U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
General Form for Registration of Securities
of Small Business Issuers Under Section 12(b)
or 12(g) of the Securities Act of 1934
HADRO RESOURCES, INC.
---------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Nevada 87-0571853
--------- --------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
145 Tyee Road #1526
Point Roberts, Washington 98281
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(Address of Principal Executive Offices) (Zip Code)
(604) 943-7515
------------------
(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
----------------------- -------------------------------------
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.001 par value
------------------------------
(Title of Class)
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Management's Discussion and Analysis
Item 3. Description of Property
Item 4. Security Ownership of Certain Beneficial Owners and Management
Item 5. Directors, Executive Officers, Promoters and Control Persons
Item 6. Executive Compensation
Item 7. Certain Relationsh
PART II
Item 1. Market Price of and Dividends on the Company's Common Equity and Other
Shareholder Matters
Item 2. Legal Proceedings
Item 3. Changes in and Disagreements with Accountants
Item 4. Recent Sales of Unregistered Sec
Part F/S
Index to Financial Statements
PART III.
Item 1. Index to Exhibits
SIGNATURES
PART I
The Company is filing this Form 10-SB on a voluntary basis to (1) provide
current, public information to the investment community, (2) to expand the
availability of secondary trading exemptions under the Blue Sky laws and thereby
expand the trading market in the Company's securities and (3) to comply with
prerequisites for listing of the Company's securities on NASDAQ.
ITEM 1. DESCRIPTION OF BUSINESS
General
Hadro Resources, Inc. (the "Company") was incorporated in the State of
Nevada on December 3, 1997 under the name Hadrosaurus Resources, Inc. On
January 20, 1998, the Company filed an Amendment to its Articles of
Incorporation changing the name of the Company to Hadro Resources, Inc. The
Company is engaged in the production of oil and gas.
The Company expects to generate revenues from operations and obtain
additional working capital through future equity and/or financings.
The Company maintains principal business offices at (1) 145 Tyee Road
#1526, Point Roberts, Washington 98281 and (2) 5405 12th Avenue, Suite 204,
Delta, B.C., Canada V4M 2B2. Its statutory office is located at 3230 East
Flamingo Road, Suite 156, Las Vegas, Nevada 89121. The Company's fiscal year end
is December 31.
Business of the Company
The Company is a natural resource exploration company engaged in the
acquisition, exploration and development of oil and natural gas properties. The
Company plans to focus the majority of its exploration for oil and natural gas
deposits in the Western Alberta Basin by acquiring and exploring several
properties. Currently, the Company only has one property.
Properties
On August 1, 1998, the Company entered into an Option Agreement to acquire
an interest in an oil and gas property in Alberta, Canada from Donn Capital
Corp., a privately-held company wholly owned by Frank W. Donis, President of the
Company. Under the terms of the Agreement, the Company will acquire a 2%
interest in an oil and gas lease covering approximately 12,000 acres and
containing five producing and two non-producing wells in the Redwater area of
Alberta, Canada. The Company paid a down payment of $1.00 and a payment of
$20,000 U.S. is due and payable within one year from the date of the Option
Agreement. In the event the Company does not pay the requisite $20,000 on or
before August 1, 1999, the Option Agreement will be terminated and the Company
will have no interest in the property and will have no additional liability with
respect thereto. Either party may rescind the Option Agreement on 90-days'
written notice.
Location and Background of Redwater Area
The Redwater Area is located in Alberta, Canada, approximately 25 miles
northeast of the City of Edmonton, Alberta, Canada. A report prepared prepared
by Sproule Associated Limited, independent Geological and Petroleum Engineering
Consultants, dated April 21, 1997, indicated the wells produced from three
formations: Ostracod, Ellerslie and Bruderheim. Alberta has been one of the
largest source of oil and gas in Canada, as the entire province is rich in oil
and gas. There are large tracts of land which have not yet been explored and/or
drilled. The property to be acquired by the Company has both step out well
possibilities and reworking of existing wells to increase profitability. The
producing wells on the property are currently being operated by Renaissance
Energy, a publicly-traded Canadian corporation and unrelated third party.
Oil and Gas Exploration Risks
Oil and gas exploration involves a high degree of risk and there is no
assurance that expenditures to be made by the Company on prospective oil and gas
properties will result in any discoveries of oil and gas in commercial
quantities. The Company intends to participate in the drilling of both
exploratory and development wells. Exploratory wells have a much greater dry
hole risk than do wells which are drilled offsetting established production.
The marketability of oil and gas which may be acquired or discovered will be
affected by numerous factors beyond the control of the Company. These factors
include market fluctuations, the proximity and capacity of oil and gas pipelines
and processing equipment, supply and demand for petroleum and petroleum
products, rig availability and government regulation, including regulations
relating to prices, taxes, royalties, land tenure, allowable production and
environmental protection. The extent of these factors cannot be accurately
predicted, but the combination of these factors may result in the Company not
receiving an adequate return on invested capital.
Financing Risks
The Company has limited financial resources and there can be no assurance
that additional funding will be available for exploration and development of its
projects or to fulfill its obligations under any agreements, as and when
required. Although the Company has been successful in the past in obtaining
financing through the sale of equity securities, there can be no assurance the
Company will be able to obtain adequate financing in the future, as and when
needed, or that the terms of such financing, if any, will be favorable. Failure
to obtain such additional financing could result in delay or indefinite
postponement of the exploration and development of prospective properties,
resulting in a possible loss of such properties. Such failure to obtain
financing could also materially affect the Company's ability to continue as a
going concern.
Permits and Licenses
The operations of the Company may require licenses and permits from various
governmental authorities. There can be no assurance the Company will be able to
obtain all necessary licenses and permits that may be required to carry out
exploration and development on prospective properties.
Competition
The oil and gas industry is highly competitive. The competition includes
bidding for oil and natural gas rights and sale of oil and natural gas, in each
of which cases price is the main determinant. In searching for oil and gas
prospects, the Company will be competing with other companies and individuals,
some of which have far greater resources than the Company. In addition, the oil
and gas industry also competes with other industries in supplying the energy
needs of consumers. The marketability of any oil and natural gas discovered by
the Company will be affected by numerous factors beyond its control. These
factors include market fluctuations, supply and demand, the proximity and
capacity of oil and gas pipelines and processing equipment and government
regulations. The staff and consultants of the Company possess a technical
expertise in the business of the Company. The Company's expertise is enhanced
through the use of sophisticated analytical tools such as computer work stations
for effective interpretation, computer mapping systems and an extensive
technical library.
The oil and gas industry in Canada is subject to extensive controls and
regulations imposed by various levels of government. All current legislation is
a matter of public record and the Company is unable to predict what additional
legislation or amendments may be enacted, or how the same may affect the Company
and/or its business operations.
Environmental Regulations
The Company's operations may also be subject to environmental regulations
promulgated by government agencies from time to time. Environmental legislation
currently provides for restrictions and prohibitions on spills, releases or
emissions of various substances produced in association with oil and gas
operations which would result in environmental pollution. A breach of such
legislation may result in imposition of fines and penalties. In addition,
certain types of operations require the submission and approval of environmental
impact assessments. Environmental assessments of proposed projects carry a
heightened degree of responsibility for directors, officers and employees of oil
and gas companies. The cost of compliance with changes in governmental
regulations has a potential to reduce the profitability of the Company's
business operations.
Title Risks
In the oil and gas industry, it is common practice for operators to refrain
from obtaining title opinions to oil and gas properties until commencement of
drilling and, accordingly, ownership of the Company's oil and gas properties is
subject to doubt until the title is confirmed. The Company intends to follow
usual industry practice in obtaining a satisfactory title opinion prior to
drilling a property.
Conflicts of Interest
Certain of the Company's directors and officers are also directors,
officers and shareholders of other companies engaged in oil and gas explorations
and development, and conflicts of interest may arise between their duties as
directors and officers of the Company and as directors of other companies. All
such possible conflicts will be disclosed and the directors concerned will
govern themselves to the best of their ability in accordance with the
obligations imposed upon them by law. In particular, the Company's directors
and officers have agreed to the following:
(a) Participation in natural resource prospects offered to the directors and
officers will be allocated between the various companies in which they have an
interest on the basis of prudent business judgment and the relative financial
abilities and needs of the companies; and
(b) any natural resource prospects formulated by or through other companies
in which the Company's directors and officers are involved will not be offered
to the Company, except on the same or better terms than the basis on which they
are offered to third parties.
Except for the Company's existing Option Agreement with Donn Capital Corp.,
which is wholly-owned by Frank W. Donis, President of the Company, the Company
has no knowledge of any existing or potential conflicts of interest among the
Company, distributors, promoters, directors, officers, principal shareholders
and/or persons providing professional services to the Company which could
reasonably be expected to affect a potential investor's decision to invest in
the Company.
Year 2000 Computer Problems
The Company is engaged in and heavily dependent on computer technology in
its business operations. Many existing computer programs use only two digits to
identify a year in the date field, e.g., "98" instead of "1998". These programs
were designed and developed without considering the impact of the upcoming
change in the century, i.e., Year 2000. The Company uses a significant number
of computer software programs and systems that are essential to its business
operations. If not corrected, many computer applications could fail or create
erroneous results by or at the Year 2000. The Company has diagnosed and repaired
the existing and known Year 2000 problems in its computer software and systems;
(ii) has reviewed the possible contingent liabilities the Company may have to
third parties as a result of non-compliant systems; and (iii) has examined the
extent the Company depends on third parties whose systems may not be Year 2000
compliant. However, there may be untold numbers of unforseen circumstances or
unknown factors which the Company has not yet identified, determined or
anticipated regarding the Year 2000 computer problems, and such problems could
have a material adverse affect on the Company's business operations and
financial condition. Consequently, the Company can give no assurance that the
Year 2000 compliance can be fully achieved without costs and uncertainties that
may seriously and substantially adversely affect the Company's operations and
financial results. In summary, the problem is a massive, pervasive, complex,
world-wide phenomena that could, in a worst-case scenario, totally shut down and
destroy the Company's business operations. This discussion contains
forward-looking statements regarding the Company's Year 2000 problems and their
effect on the Company. In this regard, the Company is relying upon the "safe
harbor" provided under the Private Securities Litigation Reform Act of 1995 for
protection from liability in the event such statements are not proven accurate.
Employees
At present, the Company has no employees, other than its officers and
directors.
Legal Proceedings
There are no material legal proceedings to which the Company is a party or
to which its property is subject, nor, to the best of the knowledge of
management, are any material legal proceedings contemplated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Registration Statement contains forward-looking statements that
involve risks and uncertainties. The statements contained in this Registration
Statement that are not purely historical are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, without limitation, statements
regarding the Company's expectations, beliefs, intentions or strategies
regarding future business operations and projected earnings from oil and gas
operations, which are subject to many risks. All forward- looking statements
included in this document are based on information available to the Company on
the date hereof, and the Company assumes no obligation to update any such
forward-looking statements. The Company's actual results may differ materially
as a result of certain factors, including those set forth hereafter and
elsewhere in this Registration Statement. Potential investors should consider
carefully the previously stated factors, as well as the more detailed
information contained elsewhere in this Registration Statement, before making a
decision to invest in the common stock of the Company.
Overview
Since its formation in December, 1997, the Company has been engaged in
research and development activities relating to the acquisition of possible oil
and gas producing properties. Currently, it has only an Option Agreement to
acquire land containing 7 wells (5 producing and 2 non-producing).
For a complete understanding of these activities, this Management's
Discussion and Analysis should be read in conjunction with Part I. Item 1.
Description of Business and Part F/S-Financial Statements to this Form 10-SB.
Results of Operations
As of the date of this filing, the Company has yet to generate any revenues
from business operations due to the preliminary nature of such operations and
substantial expenditure in ongoing research and development efforts relating to
its one property acquisition and other possible property acquisitions.
Consequently, the Company has been substantially dependent on sales of its
equity securities to fund its cash requirements.
The Company's net loss reflects the costs of its research activities
relating to possible property acquisitions. The net loss was also impacted by
the costs of raising capital required to support the Company's operations until
sufficient revenues are achieved.
Since inception, the Company has sold a total of 4,174,200 shares of its
Common Stock in private placement transactions to unrelated third parties,
raising a total of $82,800. All stock sales were made offshore to non-U.S.
persons. The Company sold such securities in reliance upon exemptions from
registration provided by Section 4(2) and/or 3(b) of the Securities Act of 1933,
as amended, and/or Regulation D, Rule 504.
Selected Financial Data
The following historical financial data for the period from inception to
the year ended December 31, 1998 and at January 31, 1999 was derived from the
historical financial statements of the Company that have been prepared by
Andersen Andersen & Strong, L.C., independent Certified Public Accountants (the
Financial Statements").
<TABLE>
<CAPTION>
<S> <C> <C>
Balance Sheet Data:
- -----------------------
1/31/99 12/31/98
---------- -----------
Cash and cash equivalents . . . . . . $ 59,939 $ 59,139
Other Assets-Mineral Lease. . . . . . 1 1
---------- -----------
Total assets. . . . . . . . . . . . . $ 59,940 $ 59,140
Total Liabilities . . . . . . . . . . $ 176 $ 130
Shareholders' Equity. . . . . . . . . $ 53,940 $ 57,140
Statements of Operations Data:
- -------------------------------------
Sales . . . . . . . . . . . . . . . . $ 0 $ 0
Expenses. . . . . . . . . . . . . . . $ 5,246 $ 31,038
Net Loss from operations. . . . . . . $ (5,246) $ (31,038)
Net loss per common share . . . . . . $ (.0004) $ (.003)
Weighted average common shares
outstanding . . . . . . . . . . . . . 13,054,200 12,300,000
</TABLE>
<PAGE>
Limited Operating History; Accumulated Deficit; Need for Additional Capital
There is limited historical financial information about the Company upon
which to base an evaluation of the Company's performance or to make a decision
regarding an investment in shares of the Company's Common Stock. Registrant has
a accumulated deficit of ($36,284) through January 31, 1999. Registrant's cash
and equivalents balance at January 31, 1999 was $53,939. The Company has not yet
realized any revenues from business operations and has engaged in no active
business operations. There can be no assurance the Company will be successful
in its business operations or will achieve any significant revenues from its
proposed operations. The Company's business could be subject to any or all of
the problems, expenses, delays and risks inherent in the establishment of a new
business enterprise, including limited capital resources, possible delays in the
exploration and/or development of properties, possible cost overruns due to
price and cost increases in raw products and exploration and/or development
processes, uncertain marketability of any oil and gas recovered on its
properties and the absence of an operating history. Therefore, there can be no
assurance the Company's business or proposed ventures will be successful or that
the Company will be able to achieve or maintain profitable operations. Further,
there can be no assurance that the Company will not encounter unforeseen
difficulties that may deplete its capital resources more rapidly than
anticipated.
To become and remain profitable and competitive, the Company will likely be
required to make significant investments in the exploration and development of
its properties. The Company is seeking additional equity
financing to provide for the capital required to commence and develop its
proposed business operations.
The timing and total amount of capital requirements cannot be predicted at
this time. There can be no assurance that any financing will be available on
acceptable terms, if at all. If such financing is not available on satisfactory
terms, the Company may be unable to continue, develop or expand its business or
develop new properties at the rate desired and its operating results may be
adversely affected. Equity financing could result in substantial additional
dilution to existing shareholders.
Liquidity and Capital Resources
As of the date of this Form 10-SB, the Company has yet to generate any
revenues from its operations due to the preliminary nature of such operations,
substantial ongoing research relating to possible property acquisition targets
and expenditures to build the appropriate infrastructure to support expected
future growth. Consequently, the Company has been substantially dependent on
sales of its equity securities to fund its cash requirements.
The Company is taking steps to raise additional equity capital; however,
there can be no assurance that any new capital will be available to the Company
or that adequate funds for operations, whether from future revenues, financial
markets, collaborative or other arrangements with corporate partners or from
other sources, will be available as and when needed, or on terms satisfactory to
the Company. The failure of the Company to obtain adequate additional financing
may require the Company to delay or cut back some or all of its proposed
business operations and, potentially, to cease its operations. Any additional
equity financing may involve substantial dilution to the Company's then-
existing shareholders.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company currently utilizes the offices of the President, Frank W.
Donis, at 145 Tyee Road, Point Roberts, Washington, on a rent-free basis.
On August 1, 1998, the Company entered into an Option Agreement to acquire
an interest in an oil and gas property in Alberta, Canada from Donn Capital
Corp., a privately-held company wholly owned by Frank W. Donis, President of the
Company. Under the terms of the Option Agreement, the Company has an option to
acquire a 2% interest in oil and gas leases covering approximately 12,000 acres,
containing 5 producing and 2 non-producing wells in the Redwater area of
Alberta, Canada. The Company paid a down payment of $1.00 and a payment of
$20,000 U.S. is due and payable within one year from the date of the Option
Agreement. In the event the Company does not pay the requisite $20,000 on or
before August 1, 1999, the Option Agreement will be terminated and the Company
will own no further interest in the property, or have any liability with respect
thereto. Either party may rescind the Option Agreement on 90 days' written
notice.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth certain information regarding the Company's
Common Stock, par value $.001 ("Common Stock") beneficially owned as of January
31, 1999 for (i) each stockholder known by the Company to be the beneficial
owner of five (5%) percent or more of the Company's outstanding Common Stock;
(ii) each of the Company's directors; (iii) each named executive officer (as
defined in Item 402(a)(2) of Regulation S-B); and (iv) all executive officers
and directors as a group. At January 31, 1999, there were 13,054,200 shares of
Common Stock outstanding.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Amount and
- Name Nature of
Title of of Beneficial Percent of
Class Beneficial Ownership(2) Ownership (2)
Owner(1)
Common Stock. . Frank W. Donis 7,005,000 (i) (ii) 53.7 %
413 Tsawwassen
Beach Road
Delta, B.C.,
Canada, V4M 2J2
Common Stock. . Marilyn J. Rafter 255,000 (i)(ii) 2%
5268 IA Avenue
Delta, B.C.,
Canada, V4M 1 C 1
Common Stock. . Gene Wilson 500,000 (i) 3.8 %
811 Four Hills Rd. S.E.
Albuquerque, N.M. 87123
All Officers and
Directors as a Group 7,750,000 59.5%
</TABLE>
<PAGE>
(i) Each person named above may be deemed to be a "parent" and "promoter" of
the Company, within the meaning of such terms under the Securities Act of 1933,
as amended, by virtue of his/her direct and indirect holdings in the Company.
These persons are the only "promoters" of the Company.
(ii) Frank Donis and Marilyn Rafter's spouses each own 5,000 shares of the
Company's Common Stock included in these shares.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Each director of the Company is elected by the stockholders to a term of
one (1) year and serves until his or her successor is elected and qualified.
Each officer of the Company is elected by the Board of Directors to a term of
one (1) year and serves until his or her successor is duly elected and
qualified, or until he or she is removed from office. The Board of Directors
has no nominating, auditing or compensation committees.
The names, addresses, ages and positions of the present officers and
directors of the Company are set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address. . . . . Age Position(s)
- --------------------- ---- ------------
Frank W. Donis. . . . . . 55 President and Director
413 Tsawwassen Beach Road
Delta, British Columbia
Canada, V4M 2J2
Marilyn Rafter. . . . . . 47 Secretary, Treasurer
5268 IA Avenue. . . . . . and Director
Delta, British Columbia
Canada, V4M ICI
Gene D. Wilson. . . . . . 70 Director
8 10 Four Hills Road
Albuquerque, NW
USA, 8712-3
</TABLE>
<PAGE>
Frank W. Donis has been the President and a Director of the Company since
inception. Since September 1980, he has also been the President of Epic Oil and
Gas Ltd., a publicly-traded Canadian corporation engaged in oil and gas
exploration. Since June 1968, he has also been a self-employed Dentist. He
graduated from the University of Alberta in 1968 with a Degree in Dentistry.
Mr. Donis devotes his time as required to the business of the Company.
Marilyn Rafter has been the Secretary, Treasurer and a Director of the
Company since inception. Since April 1995, she has also been the Manager of
A.D. Garnet Investments, Ltd., a privately-held Canadian corporation, engaged in
the business of real estate development and management. From October 1991 to
August 1993, she was a Consultant for ExperDent Consulting, Inc., a Canadian
corporation engaged in the business dental consulting. From 1993 to 1995, she
was unemployed. Ms. Rafter devotes her time as required to the business
of the Company.
Gene Wilson has been a Director of the Company since inception. Since
1960, he has also been a self-employed Consulting Geologist. He graduated from
Marshall University in Huntington, W. Virginia, in 1950 with a Degree in
Geology and from the University of Illinois in 1954 with a Masters Degree in
Geology. Mr. Wilson devotes his time as required to the business of the Company.
Each of the persons named above has held his/her office/position since
inception of the Company and is expected to hold said office/position until the
next annual meeting of stockholders.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers and directors are currently compensated for
their services as the Company is only in the development stage and has not yet
fully commenced business operations. However, the officers and directors are
reimbursed for any expenses they incur on behalf of the Company.
Employment Agreements
None of the Company's officers or directors are currently party to
employment agreements with the Company. The Company presently has no pension,
health, annuity, insurance, stock options, profit sharing or similar benefit
plans; however, the Company may adopt such plans in the future. There are
presently no personal benefits available for directors, officers or employees of
the Company.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On January 5, 1998 , Frank Donis and Marilyn Rafter, officers and director
of the Company, purchased a total of 7,250,000 shares of Common Stock, at a
price of $.001 per share, for a total consideration of $7,250.
On February 23, 1998, the Company sold 500,000 shares of Common Stock to
Gene Wilson, a director of the Company, at a price of $.01 per share for a total
consideration of $5,000.
On August 1, 1998, the Company entered into an Option Agreement to acquire
an interest in an oil and gas property in Alberta, Canada from Donn Capital
Corp., a privately-held company wholly owned by Frank W. Donis, President of the
Company. Under the terms of the Option Agreement, the Company has an option to
acquire a 2% interest in oil and gas leases covering approximately 12,000 acres,
containing 5 producing and 2 non-producing wells in the Redwater area of
Alberta, Canada. The Company paid a down payment of $1.00 and a payment of
$20,000 U.S. is due and payable within one year from the date of the Option
Agreement. In the event the Company does not pay the requisite $20,000 on or
before August 1, 1999, the Option Agreement will be terminated and the Company
will own no further interest in the property, or have any liability with respect
thereto. Either party may rescind the Option Agreement on 90 days' written
notice.
ITEM 8. DESCRIPTION OF SECURITIES
Common Stock
The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.001 per share. The holders of Common Stock (i)
have equal ratable rights to dividends from funds legally available therefor,
when, as and if declared by the Board of Directors of the Company; (ii) are
entitled to share ratably in all of the assets of the Company available for
distribution to holders of Common Stock upon liquidation, dissolution or winding
up of the affairs of the Company; (iii) do not have preemptive, subscription or
conversion rights and there are no redemption or sinking fund provisions or
rights applicable thereto; and (iv) are entitled to one non-cumulative vote per
share on all matters on which stockholders may vote. All shares of Common Stock
now outstanding are fully paid for and non-assessable and all shares of Common
Stock which are the subject of this Offering, when issued, will be fully paid
for and non-assessable. Reference is made to the Company's Articles of
Incorporation, By-Laws and the applicable statutes of the State of Nevada for a
more complete description of the rights and liabilities of holders of the
Company's securities.
Non-cumulative Voting
The holders of shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors to
be elected, if they so choose, and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors. The officers
and directors of the Company beneficially own, directly or indirectly,
approximately 58% of the total issued and outstanding shares.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY AND OTHER
SHAREHOLDER MATTERS
The Company's Common Stock is not currently listed or trading.
The Company has never paid cash dividends on its Common Stock. The
Company presently intends to retain future earnings, if any, to finance the
development and expansion of its business and does not anticipate that any cash
dividends will be paid in the foreseeable future. The future dividend policy
will depend on the Company's earnings, capital requirements, expansion plans,
financial condition and other relevant factors.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price (as defined) of less than $5.00 per share, subject to certain
exceptions. The Company's Common Stock may be deemed to be a "penny stock" and
thus, if and when it becomes listed and trading, of which there can be no
assurance, will become subject to rules that impose additional sales practice
requirements on broker/dealers who sell such securities to persons other than
established customers and accredited investors, unless the Common Stock is
listed on The NASDAQ Small Cap Market. Consequently, the "penny stock" rules may
restrict the ability of broker/dealers to sell the Company's securities, and may
adversely affect the ability of holders of the Company's Common Stock to resell
their shares in the secondary market, assuming such market develops, of which
there can be no assurance.
Reports
The Company will furnish annual financial reports to stockholders,
certified by its independent accountants, and will furnish unaudited quarterly
financial reports.
Stock Transfer Agent
The Company's stock transfer agent for its securities is Nevada Agency &
Trust Company, Suite 880, 50 West Liberty Street, Reno, Nevada 89501.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not involved in any legal proceedings that it believes will
result, individually or in the aggregate, in a material adverse effect upon its
financial condition or results of operations.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
Since the Company's inception, there have been no disagreements with
Andersen Andersen & Strong, L.C., Independent Certified Public Accountants,
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On January 5, 1998, pursuant to an exemption provided by Section 4(2) of
the Securities Act of 1933, as amended, Frank Donis and Marilyn Rafter, officers
and directors of the Company, purchased a total of 7,250,000 shares of
restricted Common Stock, at a price of $.001 per share.
On February 23, 1998, pursuant to an exemption provided by Section 4(2) of
the Securities Act of 1933, as amended, the Company sold 500,000 shares of
restricted Common Stock to Gene Wilson, a director of the Company, at a price of
$.01 per share.
On January 5, 1998, pursuant to an exemption provided by Rule 504 of
Regulation D, the Company sold a total of 100,000 shares of Common Stock to
Michelle Koot, an unrelated third party, at a price of $.001 per share.
On December 9, 1997, pursuant to an exemption provided by Rule 504 of
Regulation D, the Company sold a total of 1,000,000 shares of Common Stock of
NNOD Investments Ltd., an unrelated third party, at a price of $.001 per share.
On February 3, 1998, pursuant to an exemption provided by Rule 504 of
Regulation D, the Company sold a total of 4,000,000 shares of Common Stock to
four unrelated corporate entities, at a price of $.001 per share.
On February 15, 1998, pursuant to an exemption provided by Rule 504 of
Regulation D, the Company sold a total of 30,000 shares of Common Stock to
unrelated third parties, at a price of $.01 per share, at a price of $.01 per
share.
On February 15, 1998, pursuant to an exemption provided by Section 4(2) of
the Securities Act of 1933, as amended, four (4) family members of the directors
and officers of the Company purchased a total of 20,000 shares of Common Stock,
at a price of $.01 per share
Between February 27, 1998 and September 11, 1998, pursuant to an exemption
provided by Section 4(2) of the Securities Act of 1933, as amended, the Company
sold a total of 144,200 shares of Common Stock to unrelated third parties, at a
price of $.50 per share.
ITEM 5: INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 78.751 of the Nevada General Corporation Law, provides as follows:
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 attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or 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.
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 under the circumstances. The
determination must be made:
(a) By the stockholders;
(b) By the board of Directors by majority vote of a quorum consisting of
Directors who were not parties to the 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 be obtained, by independent legal counsel in a written
opinion.
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 action, 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 the
corporation. The provisions of this subsection do not affect any rights to
advancement of expenses to which corporate personnel other than 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 acts 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 inures to the benefit of the heirs, executors and administrators of
such a person.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Directors, officers or persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed
that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as express in the act and is therefore
unenforceable.
PART F/S
FINANCIAL STATEMENTS AND EXHIBITS
Audited financial statements of Registrant for the period from December 7, 1997
(date of incorporation) through the year ended December 31, 1998 and January
31, 1999, prepared by Andersen Andersen & Strong, L.C., Certified Public
Accountants, 941 East 3300 South, Suite 202, Salt Lake City, Utah 84106,
immediately follow:
ANDERSEN ANDERSEN & STRONG, L.C.
Certified Public Accountants and Business Consultants
Member SEC Practice Section of the AICPA
941 East 3300 South, Suite 202
Salt Lake City, Utah 84106
Telephone 801-486-0096
Fax 801-486-0098
E-mail KAndcrscn @mm.cmn
Board of Directors
Hadro Resources, Inc.
Point Roberts, Washington
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have audited the accompanying balance sheets of Hadro Resources, Inc. (a
development stage company) at January 31, 1999, and December 31, 1998 the
statement of operations, stockholders, equity, and cash flows for the one month
ended January 31, 1999 and the year ended December, 31, 1998 and the period from
December 3, 1997 ((late of inception) to January 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
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 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 financial position of Hadro Resources, Inc. at
January 31, 1999, and December 31, 1998 and the results of operations, and cash
flows for the one month ended January 31, 1999 and the year ended December 31,
1998 and the period from December 3, 1997 (date of inception) to January
31, 1999, in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is in the development
stage and will need additional working capital for its planned activity, which
raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 5. These
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Salt Lake City, Utah
Andersen Andersen & Strong
February 10, 1999
<PAGE>
<TABLE>
<CAPTION>
HADRO RESOURCES, INC.
(A Development Stage Company)
BALANCE SHEET
January 31, 1999 and December 31, 1998
<S> <C> <C>
1/31/99 112/31/98
ASSETS --------- ------------
CURRENT ASSETS. . . . . . . . . . . . $ 53,939 $ 59,139
----------- ----------
Total Current Assets. . . . . . . . . $ 53,939 $ 59,139
OTHER ASSETS
Mineral Lease - Note 3. . . . . . . . $ 1 $ 1
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable -
related parties . . . . . . . . . . . $ 152 $ 115
Accounts payable. . . . . . . . . . . 24 15
----------- -----------
Total Current Liabilities . . . . . . $ 176 $ 130
STOCKHOLDERS' EQUITY
Common Stock
100,000,000 shares authorized, at
.001 par value; 13,054,200 shares
issued and outstanding. . . . . . . . $ 13,054 $ 13,054
Capital in excess of par value. . . . 76,994 76,994
Deficit accumulated during the
development stage . . . . . . . . . . (36,284) (31,038)
----------- -----------
Total Stockholders' Equity. . . . . . $ 53,764 $ 57,010
<FN>
The accompanying notes are an integral part of these financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the One Month Ended January 31, 1999; the Year Ended December 31,1998
and the Period from December 3, 1997 (Date of Inception) to
January 31, 1999
<S> <C> <C> <C>
Jan 31 Dec 31 Dec 3, 1997
1999 1998 to Jan 31. 1999
-------- --------- -------------------
SALES . . . . . . . . . . . . . $ - $ - $ -
EXPENSES. . . . . . . . . . . . $ 5,246 $ 31,038 $ 36,284
----------- ------------ -------------
NET LOSS. . . . . . . . . . . . $ (5,246) $ (31,038) $ (36,284)
NET LOSS PER COMMON SHARE
Basic . . . . . . . . . . . . . $ - $ (.003) -
AVERAGE OUTSTANDING SHARES
Basic . . . . . . . . . . . . . 13,054,200 12,300,000 -
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the Period from December 3, 1997 (Date of Inception) to January 31, 1999
<S> <C> <C> <C> <C>
Capital in
Common Stock Excess of Accumulated
Shares Amount Par Value Deficit
Balance -
December 3, 1997
(date of inception). . . - - $ - -
Issuance of common
stock for cash
at $.001 February
through July 1998. . . . 12,350,000 $ 12,350 $ - -
Issuance of common
stock for cash at $.01
July 1998. . . . . . . . 560,000 $ 560 $ 5,040- -
Issuance of common
stock for cash at $.50
July 1998. . . . . . . . 114,000 $ 114 $ 56,886 -
Issuance of common
stock for cash at $.50
August 1998. . . . . . . 30,200 $ 30 $ 15,068 -
Net operating loss for
The year ended
December 31, 1998. . . . 3,054,200 $ 13,054 $ 76,994 $(31,038)
Net operating loss for
the one month
ended January 31, 1999 . - - $ (5,246)
Balance
January 31, 1999 . . . . 13,054,200 $ 13,054 $ 76,994 $(36.284)
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF CASH FLOWS
For the One Month Ended January 31, 1999 and the Year Ended December 31, 1998
and the Period from December 3, 1997 (Date of Inception) to January 31, 1999
Jan 31
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . $ (5,246)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Changes in accounts payable . .. . . . . . . . . . . . . . $ 46
------------
Net (decrease) in Cash Froth Operations . . . . . . . . . $ (5,200)
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of mineral lease . . . . . . . . . . . . . . . . $
-----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock. . . . . . . . . . $ -
--------------
Net Increase (Decrease) in Cash .. . . . . . . . . . . . . $ (5,200)
Cash at Beginning of Period . . .. . . . . . . . . . . . . $ 59,139
------------
Cash at End of Period . . . . . . . . . . . . . . . . . . $ 59,939
</TABLE>
<PAGE>
<TABLE><CAPTION>
<S> <C> <C> <C>
STATEMENT OF CASH FLOWS
For the One Month Ended January 31, 1999 and the Year Ended December 31, 1998
and the Period from December 3, 1997 (Date of Inception) to January 31, 1999
Jan 31 Dec 31 Dec 3, 1997
1999 1998 To Jan. 31, 1999
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . $ (5,246). . . $(31,038) $ (36,284)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Changes in accounts payable . . . . . . $ 46 128 $ 174
Net (decrease) in Cash Froth Operations . $ (5,200). $(30,910) $ (36,110)
CASH FLOWS FROM INVESTING
ACTIVITIES
Option to Purchase mineral lease - $ (1) $ (1)
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock. . . . . .- $ 90,050 $ 90,050
Net Increase (Decrease) in Cash . . . . . .$ (5,200) $ 59,139 $ 53,939
Cash at Beginning of Period $ 59,139 $ - $ -
Cash at End of Period . . . . . . . . . . .$ 59,939 $ 59,139 $ 53,939
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on December
3, 1997 with authorized common stock of 100,000,000 shares at $0.001 par value
with the name "Hadrosaurus Resources, Inc". On January 12, 1998 the name was
changed to Hadro Resources Inc. The Company was organized for the purpose of
acquiring and developing mineral properties. The Company is in the development
stage.
Since its inception the Company has completed a Regulation D offering of
4,174,200 shares of its capital stock for cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
At December 31, 1998, the Company had a net operating loss carry forward of
$31,038. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful, since
the Company has no operations on which to project future net profits.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding using the treasury stock method in
accordance with FASB statement No. 128.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity,
at the time of purchase of less than three months, to be cash equivalents.
Foreign Currency Translation
The transactions of the Company completed in Canadian dollars have been
translated to US dollars. Assets and liabilities are translated at the year end
exchange rates and the income and expenses at the average rates of exchange
prevailing during the period reported on.
Amortization of Capitalized Mining Claim Costs
The Company will use the successful efforts method to amortize the capitalized
costs of any oil and gas claims it acquires, which provides for capitalizing the
purchase price of the project and the additional costs directly related to
proving the properties, and amortizing these amounts over the life of the
mineral deposit. All other costs will be expensed as incurred. Unamortized
capitalized costs will be expensed if the property is proven to be of no value.
Financial Instruments
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values. These
values are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. PURCHASE OF MINERAL LEASE
On August 1, 1998 the Company entered into an Option Agreement to purchase a 2%
interest in an oil and gas lease located in the Redwater area of Alberta,
Canada, from a related party.
The terms of the agreement include an advance payment of $1.00 and a payment of
$20,000 within one year. The title will be transferred to the Company on the
date of the payment.
The Option Agreement can be rescinded by either party with a 90-day written
notice.
4. RELATED PARTY TRANSACTIONS
Related parties have acquired 58% of the common stock issued.
The officers and directors of the Company are involved in other business
activities and they may, in the future, become involved in additional business
ventures which also may require their attention. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between the Company and their other business interests. The Company has
formulated no policy for the resolution of such conflicts.
5. GOING CONCERN
Management is currently seeking oil and gas leases which it believes can be
profitable. To be successful in this effort the Company will need additional
working capital.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
equity funding, and long term financing, which will enable the Company to
operate in the future.
Management recognizes that, if it is unable to raise additional capital, the
Company cannot be successful
in its efforts.
6. CONTINGENT AND CONTINUING LIABILITIES
See Note 3 for a payment due on the purchase of a mineral lease.
PART III
ITEM 1. INDEX TO EXHIBITS
Exhibit No. Description of Document
2 Articles of Incorporation, Amendments
and Bylaws
6 Option Agreement between the
Company and Donn Capital Corp.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
Company caused this Form 10-SB to be signed on its behalf by the undersigned,
thereunto duly authorized.
HADRO RESOURCES, INC.
Date: March 15, 1999 By: /s/ Frank W. Donis, Chief Executive
Officer
Date: March 15, 1999 By: /s/ Marilyn Rafter, Director
<PAGE>
EXHIBIT NO. 2
- --------------------
ARTICLES OF INCORPORATION
OF
HADROSAURUS RESOURCES, INC.
FILED in the Office of the
Secretary of the State of Nevada
December 3, 1997 - File No. C26970-97
/s/ Dean Heller, Secretary of State
THE UNDERSIGNED natural person of the age of twenty-one (21) years or
more, acting as incorporator of a corporation under the Nevada Business
Corporation Act, adopts the following Articles of Incorporation for such
corporation.
ARTICLE I - NAME
The name of the corporation is HADROSAURUS RESOURCES, INC.
ARTICLE II - DURATION
The duration of the corporation is perpetual.
ARTICLE III - PURPOSES
The corporation is organized to engage in any lawful act or activity for
which corporations may be organized under Nevada's Private Corporations Act.
ARTICLE IV - STOCK
The aggregate number of shares which this corporation shall have authority
to issue is 100,000,000 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 - RESIDENT AGENT
The name of the Corporation's resident agent in the State of Nevada and the
street address of the resident agent where process may be served upon the
Corporation is:
Caraway Enterprises, Inc.
3230 East Flamingo Road
Suite 156
Las Vegas, NV. 89121
ARTICLE VIII - DIRECTOR
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 from 1-9. The initial number of directors constituting the
initial Board of Directors is one. The name and address of this person who is
to serve as Director until the first annual meeting of stockholders or until
successors are elected and qualify is:
Shawnee M. Larrabee
372 East 12600 South
Draper, Utah 84020
ARTICLE IX - INCORPORATOR
The name and address of the incorporator is:
Shawnee M. Larrabee
372 East 12600 South
Draper, Utah 84020
ARTICLE X - COMMON DIRECTORS TRANSACTIONS
BETWEEN CORPORATIONS
No contact or other transaction between this corporation and any one or
more of its directors or officers 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 person is 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 in good faith 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 of 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 fact of the
common directorship, office or financial interest is not disclosed or known to
the director or officer at the time the transaction is brought before the Board
of Directors of the corporation for action; or (d) the contract or transaction
is fair and reasonable to the corporation at the time it is approved.
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.
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 extend 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
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.
Under penalties of perjury, I declare that these Articles of Incorporation
have been examined by me and are, to the best of my knowledge and belief, true,
correct and complete.
Dated this 24th day of November, 1997.
/s/ Shawni M. Larrabee, Incorporator
STATE OF UTAH )
) ss:
COUNTY OF SALT LAKE )
On the 24th day of November, 1997, personally appeared before me Shawni M.
Larrabee, who signed the foregoing Articles of Incorporation.
/s/ Gloria O.W. Kemker, Notary Public
Residing at Salt Lake County
<PAGE>
CERTIFICATE OF AMENDMENT OF ARTICLES OF
INCORPORATION OF
HADROSAURUS RESOURCES, INC.
(a Nevada corporation)
The undersigned, Shawni Larrabee, incorporator and Director of Hadrosaurus
Resources, Inc. and representing over 2/3 of the Board of Directors, do hereby
certify as follows:
That on January 12, 1998, the Board of Directors adopted a resolution to
amend the Articles of the Corporation (originally filed December 3, 1997) as
follows:
Article I presently reads as follows:
ARTICLE I - NAME
The name of the Corporation shall be : HADROSAURUS RESOURCES, INC.
Article I is hereby amended to read as follows:
ARTICLE I - NAME
The name of the Corporation shall be: HADRO RESOURCES, INC.
The undersigned do hereby certify that the company has issued no stock as
of January 12, 1998. This amendment is to be effective upon filing with the
State of Nevada.
/s/ Shawni Larabee, Director
and Incorporator
STATE OF UTAH )
) ss:
COUNTY OF SALT LAKE )
On the 12th day of January, 1998, personally appeared before me Shawni M.
Larrabee, who signed the foregoing Articles of Incorporation.
/s/ Janamarie McAllister, Notary Public
<PAGE>
BYLAWS
OF
HADROSAURUS RESOURCES, INC.
a Nevada corporation
ARTICLE I
OFFICES
- ------------
Section 1. Principal Offices.
The principal office for the transaction of business of the corporation is fixed
and located at 145 Tyee Drive #1526, Point Roberts, Washington 98281-9602. The
Board of Directors may change the principal office from one location to another
as from time to time may be necessary. Any change of this location shall be
noted by the Secretary on these Bylaws opposite this section, or this section
may be amended to state the new location.
Section 2. Other Offices.
The Board of Directors may, at any time, establish branch or subordinate offices
at any place or places.
ARTICLE II
MEETINGS OF SHAREHOLDERS
- ---------------------------------------------
Section 1. Annual Meeting.
The annual meeting of the shareholders may be held on a date and time which
may be scheduled by the Board of Directors to the extent that such scheduling is
in compliance with the laws of the state of incorporation of the Company. At
this meeting, Directors shall be elected, and any other proper business within
the power of the shareholders may be transacted. In the event that an annual
meeting is not held in any year, the Board of Directors, as then constituted,
shall continue to perform their duties until such annual or special meeting is
properly called and they, or any of them, are reelected or replaced.
Section 2. Place of Meeting.
All annual shareholders meetings shall be held at the Corporation's principal
office, or a location selected by the Board of Directors and notice to the
shareholders as required by Section 4 of these Articles, and all other
shareholders meeting shall be held either at the principal office or any other
place within or outside the State of Nevada that may be designated either by the
Board of Directors in accordance with these Bylaws, or by the written consent of
all persons entitled to vote at the meeting, given either before or after the
meeting and filed with the Secretary of the Corporation.
Section 3. Shareholder Action Without Meeting.
Pursuant to Nevada law, any action which could be taken at a meeting of the
shareholders may be taken without a meeting, if a written consent thereto is
signed by shareholders holding at least a majority of the voting power of the
corporation, except that if a different proportion of voting power is required
for such action at a meeting, then that proportion of written consent shall be
required.
Section 4. Special Meetings.
A Special shareholders meeting for any purpose whatsoever may be called at any
time by the President, any Vice-President, the Board of Directors, or one or
more shareholders holding not less than one-tenth (1/10) of the voting power or
the Corporation.
Section 5. Notice of Meetings.
Written notices specifying the place, day, and hour of the meeting and, in the
case of a special meeting, the general nature of the business to be transacted,
shall be given not less than ten (10) days, nor more than fifty (50) days before
the date of the meeting. Such notice must be given personally or by mail or by
other means of written communication, addressed to the shareholder at the
address appearing on the books of the corporation or given by the share-holder
to the corporation for the purpose of notice. If no such address appears or is
given by a shareholder of record entitled to vote at the meeting, notice is
given at the place where the principal executive office of the corporation is
located, or by publication at least once in a newspaper of general circulation
in the county where the principal executive office is located.
The notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by other means of written
communication. An affidavit of mailing of any notice in accordance with the
provisions of this section executed by the Secretary shall be prima facie
evidence of the giving of notice.
Section 6. Waiver of Notice.
A shareholder may waive notice of any annual or special meeting by signing a
written notice of waiver either before or after the date of such meeting.
Section 7. Quorum.
The presence in person or by proxy of the holders of at least fifty-one percent
(51%) of the outstanding shares entitled to vote at any meeting of the
shareholders shall constitute a quorum for the transaction of business. The
shareholders present at a duly called or held meeting at which a quorum is
present may continue to do business until adjournment notwithstanding the
withdrawal of enough shareholders to leave less than a quorum, any action taken
(other than adjournment) is approved by at least a majority of the shares
required to constitute a quorum.
Section 8. Proxies.
Every person entitled to vote at a shareholders meeting of the corporation, or
entitled to execute written consent authorizing action in lieu of a meeting, may
do so either in person or by proxy executed in writing by the shareholder or by
his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise provided in the proxy.
Section 9. Voting.
Except as otherwise provided in the Articles of Incorporation or by agreement or
by the general corporation law, shareholders at the close of business on the
record date are entitled to notice and to vote.
Section 10. List of Shareholders.
The Secretary shall prepare, at least ten (10) days before every meeting of
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, showing the address of each shareholder
and the number of shares registered in the name of each shareholder. Such list
shall be open to the examination of any shareholder, for any purpose germane to
the meeting. This fist shall be produced and kept at the time and place of the
meeting during the whole time thereof and may be inspected by any shareholder
present.
Section 11. Inspectors.
At each meeting of shareholders, the chairman of the meeting may appoint one or
more inspectors of voting, whose duty it shall be to receive and count the
ballots and make a written report showing the result of the balloting. The
Secretary of the Corporation may perform this function.
Section 12, Election by Ballot.
Election for directors need not be by ballot unless a shareholder demands
election by ballot at the meeting and before the voting begins. The candidates
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected. No cumulative voting shall be allowed.
Section 13. Order of Business.
The order of business at the annual meeting of the shareholders, insofar as
possible, and at all other meetings of shareholders, shall be as follows:
1. Call to order.
2. Proof of notice of meeting.
3. Reading and disposing of any unapproved minutes.
4. Reports of officers.
5. Reports of committees.
6. Election of Directors.
7. Disposition of unfinished business.
8. Disposition of new business.
9. Adjournment.
ARTICLE III
BOARD OF DIRECTORS
Section 1. General Powers.
Subject to the provisions of the Nevada Corporation Act, and any limitations in
the Articles of Incorporation and these Bylaws relating to actions required to
be approved by the shareholders or by the outstanding shares, the business and
affairs of the Corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the Board of Directors.
Section 2. Enumeration of Directors' Powers.
Without prejudice to these general rules, and subject to the same limitation,
the Board of Directors shall have the power to:
(a) Select and remove all officers, agents and employees of the Corporation;
prescribe any powers and duties for them that are consistent with law, with the
Articles of Incorporation, and these Bylaws; fix their compensation; and require
from them security for faithful service.
(b) Change the principal executive office or the principal business office from
one location to another; cause the Corporation to be qualified to do business in
any other state, territory, dependency, or country and conduct business within
or outside the State of Nevada; and designate any place within or outside the
State of Nevada for the holding of any shareholders meeting of meetings,
including annual meetings.
(c) Adopt, make, or use a corporate seal; prescribe the forms of certificates of
stock; and otter the form of the seal and certificate.
(d) Authorize the issuance of shares of stock of the corporation on any lawful
terms, in consideration of money paid, labor done, services actually rendered,
debts or. securities canceled, or tangible or intangible property actually
received.
(e) Borrow money and incur indebtedness on behalf of the Corporation, and cause
to be executed and delivered for the Corporation's purposes, in the corporate
name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges,
hypothecations, and other evidences of debt and securities.
(f) Engage in and/or adopt employment agreements, contracts, or other employment
contracts with independent contractors, companies, government agencies, or
individuals.
Section 3. Number, Tenure, Qualification and Elections.
To the extent allowed by the Articles of incorporation, the Board of Directors
shall be fixed from time to time by resolution of the Board, but shall not be
less than one (1). Directors need not be shareholders of the Corporation. The
Directors of the Corporation shall be elected at the annual meeting of the
shareholders and shall serve until the next annual or special meeting is
properly called and they, or any of them, are re-elected and until their
successors have been elected and qualified.
Section 4. Vacancies.
A vacancy or vacancies on the Board of Directors shall be deemed to exist in
the event of the death, resignation, or removal of any Director, or if the Board
of Directors by resolution declares vacant that office of a Director who has
been declared of unsound mind by an order of court or convicted of a felony, or
if the authorized number of Directors is increased, the shareholders fail at any
meeting of shareholders at which any Director of Directors are elected, to elect
the number of Directors to be voted for at that meeting.
Any Director may resign effective on giving written notice to the Chairman of
the Board, the President, the Secretary, or the Board of Directors, unless a
notice specifies a later time for that resignation to become effective. If the
resignation of a Director is effective at a future time, the Board of Directors
may elect a successor to take office when the resignation becomes effective.
Section 6. Notice of Meetings.
Notice need not be given of regular meetings of the Board of Directors, nor is
it necessary to give notice of adjourned meetings. Notice of special meetings
shall be in writing by mail at least four (4) days prior to the date of the
meeting or forty-eight (48) hours' notice delivered personally or by telephone
or telegraph or telecopier. Neither the business to be transacted at, nor the
purpose of any such meeting need be specified in the notice. Attendance of a
Director at a meeting shall constitute a waiver of notice of that meeting except
when the Director attends for the express purpose of objecting to the
transaction of any business in that the meeting is not lawfully called or
convened.
Section 7. Place of Meetings and Meetings By Telephone.
Regular and special meetings of the Board of Directors may be held at any place
within os outside the State of Nevada that has been designated from time to time
by the Board. In the absence of such designation, meetings shall be held at the
principal executive office of the Corporation. Any meeting, regular or special,
may be held by conference telephone, or similar communication equi0ment, as long
as all Directors participating in the meeting can hear one another, and ail such
Directors shall be deemed to be present in person at the meeting.
Section 8. Special Meetings.
Special meetings of the Board of Directors for any purpose or purposes may be
called at any time by the Chairman of the Board or the President, any Vice-
President, or the Secretary.
Section 9. Majority or Quorum.
A majority of the authorized number of Directors constitutes a quorum of the
Board for the transaction of business except as hereinafter provided.
Section 10. Transactions of Board.
Except as otherwise provided in the Articles or these Bylaws, or by taw, every
act or decision done or made by a majority of the Directors present at a duly
held meeting at which a quorum is present, is the act of the Board, provided,
however, that any meeting at which a quorum was initially present may continue
to transact business notwithstanding the withdrawal of Directors if any action
taken is approved by at least a majority of the required quorum for such
meeting.
Section 11. Adjournment.
A majority of Directors present at any meeting, whether or not a quorum is
present, may adjourn the meeting to another time and place. If the meeting is
adjourned for more that twenty-four (24) hours, notice of the adjournment to
another time and place must be given prior to the time of the adjourned meeting
to the Directors who were present at the time of the adjournment.
Section 12. Conduct of Meetings.
The Chairman of the Board, or if there is no such officer, the President, or in
his absence, any Director selected by the Director present shall preside at the
meeting of the Board of Directors. The Secretary of the Corporation or, in the
Secretary's absence any person appointed by the presiding officer, shall act as
Secretary of the Board.
Section 13. Action Without Meeting.
Any action required or permitted to be taken by the Board of Directors may be
taken without a meeting, if all members of the Board shall individually or
collectively consent in writing to such action. Such action by written consent
shall have the same force and effect as a unanimous vote of the Board of
Directors. Such written consent(s) shall be filed with the minutes of the
proceedings of the Board.
Section 14. Fees and Compensation of Directors.
Directors and members of committees may receive such compensation, if any, for
their services, and such reimbursement of expenses, as may be fixed or
determined by resolution of the Board of Directors. Nothing herein contained
shall be construed to preclude any Director from serving the corporation in any
other capacity as an officer, agent, employee, or otherwise, and receiving
compensation for such services.
Section 15. Approval of Bonuses for Directors and Officers.
No bonuses or share in the earnings or profits of the Corporation shall be paid
to any of the officers, Directors, or employees of the Corporation except as
approved by the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. Officers.
The officers of the Corporation shall be a President, a Vice-President, a
Secretary, and a Chief Financial Officer (Treasurer). The Corporation may also
have, at the discretion of the Board of Directors, a Chairman of the Board, one
or more Assistant Secretaries, one or more Assistant Treasurers, and such other
officers as may be appointed in accordance with the provisions of Section 3 of
this Article IV. Any number of offices may be held by the same person, except
the offices of President and Secretary.
Section 2. Election of Officers.
The officers of the Corporation, except such officer as may be appointed in
accordance with the provisions of Section 3 or Section 5 of this Article IV
shall be chosen by the Board of Directors, and each shall serve at the pleasure
of the Board, subject to the rights, if any, of an officer under any contract of
employment.
Section 3. Subordinate Officers.
The Board of Directors may appoint, and may empower the President to appoint,
such other officers as the business
meetings or committee meetings, the number of shares present or represented at
share-holders meetings, and the proceedings.
The Secretary shall keep, or cause to be kept, at the principal executive office
or at the office of the Corporation's transfer agent or registrar, as determined
by resolution of the Board of Directors, a record of shareholders, or a
duplicate record of shareholders showing the names of all shareholders and their
addresses, the number of shares held by each, the number and date of
certificates issued for the same, and the number and date of cancellation of
every certificate surrendered for cancellation.
The Secretary or Assistant Secretary, if they are absent or unable to act or
refuse to act, any other officer of the Corporation shall give, or cause to be
given, notice of all meetings of the shareholders, of the Board of Directors,
and of committees of the Board of Directors required by the Bylaws or by law to
be given. The Secretary shall keep the seal of the Corporation, if one is
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or by the Bylaws.
Section 9. Chief Financial Officer.
The Chief Financial Officer (Treasurer) shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the Corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The book of accounts shall at all reasonable
times be opened to inspection by any Director.
The Chief Financial Officer shall deposit all monies and other valuables in the
name and to the credit of the Corporation with such depositories as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
President and Directors, whenever they request it, an account of ail of his
transactions as Chief Financial Officer and of the financial condition of the
Corporation, and shall have other powers and perform other such duties as may be
prescribed by the Board of Directors or the Bylaws.
ARTICLE V
INDEMNIFICATION OF DIRECTOR, OFFICERS, EMPLOYEES AND OTHER AGENTS
Section 1. Agents, Proceedings and Expenses.
For the purpose of this Article, "agent'.' means any person who is or was. a.
Director, officer, employee, or other agent of this~Corporation, or is or was
serving at the request, of this.
Corporation as a Director, officer, employee, or agent of another foreign or
domestic corporation, partnership, joint venture, trust or other enterprise, or
was a Director, officer, employee, or agent of a foreign or domestic corporation
which was a predecessor corporation of this corporation or of another enterprise
at the request of such predecessor corporation; "proceeding" means any
threatened, pending or completed action or proceeding, whether civil, criminal,
administrative, or investigative; and "expenses" includes, without limitation,
attorneys' fees and any expenses of establishing a right to indemnification
under Section 4 or Section 5(c) of this Article.
Section 2. Actions other than by the Corporation.
This Corporation shall defend and indemnify any person who was or is a party, or
is threatened to be made a party, to any proceeding (other than an action by or
in the right of this Corporation) by reason of the fact that such person is or
was an agent of this Corporation, against expenses, judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with such proceeding if that person acted in good faith and in a manner that
person reasonably believed to be in the best interests of this corporation and,
in the case of a criminal proceeding, had no reasonable cause to believe the
conduct of that person was unlawful. The termination of any proceeding by
judgment, order, settlement, conviction, or upon a pleas of nolo contendere or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which the person reasonably believed to be
in the best interest of this Corporation or that the person had reasonable cause
to believe that the person's conduct was lawful.
Section 3. Actions by the Corporation.
This Corporation shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of this Corporation to procure a judgment in its favor by reason
of the fact that said person is or was an agent, counsel to the Corporation,
officer or director of this Corporation, against expenses actually and
reasonably incurred by that person in connection with the defense or settlement
of that action if that person acted in good faith, in a manner that person
believed to be in the best interests of this Corporation and with such care,
including reasonably inquiry, that such action would not be deemed grossly
negligent on the part of such agent (for the purposes of this Article V, the
term "agent" shall mean and include all officers, directors, counsel, and
employees). Indemnification shall be available under this Section 3, conditioned
only upon the following:
(a) In respect of any claim, issue or matter as to which that person may be
liable to this Corporation, the duty and obligation of the Corporation to defend
and indemnify such agent shall be absolute unless and only to the extent that
the court in which that action was brought shall determine, upon application,
that in view of all the circumstances of the case, said person acted with
reckless disregard equated to gross negligence with regard to the specific
claims made against said person;
(b) The indemnification provisions set forth herein are to be interpreted as
broadly as possible in their application to any officer, director, counsel or
agent of the corporation, to include accountants and counsel for the
corporation. Such interpretation shall treat these provisions as continuing
contractual obligations of the corporation and subsequent modification shall not
limit the effect of these provisions as applied to the covered classes who were
so covered, at any time following adoption hereof.
Section 4. Successful Defense by Agent.
To the extent that an agent of this corporation has been successful on the
merits or otherwise in defense of any proceeding referred to in Section 2 or 3
of this Article, or in defense of any claim, issue, or matter therein, the agent
shall be indemnified against expenses actually and reasonably incurred by the
agent in connection therewith. An agent shall be deemed successful if the Court
fails to make a specific finding regarding the degree of fault as set forth in
Section 3 hereinabove
Section 5. Required Approval.
Except as provided in Section 4 of this Article, any indemnification under this
Article shall be made by this Corporation only if authorized in the specific
case on a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in Sections 2 or 3 of this Article. by:
(a) A majority vote of a quorum consisting of Directors who are not parties to
the proceeding;
(b) Approval by the affirmative vote of a majority of the shares of this
corporation entitled to vote represented at a duly held meeting at which a
quorum is present or by written consent of holders of a majority of the
outstanding shares entitled to vote; or
(c) The court in which the proceeding is or was pending, on application made by
this corporation or the agent or the attorney or other person rendering services
in connection with the defense, whether or not such application by the agent,
attorney or other person is opposed by this Corporation.
Section 6. Advance of Expenses.
Expenses incurred in defending any proceeding may be advanced by this
Corporation before the final disposition of the proceeding on receipt of an
undertaking by or on behalf of the agent to repay the amount of the advance
unless it shall be determined ultimately that the agent is entitled to be
indemnified as authorized in this Article.
:
Section 7. Other Contractual Rights.
Nothing contained in this Article shall affect any right to indemnification to
which persons other than Directors and officers of this Corporation or any
subsidiary hereof may be entitled to contract or otherwise.
Section 8. Insurance.
Upon and in the event of a determination by the Board of Directors of this
Corporation to purchase such insurance, this Corporation shall purchase and
maintain insurance on behalf of any agent of the corporation against any
liability asserted against or incurred by the agent in such capacity or arising
out of the agent's status as such whether or not this corporation would have the
power to indemnify the agent against that liability under the provisions of this
section.
Section 9. Fiduciaries of Corporate Employee Benefit Plan.
This Article does not apply to any proceeding against any trustee, investment
manager, or other fiduciary of an employee benefit plan in that person's
capacity as such, even though that person may also be an agent of the
Corporation as defined in Section 1 of this Article. Nothing contained in this
Article shall limit any right to indemnification to which such trustee,
investment manager, or other fiduciary may be entitled by contract or otherwise,
which shall be enforceable to the extent permitted by applicable law other than
this Article.
ARTICLE VI
STOCK CERTIFICATES
Section 1. Form.
The shares of the Corporation shall be represented by certificates signed by the
President or Vice- President, and the Chief Financial Officer or the Secretary
of the Corporation. Any or all of such signatures may be facsimiles if
countersigned by a transfer agent, or registered by a registrar, other than the
Corporation itself or an employee of the Corporation. Each such certificate
shall also state:
(a) The name of the record holder of' the shares represented by such
certificate;
(b) The number of shares represented thereby;
<PAGE>
(b) A designation of any class or series of which such shares are a part;
(d) That the shares have a par value of $0.001;
(e) That the corporation is organized under the laws of the State of
Nevada.
_.
(f) Any restrictions applicable to the shares shall be so designated on the
face thereof.
Section 2. Transfers.
Transfer of shares of the Corporation shall be made in the manner set forth in
the Nevada Uniform Commercial Code. The Corporation shall maintain stock
transfer books, and any transfers shall be registered thereon only on request
and surrender of the stock certificate representing the transferred shares, duly
endorsed; if transfer is by Power of Attorney, the Power of Attorney shall be
deposited with the Secretary of the Corporation or with the designated Transfer
Agency.
Section 3. Lost, Destroyed and Stolen Certificates
No certificate or shares of stock in the Corporation shall be issued in place of
any certificate alleged to have been lost, destroyed, stolen, or mutilated
except on production of such evidence and provision of such indemnity to the
Corporation as the Board of Directors may prescribe.
ARTICLE VII
CORPORATE ACTIONS
Section 1. Contracts.
The Board of Directors may authorize any officer or officers, or any agent or
agents of the Corporation, to enter into any contract or to execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
Section 2. Loans.
No loan shall be made by the Corporation to its officers or Directors, and no
loan shall be made by the Corporation secured by its shares. No loan shat1 be
made or contracted on behalf of the Corporation and no evidences of indebted-
ness shall be issued in its name unless authorized by resolution of the Board of
Directors. Such authority may be general or confined to specific instances.
Section 3. Checks, Drafts or Orders.
All checks, drafts, or other orders for the payment of money by or to the
Corporation and all notes and other evidence 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 be determined by resolution of
the Board of Directors.
Section 4. Bank Deposits.
All funds of the Corporation not otherwise employed, shall be deposited to the
credit of the Corporation in such banks, trust companies, or other depositories
as the Board of Directors may select.
ARTICLE VIII
MISCELLANEOUS
Section 1. Inspection of Corporate Records.
The stock ledger and minute books may be kept by any information storage device
if readily convertible into legible form. Any shareholder of record, in person
or by an attorney or agent who presents proof of such position with guaranteed
signature on such proof, may, upon written demand under oath, stating purpose,
inspect for any proper purpose, the stock ledger, list of shareholders and make
written extracts of the same. Such extracts shall be made in writing by the
individual preparing or requesting such inspection and such inspection shall be
during normal business hours and shall not be made without at least five (5)
business days written notice thereof. Such notice, to be effective must be
received not at least five (5) business days prior to the proposed inspection
date, a signed receipt from the US Postal Service shall be proof of such notice
and the date of receipt.
Section 2. Inspection of Articles of Incorporation and Bylaws.
The original or a copy of the Articles of Incorporation and Bylaws of the
Corporation, as amended or otherwise altered to date, and certified by the
Secretary of the Corporation, shall at all times be kept at the principal
executive office of the Corporation. Such Articles and Bylaws shall be open for
inspection to all shareholders of record or holders of voting trust certificates
at all reasonable times during the business hours of the Corporation.
Section 3. Fiscal Year.
The fiscal year of the Corporation shall begin on the first day of January of
each year and end at midnight on the last day of December of the same year or as
otherwise determined by the Board of Directors.
Section 4. Construction and Definition.
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions contained in the applicable Nevada Statutes which
shall govern the construction of these Bylaws.
Without limiting the foregoing, the masculine gender where used included
the feminine and neuter; the singular number includes the plural, and the plural
number includes the singular, "shall" is mandatory and "may" is permissive; and
"person" includes the Corporation as well as a natural person.
ARTICLE IX
AMENDMENTS TO BYLAWS
These Bylaws may be amended at any time by a majority vote of the Board of
Directors or by a majority vote of the outstanding shares held by the share-
holders of the corporation.
CERTIFICATE OF SECRETARY OF ADOPTION BY DIRECTORS
I HEREBY CERTIFY that I am the duly elected, qualified and acting Secretary of
the above-named Corporation and that the above and foregoing Bylaws were adopted
as the Bylaws of said Corporation on the date set forth above by a majority of
vote of the shareholders of said Corporation.
Dated: December 10, 1997 /s/ Shawni M. Larrabee
Incorporator/Initial Director
<PAGE>
EXHIBIT NO. 6
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<PAGE>
OPTION AGREEMENT
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THIS AGREEMENT made this 1st day of August,1998
BETWEEN:
DONN CAPITAL CORP., a company incorporated under the laws of British Columbia
having its registered office at 204 - 5405 12th Avenue, Delta, British Columbia,
Canada, V4M 2B2 (known herein as "Donn") ON THE FIRST PART
AND:
HADRO RESOURCES, INC., a company incorporated under the laws of the State of
Nevada having its registered office at 145 Tyee Drive, #1526, Point Roberts,
Washington, 98281-9602 (known herein as "Hadro") ON THE SECOND PART
WHEREAS:
A. Donn has under its control certain oil and gas leases located in Redwater,
Alberta and is interested in selling to Hadro a fifty percent (50%) interest
therein:
B. Hadro wishes to acquire a fifty percent (50%) interest in the oil and gas
leases held by Donn in Redwater, Alberta, more fully described in paragraph A
above.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the mutual
covenants and agreements herein contained and the sum of One Dollar ($1.00) paid
to Donn by Hadro, the receipt of which is hereby acknowledged, the parties agree
as follows:
1. DEFINITIONS
1.01 In this Agreement, including the recitals and schedules hereto, unless
there is something in the subject matter or context inconsistent therewith, the
following words and expressions shall have the following meanings:
(a) "Agreement" means this Option Agreement as amended from time to time;
(b) "Leases" means the oil and gas leases being acquired from Donn as more
fully described under paragraph A above;
(c) "Interest" means a fifty percent (50%) in the leases more fully
described under recital "A" above;
(d) "Project" means the Redwater area oil and gas leases held by Donn as to
four percent (4%) of which Hadro will acquire fifty percent (50%) of the four
percent (4%), or a two percent (2%); and
(e) "Property" means the Redwater area.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS
2.01 Donn represents and warrants to Hadro that:
(a) it is a company duly incorporated, organized and validly existing under
the laws of its incorporating jurisdiction;
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or contemplated
by this Agreement;
(c) the Project is presently owned by Donn as to four percent (4%);
(d) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated, conflict with, will result in the breach
of, or accelerate the performance required by, any agreement to which it is a
party; and
(e) the execution and delivery of this Agreement and the agreements
contemplated hereby will not violate or result in the breach of the laws of any
jurisdiction applicable or pertaining thereto or of its constating documents.
2.02 Hadro represents and warrants to Donn that:
(a) it is a company duly incorporated, organized and validly existing under
the laws of its incorporating jurisdiction;
(b) it has full power and authority to carry on its business and to enter
into this Agreement and any agreement or instrument referred to or contemplated
by this Agreement;
(c) neither the execution and delivery of this Agreement nor any of the
agreements referred to herein or contemplated hereby, nor the consummation of
the transactions hereby contemplated conflict with, will result in the breach
of, or accelerate the performance required by, any agreement to which it is a
party; and
(d) the execution and delivery of this Agreement and the agreements contemplated
hereby will not violate or result in the breach of the laws of any jurisdiction
applicable or pertaining thereto or of its constating documents.
2.03 The representations, warranties and covenants herein- before set out
are conditions on which the parties have relied in entering into this Agreement
and shall survive the acquisition of any Interest in the Project by Hadro and
any loss, damage, cause of action and suits arising out of or in connection with
any breach of any representation warranty, covenant, agreement or condition made
by them and contained in this Agreement.
3. OBLIGATIONS OF HADRO
3.01 Hadro shall pay to Donn, in United States currency, the sum of Twenty
Thousand Dollars (US $20,000) on or before August 1, 1999, one (1) year from the
date of the signing of this Option Agreement; and
3.02 Hadro agrees that if it does not pay to Donn the full amount of the sum
indicated in 4.01 above within the required period that it will have no future
interest in the Project.
4. OBLIGATIONS OF DONN
4.01 Upon receipt of payment in full in the amount of Twenty Thousand
Dollars in United States currency(US $20,000) for the 2% Interest in the
Project, Donn will undertake to transfer title in the Leases of the 2% ownership
share held by Hadro and will deliver to Hadro, on a period basis to be
determined, Hadro's share of any oil and gas revenues earned from the Leases,
after deduction of all pulling costs and associated costs charged by the
operator, during the option period (August 1, 1998 to August 1, 1999) and
thereafter.
4.02 Donn will assist Hadro in dealing with the operator of the Leases, as
and when required.
5. AREA OF INTEREST
5.01 In respect of this Agreement, the only area of interest shall be the
oil and gas Leases owned by Donn, as more fully described in the recitals
herein. There is no obligation on the part of Donn to give a right of first
refusal to Hadro in any other Projects or Leases currently under the control of
Donn or to be acquired by Donn in the future.
6. TERMINATION OF AGREEMENT
7.01 This Agreement shall terminate:
(a) if Hadro fails to make the required option payment as mentioned under
4.01 above: and
(b) if either Hadro and/or Donn gives notice in accordance with paragraph
7.
7. TERMINATION PRIOR TO FINALIZATION OF AGREEMENT
7.01 At any time prior to the finalization of the terms and conditions of
this Agreement, either Hadro and/or Donn can terminate this Agreement, by giving
ninety (90) days' notice in writing to that effect to each other, and upon
receipt of such notice by either party, the Agreement shall become null and void
and of no further force or effect.
8. FORCE MAJEURE
8.01 No party will be liable for its failure to perform any of its
obligations under this Agreement due to a cause beyond its reasonable control
(except those caused by its own lack of funds) including, but not limited to
acts of God, fire, storm, flood, explosions, strikes, lockouts or other
industrial disturbances, act of the public enemy, riots, laws, rules and
regulations or orders of any duly constituted governmental authority, including
environmental protection agencies, or non-availability of materials or
transportation.
8.02 All time limits imposed by this Agreement will be extended by a period
equivalent to the period of delay resulting from events described in paragraph
9.01 hereof but may not exceed ninety (90) days in total.
8.03 A party relying on the provisions of paragraph 8.01 hereof will take
all reasonable steps to eliminate any of the events mentioned in 8.01 and, if
possible, will perform its obligations under this Agreement as far as
practicable, but nothing herein will require such party to settle or adjust any
labour dispute or to question or to test the validity of any law, rule,
regulation or order of any duly constituted governmental authority or to
complete its obligations under this Agreement if an event under 8.0 l renders
completion impossible.
9. NOTICE
9.01 Any notice, direction, cheque or other instructions required or
permitted to be given under this Agreement shall be in writing and may be given
by the delivery of the same or by mailing the same by prepaid registered or
certified mail or by sending the same by telegram, telex, telecommunication or
other similar forms of communication including facsimile, in each case addressed
to the intended recipient at the address of the respective party set out on the
front page hereof.
9.02 Any notice, direction, cheque or other instrument aforesaid will, if
delivered, be deemed to have been given and received on the day it was
delivered, and if mailed, be deemed to have been given and received on the fifth
business day following the day of mailing, except in the event ora disruption of
the postal service in which event notice will be deemed to be received only when
actually received and, if sent by telegram, telex, fax machine,
telecommunication or other similar form of communication, be deemed to have been
given or received on the day it was so sent.
9.03 Any party may at any time give to the other notice in writing of any
changes or address of the party giving such notice and from and after the giving
of such notice the address or addresses therein specified will be deemed to be
the address of such party for the purposes of giving notice hereunder.
10. FURTHER ASSURANCES
10.01 Each of the parties hereto shall from time to time and at all times do
all such further acts and execute and deliver all further deeds and documents as
shall be reasonably required in order to fully perform and carry out the terms
of this Option Agreement. For greater certainty, this section shall not be
construed as imposing any obligation on any party to provide guarantees.
11. ENTIRE AGREEMENT
11.01 This Agreement embodies the entire agreement and understanding between
Hadro and Donn and supersedes all prior agreements and undertakings, whether
oral or written, relative to the subject matter hereof.
12. AMENDMENTS
12.01 This Agreement may be changed orally but only by an agreement in writing,
executed under seal, by the party or parties against which enforcement, waiver,
change, modification or discharge is sought.
13. ARBITRATION
13.01 If any question, differences or disputes shall arise between the parties
in respect of any matters arising under this Agreement or in relation to the
construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
(a) the party sharing one side of the dispute shall name an arbitrator and
give notice thereof to the party sharing the other side of the dispute:
(b) the party sharing the other side of the dispute shall, within 14 days of
receipt of the notice, name an arbitrator; and
(c) the two arbitrators so named shall, within 15 days of the naming of the
latter of them, select a third arbitrator.
The decision of the majority of these arbitrators shall be made within 30 days
after the selection of the latter of them. The expense of the arbitration shall
be borne equally by Hadro and Donn. If the parties on either side of the dispute
fail to name an arbitrator within the time limit or proceed with the
arbitration, the arbitrator named may decide the question. The place of
arbitration shall be Vancouver, British Columbia, Canada.
14. RULES AGAINST PERPETUITIES
14.01 If any right, power or interest of either Hadro or Donn under this
Agreement would violate the Rule against perpetuities, then such right, power
and interest shall terminate at the expiration of 20 years after the death of
the last survivor of all the lineal descendants of his late Majesty, King George
V of England, living on the date of execution of this Agreement.
15. INUREMENT
15.01 This Agreement shall enure to the benefit and be binding upon the parties
hereto and their respective successors and permitted assigns.
16. GOVERNING LAW
16.01 This Agreement shall be governed by and interpreted in accordance with the
laws of the Province o British Columbia, Canada.
17. SEVERABILITY
17.01 If any one or more of the provisions contained herein shall be
invalid, illegal or unenforceable in any respect in any jurisdiction, the
validity, legality, and enforceability of such provision shall not in any way be
affected or impaired thereby in any other jurisdiction and the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.
18. NUMBER AND GENDER
18.01 Words used herein importing the singular number only shall include the
plural, and vice versa, and words importing the masculine gender shall include
the feminine and neuter genders, and vice versa, and words importing persons
shall include firms and corporations.
19. HEADINGS
19.01 The division of this Agreement into articles and sections and the
insertion of headings are for convenience of reference only and shall not affect
the construction or interpretation of this Agreement.
20. CURRENCY
20.01 All references to currency are stated in United States currency unless
otherwise stated.
21. TIME OF THE ESSENCE
21.01 Time shall be of the essence in the performance of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as of
the day, month and year first above written.
THE COMMON SEAL OF HADRO
RESOURCES, INC. was hereunto affixed
in the presence of
/s/ Marilyn Rafter, Director
/s/ Gene D. Wilson, Director
THE COMMON SEAL OF DONN
CAPITAL CORP. was hereunto affixed in
the presence of:
/s/ Frank W. Donis
THE COMMON SEAL OF HADRO
RESOURCES, INC. was hereunto affixed
in the presence of
/s/ Marilyn Rafter, Director
/s/ Gene D. Wilson, Director
THE COMMON SEAL OF DONN
CAPITAL CORP. was hereunto affixed in
the presence of:
/s/ Frank W. Donis
