional
Office at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material also can be obtained form the Public Reference Section
of the Commission at 450 Fifth Street NW, Washington DC 20549, at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company has not filed any documents, pursuant to the Exchange Act,
which could be deemed to be incorporated by reference in the Company's
Prospectus (not including exhibits to the information that is incorporated by
reference unless the exhibits are themselves specifically incorporated by
reference).
PERTINENT INFORMATION OF THE COMPANY
Exact Corporate Name: TrueTraks, Incorporated
State and Date of Incorporation: Delaware March 31, 1997
Street Address of Principal Office: 1408 Kit Carson Drive, Gallup, New Mexico
87301
Company Telephone Number: (612) 928-0953
Fiscal year: December, 31 1997
(month) (year)
Person(s) to Contact at Company with respect to Offering: Michael Hall,
Coordinator
Telephone Number: (612) 928-0953
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY INFORMATION IS NOT A COMPLETE PRESENTATION OF ALL
RELEVANT FACTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. THE ENTIRE PROSPECTUS,
INCLUDING THE INFORMATION SET FORTH UNDER THE CAPTION "RISK FACTORS," SHOULD BE
READ AND CAREFULLY CONSIDERED BY PROSPECTIVE INVESTORS. ALL INFORMATION
CONCERNING THE COMPANY'S AUTHORIZED, ISSUED AND OUTSTANDING COMMON STOCK AND ITS
PREFERRED STOCK, NONE OF WHICH IS ISSUED OR OUTSTANDING, AND ALL FINANCIAL
INFORMATION IS PRESENTED ON A PER SHARE BASIS. UNLESS THE CONTEXT REQUIRES, THE
TERM "COMPANY" REFER COLLECTIVELY TO TRUETRAKS, INC.
THE COMPANY
TrueTraks, Incorporated (the "Company"), intends on becoming a dominant
provider of rail freight transportation through the acquisition and
consolidation of existing regional, short-line and divested rail assets from
Class 1 railroads. The targeted rail assets, either publicly or privately owned,
may be acquired via outright purchase, stock purchase, lease, operating lease or
other combination.
The Company's fundamental acquisition philosophy with respect to regional
and/or short-line acquisitions is to identify regional and/or short-line
railroad properties within a specific region that have an established operating
history, an established industrial and/or bulk commodity customer base which
will provide a stable initial revenue base. These railroad properties must have
the size, either individually or collectively, necessary to establish a dominant
railroad transportation presence in the region. These acquired assets will
become part of a comprehensive program of physical plant and equipment
improvements that the Company intends to implement.
The Company believes that the major rail carriers (known as "Class 1"s")
will continue to downsize rail operations and this downsizing could result in
numerous rail lines or sections of rail lines coming on the market for sale. The
Company also believes that the current merger environment taking place among the
Class 1 rail carriers will continue thereby providing rail line acquisition
opportunities as the larger merged Class 1 system look to maximize the
profitability of their rail lines through divestiture of certain rail lines and
assets. The Company believes that, within this industry, further mergers and
consolidation by major rail carriers will make available large portions of rail
lines that can be operated profitably by a rail entity that is more regionally
focused. The Company believes that this trend will result in a rail
transportation network that will be composed primarily of coast-to-coast rail
entities and a series of smaller, regional rail systems.
The Company believes these rail properties, divested by the Class 1
carriers, could be profitable if a focused marketing strategy stressing customer
satisfaction and quality service was implemented. The Company intends to
establish and develop contractual relationships with other transportation modes
that could maximize all modes of shipping. The Company believes that by
developing cooperative relationships with major rail entities, shippers and
other transportation modes, many new sources of revenue traffic can be developed
which should lead to higher levels of profitability for all.
The Company's intended regional rail transportation systems will: 1.)
concentrate on maximizing the current profitability of the combined individual
railroads by consolidating costs, duplicate functions, and overhead expenses,
2.) increase the percentage of revenue received through longer line-haul
opportunities, 3.) work to develop new sources of on-line traffic through
aggressive marketing efforts, and, 4.) work to develop cooperative
transportation partnerships with other rail and non-rail transportation
entities.
The Company intends to apply its acquisitions strategy to any region in the
country where the potential exists to combine several regional/short-line
railroads and/or divested Class 1 rail lines into a contiguous rail system.
Competition for the Company's services will be trucking entities, river barge
companies and other rail carriers. These entities have the ability to compete
with the Company on both price and service. The Company believes that its
primary competitor is the trucking industry.
CURRENT STATUS
TrueTraks, Incorporated is presently a non-operating/development stage
corporation seeking to raise $1,300,000 in capital. This capital is necessary to
allow the Company to implement its acquisitions strategy and to becoming a
3
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fully-operational railroad. The Company will require additional capital to fully
exploit its acquisitions and operations strategy. The Company currently has two
full-time employees. Additional management, advisory and consulting staff will
be added upon completion of this Offering. The Company currently does not own
any railroads, or have any purchase agreements or Letters of Intent outstanding
to acquire any of its targeted acquisition candidates. The Company has no
contracts with any entities to handle their transportation needs.
OBJECTIVES
The Company believes that there are numerous objectives that will be key
factors to the Company's success within the current rail road industry. These
objectives are as follows:
First, the acquisition of existing regional, short-line and rail lines from
Class 1 railroads in specific geographic territories, and combining these
properties into a contiguous regional railroad network. The Company must detail
the most appropriate acquisitions strategy tailored for each targeted property.
These acquisitions may be accomplished by outright purchase, stock purchase,
lease, operating lease or appropriate combination thereof.
Second, the Company will need to hire additional experienced management and
advisory personnel with specific experience in railroad acquisition due
diligence, railroad marketing, railroad finance and railroad law. These
individuals will aid in the preparation of the individual formal acquisition
strategies for each property targeted by the Company for purchase and will aid
in the development and review of the Acquisition, Marketing and Operating Plans.
Management functions of the Company will be divided into four functional
departments, with each department being managed by an experienced professional
with appropriate railroad or business experience. These departments will be
Operations, Marketing, Administrative/Legal and Finance. The Company intends to
focus on hiring the most qualified individuals who share the Company's business
and operating philosophies, with many of the management and operating personnel
coming directly from the railroads that are acquired by the Company
Third, begin the process to integrate these potential acquisitions into a
contiguous rail transportation system. The Company has an opportunity to,
consolidate duplicate functions, processes, overhead expenses, and to realize a
greater efficiency in the utilization of equipment and personnel resources and
improve the efficiency of operations and customer responsiveness. This
integration of potentially acquired rail properties could allow the Company to
develop new traffic sources which currently do not exist because these
properties were operating as separate entities prior to their acquisition.
Fourth, the intended domination of regional markets through aggressive pro-
active, customer-focused marketing efforts, identifying, promoting and
developing economic development opportunities for each region and development of
cooperative transportation partnerships with non-rail transportation entities.
The Company wants to be recognized as the industry leader in terms of quality in
rail freight transfer. The Company intends to achieve this objective by
remaining focused and committed to our potential customers needs. The Company
intends to take the lead with other transportation modes to develop partnerships
that leverage each mode's particular strengths. The Company believes that higher
levels of profitability can be achieved by developing cooperative relationships
with major transportation modes, communities and shippers. The Company does not
have agreements with any entities to handle their rail transportation needs,
however; the Company has significant relationships within the railroad industry
which have been built over years of dedicated customer oriented advocacy.
Fifth, the Company will not expand or diversify beyond its means to remain
a profitable enterprise. We believe this objective means that diversification
and expansion cannot occur until the Company has had profitable months and cash
reserves. Even meeting these minimum requirements, the Company intends to adopt
an approach to growth that will include a monthly assessment of progress and
strategy review to ensure that the Company is not extended beyond its means.
Sixth, the Company intends to operate within any region in the country
where the potential to build a dominant regionally specific rail transportation
network exists.
ACQUISITIONS/FUNDING
The Company presently does not own any rail assets. However, the Company
has been in negotiations with various companies and individuals discussing the
specifics of acquiring various rail assets. The Company has
4
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researched numerous properties that it plans to acquire. The Company has not
signed or written any Purchase Offers or Purchase Letters of Intent to acquire
any rail assets as of the date of this Prospectus. Even though the Company may
not have any written Purchase Agreements in place as of the date of the Offering
Circular, the Company believes it does have significant relationships within the
rail industry, which the directors and executive officers have built over the
years which will allow the Company to acquire rail assets shortly after the
closing of the Offering and the acquisition of additional financing.. Upon the
closing of this Offering, the Company will use part of the proceeds from this
Offering to fund the debt offering, which will ultimately allow the company to
acquire the select rail assets it has researched.
The funds from this Offering will not be sufficient to acquire any rail
assets directly. The Company will need to secure additional debt capital in
order for any acquisitions to occur. There can be no assurance made that this
capital will be available to fund the Company's acquisitions strategy. However,
the Company has identified several potential sources of debt capital who have
expressed an interest in working with the Company. The Company has been working
with one of these sources for additional debt capital for the acquisitions that
the Company wishes to make. The Company is presently in the final stages, prior
to receiving a firm funding commitment from Heller Capital Inc., for additional
capital (debt capital) to fund the acquisitions targeted by the Company. The
firm funding commitment from Heller Capital, Inc. is for a maximum of $30M U.S.
Dollars for use in the purchase of rail assets. There are other potential
sources for additional capital that may be approached by the Company at such
time that additional acquisitions becomes imminent.
THE OFFERING
Securities to be Offered: . . . . . . 200,000 shares of Common Stock (maximum)
100,000 shares of Common Stock (minimum)
par value $.01, at $6.50 per share;
These shares are being offered by the
Company on a "best efforts" basis. See
"Description of Capital Stock" and
"Underwriting."
Approximate Net Proceeds - Maximum: $1,300,000. See "Use of Proceeds."
Approximate Net Proceeds - Minimum: $ 650,000. See "Use of Proceeds."
Use of Proceeds: . . . . . . . . . . The Company expects to use the net
proceeds of the Offering for working
capital and other general corporate
purposes. See "Use of Proceeds."
Common Stock Outstanding After Offering
-----Maximum: .................... 1,950,000 shares.
-----Minimum: .................... 1,850,000 shares.
Common Stock Publicly Owned After
Offering
-----Maximum:..................... 200,000 shares.
-----Minimum...................... 100,000 shares.
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CERTAIN RISK FACTORS
Prospective purchasers of the Common Shares should consider carefully the
information set forth under the caption "Risk Factors" on page 7, and all other
information set forth in this Prospectus, in evaluating an investment in the
Common Shares. The Company has a limited operating history and may be construed
as a "development stage" company. For this reason investment in shares of Common
Stock offered hereby involves a high degree of risk. See "Risk Factors".
5
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SUMMARY CONSOLIDATED FINANCIAL DATA
As of July 31, 1997 As of the Effective Date
------------------- ------------------------
As Adjusted As Adjusted
Actual Maximum Minimum
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Consolidated Balance Sheet Data
Cash and Cash Equivalents(1) $ 420 $1,275,420 $ 625,420
Total Assets 139,920 1,415,340 765,340
Total Liabilities 25,000 0 0
Stockholder's Equity(2) 114,920 1,415,340 765,340
(1) THE COMPANY HAS PRE-PAID THE COSTS OF THIS OFFERING TO $155,000
(2) The Company has no redeemable convertible preferred stock.
COMPANY'S INDEBTEDNESS
The Company has no outstanding indebtedness to any officers, directors,
or commercial lending institutions, private individuals, or other affiliates.
The Company may have general obligations under normal business lease
agreements.
PLAN OF DISTRIBUTION
The Company will be offering these securities under this Offering without
the use of underwriters, brokers or dealers. The Officers and Directors of the
Company will be the only persons selling the Company's securities. The Officers
and Directors will receive no commissions or remuneration for the selling of the
Company's securities. The Officers and Directors are relying on Rule 3a4-1 of
the Exchange Act as the exemption from registration as a broker-dealer.
Furthermore, no securities under this Offering are being sold on behalf of any
security account holders. There are no funds from this offering which are to be
returned to any other stakeholders to the Company. Should the Minimum offered
securities under this Offering of $650,000 or 100,000 shares not be fully
subscribed to, it is the obligation of the Company to direct the Escrow Agent,
FIRSTAR BANK of Minnesota N.A. Trust Division, St. Paul MN, pending the
effective date of the Prospectus, to return all proceeds collected and deposited
for purchase of the securities described herein, upon the expiration of 180 days
from the effective date of this offering. The funds deposited by the investors
with the Escrow Agent, FIRSTAR BANK of Minnesota N.A. Trust Division, St. Paul
MN, pending the effective date of the Prospectus, for the purchase of these
securities to this offering will be returned without interest.
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK. SEE " RISK FACTORS."
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RISK FACTORS
IN EVALUATING THE COMPANY'S BUSINESS, PROSPECTIVE INVESTORS SHOULD CAREFULLY
CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION
PRESENTED IN THIS PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS
MAY DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE FORWARD-LOOKING STATEMENTS.
POTENTIAL PURCHASERS OF THE CLASS A COMMON STOCK SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS, AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS, BEFORE DECIDING TO PURCHASE SHARES OF THE CLASS A COMMON STOCK
OFFERED HEREBY.
FLUCTUATION IN REVENUES AND EXPENSES
The companies in this industry have historically experienced fluctuations
in revenues and expenses due to unpredictable events such as one-time freight
moves, customer plant expansions and shut-downs, rail car sales, accidents and
derailments. Once the Company has acquired one or more existing railroads, the
occurrence of such events may cause further fluctuations in revenues and
expenses and negatively affect the Company's financial performance.
AVAILABILITY OF ACQUISITION OPPORTUNITIES
The Company's ability to apply its Acquisition Strategy, and thus become a
fully operational railroad is dependent upon its ability to acquire existing
railroad properties. In making acquisitions the Company will compete with other
short line and regional operators, some of which are larger, more experienced
and/or have greater financial resources than the Company. There can be no
assurance that acquisition opportunities will be available to the Company in the
near future, or that the Company will be able to compete successfully for
available properties. The Company's ability to acquire existing regional and
short-line railroads and related railroad assets may also be dependent upon its
ability to obtain financing for such acquisitions. Financing may not be
available or may be available only on terms and conditions unfavorable to the
Company. In addition, the Company's future credit facilities may contain certain
limitations on the Company's ability to make acquisitions.
CUSTOMER CONCENTRATION
Upon becoming a fully-operational railroad, the Company's business could be
adversely affected if any of the Company's customers suffer significant
businesses downturns or reduce shipments of commodities transported by the
Company. Additionally, the Company may depend on one or a small group of
customers on any given rail line. The loss of one, or any portion of these
customers, could affect the profitability of the Company.
RELIANCE ON KEY PERSONNEL
TrueTraks success to date has been largely dependent on the leadership of
Mr. Garry Oglesbee, Chairman, President and Chief Executive Officer and Mr.
Leonard Mitchell, Vice President and Chief Operating Officer. While the Company
is in the process of building a deeper, experienced management, advisory and
consulting team, the loss of Mr. Oglesbee's and/or Mr. Mitchell's services could
adversely affect the Company's operations.
RELATIONSHIPS WITH CLASS 1 RAILROADS
A substantial portion of the railroad traffic in the United States is
dominated by a number of large Class 1 rail carriers that have substantial
market control and negotiating leverage. Almost all of the traffic on the
Company's potentially acquired railroads is interchanged with Class 1 carriers.
A decision by any of these Class 1 carriers to discontinue transporting certain
commodities or to use alternate modes of transportation, such as motor carriers,
could adversely affect the Company's business in the future.
Upon becoming a fully-operational railroad, the Company's ability to
provide rail service to its current and/or future customers will depend in large
part upon its ability to maintain cooperative relationships with Class 1
connecting rail carriers with respect to freight rates, car supply, reciprocal
switching, interchange, trackage rights and other matters. A deterioration in
the operations of, or service provided by connecting carriers, or in the
relationships with its connecting carriers, could adversely affect the Company's
business. The Company may not maintain an adequate supply of rail cars to meet
the transfer demands. Further, the Company may not be able to obtain additional
rail cars or replacements on favorable terms.
Portions of the Company's eventual rail system could operate under leases,
operating agreements or trackage rights agreements with Class 1 carriers.
Failure of the Company to comply with such potential leases and agreements in
all material respects could result in the loss of operating rights with respect
to such rail lines, which would adversely affect the Company's business.
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COMPETITION
Each of the Company's potentially acquired railroads intends to operate
typically as the only rail carrier directly serving its customers; however, the
Company's railroads compete directly with other modes of transportation,
including motor carriers and, to a lesser extent, ships and barges. Competition
is based primarily upon the rate charged and the transit time required, as well
as the quality and reliability of the service provided. Any improvement in the
cost or quality of these alternate modes of transportation could increase
competition from these other modes of transportation and adversely affect the
Company's business.
REGULATION
Once the Company becomes a fully operational railroad, the Company's
railroads will be subject to regulation by the Surface Transportation Board
("STB"), the Federal Railroad Administration ("FRA"), state departments of
transportation and some state and local regulatory agencies. Despite
deregulation in the recent years, federal and state regulation continues to
affect profitability and competitiveness in the railroad industry. The federal
and state regulatory processes negatively affect the Company through, among
other things, the delays and costs associated with protracted abandonment
proceedings and the legal cost associated with acquisition proceedings. Although
the recently enacted ICC Termination Act of 1995 ( the "ICCTA") purports to aim
at eliminating or reducing such costs, the ICCTA has not been in effect long
enough to determine the extent to which it will be successful in this regard. In
reducing regulation, an effect of the ICCTA may be diminished regulatory
protection for small railroads, which negatively affects their competitive
position with their Class 1 connections.
ENVIRONMENTAL MATTERS
The Company's eventual railroad operations and real estate ownership will
be subject to extensive federal, state and local environmental laws and
regulations concerning, among other things, emissions to the air, discharges to
waters and the handling, storage, transportation and disposal of waste and other
materials. The railroads targeted by the Company for purchase regularly
transport hazardous materials for shippers, and also periodically use hazardous
materials in their own operations. As a result, the Company's future business
will involve the risk of substantial environmental liability as a result of
current and past operations.
LIABILITY FOR CASUALTY LOSSES
The Company will obtain new, or assume current insurance coverage for
losses arising from personal injury and for property damage in the event of
derailments or other accidents or occurrences on each of the railroads the
Company intends to acquire. The Company believes that it will be able to secure
adequate insurance coverage for the business. Under catastrophic circumstances
such as accidents involving passenger trains or spillage of hazardous materials,
the Company's liability could exceed its insurance limits. Insurance is
available from only a limited number of insurers and there can be no assurance
that insurance protection will continue to be available or, if available, will
be obtainable on terms acceptable to the Company. The occurrence of losses or
other liabilities which are not covered by insurance or which exceed the
Company's insurance limits could materially adversely affect the future
financial condition of the Company.
LABOR MATTERS
The Company could have employees who are subject to collective bargaining
agreements. Strikes and work stoppages, whether brought against the Class 1
carriers or the Company itself with which they connect, could adversely affect
the future operations of the Company's railroads. In the future the Company may
have collective bargaining agreements.
DILUTION
Purchasers of Class A Common Stock in the Offering will experience an
immediate and substantial dilution of $6.16 per share (Minimum Offering) or
$5.85 per share (Maximum Offering) in the net tangible book value of their
shares. See "Dilution"
CONCENTRATION OF VOTING POWER
Upon completion of the Offering, the directors and executive officers of
the Company will beneficially own approximately 87% of the outstanding shares of
Class A Common Stock (under the maxi portion of the Offering) representing
approximately 87% of the voting power of the Company controlled by Garry
Oglesbee, (the Company's Chairman, President and Chief Executive Officer). As a
result Mr. Oglesbee, will have the ability to affect the vote of the Company's
stockholders on significant corporate actions requiring stockholders' approval,
including mergers, share
8
<PAGE>
exchanges or sale of all, or substantially all, of the Company's assets. With
such voting power, Mr. Oglesbee will have the ability to delay or prevent a
change in control of the Company.
NO PRIOR PUBLIC MARKET FOR CLASS A COMMON STOCK
Prior to this offering there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after the Offering. The initial public
offering price has been determined by the Company. The trading price of the
Company's Common Stock could be subject to significant fluctuations in response
to variations in quarterly operating results, the gain and loss of significant
orders, changes in earning estimates by analysts, announcements of technological
innovations or new products by the Company or its competitors, general
conditions in the industry, and other events or factors. The Company intends to
apply for an application to be on the Bulletin Board, but there is no guarantee
that the Company will be on the Bulletin Board. As of this time no broker-dealer
has agreed to make a market in the Company's securities.
SHARES ELIGIBLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that future sales of
shares of Class A Common Stock, or the availability of shares of Class A Common
Stock for future sales will have on the market price of the Class A Common Stock
prevailing from time to time. Sales of substantial amounts of Class A Common
Stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Class A Common Stock and limit the Company's
ability to raise additional capital. Upon completion of this Offering the
Company will have 1,850,000 shares of Common Stock (minimum) or 1,950,000 shares
of Common Stock (maximum) outstanding. The 100,000 shares (minimum) or the
200,000 shares (maximum) offered hereby will be fully tradable without
restrictions. All of the remaining 1,750,000 shares of Common Stock outstanding
are deemed to be "restricted securities" as that term is defined under Rule 144,
in that such shares were issued in private transactions not involving a public
offering. The Company, its officers, directors, and/or certain other
stockholders have agreed not to sell or otherwise dispose of any shares of
Common Stock for a period of 1 year after the date of this Prospectus subject to
Rule 144 of the Securities Act ("Rule 144"). Following the Offering an aggregate
of 1,750,000 shares will be subject to these restrictions. See "Shares Eligible
for Future Sale"
POSSIBLE NEED FOR ADDITIONAL CAPITAL FINANCING
The Company believes that the net proceeds of this Offering will not be
sufficient to expand the Company and to provide for the implementation of the
Company's Acquisition Strategy. The Company's cash needs may vary significantly
from its predictions if it is unable to generate anticipated cash flow or its
growth occurs faster than anticipated. No assurance can be given that the
Company's predictions regarding its cash needs will prove accurate, nor that the
Company, if able to secure any required additional financing when needed, or at
all, or that such financing, if obtained, will be in terms favorable or
acceptable to the Company. If the Company is unable to obtain additional
financing when needed, it could be required to curtail its planned expansion and
possibly reduce the scope of its operations. The Company's inability to obtain
needed financing could have a material adverse effect on future operating
results and any future growth and operating results will depend on management's
continuing ability to implement its Acquisitions, Marketing, and Operating
strategies, as to which no assurance can be given. See "Use of Proceeds", See
"Business".
NO SPECIFIC PROPERTIES/RAIL ASSETS CHOSEN
The Company as of the effective date of the Offering Circular has not
chosen any specific property(ies) to acquire. The Company has researched
numerous properties and is prepared to move forward with the acquisition of rail
assets once the Offering has been concluded. However, there can be no guarantee
that any of the properties researched by the Company will be able to be acquired
by the Company. See "Business"
LIMITATIONS ON TAKEOVERS
Certain provisions of the Company's Certificate of Incorporation and By-
laws may have the effect of discouraging a third party from making an
acquisition proposal for the Company and may thereby inhibit a change in control
of the Company under circumstances that could give the stockholders the
opportunity to realize a premium over the then prevailing market prices.
Specifically, mergers and certain other corporate actions require the approval
of two-thirds of the total votes represented by all Class A Common Stock. The
board is expressly authorized to consider a variety of factors and
constituencies in determining the Company's best interests. In addition, under
certain circumstances, Section 203 of the Delaware General Corporate Law makes
it more difficult for an "interested stockholder" (generally a 15% stockholder)
to affect certain business combinations with the corporation for a three-year
period.
9
<PAGE>
NO DIVIDENDS
TrueTraks, Inc. has never paid cash dividends on the Common Stock and has
no present intention to declare or pay a cash dividend on the Common Stock.
NO CREDIT
The Company presently has no line of credit with any banks or leading
institutions, nor can the Company guarantee any credit will be established in
the future. Investors should be aware that lack of credit and the need for
additional capital financing could cause adverse effects to the Company.
NO OPERATING REVENUE
There have been no revenues achieved by the Company to date. There can be
no guarantee that TrueTraks Inc. will be successfully commercialized or that the
Company will achieve any operating revenues ever.
BROAD DISCRETION IN APPLICATION OF PROCEEDS
The principal purposes of this Offering is to capitalize the implementation
of TrueTraks, Incorporated's Acquisitions Strategy and provide funds for general
corporate purposes. The Company has no current specific plans for a significant
portion of the proceeds of the working capital. As a consequence, the Company's
management will have broad discretion over the proceeds for the foreseeable
future.
NON-REGISTRATION IN CERTAIN JURISDICTIONS
The Company is applying for registration of this Offering in only four
states, New Mexico, Colorado, Texas and Georgia. The Offering may not achieve
the minimum amount to be sold or the maximum amount to be sold due to this
limited registration. The lack of registration in only four states could also
affect the tradability of the common stock. This lack of tradability may have an
adverse effect on the amount of shares sold.
NO UNDERWRITER
TrueTraks Incorporated has chosen not to employ an underwriter for this
size of an Offering. This decision by the Company to not utilize an underwriter
poses the risk of not having an Errors and Omissions insurance policy normally
carried by an underwriter. There is also the risk of the whole Offering not
being sold out due to the lack of an underwriter.
NOTE: IN ADDITION TO THE ABOVE RISKS, BUSINESSES ARE OFTEN SUBJECT TO RISKS
NOT FORESEEN OR FULLY APPRECIATED BY MANAGEMENT. IN REVIEWING THIS
DISCLOSURE DOCUMENT POTENTIAL INVESTORS SHOULD KEEP IN MIND OTHER
POSSIBLE RISKS THAT COULD BE IMPORTANT.
USE OF PROCEEDS
The net proceeds to the Company from the offering are to be $1,300,000
under the Maximum and $650,000 under the Minimum as there are no anticipated
Underwriting fees, discounts, or commissions. It is the Company's intention to
sell this issue under its own efforts, thereby increasing the net proceeds to
the Company. The expenses of the Offering have been prepaid by the stockholders
of the Company. None of the Company's stockholders will be selling stock under
this Offering.
The following table sets forth the use of the proceeds from this Offering:
<TABLE>
<CAPTION>
If Minimum Sold If Maximum Sold
--------------- ---------------
Amount % Amount %
------ - ------ -
<S> <C> <C> <C> <C>
TOTAL PROCEEDS $650,000 100% $1,300,000 100%
LESS: OFFERING EXPENSES
Commissions and Finders Fees $ 0 0% $ 0 0%
Legal & Accounting ($77,500 Prepaid)* 0% ($77,500 Prepaid)* 0%
Copying & Advertising ($77,500 Prepaid)* 0% ($77,500 Prepaid)* 0%
Other 0 0% 0 0%
NET PROCEEDS FROM OFFERING $650,000 100% $1,300,000 100%
---------------- ---- ---------------- ----
10
<PAGE>
USE OF NET PROCEEDS
Legal Fees $ 80,000 12.3% $150,000 11.5%
Advertising 40,000 6.2% 80,000 6.2%
Travel 20,000 3.1% 50,000 3.8%
Printing-Brochures 20,000 3.1% 50,000 3.8%
Salaries 150,000 23.0% 150,000 11.6%
Secure Property/Assets 210,000 32.3% 452,000 34.8%
Working Capital 130,000 20.0% 368,000 28.3%
---------------- ----- ---------------- ------
TOTAL USE OF NET PROCEEDS 650,000 100.0% 1,300,000 100.00%
---------------- ----- ---------------- ------
</TABLE>
* THE EXPENSE OF THIS OFFERING, $155,000, HAS BEEN PREPAID BY THE
COMPANY. NO PROCEEDS FROM THIS OFFERING WILL BE USED TO PAY FOR ANY
EXPENSES OF THIS OFFERING.
The Company intends to use the net proceeds from this Offering to implement
its acquisitions strategy and to become a fully-operational railroad. The
acquisitions strategy stage will require the Company to hire or retain the
services of individuals with specific railroad experience in the areas of:
acquisitions, due diligence, operations, marketing, finance, and law. The
Company has identified a number of these required individuals and will secure
their services as soon as possible upon completion of the Offering. Beyond the
Company's Acquisitions Strategy, the Company intends to become a fully-
operational railroad through the acquisition of existing regional and short-line
railroads, and/or divested Class 1 rail lines. These acquisitions may be by
asset purchase, stock purchase, lease, operating lease or any combination
thereof.
The proceeds that will be used for legal representation in the acquisition
of the rail assets will be in the amount of $150,000 under the Maximum and
$80,000 under the Minimum. Advertising by the Company, to promote the Company
and its services, will be $80,000 under the Maximum and $40,000 under the
Minimum. Travel by the Company's executives to appraise and negotiate with the
various rail property owners is $50,000 under the Maximum and $20,000 under the
Minimum. Printing costs for the Company's collateral material under the Maximum
is $50,000 and $20,000 under the Minimum. The executives will receive salaries
(collectively) from the Offering in the amount of $150,000 under the Maximum and
$150,000 under the Minimum.
The Company plans on securing leases for office space, office equipment,
computers, automobiles and possibly other equipment which may be needed in the
everyday course of business. These equipment leases will be secured using part
of the proceeds from the $452,000 under the Maximum and $210,000 under the
Minimum These leases may be secured through a commercial building leasing
service or a Realtor for the office space, through various business retailers or
distributors for the office equipment and computers and through local automobile
dealers for the auto leases, depending on the best price at the time of leasing.
Additional items that may be needed will be leased from local or international
companies depending on the best price at the time of leasing.
Working capital will be used to run the day to day operations of the
Company and would result in $368,000 under the Maximum and $130,000 under the
Minimum. A portion of the working capital may be used to assist the securing of
the properties.
The Company plans to secure the intended acquisition(s)/property(ies) by
using funds from the $452,000, under the Maximum, or $210,000, under the Minimum
and additional debt funding the Company will acquire from other sources. The
leases/properties may be secured through outright purchase, stock purchase,
lease, lease of operating rights or any other combination thereof. See
"Business".
The Company will need additional funding to complete the initial
acquisition of the Company's Acquisition Strategy and additional properties the
Company plans to acquire. There can be no assurance made that this capital will
be available to fund the Company's initial acquisition or any further
acquisitions planned in the Company's Acquisitions Strategy. However, the
Company has met with and received a verbal commitment from a funding source in
Plantation, Florida for the additional capital required to purchase the
Company's initial acquisition and other planned acquisitions. The Company will
need additional funding of up to $30M U. S. Dollars to complete the purchase of
the Company's initial acquisition. The funding source in Plantation, Florida,
(the firm of Heller Capital, Inc.) has expressed an interest in funding other
acquisitions that the Company intends to pursue. Other funding sources for
additional capital will be approached by the Company at such time that
additional acquisitions becomes imminent. See "Business"
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<PAGE>
There can be no assurance that the proceeds of this Offering, after
deducting cash used in the Company's operations will be adequate to fund all of
the Company's plans. If adequate funds are not available, the Company may be
required to delay, scale back or eliminate parts of its development plan or
obtain funds through arrangements with collaborative partners or others that may
require the Company to alter its plans on ownership and/or control.
The Company believes that the net proceeds from the Offering will not be
sufficient to fund the development of its Acquisitions Strategy for the next 12
months. Additional funding will be required for the continuing development of
the Acquisition Strategy. However the acquisition of the Company's initial
property should enable the Company to become a fully-operational railroad. The
Company will require additional capital to acquire the additional rail assets
that have been targeted for purchase by the Company. While no assurance can be
given, the Company believes that it will be able to secure the additional
capital required to successfully implement its Acquisitions Strategy. Proceeds
not immediately required for the purposes described above will be invested
primarily in United States Government securities or qualified money market
funds. The Company will need material amounts of funds from other sources to be
used in conjunction with the proceeds of this Offering.
The foregoing represents the Company's best estimate of the net proceeds of
the Offering based on current planning and business conditions. The exact
allocation of the proceeds for the purposes set forth above and timing of the
expenditures may vary significantly depending upon numerous factors, the time
and cost involved in obtaining any regulatory approvals, the status of competing
entities, the establishment of sales and marketing capabilities and the
establishment of collaborative relationships with other parties, if necessary.
DILUTION
MAXIMUM OFFERING
The net tangible book value of the Common Stock after a successful maximum
Offering would be $0.65. Net tangible book value per share of Common Stock
represents the total tangible assets (total assets minus intangible assets)
reduced by total liabilities, divided by the number of outstanding shares of
Common Stock. After giving effect of this Offering by the Company of 200,000
shares offered hereby assuming an offering price of $6.50 per share, the pro
forma net tangible book value of the Common Stock, after deduction of selling
and Offering expenses, would have been approximately $1,275,420 or approximately
$.65 per share. Thus purchasers of the shares offered hereby would have suffered
immediate dilution of $5.85 per share.
Initial public offering price per share. . . . . . . . . . . . . $6.50
Net tangible book value per share at July 31, 1997. . . . . $0.00
Increase per share to attributable to new investor. . . . . $0.65
-----
Pro forma net tangible book value per share after the offering . $0.65
-----
Dilution per share to new investors . . . . . . . . . . . . $5.85
-----
-----
MINIMUM OFFERING
The net tangible book value of the Common Stock after a successful Minimum
Offering would be $0.34. Net tangible book value per share of Common Stock
represents the total tangible assets (total assets minus intangible assets)
reduced by total liabilities, divided by the number of outstanding shares of
Common Stock. After giving effect of this Offering by the Company of 100,000
shares offered hereby assuming an offering price of $6.50 per share, the pro
forma net tangible book value of the Common Stock, after deduction of selling
and Offering expenses, would have been approximately $625,420 or approximately
$0.34 per share. Thus purchasers of the shares offered hereby would have
suffered immediate dilution of $6.16 per share.
Initial public offering price per share. . . . . . . . . . . . . $6.50
Net tangible book value per share at July 31, 1997. . . . . $0.00
Increase per share to attributable to new investor. . . . . $0.34
Pro forma net tangible book value after this offering. . . . . . $0.34
-----
Dilution per share to new investors. . . . . . . . . . . . . . . $6.16
-----
-----
The following tables sets forth the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid by existing shareholders and to be paid ( at the initial public
offering price of $6.50 per share by purchasers of shares offered by the Company
hereby.)
12
<PAGE>
MINIMUM OFFERING
Shares Purchased Total Consideration
---------------- -------------------
Amount Percent Amount Percent Ave. Price
------ ------- ------ ------- per Share
---------
Existing Shareholders 1,750,000 94.6% $ 155,000 19.3% $ 0.09
New Investors 100,000 5.4% $ 650,000 80.7% $ 6.50
Total 1,850,000 100% $ 805,000 100%
MAXIMUM OFFERING
Shares Purchased Total Consideration
---------------- -------------------
Amount Percent Amount Percent Ave. Price
------ ------- ------ ------- per Share
---------
Existing Shareholders 1,750,000 89.7% $ 155,000 10.7% $ 0.09
New Investors 200,000 10.3% $ 1,300,000 89.3% $ 6.50
Total 1,950,000 100% $ 1,455,000 100%
DIVIDEND POLICY
The Company intends to retain all future earnings for use in the
development of its business and does not anticipate paying any cash dividends in
the foreseeable future. The payment of all dividends will be at the discretion
of the Company's board of directors and will depend upon, among other things,
future earnings, operations, capital requirements, the general financial
condition of the Company and general business conditions.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of July
31, 1997 and as adjusted to give effect to, among other things, the Offering
(at an assumed initial public offering price of $6.50 per share):
<TABLE>
<CAPTION>
As of:
July 31, 1997 Minimum Maximum
------------- ------- -------
<S> <C> <C> <C>
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . $0 $0 $0
Short-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . 0 0 0
Stockholder's Equity:
Class A Common Stock, $.05 par value,
2,000,000 shares authorized, 1,750,000 shares
issued and outstanding actual, as adjusted (1)
1,850,000 shares issued and outstanding
(minimum) 1,950,000 shares issued and outstanding
(maximum). . . . . . . . . . . . . . . . . . . . . . . . . . 87,500 92,500 97,500
Additional paid-in capital. . . . . . . . . . . . . . . . . 70,000 715,000 1,360,000
Deficit accumulated during development stage . . . . . . . . (42,580) (42,580) (42,580)
Total Stockholder's Equity. . . . . . . . . . . . . . . . $114,920 $764,920 $1,414,920
------------- ----------- -----------
Total Capitalization. . . . . . . . . . . . . . . . . . . $114,920 $764,920 $1,414,920
------------- ----------- -----------
------------- ----------- -----------
</TABLE>
(1) At July 31, 1997, the Company had 1,750,000 common shares outstanding on a
fully diluted basis consisting of: (i) 1,750,000 shares issued and
outstanding; (ii) as adjusted common shares outstanding includes the sale
of 100, 000 shares for the Minimum Offering and the sale of 200,000 shares
for the Maximum Offering.
13
<PAGE>
PLAN OF OPERATION
The Company was organized on March 31, 1997 and is in the development
stage. Since inception the Company has been engaged principally in
organizational activities, including developing a business plan, identifying and
negotiating with specific regional and short-line railroad acquisitions
candidates and potentially-divested Class 1 rail lines, negotiating with lending
sources to acquire additional capital for the acquisitions that the Company
wishes to secure, identifying and negotiating with qualified management,
consulting, and advisory personnel necessary for the successful implementation
of the Company's Acquisitions, Marketing and Operating Strategies and
establishing the business opportunities within the niche in which to focus the
Company's efforts
The Company has generated no revenues as to date and does not expect to
generate meaningful revenues in the near future until such time, if ever, it has
acquired its "base property" and is a fully functioning railroad. The Company
has incurred a loss since its inception, resulting in an accumulated deficit at
July 31, 1997 of $42,580. The Company anticipates that it will continue to incur
losses for the foreseeable future until such time, if ever, the Company is able
to generate sufficient revenues to finance its operations.
The Company's objective is to become a dominant provider of rail freight
transportation through the acquisition and consolidation of existing regional,
short-line and divested rail assets from Class 1 railroads. railroads. The
targeted rail assets, either publicly or privately owned, may be acquired via
outright purchase, stock purchase, lease, operating lease or other combination.
Following the completion of this offering, the Company will move forward
with it's Acquisition, Marketing and Operating Strategies and become a fully-
operational railroad. The Company will attempt to acquire, via asset purchase,
stock purchase, lease, operating contract or appropriate combination thereof,
one or more of the properties targeted by the Company. Once the Company has
acquired all of the targeted properties within the region of the country that
the Company has identified as most desirable to apply its Marketing and
Operating Strategies it will begin the operational strategy phase. The Company
intends to begin a complete and comprehensive rail line rehabilitation program,
commensurate and appropriate with existing traffic levels to increase
reliability, enhance safety, and provide for the ability to compete for
additional revenue traffic. The Company intends to simultaneously reduce
operating expenses to a level where maximum expense efficiencies are reached
without compromising safety or customer service. The Company will strive to
generate sufficient levels of revenue and profitability to allow the Company to
continue to explore new business and railroad acquisitions opportunities which
are consistent with its Marketing and Operating Strategies.
The funds received from this Offering will not be sufficient to satisfy the
cash needs of the Company for the next twelve months. The Company will need
additional funding after the offering closes to acquire the initial "base"
property, that is discussed throughout this Prospectus. The Company intends to
use the proceeds of this Offering to fund the administrative costs of the debt
offering, for up to $30M U.S. Dollars, that will be needed to acquire the base
property. The net proceeds from the Offering, either the $650K minimum or the
$1.3M maximum, will also be used to put the company's acquisition plan into
force and to capitalize the Company itself.
Over the next twelve months the Company intends to add employees on an as-
needed basis. In addition to the initial management team, the Company has
identified, and upon completion of this offering the Company intends to secure
the services of numerous individuals with specific expertise in the railroad
acquisitions due diligence process, railroad operations, transportation
marketing and logistics and railroad law. Through these targeted individual's
prior involvement in the industry they may have important contacts and
relationships within the Class 1 and regional/short-line railroad communities.
These individuals will work during the Company's ongoing Acquisitions Strategy
to focus the process of identifying acquisition opportunities, perform the due
diligence analysis needed to determine acquisition price and operating strategy,
and to conduct marketing studies and shipper interviews to identify what
additional opportunities for revenue growth are available.
It is the Company's intent to acquire an existing regional or short-line
railroad and utilize the property as it's "base" property. Thus, the initial
management, operating, marketing, and the administrative work force will already
be in place. As additional railroads or rail lines are acquired, the
organizational structure will evolve, by absorbing, where practical, operating
employees of each acquired railroad
14
<PAGE>
BUSINESS
INDUSTRY SUMMARY
Since 1980 the railroad industry in the United states has undergone
significant changes due to the passage of the Staggers Rail Act of 1980 (the
"Staggers Rail Act") The 1980 Staggers Rail Act fundamentally changed Federal
regulatory policy by emphasizing the promotion of "revenue adequacy" (the
opportunity to earn revenues sufficient to cover cost and to attract capital)
for the railroads and allowing competition to determine, to a greater extent,
rail prices and route service options. Since 1980, Class 1 railroads in the U.S
and Canada have taken steps to improve profitability and increase their market
share. The Class 1 railroads have focused their capital resources on their core
system, which is the long haul sector. Certain Class 1 railroads have sold
branch lines/short-lines to smaller operators, who have lower overheads and are
willing to commit the resources necessary to service the shippers/customers on
the branch lines. The divestment of the branch lines/short lines allows Class 1
carriers to minimize capital expenditures, improve efficiency while avoiding
traffic losses and the long drawn out legal processes involved with abandonment.
Out of this environment was created a host of smaller regional and short-
line railroads that could afford to operate profitably where the larger carriers
could not, due to their much lower overhead and operating cost structures. While
able to operate on a profitable basis, many of these newly-created regional and
short-line railroads simply did not have the excess capital or access to capital
required to expand and improve their physical plant and equipment resources. As
a result, many of these new regional and short-line railroads took on a
"custodial" transportation role; providing continued service for selected
shippers that remained on-line, but limited, by lack of capital or management
resources as to their ability to upgrade their physical plant or transportation
services in order to compete for new traffic sources.
The Company believes it sees a new wave of merger activity taking place
within the railroad industry. In 1995, the Burlington Northern and Santa Fe
railroads merged. In 1996, the Union Pacific and Southern Pacific railroads
merged and, as 1997 moves forward, the Norfolk Southern and CSX railroads have
agreed to buy and divide the Conrail railroad system The Company believes that
these completed and proposed mergers will result, as they have in the past, in a
new wave of rail line divestitures by these new, larger entities, as they focus
their resources on their most profitable core routes.
As the remaining Class 1 railroads look to rationalize non-priority
portions of their rail systems, they will be looking to divest those rail line
assets to other railroad operators. These railroad operators will be required
to have the capital and management resources to continue to operate these rail
lines efficiently, maintain the physical plant, and be willing to work
cooperatively with the Class 1 railroads to create a structured and seamless
interchange of traffic to and from these divested rail lines.
CURRENT CORPORATE STATUS
PRESENT STATUS
The Company is currently a non-operating/development stage company. The
activities of the executives to-date have been: 1.) identifying and negotiating
with specific regional and short-line railroad acquisitions candidates and
potentially-divested Class 1 rail lines, 2.) negotiating with lending sources to
acquire additional capital for the acquisitions that the Company wishes to
secure. 3.) identifying and negotiating with qualified management, consulting,
and advisory personnel necessary for the successful implementation of the
Company's Acquisitions, Marketing and Operating Strategies. 4.) establishing the
business opportunities within the niche in which to focus the Company's efforts.
Following the completion of this Offering, the Company will move forward
with its Acquisition, Marketing and Operating Strategies and become a fully-
operational railroad. The Company will attempt to acquire, via asset purchase,
stock purchase, lease, operating contract or appropriate combination thereof,
one or more of the properties targeted by the Company. Once the Company has
acquired all of the targeted properties within the region of the country that
the Company has identified as most desirable to apply its Marketing and
Operating Strategies, it will begin the operational strategy phase. The Company
intends to begin a complete and comprehensive rail line rehabilitation program,
commensurate and appropriate with existing traffic levels to increase
reliability, enhance safety, and provide for the ability to compete for
additional revenue traffic. The Company intends to simultaneously reduce
operating expenses to a level where maximum expense efficiencies are reached
without compromising safety or customer service. The Company will strive to
generate sufficient levels of revenue and profitability to allow the
15
<PAGE>
Company to continue to explore new business and railroad acquisitions
opportunities which are consistent with its Marketing and Operating Strategies.
CURRENT MANAGEMENT TEAM
GARRY G. OGLESBEE
Mr. Garry G. Oglesbee is the Founder, Chief Executive Officer and a
Director of the Company. Please see "Management" for a complete resume of Mr.
Oglesbee, located on page 22.
LEONARD R. MITCHELL
Mr. Leonard R. Mitchell is the Vice-President and a Director of the
Company. Please see "Management" for a complete resume of Mr. Mitchell, located
on page 22.
ADDITIONAL MANAGEMENT
In addition to the initial management team, the Company has identified, and
upon completion of this offering the Company intends to secure the services of
numerous individuals with specific expertise in the railroad acquisitions due
diligence process, railroad operations, transportation marketing and logistics
and railroad law. Through these targeted individuals' prior involvement in the
industry they may have important contacts and relationships within the Class 1
and regional/short-line railroad communities. These individuals will work during
the Company's ongoing Acquisitions Strategy to focus the process of identifying
acquisition opportunities, perform the due diligence analysis needed to
determine acquisition price and operating strategy, and to conduct marketing
studies and shipper interviews to identify what additional opportunities for
revenue growth are available.
After successful implementation of the Acquisitions Strategy, the Company
anticipates it will continue to employ a staff of full-time and contract
personnel whose function is to evaluate additional acquisitions opportunities
and revise the base Company structure to allow for effective expansion.
Employees will be added on an as-needed basis as the business dictates.
LICENSE AND REGULATORY CONSIDERATIONS
TrueTraks, Incorporated will be subject to regulations by the Surface
Transportation Board (STB), the Federal Railway Administration (FRA), State
Departments of Transportation, and local regulatory agencies once it becomes an
operating railroad company. Established in 1995 by Congressional Act, the STB
has jurisdiction over service levels and compensation of rail carrier for rail
car use by other railroads, authorizing extension or rail line abandonment,
acquisition of rail lines, and consolidation, merger or acquisition of control
of rail carriers. The FRA has jurisdiction over safety and railroad equipment
standards and also assists in the coordination of projects for railroad route
simplification.
STRATEGY
GENERAL
TrueTraks, Incorporated intends on becoming a fully functioning rail
transportation company and the dominant provider of rail freight transportation
in the specific regions of the country where it eventually will serve. It will
accomplish these goals through the acquisition and consolidation/combination of
several existing regional and short-line railroads in specific geographic
regions of the country. It intends to add to these regional rail systems via the
acquisition of divested Class 1 rail lines which connect to the existing system.
The Company believes that the acquisition and consolidation of existing
regional and short-line railroads could provide the opportunity to generate new
levels of revenue, profitability and more efficient customer service through the
elimination of duplicate costs and functions, the opportunity to generate more
efficient single-line rail transportation service for a greater number of
customers, the opportunity to gain a longer line-haul and greater share of the
transportation revenue for goods moving through the region on the Company's
combined rail system, and the opportunity to attract new customers through the
efficiencies gained by establishing a single, contiguous regional rail
transportation system.
The Company's strategy is to purchase existing regional, short-line
railroads and rail lines divested by Class 1 railroads in targeted geographic
regions of the country and combine them into a contiguous railroad system within
that targeted region. The Company's fundamental acquisition strategy is to
identify properties that have large industrial customers which can provide the
Company with a stable revenue base and the potential to generate revenues and
additional customers upon the implementation of a focused market plan. In new
areas that the
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Company plans to enter, the Company intends to target rail properties that have
adequate size to establish a presence in the area, provide a basis of growth for
the area and have the availability to attract qualified management. In areas the
Company already would have a presence, the Company intends to target properties
that it believes the implementation of a revised operating plan is likely to
generate a significant operating efficiency, which ultimately should lead to
increased revenues. The properties that would be targeted in the areas that the
Company already has a presence, also must have large industrial customers that
have the potential to generate revenues. The goal of these "regionally-specific"
railroad entities is to provide consistent, quality rail transportation services
and to work aggressively within the region to identify, develop and promote
industrial and economic development opportunities that utilize rail
transportation as a primary transportation source.
The Company intends to engage itself cooperatively with connecting Class 1
railroads to maximize the benefits to them of providing a rail "feeder" system,
and the Company intends to further work cooperatively with non-railroad
transportation entities to develop strategic transportation partnerships.
ACQUISITION SOURCES
Over the last 15 years, a large number of regional and short-line railroads
that were created as larger rail entities (often-times Class 1 railroads)
divested portions of their rail infra-structure that they deemed as marginal,
too expensive to maintain or superfluous due to a merger with another railroad.
Many of these regional and short-line railroads were created by operating
entities whose primary desire was to maintain rail service for a selected number
of customers on-line. In many cases, the customers themselves created a
shipper's consortium to purchase and operate the divested rail lines to ensure
continued rail service.
The number of regional and short-line railroads continues to grow, and is
expected to grow at an accelerated pace as the current wave of merger activity
continues between the Class 1 rail carriers. This continued merger activity
creates the opportunity for additional divestiture candidates by the Class 1
railroads. It is within this current and growing number of existing regional,
short-line railroads and eventually-divested Class 1 rail lines, that the
Company will apply its Acquisitions Strategy.
The Company has identified a number of railroads within specific geographic
regions that it wishes to acquire and combine into a larger contiguous regional
rail system. In the regions of the country which the Company desires to employ
its Acquisitions Strategy, the Company has spent a time conducting due diligence
trips, holding meetings with local, state and government officials, and holding
meetings with shippers and economic development groups to share its proposal to
create a regional rail transportation system. The information gained by the
Company during these meetings has provided a broad-base of information, which
has been, and will be, used in the development of specific acquisitions
proposals, and will eventually be incorporated in the Marketing and Operating
Plans.
The Company believes that the continued merger activity among the remaining
Class 1 railroads will eventually cause these larger railroads to shift their
operating focus away from serving the local and regional markets they once
served prior to their merging. The Company believes it will be able to realize
additional revenue traffic by positioning itself as the dominant rail carrier
within a specific geographic region and expanding rail service to those once-
served by a Class 1 railroad, or by assuming service on rail lines once owned by
a Class 1 railroad. The Company will be able to compete for the acquisition of
Class 1 rail lines after it has established itself as a dependable and
experienced railroad operating company. The acquisition and operation of
existing regional and short-line railroad properties may provide the Company the
necessary credibility to compete for acquisition of divested Class 1 rail lines
when they become available.
Many of the railroads which the Company has targeted for acquisition are
owned by entities which do not have the financial resources and/or the incentive
to dramatically improve the rail infrastructure. Rail line maintenance and
rehabilitation are required to maintain reliable and safe service, and to expand
potential service options. The Company has taken a long-term view on the
rehabilitation of the railroads targeted for purchase, and believes that the
business value of a combined system such as the Company envisions will provide
both the financial resources and the business incentive to bring substantial
rail line infrastructure improvements within a five-to-seven year time frame.
The Company sees opportunity throughout the entire United States to
implement its Acquisitions Strategy. Specific regions of the country which
appear, based upon the availability of connectable regional and short-line
railroad properties and potential Class 1 rail line divestitures, would be: 1.)
the near-West region, encompassing
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such states as Kansas, Colorado, New Mexico, and Utah; 2.) Northeast,
encompassing such states as New York, New Jersey, and the New England area; 3.)
the Southeast, encompassing such states as The Carolinas, Tennessee, and
Kentucky; and 4.) Midwest, encompassing such states as The Dakotas, Minnesota,
Iowa, Indiana, and Ohio While these are general regions which the Company has
identified as having the greatest near-term opportunities to implement the
Company's Acquisitions Strategy, it will not rule out other geographic locales,
provided they fit within the niche that the Company has defined.
ACQUISITION COMPETITION
There are currently a number of publicly and privately-held companies that
area involved in the ownership and operation of regional and short-line
railroads in numerous geographic locations. The primary competitors for the
Company's goals and objectives are: Genesee and Wyoming Corporation, RailTex
Industries, OmniTRAX, RailAmerica, and Pioneer Railcorp. These companies own and
operate several hundred to several thousand miles of rail lines throughout the
United States, and have the advantages of an established track record,
established relationships with Class 1 railroads and established lines of credit
and financing facilities.
Not all of the primary competitors seem to have a corporate strategy
similar to that of the Company. RailTex, Pioneer Railcorp, OmniTRAX, and
RailAmerica tend to focus their acquisitions on smaller short-line and switching
railroads with under $10 million in revenues. These competitors tend to grow
their business by diversification of geographic location as opposed to maximum
expansion within a defined geographic location.
The prime competitor whose historical corporate acquisitions and operations
strategy most closely mirrors that of the Company is Genesee and Wyoming
Corporation. The Company believes that with the supply of available regional and
short-line railroads and the potential for additional rail line divestiture by
the Class 1 railroads, there will be an ample availability of acquisition
candidates for the Company which will mitigate any direct competitive effects.
Typically the Company would bid against other short line and regional
operators for available properties. The structure/price of each transaction
would be determined by the seller based upon economic and strategic
considerations. In addition to the financial terms of the transaction, sellers
may consider more subjective criteria such as a prospective purchaser's
operating experience or management's experience in the railroad industry.
ACQUISITION COSTS/CONSIDERATIONS
Purchase prices for railroads and divested Class 1 rail lines are arrived
at through negotiations based upon several industry norms. The various methods
center around three basic industry guidelines: 1.) Multiple-to-Revenue generated
on-line, 2.) $1.00 lease per year plus a percentage of business interchange
charges should rail traffic be diverted to a different railroad, 3.) Net
Liquidation Value of the Base, which is the scrap value of the track structure
and underlying land values. Historically, acquisitions of divested Class 1 track
and outright acquisition of an existing regional or short-line railroad have
been based on a multiple of gross revenues. Recent transaction costs have ranged
from between 1.5 times to 2.5 times gross revenues. These figures will often
include equipment, but everything is negotiable. The multiple to revenues paid
can be adjusted up or down by several factors, including: track condition,
maintenance requirements, diversity and stability of customer base, seasonality
of the business, connecting rail carriers, assumption of certain liabilities and
expected financial returns.
The Company, in evaluating acquisition opportunities, would consider, among
other things, the size of the rail operations, customer and commodity
diversification, connecting carriers, revenue stability, track and maintenance
requirements, opportunities for expansion and financial returns. The Company
would also consider acquisition opportunities that would have the potential to
enable the rail line to provide better or more cost effective service to major
shippers or to increase or diversify the overall customer make-up of the
railroad.
The Company's strategy will be to acquire railroads by asset purchase,
stock purchase, leasing, operating rights or any appropriate combination
thereof, using the lowest multiple to gross revenues possible, yet insuring that
all underlying real estate and underground and air rights are included in any
purchase. The Company believes that the advisory and consulting staff hired
during the Acquisitions Stage will help to insure the maximum level of success
in this specific area.
The decision to abandon, sell, or otherwise cease operational interest in
certain track by Class 1 railroad management can arise for numerous reasons.
One major factor in that decision is based upon how much and what type of
traffic is carried on the property. If the traffic on the railroad or rail line
segment is primarily concentrated
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in the hands of a single customer, the price paid must reflect the potential
risk of the loss of the key customer. If the Class 1 rail line acquisition
includes equipment (locomotives and rail cars), the sales price will be adjusted
to reflect those equipment assets.
The definitions of available rail lines divested by Class 1 railroads can
be described by the three terms utilized industry-wide: The first term is
"scrap". If the property under consideration for divestiture carries less than
20 rail cars per mile per year, the owning railroad will consider this property
to be scrap unless it provides other strategic benefits to maintaining
ownership. The second term is "sell as marginal". If a rail line carries less
than 30 rail cars per mile per year, the railroad will consider the sale of this
property due to its marginal profitability, unless it provides some other
strategic benefit to the Class 1. The operational costs on Class 1 railroads and
many large regional railroad operating companies make continued operations of
these low-traffic properties not viable from an economic standpoint. The third
term is "keep as profitable". If the rail line carries more than 30 cars per
mile per year, the Class 1 will typically consider retaining this property
unless there is some strategic or resource allocation benefit that can be
derived from its sale or lease.
As additional railroads and divested Class 1 rail lines are added to the
initial "base acquisition", line haul distances for traffic will be expanded,
thereby improving revenues-per-ton-mile. Equipment utilization will be improved
by operating locomotives greater distances and by expanding the number of
originating customers that can utilize Company-owned or-leased freight car
equipment. As additional properties are added, overhead costs should be reduced
by the consolidation of administrative, accounting, maintenance, marketing and
other management functions.
SUMMARY
The Company believes that a specific opportunity currently exists to
acquire independently-owned regional and short-line railroads in specific
geographic regions and combine them into a single contiguous regional rail
transportation system. Furthermore, the Company believes that the railroad
industry will experience further merger and consolidation activity among the
Class 1 railroads, which, in time, will make available for purchase or lease
portions of former Class 1 track that can be operated profitably by an entity
whose focus is more regional in nature and has a lower overhead expense than a
Class 1 railroad.
The Company believes that this trend will eventually result in a national
rail system composed of a few coast-to-coast railroads, and smaller, regionally-
specific "feeder" rail systems. While this system exists partially today in the
current railroad environment, the Company believes that this trend will
accelerate in the comings years, and will require a greater level of cooperation
and coordination between all rail transportation service providers to deliver a
seamless level of service to the customer.
The Company intends to operate in any region of the country where the
potential exists to acquire several existing regional, short-line and divested
Class 1 rail lines, and combine these acquisitions into a larger contiguous
regional rail transportation system. While the Company has identified a number
of potential regional and short-line acquisitions candidates, and has approached
these candidates regarding the Company's desire to make an acquisition thereof,
no formal purchase/sale agreements or Letters of Intent for the purchase of rail
assets have been executed to-date.
FINANCING/FUNDING
The Company will need additional funding after the offering closes to
acquire the initial "base" property, that is discussed throughout this
Prospectus. The Company intends to use the proceeds of this Offering to fund the
administrative costs of the debt offering, for up to $30M U.S. Dollars, that
will be needed to acquire the base property. The net proceeds from the Offering,
either the $650K minimum or the $1.3M maximum, will also be used to put the
company's acquisition plan into force and to capitalize the Company itself.
The Company has met with and received a verbal commitment from a funding
source in Plantation, Florida for the additional capital required to purchase
the Company's initial acquisition ("base property") and other planned
acquisitions. There will be certain administrative fees, legal, accounting,
travel, consulting, etc. that will be incurred by the Company in the process of
acquiring the debt funding to secure the base property. These expenses will be
paid out of the use of proceeds.
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The Company has researched numerous rail assets that it wishes to acquire
as its initial base property. As of the date of the Offering Circular the
Company has not specifically picked one of the researched rail properties as its
intended base property. Once the Company has closed the Offering, it will make a
final decision on which property it will acquire as its initial base property.
At that time the Company will work with Heller Capital, Inc. to complete the
debt funding, that will be needed by the Company, to acquire the base property.
Once the Company has acquired its initial base property it will proceed
with the process of acquiring additional rail properties. The funding source in
Plantation, Florida, (the firm of Heller Capital, Inc.) has also expressed an
interest in funding other acquisitions that the Company intends to pursue. Other
funding sources for additional capital will be approached by the Company at such
time that additional acquisitions becomes imminent. The Company's executive
officers have many years experience in the rail industry and have acquired
numerous contacts in the rail industry. The Company feels these contacts and
experience in the rail industry will help the Company stay informed of rail
assets that are on the market or will be coming on the market.
The Company believes debt financing for rail assets may be the most viable
method for the Company to use in acquiring rail assets. The Company feels that
the most viable form of debt financing would be a type of convertible debt.
These convertible debt, would allow the debt holders the option to convert their
interest payments, principal payments or a combination of these two into an
equity position in lieu of receiving cash. This debt structure could help the
Company if a cash flow shortage occurred, at some point in time, in the Company.
There is no guarantee that this is the debt structure the Company and Heller
Capital Incorporated, will agree on to be used as the debt vehicle.
There can be no assurances made that the additional capital will be
available to fund the Company's initial base acquisition or any further
acquisitions planned by the Company. Such funding, if available, may be on terms
unfavorable to the Company, have restrictions on future acquisition and/or
restrictions on future uses of capital or other restrictions that may be
unfavorable for the Company.
MARKETING
It is the Company's intent to acquire an existing regional or short-line
railroad and utilize the property as it's "base" property. Thus, the initial
management, operating, marketing, and the administrative work force will already
be in place. As additional railroads or rail lines are acquired, the
organizational structure will evolve, by absorbing, where practical, operating
employees of each acquired railroad.
The Company's intended Marketing plan is intended to work hand-in-hand with
the Operational plan by maximizing the profitability of the current revenue base
of each railroad acquired, increasing the revenue traffic on each acquired
railroad, creating operational and customer service efficiencies, developing
traffic and revenue synergies through the combined contiguous regional rail
transportation entity and generating incremental revenue growth by attracting
smaller customers and providing ancillary services which generate non-freight
revenues.
TARGET MARKETING
Upon becoming a fully-operational railroad operating company, the Company
intends to implement an aggressive marketing campaign in the regional markets
which it serves. The Company intends to utilize a well-trained, knowledgeable
and pro-active marketing team experienced in understanding and explaining the
benefits of rail transportation services to potential customers, and in
developing creative or expanded transportation solutions to the current customer
base. The Company intends to direct its marketing efforts towards manufacturers,
inter-modal trucking companies, agricultural firms, commodity producing
industries, municipalities, and industrial/economic development authorities
whose transportation needs are not being fully met, or whose businesses could
expand or diversify through the application of greater transportation
efficiencies.
The Company believes it will be critical for customers to know the
commitment to quality and service the Company intends to provide. This message
can be best delivered by being pro-active in working with our customers to
provide new or additional transportation services that will allow their
businesses to grow, developing a consistent level and frequency of
communications and responding immediately to our customers' service questions
and concerns. Personal involvement by the Company's experienced executives and
the Company's, marketing and customer service professionals will serve to
underscore the value that the Company places on the customers' business. The
Company anticipates personal relationships can be established that will
strengthen the Company's opportunity to foster long-term customer loyalty.
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Upon becoming a fully-operational railroad, the Company intends to develop
additional transportation and logistics strategies that will improve the
customers' ability to move their products to their customers and to customize
existing services to meet specialized customer demands. The Company believes
this strategy would complement our customer service philosophy to meet customer
demands which will foster customer loyalty. The Company also believes this
strategy will allow the Company to develop effective, innovative services
allowing the Company to capture and retain a greater portion of the customers'
transportation needs.
Upon becoming a fully-operation railroad, the Company may seek allegiances
with other railroads for the purpose of conducting mutually-beneficial business.
These allegiances could be beneficial to the expected growth in revenue traffic
that could be carried by the Company's future railroads. These allegiances
should result in additional profit for the Company. The Company intends to work
cooperatively with other transportation modes to develop partnerships designed
to leverage each other's inherent strengths. The Company believes that by
developing these relationships with Class 1 carriers, other regional and short-
line railroads and other non-rail transportation entities, new sources of
revenue traffic and higher levels of profitability can eventually be realized.
OPERATIONS
REVENUE
The railroad industry is an interconnected network of track. As a result,
rail cars which originate on one railroad will often travel over the track of
another or several railroads. In these cases, the railroad that has the foreign
rail cars traveling on their property are charged a daily rate (known as "Car
Hire") by the owner of the rail car. This daily rate is incumbent upon the rail
car owner to track and collect. The coordination of the interchange of rail cars
is done through the American Association of Railroads (AAR) by means of
electronic data interchange. Once the Company acquires its first railroad, it
will earn car hire income on equipment that it owns or leases that travels over
other railroads. The Company will also earn revenue for the repair of foreign-
owned freight car equipment that requires repair while traveling on the
Company's rail system. Billing for this service is through AAR-established rates
and is remunerative.
Although some traffic will both originate and terminate on Company-owned
rail lines, most traffic will be received or forwarded via interchange with
other railroads. For customer convenience, only one rate is quoted on traffic
moving over multiple railroads and only one railroad is responsible for the
billing and collection of revenues. The revenue collected must be divided
between all railroads participating in the traffic move, with that division
being accomplished by one of the following methods. Revenue may be collected by
negotiation between railroads, an established division of revenue agreement, a
dictated allowance from a Class 1 railroad to a short-line railroad, an
established switching allowance in major terminal areas or a set fee-for-haulage
agreement.
INSURANCE
The company intends to carry or obtain insurance coverage for losses
arising from personal damages in the event of derailments or other accidents or
occurrences. The Company may also carry excess liability insurance policies
which would provide supplemental coverage for losses in excess of the primary
policy limits. The Company's liability policy would also cover certain aspects
of hazardous commodities and person injury issues. The Company also plans to
carry all-risk property damage insurance coverage. The Company plans to carry
sufficient insurance coverage to handle most situations, however in the event of
a catastrophic situation, the Company may not have sufficient insurance coverage
to adequately cover the liability. If this type of situation occurred the
Company could be adversely effected.
CONTRACTS
Once a railroad acquisition has taken place, the Company will assume
certain contractual conditions. Historically, when an acquisition takes place,
all marketing contracts with shippers remain in effect, trackage rights remain
in effect and all leases on property or adjacent property are assigned to the
new owner. Should a shipper have certain negotiated pricing with a current-
servicing Class 1 railroad, those arrangements remain in effect.
ENVIRONMENTAL
The Company's intended operation will be subject to various federal, state
and local laws and regulations relating to the protection of the environment,
which have and will become, increasingly stringent. These environmental laws and
regulations, which are implemented principally by the Environmental Protection
Agency (EPA) and equivocal state agencies, govern the management of hazardous
wastes, the discharge of pollutants in the
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air and into surface and underground waters and the disposal and manufacture of
certain substances. The Company believes that any expense incurred in
maintaining compliance with current environmental laws and regulations would not
have a material effect on the Company's earnings or expenditures. However, there
can be no assurance that the current regulatory environment will not change, or
unforeseen environmental incidents will not occur, or that past non-compliance
with environmental laws and regulations will not be discovered on Company
property or acts committed by the Company were in non-compliance by the Company.
The Company may be acquiring property which may have environmental
considerations and potential remediations. Prior due diligence will reveal this
aspect, and the eventual purchase price will be adjusted to reflect the
potential expenses for the remediation of any environmental issues.
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The Company's Directors and Executive Officers, their ages and positions
with the Company as of the date of this Prospectus, are as follows:
Name Age Position
---- --- --------
Garry G. Oglesbee ---------- 56 Chairman, President, Chief Executive
Officer, Director
Leonard R. Mitchell -------- 53 Vice-President, Chief Operating Officer,
Director
GARRY G. OGLESBEE
Mr. Oglesbee was named Chief Executive Officer of the Company effective
March 31, 1997. Mr. Oglesbee is a 1973 graduate of LaSalle University, Chicago,
Illinois, where he receive his degree in Business Management. Prior to attending
LaSalle University, Mr. Oglesbee attended Barstow Community College, Barstow,
California, where he studied Civil Engineering and Mathematics. Mr. Oglesbee
also is a Certified Locomotive Electrician, he completed his apprenticeship in
1964 with the Atchison and Topeka, Santa Fe Railway Apprentice School where he
attained a 4.0 GPA and finished in the top 10% of his class.
Prior to accepting this position, Mr. Oglesbee was an independent
consultant in his own firm, Rail Transportation Consulting Inc., providing
executive level, focused services to the rail transportation industry. The
focused services Mr. Oglesbee offered his clients, included planning new rail
services, operational improvements, Federal Railroad Administration Regulations,
facilities planning and development, computer systems requirements, locomotive
engineering training, and scheduling.
Prior to operating Rail Transportation Consulting Inc., Mr. Oglesbee spent
over 30 years with the Atchison and Topeka, Santa Fe Railway. Mr. Oglesbee
spent 22 years in positions of responsibilities and management. Mr. Oglesbee is
a federally licensed locomotive engineer and designated supervisor of locomotive
engineers (DSLE). He left Santa Fe in 1994 as the Manager of Train Operations,
Trainmaster of five subdivisions Gallup East, Gallup West, Lee Ranch, Defiance,
and Coranoda and Springerville. His responsibilities also included management of
all Yard and Local Train Operations in Gallup which encompassed the supervision
of over 600 personnel.
Mr. Oglesbee's other achievements are the establishment and conduction of
the locomotive maintenance training program including solid state and transistor
theory, the development and implementation of the "split yard" concept which
allows for storage and operations to coexist thereby reducing switching time and
increasing revenue and realized a 46% ROI in 3 years, the design and
implementation of track switching layout to serve the paper mill industry
providing for efficient loading, unloading, and turnaround realizing $5 million
in annual revenue, the designed and implemented train schedules and crew
training to move 11 million tons of coal annually from 2 mines to 5 power plants
representing 35% of Santa Fe's coal business with a 96% on-time delivery and
zero injuries in 3 years of operation, the re-design of the operations plan for
service to industrial customers thereby increasing on-time service to 89% and
crew reduction costs by 22%. Additionally, Mr. Oglesbee implemented the Federal
Engineer Licensing certification program and personally certified 35 Engineers
in less than 12 months
LEONARD R. MITCHELL
Mr. Mitchell was named Vice-President and Chief Operating Officer for the
Company effective March 31, 1997.
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Mr. Mitchell is a 1972 graduate of Eastern New Mexico University of
Portales, New Mexico where he received his Bachelor of Science degree. Mr.
Mitchell also is a graduate of the Westinghouse Air Brake School, the Santa Fe
Locomotive Engineer Training School and the Nashville Diesel Mechanics School.
Mr. Mitchell has over 34 years experience in the Railroad Industry. Mr.
Mitchell starting with the Santa Fe Railroad as a Locomotive Fireman in 1963 and
progressed through the positions of Locomotive Engineer, Operating Assistant and
Safety Supervisor. As Safety and Transportation Supervisor for the Santa Fe
Railroad from 1974 to 1976 Mr. Mitchell was responsible for safety and training
programs for various railroad divisions. He was responsible for maintaining and
developing budgets, interpreting and dealing with F.R.A. regulations and dealing
and directing large staff organizations.
In 1977 Mr. Mitchell became a Assistant Train Master and in 1976 became a
relief Assistant Superintendent. In 1981 Mr. Mitchell became a Rules Examiner
and in 1987 became a Manager of Rules for the Santa Fe Railroad. In 1991 Mr.
Mitchell became the designated supervisor of Locomotive Engineers and in 1993
became the Assistant Supervisor of Operations for the Santa Fe Railroad. Mr.
Mitchell at the present time is still employed by the Omnitrax railroad.
KEY MAN INSURANCE
The Company plans to obtain "key man" insurance policies on its officers at
the completion of this Offering. The loss or incapacity of any of the Company's
management to perform their functions at the present time or in the foreseeable
future before a qualified replacement is found, could have a material adverse
effect on the Company's operation. The Company, at the present time, does not
have key man life insurance policies in place on the officers of the Company.
BOARD OF DIRECTORS COMPOSITION
The Company's By-laws authorize the Board to designate the number of
directors. The Company currently has seven directors. All directors hold office
until the next annual meeting of the stockholders or until their successors have
been elected and qualified. Officers serve at the discretion of the Board of
Directors. Each of the Company's officers and directors, other than non-employee
directors, devotes substantially full time to the affairs of the Company. The
Company's non-employee directors, when elected or appointed, will devote such
time to the affairs of the Company as is necessary to discharge their duties.
There are no family relationships between any of the director's executive
officers or key employees of the Company.
BOARD OF DIRECTORS COMMITTEES
The Company's Board of Directors plans in the near future to establish a
Compensation Committee and an Audit Committee. The Compensation Committee would
establish salaries, incentives and other forms of compensation for directors,
executive officers and key employees of the company, and administer various
other incentive compensation plans than may be instituted in the future. The
Audit Committee would oversee the work performed by the Company's independent
auditors and review the Company's internal audit controls.
DIRECTOR COMPENSATION
The Company does not currently pay any cash director's fees, but it will
pay the expenses of its directors in attending board meetings. The non-employee
directors of the Company may, in the future, be entitled to cash compensation or
compensation through stock options or warrants. The Employee Directors will not
be entitled to cash Director's fees but will have their expenses paid, if
required, to attend board meetings.
LIMITATIONS ON DIRECTORS' AND OFFICERS' LIABILITY
The Company's Certificate of Incorporation provides that directors of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director except for liability
(i) for any breach of the director's duty of loyalty to the Company or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) in respect of
certain unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law,
or (iv) for any transaction from which the director derived an improper personal
benefit. The effect of these provisions will be to eliminate the rights of the
Company and its stockholders (through stockholders' derivative suits on behalf
of the Company) to recover monetary damages against a director for breach of
fiduciary duty as a director (including breaches resulting from grossly
negligent behavior), except in the situations described above. These provisions
will not limit the liability of directors under federal securities laws.
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The Company's Certificate of Incorporation provides that the Company shall
indemnify its directors, officers, employees and agents to the fullest extent
permitted by law. The Company believes that such indemnification covers gross
negligence on the part of the indemnified parties. The Company's Certificate of
Incorporation also permits it to secure insurance on behalf of any director,
officer, employee or agent against any expense, liability or loss arising out of
his or her actions in such capacity.
The Company intends to obtain directors' and officers' liability
insurance ("D&O Insurance") after the effective date of this Offering, and
expects to continue to carry D&O Insurance following this offering. In addition,
the Company has entered into an indemnification agreement with each of its
directors and officers under which the Company has indemnified each of them
against expenses and losses incurred for claims brought against them by reason
of being a director or officer of the Company.
The Company believes that the limitation of liability and indemnification
provisions in its Certificate of Incorporation, the D&O Insurance and the
indemnification agreements will enhance the Company's ability to continue to
attract and retain qualified individuals to serve as directors and officers.
There is no pending litigation or proceeding involving a director, officer or
employee of the Company to which the indemnification provisions would apply.
LEGAL PROCEEDINGS
TrueTraks, Incorporated is not a party to any legal proceedings.
EXECUTIVE COMPENSATION
The following table reflects all forms of compensation for services to the
Company. No executive officer, director or significant employee will receive
compensation which will exceed $150,000 per annum for the first fiscal year the
Company is in operation. There has been no remuneration for services to the
officers of the Company, prior to the completion of this offering. The Company
has accrued wages for the executive officers of the Company commencing on March
31, 1997.
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------
Annual Compensation Awards Payouts
------------------- ------ -------
Other Securities All
Annual Restricted Underlying LTIP Other
Salary Bonus Compensation Stock Options/ Payouts Compensation
Year ($)(3) ($)(1)(3) ($)(2)(3) Awards ($) SARs (#) ($) ($)(2)(3)
---- ------ --------- --------- ---------- --------- --- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Garry G. Oglesbee - - - - - - -
Chief Executive Officer * * - - - *
President 1997 $75,000
Leonard R. Mitchell - - - - - - -
Chief Operating Officer * * - - - *
Vice-President 1997 $75,000
</TABLE>
(1) Each officer of the Company is eligible to receive annual bonus awards
totaling not more than 2% of gross sales on any given month, based on the
achievement of performance established by the Board of Directors.
(2) Will consist of premiums paid by the Company on life and health insurance
polices.
(3) No officer, director or employee will receive compensation in excess of
$150,00 for the first fiscal year of operations.
* The value of this compensation can not be determined at this time. No bonus
projections have been figured or insurance policy premiums or other types
of compensation have been calculated at this time.
MANAGEMENT BONUS PLAN
The Company has established a Management Bonus Plan pursuant to which key
management personnel of the Company are eligible to receive cash bonuses based
upon achievement of specified targets and goals for the Company and for the
particular employees. Each officer of the Company is eligible to receive annual
bonus awards totaling not more than 2% of gross sales on any given month, based
on the achievement of performance criteria established by a bonus review
committee consisting of members of the Board of Directors of the Company.
24
<PAGE>
DIRECTOR COMPENSATION
The Company does not currently pay any cash director's fees, but it will
pay the expenses of its directors in attending board meetings. The non-employee
directors of the Company may, in the future, be entitled to cash compensation or
compensation through stock options or warrants. The Employee Directors will not
be entitled to cash Director's fees but will have their expenses paid, if
required, to attend board meetings.
EMPLOYMENT AGREEMENTS
The Company presently has five year employment agreements with Messrs.
Oglesbee and Mitchell. Each employment agreement has a five year term. Pursuant
to the agreements, each officer receives a specified annual salary which may, at
the discretion of the Board, be increased in light of performance, inflation or
other factors. Each officer may also be entitled to receive an annual bonus
based on the Company's performance, awarded at the discretion of the Board based
upon the attainment of mutually agreed upon performance goals. Performance goals
of the Company for purposes of calculating bonus payments are not specified in
the employment agreements but rather are determined on a yearly basis by mutual
agreement between the Board and the officers. Additionally pursuant to such
employment agreements, Messrs. Oglesbee and Mitchell have entered into
Confidentiality, Non-Compete and Proprietary Rights Agreements.
STOCK OPTION PLAN
The Company currently has no stock option plans in force for officers,
directors and/or employees of the Company. Any such plan must be adopted by the
Board of Directors and approved by the shareholders. Any such plan of this type
would have to be adopted by the Board of Directors and approved by the
shareholders. These types of plans would be administered by the Board of
Directors Compensation Committee. The Company, at some time in the future, may
institute a stock option plan or a variant of a stock option plan for the
officers, directors and/or employees of the Company.
OTHER COMPENSATION
The Company has tentative plans to offer to the officers, directors and/or
employees of the Company, in the future, health insurance, life insurance and
possibly other forms of compensation. There have been no decisions or plans
made on implementation of these other methods of compensation for officers,
directors and/or employees.
PRINCIPAL SHAREHOLDERS
The following table sets forth as of July 31, 1997 and as adjusted to
reflect the sale of shares of the Company's Class A Common Stock in this
offering, certain information with respect to beneficial ownership of the Common
Stock by (i) each person or entity known by the Company to own beneficially more
than 5% of the Common Stock, (ii) each director of the Company, (iii) each
executive officer of the Company named in the summary compensation table, and
(iv) all directors and officers as a group. Except if indicated in footnotes to
this table, each of the persons named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED BEFORE OWNED AFTER OWNED AFTER
THE OFFERING THE OFFERING THE OFFERING
-------------------- ---------------------- ----------------------
MINIMUM MAXIMUM
------- -------
NUMBER PERCENT(2) NUMBER PERCENT(2) NUMBER PERCENT(2)
------ ---------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Garry G. Oglesbee(1)(2)(3) 1,750,000 100% 682,000 36.9% 682,000 34.9%
Leonard R. Mitchell(1)(2)(3) 0 0% 50,000 2.7% 50,000 2.6%
Lilly Beter(2)(3) 0 0% 600,000 32.5% 600,000 30.7%
Michael Chappue(2)(3) 0 0% 50,000 2.7% 50,000 2.6%
Lonnie Eidson(2)(3) 0 0% 84,000 4.5% 84,000 4.3%
25
<PAGE>
Karl Benz 0 0% 100,000 5.4% 100,000 5.1%
Dr. George Gavrell 0 0% 100,000 5.4% 100,000 5.1%
Nelda Oglesbee 0 0% 34,000 1.8% 34,000 1.8%
William T. Muth(2)(3) 0 0% 0 0% 0 0%
Jack Wiles(2)(3) 0 0% 50,000 2.7% 50,000 2.6%
All directors and officers as a
group (7 persons) 1,750,000 100% 1,516,000 82.0% 1,516,000 77.8
</TABLE>
(1) The address of the Executive officers are as follows:
Garry G. Oglesbee Leonard Mitchell
1408 Kit Carson Dr. 1509 Sundance
Gallup, NM 87301 Wichita, KS 67230
(2) A Director of the Company.
(3) The addresses of the Directors are as follows:
Garry G. Oglesbee Leonard Mitchell Lilly Beter
1408 Kit Carson Dr. 1509 Sundance 3925 Excelsior Blvd. #5
Gallup, NM 87305 Wichita, KS 67230 St. Louis Park, MN. 55416
William T. Muth Lonnie Eidson Michael Chappue
4N 608 High Meadow Road 4570 Valancius Way 49545 Hopi Dr.
St. Charles, IL 60174 Lake Montezuma, AZ 86342 Parker, AZ 85344
Jack Wiles
2920 E. 33rd North Box #3
Wichita, Ks 67219
(4) Percentage calculation is based upon 1,750,000 shares outstanding (actual)
as of July 31, 1997. The minimum percentage calculation is based upon
1,850,000 shares outstanding after the Offering and the maximum percentage
calculation is based upon 1,950,000 shares outstanding after the Offering.
There are no options, warrants or rights to purchase securities
outstanding.
Certain Officers, Directors and future shareholders will be receiving
shares of Common Stock from Garry G. Oglesbee. These Officers, Directors and
future shareholders are receiving their equity ownership in the Company, shares
of Common Stock, for loaning Mr. Oglesbee money to capitalize the Company and
for performing certain services/tasks that Mr. Oglesbee needed performed. Mr.
Oglesbee will repay the Officers, Directors and future shareholders the funds
that were loaned to him in full. The distribution of the shares of Common Stock
to certain Officers, Directors and future shareholders is to be considered part
of the repayment plan for the funds borrowed by Mr. Oglesbee. The shares of
Common Stock that Mr. Oglesbee is distributing to certain Officer, Directors and
future shareholders is to be considered 144 stock. This 144 stock that the
certain Officers, Directors and future shareholders will receive will be subject
to a lock-up agreement and will be held by the transfer agent for a period of
one year from the date of distribution.
SUMMARY OF CERTAIN TRANSACTIONS
OFFICER OR DIRECTOR TRANSACTION VALUE AMOUNTS TO BE
RECEIVED RECEIVED
(IN STOCK) (IN CASH)
26
<PAGE>
Garry G. Oglesbee Garry G. Oglesbee contributed 1,750,000 None
cash in the amount of $155,000
for organizational expenses and
to capitalize the Company.
The Company has no plans to enter into any transactions with or make any
advances to or from officers, directors or stockholders of the Company. In the
future, the Company will not engage in any transactions with its officers,
directors or five percent shareholders or their affiliates unless the
transaction is approved by a majority of the disinterested directors of the
Company after full disclosure and will be on terms no less favorable to the
Company than would be available from an affiliated third party.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's Certificate of Incorporation provides that the authorized
capital stock of the Company consists of 2,000,000 shares of Common Stock, par
value $0.05 per share. Upon consummation of the Offering, 1,850,000 shares of
Common Stock will be issued and outstanding under the Minimum, and 1,950,000
shares of Common Stock will be issued and outstanding under the Maximum. The
Company's Certificate of Incorporation does not authorize any shares of
Preferred Stock.
The following summary description of the securities of the Company is
qualified in its entirety by reference to the Articles of Incorporation
("Articles") of the Company, a copy of which is filed as an exhibit to the
Registration Statement of which this Offering Circular is a part. The By-laws
have been adopted by the stockholders and the Board of Directors of the Company.
COMMON STOCK
The issued and outstanding shares of Common stock are, and the shares
offered hereby when issued in accordance with the terms of this Offering will be
validly issued, fully paid and non-assessable. Holders of Common Stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of the shareholders. The holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available for that purpose. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities then outstanding. Holders of Common Stock have no preemptive
rights, conversion rights, subscription rights or cumulative voting rights to
any securities. There are no redemption or sinking fund provisions applicable to
the Common Stock.
PREFERRED STOCK
The Board has the authority to authorized and issue shares of Preferred
Stock in one or more series and to fix the designations, relative powers,
preferences, rights, qualifications, limitations and restrictions of all shares
of each such series, including without limitation dividend rates, conversion
rights, voting rights, redemption and sinking fund provisions, liquidation
preferences, and the number of shares constituting each series, without any
further vote or action by the stockholders. Shares of Preferred Stock that are
so designed may have rights which are superior to those of Common Stock. The
issuance of Preferred Stock could decrease the amount of earnings and assets
available, or adversely affect the rights and powers, including voting rights,
of the holders of Common Stock. The issuance of Preferred Stock also could have
the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders, may discourage bids for the
Common Stock at a premium over the market price of the Common. At present the
Company has no plans to authorize or issue any Preferred Stock.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION,
BYLAWS AND DELAWARE LAW
CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation provides that, effective upon the closing
of this offering, all stockholder actions must be effected at a duly called
meeting and not by a consent in writing. The Bylaws provide that the Company's
stockholders may call a special meeting of stockholders only upon a request of
stockholders owning at least 50% of the Company's capital stock. These
provisions of the Certificate of Incorporation and Bylaws could discourage
potential acquisition proposals and could delay or prevent a change in control
of the Company. These provisions are intended to enhance the likelihood of
continuity and stability in the composition of the Board of
27
<PAGE>
Directors and in the policies formulated by the Board of Directors and to
discourage certain types of transactions that may involve an actual or
threatened change of control of the Company. These provisions are designed to
reduce the vulnerability of the Company to an unsolicited acquisition proposal.
The provisions also are intended to discourage certain tactics that may be used
in proxy. However, such provisions could have the effect of discouraging others
from making tender offers for the Company's shares and, as a consequence, they
also may inhibit fluctuations in the market price of the Company's shares that
could result from actual or rumored takeover attempts. Such provisions also may
have the effect of preventing changes in the management of the Company.
DELAWARE TAKEOVER STATUTE
The Company is subject to Section 203 of the Delaware General
Corporation Law ("Section 203"), which, subject to certain exceptions,
prohibits a Delaware corporation from engaging in any business combination
with any interested stockholder for a period of three years following the
date that such stockholder became an interested stockholder, unless: (i)
prior to such date, the board of directors of the corporation approved either
the business combination or the transaction that resulted in the stockholder
becoming an interested stockholder; (ii) upon consummation of the transaction
that resulted in the stockholder becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced, excluding for
purposes of determining the number of shares outstanding those shares owned
(x) by persons who are directors and also officers and (y) by employee stock
plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a
tender or exchange offer; or (iii) on or subsequent to such date, the
business combination is approved by the board of directors and authorized at
an annual or special meeting of stockholders, and not by written consent, by
the affirmative vote of at least 66% of the outstanding voting stock that is
not owned by the interested stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder; (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder; (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder, (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock of any class or series of the corporation
beneficially owned by the interested stockholder, or (v) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation. In
general, Section 203 defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of the
corporation and any entity or person affiliated with or controlling or
controlled by such entity or person.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, the Company will have 1,850,000 shares
of Common Stock outstanding (minimum) and 1,950,000 shares of Common Stock
outstanding (maximum). Of these shares, the 100,000 shares (minimum) or the
200,000 shares (maximum) sold in this Offering will be freely tradeable without
restriction or further registration under the Securities Act, except that any
shares purchased by "affiliates" of the Company, as that term is defined under
the Securities Act ("Affiliates"), may generally only be sold in compliance with
the limitations of Rule 144 described below.
SALES OF RESTRICTED SHARES
The remaining 1,750,000 shares of Common Stock are deemed "Restricted
Shares" under Rule 144. The number of shares of Common Stock available for sale
in the public market is limited by restrictions under the Securities Act. On the
date of this Offering Circular, no shares other than the 100,000 shares
(minimum) or the 200,000 shares (maximum) offered hereby will be eligible for
sale.
In general, under Rule 144 of the Securities Act as currently in effect,
beginning 90 days after this offering, a person (or persons whose shares are
aggregated) who has beneficially owned "restricted" shares for at least one
year, including a person who may be deemed an Affiliate of the Company, is
entitled to sell within any three-month period a number of shares of Common
Stock that does not exceed the greater of 1% of the then-outstanding shares of
Common Stock of the Company and the average weekly trading volume of the Common
Stock during the four calendar weeks preceding such sale. Sales under Rule 144
of the Securities Act are subject to certain restrictions relating to manner of
sale, notice and the availability of current public information about the
Company. A person who is not an Affiliate of the Company at any time during the
ninety days preceding a sale, and who has
28
<PAGE>
beneficially owned shares for at least two years, would be entitled to sell such
shares immediately following this offering without regard to the volume
limitations, manner of sale provisions or notice or other requirements of Rule
144 of the Securities Act. However, the transfer agent may require an opinion of
counsel that a proposed sale of shares comes within the terms of Rule 144 of the
Securities Act prior to effecting a transfer of such shares.
Prior to this Offering, there has been no public market for the Common
Stock of the Company and no predictions can be made of the effect, if any, that
the sale or availability for sale of shares of additional Common Stock will have
on the market price of the Common Stock. Nevertheless, sales of substantial
amounts of such shares in the public market, or the perception that such sales
could occur, could adversely affect the market price of the Common Stock and
could impair the Company's future ability to raise capital through an offering
of its equity securities.
UNDERWRITING
This Offering will be Self-Underwritten to save the commission expenses
incurred by using an outside underwriter.
The sales of this Offering will be through this Prospectus only. This
Prospectus is the only official document of this Offering. No officer or
director will receive compensation or commission from the sales of this
Offering. The Officers and Directors are indemnified through the Company's
Certificate of Incorporation. See "Management, Limitations on Director's and
Officer's Liability". This Offering will only be sold by the following officers
of the Company:
Garry G. Oglesbee Leonard Mitchell
P.O. Box 5065 15029 Sundance
Gallup, New Mexico 87305 Wichita, Kansas 67230
It is the intention of the Company to apply for acceptance to trade this
security on the Bulletin Board. There can be no assurance made as to a market
for this security, or that this security will actually trade on such market and
no broker-dealer has agreed to make a market in the Company's securities at this
time.
Prior to the Offering made hereby, there has been no public market for the
Common Stock. Accordingly, the initial public offering price has been
arbitrarily determined by the Company. Among the factors considered were the
Company's results of operations, current financial conditions, estimates of the
business potential and prospects of the Company, the market for the Company's
products, the experience of the Company's management, the economics of the
industry in general, the general condition of the equities market, market
conditions for new offerings of securities and the prices of similar securities
of comparable companies and other relevant factors. There can be no assurance
that any active trading market will develop for the Common Stock or as to the
price at which the Common Stock may trade in the public market from time to time
subsequent to the Offering made hereby.
ESCROW ACCOUNT
The Board has made the decision that FIRSTAR BANK of Minnesota N.A. Trust
Division, St. Paul MN, will be used for the impound of funds generated by this
Offering, pending the effective date of the Prospectus. They will hold in escrow
all proceeds from this Offering until the Minimum $650,000 (the sales of 100,000
shares) has been obtained. At that time, under the pending agreement, FIRSTAR
BANK of Minnesota N.A. Trust Division, St. Paul MN, will release the funds to
the general fund account of TrueTraks, Incorporated, although the Company will
continue to sell the offering to reach the Maximum $1,300,000 (the sale of
200,000 shares) from the date of effectiveness to 180 days. These funds once
released will then be used as described in the Use of Proceeds. See "Use of
Proceeds".
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Bartz & Bartz, 6750 France Avenue South, Suite 350,
Edina, Minnesota 55435 Certain legal matters in connection with
29
<PAGE>
the Offering will be passed upon for the Company by Bartz & Bartz, 6750 France
Avenue South, Suite 350, Edina, Minnesota 55345.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Commercial
Transaction Center Ltd., 3925 Excelsior Boulevard, Suite 5, St. Louis Park
Minnesota 55416.
EXPERTS
The balance sheet as of July 31, 1997 and the related statements of Income
(Loss) and Retained Earnings (Deficit), stockholders' equity and cash flows
included in this Prospectus and the related financial statements included
elsewhere in the registration statement of which this Prospectus is a part, have
been included herein in reliance on the reports of Curtis Forse, an independent
Certified Public Accountant, 5304 - 367 Court, North Branch, Minnesota 55056,
given upon the authority of Curtis Forse as an expert in auditing and
accounting.
30
<PAGE>
TRUETRAKS INCORPORATED
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . F-2
Balance Sheet at July 31, 1997 (audited) . . . . . . . . . . . . . . . . . F-3
Statement of Income (Loss) and Retained Earnings (Deficit)
for the Four Months Ended July 31, 1997 (audited) . . . . . . . . . . F-4
Statement of Changes in Stockholders' Equity for the
Four Months Ended July 31, 1997 (audited) . . . . . . . . . . . . . . F-5
Statement of Cash Flows for the Four Months Ended July 31, 1997 (audited). F-6
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . F-7
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
TrueTraks, Incorporated
Gallup, NM. 87301
I have audited the accompanying balance sheet of TrueTraks, Incorporated as
of July 31, 1997, and the related statements of Income (Loss) and Retained
Earnings (Deficit), stockholders' equity and cash flows for the four months
ended July 31, 1997. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on this
financial statement based on my audit.
I have conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes, examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion the financial statements referred to above presents fairly,
in all material respects, the financial position of TrueTraks, Incorporated as
of July 31, 1997, and the results of its operations and its cash flows for the
four months ended July 31, 1997 in conformity with generally accepted accounting
principles.
- ----------------------------
Curtis Forse CPA
North Branch, MN.55056
September 29, 1997
F-2
<PAGE>
TRUETRAKS, INCORPORATED
BALANCE SHEET
July 31, 1997
ASSETS
Current Assets:
Cash in Bank $ 420
--------
Intangible Assets
Organizational Costs 155,000
Less: Accumulated Amortization (15,500)
--------
Total Intangible Assets 139,500
--------
TOTAL ASSETS $139,920
--------
--------
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities:
Accrued Salaries $ 25,000
--------
TOTAL LIABILITIES 25,000
--------
STOCKHOLDERS' EQUITY
Common Stock, $.05 par value 2,000,000 Shares $ 87,500
authorized, 1,750,000 shares
issued and outstanding
Additional Paid in Capital 70,000
Retained Earnings (Deficit) (42,580)
--------
Total Stockholders' Equity 114,920
--------
Total Liabilities and Stockholders' Equity $139,920
--------
--------
F-3
<PAGE>
TRUETRAKS, INCORPORATED
STATEMENT OF INCOME (LOSS) AND RETAINED EARNINGS (DEFICIT)
For the Four Months Ended July 31, 1997
OPERATING EXPENSES
Amortization $15,500
Bank Charges 63
Dues & Subscriptions 55
Meetings 234
Professional Fees 448
Travel 177
Office Supplies 270
Telephone 833
Accrued Wages 25,000
Net Income (Loss) (42,580)
Retained Earnings, Beginning 0
--------
Retained Earnings (Deficit), Ending ($42,580)
--------
--------
Weighted average common and
common equivalent shares outstanding 1,750,000
Income (Loss) per share -$(.02)
--------
TOTAL NET INCOME (LOSS) PER SHARE -$(.02)
--------
--------
F-4
<PAGE>
TRUETRAKS, INCORPORATED
CHANGES IN STOCKHOLDERS' EQUITY
For the Four Months Ended July 31, 1997
<TABLE>
<CAPTION>
Common Stock Additional Total
--------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
--------- --------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance as of January 1, 1997 0 $0 $0 $0 $0
Common Stock issued at 1,750,000 $87,500 $70,000
$.05 per share
Net Loss (42,580)
--------- --------- -------- --------- -----------
Balance as of July 31, 1997 1,750,000 $87,500 $70,000 ($42,580) $114,920
--------- --------- -------- --------- -----------
--------- --------- -------- --------- -----------
</TABLE>
F-5
<PAGE>
TRUETRAKS, INCORPORATED
STATEMENT OF CASH FLOWS
For the Four Months Ended July 31, 1997
Cash Flows From Operating Activities:
Net Income (Loss) $(42,580)
Adjustments to reconcile Net Income (Loss)
to net cash provided from operating activities:
Depreciation & Amortization 15,500
Increase in Accrued Salaries 25,000
--------
Net Cash Flows (used) by Operating Activities: (2,080)
--------
Cash Flows From Investing Activities:
Purchase of Assets (155,000)
--------
Net Cash Flows (used) by Investing Activities: (155,000)
--------
Cash Flows From Financing Activities:
Proceeds from Issuance of Stock 157,500
--------
Net Cash Flows Provided by Financing Activities: 157,500
--------
Net Increase in cash 420
Cash - Beginning of Period 0
--------
Cash - End of Period $ 420
--------
--------
F-6
<PAGE>
TRUETRAKS, INCORPORATED
NOTES TO THE FINANCIAL STATEMENT
JULY 31, 1997
NATURE OF BUSINESS
The Company intends to build regionally-specific rail entities via purchase,
lease, or combination purchase-leasing of existing rail operations and/or rail
lines deemed expendable by larger (typically "Class 1") rail entities.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The summary of certain significant accounting policies of TrueTraks Incorporated
is presented to assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's management
which is responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
USE OF 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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Costs of maintenance, repairs and
minor renewals are expensed as incurred. Major improvements and repairs are
capitalized. The cost and accumulated depreciation of assets sold or otherwise
disposed of are removed from accounts and any loss or gain is recognized.
INTANGIBLE ASSETS
Intangible assets are stated at cost. Intangible assets consist of
organizational costs. The costs of the intangible assets will be amortized
straight line over 5 years.
HISTORY
TrueTraks, Incorporated was incorporated under the laws of Delaware on March 31,
1997. TrueTraks, Inc. is recognized as a development stage company for financial
reporting purposes as required by FAS #7. The Company's year end is December 31.
DEPRECIATION & AMORTIZATION
Property, plant and equipment are recorded at cost. Depreciation is computed
using the MACRS method over the estimated useful lives of the assets, which is
five years.
COMPANY EMPLOYMENT AGREEMENTS
The Company has five year employment agreements with each of its 2 officers. As
of the date of the financials the two officers have received no compensation.
The CEO of the Company, Garry G. Oglesbee,
F-7
<PAGE>
will receive a salary of 75,000 per annum, Leonard R. Mitchell, Vice-President,
will receive a salary of $75,000 per annum. These funds will be paid in U.S.
Dollars.
CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of
credit risks consist principally of temporary cash investments. The Company
maintains its cash balances in one financial institution located in Gallup, NM.
The balances are insured by the Federal Deposit Insurance Corporation up to
$100,000. As of July 31, 1997 the Company has no credit risk.
F-8
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus, and if given or made, such other information or representations
must not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any sales made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it relates. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy such securities in any circumstances in which such offer of solicitation is
unlawful.
TABLE OF CONTENTS
Page
----
Available Information. . . . . . . . . . . . . . . . . . 2
Pertinent Information. . . . . . . . . . . . . . . . . . 2
Prospectus Summary . . . . . . . . . . . . . . . . . . . 3
Plan of Distribution . . . . . . . . . . . . . . . . . . 6
Risk Factors . . . . . . . . . . . . . . . . . . . . . . 7
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 10
Dilution . . . . . . . . . . . . . . . . . . . . . . . . 12
Dividend Policy. . . . . . . . . . . . . . . . . . . . . 13
Capitalization . . . . . . . . . . . . . . . . . . . . . 13
Plan of Operation. . . . . . . . . . . . . . . . . . . . 14
Business . . . . . . . . . . . . . . . . . . . . . . . . 15
Management . . . . . . . . . . . . . . . . . . . . . . . 22
Executive Compensation . . . . . . . . . . . . . . . . . 24
Principal Shareholders . . . . . . . . . . . . . . . . . 25
Certain Transactions . . . . . . . . . . . . . . . . . . 26
Description of Capital Stock . . . . . . . . . . . . . . 27
Shares Eligible for Future Sale. . . . . . . . . . . . . 28
Underwriting . . . . . . . . . . . . . . . . . . . . . . 29
Escrow Account . . . . . . . . . . . . . . . . . . . . . 29
Legal Matters. . . . . . . . . . . . . . . . . . . . . . 29
Transfer Agent and Registrar . . . . . . . . . . . . . . 30
Experts. . . . . . . . . . . . . . . . . . . . . . . . . 30
Index to Financial Statements. . . . . . . . . . . . . . F-1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
100,000 SHARES (MINIMUM)
200,000 SHARES (MAXIMUM)
TRUETRAKS, INCORPORATED.
COMMON STOCK
----------
PROSPECTUS
----------
Xxxxxxxx 21, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 102(b) of the Delaware General Corporation Law ("Delaware Law")
permits a provision in the certificate of incorporation of each corporation
organized thereunder eliminating or limiting, with certain exceptions, the
personal liability of a director to the corporation or its stockholders for
monetary damages for certain breaches of fiduciary duty as a director. The
Certificate of Incorporation of the Registrant eliminates the personal liability
of directors to the fullest extent permitted by Delaware Law.
Section 145 of Delaware Law ("Section 145"), in summary, empowers a
Delaware corporation, within certain limitations, to indemnify its officers,
directors, employees and agents against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them in connection with any nonderivative suit or proceeding, if they acted
in good faith and in a manner they reasonably believe to be in or not opposed to
the best interest of the corporation, and, with respect to a criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful.
With respect to derivative actions, Section 145 permits a corporation to
indemnify its officers, directors, employees and agents against expenses
(including attorneys' fees) actually and reasonably incurred in connection with
the defense of settlement of such action or suit, provided such person meets the
standard of conduct described in the preceding paragraph, except that no
indemnification is permitted in respect of any claim where such person has been
found liable to the corporation, unless the Court of Chancery or the court in
which such action or suit was brought approves such indemnification and
determines that such person is fairly and reasonably entitled to be indemnified.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ( the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been informed that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore, unenforceable.
The Company's Bylaws provide that the Company shall indemnify officers and
directors, and to the extent authorized by the Board of Directors, employees and
agents of the Company, to the fullest extent permitted by and in the manner
permissible under the laws of the State of Delaware. The Bylaws also permit the
Board of Directors to authorize the Company to purchase and maintain insurance
against any liability asserted against any director, officer, employee or agent
of the Company arising out of his capacity as such.
The Company intends to enter into and execute indemnity agreements with
present and future directors for indemnification to the fullest extent permitted
by law.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses in connection with
the sale of the Common Stock. All amounts are estimated. All such fees have been
prepaid by the Company.
SEC Filing Fee $ 429
Blue Sky Expenses 6,000
Accounting Fees and Expenses 25,000
Legal Fees and Expenses 40,000
II-1
<PAGE>
Legal Writing (outsourced) 19,000
Postage 5,000
Printing Fees 19,571
Escrow Agent Fees 5,000
Transfer Agent Fees 5,000
Due Diligence Fees 20,000
Miscellaneous Fees 10,000
TOTAL $155,000
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Since its inception on March 31, 1997, the Registrant has issued securities
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), in the following transactions:
On March 31, 1997, TrueTraks Inc. (the Registrant) issued an aggregate of
1,750,000 shares of Common Stock to its founder.
The sales and issuance of the securities described above were deemed to be
exempt from registration under the Securities Act in reliance upon section 4(2)
thereof as transactions not involving a public offering and/or pursuant to
regulations promulgated under the Securities Act.
ITEM 27. EXHIBITS
Exhibit
Number Description of Document
- ------- -----------------------
1.1 Underwriting Agreement, Company Underwritten Offering
3.1 Articles of Incorporation
3.2 By-Laws
4.1 TrueTraks, Inc., Instrument defining the rights of the security
holders
4.2 TrueTraks, Inc., Instrument defining the rights of the security
holder, Karl Benz
4.3 TrueTraks, Inc., Instrument defining the rights of the security
holder, Jack Wiles
4.4 Sample of Stock Certificate
5.1 Opinion of Counsel regarding Legality
6.1 Opinion Statement of Accountant
7.1 Subscription Agreement
8.1 Employment Agreement with the Registrant and Garry Oglesbee
8.2 Employment Agreement with the Registrant and Leonard Mitchell, Jr.
9.1 Proprietary Information Agreement with Registrant and Garry Oglesbee
9.2 Proprietary Information Agreement with Registrant and Leonard
Mitchell, Jr.
II-2
<PAGE>
10.1 Escrow Agreement, (To be filed by Amendment)
10.2 TrueTraks, Inc., Documents deposited in Escrow to Commercial
Transaction Center
11.1 Consent of Independent Accountant
12.1 Directors Letters of consent
13.1 Officers selling Company Securities
14.1 Consent to process, ( Form U-2)
14.2 Corporate Resolution, ( Form U-2a)
15.1 Financial Data Schedule
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Act,
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information set forth in the
Registration Statement, and
(iii) Include any additional or changed material information on the
plan of distribution;
(2) For determining liability under the Act, treat such post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the forgoing provisions , or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submitted to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in Minneapolis,
Minnesota, on September 29, 1997.
TRUETRAKS, INCORPORATED
By: /s/ Garry G. Oglesbee
------------------------------
Garry G. Oglesbee, President
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement on Form SB-2 was signed by the following persons in the
capacities and on the dates stated.
Name Title Date
- ---- ----- ----
/s/ Garry G. Oglesbee Chief Executive Officer, September 29, 1997
- --------------------------- President, Chairman of
the Board
/s/ Lilly Beter Vice Chairperson, Director September 29, 1997
- ---------------------------
/s/ Leonard Mitchell, Jr. Chief Operating Officer, September 29, 1997
- --------------------------- Vice President, Director,
Chief Financial Officer
(Acting)
/s/ William Muth Secretary, Director September 29, 1997
- ---------------------------
/s/ Lonnie Eidson Director September 29, 1997
- ---------------------------
/s/ Michael Chappue Director September 29, 1997
- ---------------------------
/s/ Jack Wiles Director September 29, 1997
- ---------------------------
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Document
- ------ -----------------------
1.1 Underwriting Agreement, Company Underwritten Offering
3.1 Articles of Incorporation
3.2 By-Laws
4.1 TrueTraks, Inc., Instrument defining the rights of the security
holders
4.2 TrueTraks, Inc., Instrument defining the rights of the security
holder, Karl Benz
4.3 TrueTraks, Inc., Instrument defining the rights of the security
holder, Jack Wiles
4.4 Sample of Stock Certificate
5.1 Opinion of Counsel regarding Legality
6.1 Opinion Statement of Accountant
7.1 Subscription Agreement
8.1 Employment Agreement with the Registrant and Garry Oglesbee
8.2 Employment Agreement with the Registrant and Leonard Mitchell, Jr.
9.1 Proprietary Information Agreement with Registrant and Garry Oglesbee
9.2 Proprietary Information Agreement with Registrant and Leonard
Mitchell, Jr.
10.1 Escrow Agreement, (To be filed by Amendment)
10.2 TrueTraks, Inc., Documents deposited in Escrow to Commercial
Transaction Center
11.1 Consent of Independent Accountant
12.1 Directors Letters of consent
13.1 Officers selling Company Securities
14.1 Consent to process, ( Form U-2)
14.2 Corporate Resolution, ( Form U-2a)
15.1 Financial Data Schedule
<PAGE>
UNDERWRITING AGREEMENT
This offering will be self-underwritten to save the commission expenses
incurred by using an outside underwriter.
The sales of this offering will be through Regulation SB, Form SB-2. No
officers or directors will receive compensation or commission from the sales of
this offering. This offering will only be sold by the following officers of the
Company;
GARRY OGLESBEE LEONARD MITCHELL
1408 KIT CARSON DR. 15029 SUNDANCE
GALLOP, NM. 87301 WICHITA, KS. 67230
It is the intention of the Company to apply for acceptance to trade this
security on the Bulletin Board. There can be no assurance made as to a market
for this security or that this security will actually trade on such market.
Expenses of this offering payable by The Company is estimated to be $155,000.
<PAGE>
CORPORATE RECORDS
OF
TRUETRAKS, INCORPORATED.
INCORPORATED UNDER THE LAWS
OF THE
STATE OF DELAWARE
<PAGE>
- --------------------------------------------------------------------------------
[LETTERHEAD]
STATEMENT BY INCORPORATOR OF ACTION TAKEN
IN LIEU OF ORGANIZATION MEETING OF
TRUETRAKS, INC.
---------------
The undersigned being the incorporator of the corporation makes the
following statement of action taken to organize the corporation in lieu of an
organization meeting.
By-laws regulating the conduct of the business and affairs of the
corporation will be adopted and appended to this statement.
The following person(s) were appointed director(s) of the corporation until
the first annual meeting of the stockholders or until their successors shall be
elected or appointed and shall qualify:
The director(s) are authorized and directed to issue from time to time the
shares of capital stock of the corporation, now or hereafter authorized, wholly
or partly for cash, or labor done, or services performed, or for personal
property or leases thereof, received for the use and lawful purposes of the
corporation, or for any consideration permitted by law, as in the discretion of
the director(s) may seem for the best interests of the corporation.
/s/ Regina Cephas
--------------------------------------------------
<PAGE>
CERTIFICATE OF INCORPORATION
OF
TRUETRAKS, INC.
FIRST: The name of this corporation is TRUETRAKS, INC.
SECOND: Its registered office in the State of Delaware is to be located at
1313 N. Market Street, Wilmington DE 19801-1151, County of New Castle. The
registered agent in charge thereof is The Company Corporation, address "same as
above".
THIRD: The nature of the business and, the objects and purposes proposed to
be transacted, promoted and carried on, are to do any or all the things herein
mentioned as fully and to the same extent as natural persons might or could do,
and in any part of the world, viz:
The purpose of the corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH: The amount of the total authorized capital stock of this
corporation is divided into 2,000,000 shares of stock at .05 par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Regina Cephas, 1313 N. Market St., Wilmington DE 19801-1151
SIXTH: The Directors shall have power to make and to alter or amend the By-Laws:
to fix the amount to be reserved as working capital, and to authorize and cause
to be executed, mortgages and liens without limit as to the amount, upon the
property and franchise of the Corporation.
With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
the authority to dispose, in any manner, of the whole property of this
corporation.
The By-Laws shall determine whether and to what extent the accounts and
books of this corporation, or any of them shall be open to the inspection of the
stockholder, and no stockholder shall have any right of inspecting any account,
or book or document of this Corporation, except as conferred by the law of the
By-Laws, or by resolution of the stockholders.
The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.
SEVENTH: Directors of the corporation shall not be liable to either the
corporation or its stockholders for monetary damages for a breach of fiduciary
duties unless the breach involves: (1) a director's duty of loyalty to the
corporation or its stockholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful payments of dividends or unlawful stock purchase or
redemption by the corporation; or (4) a transaction from which the director
derived an improper personal benefit.
I, THE UNDERSIGNED, for the purpose of forming a Corporation under the laws
of the State of Delaware, do make, file and record this Certificate and do
certify that the facts herein are true: and I have accordingly hereunto set my
hand.
DATED: March 31, 1997 /s/ Regina Cephas
Regina Cephas
<PAGE>
BY-LAWS
ARTICLE I - OFFICES
SECTION 1. The registered office of the corporation shall be at 1313 N.
Market Street, Wilmington, DE. 19801-1151
The registered agent in charge thereof shall be Regina Cephas
SECTION 2. The corporation may also have offices at such other places as
the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
SECTION 1. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware".
ARTICLE III - STOCKHOLDERS' MEETINGS
SECTION 1. Meetings of stockholders shall be held at the registered office
of the corporation in this state or at such place, either within or without this
state, as may be selected from time to time by the Board of Directors.
SECTION 2 ANNUAL MEETINGS: The annual meeting of the stockholders shall
be held on the first legal Monday of January in each year if not a legal
holiday, and if a legal holiday, then on the next secular day following at 10
o'clock A.M., when they shall elect a Board of Directors and transact such other
business as may properly be brought before the meeting. If the annual meeting
for election of directors is not held on the date designated therefor, the
directors shall cause the meeting to be held as soon thereafter as convenient.
SECTION 3. ELECTION OF DIRECTORS: Elections of the directors of the
corporation will be by written ballot.
SECTION 4. SPECIAL MEETINGS: Special meetings of the stockholders may be
called at any time by the President, or the Board of Directors, or stockholders
entitled to cast at least one-fifth of the votes which all stockholders are
entitled to cast at the particular meeting. At any time, upon written request
of any person or persons who have duly called a special meeting, it shall be the
duty of the Secretary to fix the date of the meeting, to be held not more than
sixty days after receipt of the request, and to give due notice thereof, If the
Secretary shall neglect or refuse to fix the date of the meeting and give notice
thereof, the person or persons calling the meeting may do so.
Business transacted at all special meetings shall be confined to the objects
stated in the call and matters germane thereto, unless all stockholders entitled
to vote are present and consent.
<PAGE>
Written notice of a special meeting of stockholders stating the time and place
and object thereof, shall be given to each stockholder entitled to vote thereat
at least ten days before such meeting, unless a greater period of notice is
required by statute in a particular case.
SECTION 5. OUORUM: A majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of
the outstanding shares entitled to vote is represented at a meeting, a majority
of the shares so represented may adjourn the meeting from time to time without
further notice. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. The stockholders present at a duly organized
meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.
SECTION 6. PROXIES: Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.
A duly executed proxy shall be irrevocable if it states that it is
irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A proxy may be made
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the corporation generally. All
proxies shall be filed with the Secretary of the meeting before being voted
upon.
SECTION 7. NOTICE OF MEETINGS: Whenever stockholders are required or
permitted to take any action at a meeting, a written notice of the meeting shall
be given which shall state the place, date and hour of the meeting, and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called.
Unless otherwise provided by law, written notice of any meeting shall be
given not less than ten nor more than sixty days before the date of the meeting
to each stockholder entitled to vote at such meeting.
SECTION 8. CONSENT IN LIEU OF MEETINGS: Any action required to be taken
at any annual or special meeting of stockholders or a corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
in writing, setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking of
the corporate action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in writing.
SECTION 9. LIST OF STOCKHOLDERS: The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
No share of stock upon which any installment is due and unpaid shall be voted at
any meeting, The list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours,
<PAGE>
for a period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place where the meeting
is to be held, The list shall also be produced and kept at the time and place of
the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
ARTICLE IV - DIRECTORS
SECTION 1. The business and affairs of this corporation shall be managed
by its Board of Directors, Seven in number. The directors need not be residents
of this state or stockholders in the corporation. They shall be elected by the
stockholders at the annual meeting of stockholders of the corporation, and each
director shall be elected for the term of on4e year, and until his successor
shall be elected and shall qualify or until his earlier resignation or removal.
SECTION 2. REGULAR MEETINGS: Regular meetings of the Board shall be
held without notice, at the registered office of the corporation, or at such
other time and place as shall be determined by the Board.
SECTION 3. SPECIAL MEETINGS: Special Meetings of the Board may be
called by the President on Ten days notice to each director, either
personally or by mail or by telegram; special meetings shall be called by the
President or Secretary in like manner and on like notice on the written
request of a majority of the directors in office.
SECTION 4. OUORUM: A majority of the total number of directors shall
constitute a quorum for the transaction of business.
SECTION 5. CONSENT IN LIEU OF MEETING: Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken without a meeting if all members of the Board of
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board or committee.
The Board of Directors may hold its meetings, and have an office or offices,
outside of this state.
SECTION 6. CONFERENCE TELEPHONE: One or more directors may participate in
a meeting of the Board, or a committee of the Board or of the stockholders, by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other;
participation in this manner shall constitute presence in person at such
meeting.
SECTION 7. COMPENSATION: Directors as such, shall not receive any stated
salary for their services, but by resolution of the Board, a fixed sum and
expenses of attendance at each regular or special meeting of the Board PROVIDED,
that nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
SECTION 8. REMOVAL: Any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors, except that when cumulative voting
is permitted, if less than the entire Board is to be removed, no director may be
removed without cause if the votes cast against his removal would be sufficient
to elect him if then cumulatively voted at an election of the entire Board of
Directors, or, if there be classes of directors, at an election of the class of
directors of which he is a part.
<PAGE>
ARTICLE V - OFFICERS
SECTION 1. The executive officers of the corporation shall be chosen by
the directors and shall be a President, Secretary and Treasurer. The Board of
Directors may also choose a Chairman, one or more Vice Presidents and such other
officers as it shall deem necessary. Any number of offices may be held by the
same person.
SECTION 2. SALARIES: Salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
SECTION 3. TERM OF OFFICE: The officers of the corporation shall hold
office for one year and until their successors are chosen and have qualified.
Any officer or agent elected or appointed by the Board may be removed by the
Board of Directors whenever in its judgment the best interest of the corporation
will be served thereby.
SECTION 4. PRESIDENT: The President shall be the chief executive officer
of the corporation; he shall preside at all meetings of the stockholders and
directors; he shall have general and active management of the business of the
corporation, shall see that all orders and resolutions of the Board are carried
into effect, subject, however, to the right of the directors to delegate any
specific powers, except such as may be by statute exclusively conferred on the
President, to any other officer or officers of the corporation. He shall
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the corporation. He shall be EX-OFFICIO a member of all committees, and shall
have the general power and duties of supervision and management usually vested
in the office of President of a corporation.
SECTION 5. SECRETARY. The Secretary shall attend all sessions of the
Board and all meetings of the stockholders and act as clerk thereof, and record
all the votes of the corporation and the minutes of all its transactions in a
book to be kept for that purpose, and shall perform like duties for all
committees of the Board of Directors when required. He shall give, or cause to
be given, notice of all meetings of the stockholders and of the Board of
Directors, and shall perform such other duties as may be prescribed by the Board
of Directors or President, and under whose supervision he shall be. He shall
keep in safe custody the corporate seal of the corporation, and when authorized
by the Board, affix the same to any instrument requiring it.
SECTION 6. TREASURER: The Treasurer shall have custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in separate account to the credit of the corporation. He
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the President
and directors, at the regular meetings of the Board, or whenever they may
require it, an account of all his transactions as Treasurer and of the financial
condition of the corporation.
ARTICLE VI - VACANCIES
SECTION 1. Any vacancy occurring in any office of the corporation by
death, resignation, removal or otherwise, shall be filled by the Board of
Directors. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although not less than a quorum, or by a sole
remaining director. If at any time, by reason of death or resignation or other
cause, the corporation should have no directors in office, then any officer or
any stockholder or an executor, administrator, trustee or guardian of a
stockholder, or other fiduciary entrusted with like responsibility for the
person or estate of stockholder, may call a special meeting of stockholders in
accordance with the provisions of these By-Laws.
<PAGE>
SECTION 2. RESIGNATIONS EFFECTIVE AT FUTURE DATE: When one or more
directors shall resign from the Board, effective at a future date, a majority of
the directors then in office, including those who have so resigned, shall have
power to fill such vacancy or vacancies, the vote thereon to take effect when
such resignation or resignations shall become effective.
ARTICLE VII - CORPORATE RECORDS
SECTION 1. Any stockholder of record, in person or by attorney or other
agent, shall, upon written demand under oath stating the purpose thereof,
have the right during the usual hours for business to inspect for any proper
purpose the corporation's stock ledger, a list of its stockholders, and its
other books and records, and to make copies or extracts therefrom. A proper
purpose shall mean a purpose reasonably related to such person's interest as
a stockholder. In every instance where an attorney or other agent shall be
the person who seeks the right to inspection, the demand under oath shall be
accompanied by a power of attorney or such other writing which authorizes the
attorney or other agent to so act on behalf of the stockholder. The demand
under oath shall be directed to the corporation at its registered office in
this state or at its principal place of business.
ARTICLE VIII - STOCK CERTIFICATES, DIVIDENDS, ETC.
SECTION 1. The stock certificates of the corporation shall be numbered and
registered in the share ledger and transfer books of the corporation as they are
issued. They shall bear the corporate seal and shall be signed by the
PRESIDENT AND SECRETARY.
SECTION 2. TRANSFERS: Transfers of shares shall be made on the books of
the corporation upon surrender of the certificates therefor, endorsed by the
person named in the certificate or by attorney, lawfully constituted in writing.
No transfer shall be made which is inconsistent with law.
SECTION 3. LOST CERTIFICATE: The corporation may issue a new certificate
of stock in the place of any certificate theretofore signed by it, alleged to
have been lost, stolen or destroyed, and the corporation may require the owner
of the lost, stolen or destroyed certificate, or his legal representative to
give the corporation a bond sufficient to indeminify it against any claim that
may be made against it on account of the alleged loss, theft or destruction of
any such certificate or the issuance of such new certificate.
SECTION 4. RECORD Date: In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or the express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.
If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held.
(b) The record date for determining stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior
action by the Board of Directors is necessary, shall be the day on which
the first written consent is expressed.
<PAGE>
(c) The record date for determining stockholders for any other purpose
shall be at the close of business on the day on which the Board of
Directors adopts the resolution relating thereto.
(d) A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
SECTION 5. DIVIDENDS: The Board of Directors may declare and pay
dividends upon the outstanding shares of the corporation from time to time and
to such extent as they deem advisable, in the manner and upon the terms and
conditions provided by the statute and the Certificate of Incorporation.
SECTION 6. RESERVES: Before payment of any dividend there may be set
aside out of the net profits of the corporation such sum or sums as the
directors, from time to time, in their absolute discretion, think proper as a
reserve fund to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interests of the
corporation, and the directors may abolish any such reserve in the manner in
which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
SECTION 1. CHECKS: All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate.
SECTION 2. FISCAL YEAR: The fiscal year shall begin on the first day of
January.
SECTION 3. NOTICE: Whenever written notice is required to be given to any
person, it may be given to such person, either personally or by sending a copy
thereof through the mail, or by telegram, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or by telegraph, it
shall be deemed to have been given to the person entitled thereto when deposited
in the United States mail or with a telegraph office for transmission to such
person. Such notice shall specify the place, day and hour of the meeting and,
in the case of a special meeting of stockholders, the general nature of the
business to be transacted.
SECTION 4. WAIVER OF NOTICE: Whenever any written notice is required by
statute, or by the Certificate or the By-Laws of this corporation a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice. Except in the case of a special meeting of
stockholders, neither the business to be transacted at nor the purpose of the
meeting need be specified in the waiver of notice of such meeting. Attendance
of a person either in person or by proxy, at any meeting shall constitute a
waiver of notice of such meeting, except where a person attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting was not lawfully called or convened.
SECTION 5. DISALLOWED COMPENSATION: Any payments made to an officer or
employee of the corporation such as a salary, commission, bonus, interest, rent,
travel or entertainment expense incurred by him, which shall be disallowed in
whole or in part as a deductible expense by the Internal Revenue Service, shall
be reimbursed by such officer or employee to the corporation to the full extent
of such disallowance, It shall be the duty of the directors, as a Board, to
enforce payment of each such amount disallowed. In lieu of payment by the
officer or employee, subject to the determination of the directors,
proportionate amounts may be withheld from his future compensation payments
until the amount owed to the corporation has been recovered.
<PAGE>
SECTION 6. RESIGNATIONS: Any director or other officer may resign at
anytime, such resignation to be in writing, and to take effect from the time of
its receipt by the corporation, unless some time be fixed in the resignation and
then from that date. The acceptance of a resignation shall not be required to
make it effective.
ARTICLE X - ANNUAL STATEMENT
SECTION 1. The President and Board of Directors shall present at each
annual meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
SECTION 1. These By-Laws may be amended or repealed by the vote of
stockholders entitled to cast at least a majority of the votes which all
stockholders are entitled to cast thereon, at any regular or special meeting of
the stockholders, duly convened after notice to the stockholders of that
purpose.
<PAGE>
ACKNOWLEDGMENT OF RECEIPT OF RESTRICTED SHARES OF COMMON STOCK
OF
TRUETRAKS, INCORPORATED, A DELAWARE CORPORATION
The parties to this acknowledgment understanding are Garry Oglesbee,
President/CEO TrueTraks, Incorporated, and TrueTraks, Incorporated, ("TTI"), A
Delaware Corporation.
Garry Oglesbee, Lilly Beter, Michael Chappue, Lonnie Eidson, Leonard Mitchell,
Nelda Oglesbee, Dr. George Gavrell and Karl Benz are the present owners of all
the issued and outstanding shares of common stock of TrueTraks, Incorporated.
It is contemplated that TrueTraks, Incorporated will make a stock offering
pursuant to Regulation SB of the laws and regulations of the Securities and
Exchange Commission ("Offering"), and Garry Oglesbee, Lilly Beter, Michael
Chappue, Lonnie Eidson, Leonard Mitchell, Nelda Oglesbee, Dr. George Gavrell and
Karl Benz hereby agrees that the shares of stock owned by him/her and the
certificates evidencing such ownership ("the certificates") have not been
registered under the Securities Act of 1933. He/She will not transfer
Certificates unless:
1. There is an effective registration covering the shares represented by
the Certificate pursuant to the Securities Act of 1933 and all
applicable State securities laws; or,
2. It first receives a letter from an attorney, acceptable to the Board
of Directors or it's agents of TrueTraks, Incorporated stating that in
the opinion of such attorney the proposed transfer is exempt from
registration under the Securities Act of 1933 and under all applicable
state securities laws; or,
3. The transfer is made pursuant to Rule 144 under the Securities Act of
1933. Each acknowledges it's understanding that the rule prohibits a
transfer for a period of one year beginning 90 days following the
Offering, further limits the number of shares which can be transferred
in any period of time and imposes other limitations and restrictions.
Dated this 29 day of September , 1997.
TrueTraks, Incorporated
A Delaware Corporation
By: /s/ Garry Oglesbee By: /s/ Lilly Beter
-------------------------------- --------------------------------
Garry Oglesbee Lilly Beter
Its: President, CEO, Shareholder Its: Vice Chairperson, Shareholder
------------------------------- -------------------------------
By: /s/ Leonard Mitchell By: /s/ Lonnie Eidson
-------------------------------- --------------------------------
Leonard Mitchell Lonnie Eidson
Its: VP of Transp., COO, CFO, Its: Director, Shareholder
Shareholder --------------------------------
-------------------------------
By: /s/ Dr. George Gavrell
By: /s/ Michael Chappue --------------------------------
------------------------------- Dr. George Gavrell
Michael T. Chappue Its: Shareholder
Its: Director, Shareholder -------------------------------
------------------------------
By: /s/ Nelda Oglesbee
--------------------------------
Nelda Oglesbee
Its: Shareholder
-------------------------------
<PAGE>
ACKNOWLEDGMENT OF RECEIPT OF RESTRICTED SHARES OF COMMON STOCK
OF
TRUETRAKS, INCORPORATED, A DELAWARE CORPORATION
The parties to this acknowledgment understanding are Garry Oglesbee,
President/CEO TrueTraks, Incorporated, and TrueTraks, Incorporated, ("TTI"), A
Delaware Corporation.
Garry Oglesbee, Lilly Beter, Michael Chappue, Lonnie Eidson, Leonard Mitchell,
Nelda Oglesbee, Dr. George Gavrell and Karl Benz are the present owners of all
the issued and outstanding shares of common stock of TrueTraks, Incorporated.
It is contemplated that TrueTraks, Incorporated will make a stock offering
pursuant to Regulation SB of the laws and regulations of the Securities and
Exchange Commission ("Offering"), and Garry Oglesbee, Lilly Beter, Michael
Chappue, Lonnie Eidson, Leonard Mitchell, Nelda Oglesbee, Dr. George Gavrell and
Karl Benz hereby agrees that the shares of stock owned by him/her and the
certificates evidencing such ownership ("the certificates") have not been
registered under the Securities Act of 1933. He/She will not transfer
Certificates unless:
1. There is an effective registration covering the shares represented by
the Certificate pursuant to the Securities Act of 1933 and all
applicable State securities laws; or,
2. It first receives a letter from an attorney, acceptable to the Board
of Directors or it's agents of TrueTraks, Incorporated stating that in
the opinion of such attorney the proposed transfer is exempt from
registration under the Securities Act of 1933 and under all applicable
state securities laws; or,
3. The transfer is made pursuant to Rule 144 under the Securities Act of
1933. Each acknowledges it's understanding that the rule prohibits a
transfer for a period of one year beginning 90 days following the
Offering, further limits the number of shares which can be transferred
in any period of time and imposes other limitations and restrictions.
Dated this 29 day of September, 1997.
TrueTraks, Incorporated
A Delaware Corporation
By: /s/ Karl Benz
----------------------
Karl Benz
Its: Shareholder
<PAGE>
ACKNOWLEDGMENT OF RECEIPT OF RESTRICTED SHARES OF COMMON STOCK
OF
TRUETRAKS, INCORPORATED, A DELAWARE CORPORATION
The parties to this acknowledgment understanding are Garry Oglesbee,
President/CEO TrueTraks, Incorporated, and TrueTraks, Incorporated, ("TTI"), A
Delaware Corporation.
Garry Oglesbee, Lilly Beter, Michael Chappue, Lonnie Eidson, Leonard Mitchell,
Nelda Oglesbee, Dr. George Gavrell, Jack Wiles and Karl Benz are the present
owners of all the issued and outstanding shares of common stock of TrueTraks,
Incorporated. It is contemplated that TrueTraks, Incorporated will make a stock
offering pursuant to Regulation SB of the laws and regulations of the Securities
and Exchange Commission ("Offering"), and Garry Oglesbee, Lilly Beter, Michael
Chappue, Lonnie Eidson, Leonard Mitchell, Nelda Oglesbee, Dr. George Gavrell,
Jack Wiles and Karl Benz hereby agrees that the shares of stock owned by him/her
and the certificates evidencing such ownership ("the certificates") have not
been registered under the Securities Act of 1933. He/She will not transfer
Certificates unless:
1. There is an effective registration covering the shares represented by
the Certificate pursuant to the Securities Act of 1933 and all
applicable State securities laws; or,
2. It first receives a letter from an attorney, acceptable to the Board
of Directors or it's agents of TrueTraks, Incorporated stating that in
the opinion of such attorney the proposed transfer is exempt from
registration under the Securities Act of 1933 and under all applicable
state securities laws; or,
3. The transfer is made pursuant to Rule 144 under the Securities Act of
1933. Each acknowledges it's understanding that the rule prohibits a
transfer for a period of one year beginning 90 days following the
Offering, further limits the number of shares which can be transferred
in any period of time and imposes other limitations and restrictions.
Dated this 29 day of September, 1997.
TrueTraks, Incorporated
A Delaware Corporation
By: /s/ Jack Wiles
--------------------------------
Jack Wiles
Its: Shareholder
--------------------------------
<PAGE>
[EAGLE]
E PLURIBUS UNUM
NUMBER SHARES
TRUETRAKS, INC.
OPEN CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
Authorized Capital Stock 2,000,000 Shares With Par Value $0.0500
THIS CERTIFIES THAT
-----------------------------------------------------------
(SEE REVERSE FOR CERTAIN CONDITIONS)
IS THE OWNER OF SHARES OF THE CAPITAL STOCK OF
----------------------------------
TRUETRAKS, INC.
FULL PAID AND NON-ASSESSABLE, TRANSFERABLE ONLY ON THE BOOKS OF THE
CORPORATION IN PERSON OR BY ATTORNEY, UPON SURRENDER OF THIS
CERTIFICATE PROPERLY ENDORSED. IN WITNESS WHEREOF, THE SAID
CORPORATION HAS CAUSED THIS CERTIFICATE TO BE SIGNED BY ITS
DULY AUTHORIZED OFFICERS, AND ITS CORPORATE SEAL TO BE
HEREUNTO AFFIXED
THIS DAY OF A.D. 19 .
---------- ---------- -------
- ------------------------------ ------------------------------
SECRETARY PRESIDENT
<PAGE>
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written
out in full according to applicable laws or regulations.
TEN COM: as tenants in common
TEN ENT: as tenants by the entireties
JT TEN: as joint tenants with the right of survivorship and not as
tenants in common
UNIF GIFT ACT: Custodian under Uniform Gifts to Minors Act
-------- ------- ------
(CUST) (MINOR) (STATE)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND TRANSFER UNTO
---------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
----------------------------------------
- --------------------------------------------------------------------------------
SHARES REPRESENTED BY THE WITHIN CERTIFICATE, AND DO HEREBY IRREVOCABLY
CONSTITUTE AND APPOINT ATTORNEY TO TRANSFER THE
SAID SHARES ON THE BOOKS OF THE WITHIN NAMED CORPORATION WITH FULL POWER OF
SUBSTITUTION IN THE PREMISES.
DATED 19 .
---------------- -----
- ----------------------------------- ------------------------------
IN PRESENCE OF SIGNED
NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATEVER.
<PAGE>
[LETTERHEAD]
Securities Commissioner September 29, 1997
Securities and Exchange Commission
450 5th Street NW
Washington, DC. 20549
Dear Commissioner,
We have acted as counsel to TrueTraks, Incorporated, a Delaware
corporation, in connection with the preparation of a Regulation SB Offering
Statement (the "Offering Statement" on Form SB-2, to be filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933. The Offering Statement relates to the sale of 200,000 shares of Common
Stock, with par value of $.05 (the "Common Stock") as more particularly
described in the Offering Statement.
In connection therewith, we have examined (i) the Articles of Incorporation
and the By-Laws of TrueTraks, Incorporated; (ii) records of the corporate
proceedings of TrueTraks, Incorporated with respect to the issuance of shares of
Common Stock by TrueTraks, Incorporated; (iii) the Offering Statement; and (iv)
and such other documents as we have deemed necessary for the expression of the
opinions contained herein.
In making the foregoing examinations, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photo-static copies. As to questions of fact material to
this opinion, where such facts have not been independently established by us,
and as to the content and form of Articles of Incorporation, By-Laws, minutes
and resolutions and other documents or writings, we have relied to the extent we
deemed reasonably appropriate, upon representations of corporate officers or
certificates of governmental officials. We express no opinion as to compliance
with applicable state anti-fraud statutes, rules or regulations concerning the
issuance of securities.
<PAGE>
Opinion of Consul
September 29,1997
Page 2 of 2
Based upon and subject to the foregoing and having due regard for such
legal considerations that we deem relevant, we are of the opinion (i) that the
Common Stock has been duly authorized for issuance and (ii) that upon payment
for, and issuance of, the Common Stock in accordance with the terms of the
Offering Statement, the Common stock will be validly issued and will be fully
paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Offering Statement.
Sincerely,
BARTZ & BARTZ, P.A.
/s/ R. John Bartz
Attorney at Law
RJB/cn
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
TrueTraks, Incorporated
Gallup, NM. 87301
I have audited the accompanying balance sheet of TrueTraks, Incorporated as
of July 31, 1997, and the related statements of income (Loss) and Retained
Earnings (Deficit), stockholders' equity and cash flows for the four months
ended July 31, 1997. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on this
financial statement based on my audit.
I have conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes, examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principals used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion the financial statement referred to above presents fairly, in
all material respects, the financial position of TrueTraks, Incorporated as of
July 31, 1997, and the results of its operations and its cash flows for the four
months ending July 31, 1997 in conformity with generally accepted accounting
principles.
/s/ Curtis Forse
- ------------------------------
Curtis Forse CPA
North Branch, MN. 55056
September 22, 1997
<PAGE>
TRUETRAKS, INCORPORATED
SUBSCRIPTION AGREEMENT
The undersigned hereby subscribes for the purchase of ____________ shares
of TrueTraks, Incorporated, a Delaware Corporation (the Company) at $6.50 per
share in the aggregate amount of $_________________.
The undersigned herewith submits the undersigned's check payable to
TrueTraks, Incorporated in full payment for such shares. INCLUDE CHECK PAYABLE
TO TRUETRAKS, INCORPORATED
Please print names in which shares are to be
registered _________________________
_________________________
Investors Residence Address and Social Security or _________________________
Tax Identification Number(s).( Must be completed for
registration purposes; no post office boxes please). _________________________
City ____________________
State & Zip _____________
Tax ID or SS No. ________
Tax ID or SS No. ________
Mailing Address to which notices and checks ________________________
Should be sent( if different from the Residence ________________________
Address) ________________________
City ___________________
State & Zip ____________
TELEPHONE Home: __________________
Business: ______________
Manner in which title is held (check one):
1. ________ Community Property
2. ________ Joint Tenants With Right of Survivorship
3. ________ Separate Property
4. ________ Individual Ownership
5. ________ Partnership
6. ________ Tenants in Common
7. ________ Corporation
8. ________ Other (Specify): _______________________________________
_______________________________________
__________________________________ _______________________________
Signature Date
<PAGE>
EMPLOYMENT AGREEMENT
(FIVE YEAR)
Employment agreement, between TRUETRAKS, INCORPORATED and GARRY G.
OGLESBEE.
1. For good consideration, the Company employs the Employee on the following
terms and conditions.
2. Term of employment: Subject to the provisions for termination set forth
below this agreement will begin on The "effective date of the offering",
for a period of five years unless sooner terminated.
3. Salary: The Company shall pay Employee a salary of $75,000 per year, for
the services of the employee, payable at regular payroll periods.
4. Duties and Positions: The Company hires the Employee in the capacity of
President/Chief Executive Officer. The Employee's duties may be reasonably
modified at the Company's direction from time to time.
5. Employee to Devote Full Time to Company: The Employee will devote full
time, attention, and energies to the business of the Company and during
this employment, will not engage in any other business activity, regardless
of whether such activity is pursued for profit, gain, or other pecuniary
advantage. Employee is not prohibited from making personal investments in
any other businesses provided those investments do not require active
involvement in the operation of said companies.
6. Confidentiality of Proprietary Information: Employee agrees, during or
after the term of this employment, not to reveal confidential information,
or trade secrets to any person, firm, corporation, or entity. Should
employee reveal or threaten to reveal this information, the Company shall
be entitled to an injunction restraining the Employee from disclosing same,
or from rendering any services to any entity to whom said information has
been or is threatened to be disclosed. The right to secure an injunction
is not exclusive, and the Company may persue any other remedies it has
against the Employee for a breach of threatened breach of this condition,
including recovery of damages from the Employee.
7. Reimbursement of expenses: The Employee may incur reasonable expenses for
furthering the Company's business, including expenses for entertainment,
travel, and similar items. The Company shall reimburse Employee for all
business expenses after the Employee presents any itemized account of
expenditures, pursuant to Company policy.
8. Vacation: The Employee shall be entitled to a yearly vacation of 4 weeks
at full pay.
9. Medical Benefit Compensation: Medical (including EYE) and, Dental, and
life insurance will be carried at the expense of the Company with normal
co-payments being the responsibility of the Employee.
10. Life Insurance: The Company shall purchase key man life insurance for the
benefit of the Employee on such terms and conditions as established by the
Board of Directors for the Company.
11. Termination of Agreement: Without cause, the Company (Directors by a
majority of eligible Directors) (Eligible is defined as any director not in
conflict of interest with interested employee party) may terminate this
agreement at any time upon 90 days written notice to the Employee. If the
Company requests, the Employee will continue to perform his/her duties and
be paid his/her regular salary up to the date of termination. Without
cause, the Employee may terminate employment upon 90 days written notice to
the Company. Employee may be required to perform his/her duties and will
be paid the regular salary to date of termination. Notwithstanding
anything to the contrary contained in this agreement, the Company may
terminate the Employee's employment upon 90 days notice to the Employee
should any of the following events occur:
a) The sale of substantially all of the Company's assets to a single
purchaser or group of purchasers, or
b) The sale, exchange, or other disposition, in one transaction of
the majority of the Company's outstanding corporate shares; or
c) The Company's decision to terminate it business and liquidate its
assets;
d) The merger or consolidation of the Company with another company.
1
<PAGE>
e) Bankruptcy or Chapter 11 Reorganization. Where liquidation is
ordered by the Court.
The Company may terminate this agreement, for cause, in the event that the
Employee commits one of the acts or omissions listed on Exhibit A to this
agreement. The company shall not be required to give notice or pay
severance pay in the event of a termination for cause.
12. Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after employment.
13. Effect of prior agreements: This agreement supersedes any prior agreement
between the Company or any predecessor of the Company and the Employee,
except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere
provided and not expressly provided in this agreement.
14. Settlement by Arbitration: Any claim or controversy that arises out of or
relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court
with jurisdiction.
15. Limited Effect of Waiver by Company: Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate
or be construed as waiver of further breach by the Employee.
16. Severability: If, for any reason, any provision of this agreement is held
invalid, all other provisions of this agreement shall remain in effect. If
this agreement is held invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement between the Company (or any
predecessor thereof) and the Employee shall be deemed reinstated as if this
agreement had not been executed.
17. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the
benefit and be binding upon the Company's successors and assignees.
18. Oral Modifications Not Binding: This instrument is the entire agreement of
the Company and the Employee. Oral changes shall have no effect. It may
be altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
/s/ Garry Oglesbee
------------------------------
Garry G. Oglesbee, Employee
TRUETRAKS, INCORPORATED
Attest:
By
----------------------------
- -------------------------------------
2
<PAGE>
EXHIBIT A
1. Falsification of an Employment Application.
2. Conviction of a felony or commission of any which, resulting in a
conviction or not, would constitute a felony.
3. Incompetence in the performance of duties.
4. Insubordination.
5. Discrimination against any other employee on the basis of age, race, sex,
national origin, political or religious affiliation or absence thereof,
handicap or disability, veterans status or personal animosity.
6. Sexual harassment of any employee.
7. Careless, reckless, negligent or deliberate conduct on the job which
results in personal injury to any person.
8. Unlawful manufacture, sale, distribution, dispensing possession or use of a
controlled substance or alcohol on company property, while driving,
operating or riding as a passenger in company owned or leased vehicles or
equipment and/or while otherwise in an official capacity whether on or off
company property.
9. Misappropriation of company funds or falsification of a company expense
account.
10. Careless, reckless, negligent or deliberate conduct which results in damage
to company property.
11. Falsification of any official report or document.
12. Unauthorized disclosure of any investigation, propose sale or purchase, or
personal action not a part of public record.
13. Campaigning for public office on company time or using company equipment or
facilities.
14. Personal use of a company vehicle.
15. Display of hostile, unfriendly, or abrasive attitude rendering the work
place unpleasant or uncomfortable for other employees or personnel
conducting business with the company.
16. Failure to carry out instructions, or violation of written statutory
policies, procedures, or directives.
17. Behavior on or off the job which tends to bring discredit upon the company
or any of its employees or which will bring other employees into disrepute
or disgrace.
18. Conduct by the employee which disturbs, disrupts, or interferes with the
normal work or functions of an office, group and the company.
19. Failure to carry out instructions when the failure to do so jeopardizes
ones personal safety, other employees, customers and/or the public.
3
<PAGE>
EMPLOYMENT AGREEMENT
(FIVE YEAR)
Employment agreement, between TRUETRAKS, INCORPORATED and LEONARD R.
MITCHELL, JR.
1. For good consideration, the Company employs the Employee on the following
terms and conditions.
2. Term of employment: Subject to the provisions for termination set forth
below this agreement will begin on the "effective date of the offering",
for a period of five years unless sooner terminated.
3. Salary: The Company shall pay Employee a salary of $75,000 per year, for
the services of the employee, payable at regular payroll periods.
4. Duties and Positions: The Company hires the Employee in the capacity of
Vice President Transportation / Chief Operating Officer. The Employee's
duties may be reasonably modified at the Company's direction from time to
time.
5. Employee to Devote Full Time to Company: The Employee will devote full
time, attention, and energies to the business of the Company and during
this employment, will not engage in any other business activity, regardless
of whether such activity is pursued for profit, gain, or other pecuniary
advantage. Employee is not prohibited from making personal investments in
any other businesses provided those investments do not require active
involvement in the operation of said companies.
6. Confidentiality of Proprietary Information: Employee agrees, during or
after the term of this employment, not to reveal confidential information,
or trade secrets to any person, firm, corporation, or entity. Should
employee reveal or threaten to reveal this information, the Company shall
be entitled to an injunction restraining the Employee from disclosing same,
or from rendering any services to any entity to whom said information has
been or is threatened to be disclosed. The right to secure an injunction
is not exclusive, and the Company may persue any other remedies it has
against the Employee for a breach of threatened breach of this condition,
including recovery of damages from the Employee.
7. Reimbursement of expenses: The Employee may incur reasonable expenses for
furthering the Company's business, including expenses for entertainment,
travel, and similar items. The Company shall reimburse Employee for all
business expenses after the Employee presents any itemized account of
expenditures, pursuant to Company policy.
8. Vacation: The Employee shall be entitled to a yearly vacation of 4 weeks
at full pay.
9. Medical Benefit Compensation: Medical (including EYE) and, Dental, and
life insurance will be carried at the expense of the Company with normal
co-payments being the responsibility of the Employee.
10. Life Insurance: The Company shall purchase key man life insurance for the
benefit of the Employee on such terms and conditions as established by the
Board of Directors for the Company.
11. Termination of Agreement: Without cause, the Company (Directors by a
majority of eligible Directors) (Eligible is defined as any director not in
conflict of interest with interested employee party) may terminate this
agreement at any time upon 90 days written notice to the Employee. If the
Company requests, the Employee will continue to perform his/her duties and
be paid his/her regular salary up to the date of termination. Without
cause, the Employee may terminate employment upon 90 days written notice to
the Company. Employee may be required to perform his/her duties and will
be paid the regular salary to date of termination. Notwithstanding
anything to the contrary contained in this agreement, the Company may
terminate the Employee's employment upon 90 days notice to the Employee
should any of the following events occur:
a) The sale of substantially all of the Company's assets to a single
purchaser or group of purchasers, or
b) The sale, exchange, or other disposition, in one transaction of
the majority of the Company's outstanding corporate shares; or
c) The Company's decision to terminate it business and liquidate its
assets;
d) The merger or consolidation of the Company with another company.
e) Bankruptcy or Chapter 11 Reorganization. Where liquidation is
ordered by the Court.
1
<PAGE>
The Company may terminate this agreement, for cause, in the event that the
Employee commits one of the acts or omissions listed on Exhibit A to this
agreement. The company shall not be required to give notice or pay
severance pay in the event of a termination for cause.
12. Assistance in Litigation: Employee shall upon reasonable notice,
furnish such information and proper assistance to the Company as it may
reasonably require in connection with any litigation in which it is, or may
become, a party either during or after employment.
13. Effect of prior agreements: This agreement supersedes any prior agreement
between the Company or any predecessor of the Company and the Employee,
except that this agreement shall not affect or operate to reduce any
benefit or compensation inuring to the Employee of a kind elsewhere
provided and not expressly provided in this agreement.
14. Settlement by Arbitration: Any claim or controversy that arises out of or
relates to this agreement, or the breach of it, shall be settled by
arbitration in accordance with the rules of the American Arbitration
Association. Judgment upon the award rendered may be entered in any court
with jurisdiction.
15. Limited Effect of Waiver by Company: Should Company waive breach of any
provision of this agreement by the Employee, that waiver will not operate
or be construed as waiver of further breach by the Employee.
16. Severability: If, for any reason, any provision of this agreement is held
invalid, all other provisions of this agreement shall remain in effect. If
this agreement is held invalid or cannot be enforced, then to the full
extent permitted by law any prior agreement between the Company (or any
predecessor thereof) and the Employee shall be deemed reinstated as if this
agreement had not been executed.
17. Assumption of Agreement by Company's Successors and Assignees: The
Company's rights and obligations under this agreement will inure to the
benefit and be binding upon the Company's successors and assignees.
18. Oral Modifications Not Binding: This instrument is the entire agreement of
the Company and the Employee. Oral changes shall have no effect. It may
be altered only by a written agreement signed by the party against whom
enforcement of any waiver, change, modification, extension, or discharge is
sought.
19. In addition to his other holdings, at signing, Mr. Mitchell will receive 1%
of the stock of TrueTraks, Inc. (fully vested) and during the first three
years of this contract will earn one half of one percent per year (total of
one and one-half percent at the end of three years) of TrueTraks, Inc.
stock. The one and one-half percent of earned stock will be fully vested
only at the end of the third full year calculated from the date of
signature of this contract.
/s/ Leonard R. Mitchell
------------------------------
LEONARD R. MITCHELL, JR. Employee
TRUETRAKS, INCORPORATED
Attest:
By
----------------------------
- -------------------------------------
2
<PAGE>
EXHIBIT A
1. Falsification of an Employment Application.
2. Conviction of a felony or commission of any which, resulting in a
conviction or not, would constitute a felony.
3. Incompetence in the performance of duties.
4. Insubordination.
5. Discrimination against any other employee on the basis of age, race, sex,
national origin, political or religious affiliation or absence thereof,
handicap or disability, veterans status or personal animosity.
6. Sexual harassment of any employee.
7. Careless, reckless, negligent or deliberate conduct on the job which
results in personal injury to any person.
8. Unlawful manufacture, sale, distribution, dispensing possession or use of a
controlled substance or alcohol on company property, while driving,
operating or riding as a passenger in company owned or leased vehicles or
equipment and / or while otherwise in an official capacity whether on or off
company property.
9. Misappropriation of company funds or falsification of a company expense
account.
10. Careless, reckless, negligent or deliberate conduct which results in damage
to company property.
11. Falsification of any official report or document.
12. Unauthorized disclosure of any investigation, propose sale or purchase, or
personal action not a part of public record.
13. Campaigning for public office on company time or using company equipment or
facilities.
14. Personal use of a company vehicle.
15. Display of hostile, unfriendly, or abrasive attitude rendering the work
place unpleasant or uncomfortable for other employees or personnel
conducting business with the company.
16. Failure to carry out instructions, or violation of written statutory
policies, procedures, or directives.
17. Behavior on or off the job which tends to bring discredit upon the company
or any of its employees or which will bring other employees into disrepute
or disgrace.
18. Conduct by the employee which disturbs, disrupts, or interferes with the
normal work or functions of an office, group and the company.
19. Failure to carry out instructions when the failure to do so jeopardizes
ones personal safety, other employees, customers and / or the public.
3
<PAGE>
[LOGO] TRUETRAKS, INCORPORATED
P.O. BOX 5065
GALLUP, NEW MEXICO 87305
505-722-6900
9/24/97
- --------------------------------------------------------------------------------
PROPRIETARY INFORMATION AGREEMENT
As an employee of TRUETRAKS, INCORPORATED or its parent, subsidiary or
affiliated corporations (the "Company"), and in consideration of my employment,
access to confidential information and other good and valuable consideration, I
agree to the following.
1. MAINTAINING CONFIDENTIAL INFORMATION
a) COMPANY INFORMATION. I agree, at all times during the term of my
employment and thereafter, to hold in strictest confidence and not to
use, except for the benefit of the Company, or disclose to any person,
firm, or corporation without written authorization of the Board of
Directors of the company, any trade secrets, confidential knowledge,
data, or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental
work, computer programs, databases, other original works of
authorship, customer lists, business plans, financial information, or
other subject matter pertaining to any business of the Company or any
of its clients, consultants, or licensees.
b) FORMER EMPLOYER INFORMATION. I agree that I will not, during my
employment with the Company, improperly use or disclose any trade
secrets of my former or concurrent employers or companies, if any, and
that I will not bring onto the premises of the Company any unpublished
document or any property belonging to my former or concurrent
employers or companies, if any, unless consented to in writing by said
employers or companies.
c) THIRD PARTY INFORMATION. I recognize that the Company has received
and, in the future, will receive from third parties their confidential
or proprietary information regarding which the Company is subject to a
duty of confidentiality. I agree that during the term of my
employment and thereafter, I will hold all such confidential
information in the strictest confidence, and will not disclose it to
any person, firm, or corporation (except as necessary in carrying out
my work for the Company), or use it for the benefit of anyone other
than for the Company without the written authorization of the Board of
Directors of the Company.
2. RETAINING AND ASSIGNING INVENTIONS AND ORIGINAL WORKS
a) INVENTIONS AND ORIGINAL WORKS RETAINED BY ME. I have attached hereto
as Exhibit A the list describing all inventions, original works of
authorship, developments, improvements, and trade secrets that were
made by me prior to any employment with the Company,
1
<PAGE>
which belong to me, which relate to the Company's proposed business
and products and which are not assigned to the Company; or, if no such
list is attached, I represent that there are no such Inventions.
b) INVENTIONS AND ORIGINAL WORKS ASSIGNED TO THE COMPANY. I agree that I
will promptly make full written disclosure to the Company, will hold
in trust for the sole right and benefit of the Company, and will
assign to the Company all my right, title, and interest in and to any
and all inventions, originals works of authorship, developments,
improvements or trade secrets which I may solely or jointly conceive
or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice during the period of time I am in the
employ of the Company and for twelve (12) months thereafter. I
recognize, however, that this section shall not apply to inventions,
improvements or discoveries meeting all of the following conditions.
i) It was developed entirely on my own time.
ii) No equipment, supplies, facility or trade secret of the Company
was used in its development; and
iii) It either:
(1) does not relate to the business of the Company or to the
Company's actual or demonstrably anticipated research and
development; or
(2) does not result from any work performed by me for the
Company.
I acknowledge that all original works of authorship which
are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by
copyright are "works made for lure" as that term is defined
in the United States Copyright Act (I 7 U.S.C.A., Section I
0 1).
c) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate and
current written records of all inventions and original works of
authorship made by me (solely or jointly with others) during the term
of my employment with the Company. The records will be in the form of
notes, sketches, drawings, and any other format that may be specified
by the Company. The records will be available to the remain the sole
property of the Company at all times.
d) OBTAINING LETTERS PATENT AND COPYRIGHT REGISTRATION. I agree that my
obligation to assist the Company to obtain United States or foreign
letters patent and copyright registrations covering inventions and
original works of authorship assigned hereunder to the Company shall
continue beyond the termination of my employment, but the company
shall compensate me at a reasonable rate for the time actually spent
by me at the Company's request on such assistance. If the Company is
unable because of my mental or physical incapacity, or for any other
reason to secure my signature to apply for or to pursue any
application for any United States or foreign letters patent or
copyright registrations covering inventions or original works of
authorship assigned to the Company as above,
2
<PAGE>
then I hereby irrevocably designate and appoint the Company and its
duly authorized officers and agents as my agent and attorney in fact,
to act for and in my behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further
the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if
executed by me. I hereby waive and quitclaim to the Company any and
all claims of any nature whatsoever, which I now or may hereafter have
for infringement of any patents or copyright resulting from any such
application for letters or copyright registrations assigned hereunder
to the Company.
3. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving my
employ of the Company, I will deliver to the Company (and will not
keep in my possession or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, material, equipment,
other documents or property, or reproduction of any aforementioned
items belonging to the Company, it successors or assigns.
4. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I
represent that my performance of all the terms of this agreement will
not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and agree I will not enter into,
any oral or written agreement in conflict herewith.
5. GENERAL PROVISIONS.
a) GOVERNING LAW. This Agreement will be governed by the laws of the
State of Delaware.
b) CONSENT TO JURISDICTION / EXCLUSIVITY OF JURISDICTION. I consent to
the exercise of personal jurisdiction over me by the state and federal
courts of the State of Delaware. I agree that such Delaware courts
shall be the exclusive forum for litigation regarding the
interpretation or enforcement of this Agreement. By so agreeing, I
understand that I am surrendering the right to commence litigation
against TrueTraks, Inc. outside the State of Delaware.
c) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No
modification of or amendment to this Agreement will be effective
unless in writing, signed by the party to be charged. Any subsequent
change or changes in my duties, salary or compensation will not affect
the validity or scope of this Agreement. All prior agreements,
understandings, oral agreements, and writing are expressly superseded
by this document.
d) SEVERABILITY. If one or more of the provisions of this Agreement are
deemed void by law, then the remaining provisions will continue in
full force and effect.
e) SUCCESSORS AND ASSIGNS. This agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors and its assigns.
3
<PAGE>
f) NON-EMPLOYMENT AGREEMENT. This is not an employment contract and does
not give you any right to continued employment. You acknowledge that
the ability of the Company to terminate your employment at will is not
affected by this Agreement.
/s/ Garry Oglesbee
- ---------------------- -----------------------------------
Date Signature
/s/ Garry Oglesbee
-----------------------------------
Name of Employee (typed or
printed)
<PAGE>
TRUETRAKS, INCORPORATED
[LOGO] P.O. BOX 5065
GALLUP, NEW MEXICO 87305
505-722-6900
10/1/97
- --------------------------------------------------------------------------------
PROPRIETARY INFORMATION AGREEMENT
As an employee of TRUETRAKS, INCORPORATED or its parent, subsidiary or
affiliated corporations (the "Company"), and in consideration of my employment,
access to confidential information and other good and valuable consideration,
I agree to the following.
1. MAINTAINING CONFIDENTIAL INFORMATION
a) COMPANY INFORMATION. I agree, at all times during the term of my
employment and thereafter, to hold in strictest confidence and not to
use, except for the benefit of the Company, or disclose to any person,
firm, or corporation without written authorization of the Board of
Directors of the company, any trade secrets, confidential knowledge,
data, or other proprietary information relating to products,
processes, know-how, designs, formulas, developmental or experimental
work, computer programs, databases, other original works of
authorship, customer lists, business plans, financial information, or
other subject matter pertaining to any business of the Company or any
of its clients, consultants, or licensees.
b) FORMER EMPLOYER INFORMATION. I agree that I will not, during my
employment with the Company, improperly use or disclose any trade
secrets of my former or concurrent employers or companies, if any, and
that I will not bring onto the premises of the Company any unpublished
document or any property belonging to my former or concurrent
employers or companies, if any, unless consented to in writing by said
employers or companies.
c) THIRD PARTY INFORMATION. I recognize that the Company has received
and, in the future, will receive from third parties their confidential
or proprietary information regarding which the Company is subject to a
duty of confidentiality. I agree that during the term of my
employment and thereafter, I will hold all such confidential
information in the strictest confidence, and will not disclose it to
any person, firm, or corporation (except as necessary in carrying out
my work for the Company), or use it for the benefit of anyone other
than for the Company without the written authorization of the Board of
Directors of the Company.
2. RETAINING AND ASSIGNING INVENTIONS AND ORIGINAL WORKS
a) INVENTIONS AND ORIGINAL WORKS RETAINED BY ME. I have attached hereto
as Exhibit A the list describing all inventions, original works of
authorship, developments, improvements, and trade secrets that were
made by me prior to any employment with the Company,
1
<PAGE>
which belong to me, which relate to the Company's proposed business
and products and which are not assigned to the Company; or, if no such
list is attached, I represent that there are no such Inventions.
b) INVENTIONS AND ORIGINAL WORKS ASSIGNED TO THE COMPANY. I agree that I
will promptly make full written disclosure to the Company, will hold
in trust for the sole right and benefit of the Company, and will
assign to the Company all my right, title, and interest in and to any
and all inventions, originals works of authorship, developments,
improvements or trade secrets which I may solely or jointly conceive
or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice during the period of time I am in the
employ of the Company and for twelve (12) months thereafter. I
recognize, however, that this section shall not apply to inventions,
improvements or discoveries meeting all of the following conditions.
i) It was developed entirely on my own time.
ii) No equipment, supplies, facility or trade secret of the Company
was used in its development; and
iii) It either:
(1) does not relate to the business of the Company or to the
Company's actual or demonstrably anticipated research and
development; or
(2) does not result from any work performed by me for the
Company.
I acknowledge that all original works of authorship which
are made by me (solely or jointly with others) within the
scope of my employment and which are protectable by
copyright are "works made for lure" as that term is defined
in the United States Copyright Act (I 7 U.S.C.A.,
Section I 0 1).
c) MAINTENANCE OF RECORDS. I agree to keep and maintain adequate and
current written records of all inventions and original works of
authorship made by me (solely or jointly with others) during the term
of my employment with the Company. The records will be in the form of
notes, sketches, drawings, and any other format that may be specified
by the Company. The records will be available to the remain the sole
property of the Company at all times.
d) OBTAINING LETTERS PATENT AND COPYRIGHT REGISTRATION. I agree that my
obligation to assist the Company to obtain United States or foreign
letters patent and copyright registrations covering inventions and
original works of authorship assigned hereunder to the Company shall
continue beyond the termination of my employment, but the company
shall compensate me at a reasonable rate for the time actually spent
by me at the Company's request on such assistance. If the Company is
unable because of my mental or physical incapacity, or for any other
reason to secure my signature to apply for or to pursue any
application for any United States or foreign letters patent or
copyright registrations covering inventions or original works of
authorship assigned to the Company as above,
2
<PAGE>
then I hereby irrevocably designate and appoint the Company and its
duly authorized officers and agents as my agent and attorney in fact,
to act for and in my behalf and stead to execute and file any such
applications and to do all other lawfully permitted acts to further
the prosecution and issuance of letters patent or copyright
registrations thereon with the same legal force and effect as if
executed by me. I hereby waive and quitclaim to the Company any and
all claims of any nature whatsoever, which I now or may hereafter have
for infringement of any patents or copyright resulting from any such
application for letters or copyright registrations assigned hereunder
to the Company.
3. RETURNING COMPANY DOCUMENTS. I agree that, at the time of leaving my
employ of the Company, I will deliver to the Company (and will not keep
in my possession or deliver to anyone else) any and all devices,
records, data, notes, reports, proposals, lists, correspondence,
specifications, drawings, blueprints, sketches, material, equipment,
other documents or property, or reproduction of any aforementioned
items belonging to the Company, it successors or assigns.
4. REPRESENTATIONS. I agree to execute any proper oath or verify any
proper document required to carry out the terms of this Agreement. I
represent that my performance of all the terms of this agreement will
not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment by the
Company. I have not entered into, and agree I will not enter into, any
oral or written agreement in conflict herewith.
5. GENERAL PROVISIONS.
a) GOVERNING LAW. This Agreement will be governed by the laws of the
State of Delaware.
b) CONSENT TO JURISDICTION / EXCLUSIVITY OF JURISDICTION. I consent to
the exercise of personal jurisdiction over me by the state and federal
courts of the State of Delaware. I agree that such Delaware courts
shall be the exclusive forum for litigation regarding the
interpretation or enforcement of this Agreement. By so agreeing, I
understand that I am surrendering the right to commence litigation
against TrueTraks, Inc. outside the State of Delaware.
c) ENTIRE AGREEMENT. This Agreement sets forth the entire agreement and
understanding between the Company and me relating to the subject
matter herein and merges all prior discussions between us. No
modification of or amendment to this Agreement will be effective
unless in writing, signed by the party to be charged. Any subsequent
change or changes in my duties, salary or compensation will not affect
the validity or scope of this Agreement. All prior agreements,
understandings, oral agreements, and writing are expressly superseded
by this document.
d) SEVERABILITY. If one or more of the provisions of this Agreement are
deemed void by law, then the remaining provisions will continue in
full force and effect.
e) SUCCESSORS AND ASSIGNS. This agreement will be binding upon my heirs,
executors, administrators and other legal representatives and will be
for the benefit of the Company, its successors and its assigns.
3
<PAGE>
f) NON-EMPLOYMENT AGREEMENT. This is not an employment contract and does
not give you any right to continued employment. You acknowledge that
the ability of the Company to terminate your employment at will is not
affected by this Agreement.
/s/ Leonard Mitchell
- ------------------------- -------------------------
Date Signature
/s/ Leonard Mitchell
-------------------------
Name of Employee (typed or
printed)
4
<PAGE>
ESCROW AGREEMENT
(To be filed by Amendment)
FIRSTAR BANK OF MINNESOTA, N. A.
of
St. Paul, MN.
<PAGE>
August 22, 1997
Commercial Transaction Center
3925 Excelsior Blvd. Suite # 5
Minneapolis, MN. 55416
RE: TrueTraks, Inc., Stock Certificates held in Escrow
Dear Mr. Kosloske,
This irrevocable letter is being provided to you in connection with the offering
by TrueTraks, Inc., a Delaware Corporation (the "company") of shares of Stock in
the Company (the "Offering"). The offering is being made by TrueTraks, Inc.,
which will be its own underwriter. Pursuant to the terms and provisions of the
offering, all funds received by the Company with respect to the first 100,000
shares of stock in the Company which will be deposited with Firstar Bank of
Minnesota (Escrow Agent). At the time of successfully raising of 100,000 shares
of stock and Firstar Bank releasing the minimum funds in Escrow, that Commercial
Transaction Center will issue Stock in the following instructions listed below.
The Company's stock will be held in Escrow until the minimum offering is raised
or until the offering is withdrawn. This letter constitutes he Company's
supplemental Commercial Transaction Center escrow instructions. To be held in
Escrow for Commercial Transaction Center until the minimum offering is reached,
then Commercial Transaction Center will distribute the Company's Stock as
requested in this Escrow Agreement. The following will be the persons for stock
distribution:
TRUETRAKS, INC.
COMMON STOCK
Garry Oglesbee 682,000 Shares Leonard Mitchell 50,000 Shares
1408 Kit Carson Dr. 15029 Sundance
Gallop, NM. 87301 Wichita, KS. 67230
Lilly Beter 600,000 Shares Lonnie Eidson 84,000 Shares
5707 Hwy. 7 P. O. Box 5413
St. Louis Park, MN. 55416 Lake Montezuma, AZ. 86342
Michael Chappue 50,000 Shares Dr. George Gavrell 100,000 Shares
49545 Hopi Dr. 1433 Emmons Canyon Dr.
Parker, AZ. 85344 Danville, CA. 94526
Karl Benz 100,000 Shares Nelda Oglesbee 34,000 Shares
517 West Chestnut Street P. O. Drawer D
Leadville, CO. 80461 Sedan, KS. 67361
Jack Wiles 50,000 Shares
12940 Basswood Lane
Beaumont, Texas 77713
<PAGE>
Please acknowledge your receipt of these instructions, and your agreement to act
in accordance therewith, by returning to Garry Oglesbee the enclosed copy of
these instructions, bearing your signature in the place provided.
TRUETRAKS, INCORPORATED.,
a Delaware Corporation
By: /s/ Garry Oglesbee
--------------------------------
Title: President
-----------------------------
ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledges receipt of the foregoing escrow instructions
on behalf of Commercial Transaction Center, Ltd. ("Commercial"), consents on
behalf of Commercial to in accordance therewith, and respects and warrants to
Company that the undersigned is authorized to execute this Acknowledgment and
Consent on behalf of Commercial.
Date: August 29, 1997
---------------------
COMMERCIAL TRANSACTION CENTER, LTD.
By: /s/ Michael Kosloske
-------------------------------------
Title: President
----------------------------------
<PAGE>
CURTIS FORSE
CERTIFIED PUBLIC ACCOUNTANT
INDEPENDENT AUDITORS CONSENT
I consent to the use in this Registration Statement of TrueTraks,
Incorporated on Form SB-2 of my report dated July 31, 1997, appearing in the
Prospectus, which is part of this Registration Statement.
/s/ Curtis Forse
- ------------------------------
Curtis Forse CPA
September 29, 1997
5304-367 COURT NORTH BRANCH MN. 55056 TELEPHONE (612) 674-8533
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Garry Oglesbee
--------- -----------------------------------
Garry Oglesbee
President, CEO, Chairman of
the Board.
ADDRESS: Garry Oglesbee
1408 Kit Carson Drive
Gallup, New Mexico 87301
PHONE: (505) 722-2855
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Jack Wiles
--------- -----------------------------------
Jack Wiles
Director
ADDRESS: Jack Wiles
12940 Basswood Lane
Beaumont, Texas 77713
PHONE: (316) 838-4878
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Lilly Beter
--------- -----------------------------------
Lilly Beter
Vice-Chairperson, Director
ADDRESS: Lilly Beter
5707 Hwy. 7
St. Louis Park, MN. 55416
PHONE: (612) 920-2693
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Lonnie Eidson
--------- -----------------------------------
Lonnie Eidson
Director
ADDRESS: Lonnie Eidson
4570 Valancius Way
Lake Montezuma, AZ. 86342
PHONE: (520) 567-7225
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Leonard Mitchell
--------- -----------------------------------
Leonard Mitchell
Vice President of Transportation,
COO, CFO (Acting), Director
ADDRESS: Leonard Mitchell
15029 Sundance
Wichita, KS. 67230
PHONE: (316) 733-6905
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ Michael Chappue
--------- -----------------------------------
Michael Chappue
Director
ADDRESS: Michael Chappue
49545 Hopi Dr.
Parker, AZ. 85344
PHONE: (520) 667-3078
<PAGE>
DIRECTORS ACCEPTANCE AND APPROVAL OF
PROSPECTUS
I am one of the Directors of TrueTraks, Inc. I have read the Prospectus
(Disclosure Document) of this offering and agree with all of the contents of
said Prospectus. I, furthermore, know of no emissions or deletions. I have no
knowledge of any lawsuits, or liabilities that pertains to this Company.
I, also agree to the filing of this Prospectus (Disclosure Document) with
the Securities and Exchange Commission and in the States of Texas, Colorado, New
Mexico and Georgia.
DATED: 9-29 , 1997 SIGNATURE: /s/ William Muth
--------- -----------------------------------
William Muth
Secretary, Director
ADDRESS: William Muth
4 N 608 High Meadow Park
St. Charles, IL. 60174
PHONE: (630) 443-0057
<PAGE>
LIST OF OFFICERS AND DIRECTORS
SELLING COMPANY SECURITIES
The sales of this offering will be through Regulation SB, Form SB-2. No
officers or directors will receive compensation or commission from the sales of
this offering. THIS OFFERING WILL ONLY BE SOLD BY THE FOLLOWING OFFICERS OF THE
COMPANY:
GARRY OGLESBEE LEONARD MITCHELL
1408 KIT CARSON DR. 15029 SUNDANCE
GALLOP, NM. 87301 WICHITA, KS. 67230
- --------------------------------------------------------------------------------
It is the intention of the Company to apply for acceptance to trade this
security on the Bulletin Board. There can be no assurance made as to a market
for this security or that this security will actually trade on such market.
<PAGE>
FORM U-2
UNIFORM CONSENT TO SERVICE OF PROCESS
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned TRUETRAKS, INC., (a corporation), organized under the
laws of DELAWARE, for purposes of complying with the laws of the States
indicated hereunder relating to either the registration or sale of securities,
hereby irrevocably appoints the officers of the States so designated hereunder
and their successors in such offices, its attorney in those States so designated
upon whom may be served any notice, process or pleading in any action or
proceeding against it arising out of, or in connection with, the sale of
securities or out of violation of the aforesaid laws of the States so
designated; and the undersigned does hereby consent that any such action or
proceeding against it may be commenced in any court of competent jurisdiction
and proper venue within the States so designated hereunder by service of process
upon the officers so designated with the same effect as if the undersigned was
organized or created under the laws of that State and have been served lawfully
with process in that State.
It is requested that a copy of any notice, process or pleading served
hereunder be mailed to:
TRUETRAKS, INC.
- --------------------------------------------------------------------------------
NAME
3925 EXCELSIOR BLVD. SUITE #5 MINNEAPOLIS, MN. 55416. (612)-928-0953
- --------------------------------------------------------------------------------
ADDRESS
Place a "./" before the names of all the States for which the person executing
this form is appointing the designated Officer of that State as its attorney in
that State for receipt of service of process:
[ ] ALABAMA Secretary of State. [ ] DELAWARE Securities
Commissioner
[ ] ALASKA Administrator of the [ ] DISTRICT OF Public Service
Division of Banking and COLUMBIA Commission
Corporations, Department
of Commerce and Economic [ ] FLORIDA Department of
Development. Banking and
Finance
[X] GEORGIA Commissioner of
Securities
[ ] ARIZONA The Corporation
Commission. [ ] GUAM Administrator,
Department
of Finance
[ ] ARKANSAS The Securities
Commissioner. [ ] HAWAII Commissioner of
Securities
[ ] CALIFORNIA Commissioner of [ ] IDAHO Director, Department
Corporations of Finance.
[X] COLORADO Securities Commissioner.[ ] ILLINOIS Secretary of State
[ ] CONNECTICUT Banking Commissioner. [ ] INDIANA Secretary of State
[ ] IOWA Commissioner of [ ] NORTH DAKOTA Securities
Insurance. Commissioner.
<PAGE>
[ ] KANSAS Secretary of State. [ ] OHIO Secretary of State.
[ ] KENTUCKY Director, Division of [ ] OREGON Director, Department
Securities. of Insurance and
Finance.
[ ] LOUISIANA Commissioner of [ ] OKLAHOMA Securities
Securities. Administrator.
[ ] MAINE Administrator, ***PENNSYLVANIA Pennsylvania does
Securities Division. not require filing
of a Consent to
Service of Process.
[ ] MARYLAND Commissioner of the
Division of Securities.
[ ] PUERTO RICO Commissioner of
Financial
Institutions.
[ ] MASSACHUSETTS Secretary of State.
[ ] MICHIGAN Administrator, [ ] RHODE ISLAND Director of Business
Corporation and Regulation.
Securities Bureau,
Department of Commerce.
[ ] MINNESOTA Commissioner of [ ] SOUTH CAROLINA Secretary of State.
Commerce.
[ ] SOUTH DAKOTA Secretary of State.
[ ] MISSISSIPPI Secretary of State [ ] TENNESSEE Commissioner of
Commerce and
Insurance.
[ ] MISSOURI Securities Commissioner.
[X] TEXAS Securities
Commissioner.
[ ] MONTANA State Auditor and
Commissioner of [ ] UTAH Director, Division
Insurance. of Securities.
[ ] NEBRASKA Director of Banking and
Finance. [ ] VERMONT Secretary of State.
[ ] NEVADA Secretary of State, [ ] VIRGINIA Clerk, State
Corporation
Commission.
[ ] NEW HAMPSHIRE Secretary of State.
[ ] WASHINGTON Director of the
Department
[ ] NEW JERSEY Chief, Securities Bureau. of Financial
Institutions.
[X] NEW MEXICO Director, Securities [ ] WEST VIRGINIA Commissioner of
Division. Securities.
[ ] NEW YORK Secretary of State, [ ] WISCONSIN Commissioner of
Securities.
[ ] NORTH CAROLINA Secretary of State [ ] WYOMING Secretary of State.
Dated this 29 day of September, 1997
/s/ Garry Oglesbee
----------------------------------
(SEAL) By GARRY OGLESBEE
--------------------------------
PRESIDENT
----------------------------------
Page 2 of 4 Title
<PAGE>
CORPORATE ACKNOWLEDGMENT
State or Province of DELAWARE )
-----------------
County of NEW CASTLE ) SS: TRUETRAKS, INC.
-------------------------
On this 29 day of September, 1997, before me Michael Kosloske the
undersigned officer, personally appeared William Muth known personally to me to
be the Secretary of the above named corporation and acknowledged that he, as
---------
Title
an officer being authorized so to do, executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation by himself as
an officer.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
/s/ Michael Kosloske
-----------------------------------
NOTARY PUBLIC/COMMISSIONER OF OATHS
My commission expires: 1-31-2000
-------------
(SEAL)
INDIVIDUAL OR PARTNERSHIP ACKNOWLEDGMENT
State or Province of )
-----------
County of ) SS:
---------------------
On this day of , 19 , before me
------ ------------ --- -----------
the undersigned officer, personally appeared to me
-----------------
personally known and known to me to be the same person(s) whose name(s) is (are)
signed to the foregoing instrument, and acknowledged the execution thereof for
the uses and purposes therein set forth.
IN WITNESS WHEREOF I have hereunto set my hand and official seal.
-----------------------------------
NOTARY PUBLIC/COMMISSIONER OF OATHS
My commission expires:
-------------
(SEAL)
page 3 of 4
<PAGE>
INSTRUCTIONS TO FORM U-2
UNIFORM CONSENT TO SERVICE OF PROCESS
1. The name of the issuer is to be inserted in the blank space on line 1 of
Uniform Form U-2 ("Form").
2. The type of person executing the Form is to be described by striking out
the inapplicable nomenclature in lines 2 - 4 and, if appropriate, by
inserting a description of the person in the blank space provided on line
2 of the Form.
3. The name of the jurisdiction under which the issuer was formed or is to be
formed is to be inserted in the blank space on line 3 of the Form.
4. The person to whom a copy of any notice, process or pleading which is
served pursuant to the Consent to Service of Process is to be inserted in
the appropriate blank spaces at the end of page 1 of the Form.
5. A"./"is to be placed in the space before the names of all States which the
person executing this Form lawfully is appointing the officer of each State
so designated on the Form as its attorney in that State for receipt of
service of process
6. A manually signed Form must be filed with each State requiring a Consent to
Service of Process on Form U-2 at the office so designated by the laws or
regulations of that State and must be accompanied by the exact filing fee,
if any.
7. The Form must be signed by the issuer. If the issuer is a corporation, it
should be signed in the name of the corporation by an executive officer
duly authorized; if a partnership, it should be signed in the name of the
partnership by a general partner, and if an unincorporated association or
other organization which is not a partnership, the Form should be signed in
the name of such organization by a person responsible for the direction or
management of its affairs.
8. If the Form is mailed, it is advisable to send it by registered or
certified mail, postage prepaid, return receipt requested.
Page 4 of 4
<PAGE>
Form U-2A
UNIFORM FORM OF
CORPORATE RESOLUTION
OF
TRUETRAKS, INC.
RESOLVED, that it is desirable and in the best interest of this Corporation
that its securities be qualified or registered for sale in various states; that
the President or any Vice President and the Secretary or an Assistant Secretary
hereby are authorized to determine the states in which appropriate action shall
be taken to qualify or register for sale all or such part of the securities of
this Corporation as said officers may deem advisable; that said officers are
hereby authorized to perform on behalf of this Corporation any and all such acts
as they may deem necessary or advisable in order to comply with the applicable
laws of any such states, and in connection therewith to execute and file all
requisite papers and documents, including, but not limited to, applications,
reports, surety bonds, irrevocable consents and appointments of attorneys for
service of process; and the execution by such officers of any such paper or
document or the doing by them of any act in connection with the foregoing
matters shall conclusively establish their authority therefor from this
Corporation and the approval and ratification by this Corporation of the papers
and documents so executed and the action so taken.
OVER
<PAGE>
Form U-2A
2
CERTIFICATE
The undersigned hereby certifies that he is the CORPORATE Secretary of
TRUETRAKS, INC., a corporation organized and existing under the laws of the
State of DELAWARE that the foregoing is a true and correct copy of a resolution
duly adopted at a meeting of the Board of Directors of said corporation held on
the 29 day of September, 1997 at which meeting a quorum was at all times present
and acting; that the passage of said resolution was in all respects legal; and
that said resolution is in full force and effect.
Dated this 29 day of September, 1997
/s/ William Muth
------------------------------
Secretary
(Corporate Seal)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> MAR-31-1997
<PERIOD-END> JUL-31-1997
<CASH> 420
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 420
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 139,920
<CURRENT-LIABILITIES> 25,000
<BONDS> 0
0
0
<COMMON> 87,500
<OTHER-SE> 27,420
<TOTAL-LIABILITY-AND-EQUITY> 139,920
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
</TABLE>
