As filed with the Securities and Exchange Commission
on December 3, 1997
Registration No.
===================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
NORTHWEST PACIFICA, INC.
--------------------------
(Exact Name of registrant as specified in its charter)
Delaware 91-1761480 7373
- -------- -------------------- ------------
(State or other (I.R.S. Employer (Primary Standard
jurisdiction of Identification Number) Industrial Classif-
incorporation or ication Code
organization)
------------
12811 SE Bryn Street
Clackamas, Oregon 97015
503/698-2554
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Charles H. Powers, President
12811 SE Bryn Street
Clackamas, Oregon 97015
503/698-2554
Northwest Pacifica, Inc.
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to: Cassidy & Associates, 1504 R Street, N.W.
Washington, D.C. 20009, 202/387-5400
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on 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 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
<TABLE>
<CAPTION>
Proposed Proposed Amount
Title of Each Class Amount Maximum Maximum of
of Securities to to be Offering Aggregate Regis-
be Registered Reg- Price Offering tration
tered Per Share Price Fee
<S> <C> <C> <C> <C>
Units consisting of 500,000 $2.50 $1,250,000 $378.75
1 share Common Stock
and 1 Warrant
Common Stock
contained in Units 500,000 NA ---- ----
Common Stock Warrants
contained in Units 500,000 NA ---- ----
Common Stock
underlying Warrants 500,000 NA ---- ----
Distribution Units 500,000 0.04 20,000 6.00
Common Stock contained
in Distribution Units 500,000 NA ---- ----
Common Stock Warrants
contained in Distribution
Units 1,000,000 NA ---- ----
Common Stock underlying
Distribution Warrants 1,000,000 NA ---- ----
Common Stock held by
Selling Security-
holders 470,400 $.04 $18,816 5.64
Total $1,250,097 $396.49
(3)
</TABLE>
(1) There is no current market for the securities and the dollar amount
of the Units to be registered is de minimis based upon the
estimated per share of common stock book value ($.04).
(2) Estimated solely for the purpose of calculating the registration
fee based on Rule 457(f)(2).
(3) Paid by electronic transfer.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-1 (the
"Registration Statement") under the Securities Act with respect to the
securities offered hereby. This Prospectus does not contain all the
information contained in the Registration Statement. For further
information regarding the Company and the securities offered hereby,
reference is made to the Registration Statement, including all exhibits and
schedules thereto, which may be inspected without charge at the public
reference facilities of the Commission's Washington, D.C. office, 450 Fifth
Street, N.W., Washington, D.C. 20549. Each statement contained in this
Prospectus with respect to a document filed as an exhibit to the Registration
Statement is qualified by reference to the exhibit for its complete terms and
conditions.
The Company will be subject to the informational requirements of
the Securities Exchange Act of 1934 ("Exchange Act") and in accordance
therewith will file reports and other information with the Commission.
Reports, proxy statements and other information filed by the Company can
be inspected and copied on the Commission's home page on the World
Wide Web at http://www.sec.gov or at the public reference facilities of the
Commission, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, as well as the following Regional Offices: 7 World Trade Center,
Suite 1300, New York, N.Y. 10048; and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois. 60661-2511. Such material
can also be inspected at the New York, Boston, Midwest, Pacific and
Philadelphia Stock Exchanges. Copies can be obtained from the
Commission by mail at prescribed rates. Request should be directed to the
Commission's Public Reference Section, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549.
The Company intends to furnish its stockholders with annual reports
containing audited financial statements and such other reports as may be
required by law.
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, as amended, or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
[Legend for Red Herring Prospectuses]
The 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.
<PAGE>
PROSPECTUS Subject to Completion, Dated December ____, 1997
NORTHWEST PACIFICA, INC.
500,000 Units, 500,000 Shares of Common Stock and
500,000 Redeemable Warrants contained in the Units
and 500,000 Shares of Common Stock underlying such Warrants;
500,000 Distribution Units, 500,000 Shares of Common Stock,
and 1,000,000 Common Stock Warrants contained in the
Distribution Units, and 1,000,000 Shares of Common Stock
underlying the Distribution Warrants and
470,400 Shares of Common Stock to be Sold by the Holders thereof
Northwest Pacifica, a development-stage Delaware corporation (the
"Company"), is offering for sale 500,000 units (the "Company Units"),
each Company Unit consisting of one share of common stock of the
Company (the "Company Shares"), par value $.0001 per share (the
"Common Stock") and one redeemable warrant (the "Company Warrants").
The Company has limited business operations, assets and revenues.
The Company is a regionally-focused network and Internet service provider
("NSP"). The Company intends to provide client companies with (i)
individual and intranet access to the Internet through dial-up and dedicated
connections (ii) value-added Internet services, (iii) hardware and software
sales and network design and consulting for intranet and local internet
systems, and (iv) cybercafes located in metropolitan areas that offer displays
of the latest in business communication technology.
The Company Shares and the Company Warrants contained in the
Company Units may be separately transferred immediately upon the
effective date (the "Effective Date") of the registration statement of which
this Prospectus is a part (the "Registration Statement"). Each Company
Warrant entitles the holder thereof to purchase one share of Common Stock
at a per share exercise price of 75% of the Common Stock per share market
price at the time of such exercise, subject to adjustment from time to time,
for a period of 12 months commencing on the date of grant of such
Warrant. If at the time of exercise of such Company Warrant, no market
price exists for the Common Stock then the per share exercise price shall be
$2.50. The Company Warrants are subject to redemption by the Company
commencing one year from the date of this Prospectus at a price of $.05 per
Warrant on 30 days' written notice if the closing bid price of the Common
Stock for 30 consecutive trading days ending within 15 days of the notice of
redemption averages in excess of $3.00 per share (subject to adjustment).
The exercise price and maturity date of the Warrants are subject to
adjustment at the discretion of the Company. SEE "DESCRIPTION OF
SECURITIES."
The Company is a recently formed development-stage corporation,
with limited operations and revenues and with limited capital. Prior to the
Company's offering of the securities as described herein, there has been no
public market for the Company Units, the Common Stock or the Company
Warrants, and no assurances can be given that a public market will develop
following completion of this Offering or that, if any such market does
develop, it will be sustained. It is currently anticipated that the initial
offering price of the Company Units will be $2.50 per Company Unit. The
offering price of the Company Units and the exercise price of the Company
Warrants were determined arbitrarily by the Company and are not
necessarily related to asset or book value, net worth or any other established
criteria of value. The Company will receive the proceeds (net of certain
expenses) of the Offering of the Units and exercise of the Company
Warrants. SEE "USE OF PROCEEDS."
The Registration Statement of which this Prospectus is a part also
relates to the offer and sale of certain securities by the holders thereof (the
"Selling Securityholders") including (i) 500,000 units to be distributed by
the holder thereof to its shareholders (the "Distribution Units"), each
Distribution Unit consisting of one share of Common Stock (the
"Distribution Shares") and two warrants for the purchase of Common Stock
(the "Distribution Warrants"); (ii) 1,000,000 shares of Common Stock
underlying the Distribution Units; and (iii) 470,400 shares of Common
Stock held by certain securityholders of the Company. (The aforementioned
securities are hereinafter collectively referred to throughout as the "Selling
Securityholders Securities"). All costs incurred in the registration of the
Company Shares, the Company Warrants and the Selling Securityholders'
Securities are being borne by the Company.
The Selling Securityholders' Securities are expected to become
tradeable on or about the date of this Prospectus subject to the terms of an
agreement between certain Selling Securityholders and the Company
restricting the sale thereof for a period of six months from the Effective
Date hereof. Sales of the securities being offered by Selling
Securityholders, or even the potential of such sales, may likely have an
adverse effect on the market prices of the securities of the Company. The
Selling Securityholders will receive the proceeds from the sale of the
securities being offered by them. The Company will not receive any of the
proceeds from such sales. The Selling Securityholders, directly or through
agents, dealers or representatives to be designated from time to time, may
sell their securities on terms to be determined at the time of sale. SEE
"PLAN OF DISTRIBUTION." The Selling Securityholders reserve the sole
right to accept or reject, in whole or in part, any proposed purchase of the
Selling Securityholders' Shares being offered by them pursuant hereto.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" CONTAINED IN THIS PROSPECTUS EGINNING ON PAGE 7.
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 COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is December ____, 1997.<PAGE>
CERTAIN SECURITIES DESCRIBED HEREIN ARE OFFERED BY THE SELLING SHAREHOLDERS
SUBJECT TO PRIOR SALE, WITHDRAWAL, CANCELLATION OR MODIFICATION OF THE
OFFERING, WITHOUT NOTICE. IN ADDITION, THE RIGHT IS RESERVED TO CANCEL ANY
CONFIRMATION OF SALE EVEN IF THE PURCHASE PRICE HAS BEEN PAID, IF IN THE
OPINION OF THE COMPANY OR ANY PARTICIPATING BROKER-DEALER, COMPLETION OF
SUCH SALE WOULD VIOLATE FEDERAL OR STATE SECURITIES LAWS OR A RULE OR POLICY
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC.
FOLLOWING THE COMPLETION OF THIS OFFERING, CERTAIN BROKER-DEALERS MAY BE THE
PRINCIPAL MARKETMAKERS FOR THE SECURITIES OFFERED HEREBY. UNDER THESE
CIRCUMSTANCES, THE MARKET BID AND ASKED PRICES FOR THE SECURITIES MAY BE
SIGNIFICANTLY INFLUENCED BY DECISIONS OF THE MARKETMAKERS TO BUY OR SELL THE
SECURITIES FOR THEIR OWN ACCOUNT. NO ASSURANCE CAN BE GIVEN THAT ANY MARKET
MAKING ACTIVITIES OF THE MARKET MAKERS, IF COMMENCED, WILL BE CONTINUED.
FOR A PERIOD OF AT LEAST ONE YEAR FOLLOWING CLOSING OF THIS OFFERING, THE
COMPANY WILL BE REQUIRED BY THE SECURITIES EXCHANGE ACT OF 1934 TO FILE
PERIODIC REPORTS AND OTHER INFORMATION WITH THE SECURITIES AND EXCHANGE
COMMISSION. SUCH MATERIAL MAY BE INSPECTED AT THE COMMISSION'S PRINCIPAL
OFFICES AT JUDICIARY PLAZA, 450 FIFTH STREET, N.W. WASHINGTON, D.C. 20459
AND COPIES MAY BE OBTAINED ON PAYMENT OF CERTAIN FEES PRESCRIBED BY THE
COMMISSION. THE COMPANY WILL FURNISH TO HOLDERS OF ITS COMMON STOCK
ANNUAL REPORTS CONTAINING AUDITED FINANCIAL STATEMENTS EXAMINED AND REPORTED
UPON, AND WITH AN OPINION EXPRESSED BY AN INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT. THE COMPANY MAY ISSUE OTHER UNAUDITED INTERIM REPORTS TO ITS
SHAREHOLDERS AS IT DEEMS APPROPRIATE.
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained
elsewhere in this Prospectus. Reference is made to, and this summary is
qualified by, the more detailed information set forth in this Prospectus,
which should be read in its entirety.
The Company Northwest Pacifica, Inc. is a development-stage
corporation incorporated in Oregon in January
1997 and reincorporated in Delaware in
December, 1997. The Company's principal
place of business is located in Clackamas,
Oregon.
Business The Company has limited business operations,
limited assets and revenues. The Company is a
regionally-focused network and Internet service
provider ("NSP"). The Company (i) provides
client companies with network design and
consulting for intranet systems (ii) offers
individual and intranet access to the Internet
through dial-up and dedicated connections (iii)
offers value-added Internet services and (iv)
intends to operate a cybercafe that showcases
the latest in business communications
technology. The Company offers for sale to
clients and others the computer hardware
necessary to support the services offered
by the Company. SEE "DESCRIPTION OF BUSINESS
--Plan of Operation." The Company offers its
services to small and mid-size companies
located in urban areas in the Pacific
Northwest, primarily Seattle, Washington,
Portland, Oregon, and Boise, Idaho.
Transfer Agent The Company will initially act as transfer agent
for the Shares. SEE "DESCRIPTION OF
SECURITIES--Transfer Agent and Registrar."
Selling
Securityholders'
Securities The Selling Securityholders' Securities consist
of (i) 500,000 Distribution Units registered
hereby and owned by a certain Selling Security-
holder for distribution to its shareholders,
each Distribution Unit consisting of one
Distribution Share and Distribution Warrants to
purchase two shares of Common Stock,
(ii) 1,000,000 shares of Common Stock under-
lying such Distribution Warrants and (iii)
470,400 shares of Common Stock to be offered
for sale by Selling Securityholders subject
to certain limitations. SEE "SELLING
SECURITYHOLDERS." The Common Stock
offered for sale by the Selling Securityholders'
constitute an aggregate of 24% of the issued and
outstanding Common Stock of the Company as of
the date hereof.
Trading Market The Company intends to apply for admission to
quotation of its Common Stock on the NASD
OTC Bulletin Board and intends to apply for
listing on the Nasdaq SmallCap Market when,
and if, it qualifies therefor. There can be no
assurance that the Company will qualify for
such quotation or that its Common Stock will
be so listed. SEE "RISK FACTORS--Absence
of Trading Markets" and "DESCRIPTION OF
SECURITIES--Admission to Quotation on
Nasdaq SmallCap Market or the NASD OTC
Bulletin Board".
SELECTED FINANCIAL DATA
The following table sets forth selected financial information
concerning the Company for the nine months ended September 30, 1997:
Balance Sheet Data:
Current assets $ 22,517.99
Fixed and other assets 80,500.34
Total Assets $ 103,018.33
Total Liabilities 2,713.20
Stockholders' equity (deficit) 100,305.13
Total Liabilities and Equity $ 103,018.33
The selected financial data above is a summary only and has been
derived from and is qualified in its entirety by reference to the Company's
financial statements and the report related thereto of Betty E. Veveiros,
Certified Public Accountant, included elsewhere in this Prospectus. SEE
"EXPERTS" and "FINANCIAL STATEMENTS."
<PAGE>
THE COMPANY
The Company, a recently formed development stage company, was
incorporated in the State of Oregon in January, 1997, and reincorporated in
Delaware in December, 1997. The Company has had limited operations to
date and has received limited revenues.
The Company is a regionally-focused network and Internet service
provider ("NSP"). The Company (i) provides client companies with
network design and consulting for intranet systems, (ii) offers individual and
intranet access to the Internet through dial-up and dedicated connections,
(iii) offers value-added Internet services, and (iv) intends to operate
cybercafes that showcase the latest in business communications technology.
The Company offers for sale to clients and others the computer hardware
necessary to support its other operations. The Company anticipates
focusing its operations in the Portland, Oregon metropolitan area and
anticipates expansion to the Seattle, Washington and Boise, Idaho
metropolitan areas.
EMPLOYEES
The Company presently has two officers and three directors. The
Company expects to employ one network engineer and one sale manager in
each geographic location and to retain in the Portland headquarters one
technical support specialist for every 750 accounts.
OFFICES
The United States offices of the Company are located at 12811 SE
Bryn Street, Clackamas, Oregon 97015. Its telephone number is 503/698-
2554, its fax number is 503/786-8252, and its E-mail address is
[email protected]. The Company can be located on the Internet at
http://www.nwpacifica.net/.
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN
NATURE AND INVOLVE A HIGH DEGREE OF RISK. THE
SECURITIES OFFERED HEREBY SHOULD BE PURCHASED ONLY
BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE
INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY
THE FOLLOWING RISK FACTORS, AS WELL AS ALL OF THE
OTHER INFORMATION SET FORTH ELSEWHERE IN THIS
PROSPECTUS AND THE INFORMATION CONTAINED IN THE
FINANCIAL STATEMENTS, INCLUDING ALL NOTES THERETO.
RISK FACTORS CONCERNING THE COMPANY'S BUSINESS
THE COMPANY IS A DEVELOPMENT-STAGE COMPANY WITH
LIMITED OPERATING HISTORY
The Company, organized in January, 1997, is a development-stage
company, with limited operations since inception. and, accordingly, there
is only a limited basis upon which to evaluate its prospects for achieving its
intended business objectives. The Company's proposed operations are
subject to all of the risks inherent in the establishment of a new business
enterprise, including the absence of an operating history. The likelihood of
the success of the Company must be considered in light of the problems,
expenses, difficulties, complications and delays frequently encountered in
connection with a new business and the competitive environment in which
the Company will operate. No assurance can be given that the operations
of the Company will result in any revenues or that the Company will be
profitable. SEE "BUSINESS."
SUCCESS OF PLAN OF OPERATION DEPENDENT ABILITY TO
ATTRACT AND RETAIN CLIENTS
The Company's proposed plan of operation and prospects will be
largely dependent upon the Company's ability to successfully attract client
companies, purchase and service the equipment network necessary to
provide client internet services, including points-of-presence and data lines
and hire and retain qualified personnel to market and service the Company's
operations. The Company has limited experience and there is limited
information available concerning the potential performance or market
acceptance of the Company's operations. There can be no assurance that
the Company will be able to successfully implement its business plan or that
unanticipated expenses, problems, or technical difficulties will not occur
which would result in material delays in its implementation.
SUCCESS OF OPERATIONS DEPENDENT ON MANAGEMENT'S
DECISIONS
The ability of the Company to successfully effect its business
objectives will be largely dependent upon the efforts of its Management
including Charles H. Powers, President and a director of the Company. All
decisions with respect to the management of the Company will be made
exclusively by Management. The Company has not entered into
employment agreement or other understanding with any key executive or
obtained any "key man" life insurance on any officer's life. The loss of the
services of such key executive could have a material adverse effect on the
Company's ability to successfully achieve its business objectives. The
Company's future success depends in part on its ability to attract and retain
additional skilled technical and managerial personnel. The Company faces
competition from other Internet, intranet, computer, research, and other
companies for such personnel. There is no assurance that the Company will
be successful in attracting or retaining the services of such personnel.
CONTINUING CONTROL BY PRESENT STOCKHOLDERS
Following the offering, the officers, directors and affiliates will own
approximately 68.4% of the issued and outstanding Common Stock of the
Company. Accordingly, such officers and directors will be in a position to
elect all of the Company's directors, approve amendments to its Certificate
of Incorporation, to authorize issuance of additional shares of stock, to
award performance bonuses and other compensation arrangements and
otherwise direct the affairs of the Company. The Company has issued to
Charles H. Powers, President of the Company and a director, 2,000,000
shares of Preferred Stock. Such Preferred Stock has been designated by the
Company to have preferred dividend and liquidation rights. In addition,
each outstanding share of Preferred Stock is entitled to one vote on all
matters on which shareholders are entitled to vote. Prior to the Offering,
Mr. Powers controlled 84% of the outstanding shares of the Company
giving effect to such Preferred Stock and after the Offering, assuming no
exercise of any Warrants, Mr. Powers will have voting control of 77% of
the outstanding shares of Company. SEE "DESCRIPTION OF
SECURITIES" and "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT".
POSSIBLE NEED FOR ADDITIONAL FINANCING TO CONTINUE
OPERATIONS
The Company anticipates that the net proceeds from the Offering, in
addition to the capital raised from earlier sale of its securities, plus
revenues from any exercise of the Warrants and from operating revenues,
should be sufficient to meet the Company's operating expenses and capital
requirements for at least the next 12 months. However, the Company's
capital requirements depend on numerous factors, including the rate of
market acceptance of the Company's services, the Company's ability to
maintain and expand its customer base, the rate of expansion of the
Company's network infrastructure, the level of resources required to expand
the Company's marketing and sales organization, information systems and
research and development activities, the availability of hardware and
software provided by third-party vendors and other factors. The timing and
amount of such capital requirements cannot accurately be predicted. If
capital requirements vary materially from those currently planned, the
Company may require financing sooner than anticipated. The Company has
no commitments for any financing, and there can be no assurance that any
such commitments can be obtained on favorable terms, if at all. Any equity
financing may be dilutive to the Company's stockholders, and debt
financing, if available, may involve restrictive covenants with respect to
dividends, raising future capital and other financial and operational matters.
If the Company is unable to obtain financing as needed, the Company may
be required to reduce the scope of its operations or its anticipated
expansion, which could have a material adverse effect on the Company, as
well as the market price of the Common Stock. SEE "BUSINESS."
COMPETITION FROM OTHER MORE ESTABLISH ENTITIES
The Company faces competition in all three of its major areas of
proposed operations: Internet provider services, intranet consulting and
constructing, and direct hardware/software sales. The Company expects
competition in these markets to intensify in the future. The computer
business, including Internet services, software, hardware and intranet
technology is characterized by rapid technology changes. Success of the
Company depends upon its ability to develop new and innovative products
and services. Many of the Company's present and future competitors have
substantially greater financial, technical and marketing resources than the
Company. The Company competes (or is expected to compete with)
directly or indirectly with the following categories of companies: (i) national
and regional Internet service providers (ISPs) such as Netcom On-Line
Communication Services, or PSINet and UUNET; (ii) established on-line
services such as America Online, CompuServe, and Microsoft Network;
(iii) computer software and technology companies; and (iv) computer
consulting companies. To the extent that these competitors offer
comparable services or products at lower prices or of higher quality, the
Company's ability to compete effectively could be adversely affected.
DEPENDENCE ON THIRD-PARTY NETWORK PROVIDERS
The Company anticipates establishing points-of-presence ("POPs") in
three main metropolitan areas (Portland, Oregon, Seattle, Washington and
Boise, Idaho) with additional POPs to reach outlying geographic areas of
these urban centers. Connections to the Internet will be supplied by third-
party network providers. In order to reduce the possibility of disruption in
service from such third-party providers, each metropolitan area network will
have multiple connections to the Internet. As of the date hereof, the
Company has not entered into agreements with any such third-party network
providers. Such third-party service providers offer similar Internet access
to many other customers, including competitors of the Company, some of
which may have larger accounts with the provider and may be granted
preferred access to such provider. Accordingly, if a competitor with such
preferred status materially increases its customer base, it could utilize such
providers services so that access available to others such as the Company
would be limited. In such a case, customers of the Company would
experience increased difficulties in gaining access to the Internet. As such
third-party provider usage increases, the system performance provided by
such third-party provider and experienced by the Company's customers may
degrade.
DEPENDENCE ON NETWORK INFRASTRUCTURE
The future success of the Company's business will depend on the
capacity, reliability and security of the Company's network infrastructure,
including its POP sites. The Company will be required to expand and
improve this infrastructure as the number of customers and the amount and
type of information its customers communicate over the Internet increases,
and the means by which customers connect to the Internet evolve. Such
expansion and improvement may require substantial financial, operational
and managerial resources. There can be no assurance that the Company will
be able to expand or improve its network infrastructure to meet any
additional demand or changing customer requirements on a timely basis or
at a commercially reasonable cost, if at all.
CONSTRAINTS ON CAPACITY
Capacity constraints could occur both at the level of particular POPs
(affecting only customers attempting to use that particular POP) and in
connection with system wide services (such as e-mail and news services,
which can affect all customers). The Company may experience delayed
delivery from suppliers of new telephone lines, modems, servers and other
equipment used by the Company in providing its services. Any severe
shortage of new telephone lines, modems, servers or other equipment could
result in incoming access lines becoming full during peak times, causing
busy signals for customers of the Company who are trying to connect to the
Internet. Similar problems may occur if the Company is unable to expand
the capacity of its various network, e-mail, World Wide Web and other
servers quickly enough to keep pace with demand from the Company's
expanding customer base. If the capacity of such servers is exceeded,
customers will experience delays when trying to use a particular service.
The Company intends to expand its facilities before any such capacity is
reached. Further, if the Company does not maintain sufficient capacity in
its network connections, customers will experience a general slow down of
all services on the Internet. Any of these events could cause customers to
terminate use of the Company's services. Accordingly, any failure of the
Company to expand or enhance its network infrastructure on a timely basis,
or to adapt it to an expanding customer base, changing customer
requirements or evolving industry standards, could have a material adverse
effect on the Company.
POTENTIAL DAMAGE TO EQUIPMENT
The Company's operations are dependent on its ability to protect its
computer equipment against damage from fire, earthquake, power loss,
telecommunication failure and similar events. The occurrence of a natural
disaster or another unanticipated problem at the Company's headquarters
and network hub or at POPs through which customers connect to the
Internet could cause interruptions in the services provided by the Company.
The occurrence of any of these events could have a material adverse effect
on the Company's ability to provide Internet services to its customers, and,
in turn, on the Company. In addition, failure of the Company's
telecommunications providers to provide the data communications capacity
required by the Company as a result of a natural disaster, operational
disruption or for any other reason could cause interruptions in the services
provided by the Company, which could have a material adverse effect on
the Company.
DISRUPTION DUE TO VIRUSES OR OTHER CAUSES
The Company engages in regular maintenance of its network
infrastructure to prevent security breaches and problems caused by computer
viruses and other attacks against the system. However, in the event the
entrance of such viruses or other similar disruptive problems into the
network infrastructure, whether caused by the Company's customers, other
Internet users or other third parties, could lead to interruptions, delays in or
cessation of service to the Company's customers, as well as corruption of
the Company's or its customers' computer systems. Inappropriate use of
the Internet by third parties could also potentially jeopardize the security of
confidential information stored in the computer systems of the Company or
those of its customers, which may cause losses to the Company or its
customers, or deter certain persons from using the Company's services. The
Company expects that its customers may increasingly use the Internet for
commercial transactions in the future. Any network malfunction or security
breach could cause these transactions to be delayed, not completed or
completed with compromised security. Alleviating problems caused by
computer viruses or other inappropriate uses or security breaches may cause
interruptions, delays or cessation in service to the Company's customers,
which could have a material adverse effect on the Company. The Company
intends to maintain redundant or backup Internet services or backup
facilities or other redundant computing and telecommunications facilities to
avoid interruptions of services to its customers.
DEPENDENCE ON TELECOMMUNICATIONS CARRIERS AND
OTHER SUPPLIERS
The Company relies on local telephone companies and other
companies to provide data communications capacity via local
telecommunications lines and leased long distance lines. The Company is
subject to potential disruptions in these telecommunications services and
may have no means of replacing these services, on a timely basis or at all,
in the event of such disruption. Any such disruptions could have a material
adverse effect on the Company.
RISKS OF JOINT VENTURES
A number of the Company's projects may be undertaken pursuant to
joint venture partnerships and strategic alliances between the Company and
third parties. The Company has not to date entered into any such joint
venture partnerships nor identified any entity with whom it intends to so
enter; however, the Company does anticipate that it may enter into such
arrangements in the future. Investment in joint venture partnerships may
involve risks not otherwise present, including among other things, the risk
of bankruptcy of a co-venturer, that the joint venture partners may be
unable to undertake the necessary financial obligations necessary, that the
business goals or interests of a co-venturer may be inconsistent with those
of the Company's, or that a co-venturer may take a position contrary to that
of the Company.
UNCERTAIN MARKET; DEPENDENCE ON GROWTH IN USE OF
INTERNET
The success of the Company's business plan is substantially
dependent upon continued growth and interest in the use of the Internet.
Rapid growth in the use of, and interest in, the Internet, and in particular
the World Wide Web, is a recent phenomenon and there can be no
assurance that Internet usage will become more widespread, that extensive
Internet content will continue to be developed or that extensive Internet
content will continue to be accessible at no or nominal cost. In addition,
because the Internet is new and the variety of available services is not well
understood by new and potential customers, it is difficult for the Company
to predict future customer retention rates.
POSSIBLE FUTURE GOVERNMENT REGULATION COULD CREATE
BARRIERS
The Company provides its services, in part, through data
transmissions over public telephone lines. These transmissions are
governed by regulatory policies establishing charges and terms for wire line
communications. The Company is not currently subject to direct regulation
by the Federal Communication Commission (the "FCC") or any other
governmental agency, other than regulations applicable to businesses
generally. However, in the future the Company could become subject to
regulation by the FCC or another regulatory agency as a provider of basic
telecommunications services if, for instance, Internet telephone service were
declared to be "telecommunications service" subject to common carrier
regulation. Such declaration would create substantial barriers to the
Company's entry into the Internet telephone market. Although no action
has been taken as of the date hereof, the FCC and the public service
commissions of certain states are exploring the adoption of regulations that
might apply ISPs.
POTENTIAL LIABILITY OF PROVIDING INTERNET SERVICE
The case law relating to the liability of ISPs and online services
companies for information carried on or disseminated through their
networks has not yet been definitively established. Several private lawsuits
seeking to impose liability upon ISPs and online services companies are
currently pending. Although no such claims have been asserted against the
Company to date, there can be no assurance that such claims will not be
asserted in the future, or if asserted, will not be successful. The
Telecommunications Act of 1996 established fines on any entity that
knowingly (i) uses any interactive computer service or telecommunications
device to send obscene or indecent material to minors; (ii) makes obscene
or indecent material available to minors via an interactive computer service;
or (iii) permits any telecommunications facility under such entity's control
to be used for the purposes detailed above. The standard for determining
whether an entity acted "knowingly" has not yet been established. As the
law in this area develops, the potential imposition of liability upon the
Company for information carried on and disseminated through its network
could require the Company to implement measures to reduce its exposure to
such liability. The implementation of such measures could require the
expenditure of substantial resources or the discontinuation of certain service
offerings. Due to the increasing use of the Internet, it is possible that
additional laws and regulations may be adopted with respect to the Internet
covering issues such as content, user privacy, pricing, libel, intellectual
property protection and infringement and technology export and other
controls. Changes in the regulatory environment relating to the Internet
services industry, including regulatory changes that directly or indirectly
affect telecommunication costs or increase the likelihood or scope of
competition, could have a material adverse effect on the Company.
ISSUANCE OF FUTURE SHARES MAY DILUTE PRESENT
INVESTORS' PER SHARE VALUE
The Certificate of Incorporation of the Company authorizes the
issuance of a maximum of 100,000,000 shares of Common Stock, $.0001
par value and 20,000,000 shares of "non-designated" preferred stock. As
of the date hereof there are 4,000,000 shares of Common Stock outstanding
and 2,000,000 shares of preferred stock outstanding. The future issuance of
all or part of the remaining authorized Common Stock may result in
substantial dilution in the percentage of the Company's Common Stock held
by the Company's then existing shareholders. Moreover, any Common
Stock issued in the future may be valued on an arbitrary basis by the
Company. The issuance of Company's shares for future acquisitions may
have the effect of diluting the value of shares held by investors, and might
have an adverse effect on any trading market, should a trading market
develop for the Company's securities. SEE "BUSINESS--Acquisition of
Income Properties."
POSSIBILITY OF ISSUANCE OF ADDITIONAL PREFERRED STOCK
COULD DEPRESS MARKET PRICE
The Company has 20,000,000 shares of non-designated preferred
stock which it may issue from time to time by action of the Board of
Directors. The Company has issued 2,000,000 shares of Preferred Stock
each share of which is entitled to one vote on all matters presented to the
vote of shareholders. The Board may designate voting and other
preferences which designations may give the holders of the preferred stock
voting control and other preferred rights such as to liquidation and
dividends. The authority of the Board to issue such stock without
shareholder consent may have a depressive effect on the market price of the
Company's Common Stock even prior to any such designation or issuance
of the preferred stock.
POTENTIAL ANTI-TAKEOVER EFFECT OF ISSUANCE OF
PREFERRED STOCK
The Board of Directors has the authority, without further approval of
the Company's stockholders, to issue preferred stock, having such rights,
preferences and privileges as the Board of Directors may determine. Any
such issuance of shares of preferred stock, under certain circumstances,
could have the effect of delaying or preventing a change in control of the
Company or other take-over attempt and could adversely affect the rights of
holders of shares of Common Stock. In addition, the Company is subject to
provisions of the General Corporation Law of the State of Delaware
respecting business combinations which could, under certain circumstances,
hinder or delay a change in control.
FACTORS BEYOND THE COMPANY'S CONTROL
Numerous conditions beyond the Company's control may
substantially affect its success such as rates of, and costs associated with,
new customer acquisition, customer retention, capital expenditures and other
costs relating to the expansion of operations, including upgrading the
Company's systems and infrastructure, the timing and market acceptance of
new and upgraded service introductions, changes in the pricing policies of
the Company and its competitors, changes in operating expenses (including
telecommunications costs), personnel changes, the introduction of alternative
technologies, the effect of potential acquisitions, increased competition in
the Company's markets and other general economic factors.
RISK FACTORS CONCERNING THE OFFERING
ABSENCE OF TRADING MARKET
There is currently no established public trading market for the
Shares. The Company intends to apply for admission to quotation of the
Shares on the OTC Bulletin Board and, when qualified it intends to apply
for admission to quotation on the Nasdaq SmallCap Market. SEE
"DESCRIPTION OF SECURITIES". The Company has limited business
operations, investments and revenues, and there can be no assurance that
such a listing can be obtained or will be obtained once operations and
revenues are established. There can be no assurance that a regular trading
market for the Common stock will develop or that, if developed, it will be
sustained. Various factors, such as the Company's operating results,
services by competitors, ability to acquire and develop properties, changes
in laws, rules or regulations may have a significant impact on the market
price of the securities. Further, the market price for the securities of public
companies often experience wide fluctuations which are not necessarily
related to the operating performance of such public companies.
ARBITRARY DETERMINATION OF OFFERING PRICE
The initial public offering price of the Units and the exercise price
and terms of the Warrants have been arbitrarily determined by the Company
and do not necessarily bear any relationship to the Company's assets, net
worth or other established criteria of value. The exercise and redemption
prices of the Warrants should not be construed to imply or predict any
increase in the market price of the Common Stock.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS
AND DIRECTORS
The Certificate of Incorporation and By-Laws of the Company
provide that the Company shall indemnify its officers and directors against
losses sustained or liabilities incurred which arise from any transaction in
such officer's or director's respective managerial capacity unless such
officer or director violates a duty of loyalty, did not act in good faith,
engaged in intentional misconduct or knowingly violated the law, approved
an improper dividend, or derived an improper benefit from the transaction.
The Company's Certificate of Incorporation and By-Laws also provide for
the indemnification by it of its officers and directors against any losses or
liabilities incurred as a result of the manner in which such officers and
directors operate the Company's business or conduct its internal affairs,
provided that in connection with these activities they act in good faith and in
a manner which they reasonably believe to be in, or not opposed to, the
best interests of the Company, and their conduct does not constitute gross
negligence, misconduct or breach of fiduciary obligations. SEE
"MANAGEMENT--Indemnification".
PENNY STOCK REGULATION
Penny stocks generally are equity securities with a price of less than
$5.00 per share other than securities registered on certain national securities
exchanges or quoted on the Nasdaq Stock Market, provided that current
price and volume information with respect to transactions in such securities
is provided by the exchange or system. The Company's securities may be
subject to "penny stock" rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other
than established customers and accredited investors (generally those with
assets in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with their spouse). For transactions covered by these
rules, the broker-dealer must make a special suitability determination for the
purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a disclosure schedule prescribed by the
Commission relating to the penny stock market. The broker-dealer also
must disclose the commissions payable to both the broker-dealer and the
registered representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell the Company's securities.
SHARES AVAILABLE FOR RESALE WITHOUT ADDITIONAL
CAPITAL PURSUANT TO RULE 144
All the issued and outstanding shares of the Company, to the extent
not sold or transferred pursuant to this offering, are "restricted securities"
as such term is defined in Rule 144 ("Rule 144") promulgated under the
Securities Act of 1933 (the "1933 Act"). In general, under Rule 144, if
adequate public information is available with respect to a company, a person
who has satisfied a one year holding period as to his restricted securities or
an affiliate who holds unrestricted securities may sell, within any three
month period, a number of that company's shares that does not exceed the
greater of one percent of the then outstanding shares of the class of
securities being sold or the average weekly trading volume during the four
calendar weeks prior to such sale. Sales of restricted securities by a person
who is not an affiliate of the company (as defined in the 1933 Act) and who
has satisfied a two year holding period may be made without any volume
limitation. The outstanding restricted securities of the Company may
become eligible for sale in the public market pursuant to Rule 144 without
additional capital contribution to the Company. Possible or actual sales of
the Company's outstanding Common Stock by all or some of the present
stockholders may have an adverse effect on the market price of the
Company's Shares should a public trading market develop.
POTENTIAL DILUTION
Investors in the securities offered herein may suffer immediate and
substantial dilution in the value of their shares. "Dilution" means the
difference between the public offering price and the pro forma net tangible
book value per share after giving effect to the offering. Additional dilution
in the value of such securities may occur upon the exercise of the warrants.
SEE "DILUTION".
DIVIDENDS
Any cash dividends will depend on earnings, if any, and on the
Company's financial requirements and other factors. Dividends are paid at
the discretion of the board of directors. There can be no assurance that the
Company will be able to pay any dividends or, if able to so make such
dividends, that the board of directors will deem it in the best interest of the
Company to do so. Investors who anticipate the need of immediate income
from their investment should refrain from the purchase of the Shares offered
herein. The Company has not paid any cash dividends on its Common
Stock since inception. For the foreseeable future, it is anticipated that any
earnings which may be generated from the Company's operations will be
used to finance the growth of the Company.
MANAGEMENT HAS DISCRETION IN USE OF PROCEEDS
Approximately $22,250 of the net proceeds of the Offering has been
allocated to working capital. Proceeds will be used for such purposes as
Management of the Company may determine in its sole discretion, without
the need for shareholder approval with respect to any such allocation.
USE OF PROCEEDS
The proceeds from the sale of the Company Units, if all the
Company Units are sold, will equal $1,250,000 and the proceeds to the
Company, after deduction of estimated expenses of the Offering, will be
approximately $1,127,600. The Company expects the net proceeds to be
utilized approximately as follows:
Sales Commissions (1) $ 125,000
Telecommunications equipment 627,600
Office equipment 127,750
Cybercafe equipment, leasing and furnishings 225,000
Working capital 22,250
(1) The Company is seeking an underwriter for the Offering but
as of the date hereof has not located or entered into any
agreements for such underwriter. If the Company locates an
underwriter, it expects to pay a sales commission equal to
10% of the sales price of the Units.
The foregoing represents the Company's best estimate of its
allocation of the proceeds from the Offering based upon its current business
plan, operations and assumptions. The amounts actually expended for each
purpose set forth above may vary significantly. Future events, including
changes in economic or competitive conditions or the Company's business
and results of the Company's sales and marketing activities, may make
shifts in the allocation of such proceeds. In light of such changing events,
assumptions or operations, Management of the Company may in its sole
discretion to use the proceeds of the Offering for other applications.
The Company anticipates that the net proceeds from the Offering, in
addition to the capital raised from earlier sale of its securities, plus
revenues from any exercise of the Warrants and from operating revenues, should
be sufficient to fund the Company's contemplated operations for the 12 months
following the Effective Date. In the event that the Company does not
receive the expected revenues from operations or exercise of Warrants, then
it may be required to seek additional financing prior to the expiration of
such 12-month period. The ability of the Company to generate revenues
from operations will be dependent upon developing public interest in the
Company and sales of its computer hardware/software, use of its consulting
services and retention of clients for its Internet services. There can be no
assurance that the Company will be successful in generating such interest.
DILUTION
Purchasers of the Units may experience immediate and substantial
dilution in the value of the Common Stock contained in such Unit. Dilution
represents the difference between the initial public offering price per share
paid by the purchasers in the Offering and the net tangible book value per
share immediately after completion of the Offering. Net tangible book
value per share represents the net tangible assets of the Company (total
assets less total liabilities), divided by the number of shares of Common
Stock outstanding.
At September 30, 1997, the Company had a net tangible book value
of $100,305 or $.04 per share. Assuming sale of all the Company Units at
$2.50 per Company Unit (and further assuming no exercise of any Warrants
and taking into consideration expenses of the offering), the net tangible
book value of the Company would be $1,145,405 or $.25 per share. This
represents an immediate dilution to investors in the Offering of $2.25 per
share and the aggregate increase in net tangible book value to present
shareholders of $.21 per share. The following table illustrates such effect:
Initial public price per Unit $2.50
Net tangible book per share value before Offering $.04
Increase per share attributable to
new investors $0.21
Net tangible book value per share after Offering $0.25
Dilution per share to new investors $2.25
BUSINESS
General
The Company targets small and medium sized businesses and
professionals in the Pacific Northwest to assist in building for such clients
communication networks from keyboard to Internet connection. The
Company will plan and construct a network system within each physical
office site of a client company (intranet system) allowing such company's
employees to use groupware and the central file server to set up shared
databases and to work on shared documents, exchange intra-office mail and
maintain a central information base. The Company will connect the intranet
systems of a client company to form an internet system for that client. In
addition, an internal website will be setup to disseminate information
company-wide. The Company will provide access to the Internet for each
client company, including access for the network, each intranet system and
individual accounts. The Company provides value-added services to its
Internet services that allows it to be a single source for regional businesses.
The Company focuses on providing the expertise and equipment
necessary to establish intra-office networking communications and on
providing access, information, assistance and services to its customers to
encourage their introduction and usage of the Internet. The Company
intends to concentrate on the Pacific Northwest, commencing operations in
Portland, Oregon with expansion into the Seattle, Washington and Boise,
Idaho markets planned. The Company intends to market its services
through print advertisements, customer referrals and other marketing
activities.
PRESENT OPERATIONS
The Company currently has 230 customers including 174 dial up
accounts, 11 dedicated connections, 44 virtual server accounts and one
colocated server. The Company receives monthly an aggregate of $7,850
from such accounts for the services provided to such clients including dial-
up access, dedicated connections, web and e-mail services. The Company
is just initiating its other services, including hardware and software
consulting, intranet design and installation, software and hardware sales and
the cybercafe and as of the date hereof has not received revenues from these
services.
INDUSTRY BACKGROUND
The Internet is a collection of computer networks linking millions of
public and private computers around the world. Historically, the Internet
was used by government agencies and academic institutions to exchange
information, publish research and transfer e-mail. A number of factors,
including the proliferation of communication-enabled personal computers,
the availability of intuitive graphical user interface software and the wide
accessibility of an increasingly robust network infrastructure, have
combined to allow users to easily access the Internet and, in turn, have
produced rapid growth in the number of Internet users.
The emergence of the World Wide Web, the graphical, multimedia
environment of the Internet, has resulted in the development of the Internet
as a new mass communications medium. The ease and speed of publishing,
distributing and communicating text, graphics, audio and video over the
Internet has led to a proliferation of Internet-based services, including chat,
online magazines, news feeds, interactive games and a wealth of educational
and entertainment information, as well as to the development of online
communities. In addition, the reduced cost of executing transactions over
the Internet provides individuals and organizations with a new means to
conduct business.
BUSINESS PLAN
The Market.
The Company markets its services to the small to
medium -ized business which may range from the single professional to a
company with about 150 networked computers. As companies make use of
the communication and information resources of computers, the demand for
Internet access and World Wide Web sites and the varies uses of such
resources is increasing. A number of Internet access providers have
emerged to service this demand primarily in the larger metropolitan areas.
However, large areas of rural Oregon, Washington and Idaho are still
without Internet access or access is limited to a very few choices of Internet
providers.
The Company intends initially to serve primarily the Portland
metropolitan area with service to certain of the rural Oregon areas. The
Portland metropolitan area has a population of approximately 1,700,000 and
is home to over 49,000 businesses. The Company intends to establish its
office in Portland on a fiberoptic network with local private fiber
companies. The Portland location will be used for connecting centrally
located businesses in the Pacific Northwest.
After its initial phase, the Company intends to expand its services to
Seattle, Washington which has a population of more than 3,000,00. In its
third phase, the Company intends to expand its services to the Boise, Idaho
metropolitan area which has a population of approximately 375,000 with
approximately 23,000 businesses.
Equipment and Staff.
Charles Powers, the Company's president,
also serves as general manager. Each POP location established by the
Company will be staffed by one network engineer and one sales manager.
The Portland office will have one technical support specialist for every 750
accounts. Each location will be equipped with one router and one Ascend
Max 4004 per every 720 dial-in users. The Company's dial-in capacity is
10 users per each incoming line equivalent (23 channels, or line equivalents,
are in teach T1 PRI). Each Ascend Max can handle three T1 PRIs. There
is one T1 PRI in every 230 dial-in users. There will be one T3 at each
location out to the Internet and one T3 between each location. Each
network will have multiple T1 connections to the Internet, the number of
which will be determined by the bandwidth requirements of the subscriber
base. The Internet T1s will be connected to a variety of carriers: Electric
Lightwave, Sprint, MCI and UUNET as the primary carriers. This will
ensure uninterrupted service if any one carrier should suffer disconnection.
The Company anticipates a monthly growth of approximately 50
dial-up accounts, five dedicated connections, fifteen virtual server accounts
and one-half colocation accounts. However, no assurances can be given
that the Company will achieve this growth rate or that it will grow at all.
The Company's expenses are proportionate to the number of accounts
obtained. The Company intends to attract customers by its emphasize on
customer satisfaction to ensure that (i) customers do not get busy signals
when attempting to dial in to the Internet (ii) customers will not find
throughput to be slow because of inadequate bandwidth and (iii) customers
will be able to get responsive and effective technical support.
PRODUCTS AND SERVICES
The Company's offers products in four general areas: connections,
value-added services, hardware/software and consulting services, and
cybercafes.
Connections.
The Company offers connections that range from
casual dial-up through T1 dedicated connections, with the greatest emphasis
on ISDN (Integrated Services Digital Network) and frame relay
connections. The broad range of connection services assures the Company
that it will meet the needs of small and medium-sized businesses. The
Company's connections services consist primarily of the following:
* Dial-on-demand modem (speeds up to 56 kbps)
and ISDN (one or two b channel) accounts;
* Dedicated modem (speeds up to 56 kbps) and
ISDN (one or two b channel);
* Dedicated connections: frame relay, fractional
T1, and full T1.
Other Internet providers offer similar connections at similar prices as
offered by the Company, but the Company intends to meet such competition
by ensuring that (i) the equipment is of the highest quality (ii) over-
saturation of the connections is avoided (iii) the system is carefully
monitored to ensure load balancing (iv) additional capacity is added when
capacity is neared and (v) technical support is highly qualified and easily
available.
Value-Added Services. To increase the marketability and appeal of
the Company as an Internet service provider, especially to businesses, the
Company provides value-added services at a uniform quality and price
throughout its service area. The Pacific Northwest region has relatively few
Internet service providers ("ISPs") that offer value-added services and none
of such ISPs promotes itself as a network service provider. The following
is a list of the value added services offered by the Company:
* Network engineering both internally (intranet) and
externally (Internet) for small to medium-sized business;
* World Wide Web services including
multiplatform website development, server
colocation, virtual server accounts and referrals
to professional website developers;
* E-mail access including autoresponders,
majordomo mail lists, unlimited wildcard e-
mail and host relay service. Each customer is
provided a mailbox, or address, from which to
send and receive e-mail.
* Secure on-line real time transaction processing
for credit card transactions;
* Server colocation allowing a server to be
hosted directly on the Company's ethernet to
utilize its high-speed leased line resources; and
* Domain name service by the Company
registers and hosts a customer or a customer's
client's domain name. Instead of
"[email protected]," the user Joseph Smith
may prefer the name "[email protected]." Or a
business user may find greater marketing
presence by having a domain name in the name
of his business, such as "[email protected]."
The Company charges a fee to assist in
establishing unique domain names for
customers and customers then pay an annual
renewal fee to an Internet domain registration
agency.
* Business Web Sites. The Company provides
space on its World Wide Web server for
customers to publish their own web pages.
* Full Internet access to all the standard Internet
services including the World Wide Web, e-
mail, file transference, USENET news bulletin
boards, chat channels, and gopher servers.
The Company charges a setup fee and a monthly or annual fee for
each of these services.
HARDWARE/SOFTWARE SALES AND CONSULTING
Hardware sales are closely tied to the Company's value-added
services. The Company offers for sale the complete package of hardware,
software and connection equipment required to create an intranet and/or
intraclient internet system. The hardware and software offered by the
Company includes the following:
* Network server technology incorporating
Windows NT or Unix designed to suite the
needs of a client professional or company;
* Networking hardware including 3Com, Cisco,
Bay Networks, Intel, Ascend and Livingston
products. These products provide technology
for network connection from the network
interface card to the leased line router;
* Internet suites from FTP Software, Netscape,
Microsoft and Netmanage. These companies
offer the best in intranet and internet
connectivity software.
* Operating systems from Microsoft, SunSoft,
Apple and IBM. This complements the
Company's ability to offer custom-designed
networks and servers. The operating systems
will include Windows NT, Solaris, OS/2 and
AIX;
* Company-designed and implemented WebBox
specifically for the small to medium-sized
business. WebBox provides a total solution
package for E-mail, web, FTP and DNS for
any network platform, including Windows NT,
MacOS and Unix.
Consulting Services.
The consulting services offered by the
Company integrate and facilitate the sales of the Company's hardware and
software. The Company offers clients the expertise to customize, configure
and build a network suited to such client's needs. The Company works
with its clients to determine the intranet and intracompany internet
networking needs and uses of each client. The Company designs specific
intranet systems to work together as a larger intracompany internet system.
The Company then builds, configures and installs the systems. Because the
Company effects the entire process, the client is not left to attempt to
integrate products or services from several suppliers. Because the Company
designs and builds the system, each component is designed to work as part
of the client's internet network. Such consulting services are a crucial part
of the Company's product line and serve to set the Company apart from
much of the competition.
CYBERCAFE
A cybercafe is a physical store usually located in a prime shopping
or business district offering a relaxed atmosphere in which customers can
view and test the latest in computer hardware, software and Internet
services. The Company's cybercafes will serve light beverages including
coffees and beer. The cybercafes will feature classes and product
demonstrations during the day and will feature low-key musical
entertainment in the evening. Physical areas in the cybercafe can be rented
for seminars or video conferencing. In each of the metropolitan areas in
which the Company operates, it will locate a cybercafe designed to
showcase the latest telecommunication business technology prominently
featuring the Company's networking services and hardware/software
equipment. As of the date hereof, the Company has not opened any
cybercafes but is in the process of locating and negotiating leased space.
The Company intends to use certain of the proceeds from this Offering to
open its initial cybercafe in Portland, Oregon.
MARKETING
The Company intends to engage a local advertising agency to market
its products and services. The Company anticipates that such agency will
develop a comprehensive marketing plan utilizing several different forms of
media, including print, radio, television and the Internet. The Company
intends to include in such marketing plan the use of regional and local trade
shows and economic incentives to current customers to refer new
customers. The Company believes that a key to success in the competitive
market is to expand its customer base as rapidly as possible to establish a
significant revenue base and to become entrenched as a regional network
service provider in the Pacific Northwest. The Company plans to devote
significant effort and financial resources on sales and marketing.
CLIENT BASE
The Company currently has 230 customers located, primarily, from
local word-of-mouth. The Company anticipates that it will significantly
increase its client base once it begins advertising and once operations are
fully commenced, including the cybercafe. However, there can be no
assurance that the Company will be able to expand its client base or retain
such client base as is already in place.
The Company has established the following goals in order to
increase its client base:
Retain the Company's Existing Customers. The Company believes
that its long-term success largely depends on maintaining customer
satisfaction with its services. The Company plans to devote significant
resources to enhancing its consulting services, its network operations
capability, its World Wide Web site and its service offerings. In addition,
the Company will continue to expand its technical support staff and enhance
the staff's effectiveness.
Develop Additional Service Offerings. The Company recognizes
that the introduction of additional service offerings can serve not only to
expand and maintain its customer base, but also, in certain instances, to
enhance revenues. Accordingly, the Company has introduced a variety of
services for business consumers, including business Web sites, high-speed
ISDN communications capability and frame relay connections, each of
which involve a monthly service charge plus set-up fees.
Focus on Customer Needs. The Company seeks to help its
customers derive meaningful benefits from utilizing an intra-office
networking communication system, a central office data storage and a
company-wide internet system. In addition, the Company seeks to help its
clients utilize the extensive resources of the Internet.
Technical Development and Service Enhancement. The Company
places significant emphasis on expanding and refining its services to
enhance its customers' computer experience. The Company's technical staff
is engaged in a variety of technical development and service enhancement
activities, including improvement of the functionality of the Company's
software and reviewing new third-party software products for potential
usage. The Company also regularly updates and expands the online
services provided.
Technical Support. The Company believes that reliable customer
and technical support is critical to retaining existing and attracting new
customers. The Company intends to offer well-trained and responsive
technical support personnel. The Company intends to select such technical
support personnel not only for technical knowledge but also for a strong
positive attitude towards customers and customer service. The Company
will provide in-depth training to ensure a high level of quality. The
Company believes that such well-trained and customer responsive technical
support will increase its competitive edge.
In order to continue to improve its support services and to deliver
those services in a more timely and cost-effective manner, the Company is
currently expanding its call center facilities and installing new call
management database software.
COMPETITION
The Internet services market in which the Company operates is
extremely competitive, and the Company expects competition in this market
to intensify in the future. The Company's current and prospective
competitors include many large companies that have substantially greater
market presence and financial, technical, marketing and other resources than
the Company. The Company competes (or in the future is expected to
compete) directly or indirectly with the following categories of companies:
(i) national and regional ISPs, such as BBN, IDT, MindSpring, NETCOM,
PSINet and UUNET; (ii) established online services such as America
Online, CompuServe, Prodigy and the Microsoft Network; (iii) computer
software and technology companies such as Microsoft; (iv) national
telecommunications companies, such as AT&T, MCI and Sprint; (v)
computer consulting services; and (vi) regional network service providers.
The entry of new participants from these categories and the potential
entry of competitors from other categories (such as computer
hardware/software manufacturers) would result in substantially greater
competition for the Company. The ability of these competitors or others to
bundle services and products with Internet connectivity services could place
the Company at a significant competitive disadvantage. Competition for
active users of Internet services has intensified. There can be no assurance
that the Company will be able to offset the adverse effect on revenues of
any necessary price reductions resulting from competitive pricing pressures
by increasing the number of its customers, by generating higher revenue
from enhanced services, by reducing costs or otherwise. SEE "Risk Factors
- -- Competition."
The Company believes that its ability to compete successfully
depends on a number of factors, including the Company's all-inclusive
services package; market presence; the adequacy of the Company's
customer and technical support services; the capacity, reliability and
security of its network infrastructure; the ease of access to and navigation of
the Internet provided by the Company's services and its value-added
services; the pricing policies of the Company, its competitors and its
suppliers; the timing of introductions of new services by the Company and
its competitors; the Company's ability to support existing and emerging
industry standards; and industry and general economic trends. There can be
no assurance that the Company will have the financial resources, technical
expertise or marketing and support capabilities to compete successfully.
The Company is aware of several firms that compete with it in the
Pacific Northwest in certain service areas. However, the Company is not
aware of any single competitor that offers the same total package of services
as the Company. The competition is primarily regionally based and single-
function focused. Such competition includes: Spire Technologies, a
network consulting firm specializing in architectural, engineering and civil
engineering market; Transport Logic, a ISP focusing primarily on home
users; Teleport, an ISP firm which offers dial-up and some World Wide
Web services; Sisna, a nationally-focused ISP with limited service to the
Pacific Northwest; and CyberHighway, a general ISP company which
emphasizes Internet access.
RESALE AGREEMENTS
The Company is an authorized reseller of TechData, Merisel and
Ascend products and has entered into resale agreements with such
companies. In providing its services to client companies including the
construction of intranet systems and Internet access, the Company does not
utilize or distribute software for third party use and does not require any
licenses or authorizations from such software manufacturers. In each case,
the client company purchases its own copy of any required software needed
by the Company to establish its system (whether through the Company or
through a third-party vendor). This provides the client company with
current and applicable warranties and guarantees for such software.
GOVERNMENT REGULATION
The Company provides client company internet services and the
Internet services, in part, through data transmissions over public telephone
lines. These transmissions are governed by regulatory policies establishing
charges and terms for wire line communications. The Company currently is
not subject to direct regulation by the FCC or any other governmental
agency, other than regulations applicable to businesses generally. However,
in the future the Company could become subject to regulation by the FCC
or another regulatory agency as a provider of basic telecommunications
services. For example, a number of long distance telephone carriers
recently filed a petition with the FCC seeking a declaration that Internet
telephone service is a "telecommunications service" subject to common
carrier regulation. Such a declaration, if enacted, would create substantial
barriers to the Company's entry into the Internet telephone market. The
FCC has requested comments on this petition, but has not set a deadline for
issuing a final decision. Also, a number of local telephone companies have
asked the FCC to levy access charges on "enhanced service providers,"
which may be deemed to include ISPs. Although the Chairman of the FCC
has indicated his opposition to levying service charges against ISPs, local
interconnection charges could be levied in the future. Moreover, the public
service commissions of certain states are exploring the adoption of
regulations that might subject ISPs to state regulation.
The recently enacted Telecommunications Act of 1996 contains
certain provisions that lift, or establish procedures for lifting, certain
restrictions relating to the regional Bell operating companies' ("RBOC")
ability to engage directly in the Internet access business. The
Telecommunications Act also makes it easier for national long distance
carriers such as AT&T to offer local telephone service. In addition, the
Telecommunications Act allows the RBOCs to provide electronic publishing
of information and databases. Competition from these companies could have
an adverse effect on the Company's business. The Telecommunications Act
also imposes fines on any entity that knowingly (i) uses any interactive
computer service or telecommunications device to send obscene or indecent
material to minors; (ii) makes obscene or indecent material available to
minors via an interactive computer service; or (iii) permits any
telecommunications facility under such entity's control to be used for the
purposes detailed above. The standard for determining whether an entity
acted "knowingly" has not yet been established. SEE "RISK
FACTORS--Government Regulation".
RECENT TRANSACTIONS
From March 13, 1997, until November 30, the Company sold
170,400 shares of its Common Stock pursuant to Rule 506 of Regulation D
of the General Rules and Regulations of the Commission at $1.25 per share
for aggregate sale proceeds of $150,500. Investors in such private
placement have registered their securities herein for sale by such holder.
SEE "CONCURRENT SALES BY SELLING SECURITYHOLDERS".
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company is a newly organized development-stage company, the
objective of which is to offer a complete package of consulting,
configuration, installation and maintenance of intranet networking services,
customer internet networking services and Internet service provider services
to small and mid-sized businesses in the Pacific Northwest.
RESULTS AND PLAN OF OPERATION
The Company currently has 230 customers including 174 dial up
accounts, 11 dedicated connections, 44 virtual server accounts and one
colocated server. The Company receives monthly an aggregate of $7,850
from such accounts for the services provided to such clients including dial-
up access, dedicated connections, web and e-mail services. The Company
is just initiating its other services, including hardware and software
consulting, intranet design and installation, software and hardware sales and
the cybercafe and as of the date hereof has not received revenues from these
services.
The Company has completed the initial phase of its planned
development into the Portland, Oregon market. The Company intends to
expand into the Seattle, Washington and Boise, Idaho markets in 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company has used the proceeds from the sale of its securities
for payment of operating costs to date. The Company has begun receiving
revenues from its Internet services as described above and anticipates such
revenues to increase with expansion of the Company's infrastructure. The
Company anticipates receiving revenues from its other services as completes
development of those operations.
MANAGEMENT
OFFICERS AND DIRECTORS
The officers and directors of the Company are as follows:
Name Title
Charles H. Powers President, Director
Michele E. Powers Secretary
Julia S. Mower Director
Directors of the Company hold office until the next annual meeting
of shareholders or until their successors are elected and qualified. The
By-laws permit the Board of Directors to fill any vacancy and such director
may serve until the next annual meeting of shareholders or until a successor
is elected and qualified.
The principal occupation and business experience for each officer
and director of the Company for at least the last five years are as follows:
CHARLES H. POWERS, 36, serves as President and director of the
Company. From 1996 to the present, Mr. Powers was owner and president
of Northwest Power.com, Clackamas, Oregon, a company providing dial-up
Internet connections for individuals and businesses, with assistance to
subscribers for connectivity problems. From 1994 to 1996, Mr. Powers
served as Staff Accountant for James H. Richardson, CPA, Portland,
Oregon where he focused on small corporate and individual tax matters
including preparation of returns, planning and long-range strategies and
representation before the IRS and ODR. In 1992 and 1993, Mr. Powers
served as a teacher in the Portland, Oregon school system. From 1985 to
1990, Mr. Powers served in the United States Army primarily in Germany
where he served as a nuclear weapons specialist and public relations
specialist. In June, 1985, Mr. Powers received his A.S. degree in business
from Mt. Hood College, Gresham, Oregon, and in 1986 his Bachelor of
Science degree, cum laude, from Portland State University. Mr. Powers
received his post-baccalaureate accounting certificate from Portland State
University in June, 1994 and passed the Uniform Certified Public
Accountant's Exam in May, 1994.
MICHELE E. POWERS, 38, serves as Secretary and a director of
the Company. From 1990 to present, Ms. Powers has been employed by
the Clackamas School District in Milwaukie, Oregon as a middle school
science teacher. Ms. Powers received her Bachelor of Science degree in
Education from Portland Sate University in 1986.
JULIA S. MOSER, 58, serves as a director of the Company. Since
1988, Ms. Moser has been employed by Pozzi, Wilson & Atchison, LLP,
as a bookkeeper.
RELATIONSHIP OF DIRECTORS AND OFFICERS
Michele E. Powers, a director and Secretary of the Company, is the
wife of Charles H. Powers, a director and President of the Company. Ms.
Moser is the mother of Michele Powers.
EMPLOYEES
The Company offers specialty "high-tech" services and therefore
requires the services of highly qualified technical personnel. The Company
utilizes the services of employment agencies specializing in "high-tech" and
computer professionals in locating potential employees.
REMUNERATION
Directors and officers of the Company may receive compensation
as determined by the Company from time to time by vote of the Board of
Directors. Such compensation might be in the form of stock options.
Following commencement of operations, the Company expects to pay
salaries to its officers, as may be determined by the Board of Directors.
Directors may be reimbursed by the Company for expenses incurred in
attending meetings of the Board of Directors.
TIME DEVOTED TO COMPANY OPERATIONS
Mr. Powers, President of the Company, is devoting all his working
time to the affairs of the Company.
EMPLOYMENT AGREEMENTS
The Company has not entered into employment agreements with any
of its officers or employees. All key employees serve in their positions
until further action of the President of the Company or the Board of
Directors.
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
The Certificate of Incorporation and Bylaws of the Company provide
that the Company shall, to the fullest extent permitted by applicable law, as
amended from time to time, indemnify all directors of the Company, as
well as any officers or employees of the Company to whom the Company
has agreed to grant indemnification.
Section 145 of the Delaware General Corporation Law ("DGCL")
empowers a corporation to indemnify its directors and officers and to
purchase insurance with respect to liability arising out of their capacity or
status as directors and officers provided that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) arising under Section 174 of the Delaware
General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Delaware General Corporation Law provides further that the
indemnification permitted thereunder shall not be deemed exclusive of any
other rights to which the directors and officers may be entitled under the
corporation's by-laws, any agreement, vote of shareholders or otherwise.
The effect of the foregoing is to require the Company to indemnify
the officers and directors of the Company for any claim arising against such
persons in their official capacities if such person acted in good faith and in a
manner that he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, MAY BE
PERMITTED TO DIRECTORS, OFFICERS OR PERSONS
CONTROLLING THE COMPANY PURSUANT TO THE FOREGOING
PROVISIONS, IT IS THE OPINION OF THE SECURITIES AND
EXCHANGE COMMISSION THAT SUCH INDEMNIFICATION IS
AGAINST PUBLIC POLICY AS EXPRESSED IN THE ACT AND IS
THEREFORE UNENFORCEABLE.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Effective
Date of this Prospectus regarding the beneficial ownership of the
Company's Common Stock, including rights to any Common Stock
exercisable within six months of the date hereof, by each officer and
director of the Company and by each person who owns in excess of five
percent of the Company's Common Stock.
[/TABLE]
[CAPTION]
Shares of Common Percentage Percentage
Name, Position and Stock Beneficially Class Before of Class
Address Owned Offering(1) Offering(1)
[S] [C] [C] [C]
Charles H. Powers(2) 3,079,600 76.9% 67.3%
12811 SE Bryn Street
Clackamas, Oregon 97015
Thornbury Capital
Corporation(3) 1,500,000 30% 0
1504 R Street, N.W.
Washington, D.C. 20009
All Officers, Directors 3,079,600 76.9% 67.3%
and Shareholders as a Group
(1 Person)
_____________
(1) Based on 4,000,000 shares of Common Stock outstanding prior to
the Offering and 4,500,000 shares of Common Stock outstanding
after the Ofering..
(2) Mr. Powers also holds 2,000,000 shares of Preferred Stock
designated to provide one vote per share on all matters on which
shareholders are entitled to vote; if included in the percentage
table above, such 2,000,000 shares would give Mr. Powers 84.6% of
the outstanding voting control before the Offering and 77.3% after
the Offering, including both common and preferred shares. Mr.
Powers is also a Selling Securityholder.
(3) Includes 500,000 Distribution Shares and Distribution Warrants
exercisable within 6 months of the date hereof for 1,000,000
Shares.
CONCURRENT SALES BY SELLING SECURITYHOLDERS
The Selling Securityholders are offering (i) 500,000 Distribution
Units to be distributed by the holder thereof to its shareholders, each
Distribution Unit consisting of one Distribution Share and two Distribution
Warrants; (ii) 1,000,000 shares of Common Stock underlying the
Distribution Units; and (iii) 470,400 shares of Common Stock held by
certain securityholders of the Company. Each Distribution Warrant entitles
the holder to purchase one share of the Company's common stock at a price
equal to 75% of the average closing inside bid of the securities on the last
business day prior to exercise. Distribution Warrants are callable on thirty
days notice by the Company at a redemption price of $.0001 per
Distribution Warrant, unless exercised by the holder during the call period.
The Distribution Warrants are detachable from the Common Stock in regard
to which they are issued, and will trade separately from the Common Stock.
The amount of discounts or commissions, if any, which may be paid by the
Selling Securityholders on the sale of their securities registered herein is
not now known.
The Distribution Units held by Thornbury Capital Corporation
("Thornbury Capital"), one of the Selling Securityholders, will be
distributed by Thornbury Capital to its shareholders as a stock dividend.
Thornbury Capital will not receive any payment for distribution of such
securities.
The Company is applying for admission to the NASD OTC Bulletin
Board for the Common Stock; however, there can be no assurance that such
Common Stock will be so listed. SEE "RISK FACTORS--Absence of
Trading Market" and "DESCRIPTION OF SECURITIES--Admission to
Quotation on the Nasdaq SmallCap Market or NASD OTC Bulletin Board".
All the Selling Securityholders Securities registered herein are
expected to become tradeable and/or exercisable on or about the date of this
Prospectus subject to the terms of an agreement with the Company with
certain Selling Securityholders restricting the transferability thereof until
six months following the Effective Date. SEE "DESCRIPTION OF
SECURITIES--Lock-Up Agreement".
The freely tradeable shares of the Common Stock (the "public float")
upon effectiveness of the Registration Statement of which this Prospectus is
a part and upon consummation of the transactions contemplated herein
(other than exercise of the Warrants) will be 1,470,400 shares of Common
Stock, of which 970,400 are to be sold or distributed by the Selling
Securityholders. In addition, if the Company Warrants and Distribution
Warrants are exercised, there will be an additional 1,500,000 freely tradable
shares of Common Stock.
The following table sets forth the beneficial ownership of the
securities of the Company held by each person who is a Selling
Securityholder and by all Selling Securityholders as a group.
<TABLE>
<CAPTION>
Percent of Stock Owned
Name and Address --------------------------
of Beneficial Owner Common Prior to After
Stock Offering Offering
<S> <C> <C> <C>
Strategic Capital
Sources, Corp. 250,000 6.2% 0%
1068 W. Pico Blvd.
Suite 300
Los Angeles, California
90064
Charles H. Powers(3) 3,079,600 76.9% 68.5%
12811 SE Bryn Street
Clackamas, Oregon 97015
Wallace & Shirley Watts 4,000 * 0%
483 E. Hemmi Road
Lynden, Washington 98264
Germaine Hoffman 20,000 * 0%
4936 Perrine Drive
Jacksonville, Florida 32210
Robert & Dolores Pfenning 12,000 * 0%
10503 231 Street S.W.
Edmonds, Washington 98020
Spencer Raymond 4,000 * 0%
183 Lake Street
Glencoe, Illinois 60022
Don & Billie McKee 8,000 * 0%
807 4th Street
Anacortes, Washington 98221
Alex Bornstein 78,400 1.9% 0%
1231 SW Orchard Hill Road
Lake Oswego, Oregon 97035
Mike Plaso 4,000 * 0%
10902 W. Exposition Drive
Lakewood, Colorado 80226
Ralph Hueah 8,000 * 0%
2342 Crestway Court
Belvidere, Illinois 61008
Clarence Mikolichek 8,000 * 0%
Box 48 300 W. Main
Silver Lake, Minnesota 55381
Dan Nutter 8,000 * 0%
6210 Jay Road
Montrose, Colorado 81401
Wilbur Guell 8,000 * 0%
133 Penna Street
Fond Du Lac, Wisconsin 54935
George Broughton 8,000 * 0%
72 Norma Court
Camarillo, California 93010
Thornbury Capital
Corporation (4) 500,000 12.5% 0%
1504 R Street, N.W.
Washington, D.C. 20009
All Selling Securityholders 100% 67.3%
as a Group
</TABLE>
(1) Based on 4,000,000 shares of Common Stock outstanding.
(2) Based on 4,500,000 shares of Common Stock outstanding.
(3) Mr. Powers is the owner of 3,079,600 Shares and is offering 50,000
Shares for sale as a Selling Securityholder.
(4) Thornbury Capital Corporation intends to distribute its Distribu-
tion Units, each Distribution Unit consisting of one Distribution
Share and two Distribution Warrants to its current shareholders as
a stock dividend and will not receive payment for such
distribution. The calculations above do not give effect to the
1,000,000 Distribution Warrants held by Thornbury Capital.
In the event the Selling Securityholders receive payment for the sale
of their securities, the Company will not receive any of the proceeds of
such sales. The Company is bearing all expenses in connection with the
registration of the Selling Securityholders' Shares offered by this
Prospectus.
DESCRIPTION OF SECURITIES
AUTHORIZED CAPITAL
The total number of authorized shares of stock of the Company is
one hundred million (100,000,000) shares of Common Stock having a par
value of $.0001 per share and twenty million (20,000,000) shares of non-
designated preferred shares.
INCORPORATION
The Company was originally incorporated in 1997 in Oregon and
reincorporated in the state of Delaware in December, 1997. The
Company's Certificate of Incorporation, By-Laws and corporate
governance, including matters involving the issuance, redemption and
conversion of securities, are subject to the provisions of the Delaware
General Corporation Law, as amended and interpreted from time to time.
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
100,000,000 shares of Common Stock, $.0001 value per share, of which
4,000,000 shares were outstanding prior to the commencement of this
Offering of its securities.
Holders of shares of Common Stock are entitled to one vote for each
share on all matters to be voted on by the stockholders. Holders of
Common Stock do not have cumulative voting rights. Holders of Common
Stock are entitled to share ratably in dividends, if any, as may be declared
from time to time by the Board of Directors in its discretion from funds
legally available therefor. In the event of a liquidation, dissolution or
winding up of the Company, the holders of Common Stock are entitled to
share pro rata all assets remaining after payment in full of all liabilities.
All of the outstanding shares of Common Stock are, and the shares of
Common Stock offered by the Company pursuant to this offering will be,
when issued and delivered, fully paid and non-assessable.
Holders of Common Stock have no preemptive rights to purchase the
Company's Common Stock. There are no conversion or redemption rights
or sinking fund provisions with respect to the Common Stock.
All outstanding shares of Common Stock are validly issued, fully
paid and nonassessable, and all Shares to be sold and issued as contemplated
hereby will be fully paid and nonassessable when sold in accordance with
the terms hereof and pursuant to a valid and current prospectus. The Board
of Directors is authorized to issue additional shares, on such terms and
conditions and for such consideration as the Board may deem appropriate
without further stockholder action.
REGISTRATION RIGHTS
The Company recently completed the sale of 170,400 shares of its
Common Stock. The holders of these shares have the right to have such
shares registered for free trading in the Registration Statement of which this
Prospectus is a part. SEE "SELLING SECURITYHOLDERS".
LOCK UP AGREEMENT
Certain of the Selling Securityholders have entered into a lock-up
agreement with the Company providing that the securities registered herein
held by such Selling Securityholder will not be transferred, sold, assigned,
pledged, hypothecated, distributed or otherwise disposed of, directly or
indirectly, for a period of six months following the Effective Date hereof.
At the expiration of such period, the securities held by such Securityholder
will no longer be restricted from transfer and will become freely tradeable
pursuant to the registration of such securities herein.
PREFERRED STOCK
The Company's Certificate of Incorporation authorize the issuance of
20,000,000 shares of Preferred Stock, $.0001 par value per share, of which
2,000,000 have been designated and issued. The designation of such issued
Preferred Stock provides that each such share of Preferred Stock will have
one vote on all matters on which shareholders are entitled to vote. Charles
H. Powers, the President and a director of the Company, is the holder of
Preferred Stock and, in combination with the shares of Common Stock
owned by him, has voting control of 84.6% of the Company's outstanding
stock prior to the Offering and 77.3% of the Company's outstanding stock
after the Offering. Preferred Stock provides for liquidation and dividend
preference, if any dividends were to be declared by the Board of Directors.
In the case of the voluntary or involuntary liquidation, dissolution or
winding up of the Company, holders of shares of Preferred Stock are
entitled to receive the liquidation preference before any payment or
distribution is made to the holders of Common Stock or any other series or
class of the Company's stock hereafter issued that ranks junior as to
liquidation rights to the Preferred Stock, but holders of the shares of the
Preferred Stock will not be entitled to receive the liquidation preference of
such shares until the liquidation preference of any other series or class of
the Company's stock hereafter issued that ranks senior as to liquidation
rights to the Preferred Stock ("senior liquidation stock") has been paid in
full. The holders of Preferred Stock and all series or classes of the
Company's stock hereafter issued that rank on a parity as to liquidation
rights with the Preferred Stock are entitled to share ratable, in accordance
with the respective preferential amounts payable on such stock, in any
distribution (after payment of the liquidation preference of the senior
liquidation stock) which is not sufficient to pay in full the aggregate of the
amounts payable thereon. After payment in full of the liquidation
preference of the shares of the Preferred Stock, the holders of such shares
will not be entitled to any further participation in any distribution of assets
by the Company. Neither a consolidation or merger of the Company with
another corporation, nor a sale or transfer of all or part of the Company's
assets for cash, securities or other property will be considered a liquidation,
dissolution or winding up of the Company.
The Board of Directors is authorized to provide for the issuance of
additional shares of Preferred Stock in series and, by filing a certificate
pursuant to the applicable law of the State of Delaware, to establish from
time to time the number of shares to be included in each such series, and to
fix the designation, powers, preferences and rights of the shares of each
such series and the qualifications, limitations or restrictions thereof without
any further vote or action by the shareholders. Any shares of Preferred
Stock so issued would have priority over the Common Stock with respect to
dividend or liquidation rights. Any future issuance of Preferred Stock may
have the effect of delaying, deferring or preventing a change in control of
the Company without further action by the shareholders and may adversely
affect the voting and other rights of the holders of Common Stock. At
present, the Company has no plans to issue any Preferred Stock nor adopt
any series, preferences or other classification of Preferred Stock.
ADDITIONAL INFORMATION DESCRIBING STOCK
The above descriptions concerning the Common and Preferred Stock
of the Company do not purport to be complete. Reference is made to the
Company's Certificate of Incorporation and By-Laws which are included in
the Registration Statement of which this Prospectus is a part and which are
available for inspection at the Company's offices. Reference is also made
to the applicable statutes of the State of Delaware for a more complete
description concerning rights and liabilities of shareholders.
COMPANY WARRANTS
The following is a summary of certain provisions of the Company
Warrants, but such summary does not purport to be complete and is
qualified in all respects by reference to the Warrant Agreement filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
The Company has issued Warrants to purchase 500,000 shares of Common
Stock contained in the Units offered hereby. The Company Warrants
contained in the Units may be separately transferred immediately upon the
Effective Date hereof.
Each Company Warrant entitles the holder thereof to purchase one
share of Common Stock at a per share exercise price of 75% of the
Common Stock per share market price at the time of such exercise, subject
to adjustment from time to time, for a period of 12 months commencing on
the date of grant of such Warrant provided that at such time a current
prospectus relating to the underlying Common Stock is in effect and the
underlying Common Stock is qualified for sale or exempt from qualification
under applicable state securities laws. If at the time of exercise of such
Company Warrant, no market price exists for the Common Stock then the
per share exercise price shall be $2.50. The exercise price and maturity
date of the Company Warrants are subject to adjustment at the discretion of
the Company.
The Warrants are subject to redemption by the Company
commencing one year from the date of this Prospectus at a price of $.05 per
Warrant on 30 days' written notice if the average closing bid price of the
Common Stock for 30 consecutive trading days ending within 15 days of the
notice of redemption averages in excess of $8.00 per share (subject to
adjustment).
DISTRIBUTION WARRANTS
A certain Selling Shareholder is distributing to its shareholder
500,000 Distribution Units held by it, each Distribution Unit consists of one
Distribution Share and two Distribution Warrants. Each Distribution
Warrant entitles the holder to purchase one share of the Company's
Common Stock at a price equal to 75% of the average closing inside bid of
the Common Stock on the last business day prior to exercise. Distribution
Warrants are callable on thirty days notice by the Company at a redemption
price of $.0001 per Warrant, unless exercised by the holder during the call
period. The Distribution Warrants are detachable from the Common Stock
in regard to which they are issued, and will trade separately from the
common stock.
ADMISSION TO QUOTATION TO NASDAQ SMALLCAP MARKET
AND NASD OTC BULLETIN BOARD
To qualify for admission to quotation on the Nasdaq SmallCap
Market, an equity security must, in relevant summary, (1) be registered
under the Securities Exchange Act of 1934; (2) have at least three registered
and active market makers, one of which may be a market maker entering a
stabilizing bid; (3) for initial inclusion, be issued by a company with
$4,000,000 in net tangible assets, or $50,000,0000 in market capitalization,
or $750,000 in net income in two of the last three years (if operating
history is less than one year than market capitalization must be at least
$50,000,000); (4) have at a public float of at least 1,000,000 shares with a
value of at least $5,000,000; (5) have minimum a bid price of $4.00 per
share; and (6) have at least 300 beneficial shareholders.
If a company's securities do not qualify for admission to quotation
on the Nasdaq SmallCap Market they will trade over-the-counter until such
future time, if any, at which the securities qualify for admission to quotation
on the Nasdaq Stock Market and the Company then applies.
The Company is applying for listing of the Shares on the NASD
OTC Bulletin Board. The over-the-counter market differs from national and
regional stock exchanges in that it (1) is not cited in a single location but
operates through communication of bids, offers and confirmations between
broker-dealers and (2) securities admitted to quotation are offered by one or
more broker-dealers rather than the "specialist" common to stock
exchanges. To qualify for listing on the NASD OTC Bulletin Board, an
equity security must have one registered broker-dealer, known as the market
maker, willing to list bid or sale quotations and to sponsor such a Company
listing.
TRADING OF SHARES
There are no outstanding options, warrants to purchase, or securities
convertible into, the shares of the Company. The Company does not have
any other public offerings in process or proposed.
TRANSFER AGENT AND REGISTRAR
The Company will initially be the registrar and transfer agent for the
Shares.
REPORTS TO SHAREHOLDERS
The Company will furnish to holders of the Shares annual reports
containing audited financial statements examined and reported upon, and
with an opinion expressed by, an independent certified public accountant.
The Company may issue other unaudited interim reports to its shareholders
as it deems appropriate.
PLAN OF DISTRIBUTION
The Company will receive proceeds from the sale of the Company
Units aggregating $1,250,000 and from the exercise of the Company
Warrants, if any. The Company will attempt to locate an underwriter for
the sale of the securities. As of the date hereof, the Company has not
located any such underwriter and there can be no assurance that the
Company will be able to locate an underwriter to sell its securities. In such
event, the securities will be offered on a "best efforts" basis through the
Company's officers and directors. No sales commission will be paid to any
officer or director of the Company. The Company will reimburse its
officers and directors for expenses incurred in connection with the offer and
sale of the Securities. In order to comply with the applicable securities
laws, if any, of certain states, the Securities will be offered or sold in such
states through registered or licensed brokers or dealers in those states.
The Company will not receive the proceeds of any sale of securities
by the Selling Securityholders pursuant to this Prospectus. The Selling
Securityholder securities may be sold to purchasers from time to time
directly by and subject to the discretion of the Selling Securityholders. The
Selling Securityholders may from time to time offer their securities for sale
through underwriters, dealers or agents, who may receive compensation in
the form of underwriting discounts, concessions or commissions from the
Selling Securityholders and/or the purchasers of the securities for whom
they may act as agents. Any underwriters, dealers or agents who
participate in the distribution of the securities may be deemed to be
"underwriters" under the 1933 Act and any discounts, commissions or
concessions received by any such underwriters, dealers or agents may be
deemed to be underwriting discounts and commissions under the 1933 Act.
At the time a particular offer is made by or on the behalf of the
Selling Securityholders, a Prospectus, including any necessary supplement
thereto, will be distributed which will set forth the number of shares of
Common Stock and other securities being offered and the terms of the
offering, including the name or names of any underwriters, dealers or
agents, the purchase price paid by any underwriter for the Securities
purchased from the Selling Securityholders, any discounts, commissions and
other items constituting compensation from the Selling Securityholders, any
discounts, commissions or concessions allowed, reallowed or paid to
dealers, and the proposed selling price to the public.
The securities sold by the Selling Securityholders may be sold from
time to time in one or more transactions: (i) at an offering price that is
fixed or that may vary from transaction to transaction depending upon the
time of sale or (ii) at prices otherwise negotiated at the time of sale. Such
prices will be determined by the Selling Securityholders or by agreement
between the Selling Securityholders and any underwriters.
In order to comply with the applicable securities laws, if any, of
certain states, the securities will be offered or sold in such states through
registered or licensed brokers or dealers in those states. In addition, in
certain states, the securities may not be offered or sold unless they have
been registered or qualified for sale in such states or an exemption from
such registration or qualification requirement is available and with which
the Company has complied.
Under applicable rules and regulations promulgated under the
Exchange Act, any person engaged in a distribution of securities may not
simultaneously bid for or purchase securities of the same class for a period
of two business days prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Securityholders will
be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder in connection with transactions in Shares during the
effectiveness of the Registration Statement of which this Prospectus is a
part.
The securities held by Thornbury Capital Corporation ("Thornbury
Capital"), one of the Selling Securityholders, consisting of 500,000 Units,
each Unit consisting of one Distribution Share and two Distribution
Warrants will be distributed by Thornbury Capital to its shareholders in a
stock dividend. Thornbury Capital will not receive any payment for
distribution of such securities.
The Company will pay all of the expenses incident to the registration
of the Shares (including registration pursuant to the securities laws of
certain states) other than commissions, expenses, reimbursements and
discounts of underwriters, dealers or agents, if any.
LEGAL MATTERS
LEGAL PROCEEDINGS
The Company is not a party to any litigation and Management has
no knowledge of any threatened or pending litigation against the Company.
LEGAL OPINION
Cassidy & Associates, Washington, D.C. has given its opinion as
attorneys-at-law that the Shares, when sold pursuant to the terms hereof will
be fully paid and non-assessable. James M. Cassidy, a principal of Cassidy
& Associates, is an officer and director of Thornbury Capital, a Selling
Securityholder, and has a controlling shareholder of First Agate Capital
Corporation, a majority shareholder of Thornbury Capital.
EXPERTS
The financial statements in this Prospectus have been included in
reliance upon the report of Betty E. Veveiros, Certified Public Accountants,
and upon the authority of such firm as expert in accounting and auditing.
<PAGE>
NORTHWEST PACIFICA, INC.
AUDITED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997
BETTY E. VEVEIROS, CPA
14670 SE SUNNYSIDE RD.
CLACKAMAS, OREGON 97015
503-658-5466
INDEX
AUDITOR'S REPORT F-2
BALANCE SHEET F-3
STATEMENT OF INCOME (LOSS) F-5
STATEMENT OF CHANGES IN
RETAINED EARNINGS F-7
STATEMENT OF CASH FLOWS F-8
NOTES TO FINANCIAL STATEMENTS F-9
<PAGE>
BETTY E. VEVEIROS
CERTIFIED PUBLIC ACCOUNTANT
14670 SE SUNNYSIDE RD.
CLACKAMAS, OREGON 97015
(503) 658-5466
To the Shareholders
Northwest Pacifica, Inc.
Clackamas, Oregon
I have audited the accompanying interim balance sheet of Northwest
Pacifica, Inc. as of September 30, 1997 and the related interim statements
of income (loss), changes in retained earnings, and cash flows for the nine
months then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on
these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform my 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 of the financial
statements 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, results from operations and cash
flows of Northwest Pacifica, Inc. as of September 30, 1997 in conformity
with generally accepted accounting principles.
Betty E. Veveiros, CPA
November 6, 1997
F-2
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Balance Sheet
For the Nine Months Ended September 30, 1997
ASSETS Nine Months
Sept. 30, 1997
Current Assets
Cash in bank $15,940.19
Accounts receivable 3,524.52
Deferred income taxes 2,653.28
Deposits 400.00
--------
Total Current Assets 22,517.99
Fixed Assets
Software 5,974.00
Hardware 55,623.96
Less:
Accumulated depreciation (6,097.62)
Net Fixed Assets 55,500.34
Other Assets
Securities held for investment 25.000.00
---------
TOTAL ASSETS $103,018.33
-----------
-----------
F-3
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Balance Sheet
For the Nine Month Ended September 30, 1997
LIABILITIES & EQUITY Nine Months
Sept. 30, 1997
--------------
Current Liabilities
Accounts payable $2,013.68
Payroll liabilities 641.76
Deferred tax liability 57.76
Total Current Liabilities 2,713.20
--------
Total Liabilities 2,713.20
Equity
Common stock 109,993.37
2,500,000 shares, 1,545,500 outstanding
Current Income (Loss) (9,688.24)
----------
Total Equity 100,305.13
----------
TOTAL LIABILITIES & EQUITY 103,018.33
----------
----------
F-4
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Statement of Income (Loss)
For the Nine Months Ended September 30, 1997
Income Nine Months
Sept. 30, 1997
Collocation $487.50
Consulting 290.00
Dial-up 23,294.92
Dedicated lines 13,662.80
DNS 450.00
E-Mail 808.75
Equipment Sales 175.00
Setup fees 3,095.00
Virtual server 9,400.95
--------
Gross Income 51,664.92
Cost of Sales
News server 224.00
Leased lines 20,974.35
Dedicated modem lines 857.38
IP fees 9,000.00
--------
Total Cost of Sales 31,055.73
---------
Gross Profit $20,609.19
F-5
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Statement of Income (Loss)
For the Nine Months Ended September 30, 1997
Expenses Nine Months
Sept. 30, 1997
Advertising 1,645.00
Bank charges 169.75
Insurance 226.00
Legal and professional 250.00
Office 1,759.30
Officer's salary 18,775.00
Payroll taxes 2,156.63
Rent 1,440.00
Telephone 100.72
Licenses and permits 300.00
Bad debts 24.95
--------
Total Expense 26,847.35
Net Ordinary Income (6,238.16)
Other Income (Expense)
Interest Income 52.02
Depreciation Expense (6,097.62)
Net Other Income (Expense) (6,045.60)
Net Income (Expense)
Before Income Taxes (12,283.76)
Income Tax (Expense) Benefit
Current 2,653.28
Deferred (57.76)
Total Income Tax (Expense) Benefit 2,595.92
Net Income (Loss) $ (9,688.24)
------------
------------
F-6
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Statement of Changes in Stockholders' Equity
For the Nine Months Ended September 30, 1997
Stockholders' Equity 1997
Balance at beginning of year $ 0
Capital Stock
1,500,000 shares issued 1/17/97 30,993.36
Common Stock Sold
45,500 Shares Issued 112,500.00
Stock Subscription Costs (33,499.99)
Net Income (Loss) YTD (9,688.24)
(Loss of $0.006 per share)
Total Stockholders' Equity
September 30, 1997 $ 100,305.13
------------
------------
F-7
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Statement of Cash Flows
For the Nine Months Ended September 30, 1997
Cash Flows from Operating Activities Nine Months
Net Income (9,688.24)
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation 6,097.62
Defeerred income taxes (2,653.28)
(Increase) decrease in:
Trade accounts receivable (3,524.52)
Prepaid expenses (400.00)
Increase (decrease) in:
Trade accounts payable 2,013.68
Accrued liabilities 641.76
Deffered taxes payable 57.76 2,233.02
------ --------
Net Cash Provided (Used)
by Operating Activities (7,455.22)
Cash Flows from Investing Activities
Purchases of equipment (61,597.96)
Purchases of investments (25,000.00)
-----------
Net Cash Provided (Used)
by Investing Activities (86,597.96)
Cash Flows from Investing Activities
Proceeds from issuing stock
Net Cash Provided (Used) by
Financing Activities 109,993.37
----------
Net Increase in Cash 15,940.19
Cash at beginning of year 0
Cash at September 30, 1997 $15,940.19
----------
----------
F-8
See Accompanying Notes and Accountant's Report
<PAGE>
<PAGE>
Northwest Pacifica, Inc.
Notes To The Financial Statements
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant policies of Northwest Pacifica, Inc. (the
Company) is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of the
Company's management who 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.
Nature of Operations
Northwest Pacifica, Inc. was incorporated on January 17, 1997 under the
laws of the State of Oregon. Northwest Pacifica is a Network Service
Provider, with a regional focus, serving Washington, Oregon and Idaho.
The Company provides networking services, products and consulting for
internal business networks, as well as, access for business and individuals to
other external Internet Services. Services include sales of hardware, design,
implementation and servicing of networking systems, including dedicated
lines, dial-up ISDN and analog modem access.
Property and Equipment
Property and equipment are stated at cost and depreciated using the straight
line method over their estimated useful lives.
For federal income tax purposes, depreciation is computed using the
modified accelerated cost recovery system. Expenditures for major renewals
and betterments that extend the useful lives of property and equipment are
capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due. Deferred taxes are
recognized for operating losses that are available to offset future federal and
state income taxes.
F-9
<PAGE>
NORTHWEST PACIFICA, INC.
Notes To The Financial Statements
Bad Debt
Trade accounts receivable are reported in the financial statements at net
value. The Company recognizes a bad debt expense only when a specific
amount is determined to be uncollectible. The amounts related to
uncollectible accounts are immaterial in amount.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
NOTE B-OTHER INVESTMENTS
The company has purchased 5000 shares at a cost of $25,000 in TPG
Capital Corporation, located in Washington D.C. This firm provides private
stock placements services for non-public corporations. The company has
subscribed to an additional 15,000 shares and a total investment of
$100,000. In exchange for this investment, TPG Capital Corporation will
register Northwest Pacifica with the Securities Exchange Commission,
obtain a listing on the NASDAQ bulletinboard and promote the Company as
a publicly-traded stock via selected market makers.
NOTE C-LEASES
The Company has signed a three year lease for offices located in Portland,
Oregon at a cost of $480 per month. The Lease contains an annual increase
of 2% and expires June 30, 2000.
NOTE D-STOCKHOLDERS EQUITY
For the nine months ended September 30, 1997 the Company purchased
from Chuck Powers $30,993 in software and equipment in exchange for
1,500,000 shares of the Company's common stock.
As of September 30, 1997 the Company had 1,546,000 shares issued and
outstanding. An additional stock offering of 60,000 shares is to be
conducted by Northwest Pacifica after the balance sheet date.
NOTE E-PROVISION FOR INCOME TAXES
For the nine months ended September, 1997 the Company had an operating
loss available of $9,688 to offset future income. Provision for income taxes
for the period ended September 30, 19997 included an estimated deferred
tax asset of $2,653 related to this loss and a timing difference liability of
$57 from depreciation differences.
F-10
<PAGE>
No dealer, salesman or any other 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
may not be relied on as having been authorized by the
Company or by any of the Underwriters. Neither the
delivery of this Prospectus nor any sale made hereunder
shall under any circumstances create an implication that there
has been no change in the affairs of the Company since the
date hereof. This Prospectus does not constitute an offer to
sell, or solicitation of any offer to buy, by any person in any
jurisdiction in which it is unlawful for any such person to
make such offer or solicitation. Neither the delivery of this
Prospectus nor any offer, solicitation or sale made hereunder,
shall under any circumstances create any implication that the
information herein is correct as of any time subsequent to the
date of the Prospectus.
------------------------
TABLE OF CONTENTS
Page
Prospectus Summary
The Company
Risk Factors
Distribution
Business
Use of Proceeds
Dilution
Management's Discussion and Analysis of
Financial Condition and Results of
Operations
Management
Security Ownership of Certain
Beneficial Owners and Management
Concurrent Sales by Selling Securityholders
Description of Securities
Legal Proceedings
Legal Matters
Experts
Index to Financial Statements
Until 90 days after the release of the registered
securities from the Escrow Account, all dealers effecting
transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a
prospectus. This is in addition to the obligations of dealers to
deliver a Prospectus when Acting as underwriters and with
respect to their unsold allotments or subscriptions.
<PAGE>
NORTHWEST PACIFICA, INC.
500,000 Units, 500,000 Shares of
Common Stock and 500,000 Redeemable
Warrants contained in the Units and 500,000
Shares of Common Stock underlying such Warrants;
500,000 Distribution Units, 500,000
Shares of Common Stock, and 1,000,000
Common Stock Warrants contained in the
Distribution Units, and 1,000,000 Shares
of Common Stock underlying the
Distribution Warrants and 470,400 Shares
of Common Stock to be Sold by the
Holders thereof
-----
PROSPECTUS
----------
December ____, 1997
=======================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Filing Fee - Securities and Exchange Commission $ 400
Fees and Expenses of Accountants and legal counsel 120,000
Blue Sky Fees and Expenses 1,000
Printing and Engraving Expenses 500
Miscellaneous Expenses 500
Total $ 122,400(2)
(1) Contributed by Management.
(2) These expenses have been or will be paid by certain officers and
directors of the Company.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company is incorporated in Delaware. Under Section 145 of the
General Corporation Law of the State of Delaware, a Delaware corporation has
the power, under specified circumstances, to indemnify its directors, officers,
employees and agents in connection with actions, suits or proceedings brought
against them by a third party or in the right of the corporation, by reason of
the fact that they were or are such directors, officers, employees or agents,
against expenses incurred in any action, suit or proceeding. The Certificate
of Incorporation and the By-laws of the Company provide for indemnification of
directors and officers to the fullest extent permitted by the General
Corporation Law of the State of Delaware.
The General Corporation Law of the State of Delaware provides that a
certificate of incorporation may contain a provision eliminating the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stock-
holders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section
174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the
State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. The Company's Certificate of
Incorporation contains such a provision.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
As listed below, the Company issued shares of its Common Stock par
value $.0001 per share to the following individuals or entities for the
consideration as listed in cash or services. If any of these sales were
made within the United States or to United States citizens or residents,
such sales were made in reliance upon the exemption from registration provided
by Section 4(2) of the Securities Act of 1933.
Date Shareholder Number of Shares Consideration
1/17/97 Charles H. Powers 1,500,000 $ 30,993
3/13/97 Wallace Watts 4,000 5,000
4/1/97 Germaine Hoffman 20,000 25,000
4/11/97 Robert Pfenning 12,000 15,000
5/21/97 Spencer Raymond 4,000 5,000
8/7/97 Don McKee 8,000 10,000
8/19/97 Alex Bornstein 78,400 98,000
8/28/97 Mike Plaso 4,000 5,000
Ralph Hueah 8,000 10,000
Clarence Mikolichek 8,000 10,000
Dan Nutter 8,000 10,000
Wilbur Guell 8,000 10,000
George Broughton 8,000 10,000
12/1/97 Thornbury Capital Corporation 500,000 100
12/1/97 Strategic Capital Sources 250,000 25
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
3.1 Certificate of Incorporation
3.2 By-Laws of the Company
4.1* Form of Common Stock Certificate
4.2* Company Warrant Agreement and form of Warrant
4.3* Distribution Warrant Agreement and form of Warrant
5.1* Opinion of Cassidy & Associates
10.1* Lock-Up agreement
24.1 Consent of Accountant
24.2* Consent of Cassidy & Associates (included in Exhibit 5)
27* Financial Data Schedule
- ---------------
* To be filed by Amendment.
(b) The following financial statement schedules are included in this
Registration Statement.
None.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission is that 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 registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant 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 registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it
is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(c) The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities Act
of 1933, the nformation omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Northwest Pacifica, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-1 and has duly
caused this Registration Statement on Form S-1 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Clackamas, Oregon
on the 2nd day of December, 1997.
NORTHWEST PACIFICA, INC.
By: /s/ Charles H. Powers
Charles H. Powers
President
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Charles H. Powers Director, President 12/2/97
Charles H. Powers
/s/ Michele E. Powers Director, Secretary 12/2/97
Michaele E. Powers
/s/ Julia S. Moser Director 12/22/97
Julia S. Moser
CERTIFICATE OF INCORPORATION
of
NORTHWEST PACIFICA, INC.
ARTICLE ONE
NAME
The name of the Corporation is Northwest Pacifica, Inc.
ARTICLE TWO
DURATION
The Corporation shall have perpetual existence.
ARTICLE THREE
PURPOSE
The purpose for which this Corporation is
organized is to engage in any lawful act or activity
for which corporations may be organized under the
General Corporation Law of Delaware.
ARTICLE FOUR
SHARES
The total number of shares of stock which the
Corporation shall have authority to issue is
120,000,000 shares, consisting of 100,000,000 shares
of Common Stock having a par value of $.0001 per
share and 20,000,000 shares of Preferred Stock having
a par value of $.0001 per share.
The Board of Directors is authorized to provide
for the issuance of the shares of Preferred Stock in
series and, by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish
from time to time the number of shares to be included
in each such series, and to fix the designation,
powers, preferences and rights of the shares of each
such series and the qualifications, limitations or
restrictions thereof.
The authority of the Board of Directors with
respect to each series of Preferred Stock shall
include, but not be limited to, determination of the
following:
A. The number of shares constituting that
series and the distinctive designation of that
series;
B. The dividend rate on the shares of that
series, whether dividends shall be cumulative, and,
if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends
on share of that series;
C. Whether that series shall have voting
rights, in addition to the voting rights provided by
law, and, if so, the terms of such voting rights;
D. Whether that series shall have conversion
privileges, and, if so, the terms and conditions of
such conversion, including provision for adjustment
of the conversion rate in such events as the Board of
Directors shall determine;
E. Whether or not the shares of that series
shall be redeemable, and, if so, the terms and
conditions of such redemption, including the date or
dates upon or after which they shall be redeemable,
and the amount per share payable in case of
redemption, which amount may vary under different
conditions and at different redemption dates;
F. Whether that series shall have a sinking
fund for the redemption or purchase of shares of that
series, and, if so, the terms and amount of such
sinking fund;
G. The rights of the shares of that series in
the event of voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, and the
relative rights of priority, if any, of payment of
shares of that series; and
H. Any other relative rights, preferences and
limitations of that series.
ARTICLE FIVE
COMMENCEMENT OF BUSINESS
The Corporation is authorized to commence
business as soon as its certificate of incorporation
has been filed.
ARTICLE SIX
PRINCIPAL OFFICE AND REGISTERED AGENT
The post office address of the initial
registered office of the Corporation and the name of
its initial registered agent and its business address
is
The Prentice-Hall Corporation System, Inc.
1013 Centre Road
Wilmington, Delaware 19805 (County of New Castle)
The initial registered agent is a resident of
the State of Delaware.
ARTICLE SEVEN
INCORPORATOR
Lee W. Cassidy, 1504 R Street, N.W., Washington,
D.C. 20009.
ARTICLE EIGHT
PRE-EMPTIVE RIGHTS
No Shareholder or other person shall have any
pre-emptive rights whatsoever.
ARTICLE NINE
BY-LAWS
The initial by-laws shall be adopted by the
Shareholders or the Board of Directors. The power to
alter, amend, or repeal the by-laws or adopt new by-
laws is vested in the Board of Directors, subject to
repeal or change by action of the Shareholders.
ARTICLE TEN
NUMBER OF VOTES
Each share of Common Stock has one vote on each
matter on which the share is entitled to vote.
ARTICLE ELEVEN
MAJORITY VOTES
A majority vote of a quorum of Shareholders
(consisting of the holders of a majority of the
shares entitled to vote, represented in person or by
proxy) is sufficient for any action which requires
the vote or concurrence of Shareholders, unless
otherwise required or permitted by law or the by-laws
of the Corporation.
ARTICLE TWELVE
NON-CUMULATIVE VOTING
Directors shall be elected by majority vote.
Cumulative voting shall not be permitted.
ARTICLE THIRTEEN
INTERESTED DIRECTORS, OFFICERS AND SECURITYHOLDERS
A. Validity. If Paragraph (B) is satisfied, no
contract or other transaction between the Corporation
and any of its directors, officers or
securityholders, or any corporation or firm in which
any of them are directly or indirectly interested,
shall be invalid solely because of this relationship
or because of the presence of the director, officer
or securityholder at the meeting of the Board of
Directors or committee authorizing the contract or
transaction, or his participation or vote in the
meeting or authorization.
B. Disclosure, Approval, Fairness. Paragraph
(A) shall apply only if:
(1) The material facts of the relationship or
interest of each such director, officer or
securityholder are known or disclosed:
(a) to the Board of Directors or the committee
and it nevertheless authorizes or ratifies the
contract or transaction by a majority of the
directors present, each such interested director to
be counted in determining whether a quorum is present
but not in calculating the majority necessary to
carry the vote; or
(b) to the Shareholders and they nevertheless
authorize or ratify the contract or transaction by a
majority of the shares present, each such interested
person to be counted for quorum and voting purposes;
or
(2) the contract or transaction is fair to the
Corporation as of the time it is authorized or
ratified by the Board of Directors, the committee or
the Shareholders.
ARTICLE FOURTEEN
INDEMNIFICATION AND INSURANCE
A. Persons. The Corporation shall indemnify,
to the extent provided in Paragraphs (B), (D) or (F)
and to the extent permitted from time to time by law:
(1) any person who is or was director, officer,
agent or employee of the Corporation, and
(2) any person who serves or served at the
Corporation's request as a director, officer, agent,
employee, partner or trustee of another corporation
or of a partnership, joint venture, trust or other
enterprise.
B. Extent--Derivative Suits. In case of a suit
by or in the right of the Corporation against a
person named in Paragraph (A) by reason of his
holding a position named in Paragraph (A), the
Corporation shall indemnify him, if he satisfies the
standard in Paragraph (C), for expenses (including
attorney's fees but excluding amounts paid in
settlement) actually and reasonably incurred by him
in connection with the defense or settlement of the
suit.
C. Standard--Derivative Suits. In case of a
suit by or in the right of the Corporation, a person
named in Paragraph (A) shall be indemnified only if:
(1) he is successful on the merits or
otherwise, or
(2) he acted in good faith in the transaction
which is the subject of the suit, and in a manner he
reasonably believed to be in, or not opposed to, the
best interests of the Corporation. However, he shall
not be indemnified in respect of any claim, issue or
matter as to which he has been adjudged liable for
negligence or misconduct in the performance of his
duty to the Corporation unless (and only to the
extent that) the court in which the suit was brought
shall determine, upon application, that despite the
adjudication but in view of all the circumstances, he
is fairly and reasonably entitled to indemnity for
such expenses as the court shall deem proper.
D. Extent--Nonderivative Suit. In case of a
suit, action or proceeding (whether civil, criminal,
administrative or investigative), other than a suit
by or in the right of the Corporation against a
person named in Paragraph (A) by reason of his
holding a position named in Paragraph (A), the
Corporation shall indemnify him, if he satisfies the
standard in Paragraph (E), for amounts actually and
reasonably incurred by him in connection with the
defense or settlement of the suit as
(1) expenses (including attorneys' fees),
(2) amounts paid in settlement
(3) judgments, and
(4) fines.
E. Standard--Nonderivative Suits. In case of a
nonderivative suit, a person named in Paragraph (A)
shall be indemnified only if:
(1) he is successful on the merits or
otherwise, or
(2) he acted in good faith in the transaction
which is the subject of the nonderivative suit, and
in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation and
, with respect to any criminal action or proceeding,
he had no reason to believe his conduct was unlawful.
The termination of a nonderivative suit by judgement,
order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent shall not, of itself,
create a presumption that the person failed to
satisfy this Paragraph (E) (2).
F. Determination That Standard Has Been Met. A
determination that the standard of Paragraph (C) or
(E) has been satisfied may be made by a court of law
or equity or the determination may be made by:
(1) a majority of the directors of the
Corporation (whether or not a quorum) who were not
parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a
majority of the directors of the Corporation, whether
or not a quorum, or elected by the Shareholders of
the Corporation) in a written opinion, or
(3) the Shareholders of the Corporation.
G. Proration. Anyone making a determination
under Paragraph (F) may determine that a person has
met the standard as to some matters but not as to
others, and may reasonably prorate amounts to be
indemnified.
H. Advance Payment. The Corporation may pay in
advance any expenses (including attorney's fees)
which may become subject to indemnification under
paragraphs (A) - (G) if:
(1) the Board of Directors authorizes the
specific payment and
(2) the person receiving the payment undertakes
in writing to repay unless it is ultimately
determined that he is entitled to indemnification by
the Corporation under Paragraphs (A) - (G).
I. Nonexclusive. The indemnification provided
by Paragraphs (A) - (G) shall not be exclusive of any
other rights to which a person may be entitled by law
or by by-law, agreement, vote of Shareholders or
disinterested directors, or otherwise.
J. Continuation. The indemnification and
advance payment provided by Paragraphs (A) - (H)
shall continue as to a person who has ceased to hold
a position named in paragraph (A) and shall inure to
his heirs, executors and administrators.
K. Insurance. The Corporation may purchase and
maintain insurance on behalf of any person who holds
or who has held any position named in Paragraph (A)
against any liability incurred by him in any such
positions or arising out of this status as such,
whether or not the Corporation would have power to
indemnify him against such liability under Paragraphs
(A) - (H).
L. Reports. Indemnification payments, advance
payments, and insurance purchases and payments made
under Paragraphs (A) - (K) shall be reported in
writing to the Shareholders of the Corporation with
the next notice of annual meeting, or within six
months, whichever is sooner.
M. Amendment of Article. Any changes in the
General Corporation Law of Delaware increasing,
decreasing, amending, changing or otherwise effecting
the indemnification of directors, officers, agents,
or employees of the Corporation shall be incorporated
by reference in this Article as of the date of such
changes without further action by the Corporation,
its Board of Directors, of Shareholders, it being the
intention of this Article that directors, officers,
agents and employees of the Corporation shall be
indemnified to the maximum degree allowed by the
General Corporation Law of the State of Delaware at
all times.
ARTICLE FIFTEEN
LIMITATION ON DIRECTOR LIABILITY
A. Scope of Limitation. No person, by virtue
of being or having been a director of the
Corporation, shall have any personal liability for
monetary damages to the Corporation or any of its
Shareholders for any breach of fiduciary duty except
as to the extent provided in Paragraph (B).
B. Extent of Limitation. The limitation
provided for in this Article shall not eliminate or
limit the liability of a director to the Corporation
or its Shareholders (i) for any breach of the
director's duty of loyalty to the Corporation or its
Shareholders (ii) for any acts or omissions not in
good faith or which involve intentional misconduct or
a knowing violation of law (iii) for any unlawful
payment of dividends or unlawful stock purchases or
redemptions in violation of Section 174 of the
General Corporation Law of Delaware or (iv) for any
transaction for which the director derived an
improper personal benefit.
IN WITNESS WHEREOF, the incorporator hereunto
has executed this certificate of incorporation on
this 26th day of November, 1997.
________________________________
Lee W. Cassidy,
Incorporator
NORTHWEST PACIFICA, INC.
By-Laws
Article I
The Stockholders
Section 1.1. Annual Meeting. The annual meeting of the
stockholders of Northwest Pacifica, Inc. (the "Corporation")
shall be held on the third Thursday in May of each year at 10:30
a.m. local time, or at such other date or time as shall be
designated from time to time by the Board of Directors and stated
in the notice of the meeting, for the election of directors and
for the transaction of such other business as may come before the
meeting.
Section 1.2. Special Meetings. A special meeting of the
stockholders may be called at any time by the written resolution
or request of two-thirds or more of the members of the Board of
Directors, the president, or any executive vice president and
shall be called upon the written request of the holders of two-
thirds or more in amount, of each class or series of the capital
stock of the Corporation entitled to vote at such meeting on the
matters(s) that are the subject of the proposed meeting, such
written request in each case to specify the purpose or purposes
for which such meeting shall be called, and with respect to
stockholder proposals, shall further comply with the requirements
of this Article.
Section 1.3. Notice of Meetings. Written notice of each
meeting of stockholders, whether annual or special, stating the
date, hour and place where it is to be held, shall be served
either personally or by mail, not less than fifteen nor more than
sixty days before the meeting, upon each stockholder of record
entitled to vote at such meeting, and to any other stockholder to
whom the giving of notice may be required by law. Notice of a
special meeting shall also state the purpose or purposes for
which the meeting is called and shall indicate that it is being
issued by, or at the direction of, the person or persons calling
the meeting. If, at any meeting, action is proposed to be taken
that would, if taken, entitle stockholders to receive payment for
their stock, the notice of such meeting shall include a statement
of that purpose and to that effect. If mailed, notice shall be
deemed to be delivered when deposited in the United States mail
or with any private express mail service, postage or delivery fee
prepaid, and shall be directed to each such stockholder at his
address, as it appears on the records of the stockholders of the
Corporation, unless he shall have previously filed with the
secretary of the Corporation a written request that notices
intended for him be mailed to some other address, in which case,
it shall be mailed to the address designated in such request.
Section 1.4. Fixing Date of Record. (a) 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, the Board of Directors may fix a record date, which
record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed
by the Board of Directors, 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. 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.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing
without a meeting (to the extent that such action by written
consent is permitted by law, the Certificate of Incorporation and
these By-Laws), the Board of Directors may fix a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is
adopted by the Board of Directors. If no record date has been
fixed by the Board of Directors, the record date for determining
stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors
is required by law, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be
taken is delivered to the Corporation by delivery to its
registered office in its state of incorporation, its principal
place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's
registered office shall be by hand or by certified or registered
mail, return receipt requested. If no record date has been fixed
by the Board of Directors and prior action by the Board of
Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such
prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other
distribution or allotment of any rights or the stockholders
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 a record date,
which record date shall not precede the date upon which the
resolution fixing the record date is adopted, and which record
date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 1.5. Inspectors. At each meeting of the
stockholders, the polls shall be opened and closed and the
proxies and ballots shall be received and be taken in charge.
All questions touching on the qualification of voters and the
validity of proxies and the acceptance or rejection of votes,
shall be decided by one or more inspectors. Such inspectors
shall be appointed by the Board of Directors before or at the
meeting, or, if no such appointment shall have been made, then by
the presiding officer at the meeting. If for any reason any of
the inspectors previously appointed shall fail to attend or
refuse or be unable to serve, inspectors in place of any so
failing to attend or refusing or unable to serve shall be
appointed in like manner.
Section 1.6. Quorum. At any meeting of the stockholders
the holders of such number of all of the outstanding shares of
the capital stock of the Corporation taken together as a single
class as represents one-third of all votes that may be made at
such meeting, present in person or represented by proxy, shall
constitute a quorum of the stockholders for all purposes, unless
the representation of a larger number shall be required by law,
and, in that case, the representation of the number so required
shall constitute a quorum.
If the holders of the amount of stock necessary to
constitute a quorum shall fail to attend in person or by proxy at
the time and place fixed in accordance with these By-Laws for an
annual or special meeting, a majority in interest of the
stockholders present in person or by proxy may adjourn, from time
to time, without notice other than by announcement at the
meeting, until holders of the amount of stock requisite to
constitute a quorum shall attend. At any such adjourned meeting
at which a quorum shall be present, any business may be
transacted which might have been transacted at the meeting as
originally notified.
Section 1.7. Business. The chairman of the Board, if any,
the president, or in his absence the vice-chairman, if any, or an
executive vice president, in the order named, shall call meetings
of the stockholders to order, and shall act as chairman of such
meeting; provided, however, that the Board of Directors or
executive committee may appoint any stockholder to act as
chairman of any meeting in the absence of the chairman of the
Board. The secretary of the Corporation shall act as secretary
at all meetings of the stockholders, but in the absence of the
secretary at any meeting of the stockholders, the presiding
officer may appoint any person to act as secretary of the
meeting.
Section 1.8. Stockholder Proposals. No proposal by a
stockholder shall be presented for vote at a special or annual
meeting of stockholders unless such stockholder shall, not later
than the close of business on the fifth day following the date on
which notice of the meeting is first given to stockholders,
provide the Board of Directors or the secretary of the
Corporation with written notice of intention to present a
proposal for action at the forthcoming meeting of stockholders,
which notice shall include the name and address of such
stockholder, the number of voting securities that he holds of
record and that he holds beneficially, the text of the proposal
to be presented to the meeting and a statement in support of the
proposal.
Any stockholder who was a stockholder of record on the
applicable record date may make any other proposal at an annual
meeting or special meeting of stockholders and the same may be
discussed and considered, but unless stated in writing and filed
with the Board of Directors or the secretary prior to the date
set forth hereinabove, such proposal shall be laid over for
action at an adjourned, special, or annual meeting of the
stockholders taking place sixty days or more thereafter. This
provision shall not prevent the consideration and approval or
disapproval at the annual meeting of reports of officers,
directors, and committees, but in connection with such reports,
no new business proposed by a stockholder, qua stockholder, shall
be acted upon at such annual meeting unless stated and filed as
herein provided.
Notwithstanding any other provision of these By-Laws, the
Corporation shall be under no obligation to include any
stockholder proposal in its proxy statement materials or
otherwise present any such proposal to stockholders at a special
or annual meeting of stockholders if the Board of Directors
reasonably believes the proponents thereof have not complied with
Sections 13 or 14 of the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder; nor shall the
Corporation be required to include any stockholder proposal not
required to be included in its proxy materials to stockholders in
accordance with any such section, rule or regulation.
Section 1.9. Proxies. At all meetings of stockholders, a
stockholder entitled to vote may vote either in person or by
proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the
secretary before or at the time of the meeting. No proxy shall
be valid after eleven months from the date of its execution,
unless otherwise provided in the proxy.
Section 1.10. Voting by Ballot. The votes for directors,
and upon the demand of any stockholder or when required by law,
the votes upon any question before the meeting, shall be by
ballot.
Section 1.11. Voting Lists. 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 of stock registered in the
name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours 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.
Section 1.12. Place of Meeting. The Board of Directors may
designate any place, either within or without the state of
incorporation, as the place of meeting for any annual meeting or
any special meeting called by the Board of Directors. If no
designation is made or if a special meeting is otherwise called,
the place of meeting shall be the principal office of the
Corporation.
Section 1.13. Voting of Stock of Certain Holders. Shares
of capital stock of the Corporation standing in the name of
another corporation, domestic or foreign, may be voted by such
officer, agent, or proxy as the by-laws of such corporation may
prescribe, or in the absence of such provision, as the board of
directors of such corporation may determine.
Shares of capital stock of the Corporation standing in the
name of a deceased person, a minor ward or an incompetent person
may be voted by his administrator, executor, court-appointed
guardian or conservator, either in person or by proxy, without a
transfer of such stock into the name of such administrator,
executor, court-appointed guardian or conservator. Shares of
capital stock of the Corporation standing in the name of a
trustee may be voted by him, either in person or by proxy.
Shares of capital stock of the Corporation standing in the
name of a receiver may be voted, either in person or by proxy, by
such receiver, and stock held by or under the control of a
receiver may be voted by such receiver without the transfer
thereof into his name if authority to do so is contained in any
appropriate order of the court by which such receiver was
appointed.
A stockholder whose stock is pledged shall be entitled to
vote such stock, either in person or by proxy, until the stock
has been transferred into the name of the pledgee, and thereafter
the pledgee shall be entitled to vote, either in person or by
proxy, the stock so transferred.
Shares of its own capital stock belonging to this
Corporation shall not be voted, directly or indirectly, at any
meeting and shall not be counted in determining the total number
of outstanding stock at any given time, but shares of its own
stock held by it in a fiduciary capacity may be voted and shall
be counted in determining the total number of outstanding stock
at any given time.
Article II
Board of Directors
Section 2.1. General Powers. The business, affairs, and
the property of the Corporation shall be managed and controlled
by the Board of Directors (the "Board"), and, except as otherwise
expressly provided by law, the Certificate of Incorporation or
these By-Laws, all of the powers of the Corporation shall be
vested in the Board.
Section 2.2. Number of Directors. The number of directors
which shall constitute the whole Board shall be not fewer than
one nor more than five. Within the limits above specified, the
number of directors shall be determined by the Board of Directors
pursuant to a resolution adopted by a majority of the directors
then in office.
Section 2.3. Election, Term and Removal. Directors shall
be elected at the annual meeting of stockholders to succeed those
directors whose terms have expired. Each director shall hold
office for the term for which elected and until his or her
successor shall be elected and qualified. Directors need not be
stockholders. A director may be removed from office at a meeting
expressly for that purpose by the vote of stockholders holding
not less than two-thirds of the shares entitled to vote at an
election of directors.
Section 2.4. Vacancies. Vacancies in the Board of
Directors, including vacancies resulting from an increase in the
number of directors, may be filled by the affirmative vote of a
majority of the remaining directors then in office, though less
than a quorum; except that vacancies resulting from removal from
office by a vote of the stockholders may be filled by the
stockholders at the same meeting at which such removal occurs
provided that the holders of not less than two-thirds of the
outstanding capital stock of the Corporation (assessed upon the
basis of votes and not on the basis of number of shares) entitled
to vote for the election of directors, voting together as a
single class, shall vote for each replacement director. All
directors elected to fill vacancies shall hold office for a term
expiring at the time of the next annual meeting of stockholders
and upon election and qualification of his successor. No
decrease in the number of directors constituting the Board of
Directors shall shorten the term of an incumbent director.
Section 2.5. Resignations. Any director of the Corporation
may resign at any time by giving written notice to the president
or to the secretary of the Corporation. The resignation of any
director shall take effect at the time specified therein and,
unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
Section 2.6. Place of Meetings, etc. The Board of
Directors may hold its meetings, and may have an office and keep
the books of the Corporation (except as otherwise may be provided
for by law), in such place or places in or outside the state of
incorporation as the Board from time to time may determine.
Section 2.7. Regular Meetings. Regular meetings of the
Board of Directors shall be held as soon as practicable after
adjournment of the annual meeting of stockholders at such time
and place as the Board of Directors may fix. No notice shall be
required for any such regular meeting of the Board.
Section 2.8. Special Meetings. Special meetings of the
Board of Directors shall be held at places and times fixed by
resolution of the Board of Directors, or upon call of the
chairman of the Board, if any, or vice-chairman of the Board, if
any, the president, an executive vice president or two-thirds of
the directors then in office.
The secretary or officer performing the secretary's duties
shall give not less than twenty-four hours' notice by letter,
telegraph or telephone (or in person) of all special meetings of
the Board of Directors, provided that notice need not given of
the annual meeting or of regular meetings held at times and
places fixed by resolution of the Board. Meetings may be held at
any time without notice if all of the directors are present, or
if those not present waive notice in writing either before or
after the meeting. The notice of meetings of the Board need not
state the purpose of the meeting.
Section 2.9. Participation by Conference Telephone.
Members of the Board of Directors of the Corporation, or any
committee thereof, may participate in a regular or special or any
other meeting of the Board or committee by means of conference
telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and
such participation shall constitute presence in person at such
meeting.
Section 2.10. Action by Written Consent. 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 prior or subsequent to such action all the members of
the Board or such committee, as the case may be, consent thereto
in writing, and the writing or writings are filed with the
minutes of the proceedings of the Board or committee.
Section 2.11. Quorum. A majority of the total number of
directors then in office shall constitute a quorum for the
transaction of business; but if at any meeting of the Board there
be less than a quorum present, a majority of those present may
adjourn the meeting from time to time.
Section 2.12. Business. Business shall be transacted at
meetings of the Board of Directors in such order as the Board may
determine. At all meetings of the Board of Directors, the
chairman of the Board, if any, the president, or in his absence
the vice-chairman, if any, or an executive vice president, in the
order named, shall preside.
Section 2.13. Interest of Directors in Contracts. (a) No
contract or transaction between the Corporation and one or more
of its directors or officers, or between the Corporation and any
other corporation, partnership, association, or other
organization in which one or more of the Corporation's directors
or officers, are directors or officers, or have a financial
interest, shall be void or voidable solely for this reason, or
solely because the director or officer is present at or
participates in the meeting of the Board or committee which
authorizes the contract or transaction, or solely because his or
their votes are counted for such purpose, if:
(1) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee,
and the Board or committee in good faith authorizes the
contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though
the disinterested directors be less than a quorum; or
(2) The material facts as to his relationship or interest
and as to the contract or transaction are disclosed or
are known to the stockholders entitled to vote thereon,
and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or
(3) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved
or ratified, by the Board of Directors, a committee of
the Board of Directors or the stockholders.
(b) Interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or of
a committee which authorizes the contract or transaction.
Section 2.14. Compensation of Directors. Each director of
the Corporation who is not a salaried officer or employee of the
Corporation, or of a subsidiary of the Corporation, shall receive
such allowances for serving as a director and such fees for
attendance at meetings of the Board of Directors or the executive
committee or any other committee appointed by the Board as the
Board may from time to time determine.
Section 2.15. Loans to Officers or Employees. The Board of
Directors may lend money to, guarantee any obligation of, or
otherwise assist, any officer or other employee of the
Corporation or of any subsidiary, whether or not such officer or
employee is also a director of the Corporation, whenever, in the
judgment of the directors, such loan, guarantee, or assistance
may reasonably be expected to benefit the Corporation; provided,
however, that any such loan, guarantee, or other assistance given
to an officer or employee who is also a director of the
Corporation must be authorized by a majority of the entire Board
of Directors. Any such loan, guarantee, or other assistance may
be made with or without interest and may be unsecured or secured
in such manner as the Board of Directors shall approve,
including, but not limited to, a pledge of shares of the
Corporation, and may be made upon such other terms and conditions
as the Board of Directors may determine.
Section 2.16. Nomination. Subject to the rights of holders
of any class or series of stock having a preference over the
common stock as to dividends or upon liquidation, nominations for
the election of directors may be made by the Board of Directors
or by any stockholder entitled to vote in the election of
directors generally. However, any stockholder entitled to vote
in the election of directors generally may nominate one or more
persons for election as directors at a meeting only if written
notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by
United States mail, postage prepaid, to the secretary of the
Corporation not later than (i) with respect to an election to be
held at an annual meeting of stockholders, the close of business
on the last day of the eighth month after the immediately
preceding annual meeting of stockholders, and (ii) with respect
to an election to be held at a special meeting of stockholders
for the election of directors, the close of business on the fifth
day following the date on which notice of such meeting is first
given to stockholders. Each such notice shall set forth: (a) the
name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a
representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the
stockholder and each nominee and any other person or persons
(naming such person or persons) pursuant to which the nomination
or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder
as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated, or intended to be
nominated, by the Board of Directors, and; (e) the consent of
each nominee to serve as a director of the Corporation if so
elected. The presiding officer at the meeting may refuse to
acknowledge the nomination of any person not made in compliance
with the foregoing procedure.
Article III
Committees
Section 3.1. Committees. The Board of Directors, by
resolution adopted by a majority of the number of directors then
fixed by these By-Laws or resolution thereto, may establish such
standing or special committees of the Board as it may deem
advisable, and the members, terms, and authority of such
committees shall be set forth in the reslutions establishing such
committee.
Section 3.2. Executive Committee Number and Term of Office.
The Board of Directors may, at any meeting, by majority vote of
the Board of Directors, elect from the directors an executive
committee. The executive committee shall consist of such number
of members as may be fixed from time to time by resolution of the
Board of Directors. The Board of Directors may designate a
chairman of the committee who shall preside at all meetings
thereof, and the committee shall designate a member thereof to
preside in the absence of the chairman.
Section 3.3. Executive Committee Powers. The executive
committee may, while the Board of Directors is not in session,
exercise all or any of the powers of the Board of Directors in
all cases in which specific directions shall not have been given
by the Board of Directors; except that the executive committee
shall not have the power or authority of the Board of Directors
to (i) amend the Certificate of Incorporation or the By-Laws of
the Corporation, (ii) fill vacancies on the Board of Directors,
(iii) adopt an agreement or certification of ownership, merger or
consolidation, (iv) recommend to the stockholders the sale, lease
or exchange of all or substantially all of the Corporation's
property and assets, or a dissolution of the Corporation or a
revocation of a dissolution, (v) declare a dividend, or (vi)
authorize the issuance of stock.
Section 3.4. Executive Committee Meetings. Regular and
special meetings of the executive committee may be called and
held subject to the same requirements with respect to time, place
and notice as are specified in these By-Laws for regular and
special meetings of the Board of Directors. Special meetings of
the executive committee may be called by any member thereof.
Unless otherwise indicated in the notice thereof, any and all
business may be transacted at a special or regular meeting of the
executive meeting if a quorum is present. At any meeting at
which every member of the executive committee shall be present,
in person or by telephone, even though without any notice, any
business may be transacted. All action by the executive
committee shall be reported to the Board of Directors at its
meeting next succeeding such action.
The executive committee shall fix its own rules of
procedure, and shall meet where and as provided by such rules or
by resolution of the Board of Directors, but in every case the
presence of a majority of the total number of members of the
executive committee shall be necessary to constitute a quorum.
In every case, the affirmative vote of a quorum shall be
necessary for the adoption of any resolution.
Section 3.5. Executive Committee Vacancies. The Board of
Directors, by majority vote of the Board of Directors then in
office, shall fill vacancies in the executive committee by
election from the directors.
Article IV
The Officers
Section 4.1. Number and Term of Office. The officers of
the Corporation shall consist of, as the Board of Directors may
determine and appoint from time to time, a chief executive
officer, a president, one or more executive vice-presidents, a
secretary, a treasurer, a controller, and/or such other officers
as may from time to time be elected or appointed by the Board of
Directors, including such additional vice-presidents with such
designations, if any, as may be determined by the Board of
Directors and such assistant secretaries and assistant
treasurers. In addition, the Board of Directors may elect a
chairman of the Board and may also elect a vice-chairman as
officers of the Corporation. Any two or more offices may be held
by the same person. In its discretion, the Board of Directors
may leave unfilled any office except as may be required by law.
The officers of the Corporation shall be elected or
appointed from time to time by the Board of Directors. Each
officer shall hold office until his successor shall have been
duly elected or appointed or until his death or until he shall
resign or shall have been removed by the Board of Directors.
Each of the salaried officers of the Corporation shall
devote his entire time, skill and energy to the business of the
Corporation, unless the contrary is expressly consented to by the
Board of Directors or the executive committee.
Section 4.2. Removal. Any officer may be removed by the
Board of Directors whenever, in its judgment, the best interests
of the Corporation would be served thereby.
Section 4.3. The Chairman of the Board. The chairman of
the Board, if any, shall preside at all meetings of stockholders
and of the Board of Directors and shall have such other authority
and perform such other duties as are prescribed by law, by these
By-Laws and by the Board of Directors. The Board of Directors
may designate the chairman of the Board as chief executive
officer, in which case he shall have such authority and perform
such duties as are prescribed by these By-Laws and the Board of
Directors for the chief executive officer.
Section 4.4. The Vice-Chairman. The vice-chairman, if any,
shall have such authority and perform such other duties as are
prescribed by these By-Laws and by the Board of Directors. In
the absence or inability to act of the chairman of the Board and
the president, he shall preside at the meetings of the
stockholders and of the Board of Directors and shall have and
exercise all of the powers and duties of the chairman of the
Board. The Board of Directors may designate the vice-chairman as
chief executive officer, in which case he shall have such
authority and perform such duties as are prescribed by these
By-Laws and the Board of Directors for the chief executive
officer.
Section 4.5. The President. The president shall have such
authority and perform such duties as are prescribed by law, by
these By-Laws, by the Board of Directors and by the chief
executive officer (if the president is not the chief executive
officer). The president, if there is no chairman of the Board,
or in the absence or the inability to act of the chairman of the
Board, shall preside at all meetings of stockholders and of the
Board of Directors. Unless the Board of Directors designates the
chairman of the Board or the vice-chairman as chief executive
officer, the president shall be the chief executive officer, in
which case he shall have such authority and perform such duties
as are prescribed by these By-Laws and the Board of Directors for
the chief executive officer.
Section 4.6. The Chief Executive Officer. Unless the Board
of Directors designates the chairman of the Board or the vice-
chairman as chief executive officer, the president shall be the
chief executive officer. The chief executive officer of the
Corporation shall have, subject to the supervision and direction
of the Board of Directors, general supervision of the business,
property and affairs of the Corporation, including the power to
appoint and discharge agents and employees, and the powers vested
in him by the Board of Directors, by law or by these By-Laws or
which usually attach or pertain to such office.
Section 4.7. The Executive Vice-Presidents. In the absence
of the chairman of the Board, if any, the president and the
vice-chairman, if any, or in the event of their inability or
refusal to act, the executive vice-president (or in the event
there is more than one executive vice-president, the executive
vice-presidents in the order designated, or in the absence of any
designation, then in the order of their election) shall perform
the duties of the chairman of the Board, of the president and of
the vice-chairman, and when so acting, shall have all the powers
of and be subject to all the restrictions upon the chairman of
the Board, the president and the vice-chairman. Any executive
vice-president may sign, with the secretary or an authorized
assistant secretary, certificates for stock of the Corporation
and shall perform such other duties as from time to time may be
assigned to him by the chairman of the Board, the president, the
vice-chairman, the Board of Directors or these By-Laws.
Section 4.8. The Vice-Presidents. The vice-presidents, if
any, shall perform such duties as may be assigned to them from
time to time by the chairman of the Board, the president, the
vice-chairman, the Board of Directors, or these By-Laws.
Section 4.9. The Treasurer. Subject to the direction of
chief executive officer and the Board of Directors, the treasurer
shall have charge and custody of all the funds and securities of
the Corporation; when necessary or proper he shall endorse for
collection, or cause to be endorsed, on behalf of the
Corporation, checks, notes and other obligations, and shall cause
the deposit of the same to the credit of the Corporation in such
bank or banks or depositary as the Board of Directors may
designate or as the Board of Directors by resolution may
authorize; he shall sign all receipts and vouchers for payments
made to the Corporation other than routine receipts and vouchers,
the signing of which he may delegate; he shall sign all checks
made by the Corporation (provided, however, that the Board of
Directors may authorize and prescribe by resolution the manner in
which checks drawn on banks or depositaries shall be signed,
including the use of facsimile signatures, and the manner in
which officers, agents or employees shall be authorized to sign);
unless otherwise provided by resolution of the Board of
Directors, he shall sign with an officer-director all bills of
exchange and promissory notes of the Corporation; whenever
required by the Board of Directors, he shall render a statement
of his cash account; he shall enter regularly full and accurate
account of the Corporation in books of the Corporation to be kept
by him for that purpose; he shall, at all reasonable times,
exhibit his books and accounts to any director of the Corporation
upon application at his office during business hours; and he
shall perform all acts incident to the position of treasurer. If
required by the Board of Directors, the treasurer shall give a
bond for the faithful discharge of his duties in such sum and
with such sure ties as the Board of Directors may require.
Section 4.10. The Secretary. The secretary shall keep the
minutes of all meetings of the Board of Directors, the minutes of
all meetings of the stockholders and (unless otherwise directed
by the Board of Directors) the minutes of all committees, in
books provided for that purpose; he shall attend to the giving
and serving of all notices of the Corporation; he may sign with
an officer-director or any other duly authorized person, in the
name of the Corporation, all contracts authorized by the Board of
Directors or by the executive committee, and, when so ordered by
the Board of Directors or the executive committee, he shall affix
the seal of the Corporation thereto; he may sign with the
president or an executive vice-president all certificates of
shares of the capital stock; he shall have charge of the
certificate books, transfer books and stock ledgers, and such
other books and papers as the Board of Directors or the executive
committee may direct, all of which shall, at all reasonable
times, be open to the examination of any director, upon
application at the secretary's office during business hours; and
he shall in general perform all the duties incident to the office
of the secretary, subject to the control of the chief executive
officer and the Board of Directors.
Section 4.11. The Controller. The controller shall be the
chief accounting officer of the Corporation. Subject to the
supervision of the Board of Directors, the chief executive
officer and the treasurer, the controller shall provide for and
maintain adequate records of all assets, liabilities and
transactions of the Corporation, shall see that accurate audits
of the Corporation's affairs are currently and adequately made
and shall perform such other duties as from time to time may be
assigned to him.
Section 4.12. The Assistant Treasurers and Assistant
Secretaries. The assistant treasurers shall respectively, if
required by the Board of Directors, give bonds for the faithful
discharge of their duties in such sums and with such sureties as
the Board of Directors may determine. The assistant secretaries
as thereunto authorized by the Board of Directors may sign with
the chairman of the Board, the president, the vice-chairman or an
executive vice-president, certificates for stock of the
Corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The assistant treasurers
and assistant secretaries, in general, shall perform such duties
as shall be assigned to them by the treasurer or the secretary,
respectively, or chief executive officer, the Board of Directors,
or these By-Laws.
Section 4.13. Salaries. The salaries of the officers shall
be fixed from time to time by the Board of Directors, and no
officer shall be prevented from receiving such salary by reason
of the fact that he is also a director of the Corporation.
Section 4.14. Voting upon stocks. Unless otherwise ordered
by the Board of Directors or by the executive committee, any
officer, director or any person or persons appointed in writing
by any of them, shall have full power and authority in behalf of
the Corporation to attend and to act and to vote at any meetings
of stockholders of any corporation in which the Corporation may
hold stock, and at any such meeting shall possess and may
exercise any and all the rights and powers incident to the
ownership of such stock, and which, as the owner thereof, the
Corporation might have possessed and exercised if present. The
Board of Directors may confer like powers upon any other person
or persons.
Article V
Contracts and Loans
Section 5.1. Contracts. The Board of Directors may
authorize any officer or officers, agent or agents, to enter into
any contract or execute and deliver any instrument in the name of
and on behalf of the Corporation, and such authority may be
general or confined to specific instances.
Section 5.2. Loans. No loans shall be contracted on behalf
of the Corporation and no evidences of indebtedness shall be
issued in its name unless authorized by a resolution of the Board
of Directors. Such authority may be general or confined to
specific instances.
Article VI
Certificates for Stock and Their Transfer
Section 6.1. Certificates for Stock. Certificates
representing stock of the Corporation shall be in such form as
may be determined by the Board of Directors. Such certificates
shall be signed by the chairman of the Board, the president, the
vice-chairman or an executive vice-president and/or by the
secretary or an authorized assistant secretary and shall be
sealed with the seal of the Corporation. The seal may be a
facsimile. If a stock certificate is countersigned (i) by a
transfer agent other than the Corporation or its employee, or
(ii) by a registrar other than the Corporation or its employee,
any other signature on the certificate may be a facsimile. In
the event that any officer, transfer agent or registrar who has
signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent,
or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue. All
certificates for stock shall be consecutively numbered or
otherwise identified. The name of the person to whom the shares
of stock represented thereby are issued, with the number of
shares of stock and date of issue, shall be entered on the books
of the Corporation. All certificates surrendered to the
Corporation for transfer shall be canceled and no new
certificates shall be issued until the former certificate for a
like number of shares of stock shall have been surrendered and
canceled, except that, in the event of a lost, destroyed or
mutilated certificate, a new one may be issued therefor upon such
terms and indemnity to the Corporation as the Board of Directors
may prescribe.
Section 6.2. Transfers of Stock. Transfers of stock of the
Corporation shall be made only on the books of the Corporation by
the holder of record thereof or by his legal representative, who
shall furnish proper evidence of authority to transfer, or by his
attorney thereunto authorized by power of attorney duly executed
and filed with the secretary of the Corporation, and on surrender
for cancellation of the certificate for such stock. The person
in whose name stock stands on the books of the Corporation shall
be deemed the owner thereof for all purposes as regards the
Corporation.
Article VII
Fiscal Year
Section 7.1. Fiscal Year. The fiscal year of the
Corporation shall begin on the first day of January in each year
and end on the last day of December in each year.
Article VIII
Seal
Section 8.1. Seal. The Board of Directors shall approve a
corporate seal which shall be in the form of a circle and shall
have inscribed thereon the name of the Corporation.
Article IX
Waiver of Notice
Section 9.1. Waiver of Notice. Whenever any notice is
required to be given under the provisions of these By-Laws or
under the provisions of the Certificate of Incorporation or under
the provisions of the corporation law of the state of
incorporation, 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. Attendance of any person at a meeting for which any
notice is required to be given under the provisions of these
By-Laws, the Certificate of Incorporation or the corporation law
of the state of incorporation shall constitute a waiver of notice
of such meeting except when the person attends for the express
purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully
called or convened.
Article X
Amendments
Section 10.1. Amendments. These By-Laws may be altered,
amended or repealed and new By-Laws may be adopted at any meeting
of the Board of Directors of the Corporation by the affirmative
vote of a two-thirds or more of the members of the Board, or by
the affirmative vote of the holders of 75 percent or more of the
outstanding capital stock of the Corporation (assessed upon the
basis of votes and not on the basis of number of shares) entitled
to vote generally in the election of directors, voting together
as a single class, cast at a meeting of the stockholders called
for that purpose.
Article XI
Indemnification
Section 11.1. Indemnification. The Corporation shall
indemnify its officers, directors, employees and agents to the
fullest extent permitted by the Nevada General Corporation Law,
as amended from time to time.
[END]
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in the Registration Statement on Form S-1 of our
report dated November 6, 1997, relating to the audited financial statements of
Northwest Pacifica, Inc. and to the reference to our Firm under the caption
"Experts" in the Prospectus.
BETTY E. VEVEIROS, CPA
Certified Public Accountants
Clackamas, Oregon
December 2, 1997
