UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SEURITIES OF
SMALL BUSINESS ISSUERS Under Section 12(b) or
(g) of the Securities Exchange Act of 1934
INVESTAMERICA, INC.
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(Name of Small Business Issuer in its charter)
Nevada 87-0400797
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1776 Park Avenue, Park City, Utah 84060
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(Address of principal executive offices) (Zip code)
435-615-8810
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Issuer's telephone number
1330 Portside Way Salt Lake City, Utah 84123
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(Former name or former address, if changed, since last report)
Securities to be registered under section 12(b) of the Act:
Title of Each Class Name on each exchange on which
to be registered each class is to be registered
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Securities to be registered under section 12(g)of the Act:
Common Stock, $0.001 par value per share, 50,000,000 shares authorized,
9,790,443 issued and outstanding as of September 30, 1999. Preferred
Non-Voting Stock, $0.001 par value per share, 5,000,000 shares authorized,
none issued nor outstanding as of September 30, 1999.
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FORWARD LOOKING STATEMENTS
CAUTIONARY NOTICE REGARDING FORWARD LOOKING STATEMENTS
INVESTAMERICA, Inc., ("INVESTAMERICA," or "Company" or "INVT" or the
"Registrant") cautions readers that certain important factors may affect the
Company's actual results and could cause such results to differ materially
from any forward-looking statements that may be deemed to have been made in
this Document or that are otherwise made by or on behalf of the Company. For
this purpose, any statements contained in the Document that are not statements
of historical fact may be deemed to be forward-looking statements. This
Registration contains statements that constitute "forward-looking statements."
These forward-looking statements can be identified by the use of predictive,
future-tense or forward-looking terminology, such as "believes," "anticipates,"
"expects," "estimates," "plans," "may," "will," or similar terms. These
statements appear in a number of places in this Registration and include
statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things:
(i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; (iii) the Company's financing plans.
Investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve significant risks and
uncertainties, and that actual results may differ materially from those
projected in the forward-looking statements as a result of various factors.
Factors that could adversely affect actual results and performance include,
among others, the Company's limited operating history, potential fluctuations
in quarterly operating results and expenses, government regulation,
technological change and competition.
The accompanying information contained in this Registration, including,
without limitation, the information set forth under the heading "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" identifies important additional factors
that could materially adversely affect actual results and performance. All of
these factors should be carefully considered and evaluated. All forward-
looking statements attributable to the Company are expressly qualified in
their entirety by the foregoing cautionary statement. Any forward-looking
statements in this report should be evaluated in light of these important risk
factors. The Company is also subject to other risks detailed herein or set
forth from time to time in the Company's filings with the Securities and
Exchange Commission.
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
Part I ......................................................... 4
Item 1. Description of Business.................................. 4
Item 2. Management's Discussion and Analysis or Plan of
Operation................................................ 19
Item 3. Description of Property.................................. 21
Item 4. Security Ownership of Management and Others and Certain
Security Holders......................................... 21
Item 5. Directors, Executives, Officers and Significant
Employees................................................ 22
Item 6. Remuneration of Directors and Executive
Officers................................................. 25
Item 7. Certain Relationships and Related Transactions........... 26
Part II ......................................................... 27
Item 1. Market Price of and Dividends of the Registrant's
Common Equity and Other Stockholder Matters.............. 27
Item 2. Legal Proceedings........................................ 30
Item 3. Recent Sales of Unregistered Securities.................. 30
Item 4. Description of Securities................................ 31
Item 5. Indemnification of Directors and Officers................ 33
Part F/S ......................................................... 35
Item 1. Financial Statements..................................... 35
Item 2. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure..................... 35
Part III ........................................................ 38
Item 1. Index to Exhibits....................................... 38
Item 2. Description of Exhibits................................. 38
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the Financial Statements
and Notes related thereto appearing elsewhere in this Registration. Except
where the context otherwise requires, all references in this Registration to
the "Registrant" or the "Company" or "INVT" refer to INVESTAMERICA, INC., a
Nevada corporation.
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Part I
Item 1. DESCRIPTION OF BUSINESS
A. Business Development, Organization and Acquisition Activities
The Company was incorporated under the laws of the State of Utah, on October
20, 1983. On or about December 18, 1986, the Company changed its domicile
from the State of Utah to the State of Nevada. This change in domicile was
accomplished by merging the Company into a Nevada corporation (File Number 8210-
1986) created solely for this purpose. This was filed with the Secretary of
State of Nevada pursuant to an Agreement and Plan of Merger and Reorganization
(see Exhibit 2.1) executed on December 18, 1986. In connection with the change
in domicile, the Company changed its corporate name from Technology Research,
Inc., to Balboa Investments, Inc. on December 18, 1986. On or about December
29, 1992, Balboa Investments, Inc., changed its name to Progressive Polymerics
International, Inc. (Parent) and acquired all of the issued and outstanding
common stock of Progressive Polymerics, Inc., (Subsidiary). On or about
April 17, 1997, the Company acquired 100% of the issued and outstanding
capital stock of InvestAmerica, Inc., thereby making it a wholly-owned
subsidiary. On or about May 14, 1997, the stockholders of the Company,
approved the merger of InvestAmerica, Inc., a wholly-owned subsidiary, with
and into the Company, with the Company the survivor of the merger. A change
of the Company's name to InvestAmerica, Inc., was also approved at that
time. During all of this transition, the Company has not commenced planned
principal operations and is considered a development stage company. The
Company is seeking selected merger candidates and acquisitions. The
Company's mailing address is: 1330 Portside Way, Salt Lake City, Utah
84123, Telephone number: 801-808-6096.
1) Principal Products, Services and Principal Markets.
InvestAmerica, Inc. (the "Company") was originally incorporated
on October 20, 1983 as Balboa Investments, Inc. under the laws of the State
of Utah to engage in any lawful corporate activity, including, but not limited
to, selected mergers and acquisitions. After a number of name changes as
described in " Business Development, Organization and Acquisition Activities,"
on or about May 14, 1997, the Company changed its name to InvestAmerica, Inc.
The Company has been in the developmental stage since inception and has no
Principal operations to date. Other than issuing shares to its shareholders,
the Company never commenced any operational activities. As such, the Company's
sole purpose at this time is to locate and consummate a merger or acquisition
with a private entity. The Board of Directors of the Company has elected to
commence implementation of the Company's principal business purpose described
below under "Item 2 - Plan of Operation."
The company has no operations and in accordance with SFAS #7, is considered a
development stage company.
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The Company is filing this registration statement to enhance investor
protection and to provide information if a trading market commences. On
December 11, 1997, the National Association of Securities Dealers, Inc.
(NASD) announced that its Board of Governors had approved a series of proposed
changes for the Over The Counter ("OTC") Bulletin Board and the OTC market.
The principal changes, which was approved by the Securities and Exchange
Commission on January 5, 1999 allows only those companies that report their
current financial information to the Securities and Exchange Commission,
banking, or insurance regulators to be quoted on the OTC Bulletin Board.
The rule provides for a phase-in period for those securities already quoted
on the OTC Bulletin Board. The Company stock is currently trading on the
OTC-BB under the symbol "INVT."
The Company is filing this registration statement in accordance with the
requirements of NASD Rule 6740, in that it will remain a primary vehicle
as a merger partner or acquisition vehicle utilizing its status as a public
company. Any business combination or transaction will likely result in a
significant issuance of shares and substantial dilution to present
stockholders of the Company.
A. Risk Factors
The Company's business is subject to numerous risk factors, including
the following:
1. Lack of History. The Company has had no operating history nor any
revenues or earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain operating
expenses without corresponding revenues, at least until the consummation of a
business combination. This may result in the Company incurring a net operating
loss which will increase continuously until the Company can consummate a
business combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity and
consummate such a business combination.
2. The Company's Speculative Proposed Operations. The success of the
Company's proposed plan of operation will depend to a great extent on the
operations, financial condition and management of the identified business
opportunity. While management intends to seek business combination(s) with
entities having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting such
criteria. In the event the Company completes a business combination, of which
there can be no assurance, the success of the Company's operations may be
dependent upon management of the successor firm or venture partner firm and
numerous other factors beyond the Company's control.
3. Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of
established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial capabilities
than the Company and, consequently, the Company will be at a competitive
disadvantage in identifying possible business opportunities and successfully
completing a business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small public
companies.
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4. No Defined Standards for Business Combination. The Company has no
arrangement, agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public entity. There
can be no assurance the Company will be successful in identifying and
evaluating suitable business opportunities or in concluding a business
combination. Management has not identified any particular industry or specific
business within an industry for evaluation by the Company. There is no
assurance the Company will be able to negotiate a business combination on
terms favorable to the Company. The Company has not established a specific
length of operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business opportunity to
have achieved, and without which the Company would not consider a business
combination in any form with such business opportunity. Accordingly, the
Company may enter into a business combination with a business opportunity
having no significant operating history, losses, limited or no potential for
earnings, limited assets, negative net worth or other negative characteristics.
5. Management Control, Limited Time Availability. While seeking a
business combination, management anticipates devoting up to ten hours per
month to the business of the Company. None of the Company's officers has
entered into a written employment agreement with the Company and none is
expected to do so in the foreseeable future. The Company has not obtained key
man life insurance on any of its officers or directors. Notwithstanding the
combined limited experience and time commitment of management, loss of the
services of any of these individuals would adversely affect development of the
Company's business and its likelihood of continuing operations. See "Item
5 -Directors, Executive Officers, Promoters and Control Persons."
6. Possible Conflicts of Interest. Officers and directors of the
Company may in the future participate in business ventures which could be
deemed to compete directly with the Company. Additional conflicts of interest
and non-arms length transactions may also arise in the future in the event the
Company's officers or directors are involved in the management of any firm
with which the Company transacts business. Management has adopted a policy
that the Company will not seek a merger with, or acquisition of, any entity in
which management serve as officers, directors or partners, or in which they or
their family members own or hold any ownership interest.
7. Reporting Requirements May Delay or Preclude Acquisitions. Sections
13 and 5(d) of the Securities Exchange Act of 1934 (the "1934 Act"), require
companies subject thereto to provide certain information about significant
acquisitions, including certified financial statements for the company
acquired, covering one, two, or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred by some
target entities to prepare such statements may significantly delay or
essentially preclude consummation of an otherwise desirable acquisition by the
Company. Acquisition prospects that do not have or are unable to obtain the
required audited statements may not be appropriate for acquisition so long as
the reporting requirements of the 1934 Act are applicable.
8. Lack of Market Research or Marketing Organization. The Company has
neither conducted, nor have others made available to it, results of market
research indicating that market demand exists for the transactions
contemplated by the Company. Moreover, the Company does not have, and does not
plan to establish, a marketing organization. Even in the event demand is
identified for a merger or acquisition contemplated by the Company, there is
no assurance the Company will be successful in completing any such business
combination.
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9. Lack of Diversification. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in a
business combination with a business opportunity. Consequently, the Company's
activities may be limited to those engaged in by business opportunities which
the Company merges with or acquires. The Company's inability to diversify its
activities into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore increase
the risks associated with the Company's operations.
10. Regulation. Although the Company will be subject to regulation
under the 1934 Act, management believes the Company will not be subject to
regulation under the Investment Company Act of 1940, insofar as the Company
will not be engaged in the business of investing or trading in securities. In
the event the Company engages in business combinations which result in the
Company holding passive investment interests in a number of entities, the
Company could be subject to regulation under the Investment Company Act of
1940. In such event, the Company would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of such Act
would subject the Company to material adverse consequences.
11. Probable Change in Control and Management. A business combination
involving the issuance of the Company's Common Shares will, in all likelihood,
result in shareholders of a private company obtaining a controlling interest
in the Company. Any such business combination may require management of the
Company to sell or transfer all or a portion of the Company's Common Shares
held by them, or resign as members of the Board of Directors of the Company.
The resulting change in control of the Company could result in removal of one
or more present officers and directors of the Company and a corresponding
reduction in or elimination of their participation in the future affairs of
the Company.
12. Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based upon a business
combination with a private concern which, in all likelihood, would result in
the Company issuing securities to shareholders of any such private company.
The issuance of previously authorized and unissued Common Shares of the
Company would result in reduction in percentage of shares owned by present and
prospective shareholders of the Company and may result in a change in control
or management of the Company.
13. Disadvantages of Acquisitions. The Company may enter into
a business combination with an entity that desires to establish a public
trading market for its shares. A business opportunity may attempt to avoid
what it deems to be adverse consequences of undertaking its own public
offering by seeking a business combination with the Company. Such consequences
may include, but are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of voting
control to public shareholders and the inability or unwillingness to comply
with various federal and state laws enacted for the protection of investors.
14. Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the Company
may undertake. Currently, such transactions may be structured so as to result
in tax-free treatment to both companies, pursuant to various federal and state
tax provisions. The Company intends to structure any business combination so
as to minimize the federal and state tax consequences to both the Company and
the target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax-free reorganization
or that the parties will obtain the intended tax-free treatment upon a
transfer of stock or assets. A non-qualifying reorganization could result in
the imposition of both federal and state taxes which may have an adverse
effect on both parties to the transaction.
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15. Requirement of Audited Financial Statements May Disqualify
Business Opportunities. Management of the Company believes that any potential
business opportunity must provide audited financial statements for review, for
the protection of all parties to the business combination. One or more
attractive business opportunities may choose to forego the possibility of a
business combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
16. Dilution. Any merger or acquisition effected by the Company can be
expected to have a significant dilutive effect on the percentage of shares
held by the Company's then shareholders.
17. Required Year 2000 Compliance. A business combination will, in all
likelihood, result in the Company disclosing additional Year 2000 matters.
Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Year 2000 issue affects virtually all companies and organizations.
18. Disclosure by Public Companies Regarding the Year 2000 Issue. A
business combination will, in all likelihood, result in the Company disclosing
additional Year 2000 matters. Many existing computer programs use only two
digits to identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change in the
century. If not corrected, many computer applications could fail or create
erroneous results by or at the Year 2000. The Year 2000 issue affects
virtually all companies and organizations.
Management of the Company believes that any potential business opportunity may
require a disclosure that many companies must undertake major project to
address the Year 2000 issue. The disclosure of the potential costs and
uncertainties will depend on a number of factors, including its software and
hardware and the nature of its industry. Companies also must coordinate with
other entities with which they electronically interact, both domestically and
globally, including suppliers, customers, creditors, borrowers, and financial
service organizations. If the Company does not successfully address its
Year 2000 issues, the Company may face material adverse consequences. The
Company will be required to review, on an ongoing basis, whether it needs to
disclose anticipated costs, problems and uncertainties associated with the
Year 2000 consequences, particularly in their filings with the Securities
and Exchange Commission. The Company may have to disclose this information
in the Securities and Exchange Commissions filings because (i) the form or
report may require the disclosure, or (ii) in addition to the information that
the Company is specifically required to disclose, the disclosure rules require
disclosure of any additional material information necessary to make the
required disclosure not misleading.
If the Company determines that is should make a Year 2000 disclosure,
applicable rules or regulations must be followed. If the Company has not
made an assessment of its Year 2000 issues or has not determined whether it
has material Year 2000 issues, a disclosure of this known uncertainty is
required. In addition, the Securities and Exchange Commission staff believes
that the determination as to whether the Company's Year 2000 issues should
be disclosed should be based on whether the Year 2000 issues are material
to the Company's business, operations, or financial condition, without regard
to related countervailing circumstances (such as Year 2000 remediation
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programs or contingency plans). If the Year 2000 issues are determined to
be material, without regard to countervailing circumstances, the nature and
potential impact of the Year 2000 issues as well as the countervailing
circumstances will be required. As part of this disclosure, the following
will be addressed:
The Company's general plans to address the Year 2000 issues relating to its
business, it operations (including operating systems) and, if material, its
relationships with customers, suppliers, and other constituents; and its
timetable for carrying out those plans; and
The total dollar amount that the Company estimates will be spent to remediate
its year 2000 issues, if such amount is expected to be material to the
Company's business, operations or financial condition, and any material impact
these expenditures are expected to have on the Company's results of operations,
liquidity and capital resources.
B. Plan of Operation
NOTE REGARDING PROJECTIONS AND FORWARD LOOKING STATEMENTS
This statement includes projections of future results and "forward-looking
statements" as that term is defined in Section 27A of the Securities Act of
1933 as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"). All statements that
are included in this Registration Statement, other than statements of
historical fact, are forward-looking statements. Although Management believes
that the expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to have
been correct. Important factors that could cause actual results to differ
materially from the expectations are disclosed in this Statement, including,
without limitation, in conjunction with those forward-looking statements
contained in this Statement.
The Company's plan is to seek, investigate, and if such investigation
warrants, acquire an interest in one or more business opportunities presented
to it by persons or firms desiring the perceived advantages of a publicly
held corporation. The Company intends to seek to acquire assets or shares
of an entity actively engaged in business which generates revenues in exchange
for its securities. The Company has no particular acquisitions in mind and has
not entered into any negotiations regarding such an acquisition. None of the
Company's officers, directors, promoters or affiliates have engaged in any
preliminary contact or discussions with any representative of any other
company regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this registration statement.
The Company will not restrict its search to any specific business, industry, or
geographical location, and may participate in business ventures of virtually
any kind or nature. Discussion of the proposed business under this caption
and throughout this Registration Statement is purposefully general and is not
meant to restrict the Company's virtually unlimited discretion to search for
and enter into a business combination.
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1. General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities
presented to it by persons or firms who or which desire to seek the advantages
of an Issuer who has complied with the 1934 Act. The Company will not restrict
its search to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any kind or
nature. This discussion of the proposed business is purposefully general and
is not meant to be restrictive of the Company's virtually unlimited discretion
to search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial
resources. See Item F/S, "Financial Statements." This lack of diversification
should be considered a substantial risk to shareholders of the Company because
it will not permit the Company to offset potential losses from one venture
against gains from another.
Selecting a business opportunity will be complex and extremely risky. Because
of general economic conditions, rapid technological advances being made in
some industries, and shortages of available capital, management believes that
there are numerous firms seeking the benefits of a publicly-traded corporation.
Such perceived benefits of a publicly traded corporation may include
facilitating or improving the terms on which additional equity financing
may be sought, providing liquidity for the principals of a business, creating
a means for providing incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of applicable statues)
for all shareholders, and other items. Potentially available business
opportunities may occur in many different industries and at various stages
of development, all of which will make the task of comparative investigation
and analysis of such business opportunities extremely difficult and complex.
Management believes that the Company may be able to benefit from the use of
"leverage" to acquire a target company. Leveraging a transaction involves
acquiring a business while incurring significant indebtedness for a large
percentage of the purchase price of that business. Through leveraged
transactions, the Company would be required to use less of its available
funds to acquire a target company and, therefore, could commit those funds
to the operations of the business, to combinations with other target
companies, or to other activities. The borrowing involved in a leveraged
transaction will ordinarily be secured by the assets of the acquired
business. If that business is not able to generate sufficient revenues to
make payments on the debt incurred by the Company to acquire that business,
the lender would be able to exercise the remedies provided by law or by
contract. These leveraging techniques, while reducing the amount of funds
that the Company must commit to acquire a business, may correspondingly
increase the risk of loss to the Company. No assurance can be given as
to the terms or availability of financing for any acquisition by the Company.
During periods when interest rates are relatively high, the benefits of
leveraging are not as great as during periods of lower interest rates,
because the investment in the business held on a leveraged basis will only
be profitable if it generates sufficient revenues to cover the related debt
and other costs of the financing. Lenders from which the Company may obtain
funds for purposes of a leveraged buy-out may impose restrictions on the
future borrowing, distribution, and operating policies of the Company. It
is not possible at this time to predict the restrictions, if any, which
lenders may impose, or the impact thereof on the Company.
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The Company has insufficient capital with which to provide the owners of
businesses significant cash or other assets. Management believes the
Company will offer owners of businesses the opportunity to acquire a
controlling ownership interest in a public company at substantially less
cost than is required to conduct an initial public offering. The owners
of the businesses will, however, incur significant post-merger or acquisition
registration costs in the event they wish to register a portion of their
shares for subsequent sale. The Company will also incur significant legal
and accounting costs in connection with the acquisition of a business
opportunity, including the costs of preparing post-effective amendments,
Forms 8-K, agreements, and related reports and documents. Nevertheless,
the officers and directors of the Company have not conducted market research
and are not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of a
businesses. The Company does not intend to make any loans to any prospective
merger or acquisition candidates or to unaffiliated third parties.
The Company will not restrict its search for any specific kind of firms,
but may acquire a venture which is in its preliminary or development stage,
which is already in operation, or in essentially any stage of its corporate
life. It is impossible to predict at this time the status of any business
in which the Company may become engaged, in that such business may need to
seek additional capital, may desire to have its shares publicly traded,
or may seek other perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds in one or more private placements
to finance the operation of any acquired business opportunity until such
time as the Company has successfully consummated such a merger or acquisition.
The Company also has no plans to conduct any offerings under Regulation S.
The Company will not have sufficient funds to undertake any significant
development, marketing, and manufacturing of any products which may be
acquired. Accordingly, if it acquires the rights to a product, rather than
entering into a merger or acquisition, it most likely would need to seek debt
or equity financing or obtain funding from third parties, in exchange for
which the Company would probably be required to give up a substantial portion
of its interest in any acquired product. There is no assurance that the Company
will be able either to obtain additional financing or to interest third parties
in providing funding for the further development, marketing and manufacturing
of any products acquired.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public marketplace
in order to raise additional capital in order to expand into new products or
markets, to develop a new product or service, or for other corporate purposes.
The Company may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business opportunity
in which to participate will be complex and extremely risky. Due to general
economic conditions, rapid technological advances being made in some
industries and shortages of available capital, management believes that there
are numerous firms seeking the benefits of an Issuer who has complied with the
1934 Act. Such benefits may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes), for all
shareholders and other factors. Potentially, available business opportunities
may occur in many different industries and at various stages of development,
all of which will make the task of comparative investigation and analysis of
such business opportunities extremely difficult and complex.
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The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant cash or
other assets. However, management believes the Company will be able to offer
owners of acquisition candidates the opportunity to acquire a controlling
ownership interest in an Issuer who has complied with the 1934 Act without
incurring the cost and time required to conduct an initial public offering.
The owners of the business opportunities will, however, incur significant
legal and accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or 10-KSB's,
agreements and related reports and documents. The 1934 Act, specifically
requires that any merger or acquisition candidate comply with all applicable
reporting requirements, which include providing audited financial statements
to be included within the numerous filings relevant to complying with the 1934
Act. Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data which would
support the benefits of a merger or acquisition transaction for the owners of
a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, the officers and directors of the Company, none of
whom is a professional business analyst. Management intends to concentrate on
identifying preliminary prospective business opportunities which may be
brought to its attention through present associations of the Company's
officers and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such matters as
the available technical, financial and managerial resources; working capital
and other financial requirements; history of operations, if any; prospects for
the future; nature of present and expected competition; the quality and
experience of management services which may be available and the depth of that
management; the potential for further research, development, or exploration;
specific risk factors not now foreseeable but which then may be anticipated to
impact the proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the public recognition of acceptance of
products, services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to meet personally with
management and key personnel of the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained within a reasonable period of time after closing
of the proposed transaction.
Management of the Company, while not especially experienced in matters
relating to the new business of the Company, will rely upon their own efforts
in accomplishing the business purposes of the Company. It is not anticipated
that any outside consultants or advisors will be utilized by the Company to
effectuate its business purposes described herein. However, if the Company
does retain such an outside consultant or advisor, any cash fee by such party
will need to be paid by the prospective merger acquisition candidate, as the
Company has no cash assets with which to pay such obligation. There have been
no contracts or agreements with any outside consultants and none are
anticipated in the future.
It is anticipated that the Company will incur nominal expenses in the
implementation of its business plan described herein. Because the Company has
no capital with which to pay these anticipated expenses, present management of
the Company will pay these charges with their personal funds, as interest free
loans to the Company or as capital contributions. However, if loans, the only
opportunity which management has to have these loans repaid will be from a
prospective merger or acquisition candidate. Management has agreed among
themselves that the repayment of any loans made on behalf of the Company will
not impede, or be made conditional in any manner, to consummation of a
proposed transaction. The Company has no plans, proposals, arrangements or
understandings with respect to the sale or issuance of additional securities
prior to the location of an acquisition or merger candidate.
13
<PAGE>
The Company has no plans, proposals, arrangements, or understanding
with respect to the sale or issuance of additional securities prior to the
location of an acquisition or merger candidate.
2. Acquisition of Opportunities
In implementing a structure for a particular business acquisition, the
Company may become a party to a merger, consolidation, reorganization, joint
venture, or licensing agreement with another corporation or entity. It may
also acquire stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and shareholders of
the Company will no longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of the acquisition transaction,
resign and be replaced by new directors without a vote of the Company's
shareholders or may sell their stock in the Company. Any terms of sale of the
shares presently held by officers and/or directors of the Company will be also
afforded to all other shareholders of the Company on similar terms and
conditions. Any and all such sales will only be made in compliance with the
securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of its transaction, the Company may agree to register all
or a part of such securities immediately after the transaction is consummated
or at specified times thereafter. If such registration occurs, of which there
can be no assurance, it will be undertaken by the surviving entity after the
Company has successfully consummated a merger or acquisition and the Company
is no longer considered a "shell" company. The issuance of substantial
additional securities and their potential sale into any trading market which
may develop in the Company's securities may have a depressive effect on the
value of the Company's securities in the future, if such a market develops, of
which there is no assurance.
While the actual terms of a transaction to which the Company may be a
party cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event
and thereby structure the acquisition in a so-called "tax-free" reorganization
under Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting stock of the
surviving entity. In such event, the shareholders of the Company, would retain
less than 20% of the issued and outstanding shares of the surviving entity,
which would result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of the
Company will meet personally with management and key personnel, may visit and
inspect material facilities, obtain independent analysis of verification of
certain information provided, check references of management and key
personnel, and take other reasonable investigative measures, to the extent of
the Company's limited financial resources and management expertise. The manner
in which the Company participates in an opportunity will depend on the nature
of the opportunity, the respective needs and desires of the Company and other
parties, the management of the opportunity and the relative negotiation
strength of the Company and such other management.
14
<PAGE>
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the Company which
the target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will in
all likelihood hold a substantially lesser percentage ownership interest in
the Company following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the
percentage of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the
terms of such agreements cannot be predicted, generally such agreements will
require some specific representations and warranties by all of the parties
thereto, will specify certain events of default, will detail the terms of
closing and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing costs,
including costs associated with the Company's attorneys and accountants, will
set forth remedies on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any
entity which cannot provide independent audited financial statements within a
reasonable period of time after closing of the proposed transaction. The
Company is subject to all of the reporting requirements included in the 1934
Act. Included in these requirements is the affirmative duty of the Company to
file independent audited financial statements as part of its Form 8-K to be
filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as the Company's audited financial statements
included in its annual report on Form 10-K (or 10-KSB, as applicable). If such
audited financial statements are not available at closing, or within time
parameters necessary to insure the Company's compliance with the requirements
of the 1934 Act, or if the audited financial statements provided do not
conform to the representations made by the candidate to be acquired in the
closing documents, the closing documents will provide that the proposed
transaction will be voidable, at the discretion of the present management of
the Company. If such transaction is voided, the agreement will also contain a
provision providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of the Company which
the target company's shareholders would acquire in exchange for their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, the Company's shareholders will, in
all likelihood, hold a lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may be subject
to significant reduction in the event the Company acquires a target company
with substantial assets. Any merger or acquisition effected by the Company
can be expected to have a significant dilutive effect on the percentage of
shares held by the Company's then shareholders, including purchasers in
this offering.
15
<PAGE>
Management has advanced, and will continue to advance, funds which shall be
used by the Company in identifying and pursuing agreements with target
companies. Management anticipates that these funds will be repaid from the
proceeds of any agreement with the target company, and that any such agreement
may, in fact, be contingent upon the repayment of those funds.
3. Competition
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are many
established management and financial consulting companies and venture capital
firms which have significantly greater financial and personnel resources and
technical expertise than the Company. In view of the Company's combined
extremely limited financial resources and limited management availability,
the Company will continue to be at a significant competitive disadvantage
compared to the Company's competitors.
4. Sources of Opportunities
The Company will seek a potential business opportunity from all known sources,
but will rely principally on personal contacts of its officers and directors
as well as indirect associations between them and other business and
professional people. It is not presently anticipated that the Company will
engage professional firms specializing in business acquisitions or
reorganizations.
Management, while not especially experienced in matters relating to the new
business of the Company, will rely upon their own efforts and, to a much
lesser extent, the efforts of the Company's shareholders, in accomplishing
the business purposes of the Company. It is not anticipated that any outside
consultants or advisors, other than the Company's legal counsel and
accountants, will be utilized by the Company to effectuate its business
purposes described herein. However, if the Company does retain such an outside
consultant or advisor, any cash fee earned by such party will need to be paid
by the prospective merger/acquisition candidate, as the Company has no cash
assets with which to pay such obligation. There have been no discussions,
understandings, contracts or agreements with any outside consultants and none
are anticipated in the future. In the past, the Company's management has
never used outside consultants or advisors in connection with a merger or
acquisition.
As is customary in the industry, the Company may pay a finder's fee for
locating an acquisition prospect. If any such fee is paid, it will be approved
by the Company's Board of Directors and will be in accordance with the
industry standards. Such fees are customarily between 1% and 5% of the size
of the transaction, based upon a sliding scale of the amount involved. Such
fees are typically in the range of 5% on a $1,000,000 transaction ratably
down to 1% in a $4,000,000 transaction. Management has adopted a policy that
such a finder's fee or real estate brokerage fee could, in certain
circumstances, be paid to any employee, officer, director or 5% shareholder
of the Company, if such person plays a material role in bringing a transaction
to the Company.
16
<PAGE>
5. Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company (see "Management").
Management intends to concentrate on identifying prospective business
opportunities which may be brought to its attention through present
associations with management. In analyzing prospective business opportunities,
management will consider, among other factors, such matters as; the available
technical, financial and managerial resources working capital and other
financial requirements history of operation, if any prospects for the future
present and expected competition the quality and experience of management
services which may be available and the depth of that management the potential
for further research, development or exploration specific risk factors not now
foreseeable but which then may be anticipated to impact the proposed activities
of the Company the potential for growth or expansion the potential for profit
the perceived public recognition or acceptance of products, services or trades
name identification Management will meet personally with management and key
personnel of the firm sponsoring the business opportunity as part of their
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited financial
statements cannot be obtained.
Opportunities in which the Company participates will present certain risks,
many of which cannot be identified adequately prior to selecting a specific
opportunity. The Company's shareholders must, therefore, depend on Management
to identify and evaluate such risks. Promoters of some opportunities may have
been unable to develop a going concern or may present a business in its
development stage (in that it has not generated significant revenues from
its principal business activities prior to the Company's participation.)
Even after the Company's participation, there is a risk that the combined
enterprise may not become a going concern or advance beyond the development
stage. Other opportunities may involve new and untested products, processes,
or market strategies which may not succeed. Such risks will be assumed by the
Company and, therefore, its shareholders.
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and
other instruments will require substantial management time and attention as
well as substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific business opportunity the
costs incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a
specific business opportunity, the failure to consummate that transaction
may result in the loss by the Company of the related costs incurred.
There is the additional risk that the Company will not find a suitable target.
Management does not believe the Company will generate revenue without finding
and completing a transaction with a suitable target company. If no such target
is found, therefore, no return on an investment in the Company will be
realized, and there will not, most likely, be a market for the Company's stock.
17
<PAGE>
6. Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933, as amended, and the 1934 Act, management believes the
Company will not be subject to regulation under the Investment Company Act of
1940 insofar as the Company will not be engaged in the business of investing
or trading in securities. In the event the Company engages in business
combinations which result in the Company holding passive investment interests
in a number of entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be required
to register as an investment company and could be expected to incur
significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940 and,
consequently, any violation of such Act would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously approved a
resolution stating that it is the Company's desire to be exempt from the
Investment Company Act of 1940 under Regulation 3a-2 thereto.
7. Employees. The Company has no full time or part-time employees. None of
the officers and directors anticipates devoting more than twenty (20%) percent
of their time to Company activities. The Company's President and Secretary have
agreed to allocate a portion of said time to the activities of the Company,
without compensation. These officers anticipate that the business plan of the
Company can be implemented by their devoting minimal time per month to the
business affairs of the Company and, consequently, conflicts of interest may
arise with respect to the limited time commitment by such officers. See
"Item 5 - Directors, Executive Officers, Promoters and Control Persons -
Resumes."
18
<PAGE>
Item 2
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Forward Looking Statements
This registration statement contains forward-looking statements. The Company's
expectation of results and other forward-looking statements contained in this
registration statement involve a number of risks and uncertainties. Among the
factors that could cause actual results to differ materially from those
expected are the following: business conditions and general economic
conditions, competitive factors, such as pricing and marketing efforts; and
the pace and success of product research and development. These and other
factors may cause expectations to differ.
All statements, trend analysis and other information contained in this
Registration relative to markets for the Company's products and trends in
revenues, gross margin and anticipated expense levels, as well as other
statements including words such as "believe," "anticipate," "expect,"
"estimate," "plan" and "intend" and other similar expressions, constitute
forward-looking statements. Those forward-looking statements are subject to
business and economic risks, and the Company's actual results of operations
may differ from those contained in the forward-looking statements.
The following discussion of the financial condition and results of operations
of the Company should also be read in conjunction with the Financial
Statements and Notes related thereto included elsewhere in this Registration.
1) Plan of Operations
The Company's purpose is to seek, investigate and, if such investigation
warrants, acquire an interest in business opportunities presented to it by
persons or firms who or which desire to seek the advantages of an Issuer who
has complied with the 1934 Act. The Company will not restrict its search to
any specific business, industry, or geographical location and the Company may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant
to be restrictive of the Company's virtually unlimited discretion to search
for and enter into potential business opportunities. Management anticipates
that it may be able to participate in only one potential business venture
because the Company has nominal assets and limited financial resources.
2) In its twelve month operating period ended September 30, 1999, the Company
incurred a net loss of two hundred fifty-six thousand eight hundred sixty-five
($256,865) dollars from operating expenses. The Company generated no revenues
from operations from the same period.
19
<PAGE>
On September 30, 1996, the Company had 8,386,760 shares of common stock
outstanding. 0n or about April 17, 1997, the Company initiated a reverse
stock split of its common stock twenty (20) old share for one (1) new share.
This reverse split resulted in 419,338 shares of its common stock outstanding
on or about April 17, 1997. Prior to becoming listed on the NASD Bulletin
Board, the Company completed an exempt placement of securities of 362,544
Shares of common stock, pursuant to a Regulation D, Rule 504 exempt offering,
resulting in gross proceeds of $13,000. During 1998, the company sold an
additional 9,008,561 of its common shares resulting in gross proceeds of
$387,592. As of September 30, 1999, the Company has 9,790,443 shares of common
stock issued and outstanding held by approximately four hundred twenty-six
(426) shareholders of record.
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. The warrants expire ten
(10) years from the date of issue. This option has not yet been exercised.
The Company currently does not have enough available funds to meet its
anticipated needs for working capital, capital expenditures and business
expansion for the next 12 months. The Company expects that it will continue
to experience negative operating cash flow for the foreseeable future as a
result of significant spending on infrastructure and seeking acquisition
and merger candidates.
If the Company needs to raise additional funds in order to fund expansion,
develop new or enhanced services or products, respond to competitive
pressures or acquire complementary products, businesses or technologies, any
additional funds raised through the issuance of equity or convertible debt
securities, the percentage ownership of the stockholders of the Company will
be reduced, stockholders may experience additional dilution and such
securities may have rights, preferences or privileges senior to those of the
Company's Common Stock. The Company does not currently have any contractual
restrictions on its ability to incur debt and, accordingly, the Company could
incur significant amounts of indebtedness to finance its operations. Any
such indebtedness could contain covenants which would restrict the Company's
operations. There can be no assurance that additional financing will be
available on terms favorable to the Company, or at all. If adequate funds
are not available or are not available on acceptable terms, the Company may
not be able to continue in business, or to a lessor extent not be able to
take advantage of acquisition opportunities, develop or enhance services
or products or respond to competitive pressures.
3) No engineering, management or similar report has been prepared or provided
for external use by the Company in connection with the offer of its securities
to the public.
4) Management believes that the Company's future growth and success will
depend on its ability to find to negotiate a business acquisition or a
merger, consolidation, reorganization, joint venture, or licensing agreement
with another corporation or entity. It may also acquire stock or assets of an
existing business.
The Company has yet to incur any research and development costs October 1
through September 30, 1999. The only research and development the Company
plans to incur is seeking appropriate merger and acquisition candidates.
20
<PAGE>
(5) Management does not anticipate any significant changes in the number of
its employees over the next approximately twelve (12) months.
B. Segment Data
For fiscal year, ended September 30, 1999, 1998, and 1997, no sales
revenue has been generated by the Company. There is no table showing
percentage breakdown of revenue by business segment or product line is
included.
ITEM 3. DESCRIPTION OF PROPERTY
One of the Officers of the Company is providing office space and computer
use at no cost to the Company. The Company currently does not expect to
purchase or sell any of its equipment, since it owns no equipment. The
computer equipment to be utilized is equipment owned by the Officers of the
Company.
Management believes that this is currently suitable for the Company's needs
for the next twelve (12) months.
ITEM 4. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the shares of Common Stock of the Company as of the end of the
fiscal year, 1999, by (i) each person who is known by the Company to be the
beneficial owner of more than five percent (5%) of the issued and outstanding
shares of common stock, (ii) each of the Company's directors and executive
officers, and (iii) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Title Name & Address Amount of Percent
of of Beneficial Date shares of
Class Owner of Shares Acquired held by Owner Class
- ------ --------------- -------- ------------- --------
<S> <C> <C> <C> <C>
Common Douglas E. Smith(1) n/a None 0.00%
Common Brian Kitts(2) 05-07-98 12,500
10-05-99 2,000,000 20.55%
- ---------------------------------------------------------------------
All Executive Officers Beneficial Owners
and Directors as a Group (2 persons) 2,012,500 20.55%
</TABLE>
(1) Douglas E. Smith, President/CEO and Chairman of the Board, #148 - 4664
Lougheed Highway, Burnaby, B.C. Canada.
(2) Brian A. Kitts, Secretary, Treasurer and Director, 1330 Portside Way, Salt
Lake City, UT 84123. Note, Christopher Kitts, son of Brian A. Kitts
beneficially owns 100,000 shares of the Company's common stock.
21
<PAGE>
B. Persons Sharing Ownership of Control of Shares
Brian Kitts, Corporate Secretary, Treasurer, and Director, owns or shares the
power to vote ten percent (10%) or more of the Company's securities.
C. Non-voting Securities and Principal Holders Thereof
The Company has not issued any non-voting securities.
D. Options, Warrants and Rights
The Company issued warrants to purchase 190,000 shares of Common Stock as
follows:
50,000 shares @ $ .05 per share
50,000 shares @ $ .10 per share
20,000 shares @ $ .20 per share
50,000 shares @ $ 1.00 per share
20,000 shares @ $ 5.00 per share
The warrants expire 10 years from date of issue.
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. This option has not yet
been exercised. (See: Management's Discussion And Analysis of Plan of
Operations)
E. Parents of Issuer
Under the definition of parent, as including any person or business entity
who controls substantially all (more than 80%) of the issuers of common
stock, the Company has no parents.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
A. Directors, Executive Officers and Significant Employees
The listed officers and directors will serve until the next annual meeting of
the shareholders or until their death, resignation, retirement, removal, or
disqualification, or until their successors have been duly elected and
qualified. Vacancies in the existing Board of Directors are filled by majority
vote of the remaining Directors. There are no agreements or understandings for
any officers or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction on any
other person. A list of the current officers and directors of the Company
appears below. The officers serve at the pleasure of the Board of Directors.
The directors do not presently receive fees or other remuneration for their
services save for the reimbursement of travel and accommodation expenses
directly associated with the attendance of Board meetings.
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<PAGE>
The names, ages and positions of the Company's directors and executive
officers are as follows:
<TABLE>
<CAPTION>
Name Age Position
- -------- ------ ----------
<S> <C> <C>
Douglas E. Smith 44 President/CEO
Chairman of the Board
Brian A. Kitts 44 Secretary Treasurer and Director
</TABLE>
B. Family Relationships
None - Not Applicable
C. Work Experience
Douglas E. Smith is President, CEO and Chairman of the Board for InvestAmerica,
Inc., and cofounder in 1980 of Zed Data Systems Corp., a private company
operating as a value added reseller in the field of data communications.
He is also CEO and President of Pacific Bancorp Inc. (June 1993 to present),
a venture capital and merchant banking company. From June 1993 to October
1996, he held various positions as Chairman, CEO and President of Trionics
industries Ltd. (now Comptec Industries Ltd.). Prior to November 1998 he was
an Attorney and a partner in a law firm. He is still a member of the Law
Society of British Columbia.
Mr. Smith has a Bachelor of Arts (Honoris) in Economics from the University
of Calgary and a Bachelor of Laws from the University of British Columbia.
Brian A. Kitts, Secretary Treasurer and Director, of InvestAmerica, Inc.
Mr. attended school in 1975 completing his studies in Architectural Design at
which time he joined his fathers business (Commercial Photography, Exhibit
Design & Manufacturing). After learning the basics of business management he
became self-employed and founded his own company (Beechwood Design) in 1983, a
private company that specialized in Store Fixture design and manufacturing.
The company had 4 employees when it started with sales in the first
year of approximately $300,000 and grew to a high of 140 employees with
sales of approximately $7,000,000 in 1995 at which time Mr. Kitts sold the
company to pursue other interests. Mr. Kitts still maintains a foothold in the
industry as a consultant for various clients and manufacturers.
In 1996 Mr. Kitts gained interest in public trading companies and in
December, 1997 he purchased a controlling interest in InvestAmerica, Inc.
23
<PAGE>
Conflicts of Interest
Members of the Company's management are associated with other firms
involved in a range of business activities. Consequently, there are potential
inherent conflicts of interest in their acting as officers and directors of
the Company. Insofar as the officers and directors are engaged in other
business activities, management anticipates it will devote only a minor amount
of time to the Company's affairs.
The officers and directors of the Company are now and may in the
future become shareholders, officers or directors of other companies which may
be engaged in business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in the future
with respect to such individuals acting on behalf of the Company or other
entities. Moreover, additional conflicts of interest may arise with respect to
opportunities which come to the attention of such individuals in the
performance of their duties or otherwise. The Company does not currently have
a right of first refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's proposed
business operations.
The officers and directors are, so long as they are officers or
directors of the Company, subject to the restriction that all opportunities
contemplated by the Company's plan of operation which come to their attention,
either in the performance of their duties or in any other manner, will be
considered opportunities of, and be made available to the Company and the
companies that they are affiliated with on an equal basis. A breach of this
requirement will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers and directors
are affiliated with both desire to take advantage of an opportunity, then said
officers and directors would abstain from negotiating and voting upon the
opportunity. However, all directors may still individually take advantage of
opportunities if the Company should decline to do so. Except as set forth
above, the Company has not adopted any other conflict of interest policy with
respect to such transactions.
D. Involvement on Certain Material Legal Proceedings During the Last Five
Years.
(1) No director, officer, significant employee or consultant has been
convicted in a criminal proceeding, exclusive of traffic violations.
(2) No bankruptcy petitions have been filed by or against any business or
property of any director, officer, significant employee or consultant of the
Company nor has any bankruptcy petition been filed against a partnership or
business association where these persons were general partners or executive
officers.
(3) No director, officer, significant employee or consultant has been
permanently or temporarily enjoined, barred, suspended or otherwise limited
from involvement in any type of business, securities or banking activities.
(4) No director, officer or significant employee has been convicted of
violating a federal or state securities or commodities law.
24
<PAGE>
(5) The directors serve for a term of one year, as stated in the Company's
By-laws, the directors are elected at the annual meeting of the stockholders
which shall be held on the third Friday in February.
Members of the Board of Directors hold office and serve until the next annual
meeting of the shareholders of the Company or until their respective
successors have been elected and qualified. Executive officers are appointed
by and serve at the discretion of the Board of Directors. The Company's
directors do not currently receive any cash compensation for service on the
Board of Directors save for the reimbursement of travel and accommodation
expenses directly associated with the attendance of Board meetings.
ITEM 6. EXECUTIVE COMPENSATION
A. Remuneration of Directors and Executive Officers
The following table sets forth the cash and noncash compensation paid by the
Company to its Chief Executive Officer and all other executive officers for
services rendered during the fiscal year ended September 30, 1999.
<TABLE>
<CAPTION>
Annual Compensation
Deferred
Name Position Salary Bonus Salary
- ------- - --------- ---------- ------ ---------
<S> <C> <C> <C> <C>
Douglas E. Smith(1) President/CEO 0 0 0
Brain Kitts(1) Secretary/
Treasurer/
Director 0 0 0
</TABLE>
(1) The Company entered into Compensation agreement with its key officers.
The key terms of the agreement include:
"4.1 No employee shall receive Total Direct Compensation for any year of
employment greater than twenty-five (25) times the wages paid to the lowest
paid full time employee, using the lowest hourly wage rate for a 40-hour week
for a 52-week year. Example: The lowest paid full time employee earns $6.72
per hour. For a 40-hour week, that is $268.80, which for a 52-week year is
$13,977.60. The limitation for Total Direct Compensation is $349,440,
calculated as 25 times $13,977.60.
4.2 No employee who receives fixed-base compensation in excess of twelve and
one-half (12.5) times the hourly wage rate paid to the lowest paid full time
employee shall also receive commission-based compensation in an amount which,
when combined with the fixed-base compensation, exceeds the restriction under
4.1 above.
4.3 Except as provided in 4.2 above, there shall be no limitation on
commission-based compensation payable to any employee of InvestAmerica, Inc.
provided that the variable basis selected to measure the employee's performance
is reasonably related to such employee's responsibilities (ability to affect
such basis) and the commission calculation reasonably reflects such employee's
contribution to the basis, and the commission rate is commercially reasonable.
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<PAGE>
4.4 The limitations imposed by Paragraphs 4.1 and 4.2 shall be increased for
non-U.S. based employees to the extent that the cost-of-living at the non-U.S.
base exceeds the equivalent cost in the United states." (See Exhibit 10.1
"--Compensation Plan.")
The Company has also adopted a "Key Employee Stock Option Plan, the key terms
of this Plan state:
"6. Price. The purchase price per share of Common Stock purchasable under
options granted pursuant to the Plan shall not be less than 100 percent of the
fair market value at the time the options are granted. The purchase price per
share of Common Stock purchasable under options granted pursuant to this Plan
to a person who owns more than ten percent (10%) of the voting power of the
Corporation's vesting stock shall not be less than 110 percent of the fair
market value of such shares, at the time the options are granted." (See Exhibit
10.2 "--Key Employee Stock Option Plan.")
B. Compensation of Directors
There were no arrangements pursuant to which any director of the Company was
compensated for any service provided as a director. In addition, no such
arrangement is contemplated for the foreseeable future as the Company's only
directors are its current executive officers.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions since the beginning of fiscal year 1999, or
any currently proposed transactions, or series of similar transactions, to
which the Company was or is to be a party, in which the amount involved
exceeds $60,000, and in which any of the officers, or directors, or holders of
over 5% of the Company's stock have or will have any direct or indirect
material interest. The Company does not currently have any policy toward
entering into any future transactions with related parties.
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
The Board of Directors has passed a resolution which contains a policy that
the Company will not seek an acquisition or merger with any entity in which
any of the Company's Officers, Directors, principal shareholders or their
affiliates or associates serve as officer or director or hold any ownership
interest. Management is not aware of any circumstances under which this policy
may be changed through their own initiative.
26
<PAGE>
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS OF THE REGISTRANT'S COMMON EQUITY AND
OTHER STOCKHOLDER MATTERS
A. Market Information
(1) The Company's common stock is listed and trading on the NASD Over The
Counter Bulletin Board under trading symbol INVT.
CERTAIN MARKET INFORMATION
The Company's Common Stock is traded on the OTC Bulletin Board under the
symbol "INVT" and commenced its trading under that symbol on or about
May 25, 1997. The following table sets forth the high and low bid quotations
for the Common Stock for the periods indicated. These quotations reflect
prices between dealers, do not include retail mark-ups, mark-downs, and
commissions and may not necessarily represent actual transactions. These bid
quotations have not been adjusted retroactively by any stock split.
<TABLE>
<CAPTION>
Common Stock
PERIOD HIGH LOW
- ------ ---- ---
<S> <C> <C>
Calendar Year 1998
- ------------------
Fourth Quarter ended 12/31/99 $0.05 $0.01
Calendar Year 1999
- ------------------
First Quarter ended 3/31/99 $0.04 $0.01
Second Quarter ended 6/30/99 $0.04 $0.01
Third Quarter ended 9/30/99 $0.18 $0.01
</TABLE>
(2)(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the Company's
Common Stock.
(ii) There are currently 327,564 shares common Stock of the Company, owned
by approximately one hundred seventy-two shareholders which could be sold
under Rule 144 under the Securities Act of 1933, as amended.
(iii) There is currently no common equity that is being or is proposed to be
publicly offered by the registrant, the offering of which could have a
material effect on the market price of the issuer's common equity.
B. Dividends
The Company has not paid any cash dividends since its inception and does not
contemplate paying any in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's
business.
27
<PAGE>
C. Holders
As of September 30, 1999, the Company has approximately four hundred twenty-
six (426) stockholders of common stock on record.
On April 17, 1997, the Company reverse-split its Common Stock twenty (20)
old share for one (1) new Share. This represented 8,386,760 common shares
reversed to 419,338 common Shares. The Company subsequently issued another
362,544 common shares for gross proceeds of $13,000; and 9,008,561 common
shares for gross proceeds of $387,592. There are currently 9,790,443 common
shares issued and outstanding. All of the issued and outstanding shares of the
Company's Common Stock were issued in accordance with the exemption from
registration afforded by Section 4(2) of the Securities Act of 1933, as amended.
As of the date of this registration statement, 327,564 shares of the
Company's Common Stock are eligible for sale under Rule 144 promulgated under
the Securities Act of 1933, as amended, subject to certain limitations
included in said Rule, owned by approximately 172 shareholders. In general,
under Rule 144, a person (or persons whose shares are aggregated), who has
satisfied a one year holding period, under certain circumstances, may sell
within any three-month period a number of shares which does not exceed the
greater of one percent of the then outstanding Common Stock or the average
weekly trading volume during the four calendar weeks prior to such sale. Rule
144 also permits, under certain circumstances, the sale of shares without any
quantity limitation by a person who has satisfied a two-year holding period and
who is not, and has not been for the preceding three months, an affiliate of
the Company.
D. Reports to Shareholders
The Company intends to furnish its shareholders with annual reports containing
audited financial statements and such other periodic reports as the Company
may determine to be appropriate or as may be required by law. Upon the
effectiveness of this Registration Statement, the Company will be required to
comply with periodic reporting, proxy solicitation and certain other
requirements by the Securities Exchange Act of 1934.
E. Transfer Agent and Registrar
The Transfer Agent for the shares of common voting stock of the Company is
Olde Monmouth Stock Transfer Company Inc., 77 Memorial Parkway, Atlantic
Highlands, NJ 07716.
28
<PAGE>
F. OTHER STOCKHOLDER MATTERS
The Securities and Exchange Commission adopted Rule 15g-9, which established
the definition of a "penny stock," for purposes relevant to the Company, as
any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity
and quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form,
(i) sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to
be made about the risks of investing in penny stock in both public offering and
in secondary trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and
the rights and remedies available to an investor in cases of fraud in penny
stock transactions. Finally, monthly statements have to be sent disclosing
recent price information for the penny stock held in the account and
information on the limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must
have net tangible assets of $4 million or market capitalization of $50 million
or a net income (in the latest fiscal year or two of the last fiscal years) of
$750,000, a public float of 1,000,000 shares with a market value of $5
million. The minimum bid price must be $4.00 and there must be 3 market
makers. In addition, there must be 300 shareholders holding 100 shares or
more, and the company must have an operating history of at least one year or a
market capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must
have net tangible assets of $2 million or market capitalization of $35 million
or a net income (in the latest fiscal year or two of the last fiscal years) of
$500,000, a public float of 500,000 shares with a market value of $1 million.
The minimum bid price must be $1.00 and there must be 2 market makers. In
addition, there must be 300 shareholders holding 100 shares or more.
Management intends to strongly consider undertaking a transaction with
any merger or acquisition candidate which will allow the Company's securities
to be traded without the aforesaid limitations. However, there can be no
assurances that, upon a successful merger or acquisition, the Company will
qualify its securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure continued
listing. The failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future may result
in the discontinuance of the inclusion of the Company's securities on a
national market exchange. As a result, a shareholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the market
value of, the Company's securities.
29
<PAGE>
ITEM 2. LEGAL PROCEEDINGS
The Company settled a lawsuit with a former consultant to the Company. Terms
of the settlement called for a payment of $80,000 and the issuance of 525,000
shares of the Company's Common stock. At the time of the issuance, the shares
had a market value of $.50 per share. The settlement resulted in a loss of
$342,000. There are no other litigations pending or threatened by or against
the Company.
ITEM 3. RECENT SALES OF UNREGISTERED SECURITIES
The Company has not issued any of its securities during the two year
period preceding the date of this registration statement. All of the shares of
Common Stock of the Company previously issued have been issued for investment
purposes in a "private transaction" and are "restricted" shares as defined in
Rule 144 under the Securities Act of 1933, as amended. These shares may not be
offered for public sale except under Rule 144, or otherwise, pursuant to said
Act.
In summary, Rule 144 applies to affiliates (that is, control persons)
and nonaffiliates when they resell restricted securities (those purchased from
the issuer or an affiliate of the issuer in nonpublic transactions).
Nonaffiliates reselling restricted securities, as well as affiliates selling
restricted or nonrestricted securities, are not considered to be engaged in a
distribution and, therefore, are not deemed to be underwriters as defined in
Section 2(11), if six conditions are met:
(1) Current public information must be available about the issuer
unless sales are limited to those made by non-affiliates after two years.
(2) When restricted securities are sold, generally there must be a
one-year holding period.
(3) When either restricted or nonrestricted securities are sold by
an affiliate after one year, there are limitations on the amount of
securities that may be sold; when restricted securities are sold
by non-affiliates between the first and second years, there are
identical limitations; after two years, there are no volume
limitations for resales by non-affiliates.
(4) Except for sales of restricted securities made by non-affiliates
after two years, all sales must be made in brokers' transactions
as defined in Section 4(4) of the Securities Act of 1933, as
amended, or a transaction directly with a "market maker" as that
term is defined in Section 3(a)(38) of the 1934 Act.
(5) Except for sales of restricted securities made by non-affiliates
after two years, a notice of proposed sale must be filed for all
sales in excess of 500 shares or with an aggregate sales price
in excess of $10,000.
(6) There must be a bona fide intention to sell within a reasonable
time after the filing of the notice referred to in (5) above.
30
<PAGE>
The Company's shares of Common Stock are not registered with the U.S.
Securities and Exchange Commission under the Securities Act of 1933, as
amended (hereinafter referred to as the "Act"), and with the exception of
certain shares issued pursuant to Regulation D-504, are "restricted
securities." Rule 144 of the Act provides, in essence, that holders of
restricted securities for a period of one year (unless an affiliate of the
Company) may, every three months, sell to a market maker or in ordinary
brokerage transactions an amount equal to one percent of the Company's
then outstanding securities. Affiliates may be required to hold for two
years. Non affiliates of the Company who hold restricted securities for a
period of two years may sell their securities without regard to volume
limitations or other restriction. A total of 7,450,379 shares are
unrestricted and the balance of common shares i. e., 2,340,064 are restricted.
Sales of shares of Common Stock under Rule 144 may have a depressive effect on
the market price of the Company's Common Stock, should a public market develop
for such stock. Such sales might also impede future financing by the Company.
Since its inception in 1983, the Company has not paid cash dividends on its
Common Stock. It is the present policy of the Company not to pay cash
dividends and to retain future earnings to support the Company's growth. Any
payments of cash dividends in the future will be dependent upon, among other
things, the amount of funds available therefor, the Company's earnings,
financial condition, capital requirements, and other factors which the Board
of Directors deem relevant. As of September 30, 1999 there were approximately
four hundred twenty-six (426) Common Shareholders of record.
Private Placements
On September 30, 1996, the Company had 8,386,760 shares of common stock
outstanding. 0n or about April 17, 1997, the Company initiated a reverse
stock split of its common stock twenty (20) old share for one (1) new share.
This reverse split resulted in 419,338 shares of its common stock outstanding
on or about April 17, 1997. Prior to becoming listed on the NASD Bulletin
Board, the Company completed an exempt placement of securities of 362,544
Shares of common stock, pursuant to a Regulation D, Rule 504 exempt offering,
resulting in gross proceeds of $13,000. During 1998, the company sold an
additional 9,008,561 of its common shares resulting in gross proceeds of
$387,592. As of September 30, 1999, the Company has 9,790,443 shares of common
stock issued and outstanding held by approximately four hundred twenty-six
(426) shareholders of record.
ITEM 4. DESCRIPTION OF SECURITIES
A. Common Stock
The Company is authorized to issue 50,000,000 shares of Common Stock, at $0.001
par value, of which, as of 9,790,443 shares are issued and outstanding and held
of record by approximately four hundred twenty-six (426) stockholders at
Sept 30, 1999, per information as supplied by the Company's Transfer Agent,
Olde Monmouth Stock Transfer Company Inc. The Company can not indicate the
number of shareholders which exist outside of those who have requested physical
delivery of shares or are trading the stock on a daily basis, with any degree
of accuracy. Holders of shares of Common Stock are entitled to one vote per
share on all matters to be voted upon by the stockholders generally. The
approval of proposals submitted to stockholders at a meeting other than for the
election of directors requires the favorable vote of a majority of the shares
voting, except in the case of certain fundamental matters (such as certain
amendments to the Certificate of Incorporation, and certain mergers and
reorganizations), in which cases Nevada law and the Company's By-Laws require
the favorable vote of at least a majority of all outstanding shares.
31
<PAGE>
Stockholders are entitled to receive such dividends as may be declared from
time to time by the Board of Directors out of funds legally available
therefor, and in the event of liquidation, dissolution or winding up of the
Company to share ratably in all assets remaining after payment of liabilities.
The holders of shares of Common Stock have no preemptive, conversion,
subscription or cumulative voting rights.
(1) Description of Rights and Liabilities of Common Stockholders
i. Dividend Rights - The holders of outstanding shares of common stock are
entitled to receive dividends out of assets legally available therefore at
such times and in such amounts as the Board of Directors of the Company may
from time to time determine. The board of directors of the Company will
review its dividend policy from time to time to determine the desirability and
feasibility of paying dividends after giving consideration the Company's
earnings, financial condition, capital requirements and such other factors as
the board may deem relevant.
ii. Voting Rights - Each holder of the Company's common stock are entitled
to one vote for each share held of record on all matters submitted to the vote
of stockholders, including the election of directors. All voting is
noncumulative, which means that the holder of fifty percent (50%) of the
shares voting for the election of the directors can elect all the directors.
The board of directors may issue shares for consideration of previously
authorized but unissued common stock without future stockholder action.
Shares of Common Stock do not have cumulative voting rights, which means that
the holders of a majority of the shareholder votes eligible to vote and voting
for the election of the Board of Directors can elect all members of the Board
of Directors. There are a total of 20,000,000 authorized regular common
shares.
iii. Liquidation Rights - Upon liquidation, the holders of the common stock
are entitled to receive pro rata all of the assets of the Company available
for distribution to such holders.
iv. Preemptive Rights - Holders of common stock are not entitled to
preemptive rights.
v. Conversion Rights - No shares of common stock are currently subject to
outstanding options, warrants, or other convertible securities.
vi. Redemption rights - no redemption rights exist for shares of common
stock.
vii. Sinking Fund Provisions - No sinking fund provisions exist.
viii. Further Liability For Calls - No shares of common stock are subject to
further call or assessment by the issuer. The Company has not issued stock
options as of the date of this registration statement.
(2) Potential Liabilities of Common Stockholders to State and Local
Authorities
No material potential liabilities are anticipated to be imposed on stockholders
under state statutes. Certain Nevada regulations, however, require regulation
of beneficial owners of more than 5% of the voting securities. Stockholders
that fall into this category, therefore, may be subject to fines in
circumstances where non-compliance with these regulations are established.
32
<PAGE>
B. Preferred Stock
The Company has 5,000,000 shares of Preferred Non-Voting Stock at $0.001 par
Value authorized with none issued nor outstanding.
C. Debt Securities
The Company is not registering any debt securities, nor are any outstanding.
D. Other Securities To Be Registered
The Company is not registering any security other than its Common Stock.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Amended Articles of Incorporation for the Company do contain provisions
for indemnification of the officers and directors; in addition, Section 78.751
of the Nevada General Corporation Laws provides as follows: 78.751
Indemnification of officers, directors, employees and agents; advance of
expenses.
1) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorney's fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with the action, suitor proceeding if he acted in good faith and
in a manner which 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. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation.
Indemnification may not be made for any claim, issue or matter as to which
such a person has been adjudged by a court of competent jurisdiction, after
exhaustion of all appeals therefrom, to be liable to the corporation or for
amounts paid in settlement to the corporation, unless and only to the extent
that the court in which the action or suit was brought or other court of
competent jurisdiction determines upon application that in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
33
<PAGE>
3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defense of any action, suit
or proceeding referred to in subsections 1 and 2, or in defense of any claim,
issue or matter therein, he must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably incurred by him
in connection with the defense.
4. Any indemnification under subsections 1 and 2, unless ordered by a court or
advanced pursuant to subsection 5, must be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances. The
determination must be made: (a) By the stockholders: (b) By the board of
directors by majority vote of a quorum consisting o directors who were not
parties to act, suit or proceeding; (c) If a majority vote of a quorum
consisting of directors who were not parties to the act, suit or proceeding so
orders, by independent legal counsel in a written opinion; or (d) If a quorum
consisting of directors who were not parties to the act, suit or proceeding
cannot to obtained, by independent legal counsel in a written opinion; or
5. The Articles of Incorporation, the Bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount if it is ultimately determined
by a court of competent jurisdiction that he is not entitled to be indemnified
by corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than the directors
or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section: (a) Does not exclude any other rights to
which a person seeking indemnification or advancement of expenses may be
entitled under the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an action in
his official capacity or an action in another capacity while holding his
office, except that indemnification, unless ordered by a court pursuant to
subsection 2 or for the advancement of expenses made pursuant to subsection 5,
may not be made to or on behalf of any director or officer if a final
adjudication establishes that his act or omissions involved intentional
misconduct, fraud or a knowing violation of the law and was material to the
cause of action. (b) Continues for a person who has ceased to be a director,
officer, employee or agent and endures to the benefit of the heirs, executors
and administrators of such a person.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. 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
Securities Act and will be governed by the final adjudication of such issue.
34
<PAGE>
Part F/S
Item 1. Financial Statements
The following documents are filed as part of this report:
a) InvestAmerica, Inc.
Financial Statements, report from Baverman & Company, CPA;
and notes to Financial Statements
b) Interim Financial Statements are not provided at this time as they
are not applicable at this time.
c) Financial Statements of Businesses Acquired or to be acquired are not
provided at this time, as they are not applicable at this time.
d) Proforma Financial Information is not provided at this time, as it is
not applicable at this time.
Item 2. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None -- Not Applicable.
35
<PAGE>
Financial Statements
INVESTAMERICA, INCORPORATED
(Formerly Progressive Polymerics International, Incorporated)
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1999, 1998, AND 1997
INVESTAMERICA, INCORPORATED
1330 Portside Way
Salt Lake City, Utah 84123
TEL: 436-615-8801/801-808-6096 - FAX: 485-658-4833
INVT-(NASD Bulletin Board)
36
<PAGE>
INVESTAMERICA, INCORPORATED
(Formerly Progressive Polymerics International, Incorporated)
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Accountants Opinion Letter.....................................F-1
Financial Statements:
Consolidated Balance Sheets...............................F-2
Consolidated Statements of Income.........................F-3
Consolidated Statements of Cash Flows.....................F-4
Notes to Financial Statements.................................F-5-8
</TABLE>
37
<PAGE>
BRAVERMAN & COMPANY
Certified Public Accountants
To: The Shareholders of
INVESTAMERICA, INC.
We have audited the consolidated balance sheets of InvestAmerica, Inc.,
formerly Progressive Polymerics International, Inc. and its subsidiary at
September 30, 1999, 1998 and 1997 and the related consolidated statements of
income and cash flows for the years then ended. These financial statements
are the responsibility of Invest America's management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of InvestAmerica,
Incorporated and its subsidiary at September 30, 1999, 1998 and 1997 and the
consolidated results of their operations and their cash flows for the year
then ended in conformity with generally accepted accounting principles.
/s/ BRAVERMAN & COMPANY
November 18, 1999
Calabasas, California
23679 Calabasas Road #149, Calabasas CA 91302
F-1
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Balance Sheets
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
BALANCE SHEET
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Assets
Current Assets:
Cash $ - $ - $ -
Receivable from sale of assets - - 419,701
-------------------------------------
Total Current Assets $ - $ - $ 419,701
-------------------------------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable and
Accrued Expenses $ 810,036 $ 622,536 $ 431,193
Notes Payable 381,546 312,181 -
-------------------------------------
Total Current Assets 1,191,582 934,717 431,193
-------------------------------------
Stockholders Equity:
Preferred Shares, par value
$.001 per share
Authorized Shares 5,000,000
Outstanding Shares None
Common Shares, par value
$.001 per share
Authorized Shares 50,000,000 9,791 9,791 782
Outstanding Shares
781,882 - 1997
9,790,443 - 1998
9,790,443 - 1999
Additional Paid - In Capital 1,989,840 1,989,840 1,611,257
Accumulated Deficit (3,191,213) (2,934,348) (1,623,531)
-------------------------------------
Total Stockholders (Deficiency) (1,191,582) (934,717) (11,492)
-------------------------------------
Total Liabilities and Stockholders $ - $ - $ 419,701
(Deficiency) -------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-2
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Statements of Income
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
1999 1998 1997
- --------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
Operating expenses 256,865 1,108,317 317,326
------------------------------------
Loss before other items (256,865) (1,108,317) (317,326)
------------------------------------
Other items
Loss from write-off
of investment - 202,500 -
------------------------------------
Net Loss $(256,865) $(1,310,817) $(137,326)
-------------------------------------
Weighted average common
shares outstanding 9,790,443 5,286,163 600,600
------------------------------------
Net loss per common share $ (.03) $ (2.48) $ (.23)
------------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Consolidated Statements of Cash Flows
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
1999 1998 1997
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Flows From (To) Operating Activities:
Net (Loss) $(256,865) $(1,310,817) $(137,326)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Decrease in accounts and
loans receivable - - 39,115
Decrease in receivables
from sales assets - 419,701 80,299
Increase in notes payable 69,365 312,181 -
Increase in accounts payable
and accrued expenses 187,500 191,343 13,912
----------------------------------
Net cash used by operating activities - 387,592 4,000
----------------------------------
Cash Flows from (To) Financing Activities:
(Decrease) in loans payable - - (9,000)
Proceeds from issuance of common stock - 387,592 13,000
----------------------------------
Net cash flow from financing activities - 387,592 4,000
----------------------------------
Increase (Decrease) in Cash 0 0 0
Cash at Beginning of Year 0 0 0
----------------------------------
Cash at End of Year $ 0 $ 0 $ 0
----------------------------------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Balboa Investments, Inc. (Parent) was organized under the laws
of the State of Utah on October 20, 1983. The Company changed its domicile
from the State of Utah to the State of Nevada on December 18, 1986. This
change in domicile was accomplished by merging the Company into a Nevada
corporation created solely for this purpose. In connection with the change in
domicile, the Company changed its corporate name from Technology Research
Inc., to Balboa Investments, Inc. effective December 18, 1986. The Company
has not commenced planned principal operations and is considered a development
stage company as defined in SFAS No. 7.
On December 29, 1992, Balboa Investments, Inc. changed its name to Progressive
Polymerics International, Inc., (Parent) and acquired all of the issued and
outstanding common stock of Progressive Polymerics, Inc., (Subsidiary).
In April of 1997, the Board of Directors of the Company approved a Plan of
Reorganization, including a partial liquidation of the Company's current
assets to a Liquidating Trust in order to effectuate the partial liquidation
portion of the Plan. The Liquidating Trust received a transfer of all the
assets of the Company subject to the assumption by the Trust of all the
Company's liabilities and those being incurred in the Reorganization. The
Trust exists solely for the purpose of liquidating the Trust Estate and
distributing the proceeds of liquidation to the Shareholders. The Trust will
serve as a temporary vehicle for the maintenance and operation of the Trust
Estate, with a view to its liquidation and not the conduct of a continuing
business.
On April 17, 1997, the Company reverse-split its Common Stock twenty (20) old
shares for one (1) new share.
On April 17, 1997, the Company acquired 100% of the issued and outstanding
capital stock of InvestAmerica, Inc., thereby making it a wholly-owned
subsidiary.
On May 14, 1997, the stockholders of the Company approved the merger of
InvestAmerica, Int., a wholly-owned subsidiary, with and into the company,
with the Company's name to InvestAmerica., was also approved.
Principles of Consolidation - The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary. All significant
intercompany transactions between the parent and the subsidiary have been
eliminated in consolidation.
Cash and Cash Equivalents - For purposes of the statements of cash flow, cash
and cash equivalents are defined as demand deposits at banks.
F-5
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 2 - NOTES PAYABLE
Demand notes payable in the amount of $312,181 were issued for services and
expenses. These notes carry an interest rate of 10% per annum. Accrued
interest has been added to principal balance on notes annually.
NOTE 3 - INCOME TAXES
Income tax expense, if applicable, includes state taxes currently payable.
There are no deferred taxes or benefits arising from timing differences
between financial statement and tax a basis income. For the period presented
the Companies were able to utilize net operating loss carry overs to reduce
Federal taxes.
NOTE 4 - WARRANTS
The Company issued warrants to purchase 190,000 shares of Common Stock as
follows:
50,000 shares @ $ .05 per share
50,000 shares @ $ .10 per share
20,000 shares @ $ .20 per share
50,000 shares @ $ 1.00 per share
20,000 shares @ $ 5.00 per share
The warrants expire 10 years from date of issue.
NOTE 5 - STOCK OPTIONS
The Company granted a ten (10) year option to purchase 1,000,000 common shares
at $.10 per share as a part of settlement agreement. This option has not yet
been exercised.
F-6
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
- ---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 6 - SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
SHAREHOLDER'S EQUITY
Common Stock Additional
------------ paid-in Accumulated
Shares Amount Capital Deficit
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balances,
September 30, 1996 419,338 $ 419 $1,598,620 $(1,486,205)
As Adjusted for
1 for 20 Reverse
Stock Split
Net(Loss) For the Year
Ended Sept 30, 1997 (137,326)
Issue of Common Stock 362,544 363 12,637
----------------------------------------------
Balances,
September 30, 1997 781,882 782 1,611,257 (1,623,531)
Net(Loss) For the Year
Ended Sept 30, 1998 (1,310,817)
Issuance of Common Stock 9,008,561 9,009 378,583
-----------------------------------------------
Balances,
September 30, 1998 9,790,443 9,791 1,989,840 (2,934,348)
Net(Loss) For the Year Ended
September 30, 1999 (256,865)
-----------------------------------------------
Balances,
September 30, 1999 9,790,443 $9,791 $1,989,840 $(3,191,213)
------------------------------------------------
</TABLE>
NOTE 7 - SALE OF ASSETS
In November of 1995, the Company sold the two Patents and related assets
attributable to its "Armored Conduit". The sale resulted in a loss of
$194,946.
Terms of the Sale - Fidelity Holdings, Inc., acquired the two patents for a
purchase price of $500,000 payable in $100,000 cash and the balance in
Eighty-Thousand (80,000) unregistered Units of Fidelity Holdings, Inc.,
securities. Each Unit consists of Two (2) shares of Common Stock (160,000
shares) and Two (2) Warrants, each Warrant being for the purchase of One (1)
share of Fidelity Holdings, Inc., Common Stock at an exercise (purchase) price
of $3,125 per share exercisable for One (1) year. For this One (1) year
exercise period, Fidelity has the irrevocable option to repurchase/redeem up
to Eighty thousand (80,000) shares of its Common Stock at a price of Two Dollars
and Fifty Cents ($2.50) per share. In addition to the purchase price, the
Company will receive royalty payments from Fidelity over the life of the two
patents. The payments will be calculated at the greater of 5% of the
manufactured cost of the conduit or 2% of the net sales.
F-7
<PAGE>
InvestAmerica, Inc. and Subsidiary formerly
Progressive Polymerics International, Inc. and Subsidiary
---------------------------------------------------------
Notes to Financial Statements (continued)
- ---------------------------------------------------------
September 30, 1999, 1998 and 1997
NOTE 8 - SETTLEMENT
The Company settled a lawsuit with a former consultant to the Company. Terms
of the settlement called for a payment of $80,000 and the issuance of 525,000
shares of the Company's Common stock. At the time of the issuance, the shares
had a market value of $.50 per share. The settlement resulted in a loss of
$342,000.
F-8
<PAGE>
PART III
Part III
Item 1. Index to Exhibits (Pursuant to Item 601 of Regulation SB)
Exhibit Number Name and/or Identification of Exhibit
1. Underwritten agreement
None. Not Applicable
2. Plan of Acquisition, Reorganization, Arrangement, Liquidation, or
Succession.
2.1 AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, adopted by Technology
Research, Inc. and Balboa Investments, Inc. filed December 18, 1986
2.2 ARTICLES OF MERGER, Merger of InvestAmerica, Inc., with and into
Progressive Polymerics International, Inc., Filed May 27, 1997
b) Asset Purchase and Liability Assumption Agreement
None. Not Applicable
c) Interest Purchase Agreement
None. Not Applicable
d) Agreement for Bill of Sale and Assignment of Assets
None. Not Applicable
e) Exchange Stock Agreement
None. Not Applicable
3. Articles of Incorporation & By-Laws
3.1 Articles of Incorporation of the Company Filed October 20, 1983
3.2 Amended Articles of Incorporation Filed on December 18, 1986
3.3 By-Laws of the Company adopted October 20, 1983
4. Instruments Defining the Rights of Security Holders
Those included in exhibit 3
5. Opinion on Legality
None. Not Applicable
6. No Exhibit Required
Not Applicable
7. Opinion on Liquidation Preference
None. Not Applicable
8. Opinion on Tax Matters
None. Not Applicable
9. Voting Trust Agreement and Amendments
None. Not Applicable
10. Material Contracts
10.1 Compensation Plan
10.2 Key Employee Stock Option Plan
38
<PAGE>
11. Statement Re Computation of Per Share Earnings
None. Not Applicable. Computation of per share earnings can be
clearly determined from the Statement of Operation from the Company's
financial statements.
12. No Exhibit Required
13. Annual or Quarterly Reports - Form 10-Q
None. Not Applicable
14. Material Foreign Patents
None. Not Applicable
15. Letters on Unaudited Interim Financial Information
None. Not Applicable
16. Letter on Change in Certifying Accountant
None. Not Applicable
17. Letter of Director Resignation
None. Not Applicable
18. Letter on Change in Accounting Principles
None. Not Applicable
19. Reports Furnished to Security Holders
None. Not Applicable
20. Other Documents or Statements to Security Holders
None. Not Applicable
21. Subsidiaries of Small Business Issuers
None. Not Applicable
39
<PAGE>
22. Published Report Regarding Matters Submitted to Vote of
None. Not Applicable
23. Consent of Experts and Counsel
23.1 Statement from Braverman & Company, Certified Public Accountants
24. Power of Attorney
None. Not Applicable
25. Statement of Eligibility of Trustee
None. Not Applicable
26. Invitations for Competitive Bids
None. Not Applicable
27. Financial Data Schedule
27.1 Financial Data Schedule
28. Information from Reports Furnished to State Insurance Regulatory
Authorities
None. Not Applicable
29. Additional Exhibits
None. Not Applicable
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
InvestAmerica, Inc.
/s/ Douglas E. Smith
- -----------------------
Douglas E. Smith
President and Chairman
Date: November 26, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
InvestAmerica, Inc.
/s/ Brian A. Kitts
- ------------------------
Brian A. Kitts, SECRETARY
Date: November 26, 1999
41
<PAGE>
EXHIBIT 2.1
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 18, 1986
SECRETARY OF STATE
File # 8210-86
PLAN AND ARTICLES OF MERGER
---------------------------
This Plan and these Articles of Merger are hereby adopted by Technology
Research, Inc. a Utah corporation, (hereinafter "TR") and Balboa Investments,
Inc., a Nevada corporation (hereinafter "BI"). This Plan and these articles of
Merger are adopted pursuant to Section 78.486, Nevada Revised Statutes as
amended and Section 16-10-72 Utah Code Annotated, 1953, as amended; all of
such laws including the laws of Nevada expressly permit the merger described
herein subject to and pursuant to all of the terms and conditions as set forth
herein.
I. PARTIES TO THE AGREEMENT
---------------------------
The parties to the Agreement are those corporations referred to in the
introductory paragraph hereof. TR owns 100% of the issued and outstanding
common stock of BI. TR is to be merged into BI and BI shall be and is
hereinafter designated as the "Surviving Corporation".
II. TERMS AND CONDITIONS OF MERGER
----------------------------------
The merger shall be deemed effective when this Plan and these Articles have
been delivered to and filed with the Secretary of State for the State of
Nevada.
The laws which are to govern the terms of this merger are the laws of Nevada
and the laws of Utah. The Surviving Corporation shall be a Nevada corporation
and shall be governed by the laws of Nevada and shall be continued to be
governed by its existing Articles of Incorporation on file in the State of
Nevada.
Upon the effective date of this merger, the following results shall occur:
1. The two corporations which are parties to this Plan of merger shall
become a single corporation, which shall be the Surviving Corporation, namely
BI, a Nevada corporation, as provided for herein.
2. The separate existence of TR shall cease.
3. Such Surviving Corporation as designated herein shall have the rights,
privileges, immunities and powers and shall be subject to all duties and
obligations of the Corporation organized under the Nevada Business Corporation
Act.
4. The Surviving Corporation shall, upon the effective date hereof and
thereafter, possess all of the rights, privileges, immunities, and franchises
as well of a public and as of a private nature of each of the merged
corporations: all property, real, personal and mixed, and all debts due on
whatever account, including subscriptions to shares, and all other choices in
<PAGE>
action and all and every other interest, of or belonging to or due to each of
the corporation so merged, shall be taken and deemed to be transferred and
invested in such Surviving Corporation without further act or deed: and the
title to any real estate or other property, or any interest therein, vested in
any of such corporations shall not revert to any other party or be in any way
impaired by reason of such merger but shall vest in the Surviving Corporation.
5. The Surviving Corporation shall henceforth be responsible and liable
for all of the liabilities and obligations and debts of each of the
corporations so merger: and any claim to existing or action or proceeding
pending by or against any of such corporations may be prosecuted as if such
merger had not taken place or such Surviving Corporation may be substituted in
the place of any submerged corporation. Neither the rights of creditors nor
any liens upon the property of any merged corporation shall be impaired by the
terms of this merger.
III. OWNERSHIP OF SHARES
------------------------
BI is a Nevada corporation and is a wholly-owned subsidiary of TR and it has
issued and outstanding 10 shares of common stock all of which are owned by TR.
TR is a Utah corporation and as of November 23, 1986, had 5,000,000 shares of
common stock issued and outstanding. In the merger, BI shall issue 10,000,000
shares of its common stock to the stockholders of TR. All prior issued and
outstanding shares of common stock of TR shall be canceled in the merger along
with the 10 shares of BI presently held by TR.
IV. DIRECTORS' RESOLUTION
-------------------------
The Board of Directors and stockholders of TR and BI, each, pursuant to a duly
convened meeting, held on November 19,1986, held at 311 South State, Salt Lake
City, Utah 84111, and upon motion duly made, seconded, and carried, did duly
and lawfully adopt the following resolution:
RESOLVED, that the officers of the Corporation are hereby authorized and
directed to execute and adopt a Plan and Articles of Merger to accomplish all
other acts necessary to consummate the merger of TR into BI, a Nevada
corporation, wherein BI, a Nevada corporation, is the Surviving Corporation.
The terms and Articles of Merger shall provide for the pro rata issuance of
stock of the Surviving Corporation to the holders of stock of the parent
corporation as described above under the Article entitled "Ownership of
Shares".
This Plan and these Articles of Merger were duly approved by the shareholders
of TR and BT at a meeting held on November 19, 1986, in Salt Lake City, Utah,
after due notice of the purpose of the meeting was executed by each of the
directors and each of the stockholders of each of said
2
<PAGE>
Corporations at said stockholder's address as they appeared on the records of
the Corporation. The Plan and Articles of Merger were duly approved by a
majority of the outstanding shares of the common stock of each corporation.
The number of shares voting in favor of said proposal being 500,000 and the
number of shares voted against the proposal to merge being -0-. A copy of the
Plan. and Articles of Merger was mailed or hand delivered to each shareholder
of record of the subsidiary corporation, BI. Such delivery was accomplished on
November 19,1986.
V. COMPLIANCE WITH LAWS
-----------------------
All conditions required by the laws of the States of Nevada and Utah
applicable to the proposed merger have been satisfied.
VII. STATED CAPITAL
-------------------
The amount of stated capital of the surviving corporation on the effective
date of the merger will be Five Thousand ($5,000).
VIII. SERVICE UNDER UTAH LAW
----------------------------
The Surviving Corporation hereby appoints Thomas G. Kimble & Associates, 311
South State, Suite 440, Salt Lake City, Utah 84111 as its registered agent in
the State of Utah for general service of process and agrees that it may be
served with process in Utah in any proceeding for the enforcement of any
obligation of TR, a Utah corporation, and in any proceeding for the
enforcement of the rights of a dissenting shareholder of TR against the
Surviving Corporation. The Surviving Corporation hereby grants an irrevocable
appointment of the Lt. Governor Secretary of State of Utah or legal successor
as its agent to accept service of process in any such proceedings: and agrees
that it will promptly pay to the dissenting shareholders of TR the amount, if
any, to which they shall be entitled under the provisions of Utah law with
respect to the rights of dissenting shareholders.
IX. SIGNATURES
--------------
This Plan and these Articles of Merger were duly adopted and executed in
duplicate by the President and Secretary of the Surviving Corporation and each
of the corporations which were parties hereto this 19th day of November, 1986.
TECHNOLOGY RESEARCH, INC.
a Utah corporation
By: /s/ Don H. Denike By: D. Reed Jensen
--------------------- ----------------------
Secretary President
BALBOA INVESTMENTS, INC.
a Nevada corporation
By: /s/ Don H. Denike By: D. Reed Jensen
--------------------- ----------------------
Secretary President
3
<PAGE>
VERIFICATION
------------
The undersigned, after being duly sworn, does hereby depose and state, that he
is the Secretary of Technology Research, Inc., a Utah corporation, and Balboa
Investments, Inc., a Nevada corporation, and that he has read the foregoing
Plan and Articles of Merger and knows the contents thereof, and does hereby
certify that this Plan and these Articles of Merger contain a truthful
statement of the Plan and Articles of Merger as duly adopted by the Directors
and Stockholders of the corporations.
By: /s/ Don H. Denike
- ----------------------
Secretary
STATE OF UTAH )
)ss.
COUNTY OF SALT LAKE )
On the ___ day of November, 1986, personally appeared before me the President
and Secretary of Technology Research, Inc., (a Utah corporation), and Balboa
Investments, Inc., (a Nevada corporation), the signers of the above instrument
who duly acknowledged to me that they executed the same on behalf of said
corporations pursuant to duly adopted director's resolutions.
My Commission Expires:
12/7/88
/s/ Patty Folger
- ---------------------------
NOTARY PUBLIC
Residing in Salt Lake City, UT
4
<PAGE>
EXHIBIT 2.2
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
MAY 29, 1997
No. C8210-86
/s/ Dean Heller
DEAN HELLER, SECRETARY OF STATE
ARTICLES OF MERGER
Merger of InvestAmerica, Inc., a Nevada corporation,
with and into
Progressive Polymerics International, Inc., a Nevada corporation
THESE ARTICLES OF MERGER, are hereby adopted by InvestAmerica, Inc., a
Nevada corporation, and Progressive Polymerics International, Inc., also a
Nevada corporation, pursuant to Section 78.458 Nevada Revised Statues as
amended, so as to provide for the merger of InvestAmerica, Inc. with and into
Progressive Polymerics International, Inc. on the following terms and
conditions:
PARTIES
The parties to the Merger are:
InvestAmerica, Inc., a Nevada corporation, the merging corporation
Progressive Polymerics International, Inc., a Nevada corporation,
the surviving corporation
ADOPTION
A Plan and Agreement of Merger was adopted by the constituent
corporations on May 14, 1997.
The Plan and Agreement of Merger, previously approved, adopted and
recommended by the Board of Directors of Progressive Polymerics International,
Inc., was submitted to and adopted by a majority vote of the stockholders of
Progressive Polymerics International Inc. at a Special Meeting of Stockholder
called pursuant to Notice and call for the purpose of acting upon such Plan
and Agreement of Merger and duly held on May 14, 1997, a quorum being present.
As of the recorded date of April 17, 1997 Progressive Polymerics
International, Inc. had only one class of capital stock issued and
outstanding, being the Common Stock, of which 481,838 shares were issued and
outstanding, of which 242,376 shares were voted "for" the Plan and Agreement
of merger and 11,340 shares were voted "against" such Plan and Agreement,
while 50 shares "abstained". The total votes "for" the Plan and Agreement of
merger was sufficient for approval of such and Agreement by the Common
Stockholders.
The plan and Agreement of Merger was (unanimously) adopted by the single
stockholder of InvestAmerica, Inc. pursuant to Written Consent dated May 14,
1997.
A complete executed Plan and Agreement of Merger is on file at the
principal office of the surviving corporation. A copy thereof shall be
furnished, at no cost, to any stock holder either constituent corporation upon
request.
<PAGE>
TERMS AND CONDITIONS
This Merger shall be effective upon the filing of these Articles of
Merger with the Secretary of State for the State of Nevada. This Merger shall
be governed by the laws of the State of Nevada.
Upon effectiveness of the Merger:
The separate existence of InvestAmerica, Inc., the merging corporation,
shall cease, while the existence of Progressive Polymerics International, Inc.,
the surviving corporation, shall continue under Nevada law.
All real estate and property of the merging corporation shall vest in
the surviving corporation without reversion or impairment.
The surviving corporation shall possess all of the rights, powers,
privileges, immunities and franchises as well of a public and as of a private
nature of the merging corporation.
The surviving corporation shall succeed to all of the liabilities of
the merging corporation and shall henceforth be responsible and liable for all
the obligations, debts and liabilities of such merging corporation.
The shares of the merging corporation shall be converted into shares
of the surviving corporation.
The Articles of Incorporation of the surviving corporation, as
amended, shall be further amended as provided herinbelow.
AMENDMENTS
Except as provided herein, the Articles of Incorporation of Progressive
Polymerics International, Inc., the surviving corporation, shall remain in
full force and effect. The amendment to the Articles of Incorporation to be
effected by the merger are as follows:
The name of the surviving corporation shall be changed; accordingly
Article FIRST shall be amended to read as follows:
FIRST: The name of the corporation is InvestAmerica, Inc.
<PAGE>
IN WITNESS WHEREOF, the constituent corporations have executed these Articles
of Merger this 14th day of May, 1997:
INVESTAMERICA, INC.
ATTEST:
By: /s/ Terance A. Davis
-----------------------
President
By: /s/ Richard C. Fox
-----------------------
Secretary
PROGRESSIVE POLYMERICS
INTERNATIONAL, INC.
ATTEST:
By: /s/ Terance A. Davis
------------------------
President
By: /s/ Richard C. Fox
-----------------------
Secretary
<PAGE>
STATE OF NEVADA )
) ss
COUNTY OF CLARK )
ACKOWLEDGEMENT AND VERIFICATION
Personally appeared before me, a notary public in and for said County and
State, Terence A. Davis and Richard C. Fox, known to me or duly proved to me,
who stated that they were the President and Secretary, respectively, of
Progressive Polymerics International, Inc. and they acknowledged that they had
executed the foregoing Articles of Merger on behalf of Progressive Polymerics,
International, Inc. for the purposes stated therein, and, they being duly
sworn, deposed and said that the facts stated in the foregoing Articles of
Merger were true and correct to the best of their information, knowledge and
belief.
Sworn to and subscribed before me the 14th day of May, 1997;
/s/ Melanie Beth Scott
- --------------------------
Notary Public
My Commission Expires:
August 28, 1999
STATE OF NEVADA )
) ss.
COUNTY OF CLARK )
ACKOWLEDGEMENT AND VERIFICATION
Personally appeared before me, a notary public in and for said County and
State, Terence A. Davis and Richard C. Fox, known to me or duly proved to me,
who stated that they were the President and Secretary, respectively, of
Progressive Polymerics International, Inc. and they acknowledged that they had
executed the foregoing Articles of Merger on behalf of Progressive Polymerics,
International, Inc. for the purposes stated therein, and, they being duly
sworn, deposed and said that the facts stated in the foregoing Articles of
Merger were true and correct to the best of their information, knowledge and
belief.
Sworn to and subscribed before me the 14th day of May, 1997;
/s/ Melanie Beth Scott
- --------------------------
Notary Public
My Commission Expires:
August 28, 1999
<PAGE>
EXHIBIT 3.1
FILED
IN THE OFFICE OF
SECRETARY OF STATE OF THE
STATE OF NEVADA
NOV 21, 1986
SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
BALBOA INVESTMENTS, INC.
WE, THE UNDERSIGNED natural persons of the age of twenty-one (21) years or
more, acting as incorporators of a corporation under the Nevada Business
Corporation Act, adopt the following Articles of Incorporation for such
corporation.
ARTICLE I - NAME
----------------
The name of the Corporation is Balboa Investments, Inc.
ARTICLE II- DURATION
--------------------
The duration of the corporation is perpetual.
ARTICLE III- PURPOSES
---------------------
The purpose or purposes for which this corporation is engaged are:
(a) To engage in the specific business of making investments, including
investment in, purchase and ownership of any and all kinds of property, assets
or business, whether alone or in conjunction with others. Also, to acquire,
develop, explore and otherwise deal in and with all kinds of real and personal
property and all related activities, and for any and all other lawful
purposes.
(b) To acquire by purchase, exchange, gift, bequest, subscription, or
otherwise: and to hold, own, mortgage, pledge, hypothecate, sell, assign,
transfer, exchange, or otherwise dispose of or deal in or with its own
corporate securities or stock or other securities including, without
limitations, any shares of stock, bonds, debentures, notes, mortgages, or
other obligations, and any certificates, receipts or other instruments
representing rights or interests therein on any property or assets created or
issued by any person, firm, associate, or corporation, or instrumentalities
thereof; to make payment therefor in any lawful manner or to issue in exchange
therefor its unreserved earned surplus for the purchase of its own shares, and
to exercise as owner or holder of any securities, any and all rights, powers,
and privileges in respect thereof.
(c) To do each and everything necessary, suitable, or proper for the
accomplishment of any of the purposes or the attainment of anyone or more of
the subjects herein
Page 1
<PAGE>
enumerated, or which may, at any time, appear conducive to or expedient for
the protection or benefit of this corporation, and to do said acts as fully
and to the same extent as natural persons might, or could do in any part of
the world as principals, agents, partners, trustees, or otherwise, either
alone or in conjunction with any other person, association, or corporation .
(d) The foregoing clauses shall be construed both as purposes and powers
and shall not be held to limit or restrict in any manner the general powers of
the corporation, and the enjoyment and exercise thereof, as conferred by the
laws of the State of Utah; and it is the intention that the purposes and
powers specified in each of the paragraphs of this Article III shall be
regarded as independent, purposes and powers.
ARTICLE IV - STOCK
------------------
The aggregate number of shares which this corporation shall have authority to
issue is 50,000,000 shares of Common Stock having a par value of $.001 per
share. All stock of the corporation shall be of the same class, common, and
shall have the same rights and preferences. Fully-paid stock of this
corporation shall not be liable to any further call or assessment.
ARTICLE V - AMENDMENT
---------------------
These Articles of Incorporation may be amended by the affirmative vote of "a
majority" of the shares entitled to vote on each such amendment.
ARTICLE VI - SHAREHOLDERS RIGHTS
--------------------------------
The authorized and treasury stock of this corporation may be issued at such
time, upon such terms and conditions and for such consideration as the Board
of Directors shall determine. Shareholders shall not have preemptive rights to
acquire unissued shares of the stock of this corporation.
ARTICLE VII- CAPITALIZATION
---------------------------
This corporation will not commence business until consideration of a value of
at least $1,000 has been received for the issuance of said shares.
Page 2
<PAGE>
ARTICLE VIII-INITIAL OFFICE AND AGENT
-------------------------------------
The Corporate Trust Company of Nevada
One East First Street
Reno, Nevada 89501
ARTICLE IX - DIRECTORS
----------------------
The directors are hereby given the authority to do any act on behalf of the
corporation by law and in each instance where the Business Corporation Act
provides that the directors may act in certain instances where the Articles of
Incorporation authorize such action by the directors, the directors are hereby
given authority to act in such instances without specifically numerating such
potential action or instance herein.
The directors are specifically given the authority to mortgage or pledge any
or all assets of the business without stockholders' approval.
The number of directors constituting the initial Board of Directors of this
corporation is three. The names and addresses of persons who are to serve as
Directors until the first annual meeting of stockholders or until their
successors are elected and qualify, are:
NAME ADDRESS
---- -------
W. Reed Jensen 311 South State Street, Suite 440
Salt Lake City, UT 84111
Ronald Olson 311 South State Street, Suite 440
Salt Lake City, UT 84111
Don H. Demke 311 South State Street, Suite 440
Salt Lake City, UT 84111
Page 3
<PAGE>
ARTICLE X - INCORPORATORS
------------------------
The name and address of each incorporator is:
NAME ADDRESS
---- -------
Thomas G. Kimble 311 South State, #440
Salt Lake City, UT 84111
Jody York 311 South State, #440
Salt Lake City, UT 84111
Van L. Butler 311 South State, #440
Salt Lake City, UT 84111
ARTICLE XI
COMMON DIRECTORS - TRANSACTIONS BETWEEN CORPORATIONS
----------------------------------------------------
No contract or other transaction between this corporation and anyone or more
of its directors or any other corporation, firm, association, or entity in
which one or more of its directors or officers are financially interested,
shall be either void or voidable because of such relationship or interest, or
because such director or directors are present at the meeting of the Board of
Directors, or a committee thereof, which authorizes, approves, or ratifies
such contract or transaction, or because his or their votes are counted for
such purpose if: (a) the fact of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves, or
ratifies the contract or transaction by vote or consent sufficient for the
purpose without counting the votes or consents of such interested director; or
(b) the fact of such relationship or interest is disclosed or known to the
stockholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent, or (c) the contract or
transaction is fair and reasonable to the corporation.
Common or interested directors may be counted in determining the presence of
a quorum at a meeting of the Board of Directors or committee thereof which
authorizes, approves, or ratifies such contract or transaction.
Page 4
<PAGE>
Under penalties of perjury, we declare that these Articles of Incorporation
have been examined by us and are, to the best of our knowledge and belief,
true, correct and complete.
DATED this 19th day of November, 1986.
/s/ Thomas G. Kimble
- ------------------------
Thomas G. Kimble
/s/ Jody York
- ------------------------
Jody York
/s/ Van L. Butler
- ------------------------
Van L. Butler
STATE OF UTAH )
)ss.
COUNTY OF SALT LAKE )
On the 19th day of November, 1986, personally appeared before me, Thomas G.
Kimble, Jody York and Van L. Butler, who duly acknowledged to me that they
signed the foregoing Articles of Incorporation.
My Commission Expires:
12/7/88
----------------------
NOTARY PUBLIC
/s/ Patty Folger
----------------------
NOTARY PUBLIC
Residing at: Salt Lake City, Utah
Page 5
<PAGE>
EXHIBIT 3.2
FILED
IN THE OFFICE OF THE
SECRETARY OF STATE OF THE
STATE OF NEVADA
DEC 30, 1992
C.A. Law Secretary of State
No. 8210-86
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
BALBOA INVESTMENTS INC.
Pursuant to the applicable provision of the Nevada Business Corporations Act,
Balboa Investments, Inc. (the "Corporation") adopts the following Articles of
Amendment to its Articles of Incorporation by stating the following:
FIRST: The present name of the Corporation is Balboa Investments, Inc.
SECOND: The following amendments to its Articles of Incorporation were
adopted by majority vote of shareholders of the Corporation on December 29,
1992 in the manner prescribed by Nevada law.
1. Article I is amended to read as follows:
Name. The name of the corporation shall be: Progressive Polymerics
International Inc.
2. Article IV is hereby amended to read as follows:
Capitalization. (a) Common Stock. The Corporation shall have the authority
to issue 50,000,000 shares of common stock having a par value of $.001. All
common stock of the Corporation shall be of the same class and shall have the
same rights and preferences. Fully paid common stock of this Corporation shall
not be liable for further call or assessment. The authorized common shares
shall be issued at the discretion of the Directors. (b) Preferred Stock. The
Corporation shall have the authority to issue 5,000,000 shares of preferred
stock each having a par value of $.001, with such rights, preferences and
designations and to be issued in such series as determined by the Board of
Directors of the Corporation.
3. Article XI is hereby added as follows:
ARTICLE XI
----------
Liability of Directors and Officers. No director or officer shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty by such person as a director or officer.
Notwithstanding the foregoing sentence, a director or officer shall be liable
to the extent provided by applicable law, (i) for acts or omissions which
involve intentional misconduct, fraud or a knowing violation of law, or (ii)
for the payment of dividends in violation of
Page 6
<PAGE>
NRS 78.300.
The provisions hereof shall not apply to or have any effect on the liability
or alleged liability of any officer or director of the Corporation for or with
respect to any acts or omissions of such person occurring prior to such
amendment.
[There is no 4 ]
5. The Corporation has effectuated a 1 for 3 reverse stock split of its
shares of common stock outstanding as of December 10, 1992 decreasing said
outstanding shares from 11,526,000 shares to 3,842,000 shares. Said reverse
split to be effective with the commencement of business on December 31, 1992.
THIRD: The number of shares of the Corporation outstanding and entitled to
vote at the time of the adoption of said amendment was 11,526,000.
FOURTH: The number of shares voted for such amendments was 8,247,500(72%) and
the number voted against such amendment was 0.
DATED this 29th day of December, 1992.
BALBOA INVESTMENTS, INC.
By: /s/ Ronald H. Olsen
--------------------
Ronald H. Olsen
President/Secretary
VERIFICATION
------------
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
The undersigned being first duly sworn, deposes and states: that the
undersigned is the Secretary of Balboa Investments, Inc. , that the
undersigned has read the Articles of Amendment and knows
Page 7
<PAGE>
the contents thereof and that the same contains a truthful statement of the
Amendment duly adopted by the sole director and stockholders of the
Corporation.
/s/ Ronald H. Olsen
- -------------------
Ronald H. Olsen,
Secretary
STATE OF UTAH )
)ss.
COUNTY OF SALT LAKE )
Before me the undersigned Notary Public in and for the said County and State,
personally appeared the President and Secretary of Balboa Investments, Inc., a
Nevada corporation, and signed the foregoing Articles of Amendment as their
own free and voluntary acts and deeds pursuant to a corporate resolution for
the uses and purposes set forth.
IN WITNESS WHEREOF, I have set my hand and seal this 29th day of December,
1992.
/s/ Thomas G. Kimble
- -------------------------
NOTARY PUBLIC, residing at
Salt Lake City, Utah
Notary Public
Thomas G. Kimble
311 South State #440
Salt Lake City, Utah 84111
My Commission Expires:
November 1, 1993
State of Utah
Page 8
<PAGE>
EXHIBIT 3.3
BY-LAWS OF INVESTAMERICA, INC.
ARTICLE I - OFFICES
-------------------
The principal office of the corporation in the State of Nevada shall be
located In the City of Reno, County of Washoe. The corporation may have such
other offices, either within or without the State of incorporation as the
board of directors may designate or as the business of the corporation may
from time to time require.
ARTICLE II - STOCKHOLDERS
-------------------------
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held on such date as is
determined by the Board of Directors for the purpose of electing directors and
for the transaction of such other business as may come before the meeting.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless
otherwise prescribed by statute, may be called by the president or by the
directors, and shall be called by the president at the request of the holders
of not less than ten per cent of all the outstanding shares of the corporation
entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the state unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or
if a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting and,
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten nor more than thirty days before
the date of the meeting, either personally or by mail, by or at the direction
of the president, or the secretary , or the officer or persons calling the
meeting, to each stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States
By-Laws Page 1
<PAGE>
mail, addressed to the stockholder at his address as it appears on the stock
transfer books of the corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DA TE.
For the purpose of determining stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a
determination of stockholders for any other proper purpose, the directors of
the corporation may provide that the stock transfer books shall be closed for
a stated period but not to exceed, in any case, thirty days. If the stock
transfer books shall be closed for the purpose of determining stockholders
entitled to notice of or to vote at a meeting of stockholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the stock transfer books, the directors may fix in advance a
date as the record date for any such determination of stockholders, such date
in any case to be not more than thirty days and, in case of a meeting of
stockholders, not less than ten days prior to the date on which the particular
action requiring such determination of stockholders is to be taken. If the
stock transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders, or stockholders entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution or the director declaring such dividend is adopted, as the case may
be, shall be the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of stockholders
has been made as provided in this section, such determination shall apply to
any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares of
the corporation shall make, at least ten days before each meeting of
stockholders, a complete list of the stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for a period of
ten days prior to such meeting, shall be kept on file at the principal office
of the corporation or transfer agent and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be
subject to the inspection of any stockholder during the whole time of the
meeting. The original stock transfer book shall be prima facie evidence as to
who are the stockholders entitled to examine such list or transfer books or to
vote at the meeting of stockholders.
By-Laws Page 2
<PAGE>
7. QUORUM.
Unless otherwise provided by law, at any meeting of stockholders one-third of
the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting,
a majority of the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which a quorum shall
be present or represented, any business may be transacted which might have
been transacted at the meeting as originally notified. The stockholders
present at a duly organized meeting may continue to transact business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote by proxy executed in
writing by the stockholder or by his duly authorized attorney in fact. Such
proxy shall be filed with the secretary of the corporation before or at the
time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and provisions
of the certificate of incorporation and these by-laws shall be entitled to one
vote, in person or by proxy , for each share of stock entitled to vote held by
such stockholders. Upon the demand of any stockholder, the vote for directors
and upon any question before the meeting shall be by ballot. All elections for
directors shall be decided by plurality vote: all other questions shall be
decided by majority vote except as otherwise provided by the Certificate of
Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
1. Roll Call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officers.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
8. New Business.
By-Laws Page 3
<PAGE>
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a
meeting of the shareholders, or any other action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by the same
percentage of all of the shareholders entitled to vote with respect to the
subject matter thereof as would be required to take such action at a meeting.
ARTICLE III - BOARD OF DIRECTORS
--------------------------------
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board of
directors. The directors shall in all cases act as a board, and they may adopt
such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICA TION.
The business and property of the corporation shall be managed by a Board of
not fewer than one (1) nor more than twenty-one (21) directors, who shall be
natural persons of full age, and who shall be elected annually by the
stockholders having voting rights, for the term of one year, and shall serve
until the election and acceptance of their duly qualified successors. In the
event of any delay in holding, or adjournment of, or failure to hold an annual
meeting, the term of the sitting directors shall be automatically continued
indefinitely until their successors shall be duly elected and qualified.
Directors need not be stockholders. The Board of Directors shall have full
power, and it is hereby expressly authorized, to increase or decrease the
number of directors from time to time without requiring a vote of the
stockholders.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
the holding of additional regular meetings without other notice than such
resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any director. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
By-Laws Page 4
<PAGE>
5. NOTICE.
Notice of any special meeting shall be given at least two days previously
thereto by written notice delivered personally, or by telegram or mailed to
each director at his business address. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail so addressed, with
postage thereon prepaid. If notice be given by telegram, such notice shall be
deemed to be delivered when the telegram is delivered to the telegraph
company, The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
6. QUORUM.
At any meeting of the directors a majority shall constitute a quorum for the
transaction of business, but if less than said number is present at a meeting,
a majority of the directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the
removal of directors without cause may be filled by a vote of a majority of
the directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled
by vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the
unexpired term of his predecessor .
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board, the
president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the
board or such officer, and the acceptance of the resignation shall not be
necessary to make it effective.
By-Laws Page 5
<PAGE>
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but
by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the hoard may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor .
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors at
which action on any corporate matter is taken shall be presumed to have
assented to the action taken unless his dissent shall be entered in the minutes
of the meeting or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the adjournment
thereof or shall forward such dissent by registered mail to the secretary of
the corporation immediately after the adjournment of the meeting. Such right
to dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of three or more directors.
Each such committee shall serve at the pleasure of the board.
ARTICLE IV - OFFICERS
---------------------
1. NUMBER.
The officers of the corporation shall he a president, a vice-president, a
secretary and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided.
By-Laws Page 6
<PAGE>
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed by
the directors whenever in their judgment the best interests of the corporation
would be served thereby, but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the
unexpired portion of the term.
5. PRESIDENT.
The president shall be the principal executive officer of the corporation and,
subject to the control of the directors, shall in general supervise and control
all of the business and affairs of the corporation. He shall, when present,
preside at all meetings of the stockholders and of the directors. He may sign,
with the secretary or any other proper officer of the corporation thereunto
authorized by the directors, certificates for shares of the corporation, any
deeds, mortgages, bonds, contracts, or other instruments which the directors
have authorized to be executed, except in cases where the signing and execution
thereof shall be expressly delegated by the directors or by these by-laws to
some other officer or agent of the corporation, or shall be required by law to
be otherwise signed or executed and in general shall perform all duties
incident to the office of president and such other duties as may be prescribed
by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or refusal
to act, the vice president shall perform the duties of the president, and when
so acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice-president shall perform such other duties as from
time to time may be assigned to him by the President or by the directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that
all notices are duly given in accordance with the provisions of these by-laws
or as required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform
all duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
By-Laws Page 7
<PAGE>
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the faithful
discharge for his duties in such sum and with such surety or sureties as the
directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the 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.
ARTICLE V - CONTRACTS. LOANS. CHECKS. AND DEPOSITS
--------------------------------------------------
1. CONTRACTS.
The 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.
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 directors. Such authority may be general or confined to specific
instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the corporation and in
such manner as shall from time to time be determined by resolution of the
directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies
or other depositaries as the directors may select.
By-Laws Page 8
<PAGE>
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
-------------------------------------------------------
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form as
shall be determined by the directors. Such certificates shall be signed by the
president and by the secretary or by such other officers authorized by law and
by the directors. All certificates for shares shall be consecutively numbered
or otherwise identified. The name and address of the stockholders, the number
of shares and date of issue, shall be entered on the stock transfer books of
the corporation. All certificates surrendered to the corporation for transfer
shall be canceled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been surrendered and
canceled, except that in case of a lost, destroyed or mutilated certificate a
new one may be issued therefor upon such terms and indemnity to the
corporation as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, and
cancel the old certificate every such transfer shall be entered on the
transfer book of the corporation which shall be kept at its principal office.
(b) The corporation shall be entitled to treat the holder of record of any
share as the holder in fact thereof, and, accordingly, shall not be bound to
recognize any equitable or other claim to or interest in such share on the
part of any other person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
-------------------------
The fiscal year of the corporation shall end on the last day of such month in
each year as the directors may prescribe.
ARTICLE VIII - DIVIDENDS
------------------------
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
By-Laws Page 9
<PAGE>
ARTICLE IX - SEAL
-----------------
The directors shall provide a corporate seal which shall be circular in form
and shall have inscribed thereon the name of the corporation, the state of
incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
----------------------------
Unless otherwise provided by law, whenever any notice is required to be given
to any stockholder or director of the corporation under the provisions of these
by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE XI - AMENDMENTS
-----------------------
These by-laws may be altered, amended or repealed and new by-laws may be
adopted by action of the Board of Directors.
ARTICLE XII - INDEMNIFICATION
-----------------------------
1. Each director, each officer and each other person who may have acted as a
representative of the corporation at its request, and his heirs, executors and
administrators, shall be indemnified by the corporation against any costs and
expenses, including counsel fees, reasonably incurred in connection with any
civil, criminal, administrative or other claim, action, suit or proceeding, in
which he or they may become involved or with which he or they may be
threatened, by reason of his being or having been a director or officer or
representative of the corporation or by reason of his serving or having served
any corporation, trust, partnership, committee, joint venture, firm or
organization as director, officer, employee, trustee, member or otherwise at
the request of this corporation, and against any payments in settlement of any
such claim, suit, action, or proceedings or in satisfaction of any related
judgment, fine or penalty , except costs, expenses or payments in relation to
any matter as to which he shall be finally adjudged derelict. In the case of a
criminal action, suit or proceeding, a conviction or judgment (whether after
trial or based on a plea of guilty or nolo contendere or its equivalent) shall
not be deemed an adjudication that the director, officer or representative was
derelict in the performance of his duties to the corporation if he acted in
good faith in what he considered to be the best interests of the corporation
and with no reasonable cause to believe the action was illegal. The foregoing
right of indemnification shall not be exclusive of other rights to which
directors, officers and others may be entitled as a matter of law, under the
Articles, or otherwise, but shall be in addition to any such provisions.
By-Laws Page 10
<PAGE>
2. The corporation shall also indemnify any director of officer who has been
successful on the merits or otherwise, in defense of any action, suit, or
proceeding, or in defense of any claim, issue, or matter therein, against all
expenses, including attorney's fees, actually and reasonably incurred by
him/her in connection therewith, without the necessity of an independent
determination that such director or officer met any appropriate standard of
conduct.
3. The indemnification provided for herein shall continue as to any person
who has ceased to be a director or officer, and shall inure to the benefit of
the heirs, executors, and administrators of such persons.
4. In addition to the indemnification provided for herein, the corporation
shall have power to make any other or further indemnification, except an
indemnification against gross negligence or willful misconduct, under any
resolution or agreement duly adopted by the Board of Directors, or duly
authorized by a majority of the shareholders.
5. This corporation shall have the power to purchase and maintain insurance
of behalf of any person who is or was a director, officer, employee,
representative of agent of this corporation, or is or was serving at the
request of the corporation as a director, officer, employee, representative or
agent of another corporation, trust, partnership, committee, joint venture,
firm or other organization against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability .
6. This corporation may advance payments to any indemnified party for the
payment of legal fees, costs, and related expenses in connection with any
investigation, suit, arbitration, or proceeding for which indemnification is
authorized by this Article.
By-Laws Page 11
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EXHIBIT 10.1 COMPENSATION PLAN
INVESTAMERICA, INC. COMPENSATION PLAN
InvestAmerica, Inc., for the purpose of providing corporate management
with compensation guidelines which will protect the shareholders "and the
corporation from excessive compensation payments while permitting the
corporation to attract and retain competent and loyal employees, hereby adopts
the following Compensation Plan.
INDEX
I. Definitions
II. Application, Interpretation, Amendment and Repeal
III. Administration
IV. Compensation Limitation
V. Compulsory (Contractual) Bonus Compensation
VI. Discretionary (Non-Contractual) Bonus Compensation
VII. Excluded Stock Option Plans
VIII. Compensation Paid in Property
IX. Deferred Compensation
X. Profit Sharing and Pension Plan Contributions
XI. Fringe Benefits
XII. Business Travel and Entertainment Expenses
ARTICLE I
DEFINITIONS
In the interpretation of this Compensation Plan, the following words and terms
shall have the meanings set forth unless the context clearly requires
otherwise:
1.1 "Board of Directors" shall mean the Board of Directors of InvestAmerica,
Inc., a Nevada Corporation.
1.2 "Commission-Based Compensation" shall mean all remuneration and
compensation calculated as a percentage of sales, revenue, income or other
variable basis selected to measure performance.
1.3 "Compensation" shall mean remuneration/compensation paid by InvestAmerica,
Inc. and its subsidiaries and its included affiliates. The term shall include
cash (whether paid as Commission-Based Compensation or Fixed-Base Compensation),
compensation paid in property, fixed deferred compensation, and compensation
in the form of stock options not excluded under
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Article VII, but shall exclude indeterminate deferred compensation, 401(k)
contributions, and ESOP contributions.
1.4 "Compensation Plan" shall mean this Compensation Plan, as amended.
1.5 "401(k) contributions" shall mean contributions by an Employer pursuant
to a plan adopted pursuant to section 401(k) of the Internal Revenue Code.
1.6 "Deferred Compensation" shall mean compensation payable with respect to
or earned or accrued in any employment year where payment of such compensation
is delayed to a subsequent time.
1.7 "Employee" shall mean any person who receives compensation from
InvestAmerica, Inc. and/or any of its subsidiaries or included affiliates for
more than forty (40) hours of service in any calendar quarter. The term shall
include leased employees but shall exclude any person who serves only as a
member of the Board of Directors or as a member of the Advisory Panel or is an
independent contractor.
1.8 "Employer" shall mean InvestAmerica, Inc. as defined in section 1.16
below.
1.9 "ESOP Contributions" shall mean contributions by an Employer pursuant to
an employee stock ownership plan as described in section 4975(e) (7) of the
Internal Revenue Code.
1.10 "Excluded Stock Option Plan" shall mean (a) non-cash deferred
compensation and (b) stock option plans adopted pursuant to Article VII of
this Compensation Plan.
1.11 "Fixed Deferred Compensation payable only in cash" shall mean deferred
compensation which InvestAmerica, Inc. must pay in a fixed amount of cash.
1.12 "Fixed-Base Compensation" shall mean all periodic wages or salary, and
other time-based remuneration or compensation.
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1.13 "Full Time" shall mean permanent employment for a minimum forty (40)
hour work week, excluding probationary and part-time employees.
1.14 "Included Affiliates" shall mean joint ventures, partnerships, joint
operating entities, or similar non-subsidiary entities, where the affected
employees are compensated wholly or partly by InvestAmerica, Inc. The
application of the term shall be determined with reference to the employee
under consideration; if the employee of the affiliate has received no
compensation from InvestAmerica, Inc. during the calendar year then such
employee and his/her compensation shall not be within this Compensation Plan.
1.15 "Indeterminate compensation" shall mean compensation (a) payable in a
presently indeterminate amount based upon so-called "phantom" securities, (b)
or other variable base for future determination of the amount of the
compensation, provided that the recipient cannot receive the compensation
(whether on redemption, repurchase, or disposition) for a period of at least
five (5) years after the date of the award or until death, retirement or
involuntary termination, whichever shall first occur.
1.16 "InvestAmerica, Inc." shall mean InvestAmerica, Inc. and its
subsidiaries and its included affiliates, except for determination of "Board
of Directors" in Section 1.1 above.
1.17 "Total Direct Compensation" shall mean, for any employment year, the sum
of all compensation, compulsory bonus compensation not excluded under Article
V, discretionary bonus compensation not excluded under Article VI, compensation
paid in property, and the annualized present value of all long-term incentive
grants not excluded under Articles VII, IX, and X, and all payments of fringe
benefits and expenses not excluded under Articles XI and XII.
ARTICLE II
APPLICATION, INTERPRETATION, AMENDMENT AND REPEAL
2.1 This Compensation Plan shall be effective, upon approval by the Board of
Directors, for the balance of the calendar year 1997 and shall continue in
effect until the next meeting of stockholders, at which time it shall be
presented to the
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stockholders for approval or rejection. If rejected, this Plan shall terminate
immediately following the meeting at which such rejection occurs. If approved
it shall continue in effect without further stockholder approval until December
31, 2002. This Compensation Plan shall be resubmitted to the stockholders for
approval of its retention for a further five year term at the Annual Meeting
in 2002 and each five years thereafter for successive effective terms of five
years.
2.2 This Compensation Plan shall be applicable to all employees of
InvestAmerica, Inc., including its subsidiaries and included affiliates and is
intended to limit the maximum compensation payable, while permitting the
corporation to attract and retain competent and loyal employees. Nothing
contained in this Compensation Plan is intended to limit the authority of the
Board of Directors and/or appropriate corporate management to negotiate and
establish compensation or the method, nature, or amount thereof, within such
maximum limitation or within the exclusions to the limitation; i.e., the
component methods of compensation, and the component amounts of compensation
within the limitation, shall be in the business judgment of the Board of
Directors.
2.3 This Compensation Plan may be amended at any time, and from time to time,
upon recommendation of a majority of the Board of Directors approved by a
majority vote of the stockholders. Amendments shall be submitted separately;
i.e., individually. Any such amendment shall be effective as of the date of
adoption by the stockholders.
2.4 If, when this Compensation Plan is resubmitted to the stockholders
pursuant to Paragraph 2.1, there are any amendments requiring approval under
Paragraph 2.3, the amendments shall be submitted separately from the Plan as
previously amended.
2.5 If the Board of Directors shall determine that this Compensation Plan, as
a whole, is too restrictive and is inhibiting, limiting or frustrating the
Company from attracting and/or retaining competent and loyal employees, then
the Board of Directors may direct that the Compensation Plan be submitted to
the stockholders for repeal. Any proposed repeal shall be effective as of the
date of. approval thereof by majority vote of the stockholders.
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ARTICLE III
ADMINISTRATION
3.1 The Board of Directors shall be responsible for administration of, and
compliance with, this Compensation Plan. The Board of Directors shall establish
such guidelines or policies, from time to time, to implement this Compensation
Plan and to provide oversight to assure compliance.
3.2 The Board of Directors may establish a Compensation Committee, consisting
of such directors, officers, stockholders, employees and/or consultants as the
Board of Directors may determine from time to time. Such Committee and the
members thereof shall serve at the pleasure of the Board of Directors and shall
receive such compensation, consistent with this Compensation Plan, as the Board
shall determine. If such a Compensation Committee is established, the Board of
Directors may delegate to such Committee all authority not otherwise restricted
to itself, subject to such oversight rules as the Board of Directors may
determine. The members of the Committee shall elect a Chairman and a Secretary
from the Committee membership and shall hold meetings upon such notice, at such
place or places, and at such times as the Committee shall determine from time
to time. A majority of the members of the Committee shall constitute a quorum
for the transaction of business. All resolutions or other action taken by the
Committee shall be by majority vote of the members present or by majority
written consent. The Committee may employ such counsel, advisors, consultants,
accountants and actuaries as may be required in administering this Compensation
Plan. The Committee may adopt such rules as it deems necessary, desirable or
appropriate. The Committee and the individual members thereof shall be
indemnified by InvestAmerica, Inc. against any and all liabilities arising by
reason of any act, or failure to act, made in good faith pursuant to the
provisions of this Compensation Plan, including expenses reasonably incurred
in the defense of any claim relating thereto or in the settlement thereof.
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3.3 The Board of Directors shall itself specifically approve all employment
contracts, all bonus and incentive bonus plans, all commission schedules and
commission bonus schedules, and all compensation programs involving annual
compensation of One Hundred Thousand Dollars ($100,000) or more, although
authority to determine or negotiate or propose any such compensation may be
delegated to the Compensation Committee and to appropriate officers and
management employees.
3.4 The Board of Directors and/or the Compensation Committee may delegate
authority to approve employment contracts, bonus and incentive bonus plans,
commission schedules and commission bonus schedules, and other compensation
programs involving annual compensation of less than One Hundred thousand
Dollars ($100,000) to appropriate officers and management employees.
ARTICLE IV
COMPENSATION LIMITATION
4.1 No employee shall receive Total Direct Compensation for any year of
employment greater than twenty-five (25) times the wages paid to the lowest
paid full time employee, using the lowest hourly wage rate for a 40-hour week
for a 52-week year. Example: The lowest paid full time employee earns $6.72
per hour. For a 40-hour week, that is $268.80, which for a 52-week year is
$13,977.60. The limitation for Total Direct Compensation is $349,440,
calculated as 25 times $13,977.60.
4.2 No employee who receives fixed-base compensation in excess of twelve and
one-half (12.5) times the hourly wage rate paid to the lowest paid full time
employee shall also receive commission-based compensation in an amount which,
when combined with the fixed-base compensation, exceeds the restriction under
4.1 above.
4.3 Except as provided in 4.2 above, there shall be no limitation on
commission-based compensation payable to any employee of InvestAmerica, Inc.
provided that the variable basis selected to measure the employee's performance
is reasonably related to such employee's responsibilities (ability to affect
such basis) and the commission calculation reasonably reflects such employee's
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contribution to the basis, and the commission rate is commercially reasonable.
4.4 The limitations imposed by Paragraphs 4.1 and 4.2 shall be increased for
non-U.S. based employees to the extent that the cost-of-living at the non-U.S.
base exceeds the equivalent cost in the United states.
ARTICLE V
COMPULSORY (CONTRACTUAL) BONUS COMPENSATION
5.1 Except for compulsory (i.e., contractually required) bonus plans within
the schedule provided in Paragraph 5.2, all compulsory bonus plans shall be
included in the calculation of Total Direct Compensation for purposes of
Paragraphs 4.1 and 4.2 and the compensation limitation imposed therein.
5.2 The Board of Directors may provide for compulsory bonuses to employees
otherwise limited under Paragraph 4.1 or 4.2 as a multiple of their fixed-base
income in accordance with a schedule based upon the pre-tax net earnings per
share provided that any such schedule does not exceed the following schedule:
Net Income Before Taxes Increase as a
Per Common Share Percent of Base Salary
----------------------- ----------------------
$.00 - $.10 5%
.11 - .20 12.5%
.21 - .30 22.5%
.31 - .40 35%
.41 - .50 50%
.51 - .60 67.5%
.61 - .70 87.5%
.71 - .80 100%
.81 - .90 125%
.91 - 1.00 150%
over $1.00 200% plus the permitted
in this schedule
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Example 1: The Net Income before Taxes per Common Share is $3.65. The
fixed-base compensation is $100,000. The bonus is 667.5% of the fixed-base
compensation (200% plus 200% plus 200% plus 67.5%) or $667,500 for a combined
compensation of $767,500 ($100,000 fixed plus $667,500 bonus).
Example 2: The Net Income before Taxes per Common Share is $1.29. The
fixed-base compensation is $200,000. The bonus is 222.5% of the fixed-base
compensation (200% plus 22.5%) or $445,000 for a coined compensation of
$645,000 ($200,000 fixed plus $445,000 bonus).
In the foregoing examples it is assumed that the fixed-base compensation is
within the limitation imposed by Paragraph 4.1. The compensation limitation of
Paragraph 4.1 is inapplicable to the bonus calculated under the schedule and
to the combined compensation because the bonus is within Paragraph 5.2.
5.3 The Board of Directors may provide compulsory (i.e., contractually
required) bonuses to employees who receive commission-based income which is not
subject to limitation under Paragraphs 4.1 or 4.2, provided that such bonuses
are pursuant to . a bonus program or schedule which is applicable to all such
commission-based compensation employees without discrimination and provided
that such bonus schedule is also commission-based compensation.
ARTICLE VI
DISCRETIONARY (NON-CONTRACTUAL) BONUS COMPENSATION
6.1 No employee who receives fixed-base compensation in excess of twelve and
one-half (12.5) times the hourly wage rate of the lowest paid full time
employee shall receive any discretionary bonus compensation, except as provided
in Paragraph 6.3, which, when combined with all fixed-base compensation and all
commission-based compensation, shall provide remuneration or compensation in
excess of twenty-five (25) times the hourly wage rate paid to the lowest paid
full-time employee.
6.2 No employee who receives commission-based income which is not
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subject to limitation under Paragraph 4.1 or 4.2 shall receive any bonus
except as provided in Paragraph 5.3 above.
6.3 The Board of Directors may provide for discretionary bonuses to eligible
employees otherwise limited under Paragraph 4.1 or 4.2, provided that such
bonuses are within the schedule provided in Paragraph 5.2 above.
ARTICLE VII
EXCLUDED STOCK OPTION PLANS
7.1 Except for stock option plans within the provisions of this Article VII,
all compensation paid pursuant to stock option plans shall be within the
limitation imposed in Article IV.
7.2 The Board of Directors may establish one or more stock option plans for
incentive compensation purposes. To be within the exclusion afforded by this
Article, any such plan must provide either:
7.2.a. An S & P indexed option plan with the following terms:
(i) no more than forty percent (40') of the shares subject to option
under the plan shall be optioned in anyone calendar year;
(ii) no option shall vest for a period of twenty-four months after grant
and the grantee must be an employee on the date of vesting (i.e., employment
continuity of twenty-four months);
(iii) the options granted shall have an exercise price which floats,
relating to the base price, indexed to the S & P 500 Index and the options
shall be subject to standard anti-dilution adjustments;
(iv) upon initial grant, the options shall have a minimum exercise price,
which shall be the base price, equal to the fair market value of the shares
determined as the average of the closing bid and asked prices on the
immediately prior trading day;
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(v) no option shall be exercisable during the first twenty-four (24) months
after the date of grant and any option shall be exercisable for a period of
three (3) years after the date of vesting;
(vi) a vested option shall be exercisable so long as the grantee shall
remain an employee, and in the event of death, termination of employment,
permanent disability, or retirement, shall be exercisable for a period of
ninety (90) days after such event, and if unexercised shall terminate;
(vii) the exercise price shall be established on the first day after the
twenty-four (24) month period (the date on which the option shall vest) by
multiplying the base price (fair market value on the day of grant) by one (1)
plus any percentage increase in the S & p 500 Index since the day of grant. No
decrease shall be recognized and the exercise price shall never be less than
the fair market value on the day of grant.
Example 1: On the day of grant, the fair market value of the
InvestAmerica stock is $1.50 and the S & P 500 Index is 439.1. On the day when
the exercise price is fixed, the market price of the InvestAmerica stock is
$2.50 and the S & P 500 Index is 543.2. The exercise price is $1.86, calculated
as $1.50 multiplied by 1.237, the increase in the S & P 500 Index plus 1. The
exercise price is less than the current InvestAmerica stock market price.
Example 2: On the day of grant, the fair market value of the InvestAmerica
stock is $1.50 and the S & p 500 Index is 439.1. On the day when the exercise
price is fixed, the market price of the InvestAmerica stock is $1.75 and the S
& p 500 Index is 543.2. The exercise price is $1.86, calculated as $1.50
multiplied by 1.237, the percentage increase in the S & p 500 Index plus 1.
The exercise price is more than the current InvestAmerica stock market price.
Example 3: On the day of grant, the fair market value of the InvestAmerica
stock is $1.50 and the S & p 500 index is 439.1. On the day when the exercise
price is fixed, the S & p 500 Index is 430. The exercise price is $1.50 as no
decrease in the S & P 500 Index is recognized and no decrease below the
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fair market value on the day of grant is permitted.
7.2.b. A stock option plan, indexed to a performance measure, such as sales,
production, net income, or earnings per share, with the following terms:
(i) no more than forty percent (40') of the shares subject to option
under the plan shall be optioned in anyone calendar year;
(ii) the options granted shall have an exercise price which floats,
relating to the base price, inversely (reciprocally) indexed to the
performance measure selected;
(iii) upon initial grant, the options shall have a minimum exercise price,
which shall be the base price, equal to the fair market value of the shares
determined as the average of the closing bid and asked prices on the
immediately prior trading day;
(iv) no option shall be exercisable during the first twenty-four (24)
months after the date of grant and the grantee 1L'USt be an employee on the
date of vesting (i.e., employment continuity for twenty-four months);
(v) the exercise price shall be established on the first day after the
twenty-four (24) month period (the date on which the option shall vest) by
multiplying the base price (fair market value on the day of grant) by one (1)
plus the inverse (reciprocal) percentage of improvement in the performance
measure selected since the day of grant.
Example 1: On the day of grant, the fair market value of the InvestAmerica
stock is $1.50 and the selected index, "gross sales", is $18,000,000. On the
day when the exercise price is fixed, the market price of the InvestAmerica
stock is $2.50 and the gross sales are $28,000,000. The increase in "gross
sales" is $10,000,000 or 55.5% improvement. The inverse is 44.5% and the
exercise price is $2.17, calculated as the inverse in the improvement (1-
55.5%) plus 1. The exercise price is less than the current InvestAmerica
stock market price.
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Example 2: On the day of grant, the fair market value of the InvestAmerica
stock is $1.50 and the selected index, "net income before taxes", is
$18,000,000. On the day when the exercise price is fixed, the market price of
the InvestAmerica stock is $1.75 and the "net income before taxes" is
$19,000,000 or 5.5% improvement. The inverse is 94.5% and the exercise price
is $2.92, calculated as the inverse in the improvement (1-5.5%) plus 1. The
exercise price is greater than the current InvestAmerica stock market price.
Example 3: On the day of grant, the fair market value of the InvestAmerica
stock is $1.50. On the day when the exercise price is fixed, the improvement
in the selected index is greater than 100%. The exercise price is $1.50 as no
decrease below the fair market value on the day of grant is permitted.
ARTICLE VIII
COMPENSATION PAID IN PROPERTY
8.1 When compensation is paid in property, the value of such property for
calculation of Total Direct compensation shall be the fair market value of
such property, net of. all liens and encumbrances assumed by the transferee,
as of the date of transfer.
ARTICLE IX
DEFERRED COMPENSATION
9.1 The Board of Directors may provide for deferred compensation. However,
except as provided in Paragraph 9.2 all deferred compensation shall be included
in the calculation of Total Direct Compensation in the year in which the
payment is committed, without regard to its treatment for current accounting
or tax purposes, and not in the year in which paid.
9.2 The Board of Directors may provide for indeterminate deferred compensation
which is not included within the limitation imposed in Paragraphs 4.1 and 4.2
provided that such indeterminate deferred compensation:
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(i) does not vest without continued employment of at least twenty-four
(24) months after the date of grant;
(ii) will not be paid by the corporation prior to at least five (5) years
after the date of the award or until death, retirement or involuntary
termination, whichever shall first occur; and
(iii) is solely contingent on the ability of the corporation to make such
payments at the time due, without escrow, guarantee or surety thereof.
ARTICLE X
PROFIT SHARING AND PENSION PLAN CONTRIBUTIONS
10.1 Except as provided in this Article X, the current cost as paid or accrued
for any profit sharing or pension plan contributions shall be included to
determine compliance with the compensation limitation imposed by Article IV.
10.2 Defined contribution profit sharing and pension plan contributions
proportionate to compensation, where the plan is applicable to all employees
not covered by a collective bargaining agreement, if non-discriminatory, shall
be excluded from the calculation of Total Direct Compensation.
10.3 Contributions to 401(k) plans and ESOPs, where the plan is applicable to
all employees not covered by a collective bargaining agreement, if
non-discriminatory, shall be excluded from the calculation of Total Direct
Compensation.
ARTICLE XI
FRINGE BENEFITS
11.1 Except as provided in this Article XI, the current cost as paid or
accrued of any special compensation or fringe benefits shall be included to
determine compliance with the compensation limitation imposed by Article IV.
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11.2 Standard fringe benefits, generally available to all employees not
covered by a collective bargaining agreement, if nondiscriminatory, shall be
excluded from the calculation of Total Direct Compensation. Standard fringe
benefits shall include such items as sick pay, vacation pay, personal leave,
hospitalization/ medical/surgical/dental insurance, moving and relocation
expense reimbursement, child care, maternity leave and family leave.
11.3 Special fringe benefits, or so-called "executive perks", available only
to a specific employee, or to a limited number of employees, such as providing
a company car, reimbursing for personal car/boat/airplane expenses, providing
of or reimbursement of personal, spousal or family social club/sports club,
country club/golf club/health club dues and expenses, etc., providing of or
reimbursement of spousal and/or dependent's travel expense, providing of or
reimbursement of legal expenses where not covered by corporate indemnification,
and use of corporate property for personal purposes, shall be included in
Total Direct Compensation. However, this provision shall not include (1)
expenses caused by executive position such as home security, bodyguards, special
reinforced vehicles, etc., nor (2) expenses for trade/business association
membership or business club expenses excludable under Article XII or approved
business expenses under Article XII, which shall not be included. Similarly,
executive perks, consistent with local (foreign) general practice, provided to
foreign-based employees, shall not be included in Total Direct Compensation.
11.4 No fringe benefit paid or accrued pursuant to a plan approved by the
stockholders shall be included within Total Direct Compensation if such plan
according to its terms specifically excludes the benefits from the
calculation.
ARTICLE XII
BUSINESS TRAVEL AND ENTERTAINMENT EXPENSES
12.1 No non-accountable expense allowances shall be permitted.
12.2 The Board of Directors shall establish, from time to time, a corporate
policy for reimbursable travel and entertainment expenses. Such policy shall
establish appropriate limits and
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standards, generally available to all employees and. without discrimination in
favor of executives or more highly compensated employees.
12.3 The Board of Directors may approve expenses for, or related to,
trade/business association memberships and business club expenses for selected
employees, provided that such expenses are reasonably related to such
employees' responsibilities and intended to primarily benefit InvestAmerica,
Inc. rather than the specific employee(s). Authority for approval of such
expenses, subject to specific guidelines adopted by the Board of Directors,
may be delegated to the Compensation Committee, if any.
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EXHIBIT 10.2 KEY EMPLOYEES INCENTIVE STOCK OPTION PLAN
INVESTAMERICA, INC.
KEY EMPLOYEES INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the Plan is to secure for the Corporation
and its stockholders the benefits which flow from providing employees of the
Corporation with the incentive inherent in common stock ownership. It is
generally recognized that stock option plans aid in retaining competent
executives and furnish a device to attract executives of exceptional ability
to the Corporation because of the opportunity offered to acquire a proprietary
interest in the business. The stock options granted under this S&P Index
Stock Option Plan are intended to qualify as incentive stock options within the
meaning of Internal Revenue Code Section 422A.
2. Amount of stock. The total number of shares of Common Stock to be
subject to options granted on and after May 14, 1997 pursuant to this Plan
shall not exceed 500,000 shares of the Corporation's Common Stock. This total
number of shares shall be subject to appropriate increase or decrease in the
event of a stock dividend upon, or a subdivision, split-up, combination or
reclassification of, the shares purchasable under such options. In the event
that options granted under this Plan shall lapse without being exercised in
whole or in part, other options may be granted covering the shares not
purchased under such lapsed options.
3. Stock option committee. The Board of Directors may, from time to
time, appoint a Stock Option Committee (hereinafter called the "Committee"),
to serve under this S&P Index Stock Option Plan. The Committee shall consist,
if possible, of disinterested persons as that term is defined in Section 16 of
the Securities and Exchange Act of 1934, as amended. In the absence of such a
committee, the entire Board of Directors shall serve as the Stock Option
Committee.
4. Eligibility and participation. Options may be granted pursuant to
the Plan to all employees of the Corporation including its subsidiaries and
included affiliates (hereinafter called "employees/consultants"). From time to
time the Committee shall select the employees/consultants to whom options may
be granted by the Board of Directors and shall determine the number of shares
to be converted by each option so granted. Future as well as present
employees/consultants (including officers, executives, managerial employees
and key consultants who are directors) shall be eligible to participate in this
Plan. Directors who are not officers, executives, managerial employees of, or
key consultants to, the Corporation or a subsidiary are not eligible to
participate in this Plan. No option may be granted under the Plan after May
24, 2001.
5. Option agreement. The terms and provisions of options granted
pursuant to this Plan shall be set forth in an agreement, herein called an
Option Agreement, between the Corporation and the employee receiving the same.
The Option may be in such form, not inconstant with the terms of this Plan, as
shall be approved by the Board of Directors.
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6. Price. The purchase price per share of Common Stock purchasable under
options granted pursuant to the Plan shall not be less than 100 percent of the
fair market value at the time the options are granted. The purchase price per
share of Common Stock purchasable under options granted pursuant to this Plan
to a person who owns more than ten percent (10%) of the voting power of the
Corporation's vesting stock shall not be less than 110 percent of the fair
market value of such shares, at the time the options are granted. For the
purposes of the preceding sentence (a) the employee/consultant shall be
considered as owning the stock owned directly or indirectly by or for himself,
the stock which the employee/consultant may purchase under outstanding options
and the stock owned, directly or indirectly, by or for his brothers and sisters
(whether of the whole or half blood), spouse, ancestors, and lineal descendants
and (b) stock owned directly or indirectly, by or for a corporation,
partnership, estate, or trust shall be considered as being owned proportionately
by or for its shareholders, partners, or beneficiaries. For all purposes of
this Plan, the fair market value of the Common Stock of the Corporation shall
be determined in good faith at the time of the grant of any determination, the
Stock Option Committee shall not take into account the affect of any
restrictions on the Common Stock other than restrictions which, by their terms,
will never lapse. The full purchase price of shares purchased shall be paid
upon exercise of the option. Under certain circumstances such purchase price
per share shall be subject to adjustment as referred to in Section 10 of this
Plan.
7. Option period. No option granted pursuant to this Plan shall be
exercisable after the expiration of five (5) years from the date the option is
first granted. The expiration date stated in the Option Agreement is
hereinafter called the Expiration Date.
8. Termination of employment. The Option Agreement shall proved that:
(a) If, after the vesting date but prior to the Expiration Date the
grantee shall for any reason whatever, other than (1) his authorized
retirement as defined in (b) below, or (2) his death, cease to be employed by
the Corporation or a subsidiary, any unexercised portions of the option
granted shall automatically terminate;
(b) If after the vesting date but prior to the Expiration Date the
grantee shall (1) retire upon or after reaching the age which at the time of
retirement is established as the normal retirement age fore employees of the
Corporation (such normal retirement age
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now being 62 years) or (2) with the written consent of the Corporation retire
prior to such age on account of physical or mental disability (such retirement
pursuant to (1) or (2) being deemed an "authorized retirement") any unexercised
portion of the option shall expire at the end of unexercised portion of the
option shall expire at the end of three (3) months after such authorized
retirement, and during such three months' period the grantee may exercise all
or any part of the then unexercised portion of the option; and
(c) If after the vesting date but prior to the Expiration Date the
employee/consultant shall die (at a time when he is an employee of the
Corporation, a subsidiary or an included affiliate or within three months
after his authorized retirement), the legal representatives of his estate or a
legatee shall have the privilege, for a period of six (6) months after his
death, of exercising all or any part of the then unexercised portion of the
option.
Nothing in (b) or (c) shall extend the time for exercising any option granted
pursuant to this S&P Index Stock Option Plan beyond the Expiration Date. In
no event shall any option exercisable before it vests and no option shall vest
unless the grantee is an employee at the end of the twenty-fourth month after
grant.
9. Assignability. The Option Agreement shall provide that the option
granted thereby shall not be transferable or assignable by the employee
otherwise than by will or by the laws of descent and distribution and during
the lifetime of the employee shall be exercisable only by him.
10. Adjustment in case of stock splits, stock dividends, etc. The Option
Agreement may contain such provisions as the Board of Directors may approve as
equitable concerning the effect upon the option granted thereby and upon the
per share or per unit option price, of (a) stock dividends upon, or
subdivision, split-ups, combinations or reclassifications of, the securities
purchasable under the option, or (b) proposals to merge or consolidate the
corporation or to sell all or substantially all of its assets, or to liquidate
or dissolve the Corporation.
11. Stock for investment. The Option Agreement shall provide that unless
the Common Stock to be issued shall have been registered the employee shall
upon each exercise of a part of all of the option granted represent and
warrant that his purchase of stock pursuant to such option is for investment
only, and not with a view to distribution involving a public offering. At any
time the Board of Directors of the Corporation may waive the requirement of
such a provision in any Option Agreement entered into any stock option plan of
the Corporation.
12. Amendment of the Plan. The Board of Directors of the Corporation
may from time to time alter, amend, suspend or discontinue the Plan and make
rules for its administration, except that the Board of Directors shall not
amend the Plan in any manner which would have the effect of preventing options
issued under the Plan from being "incentive stock options" as divided in
Section 422A of the Internal Revenue Code of 1986.
-3-
<PAGE>
13. Options discretionary. The granting of options under this S&P Index
Stock Option Plan shall be entirely discretionary with the Stock Option
Committee and nothing in this Plan shall be deemed to give any person any
right to participate in this Plan or to receive option hereunder.
14. Stockholder approval. The Plan will be submitted to the Common
stockholders of the Corporation at the Special Meeting of Stockholders to be
held on May 14, 1997, for approval by the holders of a majority of the
outstanding shares of Common Stock of the Corporation. If the Plan is not
approved by the holders of a majority of the outstanding shares of Common
Stock of the Corporation by June 1, 1997 then the Plan shall terminate and any
options granted hereunder shall be void and of no further force or effect.
-4-
<PAGE>
Exhibit 23.1 Consent from Baverman & Company, Certified Public Accountants
INVESTAMERICA, INC.
EXHIBIT #23 Consent of Experts and Counsel
Braverman & Company
Certified Public Accountants
23679 Calabasas Road #149
Calabasas, CA 91302
To Whom It May Concern: November 18, 1999
The firm of Baverman & Company, Certified Public Accountant consents
to the inclusion of my report at September 30, 1999, 1998 and 1997
on the Financial Statements of INVESTAMERIA, Inc., in any filings that are
necessary now or in the near future to be filed with the U. S. Securities
and Exchange Commission.
Professionally,
s/s Braverman & Company
- ----------------------------
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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<PERIOD-TYPE> 12-MOS
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