<PAGE>
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS UNDER THE 1934 ACT
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-SB
UTILICORE CORPORATION
---------------------
(Name of Small Business Issuer in its charter)
DELAWARE 65-0766749
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1549 STATE STREET, SARASOTA, FLORIDA 34236
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (941) 363-9300
Securities to be registered under Section 12(b) of the Act:
NONE
Securities to be registered under Section 12(g) of the Act:
Common Stock $0.0005 par value
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(Title of each class)
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PART I
ITEM ONE. DESCRIPTION OF THE BUSINESS
A. BUSINESS DEVELOPMENT
Utilicore Corporation (the "Company" or the "Registrant") is a Delaware
Corporation. The Company's principal business address is 1549 State Street,
Sarasota, Florida 34236 and its telephone number is (941) 363-9300.
The Company was incorporated under the laws of the State of Delaware on March
6, 1997 for the purpose of engaging in the business of developing private
telecommunications systems for residential, multiple dwelling unit properties.
Since its inception, the Company has been in the development stage and until
recently has not engaged in any significant business activity. Present
management has been involved with the Company since its inception. On February
4, 1998, the Company elected four new directors, Messrs. John Williams, Don
Clark, James J. Cooney, and John W. Cooney, and a new Vice President of
Technology, Jon F. Ellis. As of the date hereof, the Company had a total of
20,000,000 common shares issued and outstanding. The Company has never been a
party to any bankruptcy or insolvency proceeding.
B. NARRATIVE DESCRIPTION OF THE BUSINESS
1. General
Since its inception, the Company has been in the development stage and until
recently has not engaged in any significant business activity. No independent
market surveys have ever been conducted to determine demand for the Company's
products and services, since the Company has not provided substantial products
or services since it was incorporated. The Company has carried on no material
operations and generated no material revenues since inception. As more fully
described below, the Company intends to develop a private telephone company to
provide both local and long distance telephone service to the residential,
multiple dwelling unit market. The Company also intends to install, operate
and provide private cable television service at various locations under
long-term contractual agreements.
2. Organization
The Company presently comprises one corporation with no subsidiaries or parent
entities and is in the developmental stage.
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3. Operations
Proposed Plan of Operation
Since inception, the Company has been essentially inactive. To date, most of
the Company's focus has been directed towards organizational efforts. The
Company intends to capitalize on the opportunities created by the
Telecommunications Reform Act of 1996 and other recent regulatory developments
on the federal and state level which are designed to increase competition in
the provision of local and long distance communication services.
The Company has been certified by the Florida State Public Service Commission
as both an Alternative Local Exchange Company ("ALEC") and an Inter-Exchange
Carrier ("IXC"). These certifications enable the Company to function as both a
local and long distance telephone company, serving customers anywhere within
the state of Florida. As an ALEC and an IXC, the Company is able to purchase
services from incumbent local telephone companies, such as BellSouth and GTE,
at wholesale rates and re-sell those services at retail rates. The Company is
planning to compete with the existing telephone companies for a piece of the
$200 billion telephone business. The Company believes that it has the ability
to offer customers lower prices than the incumbents because of lower overhead
and the ability to pick and choose the most profitable customers. Unlike the
incumbent telephone companies, the Company has no need to serve unprofitable
market segments and can therefore concentrate on high profit segments of the
telephone business.
The Company's primary business is expected to consist of providing both local
and long distance telephone service to residential customers living in
multiple dwelling unit configurations, including condominiums, apartment
buildings, and mobile home parks. The Company intends to serve small to medium
sized business customers. Initially the Company intends to re-sell service
provided by the incumbent local exchange companies. This means that the
customer continues to use the incumbent's facilities, but the Company will
bill the end user for service. As a certified Alternative Local Exchange
Company, the incumbent telephone companies are required to sell to the Company
on a discounted basis. Once sufficient penetration has been achieved in a
multiple dwelling unit ("MDU"), typically fifty percent (50%), the Company may
install a telephone switch at that location. By locating a switch on the
premises, the Company becomes a "facilities based carrier." This means that
the Company can begin to offer switched services itself, thereby lowering its
cost of providing service to the individual customer. Locating a switch on
premise enables the Company to offer more services and to operate at higher
profit margins.
4. Markets
The Company's initial marketing strategy is to target the multiple dwelling
unit market. There are several key reasons for this selection, including: huge
numbers of MDUs in Florida; readily identified targets; and, the opportunity
to install facilities on a project by project basis, enabling the utilization
of a facilities based approach. These factors create a situation which
presents the greatest likelihood for successful implementation.
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5. Raw Materials
The use of raw materials is not now a material factor in the Company's
operations.
6. Competition
The Federal Communications Commission ("FCC") and state regulators are
evolving from monopoly rate regulation of local exchange carriers to
competitive market rates. Their primary tool is the encouragement of
competition through interconnection mandates and economic incentives based on
access reform. This creates a rare opportunity for new companies to enter the
multi-billion dollar local exchange market and establish market positions as
Competitive Local Exchange Carriers ("CLECs").
Competition in the market to be served by the Company is intense and subject
to rapid change. Furthermore, due to the increased demand for products and
services such as those to be offered by the Company, management expects that
competition will continue to increase in the future as more companies enter
the field of telephony. The Company's current and prospective competitors
include many companies that have substantially greater name recognition and
financial, technical and marketing resources than the Company. There can be no
guarantee that the Company's competitors will not be able to offer customers
more competitive pricing or to adapt more quickly than the Company to new
technologies and evolving customer requirements. Consequently, there can be no
assurance that the Company will be able to compete successfully in its target
markets.
7. Reliance on key customers
The Company does not intend to rely on any specific key customer or group of
customers.
8. Backlog
There are no current backlogs.
9. Proprietary Information, Trademarks and Patents
The Company has been certified by the Florida State Public Service Commission
as both an Alternative Local Exchange Company ("ALEC") and an Inter-Exchange
Carrier ("IXC").
10. Government Regulation
Overview
The Company's services are subject to varying degrees of federal, state and
local regulation. The FCC generally exercises jurisdiction over the services
offered by telecommunications common carriers that provide interstate or
international communications. The state regulatory commissions
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retain jurisdiction over the same facilities and services to the extent they
are used to provide intrastate communications.
Federal Legislation
The Company must comply with the requirements of common carriage under the
Communications Act of 1934, as amended (the "Communications Act"). The Telecom
Act, enacted on February 8, 1996, substantially revised the Communications
Act. The Telecom Act establishes a regulatory framework for the introduction
of local competition throughout the United States and is intended to reduce
unnecessary regulation to the greatest extent possible. Among other things,
the Telecom Act preempts, after notice and an opportunity for comment, any
state or local government from prohibiting any entity from providing
telecommunications service. This provision invalidated prohibitions on entry
found in almost half of the states in the country at the time the Telecom Act
was passed.
The Telecom Act also establishes a dual federal-state regulatory scheme for
eliminating other barriers to competition faced by competitors to the ILECs
and other new entrants into the local telephone market. Specifically, the
Telecom Act imposes on ILECs certain interconnection obligations, some of
which are to be implemented by FCC regulations. The Telecom Act contemplates
that states will apply the federal regulations and oversee the implementation
of all aspects of interconnection not subject to FCC jurisdiction as they
oversee interconnection negotiations between ILECs and their new competitors.
The FCC has significant responsibility in the manner in which the Telecom Act
will be implemented especially in the areas of universal service, access
charges and price caps. The details of the rules adopted by the FCC will have
a significant effect in determining the extent to which barriers to
competition in local services are removed, as well as the time frame within
which such barriers are eliminated.
The state Public Utility Commissions ("PUCs") have an even more significant
responsibility in implementing the Telecom Act. Specifically, the states have
authority to establish interconnection pricing, including unbundled loop
charges, reciprocal compensation and wholesale pricing. The states are also
charged under the Telecom Act with overseeing the arbitration process for
resolving interconnection negotiation disputes between CLECs and the ILECs.
The Telecom Act imposes on ILECs certain interconnection obligations that,
taken together, grant competitive entrants such as the Company what is
commonly referred to as "co-carrier status." It is anticipated that co-carrier
status and the preemption of state and local prohibitions on entry could
permit the Company to become a full service provider of switched
telecommunications services anywhere in the United States. In addition, the
Telecom Act, as passed, provided that ILECs that are subsidiaries of Regional
Bell Operating Companies ("RBOCs") could not offer in-region, long distance
services across Local Access Transport Areas ("LATAs") until they had
demonstrated that (i) they have entered into an approved interconnection
agreement with a facilities-based CLEC or that no such CLEC has requested
interconnection as of a statutorily determined deadline, (ii) they
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have satisfied a 14-element checklist designed to ensure that the ILEC is
offering access and interconnection to all local exchange carriers on
competitive terms and (iii) the FCC has determined that in-region, inter-LATA
approval is consistent with the public interest, convenience and necessity.
Recently, a United States District Court ruled that these RBOC-specific
provisions were unconstitutional.
Federal Regulations and Related Proceedings
The Telecom Act gives the FCC the authority to forebear from regulating
companies if it finds such regulation does not serve the public interest, and
directs the FCC to review its regulations for continued relevance on a regular
basis. As a result of this directive, a number of the regulations that
historically applied to CLECs have been and may continue to be eliminated in
the future. While it is therefore expected that a number of regulations that
were developed prior to the Telecom Act will be eliminated in time, those
which apply to the Company at present are discussed below. Pursuant to its
authority to forebear, the FCC has adopted orders eliminating tariff filing
requirements for non-dominant carriers providing interstate access and
domestic interstate long distance services. However, on February 13, 1997, the
United States Court of Appeals for the District of Columbia granted motions
for stay of the FCC order detariffing domestic interstate long distance
service pending judicial review of that order. The result of this stay is that
carriers must continue to file tariffs for interstate long distance services.
Tariff filing requirements remain in place for international traffic. The
Company is in the process of filing federal interstate long distance,
interstate access and international tariffs. The Company has been granted
authority by the FCC to offer interstate telephone services domestically and
internationally. The Company will be filing for authority to conduct business
and provide CLEC services in several other states
In addition to its forbearance activities, the FCC also has proposed reducing
the level of regulation that applies to the ILECs, and increasing their
ability to respond quickly to competition from the Company and others. For
example, in accordance with the Telecom Act, the FCC has applied "streamlined"
tariff regulation to the ILECs, which greatly accelerates the time prior to
which changes to tariffed service rates may take effect, and has eliminated
the requirement that ILECs obtain FCC authorization before constructing new
domestic facilities. These actions will allow ILECs to change service rates
more quickly in response to competition. Similarly, the FCC has proposed
affording significant new pricing flexibility to ILECs subject to price cap
regulation. To the extent such increased pricing flexibility is provided, the
Company's ability to compete with ILECs for certain service may be adversely
affected. In addition, a United States District Court in Texas recently
invalidated certain provisions of the Telecom Act which prohibited the RBOC's
from engaging in certain manufacturing and marketing activities and
conditioned RBOC provision of in-region long distance service upon a
demonstration that the local market had been opened to competition.
The FCC has taken several actions related to the assignment of telephone
numbers, first in July 1995 mandating the responsibility for administering and
assigning local telephone numbers be transferred from the RBOC's and a few
other ILECs to a neutral entity, and second in July 1996 adopting a regulatory
structure under which a wide range of number portability issues would be
resolved. In
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March 1997, the FCC affirmed its number portability rules, but it extended
slightly certain deadlines for the implementation of true number portability.
The FCC plans to establish cost recovery rules for long-term number
portability.
On August 8, 1996, the FCC issued an order containing rules providing guidance
to the ILECs, CLECs, long distance companies and state PUCs regarding several
provisions of the Telecom Act. The rules include, among other things, FCC
guidance on: (i) discounts for end-to-end resale of ILEC retail local exchange
services (which the FCC has suggested should be in the range of 17%-25%); (ii)
availability of unbundled local loops and other unbundled ILEC network
elements; (iii) the use of Total Element Long Run Incremental Costs in the
pricing of these unbundled network elements; (iv) average default proxy prices
for unbundled local loops in each state; (v) mutual compensation proxy rates
for termination of ILEC/CLEC local calls; and (vi) the ability of CLECs and
other interconnectors to opt into portions of previously-approved
interconnection agreements negotiated by the ILECs with other parties on a
most favored nation (or a "pick and choose") basis.
On May 8, 1997, the FCC released an order establishing a significantly
expanded federal universal service program which subsidized certain eligible
services. For example, the FCC established new subsidies for services provided
to qualifying schools and libraries with an annual cap of $2.25 billion and
for services provided to rural health care providers with an annual cap of
$400 million. The FCC also expanded the federal subsidies to low-income
consumers and consumers in high-cost areas. All providers of interstate
telecommunications service, such as the Company, must pay for these programs.
In the May 8, 1997 order, the FCC also announced that it will soon revise its
rules for subsidizing service provided to consumers in high cost areas.
Several parties have appealed the May 8, 1997 order. Such appeals have been
consolidated and transferred to the United States Court of Appeals for the
Fifth Circuit where they are currently pending. In addition, on July 3, 1997,
several ILECs filed a petition for stay of the May 8, 1997 order with the FCC.
That petition is also pending.
In a combined Report and Order and Notice of Proposed Rulemaking released on
December 24, 1996, the FCC made changes and proposed further changes in the
interstate access charge structure. In the Report and Order, the FCC removed
restrictions on an ILEC's ability to lower access prices and relaxed the
regulation of new switched access services in those markets where there are
other providers of access services. If this increased pricing flexibility is
not effectively monitored by federal regulators, it could have a material
adverse effect on the Company's ability to compete in providing interstate
access services. On May 16, 1997, the FCC released an order revising its
access charge rate structure. The new rules substantially increase the costs
that ILECs subject to the FCC's price cap rules ("price cap LECs") recover
through monthly, non-traffic sensitive access charges and substantially
decrease the costs that price cap LECs recover through traffic sensitive
access charges. In the May 16, 1997 order, the FCC also announced its plan to
bring interstate access rate levels more in line with cost. The plan will
include rules to be established sometime this year that grant price cap LECs
increased pricing flexibility upon demonstrations of increased competition (or
potential competition) in relevant markets. The manner in which the FCC
implements this approach to lowering access charge levels will have a material
effect on the Company's ability to compete in
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providing interstate access services. Several parties have appealed the May 16
order. Those appeals have been consolidated and transferred to the United
States Court of Appeals for the Eighth Circuit where they are currently
pending.
As part of its overall plan to lower interstate access rates, the FCC also
released an order on May 21, 1997, in which the FCC revised its price cap
rules. In the May 21 order, the FCC increased the so-called X-Factor (the
percentage by which price cap LECs must lower their interstate access charges
every year, net of inflation and exogenous cost increases) and made it uniform
for all price cap LECs. The results of these rule changes will be both a
one-time overall reduction in price cap ILEC interstate access charges and an
increase in the rate at which those charges will be reduced in the future.
Several parties have appealed the May 21 order. Those appeals were
consolidated and transferred to the United States Court of Appeals for the
Tenth Circuit. They have been subsequently transferred to the United States
Court of Appeals for the District of Columbia where they are currently
pending.
The Company anticipates that the FCC will initiate a number of additional
proceedings, of its own volition and as a result of requests from CLECs and
others, as a result of the Telecom Act. While the Eighth Circuit's recent
decision in the appeal of the August 8, 1996 order limits the FCC's
jurisdiction over the local competition provisions of the Telecom Act and
while the decision of the United States District Court for the Northern
District of Texas has held that the RBOC-specific provisions of the Telecom
Act are unconstitutional and this issue has been raised in other proceedings
(see above and below), such proceedings may nonetheless further define and
construe the Telecom Act's terms.
The FCC also requires carriers to file periodic reports concerning carriers
interstate circuits and deployment of network facilities. The FCC generally
does not exercise direct oversight over cost justification and the level of
charges for services of non-dominant carriers, although it has the power to do
so. The FCC also imposes prior approval requirements on transfers of control
and assignments of operating authorizations. The FCC has the authority to
generally condition, modify, cancel, terminate, or revoke operating authority
for failure to comply with federal laws or rules, regulations and policies of
the FCC. Fines or other penalties also may be imposed for such violations.
There can be no assurance that the FCC or third parties will not raise issues
with regard to the Company's compliance with applicable laws and regulations.
Eighth Circuit Court of Appeals Decision
Various parties, including ILECs and state PUCs, requested that the FCC
reconsider its own rules and/or filed appeals of the FCC's August 8, 1996
order in various United States Courts of Appeal. Also, several parties
petitioned the FCC and the courts to stay the effectiveness of the FCC's rules
included in the FCC's order, pending a ruling on the appeals. The appeals were
consolidated and transferred to the United States Court of Appeals for the
Eighth Circuit.
On July 18, 1997, the Eighth Circuit overturned the pricing rules established
in the August 8, 1996 order, except those applicable to commercial mobile
radio service providers. The Eighth Circuit held
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that, in general, the FCC does not have jurisdiction over prices for
interconnection, resale, leased unbundled network elements and traffic
termination. The Eighth Circuit also overturned the FCC's "pick and choose"
rules as well as certain other FCC rules implementing the Telecom Act's local
competition provisions. In addition, the Eighth Circuit decision substantially
limits the FCC's authority to enforce the local competition provisions of the
Telecom Act. The FCC and others have appealed the Eight Circuit decision to
the United States Supreme Court, and the United States Supreme Court granted
certiorari on January 26, 1998.
The decision does not delay the implementation of the Telecom Act by the
parties and by the state PUCs, but rather eliminates the guidance on pricing
and most favored nation procedures as well as other issues that the FCC sought
to provide to the parties and the state PUCs. However, since the Eighth
Circuit decision creates uncertainty about the rules governing pricing, terms
and conditions of interconnection agreements, it could make negotiation and
enforcement of such agreements more difficult and protracted, and may require
renegotiation of existing agreements. In the long term, the Eighth Circuit's
decision makes it more likely that the rules governing local competition will
vary from state to state. Most states have already begun to establish rules
for local competition that are consistent with the FCC rules overturned by the
Eighth Circuit. If a patchwork of state regulations were to develop, it could
increase the Company's costs of regulatory compliance and could make
competitive entry in some markets more difficult and expensive than in others.
United States District Court Decision
On July 2, 1997, the Southwestern Bell Corporation ("SBC") and its local
exchange carrier subsidiaries filed a lawsuit in the United States District
Court for the Northern District of Texas challenging on United States
Constitutional grounds the Telecom Act restrictions applicable to the RBOC's
only. The plaintiffs in the case sought both a declaratory judgment and an
injunction against the enforcement of the challenged provisions. On December
31, 1997, this United States District Court ruled that Sections 271-275 of the
Telecom Act were unconstitutional on the grounds that these sections
constituted a "bill of attainder." Based on this United States District Court
ruling, the RBOC's that are parties to this preceding could technically
re-enter the inter-LATA long distance market immediately.
The FCC and long distance carriers requested a stay of the decision, which has
been granted. The Company expects that the decision of the United States
District Court will be appealed to the United States Court of Appeals for the
Fifth Circuit and, likely, to the United States Supreme Court. In addition,
BellSouth has appealed to the United States Court of Appeals for the D.C.
Circuit the FCC's prior decision denying BellSouth's application to provide
in-region long distance service in South Carolina. BellSouth challenged the
decision on the same grounds on which SBC challenged Sections 271-275 of the
Telecom Act. On January 14, 1998, the North Carolina PUC gave BellSouth
approval to file with the FCC to provide long distance services in North
Carolina, provided it first improves its operating support systems and
performance measures.
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11. Research and Development
The Company intends to maintain R&D capability related to advancing network
technologies, planning and design. This will insure the Company's continuing
ability to select and negotiate with its suppliers and to effectively maintain
a competitive network in terms of feature capabilities and cost structure.
The Company expended approximately $50,000 for R&D during the last fiscal
year. In addition, the Company expects to spend approximately $200,000 on R&D
in the current fiscal year.
12. Environmental Compliance
Certain jurisdictions will require the Company to prepare and file
environmental impact statements and obtain approvals prior to commencing
operation.
13. Employees
The Company currently employs twenty-two employees of which twenty-one are
full time. The Company plans to hire twenty additional employees in the next
fiscal year.
ITEM TWO. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
A. RESULTS OF OPERATIONS
The Company has generated no substantial revenues from operations and has been
a development stage company since inception. Since the Company has not
generated revenues and has not been in a profitable position, it operates with
minimal overhead. As of the date hereof, the Company had 20,000,000 shares of
common stock outstanding. The Company's offerings have only raised sufficient
capital to finance start-up operations. The Company will require substantial
additional capital to continue operations.
There are a variety of factors which may affect the Company's liquidity, net
sales, or revenues including: (1) the speed with which the Company's
competitors arrive in the marketplace; (2) the degree of decreased regulation
for ILEC's; (3) the outcome of all of the pending legislation; (4) the ability
of the current market to remain stable and robust; and (5) continued growth in
pent-up demand for new technologies and services.
ITEM THREE. DESCRIPTION OF PROPERTIES
The Company's headquarters are located at 1549 State Street, Sarasota, Florida
34236. In May 1998 the Company signed a five-year lease for these premises.
Additionally, the Company has leased a small (1800 square feet) warehouse
facility on a one-year lease for the preparation and assembly of network
devices. Minimum future obligations under the two agreements are as follows:
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Year Ending
January 31, Amount
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1999 $ 100,260.00
2000 100,840.00
2001 104,870.00
2002 109,065.00
2003 84,230.00
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$ 499,265.00
ITEM FOUR. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth the number of shares of the Registrant's $.0005 par
value common stock beneficially owned by (i) each person who, as of the date
hereof, was known by the Company to own beneficially more than five percent
(5%) of its common stock; (ii) each of the Named Executive Officers; (iii) the
individual Directors of the Registrant; and (iv) the Officers and Directors of
the Registrant as a group. As of the date hereof, there were 20,000,000 common
shares issued and outstanding.
<TABLE>
<CAPTION>
Title of Name and Address of Amount of Beneficial Percent of Class
Class Beneficial Owner Ownership
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<S> <C> <C> <C>
Common
CIH Limited Partnership- 3773 3,214,375 16.07%
Howard Hughes Parkway, Ste. 500N,
Las Vegas, NV 89109
JLG Limited Partnership- 3,214,375 16.07%
3773 Howard Hughes Parkway, Ste.
500N, Las Vegas, NV 89109
Gregory E.Webb- 140 Carnoustie 3,214,375 16.07%
Way, Media, PA 19085
Cathy Neifeld- 184A Abrahams Lane, 1,607,188 8.04%
Villanova, PA 19147
Scott Neifeld- 823 Bainbridge St., 1,607,187 8.04%
Philadelphia, PA 19147
</TABLE>
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<TABLE>
<CAPTION>
Title of Name and Address of Amount of Beneficial Percent of Class
Class Beneficial Owner Ownership
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common
David Bednarsh (officer, 645,000 3.23%
director)- 6908 Country Lakes
Circle, Sarasota, FL 34243
Thomas M. Beard (officer, 645,000 3.23%
director)- 5220 Greystoke Lane,
Tallahassee, FL 32308
Henry C. Kavett (officer, 645,000 3.23%
director)- 1055 Lowden Ave, Union,
NJ 07083
Robert M. Miscavage (officer)- 645,000 3.23%
3349 Plantation Drive, Sarasota,
FL 34231
Jon F. Ellis (officer)- 3207 360,000 1.8%
Huntington Place Drive, Sarasota,
FL 34237
John Williams (director)- P.O. Box 50,000 .25%
4294
Incline Village, NV 99451
Don Clark (director)- 50,000 .25%
35022 Nashua Blvd., Sorrento, FL
32776
James J. Cooney (director)- 2801 50,000 .25%
Florida Ave., Unit 413, Coconut
Grove, FL 33133
John W. Cooney (director)- 3190 50,000 .25%
Via Abitare, Miami, FL 331333
Officers and Directors as a group 3,140,000 15.7%
</TABLE>
ITEM FIVE. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The Directors and Executive Officers of the Company, their ages and present
positions held in the Company are as follows:
NAME AGE POSITION HELD
- ---- --- -------------
David Bednarsh 50 President, Director
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Thomas M. Beard 48 Vice President, Director
Henry C. Kavett 43 Vice President, Director
Jon F. Ellis 29 Vice President
Robert M. Miscavage 55 Vice President
John Williams 50 Director
Don Clark 67 Director
James J. Cooney 59 Director
John W. Cooney 62 Director
The Company's Directors will serve in such capacity until the next annual
meeting of the Company's shareholders and until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. Aside from James J. Cooney and John W. Cooney being brothers, there
are no family relationships among the Company's officers and directors, nor
are there any arrangements or understandings between any of the directors or
officers of the Company or any other person pursuant to which any officer or
director was, or is, to be selected as an officer or director.
DAVID BEDNARSH. Mr. Bednarsh has been President and a Director of the Company
since its inception. For nearly twenty-five years, Mr. Bednarsh has been
actively engaged in the successful development of commercial ventures based
upon cutting edge technologies in the communications industry. Recently, he
has been involved in the development of private cable television systems for
multiple dwelling units ("MDUs") and has spearheaded efforts to develop
commercially viable home delivery of entertainment, sports, and news
programming utilizing broadband networks implemented by major telephone
companies. He has also been responsible for developing Wireless Cable
television systems which utilize microwave radio frequencies to deliver
programming to the household. In the early 1980's, Mr. Bednarsh was one of the
earliest entrants in the cellular telecommunications industry, having begun
his efforts more than two years before the first commercial cellular system
was built. He was responsible for creating joint ventures with independent
telephone companies which ultimately were awarded FCC licenses to build
cellular telephone systems. He began what was later called the settlement
process through which several thousand cellular applicants were able to
participate in system ownership. Mr. Bednarsh began his involvement with the
communications industry in broadcast television and later moved into
consulting, when he joined a major international consulting firm. Mr. Bednarsh
had the opportunity to work with a wide variety of Fortune 500 clients,
ultimately focusing on the telecommunications industry where he became exposed
to nearly every aspect of telephone company operations. Over the years his
consulting clients included the pre-divestiture AT&T, all of the Bell
operating
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telephone companies, COMSAT Corp., Bell Canada, Western Union, and others. Mr.
Bednarsh has a Bachelor of Arts degree from the City University of New York.
He will work full time for the Company.
THOMAS M. BEARD. Mr. Beard has been Vice President and a Director of the
Company since its inception. Mr. Beard has over eighteen years of experience
in the utility industry, having served in an executive capacity in both the
telecommunications and electric power industry. As a Commissioner and Chairman
of the Florida Public Service Commission ("PSC") from 1987 to 1993, Mr. Beard
expanded his expertise in telecommunications and energy related issues. As
Commission Chairman, he was responsible for the management of the agency which
develops the regulatory policy for the State of Florida and ensures that the
private investor-owned utilities adhere to that policy. Mr. Beard's state and
national experience, coupled with his background in strategic planning provide
the Company with the ability to tap a diverse set of resources and strategic
opportunities. During his tenure on the PSC, Mr. Beard also served in a
variety of roles at the national level including chairman of the
Communications Committee of the National Association of Regulatory Utility
Commissioners ("NARUC"), as a member of the NARUC Executive Committee, as the
senior member of the Federal Communications Commission's Federal/State Joint
Board on Separations which determines many of the federal-state jurisdictional
issues and as the State Chairman of the Federal/State Joint Conference on Open
Network Architecture (410(b)), where he investigated issues associated with
the telephone industry restructuring. As a key member of these bodies, he
helped to formulate and bring closure to the national policy debate on many of
the telecommunications and energy related issues. A native of Tampa, Mr. Beard
holds a Bachelor's degree from Florida State University and a Masters Degree
from the University of Florida. He will work full time for the Company.
HENRY C. KAVETT. Mr. Kavett has been Vice President and a Director of the
Company since its inception. He is responsible for marketing, new media
development and strategic planning for the Company. He directs consumer
marketing and corporate development. Previously, he was president of The
Independent Group of Companies, Inc. ("IGC"), a marketing and communications
firm. IGC created marketing programs for national cable and broadcast
networks, cellular telephone firms, direct response and location media, real
estate and financial services clients. Companies served included GE Capital,
Showtime/Viacom Networks, NBC-TV and CNBC cable network. Previously, Mr.
Kavett held senior management positions at Katz Communications, New York,
where he was Director of Corporate Communications, and for seven years at ABC,
where he was Director, Information & Public Relations, for the ABC Radio
Division (ABC Radio Networks, ABC Owned Stations Group, ABC Radio News). He
was a Broadcast Media Specialist at Burson-Marsteller, Inc., New York, one of
the world's leading public relations firms, where he specialized in major
media relations and senior executive media training. He began his career at
radio and television stations in New Jersey, Ithaca, Utica and later
Rochester, New York, before moving to NBC News in New York as a radio network
news writer/producer. Mr. Kavett has a Bachelor of Science in Communications
from Ithaca College. He has been a visiting instructor at his alma mater and
other universities, including Princeton, New York University and Hunter
College. He will work full time for the Company.
13
<PAGE>
ROBERT M. MISCAVAGE. Mr. Miscavage has been a Vice President of the Company
since its inception. During the past twenty years, Mr. Miscavage has developed
an outstanding reputation as a "hands-on" manager and principal in numerous
cable start-ups. He was one of the earliest advocates of satellite delivered
programming directly to the customer via SMATV systems and introduced many
people to the MDU cable television market. Mr. Miscavage designed, built
and/or operated cable television systems on more than 300 properties
throughout Florida, Georgia, Tennessee, and Texas, and has also consulted
internationally on cable television development. As a pioneer in the delivery
of signal to multi-unit properties, he built the first full spectrum
commercial wireless cable system to be built in the United States and provided
consulting assistance to the developers of numerous other wireless cable
systems. He has operated 18 GHz systems, MDS systems, infra-red systems and
other microwave frequencies, as well as innovative hard wire applications to
solve cable television delivery problems to customers. Mr. Miscavage holds a
Bachelor's degree from the University of Scranton and a Masters Degree from
the University of Maryland. He will work full time for the Company.
JON F. ELLIS. Mr. Ellis was recently appointed as the Company's Vice President
of Technology. Mr. Ellis began his professional career in electronics as a
communications systems technician in the United States Air Force in 1987,
entering the service after studying computer engineering at the University of
Missouri-Columbia. Primarily repairing and maintaining secure voice and data
encryption devices, Mr. Ellis also cross-trained in satellite systems
technology and teletype systems operation and maintenance. The combination of
the three career fields provided unique experience in digital audio and data
conversion, encryption and transmission, as well as experience in advanced
technologies such as the Internet. Mr. Ellis has designed private telephone
system ("PBX") call accounting and billing software which runs on a Windows 95
or NT platform and provides easy access to customer service records from any
terminal. He is now completing a Windows 95/NT-based, integrated customer
service program to handle customer activation/deactivation, customer service
and payment records. This program will allow integration of billing and
customer service information from other public utilities and services (water,
electric, sewer, cable, telephone, Internet), and will allow utility companies
to print billing for all of their services on one statement. Mr. Ellis has
also designed and built Internet access systems for private phone systems,
time-saving utility and data-collection programs for public phone systems, and
a unique three-in-one PC-based call accounting/PBX access/customer service
terminal that can be scaled from a hotel front desk to central office
applications. He will work full time for the Company.
JOHN WILLIAMS. Mr. Williams has been recently appointed a Director of the
Company. Mr. Williams also serves as a Director for New Millennium
Communications Corp., a telecommunications company. At present, in addition to
his duties as a Director of the Company, Mr. Williams is also a director of
SoftPlus, a company that develops and implements information systems solutions
with core competency in network and Java applications. From 1993 to 1996, Mr.
Williams was the president of SelectNet Telemanagement, a company that
developed and manufactured call accounting/routing systems for Pacific Bell.
From 1988 to 1993, Mr. Williams was the Chief Financial Officer of WCT
Communications. Mr. Williams received a Bachelor of Arts in Business
Administration and Accounting from the University of Washington in 1972. He
will devote approximately ten hours per month to the affairs of the Company.
14
<PAGE>
DON CLARK. Mr. Clark has been recently appointed a Director of the Company.
Mr. Clark also serves as a Director for New Millennium Communications Corp., a
telecommunications company, as well as VideoLan Technologies, Inc., a company
that develops and markets video conferencing systems. Mr. Clark has extensive
experience primarily in the area of hotel and restaurant management. In
addition to his duties as a director of the Company, Mr. Clark is President of
Accommodation Services, Inc., a complete hotel/motel/commercial and resort
management company. Mr. Clark is a graduate of Cornell University, School of
Hotel Administration. He will devote approximately ten hours per month to the
affairs of the Company.
JAMES J. COONEY. Mr. Cooney has been recently appointed a Director of the
Company. At present, in addition to his duties as a director of the Company,
Mr. Cooney is also a Director of VideoLan Technologies, Inc., a company that
develops and markets videoconferencing systems and Hollywood Beauty
Corporation, a cosmetics company. From 1987 to present, Mr. Cooney has been
the President of Cooney & Associates, which provides Consulting and
Governmental Relations representation for companies such as Arthur Andersen &
Co., Ryder Truck Rental, Carnival Hotels and Casinos, etc. From 1966 to 1986,
Mr. Cooney was a partner for the law firms Sage, Gray, Todd & Simms (New
York/Miami), Squire Sanders & Dempsey (Cleveland/Miami) and Helliwell, Melrose
& Dewolf (Miami/Orlando), specializing in Governmental Relations,
Administrative, Municipal Bond financing and International Law as well as
International Business and Immigration Law. From 1977 to 1979, Mr. Cooney's
Public Service positions included the Secretary of Commerce for the State of
Florida, Director, Economic Development for the Florida Department of Commerce
and General Counsel for the Department of Business Regulation. Mr. Cooney
holds a J.D. from the University of Florida Law School and a B.S.B.A. in
Industrial Management from the University of Florida. He has participated in
the International Law Masters Program at the University of Miami Graduate
School of Law. He has also attended the University of Barcelona, Alliance
Francaise (Paris), University of Maryland (overseas) and University of
Virginia School of Law (Judge Advocate General School). Mr. Cooney holds the
rank of Captain (USAR) with the United States Army Artillery and was awarded
the Soldiers Medal for heroic actions in a plane crash while in Airborne
School. He will devote approximately ten hours per month to the affairs of the
Company.
JOHN W. COONEY. Mr. Cooney has been recently appointed a Director of the
Company. At present, Mr. Cooney is the Vice President of Lionstone Inc., owner
of the Seville and DiLido Hotels on Miami Beach; President and owner of
LottoLine, Inc., an information phone service company; and President of
Westbourne, Inc., an import/export company. Prior to his involvement with
those companies, Mr. Cooney retired in 1986 after a thirty-year career as a
Senior Tax Partner for Coopers & Lybrand's Miami office. While with Coopers &
Lybrand he served on the National Real Estate Advisory Group and Tax Oriented
Financial Investments committees. He has lectured at numerous national tax
conferences and seminars as well as being a guest lecturer at the University
of Miami Tax Conference and the American Institute of Certified Public
Accountants Professional Development Program. Mr. Cooney is a member of the
American Institute of Certified Public Accountants. He is the former Chairman
and a current member of the Board of Overseers at the University of Miami,
School of Medicine; founder, member and former Chairman of the Bankers
15
<PAGE>
Club; and a former Chairman of the Easter Seals Society. Mr. Cooney earned his
B.S.B.A. Degree from the University of Florida. He will devote approximately
ten hours per month to the affairs of the Company.
ITEM SIX. EXECUTIVE COMPENSATION
A. DIRECTORS' COMPENSATION
Non-employee directors receive reimbursement for out-of-pocket expenses
incurred while attending Board meetings and it is intended that they will
receive certain non-qualified stock option grants in the future. Directors of
the Company who are officers or employees of the Company may also receive
extra compensation for their service on the Board in the form of qualified
stock options. Additionally, non-employee directors receive $1,000 per month
as compensation for their services.
B. COMPENSATION OF EXECUTIVE OFFICERS
The Company has agreed to pay each of its five officers $75,000 per annum in
consideration for their services as Executive Officers of the Company.
Although formal agreements have not yet been executed between the Company and
its officers, it is intended that the aforementioned terms will be formalized
in the near future.
The following table sets forth all compensation awarded or to be paid by the
Company during the period ending December 31, 1998 to its executive officers:
Name Capacity in Which Cash Long Term
Employee Serves Compensation Compensation
David Bednarsh President, Director $75,000 See above
Thomas M. Beard Vice President, Director $75,000 See above
Henry C. Kavett Vice President, Director $75,000 See above
Robert Miscavage Vice President $75,000
Jon F. Ellis Vice President $75,000
ITEM SEVEN. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other transactions or
relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
ITEM EIGHT. DESCRIPTION OF SECURITIES
On February 4, 1998, the Board of directors voted to amend the Company's
Certificate of Incorporation. Accordingly, the outstanding shares held by the
Company's founders were subject to a split of 20 shares for each one share
previously owned and the par value was changed from $.01
16
<PAGE>
to $.0005. As a result, the total number of shares which the Company shall
have the authority to issue is 52,000,000 shares divided into 50,000,000
shares of Common stock at $.0005 par value, and 2,000,000 shares of Preferred
Stock at $.0005 par value. As of the date hereof, the Company had a total of
20,000,000 Common Shares issued and outstanding. As of the same date, no
Preferred Stock was issued or outstanding.
A. COMMON STOCK
The holders of Common Stock have one vote per share on all matters (including
election of Directors) without provision for cumulative voting. The Common
Stock is not redeemable and has no conversion or preemptive rights.
The Common Stock currently outstanding is validly issued, fully paid and
non-assessable. The Company may pay dividends, in cash or in securities or
other property when and as declared by the Board of Directors from funds
legally available therefor, but has paid no cash dividends on its Common
Stock.
B. PREFERRED STOCK
Under the Certificate of Incorporation, the Board of Directors has the
authority to issue Preferred Stock. As of the date of this Registration
Statement, no shares of Preferred Stock are issued or outstanding. The Board
of Directors has no plan to issue any Preferred Stock in the foreseeable
future.
C. DIVIDEND POLICY
The Company has never declared nor paid dividends on its Common Stock and does
not intend to do so in the foreseeable future.
PART II
ITEM ONE. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A. PRINCIPAL MARKET OR MARKETS
The Company has filed an application (Form 15c2-11) to have 980,000 shares of
its common stock listed for trading on the NASDAQ Bulletin Board. During the
prior two fiscal years the low and high bid prices as reflected by interdealer
quotations were:
QUARTER Low Bid High Bid
1st Quarter '96 - -
2nd Quarter '96 - -
17
<PAGE>
3rd Quarter '96 - -
4th Quarter '96 - -
1st Quarter '97 - -
2nd Quarter '97 - -
3rd Quarter '97 - -
4th Quarter '97 - -
1st Quarter '98 - -
2nd Quarter '98 - -
B. APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK
As of the date hereof, a total of 20,000,000 shares of the Company's common
stock were outstanding and the number of holders of record of the Company's
common stock at that date was approximately eighty-four.
C. DIVIDENDS
Holders of common stock are entitled to receive such dividends as may be
declared by the Company's Board of Directors. No dividends on the Common Stock
were paid by the Company during the periods reported herein nor does the
Company anticipate paying dividends in the foreseeable future.
ITEM TWO. LEGAL PROCEEDINGS
No legal proceedings of a material nature to which the Company is a party were
pending during the reporting period, and the Company knows of no legal
proceedings of a material nature pending or threatened or judgments entered
against any director or officer of the Company in his capacity as such.
ITEM THREE. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
The Company did not have any disagreements on accounting and financial
disclosures with its accounting firm during the reporting period.
ITEM FOUR. RECENT SALES OF UNREGISTERED SECURITIES
The Company has only issued the following common stock in the three-year
period preceding the date of this Registration Statement:
On February 4, 1998, the Board of Directors of the Company authorized an
issuance of 19,020,000 shares of stock at $0.0005 per share to the founders of
the Company. All of these shares are restricted securities as defined in the
Securities Act of 1933, as amended.
18
<PAGE>
On April 28, 1998, the Company issued 980,000 shares of stock at $1.00 per
share in reliance upon Rule 504 of Regulation D promulgated under the
Securities Act of 1933.
ITEM FIVE. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by the Delaware General Corporation Law, the personal liability of
directors and officers for monetary damages for breach of their fiduciary
duties as directors and officers (other than liabilities arising from acts or
omissions that involve intentional misconduct, fraud or knowing violations of
law or the payment of distributions in violation of Delaware General
Corporation Law). The Certificate of Incorporation provides further that the
Company shall indemnify, to the fullest extent permitted by Delaware General
Corporation Law, any person made a party to an action or proceeding by reason
of the fact that such person was a director, officer, employee or agent of the
Company.
The Company intends to enter into separate indemnification agreements with its
directors and officers containing provisions that provide for the maximum
indemnity allowed to directors and officers by the Delaware General
Corporation Law and the Company, among other obligations, to indemnify such
directors and officers against certain liabilities that may arise by reason of
their status as directors and officers, other than liabilities arising from
wilful misconduct of a culpable nature, provided that such person acted in
good faith and in a manner that he or she reasonably believed to be in or not
opposed to the best interests of the Company and, in the case of a criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful.
In addition, the indemnification agreements provide generally that the Company
will, subject to certain exceptions, advance the expenses incurred by
directors and officers as a result of any proceeding against them as to which
they may be entitled to indemnification. The Company believes these
arrangements are necessary to attract and retain qualified persons as
directors and officers.
The indemnification provisions in the Company's Certificate of Incorporation,
and the indemnity agreements entered into between the Company and its
directors and executive officers, may permit indemnification for liabilities
arising under the Securities Act of 1933, as amended (The "Securities Act").
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
UTILICORE CORPORATION
Date: June 17, 1998
By: /s/ David Bednarsh
---------------------------
David Bednarsh, President
20
<PAGE>
PART III
FINANCIAL INFORMATION
21
<PAGE>
UTILICORE CORPORATION
FINANCIAL STATEMENTS
APRIL 30, 1998
<PAGE>
[LETTERHEAD OF HARVEY JUDKOWITZ]
The Board of Directors
UTILICORE CORPORATION
I have audited the accompanying balance sheet of Utilicore Corporation as of
April 30, 1998, and the related statements of operations and deficit and cash
flows for the four months ended April 30, 1998. These financial statements are
the responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform 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 the significant
estimates made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a reasonable basis
for my opinion.
In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Utilicore Corporation as of
April 30, 1998, and the results of its operations and its cash flows for the
four months ended April 30, 1998 in conformity with generally accepted
accounting principles.
/s/ Harvey Judkowitz
- --------------------------
HARVEY JUDKOWITZ, CERTIFIED
PUBLIC ACCOUNTANT
Miami, Florida
May 22, 1998
<PAGE>
UTILICORE CORPORATION
BALANCE SHEET
APRIL 30, 1998
ASSETS
Current assets
Cash ....................................................... $ 730,780
Accounts receivable ........................................ 20,285
Prepaid rent ............................................... 8,889
Equipment on operating lease, net
of accumulated depreciation of $1,492 ................. 11,294
----------
Total current assets .................................. 771,248
----------
Automobile, less accumulated
depreciation of $1,232 ..................................... 21,440
----------
Other assets
Rent deposits .............................................. 9,550
Deposit on equipment under operating lease ................. 13,707
Deposits for telephone network services .................... 270,000
----------
293,257
----------
$1,085,945
==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
UTILICORE CORPORATION
BALANCE SHEET
APRIL 30, 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current portion of long-term debt ....................... $ 10,613
Accounts payable ........................................ 5,019
Accrued expenses ........................................ 11,580
-----------
Total current liabilities .......................... 27,212
-----------
Long-term debt, less current maturities ................. 519,366
-----------
Other liabilities
Customer deposit ........................................ 2,285
Loan payable stockholder ................................ 2,530
-----------
4,813
-----------
Stockholders' equity
Common stock, $.0005 par value,
50,000,000 shares authorized,
20,000,000 shares issued and
outstanding, including 52,500
shares subscribed but unpaid for ....................... 10,000
Additional paid-in capital .............................. 979,617
Deficit ................................................. (402,563)
-----------
587,054
Less subscriptions receivable ........................... (52,500)
-----------
Total stockholders= equity ......................... 534,554
-----------
$ 1,085,945
===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENT
<PAGE>
UTILICORE CORPORATION
STATEMENT OF OPERATIONS AND DEFICIT
FOR THE FOUR MONTHS ENDED APRIL 30, 1998
Revenues ................................................. $ 41,927
General and administrative expenses ...................... 414,031
---------
Loss from operations ..................................... (372,104)
---------
Other income (expense)
Interest income .......................................... 2,038
Interest expense ......................................... (12,108)
---------
(10,070)
---------
Net loss ................................................. ($382,174)
=========
Net loss per share ....................................... ($.02)
=====
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
UTILICORE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE FOUR MONTHS ENDED APRIL 30, 1998
Capital stock
----------------------- Additional
(000's) paid-in
Shares $ capital Deficit
--------- --------- --------- ---------
Balance,
December 31,
1997 ............. 3 $ 30 $ 107 ($ 20,389)
Effect of
20 for 1
stock split ...... 57 --
Sale of
founders'
stock ............ 18,960 9,480
Sales thru
private
placement ........ 980 490 979,510
Net loss
for
period ........... (382,174)
--------- --------- --------- ---------
Balance,
April 30,
1998 ............. 20,000 $ 10,000 $ 979,617 ($402,563)
========= ========= ========= =========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
UTILICORE CORPORATION
STATEMENT OF CASH FLOWS
FOR THE FOUR MONTHS ENDED APRIL 30, 1998
OPERATING ACTIVITIES
Net loss .................................................. ($ 382,174)
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation .................................... 2,085
Increase in accounts receivable ................. (18,835)
Increase in prepayments ......................... (8,889)
Increase in security deposits ................... (293,257)
Increase in accounts payable .................... 5,019
Increase in accrued expenses .................... 11,077
-----------
Net cash used for operating activities .................... (684,974)
-----------
INVESTING ACTIVITIES
Purchase of automobile .................................... (22,672)
-----------
Net cash used for investing activities .................... (22,672)
-----------
FINANCING ACTIVITIES
Sale of common stock ...................................... 936,980
Loan from stockholder ..................................... 30
Payment of notes .......................................... (5,931)
Increase in notes payable ................................. 507,186
-----------
Net cash provided by financing activities ................. 1,438,265
-----------
Increase in cash .......................................... 730,619
Cash, beginning of year ................................... 161
-----------
Cash, April 30, 1998 ...................................... $ 730,780
===========
Supplemental information:
There were no monies paid for either interest or income taxes
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
<PAGE>
UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Utilicore Corporation (the Company) was incorporated in the State of Delaware
on March 6, 1997. The Company=s objective is to develop a private telephone
company to provide both local and long distance telephone service to the
residential, multiple dwelling unit market. The Company also installs,
operates and provides private cable TV service at various locations under
long-term contractual agreements.
On February 4, 1998, the Board of directors voted to amend the Company=s
Certificate of Incorporation. As a result, the Company is authorized to issue
up to 50,000,000 shares of common stock and up to 2,000,000 shares of
preferred stock. In conjunction therewith they split the existing stock held
by the Company=s founder at a rate or 20 shares for each share held and
changed the par value from $.01 to $.0005.
Use of Accounting Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Actual results could
differ from those estimates.
Revenue Recognition
The Company recognizes revenues when earned. Under the contractual agreement
referred to above, the revenues are recorded on the first day of the month.
Automobile
The company purchased an automobile during the period. It is being depreciated
over a three year period.
Concentrated Revenue
The Company=s income is derived under one contract with a hospital facility
and from sales and installation of satellite and broadcast receive systems.
Note 2: EQUIPMENT ON OPERATING LEASE
The equipment was purchased for the sole purpose of fulfilling a contract with
a hospital facility located in Hollywood, Florida. The equipment under this
operating lease is recorded at cost, net of accumulated depreciation, which is
computed based on the equipment=s estimated useful life which is five years.
<PAGE>
UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998
NOTE 3: DEPOSITS FOR TELEPHONE AIR TIME
The Company has deposited, with major telephone companies, funds to support
the local and long distance network services that the Company will resell to
its customers. These deposits act as a guaranty for the payment of these
services by the Company, thereby making the major companies not subject to the
collectibility of the charges by the Company.
NOTE 3: LONG-TERM DEBT
The Company borrowed $30,000 from an independent third party. The note bears
interest at the rate of 18% and is payable in the amount of $761.81 per month.
The equipment located at the hospital facility in Hollywood, Florida is
collateral for this note and a financing statement under the Uniform
Commercial Code has been filed with the appropriate agency.
On January 20, 1998, the Company issued promissory notes in the aggregate
amount of $487,500 to shareholders of the Company. These notes bear interest
at 8% and are due on January 20, 2000.
The Company also is financing the automobile that purchased over a 48 month
period. The rate of interest on this loan was .9% and the total amount of
interest over the four year period is $$373. The monthly payment is $428.
Annual payments, over the next five years, under the terms of these notes are
as follows:
1998 $ 6,966
1999 11,305
2000 500,012
2001 10,839
2002 857
---------
Total 529,979
Less amount due currently 10,613
---------
Long-term debt $ 519,366
=========
<PAGE>
UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998
NOTE 4: LEASES
Office and warehouse
The Company leases office space in Sarasota, Florida under a one year lease
agreement which runs through May 31, 1998 and which is payable at a monthly
rate of $2,068.75 plus tax plus all ad valorem taxes which are due during the
lease period.
The Company has entered into a agreement with an employee leasing company,
whereby the payroll, payroll taxes and benefits packages are paid directly to
the leasing company. This agreement is for a period of one year and the charge
is 1.52% of the gross payroll.
The company has entered into two additional leases during the current period;
both an office and a warehouse facility. The office lease is a five year lease
beginning effectively October 1998 and running until August 31, 2003. The
warehouse lease is for a one year period beginning on May 1, 1998.
Minimum annual rentals under these leases, over the next five years and eight
months is as follows:
1998 $ 31,810
1999 100,260
2000 100,840
2001 104,870
2002 109,065
2003 84,230
-----------
Total $ 499,265
===========
Rent expense for the period ended April 30, 1998 was $20,311.
Equipment
The Company entered into an operating lease for certain office computers and
equipment. The lease is for a three year period, at $1,895 per month, after
which the Company must return the equipment to the lessor. The Company was
required to place a $13,707 security deposit on this equipment.
Minimum annual lease payments under this lease is as follows:
1998 $ 15,160
1999 22,740
2000 22,740
2001 7,580
---------
Total $ 68,220
==========
<PAGE>
UTILICORE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1998
NOTE 5: PRIVATE PLACEMENT
The Company also offered 980,000 shares of its stock to the public in a
private placement in order to raise $980,000. As of April 30, 1998 all of the
issue was sold out and all of the money was received except for $52,500. These
funds were received in May.
<PAGE>
PART IV
INDEX TO EXHIBITS
2. A. Certificate of Incorporation ................................
B. Amendments to Certificate of Incorporation ...................
C. By-laws ......................................................
3. Instruments Defining Rights of Security Holders .................. n/a
5. Voting Trust Agreements .......................................... n/a
6. Material Contracts ............................................... n/a
7. Material Foreign Patents ......................................... n/a
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
-----------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
INCORPORATION OF "UTILICORE CORPORATION", FILED IN THIS OFFICE ON THE SIXTH DAY
OF MARCH, A.D. 1997, AT 3 O'CLOCK P.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW
CASTLE COUNTY RECORDED OF DEEDS FOR RECORDING.
[SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8368243
<PAGE>
CERTIFICATE OF INCORPORATION
OF
UTILICORE CORPORATION
* * * * *
1. The name of the corporation is UTILICORE CORPORATION
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall
have authority to issue is Three Thousand (3,000) and the par value of each of
such shares is One Cent ($.O1) amounting in the aggregate to Thirty Dollars
($30.00).
The holders of Common shares shall, upon the issuance or sale of
shares of stock of any class (whether now or hereafter authorized) or any
securities convertible into such stock, have the right, during such period of
time and on such conditions as
<PAGE>
the board of directors shall prescribe, to subscribe to and purchase such
shares or securities in proportion to their respective holdings of Common
Shares, at such price or prices as the board of directors may from time to time
fix and as may be permitted by law.
5. The name and mailing address of each incorporator is as follows:
Laura J. Vitalo Corporation Trust Center, 1209
Orange Street, Wilmington,
The name and mailing address of each person who is to serve as a director until
the first annual meeting of the stockholders or until a successor is elected
and qualified, is as follows:
David Bednarsh 2155 Main Street
Sarasota Florida 34237
6. The corporation shall exist perpetually.
7. In furtherance and not in limitation of the powers conferred by
statue, the board of directors is expressly authorized:
To make, alter or repeal the by-laws of the corporation.
To authorize and cause to be executed mortgages and liens upon the
real and personal property of the corporation. To set apart out of any of the
funds of the corporation available for dividends a reserve or reserves for any
proper purpose and to abolish any such reserve in the manner in which it was
created.
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By a majority of the whole board, to designate one or more committees,
each committee to consist of one or more of the directors of the corporation.
The board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The by-laws may provide that in the absence or disqualification
of a member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute
a quorum, may unanimously appoint another member of the board of directors to
act at the meeting in the place of any such absent or disqualified member. Any
such committee, to the extent provided in the resolution of the board of
directors, or in the by-laws of the corporation, shall have and may exercise
all the powers and authority of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
Certificate of Incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, recommending to the
stockholders a dissolution of the corporation or a revocation of a dissolution,
or amending the by-laws of the corporation; and, unless the resolution or
by-laws expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of
<PAGE>
stock.
When and as authorized by the stockholders in accordance with law, to
sell, lease or exchange all or substantially all of the property and assets of
the corporation, including its good will and its corporate franchises, upon
such terms and conditions and for such consideration, which may consist in
whole or in part of money or property including shares of stock in, and/or
other securities of, any other corporation or corporations, as its board of
directors shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the
by-laws of the corporation shall so provide. Meetings of stockholders may be
held within or without the State of Delaware, as the by-laws may provide. The
books of the corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the board of directors or in the by-laws of the
corporation.
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
<PAGE>
corporation under the provisions of Section 291 of Title 8 of the Delaware Code
or on the application of trustees in dissolution or of any receiver or
receivers appointed for this corporation under the provisions of Section 279 of
Title 8 of the Delaware Code order a meeting of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, to be summoned inn such manner as the said
court directs. If a majority in number representing three-fourths in value of
the creditors or class of creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, agree to any compromise
or arrangement and to any reorganization of this corporation as consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/on on
all the stockholders or class of stockholders, of this corporation, as the case
may be, and also on this corporation.
9. The corporation reserves the right to amend, alert, change
or repeal any position contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statue, and all rights conferred upon
stockholders herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary
<PAGE>
damages for breach of fiduciary duty as a director except for liability (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit.
I, THE UNDERSIGNED, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, do make this certificate, hereby
declaring and certifying that this is my act and deed and the facts herein
stated are true, and accordingly have hereunto set my hand this 6th day of
March, 1997.
/s/ Laura J. Vitalo
---------------------------------
Laura J. Vitalo
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
-----------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREYBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "UTILICORE CORPORATION", FILED IN THIS OFFICE ON THE
TWENTY-SEVENTH DAY OF JANUARY, A.D. 1998, AT 4 O'CLOCK P.M.
[SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8889263
<PAGE>
Certificate of Amendment to
Certificate of Incorporation of Utilicore Corporation
(Pursuant to Section 241)
Utilicore Corporation, a corporation formed under the Delaware
Corporation Laws.
The undersigned, the President of Utilicore Corporation, certifies
that at a meeting of the board of directors held on January 14, 1998, which was
called for the purpose of amending the Certificate of Incorporation of
Utilicore Corporation, the sole director of Utilicore Corporation approved the
following amendment to Article 4 of the Certificate of Incorporation:
4. The total number of shares of stock which the corporation shall
have the authority to issue is Fifty Million (50,000,000) shares of common
stock with a par value of each such shares of $.001 and Two Million (2,000,000)
share of preferred stock, with such rights and preferences as the board of
directors of the corporation may designate, and a par value of each such shares
of $.001.
The undersigned further certifies that at the time of the approval of the
foregoing amendment to the Certificate of Incorporation of Utilicore
Corporation there were no shareholders of the corporation. The Corporation has
not received any payment for any of its stock.
Dated, as of: January 14, 1998
By: /s/ David Bednarsh
----------------------------------
David Bednarsh, President
<PAGE>
PAGE 1
State of Delaware
Office of the Secretary of State
-----------------------------------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF
AMENDMENT OF "UTILICORE CORPORATION", FILED IN THIS OFFICE ON THE TWELFTH DAY
OF MARCH, A.D. 1998, AT 10 O'CLOCK A.M.
[SEAL OF THE STATE OF DELAWARE]
/s/ Edward J. Freel
------------------------------------
Edward J. Freel, Secretary of State
AUTHENTICATION: 8970696
<PAGE>
Director's Resolution Amending
Certificate of Incorporation of Utilicore Corporation
Whereas the sole director of Utilicore Corporation desires to amend
the certificate of incorporation to provide for an increase in the authorized
capital of the corporation;
Resolved, that the certificate of incorporation of Utilicore
Corporation shall be and is now amended as follows:
4. The total number of shares of stock which the corporation shall
have the authority to issue is Fifty Million (50,000,000) shares of common
stock with a par value of each such share of $.0005 and Two Million (2,000,000)
shares of preferred stock, with such rights and preferences as the board of
directors of the corporation may designate, and a par value of each such share
of $.0005.
Resolved further, that the amendments set forth above are adopted and
approved.
Dated, as of: February 4, 1998
/s/ David Bednarsh
--------------------------------
David Bednarsh, sole director
<PAGE>
BYLAWS
OF
UTILICORE CORPORATION
ARTICLE I
SHAREHOLDERS
1. Annual Meeting
A meeting of the shareholders shall be held annually for the
election of directors and the transaction of other business on such date in
each year as may be determined by the Board of Directors, but in no event later
than 100 days after the anniversary of the date of incorporation of the
Corporation.
2. Special Meetings
Special meetings of the shareholders may be called by any two
(2) members of the Board of Directors, or a majority of the Executive
Committee, Chairman of the Board or President and shall be called by the Board
upon the written request of the holders of record of a majority of the
outstanding shares of the Corporation entitled to vote at the meeting requested
to be called. Such request shall state the purpose or purposes of the proposed
meeting. At such special meetings the only business which may be transacted is
that relating to the purpose or purposes set forth in the notice thereof.
3. Place of Meetings
Meetings of the shareholders shall be held at such place
within or outside of the State of Delaware as may be fixed by the Board of
Directors. If no place is so fixed, such meetings shall be held at the
principal office of the Corporation.
4. Notice of Meetings
Notice of each meeting of the shareholders shall be given in
writing and shall state the place, date and hour of the meeting and the purpose
or purposes for which the meeting is called.
<PAGE>
Notice of a special meeting shall indicate that it is being issued by or
at the direction of the person or persons calling or requesting the meeting.
If, at any meeting, action is proposed to be taken which, if
taken, would entitle objecting shareholders to receive payment for their
shares, the notice shall include a statement of that purpose and to that
effect.
A copy of the notice of each meeting shall be given,
personally or by first class mail, not less than ten nor more than fifty days
before the date of the meeting, to each shareholder entitled to vote at such
meeting. If mailed, such notice shall be deemed to have been given when
deposited in the United States mail, with postage thereon prepaid, directed to
the shareholder at his address as it appears on the record of the shareholders,
or, if he shall have filed with the Secretary of the Corporation a written
request that notices to him or her be mailed to some other address, then
directed to him at such other address.
When a meeting is adjourned to another time or place, it
shall not be necessary to give any notice of the adjourned meeting if the time
and place to which the meeting is adjourned are announced at the meeting at
which the adjournment is taken. At the adjourned meeting any business may be
transacted that might have been transacted on the original date of the meeting.
However, if after the adjournment the Board of Directors fixes a new record
date for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record on the new record date entitled to notice
under this Section 4.
5. Waiver of Notice
Notice of a meeting need not be given to any shareholder who
submits a signed waiver of notice, in person or by proxy, whether before or
after the meeting. The attendance of any shareholder at a meeting, in person or
by proxy, without protesting prior to the conclusion of the meeting the lack of
notice of such meeting, shall constitute a waiver of notice by him or her.
6. Inspectors of Election
The Board of Directors, in advance of any shareholders'
meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If inspectors are not so appointed, the person presiding
at a shareholders' meeting may, and on the request of any shareholder entitled
to vote thereat shall, appoint two inspectors. In case any person appointed
fails to appear or act, the vacancy may be filled by appointment in advance of
the meeting by the Board or at the meeting by the person presiding thereat.
Each inspector, before entering upon the discharge of his duties, shall take
and sign an oath faithfully to execute the duties of such inspector at such
meeting with strict impartiality and according to the best of his ability.
<PAGE>
The inspectors shall determine the number of shares
outstanding and the voting power of each, the shares represented at the
meeting, the existence of a quorum, and the validity and effect of proxies, and
shall receive votes, ballots or consents, hear and determine all challenges and
questions arising in connection with the right to vote at the meeting, count
and tabulate all votes, ballots or consents, determine the result thereof, and
do such acts as are proper to conduct the election or vote with fairness to all
shareholders. On request of the person presiding at the meeting, or of any
shareholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, question or matter determined by them and shall
execute a certificate of any fact found by them. Any report or certificate made
by them shall be prima facie evidence of the facts stated and of any vote
certified by them.
7. List of Shareholders at Meetings
A list of the shareholders as of the record date, certified
by the Secretary or any Assistant Secretary or by a transfer agent, shall be
produced at any meeting of the shareholders upon the request thereat or prior
thereto of any shareholder. If the right to vote at any meeting is challenged,
the inspectors of election, or the person presiding thereat, shall require such
list of the shareholders to be produced as evidence of the right of the persons
challenged to vote at such meeting, and all persons who appear from such list
to be shareholders entitled to vote thereat may vote at such meeting.
8. Qualification of Voters
Unless otherwise provided in the Certificate of
Incorporation, every shareholder of record shall be entitled at every meeting
of the shareholders to one vote for every share standing in its name on the
record of the shareholders.
Treasury shares as of the record date and shares held as of
the record date by another domestic or foreign corporation of any kind, if a
majority of the shares entitled to vote in the election of directors of such
other corporation is held as of the record date by the Corporation, shall not
be shares entitled to vote or to be counted in determining the total number of
outstanding shares.
Shares held by an administrator, executor, guardian,
conservator, committee or other fiduciary, other than a trustee, may be voted
by such fiduciary, either in person or by proxy, without the transfer of such
shares into the name of such fiduciary. Shares held by a trustee may be voted
by him or her, either in person or by proxy, only after the shares have been
transferred into his name as trustee or into the name of his nominee.
Shares standing in the name of another domestic or foreign
corporation of any type or kind may be voted by such officer, agent or proxy as
the bylaws of such corporation may provide, or, in the absence of such
provision, as the board of directors of such corporation may determine.
3
<PAGE>
No shareholder shall sell his vote, or issue a proxy to vote,
to any person for any sum of money or anything of value except as permitted by
law.
9. Quorum of Shareholders
The holders of a majority of the shares of the Corporation
issued and outstanding and entitled to vote at any meeting of the shareholders
shall constitute a quorum at such meeting for the transaction of any business,
provided that when a specified item of business is required to be voted on by a
class or series, voting as a class, the holders of a majority of the shares of
such class or series shall constitute a quorum for the transaction of such
specified item of business.
When a quorum is once present to organize a meeting, it is
not broken by the subsequent withdrawal of any shareholders.
The shareholders who are present in person or by proxy and
who are entitled to vote may, by a majority of votes cast, adjourn the meeting
despite the absence of a quorum.
10. Proxies
Every shareholder entitled to vote at a meeting of the
shareholders, or to express consent or dissent without a meeting, may authorize
another person or persons to act for him by proxy.
Every proxy must be signed by the shareholder or its
attorney. No proxy shall be valid after the expiration of eleven months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as otherwise
provided by law.
The authority of the holder of a proxy to act shall not be
revoked by the incompetence or death of the shareholder who executed the proxy,
unless before the authority is exercised written notice of an adjudication of
such incompetence or of such death is received by the Secretary or any
Assistant Secretary.
11. Vote or Consent of Shareholders
Directors, except as otherwise required by law, shall be
elected by a plurality of the votes cast at a meeting of shareholders by the
holders of shares entitled to vote in the election.
4
<PAGE>
Whenever any corporate action, other than the election of
directors, is to be taken by vote of the shareholders, it shall, except as
otherwise required by law, be authorized by a majority of the votes cast at a
meeting of shareholders by the holders of shares entitled to vote thereon.
Whenever shareholders are required or permitted to take any
action by vote, such action may be taken without a meeting on written consent,
setting forth the action so taken, signed by the holders of all outstanding
shares entitled to vote thereon. Written consent thus given by the holders of
all outstanding shares entitled to vote shall have the same effect as an
unanimous vote of shareholders.
12. Fixing The Record Date
For the purpose of determining the shareholders entitled to
notice of or to vote at any meeting of shareholders or any adjournment thereof,
or to express consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other
action, the Board of Directors may fix, in advance, a date as the record date
for any such determination of shareholders. Such date shall not be less than
ten nor more than fifty days before the date of such meeting, nor more than
fifty days prior to any other action.
When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided
in this Section, such determination shall apply to any adjournment thereof,
unless the Board of Directors fixes a new record date for the adjourned
meeting.
ARTICLE II
BOARD OF DIRECTORS
1. Power of Board and Qualification of Directors
The business of the Corporation shall be managed by the Board
of Directors. Each director shall be at least eighteen years of age.
2. Number of Directors
The number of directors constituting the entire Board of
Directors shall be the number, not less than three nor more than ten, fixed
from time to time by a majority of the total number of directors which the
Corporation would have, prior to any increase or decrease, if there were no
vacancies, provided, however, that no decrease shall shorten the term of an
incumbent
5
<PAGE>
director, and provided further that if all of the shares of the
Corporation are owned beneficially and of record by less than three
shareholders, the number of directors may be less than three but not less than
the number of shareholders. Until otherwise fixed by the directors, the number
of directors constituting the entire Board shall be two.
3. Election and Term of Directors
At each annual meeting of shareholders, directors shall be
elected to hold office until the next annual meeting and until their successors
have been elected and qualified or until their death, resignation or removal in
the manner hereinafter provided.
4. Quorum of Directors and Action by the Board
A majority of the entire Board of Directors shall constitute
a quorum for the transaction of business, and, except where otherwise provided
herein, the vote of a majority of the directors present at a meeting at the
time of such vote, if a quorum is then present, shall be the act of the Board.
Any action required or permitted to be taken by the Board of
Directors or any committee thereof may be taken without a meeting if all
members of the Board or the committee consent in writing to the adoption of a
resolution authorizing the action. The resolution and the written consent
thereto by the members of the Board or committee shall be filed with the
minutes of the proceedings of the Board or committee.
5. Meetings of the Board
An annual meeting of the Board of Directors shall be held in
each year directly after the annual meeting of shareholders. Regular meetings
of the Board shall be held at such times as may be fixed by the Board. Special
meetings of the Board may be held at any time upon the call of the President or
any two directors.
Meetings of the Board of Directors shall be held at such
places as may be fixed by the Board for annual and regular meetings and in the
notice of meeting for special meetings. If no place is so fixed, meetings of
the Board shall be held at the principal office of the Corporation. Any one or
more members of the Board of Directors may participate in meetings by means of
a conference telephone or similar communications equipment.
No notice need be given of annual or regular meetings of the
Board of Directors. Notice of each special meeting of the Board shall be given
to each director either by mail or telefax not later than noon, Delaware time,
on the third day prior to the meeting or by telegram, written message or
telephonically not later than noon, Delaware time, on the day prior to the
meeting.
6
<PAGE>
Notices are deemed to have been properly given if given: by mail, when
deposited in the United States mail; by telegram at the time of filing; or by
messenger at the time of delivery. Notices by mail, telegram or messenger shall
be sent to each director at the address designated by him for that purpose, or,
if none has been so designated, at his last known residence or business
address.
Notice of a meeting of the Board of Directors need not be
given to any director who submits a signed waiver of notice whether before or
after the meeting, or who attends the meeting without protesting, prior thereto
or at its commencement, the lack of notice to any director.
A notice, or waiver of notice, need not specify the purpose
of any meeting of the Board of Directors.
A majority of the directors present, whether or not a quorum
is present, may adjourn any meeting to another time and place. Notice of any
adjournment of a meeting to another time or place shall be given, in the manner
described above, to the directors who were not present at the time of the
adjournment and, unless such time and place are announced at the meeting, to
the other directors.
6. Resignations
Any director of the Corporation may resign at any time by
giving written notice to the Board of Directors or to the President or to the
Secretary of the Corporation. Such resignation shall take effect at the time
specified therein; and unless otherwise specified therein the acceptance of
such resignation shall not be necessary to make it effective.
7. Removal of Directors
Any one or more of the directors may be removed for cause by
action of the Board of Directors. Any or all of the directors may be removed
with or without cause by vote of the shareholders.
8. Newly Created Directorships and Vacancies
Newly created directorships resulting from an increase in the
number of directors and vacancies occurring in the Board of Directors for any
reason except the removal of directors by shareholders may be filled by vote of
a majority of the directors then in office, although less than a quorum exists.
Vacancies occurring as a result of the removal of directors by shareholders
shall be filled by the shareholders. A director elected to fill a vacancy shall
be elected to hold office for the unexpired term of his predecessor.
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<PAGE>
9. Executive and Other Committees of Directors
(a) Executive Committee
The board of directors by resolution adopted by a majority of the
full board, may designate two or more of its members to constitute an executive
committee. The designation of such committee and the delegation to it of
authority shall not operate to relieve the board of directors, or any member of
such board, of any responsibility imposed by law.
The executive committee, when the board of directors is not in
session, shall have and may exercise all of the authority of the board of
directors except to the extent, if any, that such authority shall be limited by
the resolution appointing the executive committee and except also that the
executive committee shall not have the authority of the board of directors in
reference to the following matters: (a) the amendment of the articles of
incorporation; (b) the adoption of a plan of merger or consolidation; (c) the
recommendation to the shareholders of the sale, lease or other disposition of
all or substantially all of the property and assets of the corporation
otherwise than in the usual and regular course of its business; (d) the
recommendation to the shareholders of a voluntary dissolution of the
corporation or a revocation of such; or (e) the amendment of the bylaws of the
corporation.
Each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his/her
designation and until his/her successor is designated as a member of the
executive committee and is elected and qualified.
Regular meetings of the executive committee may be held without
notice at such times and places as the executive committee may fix from time to
time by resolution. Special meetings of the executive committee may be called
by any member at any time, which notice may be written or oral, and if mailed,
shall be deemed to be delivered when deposited in the United States mail
addressed to the member of the executive committee at his/her business address
or by telefax. Any member of the executive committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the executive committee need not
state the business proposed to be transacted at the meeting.
A majority of the members of the executive committee shall constitute
a quorum for the transaction of business at any meeting of such, and action of
the executive committee must be authorized by the affirmative vote of a
majority of the members present at a meeting at which a quorum is present.
Any action required or permitted to be taken by the executive
committee at a meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the members of the
executive committee.
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<PAGE>
Any vacancy in the executive committee may be filled by a resolution
adopted by a majority of the full board of directors.
Any member of the executive committee may be removed at any time with
or without cause by resolution adopted by a majority of the full board of
directors. Any member of the executive committee may resign from the executive
committee at any time by giving written notice to the president or secretary of
the corporation, and unless otherwise specified, the acceptance of such
resignation shall not be necessary to make it effective.
The executive committee shall elect a presiding officer from its
members and may fix its own rules of procedure which shall not be inconsistent
with these bylaws. It shall keep regular minutes of its proceedings and report
the same to the board of directors for its information at the meeting of such
held next after the proceedings shall have been taken.
(b) Other Committees
The Board of Directors, by resolution adopted by a majority of the
entire Board, may designate from among its members such other committees each
consisting of three or more directors and each of which, to the extent provided
in the resolution, shall have all the authority of the Board, except to the
extent, if any, that such authority shall be limited by the resolution
appointing such committee and except also that no such committee shall have
authority as to the following matters: (a) the submission to shareholders of
any action that needs shareholders' approval; (b) the filling of vacancies in
the Board or in any committee; (c) the fixing of compensation of the directors
for serving on the Board or on any committee; (d) the amendment or repeal of
the bylaws, or the adoption of new bylaws; (e) the amendment or repeal of any
resolution of the Board which, by its term, shall not be so amenable or
repealable; (f) the removal or indemnification of directors; (g) the amendment
of the articles of incorporation; or (h) the adoption of a plan of merger or
consolidation.
.
The Board of Directors may designate one or more directors as
alternate members of any such committee, who may replace any absent member or
members at any meeting of such committee.
Unless a greater proportion is required by the resolution designating
a committee, a majority of the entire authorized number of members of such
committee shall constitute a quorum for the transaction of business, and the
vote of a majority of the members present at a meeting at the time of such
vote, if a quorum is then present, shall be the act of such committee.
Each such committee shall serve at the pleasure of the Board of
Directors.
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<PAGE>
10. Compensation of Directors
The Board of Directors shall have authority to fix the
compensation of directors for services in any capacity.
11. Interest of Directors in a Transaction
Unless shown to be unfair and unreasonable as to the
Corporation, no contract or other transaction between the Corporation and one
or more of its directors, or between the Corporation and any other corporation,
firm association or other entity in which one or more of the directors are
directors or officers, or are financially interested, shall be either void or
voidable, irrespective of whether such interested director or directors are
present at a meeting of the Board of Directors, or of a committee thereof,
which authorizes such contract or transaction and irrespective of whether his
or their votes are counted for such purpose. In the absence of fraud any such
contract and transaction conclusively may be authorized or approved as fair and
reasonable by: (a) the Board of Directors or a duly empowered committee
thereof, by a vote sufficient for such purpose without counting the vote or
votes of such interested director or directors (although such interested
director or directors may be counted in determining the presence of a quorum at
the meeting which authorizes such contract or transaction), if the fact of such
common directorship, officership or financial interest is disclosed or known to
the Board or committee, as the case may be; or (b) the shareholders entitled to
vote for the election of directors, if such common directorship, officership or
financial interest is disclosed or know to such shareholders.
Notwithstanding the foregoing, no loan, except advances in
connection with indemnification, shall be made by the Corporation to any
director unless it is authorized by vote of the shareholders without counting
any shares of the director who would be the borrower or unless the director who
would be the borrower is the sole shareholder of the Corporation.
ARTICLE III
OFFICERS
1. Election of Officers
The Board of Directors, as soon as may be practicable after
the annual election of directors, shall elect a President, a Secretary, and a
Treasurer, and from time to time may elect or appoint such other officers as it
may determine. Any two or more offices may be held by the same person, except
that the same person may not hold the offices of President and Secretary unless
the person is the sole shareholder of the Corporation and holding of said
offices of President and Secretary by such person is permitted under applicable
law. The Board of Directors may also elect one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
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2. Other Officers
The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board.
3. Compensation
The salaries of all officers and agents of the Corporation
shall be fixed by the Board of Directors.
4. Term of Office and Removal
Each officer shall hold office for the term for which he is
elected or appointed, and until his successor has been elected or appointed and
qualified. Unless otherwise provided in the resolution of the Board of
Directors electing or appointing an officer, his term of office shall extend to
and expire at the meeting of the Board following the next annual meeting of
shareholders. Any officer may be removed by the Board with or without cause, at
any time. Removal of an officer without cause shall be without prejudice to his
contract rights, if any, and the election or appointment of an officer shall
not of itself create contract rights.
5. President
The President shall be the chief executive officer of the
Corporation, shall have general and active management of the business of the
Corporation and shall see that all orders and resolutions of the Board of
Directors are carried into effect. The President shall also preside at all
meetings of the shareholders and the Board of Directors.
The President shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
Board of Directors to some other officer or agent of the Corporation.
6. Vice Presidents
The Vice Presidents, in the order designated by the Board of
Directors, or in the absence of any designation, then in the order of their
election, during the absence or disability of or
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refusal to act by the President, shall perform the duties and exercise the
powers of the President and shall perform such other duties as the Board of
Directors shall prescribe.
7. Secretary and Assistant Secretaries
The Secretary shall attend all meetings of the Board of
Directors and all meetings of the shareholders and record all the proceedings
of the meetings of the Corporation and of the Board of Directors in a book to
be kept for that purpose, and shall perform like duties for the standing
committees when required. The Secretary shall give or cause to be given, notice
of all meetings of the shareholders and special meetings of the Board of
Directors, and shall perform such other duties as may be prescribed by the
Board of Directors or President, under whose supervision the Secretary shall
be. The Secretary shall have custody of the corporate seal of the Corporation
and the Secretary, or an Assistant Secretary, shall have authority to affix the
same to any instrument requiring it and when so affixed, it may be attested by
the Secretary's signature or by the signature of such Assistant Secretary. The
Board of Directors may give general authority to any other officer to affix the
seal of the Corporation and to attest the affixing by his signature.
The Assistant Secretary, or if there be more than one, the
Assistant Secretaries in the order designated by the Board of Directors, or in
the absence of such designation then in the order of their election, in the
absence of the Secretary or in the event of the Secretary's inability or
refusal to act, shall perform the duties and exercise the powers of the
Secretary and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
8. Treasurer and Assistant Treasurers
The Treasurer or any person(s) designated by the Board of
Directors or the Executive Committee, shall have the custody of the corporate
funds and securities; shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation; and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors.
The Treasurer or any such person designated by the Board or
Executive Committee by resolution shall disburse the funds as may be ordered by
the Board of Directors, taking proper vouchers for such disbursements, and
shall render to the President and the Board of Directors, at its regular
meetings, or when the Board of Directors so requires, an account of all his
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, the Treasurer or any
such person designated by the Board or Executive Committee by resolution shall
give the Corporation a bond in such sum and with such surety or sureties as
shall be satisfactory to the Board of Directors for the faithful performance of
the duties of the office of Treasurer, and for the restoration to the
Corporation, in the
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case of the Treasurer's death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in the possession or under the control of the Treasurer belonging to the
Corporation.
The Assistant Treasurer, or if there shall be more than one,
the Assistant Treasurers in the order designated by the Board of Directors or
in the absence of such designation then in the order of their election, in the
absence of the Treasurer or in the event of the Treasurer's inability or
refusal to act, shall perform the duties and exercise the powers of the
Treasurer and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
9. Books and Records
The Corporation shall keep: (a) correct and complete books
and records of account; (b) minutes of the proceedings of the shareholders,
Board of Directors and any committees of directors; and (c) a current list of
the directors and officers and their residence addresses. The Corporation shall
also keep at its office in the State of Delaware or at the office of its
transfer agent or registrar in the State of Delaware, if any, a record
containing the names and addresses of all shareholders, the number and class of
shares held by each and the dates when they respectively became the owners of
record thereof.
The Board of Directors may determine whether and to what
extent and at what times and places and under what conditions and regulations
any accounts, books, records or other documents of the Corporation shall be
open to inspection, and no creditor, security holder or other person shall have
any right to inspect any accounts, books, records or other documents of the
Corporation except as conferred by statute or as so authorized by the Board.
10. Checks, Notes, etc.
All checks and drafts on, and withdrawals from the
Corporation's accounts with banks or other financial institutions, and all
bills of exchange, notes and other instruments for the payment of money, drawn,
made, endorsed, or accepted by the Corporation, shall be signed on its behalf
by the person or persons thereunto authorized by, or pursuant to resolution of,
the Board of Directors.
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ARTICLE IV
CERTIFICATES AND TRANSFERS OF SHARES
1. Forms of Share Certificates
The share of the Corporation shall be represented by
certificates, in such forms as the Board of Directors may prescribe, signed by
the President or a Vice President and the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer. The shares may be sealed with the
seal of the Corporation or a facsimile thereof. The signatures of the officers
upon a certificate may be facsimiles if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Corporation or its
employee. In case any officer who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer at the date of issue.
Each certificate representing shares issued by the
Corporation shall set forth upon the face or back of the certificate, or shall
state that the Corporation will furnish to any shareholder upon request and
without charge, a full statement of the designation, relative rights,
preferences and limitations of the shares of each class of shares, if more than
one, authorized to be issued and the designation, relative rights, preferences
and limitations of each series of any class of preferred shares authorized to
be issued so far as the same have been fixed, and the authority of the Board of
Directors to designate and fix the relative rights, preferences and limitations
of other series.
Each certificate representing shares shall state upon the
face thereof: (a) that the Corporation is formed under the laws of the State of
Delaware; (b) the name of the person or persons to whom issues; and (c) the
number and class of shares, and the designation of the series, if any, which
such certificate represents.
2. Transfers of Shares
Shares of the Corporation shall be transferable on the record
of shareholders upon presentment to the Corporation of a transfer agent of a
certificate or certificates representing the shares requested to be
transferred, with proper endorsement on the certificate or on a separate
accompanying document, together with such evidence of the payment of transfer
taxes and compliance with other provisions of law as the Corporation or its
transfer agent may require.
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3. Lost, Stolen or Destroyed Share Certificates
No certificate for shares of the Corporation shall be issued
in place of any certificate alleged to have been lost, destroyed or wrongfully
taken, except, if and to the extent required by the Board of Directors upon:
(a) production of evidence of loss, destruction or wrongful taking; (b)
delivery of a bond indemnifying the Corporation and its agents against any
claim that may be made against it or them on account of the alleged loss,
destruction or wrongful taking of the replaced certificate or the issuance of
the new certificate; (c) payment of the expenses of the Corporation and its
agents incurred in connection with the issuance of the new certificate; and (d)
compliance with other such reasonable requirements as may be imposed.
ARTICLE V
OTHER MATTERS
1. Corporate Seal
The Board of Directors may adopt a corporate seal, alter such
seal at pleasure, and authorize it to be used by causing it or a facsimile to
be affixed or impressed or reproduced in any other manner.
2. Fiscal Year
The fiscal year of the Corporation shall be the twelve months
ending December 31st, or such other period as may be fixed by the Board of
Directors.
3. Amendments
Bylaws of the Corporation may be adopted, amended or repealed
by vote of a majority of the holders of the shares at the time entitled to vote
in the election of any directors. Bylaws may also be adopted, amended or
repealed by the Board of Directors, but any bylaws adopted by the Board may be
amended or repealed by the shareholders entitled to vote thereon as hereinabove
provided.
If any bylaw regulating an impending election of directors is
adopted, amended or repealed by the Board of Directors, there shall be set
forth in the notice of the next meeting of shareholders for the election of
directors the bylaw so adopted, amended or repealed, together with a concise
statement of the changes made.
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