FORM 10-K-SB-A3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-27131
DP Charters, Inc.
Nevada 88-0381258
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
34700 Pacific Coast Highway #303, Capistrano Beach CA 92624
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 248-9561
Securities registered pursuant to Section 12(b) of the Act: None
The following Securities are to be registered pursuant to Section 12(g) of the
Act:
Class-A Common Voting Equity Stock
27,656,000 Shares Issued and Outstanding
August 14, 2000
Yes[x] No[] (Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.)
[] (Indicate by check mark whether if disclosure of delinquent filers (
229.405) is not and will not to the best of Registrant's knowledge be contained
herein, in definitive proxy or information statements incorporated herein by
reference or any amendment hereto.)
As of 12/31/99
the aggregate number of shares held by non-affiliates was approximately
7,656,000 shares.
the number of shares outstanding of the Registrant's Common Stock was
27,656,000
Exhibit Index is found on page 21
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12Item 1. Description of Business 3
Item 2. Description of Property 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Market for Common Equity and Stockholder Matters 10
11
Item 6. Management's Discussion and Analysis or Plan of Operation 12
Item 7. Financial Statements 16
Item 8. Changes In and Disagreements With Accountants
on Accounting and Financial Disclosure 16
Item 9. Directors and Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act 17
Item 10. Executive Compensation 18
Item 11. Security Ownership of Certain Beneficial Owners and Management 19
Item 12. Certain Relationships and Related Transactions 20
Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
22
(a) Financial Statements 22
(b) Form 8-K Reports 22
(c) Exhibits 22
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PART I
INTRODUCTION
We filed our Registration Statement voluntarily pursuant to Section 12(g)
of the Securities Exchange Act of 1934, in order to comply with the requirements
of National Association of Securities Dealers for submission for quotation on
the Over the Counter Bulletin Board, often called "OTCBB". As of this filing,
that Registration has become effective but has not cleared final comments by the
Staff of the Securities and Exchange Commission.
This Form 10-KSB for 1999 is now amended to conform to changes in our Form
10-SB suggested by the Staff of the Commission. Please see Item 5(e) for the
revised discussion.
Our common stock is not presently quoted on the OTCBB. Our common stock is
qualified for listing over the counter in the NQB "Pink Sheets"; however we do
not believe that any of our shares ever traded in brokerage transactions. The
requirements of the OTCBB are that the financial statements and information
about us be reported periodically to the Commission and be and become
information that the public can access easily. We wish to report and provide
disclosure voluntarily, and will file periodic reports even in the event that we
may not remain required to do so under the Exchange Act. If and when our 1934
Act Registration may be clear of comments by the staff, we will be eligible for
consideration for the OTCBB upon submission of one or more NASD members for
permission to publish quotes for the purchase and sale of the shares of our
common stock.
Our corporation may be the subject of a "Reverse Acquisition". A reverse
acquisition is the acquisition of a private ("Target") company by a public
company, by which the private company's shareholders acquire control of the
public company. While no negotiations are in progress, and no potential targets
have been identified, our business plan is to find such a target or targets, and
attempt to acquire them for stock. While no such arrangements or plans have been
adopted or are presently under consideration, it would be expected that a
reverse acquisition of a target company or business would be associated with
some private placements and/or limited offerings of common stock of this
corporation at that time. Such placements, or offerings, if and when made or
extended, would be made with disclosure and reliance on the businesses and
assets to be acquired, and not upon our present condition.
It is the opinion of the Staff of the SEC that promoters and affiliates of
Blank Check companies, as well as their transferees are underwriters of
securities issued and that the securities can only be resold through
registration under the Securities Act of 1933, and that Rule 144 would not be
available for resale transactions in this situation.
ITEM 1. DESCRIPTION OF BUSINESS.
(A) BUSINESS DEVELOPMENT.
(1) FORM AND YEAR OF ORGANIZATION. This Corporation (stated as "we, us,
and our") was duly incorporated in Nevada on December 18, 1997, as DP Charters,
Inc., with the intention of initiating a charter yacht service from the Dana
Point Harbor, Orange County, California. We later expanded our business plan to
include the organization of scuba dive tours at various world locations.
During October, November and December of 1997, the conceptual idea of
establishing a charter boat operation in Southern California was discussed among
the Management, and with various friends and acquaintances. The decision to form
a company to be funded by those in discussion was taken, based upon the
expressed desire of the those founders to fund us initially, pursuant to a
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private placement in reliance on Rule 504. The formal funding by founders was
memorialized about January of 1998.
Specifically, 20,000,000 shares were issued at par value to the Principal
Shareholder, pursuant to Section 4(2) of the Securities Act of 1933. 6,400,000
shares (with warrants) were placed among 19 accredited investors, pursuant to
Regulation D, Rule 504, promulgated by the Commission pursuant to Section 3(b)
of the 1933 Act. All warrants have expired or been cancelled and are no longer
of any further force or effect. Thereafter, in January and April 1999, 6,000
shares and 1,250,000 shares, respectively, were placed pursuant to Rule 504, in
each case to a single sophisticated and knowledgeable investor. Each of the
foregoing issuances were made, were applicable, to specific exemptions from
registration pursuant to State Law. In the judgement of Management, there is no
unresolved issue or potential issue of non-compliance with State Laws or
regulation.
We had ambitious plans, at that time, to network through travel agencies,
upon observing that none of the notable competitors were so networked. Our plans
included the development of networking with firms marketing tour packages or
tour clubs and firms which could utilize our charter services as a value-added
supplement to their Southern California operations. Emphasis was to be placed on
identifying easy access to Dana Point Harbor, twenty minutes from Orange County
Airport, one hour from San Diego Airport or from Los Angeles International
Airport. Arrangements with Dana Point were investigated and the feasibility of
our use determined. Management further planned to make our services known to the
American Association of Retired Persons, which organization accounts nearly
500,000 members touring Southern California during the off-season. Plans were
made to join the Dana Point Chamber of Commerce, which would provide a cost-free
listing in the California tourism magazine and information data-base, with
circulation of just under one million copies in six counties and automatic
posting with all major hotels throughout the State of California. Plans were
made for an Internet web-page, linked to that of the Dana Point Chamber of
Commerce.
All of these intentions, and the best laid plans of Management, were
dependant, however, upon securing boats and/or participating boat owners or
providers, so that the services could be offered.
On or about March 5, 1998 and continuing through September, tentative
arrangements were reached to acquire boats from a provider in Norway, which had
acquired them in foreclosure of a lien, but had no profitable operation in which
to use them. The concept was to acquire the boats for stock, but the arrangement
called for our common stock to achieve acceptance for quotation on the OTC
Bulletin Board. During 1998, we paid a consulting fee to the Norwegian group for
a joint marketing, advertising and referral program to bring northern European
tourists to Southern California's sport fishing market. During 1998 arrangements
were made with scuba diving tour group leaders in Florida and Mexico, for
possible dive tours in the Florida Keys, the Great Barrier Reef of Australia,
the Island of Cozumel off the Yucatan Peninsula of Mexico, and the seas off
Egypt.
By the end of June, 1998, our then current unaudited financial statements,
indicated a net loss from operations of $155,544.00, $102,470.00 of which
represented consulting fees directed to Norway. Our ability to launch was yet
dependent upon OTC Bulletin Board acceptance, and comments between the NASD
Staff and NASD submitting members were on-going. Delay due to NASD Commenting
period for start-up companies was not deemed unusual by management, but shortly
before the review of the last set of Comments, the NASD changed its rules for
acceptability for new applicant submitter to the effect that the class of common
stock to be quoted must have been registered under the Securities Exchange Act
of 1934 Act, or we must have made an offering under the Securities Act of 1933,
such that the applicant have a Commission file number and actually file and
remain current in filing our financial statements with the Commission, and be
accessible to the public. Accordingly, the NASD responded to the final set of
Comments by qualifying our common stock for quotation on the Pink Sheets, but
not on the OTCBB.
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As a result of the poor timing of events, from our point of view, we were
unable to consummate the acquisition of the boats and was forced to abandon our
original business plan. After some unsuccessful efforts to launch operations,
the original business plan was abandoned, on or about May 15, 1999.
After abandoning our business plan, it became a company whose business plan
was to find a profitable business combination. As a practical matter, we are
required to register our common stock pursuant to Section 12(g) of the 1934 Act
and to pursue acceptance for quotation on the OTCBB if it is to have any chance
to compete with other issuers or registrants, for business combinations by
reverse acquisition. There are no lock-up or shareholder pooling agreements
between or among shareholders of DP Charters. All shares are owned and
controlled independently by the persons to whom they are issued. We have no
Internet address.
(2) BANKRUPTCY, RECEIVERSHIP OR SIMILAR PROCEEDING. None from inception
to date.
(B) BUSINESS OF THE REGISTRANT. We have no present business or business plan.
It is a potential candidate for business combination, most likely in the form of
a reverse acquisition or similar transaction.
CONSULTANTS. We have only a single consultant, namely its the United States
subsidiary of our principal shareholder, Intrepid International Ltd., a Nevada
Corporation. Information about the Principal Shareholder, and its Nevada United
States subsidiary is found later in this Report. The U.S. management of that
subsidiary serves as the management of us. No other consultants are presently
engaged nor are there any plans to retain any consultants currently or for the
foreseeable future. The Norwegian consultants previously mentioned were specific
to the previous business plan, now abandoned, and maintain no relationship to us
or any of our affiliates. It is, of course, conceivable that should a target
business be acquired, one or more consultants may be sought out by the
management of the acquired entity, following a change of control. As of this
time, there is no basis upon which Management could base anything more than mere
speculation as to what manner of consultants, what criteria for seeking or
selecting consultants, or what term of service any such consultant might
require; for the reason that all such consideration would be matters before the
Management only after a change of control which would result from a reverse
acquisition. Neither Management, nor the Principal Shareholder, nor Officers,
nor Directors or affiliates have regularly used any particular consultants on a
regular basis.
NO PRESENT ACQUISITION ACTIVITIES. We have not presently pursuing our
business plan, for the reason that such activities are not timely. They are not
timely because we must qualify ourselves for quotation on the Over the Counter
Bulletin Board ("OTCBB") before wet can enter the arena of seeking any business
combination by reverse acquisition. The process of qualifying for OTCBB requires
first that we become a reporting company pursuant our 1934 Act Registration
Statement. The process next requires that a Broker/Dealer make a submission to
the National Association of Securities Dealers ("NASD") for permission to
publish quotations for the purchase and sale of the common stock of us on the
OTCBB. It would be our policy to employ a consultant to seek a broker/dealer to
become such a submitting market-maker in our common stock. Neither us, nor any
of our affiliates, are Broker/Dealers or NASD members. Since our common stock is
presently quoted on the Pink Sheets, it is likely that one or more existing
Market-Makers would apply for up-grade from the Pink Sheets to the OTCBB,
without the necessity of us employing any consultants therefor. When and if an
NASD member Broker/Dealer might make such a submission to NASD, the Staff of
NASD would evaluate the submission and the due diligence investigation and would
make comments and requests for further information, deemed appropriate to that
Staff, over a period of some months, before granting permission for the
submitting Market-Maker to begin publishing quotations. Until such time as
permission may be granted, no quotations would be published on the OTCBB. While
quotations might be published on the Pink Sheets, such quotations do not, in the
judgment of Management, constitute the basis for the creation or development of
an orderly trading market for the common stock of this Registrant. In arriving
at this opinion, that the Pink Sheets do not constitute the equivalent of OTCBB,
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Management must consider not only its own opinion, but its assessment of the
opinions of those with whom it might evaluate a reverse acquisition.
Accordingly, Management reports its conclusion that a search for an acquisition
target is premature, and that it would remain premature for some months, until
and unless the common stock of this Registrant may be quoted on the OTCBB.
GENERAL INFORMATION ABOUT PROBABLE FUTURE ACQUISITIONS. Notwithstanding the
conclusion and report that searching for possible acquisition targets is
premature, we can and will now disclose and report our general intentions and
policies, with respect to probable future acquisitions.
LIMITED SCOPE AND NUMBER OF POSSIBLE ACQUISITIONS: We do not intend to
restrict our consideration to any particular business or industry segment, and
we may consider, among others, finance, brokerage, insurance, transportation,
communications, research and development, service, natural resources,
manufacturing or high-technology. Of course, because of our limited resources,
the scope and number of suitable candidate business ventures available will be
limited accordingly, and most likely we will not be able to participate in more
than a single business venture. Accordingly, it is anticipated that we will not
be able to diversify, but may be limited to one merger or acquisition because of
limited financing. This lack of diversification will not permit us to offset
potential losses from one business opportunity against profits from another. To
a large extent, a decision to participate in a specific business opportunity may
be made upon management's analysis of the quality of the other firm's management
and personnel, the anticipated acceptability of new products or marketing
concepts, the merit of technological changes and numerous other factors which
are difficult, if not impossible, to analyze through the application of any
objective criteria. In many instances, it is anticipated that the historical
operations of a specific firm may not necessarily be indicative of the potential
for the future because of the necessity to substantially shift a marketing
approach, expand operations, change product emphasis, change or substantially
augment management, or make other changes. We will be dependent upon the
management of a business opportunity to identify such problems and to implement,
or be primarily responsible for the implementation of, required changes. Because
we may participate in a business opportunity with a newly organized firm or with
a firm which is entering a new phase of growth, it should be emphasized that we
may incur further risk due to the failure of the target's management to have
proven our abilities or effectiveness, or the failure to establish a market for
the target's products or services, or the failure to prove or predict
profitability.
LOAN FINANCING NOT ANTICIPATED. There are no foreseeable circumstances
under which loan financing will be sought or needed by us, other than possible
advances by our Principal Shareholder, at any time before we may identify and
commit ourselves to an acquisition candidate. At such time, if any, such loan
financing would be secured on the basis of the that acquisition by and with the
owners of the acquisition target. In the absence of any present probability of
acquisition, no further information can be offered at this time.
REPORTING UNDER THE 1934 ACT. We have become a 1934 Act Reporting Company,
by operation of law due the passage time since our initial filling. As of the
date of this amended filing, we have has not cleared comments of the Staff of
SEC. As a 1934 registrant, we are required to file an Annual Report on Form 10-K
or 10-KSB, 90 days following the end of our fiscal year. The key element of such
annual filing is Audited Financial Statements prepared in accordance with
standards established by the Commission. A 1934 Act Registrant also reports on
the share ownership of affiliates and 5% owners, initially, currently and
annually. In addition to the annual reporting, a Registrant is required to file
quarterly reports on Form 10-Q or 10-QSB, containing audited or un-audited
financial statements, and reporting other material events. Some events are
deemed material enough to require the filing of a Current Report on Form 8-K.
Any events may be reported currently, but some events, like changes or
disagreements with auditors, resignation of directors, major acquisitions and
other changes require aggressive current reporting. All reports are filed and
become public information. There are other reporting obligations of a 1934 Act
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registered company, including periodic reports of activities by significant
shareholders.
The practical effects of the foregoing requirements on the criteria for
selection of a target company are two-fold: first, the target must have audited
or auditable financial statements, and the target must complete an audit for
filing promptly upon the consummation of any acquisition; and, second, that the
target management must be ready, willing and able to carry forth those reporting
requirements or face de-listing from the OTCBB, if listed, and delinquency and
possible liability for failure to report.
PROBABLE INDUSTRY SEGMENTS FOR ACQUISITION. While we may consider proposals
from a wide variety of business segments, Management is aware that
high-technology and new communication technologies, internet and information
services, are an area of current interest. Management feels that it is most
likely that a business combination candidate will be selected in these industry
segments. This present inclination of management may change, as pubic and market
interests may change, and is not a formal policy or commitment of us. Due to
circumstances unique to us, it is not in a position to consider any specific
proposal for the use of us in reverse merger transactions, for the reason that
it is not now qualified for quotation on the OTC Bulletin Board, and will not
be, if at all, for an indeterminant number of months. There is no present or
foreseeable potential that we will acquire a target business or company in which
our present management or principal shareholder, or affiliates, have an
ownership interest. Consideration has been given to corporate policy in this
regard, and it has been determined not to permit any transaction in other than
an arm's length acquisition of business assets owned and controlled by unrelated
third party interests. The basis for this policy is two fold: first, that
related party transactions are unnecessary in the judgment of management and
involve risks not necessary to invite; and second that related party
transactions do not offer the potential profitability for shareholders, that
management believes exists presently in the market place for public issuers
amenable to reverse/merger transactions.
FINDERS FEES FOR MANAGEMENT. No finder's fees will be payable to Management
in connection with any forseeable reverse acetin. Management is identified with
the principal shareholder.
Additionally, the Principal Shareholder is the Principal Consultant and
provides, has provided and may provide corporate services to us, billable hourly
in an established and customary manner. No finders fees, commissions or other
bonuses to Management, Principal Shareholder, or affiliates, for securing or in
connection with any acquisition, will be paid or payable, as a matter of both
current economic conditions and corporate policy. Management has determined that
in its view of the current market for such transactions, such fees or bonuses
are not justifiable.
DISCRETION TO ALLOCATE OPPORTUNITIES. It is disclosed here and elsewhere,
that the Management of us is also the Management of our Principal Shareholder,
and that the Principal Shareholder has other businesses than the Management of
us. Those other business activities include providing professional consulting
services to other public or private corporations in which the principal
shareholder and our officers are not involved directly in management, as
officers, directors or principal shareholders. Mr. Sifford and Mr. James, or
either of them, may from time to time serve as interim officers of other
corporations. Some clients of Intrepid International are, from time to time,
corporations which have failed to achieve previous business goals, or which have
engaged in businesses which have failed or been abandoned. Accordingly, it is
inherent in this relationship that Management and the Principal Shareholder may
be in a position to introduce one or more business opportunities to this the
shareholder of us, or to direct such opportunities to other business interests,
private or public corporations, or unrelated investors. This is an inherent
potential conflict of interest which may or may not become material in the
future. At present, no acquisition is probable or reasonably practical.
(C) FINANCING PLANS. For more information, please see Item 6 of Part II,
Management's Discussion and Analysis.
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(D) GOVERNMENT REGULATION. There are no issues of government regulation unique
to us or our business.
(E) COMPETITION. Other better capitalized firms are engaged in the search for
acquisitions or business combinations which firms may be able to offer more and
may be more attractive to acquisition candidates. We have not yet become a
present candidate for reverse acquisition transactions, for the reasons
previously stated. It may become so in the future, and becoming so when we can
is our business plan. It is doubtful whether any such transaction could be
anticipated in the next twelve months. There is no compelling reason why we
should be preferred over other reverse-acquisition public corporation
candidates. It has no significant pool of cash nor can offer any capital
formation incentive for our selection. We have a limited shareholder base
insufficient for acquisition target wishing to proceed for application to
NASDAQ. In comparison to other "public shell companies" we are unimpressive, in
the judgement of management, and totally lacking in unique features which would
make it more attractive or competitive that other "public shell companies".
While management believes that the competition of other "public shell companies"
is intense and growing, it has no basis on which to quantify our impression.
Please See the Item 6 of part II, Management Discussion and Analysis, for more
information and disclosure.
(F) PLANNED ACQUISITIONS. There are no planned acquisitions at this time.
(G) EMPLOYEES. We have no employees other than our Officers and Directors.
ITEM 2. DESCRIPTION OF PROPERTY.
We have no property and enjoy the non-exclusive use of offices and
telephone of our officers and attorneys, without charge or written agreement. We
pay for outside copying and Federal Express, U.P.S and other messenger services.
We do not pay for routine telephone, in-house copying or United States Mail. Our
address for mail and deliveries is 24843 Del Prado, Dana Point CA, 92629. Our
affairs are conducted a 34700 Pacific Coast Highway, Suite 303, Capistrano Beach
CA 92624. This latter suite is the Office of Intrepid International Ltd., the
United States Office of the Principal Shareholder.
We have adopted no policies with respect to real estate investment. While
we have no intention of investing in real estate, we are not prevented from
doing so by any corporate policy or action. Management disclaims any special
knowledge or skill with respect to real estate investment, and cannot presently
foresee any circumstances which would make such an investment attractive to us
or our shareholders.
ITEM 3. LEGAL PROCEEDINGS.
There are no legal proceedings pending against the Company, as of the
preparation of this Report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND STOCKHOLDER MATTERS.
(A) MARKET INFORMATION. Our Common Stock is cleared for quotation Over the
Counter on the Pink Sheets, only recently. To the best of the Registrant's
knowledge and belief, there has been no market activity, buying or selling, of
the common stock of this Registrant, in brokerage transactions.
(B) HOLDERS. There are presently 53 shareholders of the our common stock.
(C) DIVIDENDS. We have not paid any cash dividends on our Common Stock, and do
not anticipate paying cash dividends on our Common Stock in the next year. We
anticipate that any income generated in the foreseeable future will be retained
for the development and expansion of our business. Future dividend policy is
subject to the discretion of the Board of Directors and will depend upon a
number of factors, including future earnings, debt service, capital
requirements, business conditions, the financial condition of the Company and
other factors that the Board of Directors may deem relevant.
(D) REVERSE ACQUISITIONS. A reverse acquisition of a target business or
company would be expected to involve a change of control of us, and the
designation of new management. Our financial statements would become largely
unreflective of the true condition of us after such an acquisition. Shareholder
approval would be solicited, pursuant to the laws of the State of Nevada, to
approve the acquisition, change of control, and any material corporate changes
incidental to our reorganization. In connection with the solicitation of
shareholder approval, whether or not proxies are solicited, we would provide
shareholders with the fullest possible disclosure of all information material to
shareholder consideration, and such disclosure would include audited financial
statements of the target entity, if available. If shareholder approval is sought
in advance of audited financial statements of an acquisition target, the
authority of management to consummate any transaction would be contingent on a
proper audit of the target meeting the criteria of any un-audited information
relied upon by shareholders.
(E) SECONDARY TRADING. It is the view of the Staff of the Securities and
Exchange Commission that Rule 144 is not available for promoters or affiliates
of blank check companies, as well as their transferees, either before or after
any transaction with an operating entity or other person, and that any sales by
them would have to be registered under the Securities Act of 1933, or qualify
for an exemption available at the time of any proposed sale.
Our company has no present business and our plan is to seek and acquire
productive assets. A blank check offering is an offering of securities by a
company which, at the time of the offering, has no business or business plan
other than to seek a business by merger or acquisition or other profitable
combination. No promoter, officer, director or person engaged in management-type
activity of this corporation has been involved in any blank check offerings. Our
business plan has failed, however, such that now we have no present business and
our plan is to seek and acquire productive assets. Even though we have never
made a blank check offering, we are now considered a blank check company in our
present condition. We have indicated that we may acquire or create a new
business combination by acquisition for common stock.
An underwriter of securities is one who acquires securities with a view to
distribution of them to others. None of our affiliates, nor any person now
deemed to be a promoter, acquired any of our existing securities for such a
purpose. Nor have any earlier persons who were at any time officers, directors,
affiliates, promoters, or their transferees acquired any of our securities for
any such purpose. However, it is expected that such persons would be deemed to
be promoters of any new venture resulting from our acquisition of any target
company.
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It is the opinion of the Staff of the SEC that promoters and affiliates of
Blank Check companies, as well as their transferees are underwriters of
securities issued and that the securities can only be resold through
registration under the Securities Act of 1933, and that Rule 144 would not be
available for resale transactions in this situation.
In a business combination or transaction with an operating entity or other
person, if stock of the registrant is given in exchange for cash or stock of
another entity, the persons who receive the registrant's stock from the
officers, directors, affiliates, promoters, or their transferees will themselves
be transferees .
Secondary trading refers generally to the marketability to resell our
securities and is generally governed by Rule 144, promulgated by the Securities
and Exchange Commission pursuant to Section 3 of the Securities Act of 1933.
Securities which have not been registered pursuant to the Securities Act of
1933, but were exempt from such registration when issued, are generally
"Restricted Securities" as defined by Rule 144(a). The impact of the
restrictions of Rule 144 are (a) a basic one year holding period from purchase;
and (b) a limitation of the amount any shareholder may sell during the second
year, as to our non-affiliates. The limitation of amounts is generally 1% of the
total issued and outstanding in any 90 day period.
20,000,000 shares are held by our affiliates. These shares are not
presently entitled to reliance on Rule 144 for resale, and may not be entitled
to resell their shares of the registrant for an indefinite future, unless
registered under the Securities Act of 1933, or qualify for an exemption
available at the time of any proposed sale. It is the view of the Staff of the
Securities and Exchange Commission that Rule 144 is not available for promoters
or affiliates of blank check companies, as well as their transferees, either
before or after any transaction with an operating entity or other person, and
that any sales by them would have to be registered under the Securities Act of
1933, or qualify for an exemption available at the time of any proposed sale.
27,656,000 shares are issued and outstanding. 7,656,000 shares are owned by
our non-affiliates and are believed to be unrestricted securities which could be
sold without restriction of Rule 144. These 7,656,000 shares were issued
pursuant to Rule 504 on or before April 6, 1999, and were not, when issued
Restricted Securities, as defined by Rule 144(a).
OPTIONS AND DERIVATIVE SECURITIES. We have no outstanding options or derivative
securities. There are no shares issued or reserved which are subject to options
or warrants to purchase, or securities convertible into common stock.
RISKS OF "PENNY STOCK." Our common stock may be deemed to be "penny stock" as
that term is defined in Reg.Section 240.3a51-1 of the Securities and Exchange
Commission. Penny stock share stocks (i) with a price of less than five dollars
per share; (ii) that are not traded on a "recognized" national exchange; (iii)
whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ)
listed stocks must still meet requirement (i) above); or (iv) in issuers with
net tangible assets less than $2,000,000 (if the issuer has been in continuous
operation for at least three years) or $5,000,000 (if in continuous operation
for less than three years), or with average revenues of less than $6,000,000 for
the last three years.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and Reg.
Section 240.15g-2 of the Securities and Exchange Commission require broker
dealers dealing in penny stocks to provide potential investors with a document
disclosing the risks of penny stocks and to obtain a manually signed and dated
written receipt of the document before effecting any transaction in a penny
stock for the investor's account. Potential investors in our common stock are
urged to obtain and read such disclosure carefully before purchasing any shares
that are deemed to be "penny stock."
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Moreover, Reg. Section 240.15g-9 of the Securities and Exchange Commission
requires broker dealers in penny stocks to approve the account of any investor
for transactions in such stocks before selling any penny stock to that investor.
This procedure requires the broker dealer to (i) obtain from the investor
information concerning his or her financial situation, investment experience and
investment objectives; (ii) reasonably determine, based on that information,
that transactions in penny stocks are suitable for the investor and that the
investor has sufficient knowledge and experience as to be reasonably capable of
evaluating the risks of penny stock transactions; (iii) provide the investor
with a written statement setting forth the basis on which the broker -dealer
made the determination in (ii) above; and (iv) receive a signed and dated copy
of such statement from the investor, confirming that it accurately reflects the
investor's financial situation, investment experience and investment objectives.
Compliance with these requirements may make it more difficult for investors in
our common stock to resell their shares to third parties or to otherwise dispose
of them.
RISKS OF STATE BLUE SKY LAWS. In addition to other risks, restrictions and
limitations which may affect the resale of the existing shares of our common
stock, consideration must be given to the Blue Sky laws and regulations of
each State or jurisdiction in which a shareholder wishing to re-sell may reside.
Some States may distinguish between companies with active businesses and
companies whose only business is to seek to secure business opportunities, and
may restrict or limit resales of otherwise free-trading and unrestricted
securities of companies, like us, whose business is to seek an uncertain
profitable business combination at some future time. We have taken no action to
register or qualify our common stock for resale pursuant to the Blue Sky laws
or regulations of any State or jurisdiction. Accordingly offers to buy or sell
our existing securities may be unlawful in certain States and may be subject to
civil or criminal penalties.
(F) SALES OF UNREGISTERED COMMON STOCK 1999.
On or about January 5, 1999, we placed 6,000 shares of common stock,
pursuant to Rule 504, to a single sophisticated investor, Vegas Publications,
Inc., with a pre-existing relationship with management, for $600.00, or $0.10
per share.
On April 6, 1999, we placed 1,250,000 shares of common stock, pursuant to
Rule 504, to a single sophisticated investor, Marshall Worldwide Limited, PO Box
2047-100, San Jose, Costa Rica, for $12,500.00, paid for in cash at $0.01 per
share.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) PLAN OF OPERATION. We were duly incorporated in Nevada on December 18,
1997, as DP Charters, Inc., with the intention of initiating a charter yacht
service from the Dana Point Harbor, Orange County, California. We later expanded
our business plan to include the organization of scuba dive tours at various
world locations. After some unsuccessful efforts to launch operations, the
original business plan was abandoned, on or about May 15, 1999. We have no
present business or business plan other than to seek a profitable business
combination, most likely in a reverse acquisition or similar transaction.
Accordingly, our plan is to seek one or more profitable business combinations or
acquisitions to secure profitability for shareholders.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS. Our Management, Mr. James and
Mr. Sifford, are the Officers and Directors of Intrepid International Ltd. a
Nevada corporate subsidiary of Intrepid International, S.A. a Panama
corporation. These two Intrepid officers and directors ar referred to
collectively as our "Principal Shareholder".
We are not presently pursuing our business plan, for the reason that such
activities are not timely. They are not timely because we must qualify ourselves
for quotation on the Over the Counter Bulletin Board ("OTCBB") before it can
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<PAGE>
enter the arena of seeking any business combination by reverse acquisition. The
process of qualifying for OTCBB requires first that we become a reporting
company pursuant to our 1934 Act Registration Statement, and that such 1934
Registration Statement be clear of SEC comments. The process next requires that
a Broker/Dealer make a submission to the National Association of Securities
Dealers ("NASD") for permission to publish quotations for the purchase and sale
of our common stock on the OTCBB. It would be our policy to employ a consultant
to seek a broker/dealer to become such a submitting market-maker in our common
stock. Neither us, nor any of our affiliates, are Broker/Dealers or NASD
members. Since our common stock is presently quoted on the Pink Sheets, it is
likely that one or more existing Market-Makers would apply for up-grade from the
Pink Sheets to the OTCBB, without the necessity of us employing any consultants
therefor. When and if an NASD member Broker/Dealer might make such a submission
to NASD, the Staff of NASD would evaluate the submission, and the due diligence
investigation, and would make comments and requests for further information,
deemed appropriate to that Staff, over a period of some months, before granting
permission for the submitting Market-Maker to begin publishing quotations. Until
such time as permission may be granted, no quotations would be published on the
OTCBB. While quotations might be published on the Pink Sheets, such quotations
do not, in the judgment of Management, constitute the basis for the creation or
development of an orderly trading market for our common stock. In arriving at
this opinion, that the Pink Sheets do not constitute the equivalent of OTCBB,
Management must consider not only its own opinion, but its assessment of the
opinions of those with whom it might evaluate a reverse acquisition.
Accordingly, Management reports its conclusion that a search for an acquisition
target is premature, and that it would remain premature for some months, until
and unless our common stock may be quoted on the OTCBB.
We are not ready to search for or to consider any specific acquisition
target. It does not expect to be able to begin consideration of any acquisitions
for four to six months. We cannot expect to identify or commit ourselves to any
acquisition within the next twelve months, or perhaps longer for the following
reasons. It is not our policy or practice, our Management or Principal
Shareholder to advertise, or travel in search of possible targets. We do not
command the capital or liquidity with which to conduct such a search, and does
not expect to be able to engage in any capital formation or loan funding
activities for that purpose. While incidental advances by the Principal
Shareholder for corporate maintenance, filing fees, legal and professional, and
auditing are foreseeable, the Principal Shareholder has no intention of general
funding or funding search, advertising or other promotion us. Accordingly, our
future prospects are likely to await such serendipitous referral or introduction
as may lead to conversations with potential target businesses. The search for a
profitable business combination, accordingly, must be understood as an
essentially passive one, relying mostly on word of mouth. It is possible that
business brokers or promoters may at some point approach management with a
proposal. No estimate can be made when and if such a passive search might yield
an acquisition target.
When and if a probable acquisition target may be identified, or may
identify ourselves, Management will conduct extensive due diligence and
evaluation of the target, based upon the financial statements of an acquisition
target, our forseeable requirements for capital, and realistic potential of the
target to attract the capital we may require, and management's evaluation of our
ability to achieve our plan for profitability. No acquisition would be made if
Management were not satisfied that our plan for profitability and viability were
sound and in the interests of shareholders. We will continue our evaluation of
opportunities until an attractive business combination is accomplished, no
matter how long it may take.
CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We have
no immediate need for current capital formation in our present stage from
outside sources. This means that we expect to maintain our corporate and other
filings and reports during the next twelve months.
Reference is made to Note 2, Going Concern, of our Audited Financial
Statements: "The Registrant is dependant upon raising capital to continue
operations. The financial statements do not include any adjustments that might
12
<PAGE>
arise from the outcome of this uncertainty. It is management's plan to raise
additional funds to begin our operations." We would be dependent on the
acquisition of assets and businesses to commence business operations. We are not
dependant on additional funds to conduct our investigation and selection of a
profitable business combination. Management cannot plan such capital formation
as may be appropriate for an acquired business before selection of and
combination with such a business. It is to be expected that following the firm
agreement to combine, some capital raising program would be necessary, but any
such program would be offered to investors based upon the assets and businesses
to be acquired, and not on us in our present condition, without businesses,
revenues, or income producing assets.
Reference is made to Note 3, Development Stage Company, of the Registrant's
Audited Financial Statements: "The Registrant is a development stage company, as
defined in Financial Accounting Standards Board Statement 7. It is concentrating
substantially all of our efforts in raising capital and developing our business
operations in order to generate significant revenues." After some unsuccessful
efforts to launch operations, the original business plan was abandoned, on or
about May 15, 1999. We have no present business or business plan other than to
seek a profitable business combination, most likely in a reverse acquisition or
similar transaction. Accordingly, our plan is to seek one or more profitable
business combinations or acquisitions to secure profitability for shareholders.
We are not presently concentrating on selecting a business combination
candidate. No current fund raising programs are being conducted or contemplated
before merger, acquisition or combination is announced, and then any such
capital formation would be offered to investors based upon the assets and
businesses to be acquired, and not on us in our present condition, without
businesses, revenues, or income producing assets.
In the event, consistent with the expectation of management, that no
combination is made within the next twelve to eighteen months, we may be forced
to effect some advances from our Principal Shareholder, for costs involved in
maintenance of corporate franchise and filing reports as may be required, when
and if this 1934 Act registration is clear of comments by the SEC Staff. Should
this become necessary, the maximum amount of such advances is estimated not to
exceed $20,000.00. No agreement by the Principal shareholder to make such
advances is in place, and no guarantee can presently be given that additional
funds, if needed, will be available. It is by far more likely that advances will
take the form of providing services on a deferred compensation basis. Should
further auditing be required, such services by the Independent Auditor may not
be the subject of deferred compensation.
As reflected in our Financial Statements, provided with this Report, it has
not been necessary for any shareholder to advance operational funds to us.
SUMMARY OF PRODUCT RESEARCH AND DEVELOPMENT. None.
EXPECTED PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT. None.
EXPECTED SIGNIFICANT CHANGE IN THE NUMBER OF EMPLOYEES. None.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION.
(I) OPERATIONS AND RESULTS FOR THE PAST TWO FISCAL YEARS. This
Corporation has had no revenues since our inception in December of 1997. Our
attempt to commence operations failed and was abandoned on May 15, 1999. Our
expenses of $156,559, for the five months ended May 31, 1998, and $191,679 for
the twelve months ended December 31, 1998, are not considered indicative of
maintenance expenses for the next six to twelve months, but reflected attempts
to secure rights and assets for our former and abandoned business plan, and
unusual legal expenses in connection with due diligence investigation and
disclosure in connection with submission to the NASD for quotation on the
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Bulletin Board, the OTCBB, in the context of the NASD rule changes. As an
incidental result of the NASD Rule changes our common stock is allowed to be
quoted over the counter in the "Pink Sheets", but will not be qualified for the
OTCBB until our 1934 Registration has been cleared of comments by the SEC Staff.
Our expenses for 1999 were $27,825, consisting substantially of general and
administrative expenses, which included legal and professional expenses, mainly
for the preparation of our 1934 Act Registration. During 1999, we changed our
method of amortization of organizational costs in accordance with current
accounting principles and expensed the remaining balance, with the effect of a
$12,000 charge. During 1999, $10,000 was paid to our principal consultant as
fees for services on a time/hour/fee basis. During 1999, we received shareholder
loans of $13,000 of which $3,000 was repaid in 1999. During 1999 we advanced
$10,000 to a shareholder. This advance was a receivable as of the end of 1999.
It is noted that the total expenses for the three months ended March
31, 1999, and the six months ended June 30, 1999, are the same figure, $7,325;
and for the nine months ended September 30, 1999 are $27,325; and it is further
noted, that figure includes the amortization of organizational expenses of
$16,000. Management estimates that the expenses needed to carry us through an
ultimate reorganization, over and above current cash, to be not more than
$20,000.00, which funding, if needed, would be used to defer legal and auditing
and accounting, and incidental filings with the Commission, and with any States
in which the parties are domiciled.
We retained a firm named Capital Relations and Management to assist in
initial submission to the OTCBB, paying a fixed fee of $2,500 for that service.
Capital Relations and Management is not an affiliate of us of or our Principal
Shareholder. Capital Relations submitted our disclosure documents to National
Capital, LLC, which market maker duly submitted for permission to quote to the
NASD. Before clearing comments, the NASD effected its rule changes, with the
result that our common stock was cleared for the Pink Sheets, but cannot be
cleared for the OTCBB until our 1934 Act Registration shall have, and cleared
comments by the SEC Staff. We have not, and will not, take other affirmative
steps to encourage or request any broker-dealer to act as a market maker for our
securities.
(II) FUTURE PROSPECTS. We cannot predict when, if ever, we will
participate in a business opportunity in view of our limited resources, and
competitive disadvantages with respect to other public or semi-public
Registrants. Such a forward looking statement must be recognized as such.
Unexpected events, changes in market conditions, loss of experienced management
personnel, and the like, certainly require that management's expectations be
evaluated in the light of the basis for such forward looking statements. There
are no guaranties of success at any stage. Nor, can we predict when or whether
our 1943 Act Registration will be cleared of comments by the Staff of the SEC.
(C) REVERSE ACQUISITION CANDIDATE. We are is searching for a profitable
business opportunity. The acquisition of such an opportunity could and likely
would result in some change in control of us at such time. This would likely
take the form of a reverse acquisition. That means that we would likely acquire
businesses and assets for stock in an amount that would effectively transfer
control of us to the acquisition target company or ownership group. It is called
a reverse-acquisition because it would be an acquisition by us in form, but
would be an acquisition of us in substance. Capital formation issues for the
future of us would arise only when targeted business or assets have been
identified. Until such time, we have no basis upon which to propose any
substantial infusion of capital. While no such arrangements or plans have been
adopted or are presently under consideration, it would be expected that a
reverse acquisition of a target company or business would be associated with
some private placements and/or limited offerings of our common stock for cash.
Such placements, or offerings, if and when made or extended, would be made with
disclosure and reliance on the businesses and assets to be acquired, and not
upon our present condition.
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ITEM 7. FINANCIAL STATEMENTS.
AUDITED FINANCIAL STATEMENTS: for the years ended December 31, 1999
and 1998, are provided as Financial Statement: Exhibit F-99, filed herewith are
incorporated herein by this reference as though fully set forth herein.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
The Remainder of this Page is Intentionally left Blank
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
The following persons are our Directors, having taken office from our
inception, to serve until their successors might be elected or appointed. The
time of the next meeting of shareholders has not been determined and is not
likely to take place before a targeted acquisition or combination is determined.
J. Dan Sifford, Jr., age 61, has been our President since inception, grew
up in Coral Gables, Florida, where he attended Coral Gables High School and the
University of Miami. After leaving the University of Miami, Mr. Sifford formed a
wholesale consumer goods distribution company which operated throughout the
southeastern United States and all of Latin America. In 1965, as an extension of
the operations of the original company, he founded Indiasa Corporation
(Indiasa), a Panamanian company which was involved in supply and financing
arrangements with many of the Latin American Governments, in particular, their
air forces and their national airlines. As customer requirements dictated,
separate subsidiaries were established to handle specific activities. During
each of the past five years he has served as President of Indiasa, which serves
only as a holding company owning: 100% of Indiasa Aviation Corp. (a company
which owns aircraft but has no operations); 100% of Overseas Aviation
Corporation (a company which owns Air Carrier Certificates but has no
operations); 50% of Robmar International, S.A. (a company operates a
manufacturing plant in Argentina and Brazil, but in which Mr. Sifford holds no
office). In addition to his general aviation experience, Mr. Sifford, an Airline
Transport rated pilot, has twenty two years experience in the airline business,
and is currently the President of Airline of the Virgin Islands, Ltd. a commuter
passenger airline operating in the Caribbean, and has been our president
continuously during each of the past five years.
Mr. Sifford is not and has never been a broker-dealer. He has acted
primarily as consultant, and in some cases has served as an interim officer and
director of public companies in their development stage. The following
disclosure identifies those public companies: Air Epicurean, Inc., All American
Aircraft, Earth Industries, Ecklan Corporation, EditWorks, Ltd., Market
Formulation & Research, Inc., NetAir.com, Inc., NSJ Mortgage Capital
Corporation, Inc., North American Security & Fire, Oasis 4th Movie Project,
Professional Recovery Systems, Inc., Richmond Services, Inc., Telecommunications
Technologies, Ltd., and World Staffing II, Inc.
Of these last mentioned companies, he is currently serving in our company,
in Ecklan Corporation, in Oasis 4th Movie Project, in Richmond Services, Inc,
and in NetAir.com, Inc.
Kirt W. James, age, 42, our Secretary-Treasurer, has a lifelong background
in marketing and sales. From 1972 to 1987, Mr. James was responsible for sales
and business administrative matters for Glade N. James Sales Co., Inc. and from
1987 to 1990 Mr. James built retail markets for American International Medical
Supply Co., a publicly traded company. In 1990 he formed and became President of
HJS Financial Services, Inc., and was responsible for the day to day business
operations of the firm as well as consultation with Clients concerning their
business and Product Development. He remains the President and Sole Shareholder
of HJS, which is presently substantially in active. During the past five years
Mr. James has been involved in the valuation of private companies for internal
purposes, and as a consultant to private companies engaged in the private sale
and acquisition of other private businesses. He has also assisted private and
public companies in planning for entry into the public market place. Mr. James
is not and has never been a broker-dealer. He has acted primarily as consultant,
and in some cases has served as an interim officer and director of public
companies in their development stage. The following disclosure identifies those
public companies with which he has been involved during the past five years:
Earth Industries, Inc., EditWorks, Ltd., Market Formulation & Research, Inc.,
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Mex Trans Seafood Consulting, Inc., and North American Security & Fire. He is
also an Officer and Director of Oasis 4th Movie Project, an operating
non-trading company.
There are no persons who are officers or directors, other than the
foregoing, whose activities have been or are material to the operations of us.
The present Officers and Directors spend an insubstantial amount of time on the
activities of our company. There are no arrangements, agreements or
understandings between non-management shareholders and management, under which
non-management shareholders or other persons may directly or indirectly
participate in or influence the management of the affairs of us. There are no
agreements or understandings for any officer or director to resign at the
request of another person.
Our Officers and Directors are the Officers and Directors of Intrepid
International Ltd. of Nevada, the United States Subsidiary of Intrepid
International S.A. of Panama, the Principal Shareholder. The principal business
of the United States Subsidiary is the performance of Corporate Services on a
time-fee basis. It is foreseeable, but not presently intended, nor is it the
normal practice, that these Officers and Directors may serve as interim
management of other companies in their development stage. Intrepid does
participate from time to time in the organization of companies intending to make
offerings of unregistered securities, in connection with actual businesses
ventures.
No present or previous promoter, officer, director or person engaged in
management-type activity of this corporation has been involved in any blank
check offerings. A blank check offering is an offering of securities by a
company which, at the time of the offering, has no business or business plan
other than to seek a business by merger or acquisition or other profitable
combination. Intrepid's United States Officers, who serve as our officers, have
served as officers of companies which with initial businesses or business plans
which have failed and which have eventually been abandoned, and which, following
such failure and abandonment, became, for some period of time, companies with no
operating business or productive assets, and no business plan other than a plan
to seek to acquire profitable assets or businesses. The following companies fall
within that category of description: Earth Industries, Inc., Richmond Services,
Inc., Market Formulation & Research, Inc., Mex Trans Seafood Consulting, Inc.,
NSJ Mortgage Capital Corporation, Inc., Telecommunications Technologies, Ltd.
There are no other present or previous promoter, officer, director or person
engaged in management-type activity of this corporation involved in any in any
company or corporation within that category of description.
ITEM 10. EXECUTIVE COMPENSATION.
Each of the two Officer/Directors have been issued 2,500,000 new investment
shares of common stock, each for present service and incentive purposes, in
connection with, and as a part of the initial issuance of 20,000,000 shares to
founders for organizational costs, and valued at $20,000.00 (par value). As
indicated in Items 4 and 5 immediately preceding, the names of those officers
and directors receiving these shares are Kirt W. James, and J. Dan Sifford, Jr.
No other compensation, or plan of compensation, has been made, authorized or
contemplated at the present time and for the present period of corporate
inactivity and ill-liquidity. There is no market for our shares. It is not
possible to derive a "fair market value" for this share ownership based upon any
market. The Management shares were issued in 1997 at par value. The actual value
of this ownership would ripen if, and only if, we could achieve profitability by
acquisition of assets or businesses. It was not the intention us for our shares
to trade on the Pink Sheets. During the period of comments for the OTC Bulletin
board, the rules having changed, our common stock was cleared for the Pink
Sheets by default. We believe that no actual quotations of bid or ask are
current. It is, however useful to us to remain qualified for the Pink Sheets, in
as much as the procedure for moving from the Pink Sheets to the OTCBB is less
taxing than an original submission. Accordingly, the shares of our common stock
owned by officers and directors is deemed to have no present public trading, nor
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have ever had any public trading value. Inasmuch as the 20,000,000 shares were
issued in October 1997 for organizational services valued at $20,000.00, the
value attributed to the shares provided to the Officers therefore would be
$2,500.00 each.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. To the best of our
knowledge and belief the following disclosure presents the total security
ownership of all persons, entities and groups, known to or discoverable by us,
to be the beneficial owner or owners of more than five percent of any voting
class of our stock. More than one person, entity or group could be beneficially
interested in the same securities, so that the total of all percentages may
accordingly exceed one hundred percent of some or any classes. Please refer to
explanatory notes if any, for clarification or additional information. The
Registrant has only one class of stock; namely Common Stock.
(B) SECURITY OWNERSHIP OF MANAGEMENT. To the best of our knowledge and belief
the following disclosure presents the total beneficial security ownership of all
Directors and Nominees, naming them, and by all Officers and Directors as a
group, without naming them, known to or discoverable by us. More than one
person, entity or group could be beneficially interested in the same securities,
so that the total of all percentages may accordingly exceed one hundred percent
of some or any classes. Please refer to explanatory notes if any, for
clarification or additional information.
OFFICERS AND DIRECTORS AND OWNERS OF 5% OR MORE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Name and Address of Beneficial Owner. . . Actual % Attributed %
Shares Shares
Owned Owned
------------------------------------------------------------------------------------
J. Dan Sifford, Jr. (1). . . . . . . . . . 2,500,000 9.04 20,000,000 72.32
62 Bay Heights Drive
Miami, Florida 33133
------------------------------------------------------------------------------------
Kirt W. James (1). . . . . . . . . . . . . 2,500,000 9.04 20,000,000 72.32
24843 Del Prado #318
Dana Point CA 92629
------------------------------------------------------------------------------------
All Officers and Directors as a Group. . . 5,000,000 18.08 20,000,000 72.32
------------------------------------------------------------------------------------
Laurencio Jaen O. (2). . . . . . . . . . . 0 0.00 20,000,000 72.32
Torre Universal
Ave Federico Boyd
Piso No. 12 (Penthouse)
Panama, Republic of Panama
------------------------------------------------------------------------------------
Teodoro F. Franco L. (2) . . . . . . . . . 0 0.00 20,000,000 72.32
Torre Universal
Ave Federico Boyd
Piso No. 12 (Penthouse)
Panama, Republic of Panama
------------------------------------------------------------------------------------
Leopoldo Kennion G (2) . . . . . . . . . . 0 0.00 20,000,000 72.32
Torre Universal
Ave Federico Boyd
Piso No. 12 (Penthouse)
Panama, Republic of Panama
------------------------------------------------------------------------------------
18
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------------------------------------------------------------------------------------
Intrepid International S.A. (1) (2). . . . 15,000,000 54.24 20,000,000 72.32
Torre Universal
Ave Federico Boyd
Piso No. 12 (Penthouse)
Panama, Republic of Panama
------------------------------------------------------------------------------------
Total Other 5% Owners of the Registrant. 15,000,000 54.24 20,000,000 72.32
------------------------------------------------------------------------------------
Total Shares Issued and Outstanding. . . . 27,656,000 100.00 27,656,000 100.00
------------------------------------------------------------------------------------
</TABLE>
(1) The Officers and Directors of us are affiliates of the Principal
Shareholder. For this reason the attribution of all shares to each is shown in
the table. Please see Item 5 of this Part, Directors, Executive Officers,
Promoters and Control Persons for further information. The shares listed as
issued to them are were in fact issued to them, as individuals, and are
beneficially owned by them as indicated.
(2) The Ownership of the 15,000,000 is held by Intrepid International as a
corporate asset and is not the personal asset of any of our Officers, Directors
or shareholders. These Officers, Directors and Shareholders of the Panamanian
Principal shareholders are the same three persons. Their names and percentage of
ownership are Laurencio Ja n O. (50%), Teodoro F. Franco L. (50%), Leopoldo
Kennion G. (0%). Please see Item 7 of this Part, Certain Relationships and
Related Transactions for further information.
(1) (2) Each of the shareholders shown in the foregoing table have sole
voting power with respect to their actual legal ownership, Mr. James, Mr.
Sifford, and the Panama Corporation. There are no legal or contractual
arrangements which require these affiliates to act in concert with respect to
their share ownership.
(C) CHANGES IN CONTROL. There are no arrangements, including any pledge by any
persons, of securities of us, which may at a subsequent date result in a change
of control us. In as much as we are searching for a profitable business
opportunity, it is to be expected that a change of control would be contemplated
when such a target is identified.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Intrepid International, S. A. ("Intrepid-Panama") is our principal
shareholder. Our Officers and Directors affiliates of Intrepid-Panama. The
principal shareholder was incorporated in the Republic of Panam in 1984 to
offer financial services to natural resource companies, primarily those engaged
in the production of oil and gas. Following the world wide collapse of oil
prices in the mid-eighties, Intrepid-Panama broadened the focus of its universe
of support services to include a wider range of companies, with an emphasis on
public companies and private companies, companies engaged in the transition from
privately held to publicly held, and development stage companies, whether public
or private, requiring professional business and corporate guidance. In August of
1997 Intrepid-Panama sought a United States Representative and entered into a
relationship with a group of corporate and business specialists who, after
contracting with Intrepid-Panama, incorporated as Intrepid International, Ltd.
("Intrepid US") to provide the required representation and agency for
Intrepid-Panama in North America and Europe. Intrepid US is incorporated in the
State of Nevada. Intrepid International (US and/or Panama) is not an investment
banker, nor a broker or dealer in securities. Intrepid is a provider of
technical support services to client companies, generally, and an occasional
investor for its own account.
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The following persons are not our Officers or Directors. They are the
owners, Officers and Directors of the Principal Shareholder. The following
persons do not engage in direct control of our affairs, and our activities are
not material to our operations. While the following three persons, acting as a
Board of Directors of the Panama Corporation could exercise direct control, as
majority shareholder, they have delegated United States operations to our
Officers and Directors, and to the United States subsidiary of which they two
constitute the Management.
Laurencio Jaen O., an original incorporator who has served as President and
Director of Intrepid-Panama since its inception in 1984, resides in Panama
City, Republic of Panama. He is, and has been for the past twenty five years,
Vice President of Indiasa Corporation ("Indiasa"), a Panamanian corporation,
which, through one of its subsidiaries, Robmar International, is involved in the
manufacture and distribution of chemical products in Argentina and Brazil and
which, through its former subsidiary Indiasa Aviation Corporation, was, for
eight years ending in 1981, engaged in aviation consulting, the leasing,
purchase and sale of aircraft, and the operation of a cargo airline, primarily
in Latin America. Mr. Jaen was a founder of PAISA, Panama's international
airline, served as president of the Colon Free Zone (the world s largest free
trade zone), and as Director of Panama's Social Security Administration. He has
also served as the President of the Panamanian Chamber of Commerce, and as a
member of the Board of Presidential Advisors of the Republic of Panama.
Teodoro F. Franco L., Secretary and a Director of Intrepid-Panama, has, for
thirty years, been a specialist in maritime and aviation law. Mr. Franco is a
partner in Franco and Franco, a Panama law firm with offices around the world.
In addition to his law practice he has served as Panamanian Consul to Liverpool,
England and for the past five years as Ambassador to Great Britain. The firm
practices maritime, aviation and commercial law and currently is the legal firm
for: IBERIA (the Spanish national airline), KLM (the Dutch national airline),
VIASA (the Venezuelan national airline), Aeroflot (the Russian national airline)
and various smaller Latin American national airlines as well as being the
registered agents for thousands of ocean going ships around the world flying the
Panamanian flag. Mr. Franco brings to Intrepid-Panama a wealth of international
legal, commercial and diplomatic experience.
Leopoldo Kennion G., Treasurer and a Director of Intrepid-Panama, is, and
has for twenty years, been a Certified Public Accountant specializing in
international accounting and is an associate in the law firm of Franco and
Franco. Mr. Kennion practices maritime, aviation and commercial accounting
serving the specialized needs of the transnational clients of Franco and Franco
by providing an interface between them and their auditors.
J. Dan Sifford, Jr., is the United States Managing Director for Intrepid
International, S.A. (Panama). He is fluent in the Spanish Language. His
biographical information is found under Item 5 of this Part, Directors,
Executive Officers, Promoters and Control Persons.
The officers and directors of Intrepid International, Ltd. (Nevada)
(Intrepid US) are two individuals; Kirt W. James, and J. Dan Sifford, Jr., which
two individuals are our officers and directors. Their biographical information
is found under Item 5 of this Part, Directors, Executive Officers, Promoters and
Control Persons. These two persons are only persons in direct, day to day
control of our affairs. The Officers, Owners and Directors of the Panama parent
do not direct or participate in our management.
20
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS. AUDITED FINANCIAL STATEMENTS: for the years ended
December 31, 1999 and 1998, are provided as Financial Statement: Attachment
F-99, following the body of filing.
(B) FORM 8-K REPORTS. None.
(C) EXHIBITS. Please see Exhibit Index following, for other Exhibits.
--------------------------------------------------------------------------------
Exhibit
Table
# Table Category / Description of Exhibit Page Number
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
F-99 Audited Financial Statements for the years ended
December 31, 1999 and 1998. 22
--------------------------------------------------------------------------------
[2] ARTICLES/CERTIFICATES OF INCORPORATION, AND BY-LAWS
--------------------------------------------------------------------------------
3.1 Articles of Incorporation: DP Charters, Inc., a Nevada Corporation 32
3.2 By-Laws: DP Charters, Inc. 35
--------------------------------------------------------------------------------
dated: August 14, 2000
DP CHARTERS, INC.
by
/s/Kirt W. James /s/J. Dan Sifford, Jr.
Kirt W. James J. Dan Sifford, Jr.
president/director secretary/director
21
<PAGE>
--------------------------------------------------------------------------------
FINANCIAL STATEMENTS: ATTACHMENT F-99
AUDITED FINANCIAL STATEMENTS:
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998.
--------------------------------------------------------------------------------
22
<PAGE>
C O N T E N T S
Independent Auditors Report . 24
Balance Sheets 25
Statements of Operations 26
Statements of Stockholders Equity . 27
Statements of Cash Flows . 28
Notes to the Financial Statements . 29
23
<PAGE>
INDEPENDENT AUDITOR S REPORT
To the Board of Directors and Stockholders of
D P Charters, Inc.
We have audited the accompanying balance sheets of D P Charters, Inc. (a
Development Stage Company) as of December 31, 1999 and 1998 and the related
statements of operations, stockholders equity and cash flows for the years
ended December 31, 1999 and 1998 and from December 18, 1997 through December 31,
1997 and from inception on December 18, 1997 through December 31, 1999. These
financial statements are the responsibility of the Company s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of D P Charters, Inc. (a
Development Stage Company) as of December 31, 1999 and 1998 and the related
statements of operations, stockholders equity and cash flows for the years
ended December 31, 1999 and 1998 and from December 18, 1997 through December 31,
1997 and from inception on December 18, 1997 through December 31, 1999 in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has no operations and is dependent upon
financing to continue operations. These factors raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in the Note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
_______/s/________
Salt Lake City, Utah
February 24, 2000
24
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Balance Sheets
ASSETS
--------------------------------------------------------------------------------
December 31,
1999 1998
Current assets
Cash $996 $12,321
Advance to shareholder (Note 4) 10,000 0
Total Current Assets 10,996 12,321
Other Assets
Organizational Costs (Net of
Amortization)(Note 1) 0 16,000
Total Other Assets 0 16,000
Total Assets $10,996 $28,321
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Advance from shareholder (Note 4) $10,000 0
Total Assets $10,000 $0
Stockholders Equity
Common Stock, authorized
100,000,000 shares of $.001 par value,
issued and outstanding 27,656,000 and
26,400,000, respectively 27,656 26,400
Additional Paid in Capital 205,444 193,600
Less: Subscriptions Receivable (600) 0
Deficit Accumulated During the
Development Stage (231,504) (191,679)
Total Stockholders Equity 996 28,321
Total Liabilities and Stockholders Equity $10,996 $28,321
================================================================================
The accompanying notes are an integral part of these financial statements
25
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Statements of Operations
From inception From
on December Inception on
For the Years 18, 1997 December 18,
Ended through 1997 through
December 31, December 31 December 31,
1999 1998 1997 1999
--------------------------------------------------------------------------------
Revenues: $0 $0 $0 $0
Expenses:
General & Administrative (27,825) (191,527) (152) (219,504)
Total Expenses (27,825) (191,527) (152) (219,504)
Net (Loss) Before Cumulative
Effect of Accounting Change (27,825) (191,527) (152) (219,504)
Cumulative Effect of
Accounting Change (12,000) 0 0 (12,000)
Net (Loss) $(39,825) $(191,527) $(152)$(231,504)
Net (Loss) Per Share:
Loss before cumulative effect
of accounting change 0 (0.01) 0 (0.01)
Cumulative Effect of Accounting Change 0 0 0 0
Net (Loss) Per Share $0 $(0.01) $0 $(0.01)
Weighted average shares
outstanding 27,342,150 26,272,000 21,904,000 25,172,717
================================================================================
The accompanying notes are an integral part of these financial statements
26
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Statement of Stockholders Equity
Additional
Paid-in
Capital
Common Stock (Discount on
Subscriptions Retained
Shares Amount Stock) Receivable Deficit
--------------------------------------------------------------------------------
Balance at beginning of
Development stage-
December 18, 1997 0 $0 $0 $0 $0
Shares issued for
organizational costs 20,000,000 20,000 0 0 0
Shares issued for
cash at $.03125
per share 3,808,000 3,808 115,192 0 0
Net loss December
31, 1997 0 0 0 0 (152)
Balance, December
31, 1997 23,808,000 23,808 115,192 0 (152)
Shares issued for cash at $.03125
per share 2,592,000 2,592 78,408 0 0
Net loss December
31, 1998 0 0 0 0 (191,527)
Balance, December
31, 1998 26,400,000 26,400 193,600 0 (191,679)
Shares issued for subscription
receivable at
$.10 per share 6,000 6 594 (600) 0
Shares issued for services at $.01
per share 1,250,000 1,250 11,250 0 0
Net loss December
31, 1999 0 0 0 0 (39,825)
Balance, December
31, 1999 27,656,000 $27,656 $205,444 $(600) $(231,504)
================================================================================
The accompanying notes are an integral part of these financial statements
27
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Statement of Cash Flows
From From
Inception on Inception on
December 18, December 18,
1997 1997
through through
December 31, December 31, December 31,
1999 1998 1997 1999
--------------------------------------------------------------------------------
Cash Flows form Operating Activities
Net loss $(39,825) $(191,527) $(152) $(231,504)
Adjustments to reconcile
net loss to net cash
provided by operations
Amortization 16,000 4,000 0 20,000
Shares issued for services 12,500 0 0 12,500
Increase in Receivables (10,000) 0 0 (10,000)
Increase in Payables 10,000 0 0 10,000
Net Cash Flows used in
Operating Activities (11,325) (187,527) (152) (199,004)
Cash Flows from Investment
Activities: 0 0 0 0
Cash Flows from Financing
Activities:
Proceeds from Issuance
of stock 0 81,000 119,000 200,000
Net increase (decrease)
in cash (11,325) (106,527) 118,848 996
Cash, beginning of year 12,321 118,848 0 0
Cash, end of year $996 $12,321 $118,848 $996
Supplemental Cash Flow Information
Cash Paid for:
Interest $0 $0 $0 $0
Taxes $0 $0 $0 $0
================================================================================
The accompanying notes are an integral part of these financial statements
Supplemental Non-cash Disclosure:
In 1997, the shareholders paid $20,000 of organizational costs for the Company.
The Company reimbursed the $20,000 by issuing 20,000,000 shares of common stock.
In 1999, the Company issued 1,250,000 of its common stock for services valued at
$12,500.
28
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Notes to The Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
D P Charters, Inc., ( the Company ) is a Nevada corporation organized on
December 18, 1997. The Company was formed to provide a charter yacht service
from the Dana Point harbor located in Dana Point, Orange County, California but
operations never commenced. It is the intent of management to raise capital in
order to secure business operations.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the
weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating losses
totaling approximately $231,500 that will be offset against future taxable
income. These NOL carryforwards begin to expire in the year 2012. No tax
benefit has been reported in the financial statements because the Company
believes there is a 50% or greater chance the carryforward will expire unused.
Accordingly, per FASB 109 the potential tax benefits of the loss carryforward
are offset by the valuation of the same amount.
Deferred tax assets and the valuation account is as follows at December 31,
1999 and 1998.
December 31,
1999 1998
--------------------------------------------------------------------------------
NOL carrryforward $ 78,710 $58,005
Valuation allowance (78,710) (58,005)
Total $ 0 $ 0
f. Organizational Costs
In 1997, the shareholders paid $20,000 in organizational costs. The Company
reimbursed the shareholders by issuing 20,000,000 shares of common stock at
$.001 par value. These costs were being amortized on a straight-line method
over a 60 month period beginning January 1, 1998, however, during January 1999
the remaining balance was written off in connection with a change in accounting
principle (See Note 5). These costs will be recovered only if the Company is
able to generate a positive cash flow from operations.
29
<PAGE>
D P CHARTERS, INC.
(a Development Stage Company)
Notes to The Financial Statements
December 31, 1999 and 1998
NOTE 1 - Summary of Significant Accounting Policies (continued)
g. Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and revenues and
expenses during the reporting period. In these financial statements and other
assets involve extensive reliance on management s estimates. Actual results
could differ from those estimates.
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is dependent upon raising
capital to continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty. It is
management s plan to raise additional funds to begin its intended operations.
NOTE 3 - Development Stage Company
The Company is a development stage company as defined in Financial
Accounting Standards Board Statement No. 7. It is concentrating substantially
all of its efforts in raising capital and developing its business operations in
order to generate significant revenues.
NOTE 4 - Related Party Transactions
During 1999 and 1998, $10,000 and $58,500, respectively was paid in consulting
fees to a company owned by shareholders of the Company.
During 1999, shareholders loaned the Company $13,000. The Company made payments
of $3,000 on these loans and the balance payable at December 31, 1999 is
$10,000.
During 1999, the Company advanced a shareholder $10,000. The balance of this
receivable at December 31, 1999 is $10,000.
NOTE 5 - Change in Accounting Principles
During the year ended December 31, 1999, the Company changed its method of
amortization of organizational costs in accordance with SOP 98-5 and expensed
the remaining balance. The effect of this change was to decrease net income for
the year ended December 31, 1999 by $12,000 ($0.00 per share).
NOTE 6 - Stockholders Equity
In January 1999, the Company issued 6,000 shares of its common stock for a
subscription receivable of $600.
In April 1999, the Company issued 1,250,000 shares of its common stock for
services valued at $12,500.
30
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT 3.1
ARTICLES OF INCORPORATION:
DP CHARTERS, INC., A NEVADA CORPORATION
--------------------------------------------------------------------------------
31
<PAGE>
ARTICLES OF INCORPORATION
OF
DP CHARTERS, INC.
ARTICLE I. The name of the Corporation is DP CHARTERS, INC.
ARTICLE II. Its principal and registered office in the State of Nevada is
774 Mays Boulevard, Suite 10, Incline Village NV 89451. The initial registered
agent for services of process at that address is N&R Ltd. Group, Inc. a Nevada
Corporation.
ARTICLE III. The purposes for which the corporation is organized are to
engage in any activity or business not in conflict with the laws of the State of
Nevada or of the United States of America. The period of existence of the
corporation shall be perpetual.
ARTICLE IV. The corporation shall have authority to issue an aggregate of
One Hundred Million (100,000,000) shares of common voting equity stock of par
value one mil ($0.001) per share, and no other class or classes of stock, for a
total capitalization of $100,000. The corporation's capital stock may be sold
from time to time for such consideration as may be fixed by the Board of
Directors, provided that no consideration so fixed shall be less than par value.
ARTICLE V. No shareholder shall be entitled to any preemptive or
preferential rights to subscribe to any unissued stock or any other securities
which the corporation may now or hereafter be authorized to issue, nor shall any
shareholder possess cumulative voting rights at any shareholders meeting, for
the purpose of electing Directors, or otherwise.
ARTICLE VI. The affairs of the corporation shall be governed by a Board of
Directors of not less than one (1) nor more than (7) persons. The Incorporator
William Stocker attorney at law, 219 Broadway Suite 261, Laguna Beach CA 92651
shall serve as sole initial director.
ARTICLE VII. The Capital Stock, after the amount of the subscription price
or par value, shall not be subject to assessment to pay the debts of the
corporation, and no stock issued, as paid up, shall ever be assessable or
assessed.
ARTICLE VIII. The initial By-laws of the corporation shall be adopted by
its Board of Directors. The power to alter, amend or repeal the By-laws, or
adopt new By-laws, shall be vested in the Board of Directors, except as
otherwise may be specifically provided in the By-laws.
32
<PAGE>
ARTICLE IX. The name and address of the Incorporator (Initial Director) of
the corporation is William Stocker attorney at law, 219 Broadway Suite 261,
Laguna Beach CA 92651.
I THE UNDERSIGNED, being the Incorporator hereinbefore named for the
purpose of forming a corporation pursuant the General Corporation Law of the
State of Nevada, do make and file these Articles of Incorporation, hereby
declaring and certifying that the facts herein stated are true, and accordingly
have set my hand hereunto this Day, December 16, 1997.
/s/William Stocker
William Stocker
attorney at law
Incorporator
33
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT 3.2
BY-LAWS: DP CHARTERS, INC.
--------------------------------------------------------------------------------
34
<PAGE>
BY-LAWS
OF
DP CHARTERS, INC.
A NEVADA CORPORATION
ARTICLE I
CORPORATE OFFICES
The principal office of the corporation in the State of Nevada shall be
located at 774 Mays Blvd. Suite 10, Incline Village NV 89451. The corporation
may have such other offices, either within or without the State of incorporation
as the board of directors may designate or as the business of the corporation
may from time to time require.
ARTICLE II
SHAREHOLDERS' MEETINGS
SECTION 1. PLACE OF MEETINGS
The directors may designate any place, either within or without the State
unless otherwise prescribed by statute, as the place of meeting for any annual
meeting or for any special meeting called by the directors. A waiver of notice
signed by all stockholders entitled to vote at a meeting may designate any
place, either within or without the State unless otherwise prescribed by
statute, as the place for holding such meeting. If no designation is made, or if
a special meeting be otherwise called, the place of meeting shall be the
principal office of the corporation.
SECTION 2. ANNUAL MEETINGS
The time and date for the annual meeting of the shareholders shall be set
by the Board of Directors of the Corporation, at which time the shareholders
shall elect a Board of Directors and transact any other proper business. Unless
the Board of Directors shall determine otherwise, the annual meeting of the
shareholders shall be held on the second Monday of March in each year, if not a
holiday, at Ten o'clock A.M., at which time the shareholders shall elect a Board
of Directors and transact any other proper business. If this date falls on a
holiday, then the meeting shall be held on the following business day at the
same hour.
SECTION 3. SPECIAL MEETINGS
Special meetings of the shareholders may be called by the President, the
Board of Directors, by the holders of at least ten percent of all the shares
entitled to vote at the proposed special meeting, or such other person or
persons as may be authorized in the Articles of Incorporation.
35
<PAGE>
SECTION 4. NOTICES OF MEETINGS
Written or printed notice stating the place, day and hour of the meeting
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called, shall be delivered not less than ten (10) days nor more than
sixty (60) days before the date of the meeting, either personally or by mail, by
the direction of the president, or secretary, or the officer or persons calling
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder at his address
as it appears on the stock transfer books of the corporation, with postage
thereon prepaid.
Closing of Transfer Books or Fixing Record Date.
(a) For the purpose of determining stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment thereof, or stockholders
entitled to receive payment of any dividend, or in order to make a determination
of stockholders for any other proper purpose, the directors of the corporation
may provide that the stock transfer books shall be closed for a stated period
but not to exceed, in any case twenty (20) days. If the stock transfer books be
closed for the purpose of determining stockholders entitled to notice or to vote
at a meeting of stockholders, such books shall be closed for at least twenty
(20) days immediately preceding such meeting.
(b) In lieu of closing the stock transfer books, the directors may
prescribe a day not more than sixty (60) days before the holding of any such
meeting as the day as of which stockholders entitled to notice of the and to
vote at such meeting must be determined. Only stockholders of record on that day
are entitled to notice or to vote at such meeting
(c) The directors may adopt a resolution prescribing a date upon which the
stockholders of record are entitled to give written consent to actions in lieu
of meeting. The date prescribed by the directors may not precede nor be more
than ten (10) days after the date the resolution is adopted by directors.
SECTION 5. VOTING LIST.
The officer or agent having charge of the stock transfer books for the
shares of the corporation shall make, at least ten (10) days before each meeting
of stockholders, a complete list of stockholders entitled to vote at such
meeting, or any adjournment thereof, arranged in alphabetical order, with the
address of and number of shares held by each, which list, for a period of ten
(10) days prior to such meeting, shall be kept on file at the principal office
of the corporation and shall be subject to inspection by any stockholder at any
time during usual business hours. Such list shall also be produced and kept open
at the time and place of the meeting and shall be subject to the inspection of
any stockholder during the whole time of the meeting. The original stock
transfer book shall be prima facie evidence as to who are the stockholders
entitled to examine such list or transfer books or to vote at the meeting of
stockholders.
36
<PAGE>
SECTION 6. QUORUM.
At any meeting of stockholders, a majority of fifty percent plus one vote,
of the outstanding shares of the corporation entitled to vote, represented in
person or by proxy, shall constitute a quorum at a meeting of stockholders. If
less than said number of the outstanding shares are represented at a meeting, a
majority of the outstanding shares so represented may adjourn the meeting from
time to time without further notice. At such adjourned meeting at which a quorum
shall be present or represented, any business may be transacted which might have
been transacted at the meeting originally notified. The stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave less than a
quorum.
SECTION 7. PROXIES.
At all meetings of the stockholders, a stockholder may vote by proxy
executed in writing by the stockholder or by his duly authorized attorney in
fact. Such proxy shall be filed with the secretary of the corporation before or
at the time of the meeting. Such proxies may be deposited by electronic
transmission.
SECTION 8. VOTING.
Each stockholder entitled to vote in accordance with the terms and
provisions of the certificate of incorporation and these by-laws shall be
entitled to one vote, in person or by proxy, for each share of stock entitled to
vote held by such shareholder. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by ballot. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of Nevada.
SECTION 9. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as
follows:
a. Roll Call.
b. Proof of notice of meeting or waiver of notice.
c. Reading of minutes of preceding meeting.
d. Reports of Officers.
e. Reports of Committees.
f. Election of Directors.
g. Unfinished Business.
h. New Business.
SECTION 10. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken, or any
other action which may be taken, at a meeting of the stockholders, may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the stockholders entitled to vote with respect to the
subject matter thereof. Unless otherwise provided by law, any action required to
be taken, or any other action which may be taken, at a meeting of the
stockholders, may be taken without a meeting if a consent in writing, setting
37
<PAGE>
forth the action so taken, shall be signed by a Majority of all of the
stockholders entitled to vote with respect to the subject matter thereof at any
regular meeting called on notice, and if written notice to all shareholders is
promptly given of all action so taken.
SECTION 11. BOOKS AND RECORDS.
The Books, Accounts, and Records of the corporation, except as may be
otherwise required by the laws of the State of Nevada, may be kept outside of
the State of Nevada, at such place or places as the Board of Directors may from
time to time appoint. The Board of Directors shall determine whether and to what
extent the accounts and the books of the corporation, or any of them, other than
the stock ledgers, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or book or document of
this Corporation, except as conferred by law or by resolution of the
stockholders or directors. In the event such right of inspection is granted to
the Stockholder(s) all fees associated with such inspection shall be the sole
expense of the Stockholder(s) demanding the inspection. No book, account, or
record of the Corporation may be inspected without the legal counsel and the
accountants of the Corporation being present. The fees charged by legal counsel
and accountants to attend such inspections shall be paid for by the Stockholder
demanding the inspection.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board
of directors. The directors shall in all cases act as a board, and they may
adopt such rules and regulations for the conduct of their meetings and the
management of the corporation, as they may deem proper, not inconsistent with
these by-laws and the laws of this State.
SECTION 2. NUMBER, TENURE, AND QUALIFICATIONS.
The number of directors of the corporation shall be a minimum of one (l)
and a maximum of nine (7), or such other number as may be provided in the
Articles of Incorporation, or amendment thereof. Each director shall hold office
until the next annual meeting of stockholders and until his successor shall have
been elected and qualified.
SECTION 3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than
this by-law immediately after, and at the same place as, the annual meeting of
stockholders. The directors may provide, by resolution, the time and place for
holding of additional regular meetings without other notice than such
resolution.
38
<PAGE>
SECTION 4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the
president or any two directors. The person or persons authorized to call special
meetings of the directors may fix the place for holding any special meeting of
the directors called by them.
SECTION 5. NOTICE.
Notice of any special meeting shall be given at least one day previously
thereto by written notice delivered personally, or by telegram or mailed to each
director at his business address. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail so addressed, with postage
thereon prepaid. The attendance of a director at a meeting shall constitute a
waiver of notice of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any business because the
meeting is not lawfully called or convened.
SECTION 6. QUORUM.
At any meeting of the directors fifty (50) percent shall constitute a
quorum for the transaction of business, but if less than said number is present
at a meeting, a majority of the directors present may adjourn the meeting from
time to time without further notice.
SECTION 7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a
quorum is present shall be the act of the directors.
SECTION 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of
directors and vacancies occurring in the board for any reason except the removal
of directors without cause may be filled by a vote of the majority of the
directors then in office, although less than a quorum exists. Vacancies
occurring by reason of the removal of directors without cause shall be filled by
vote of the stockholders. A director elected to fill a vacancy caused by
resignation, death or removal shall be elected to hold office for the unexpired
term of his predecessor.
SECTION 9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the
stockholders or by action of the board. Directors may be removed without cause
only by vote of the stockholders.
SECTION 10. RESIGNATION.
A director may resign at any time by giving written notice to the board,
the president or the secretary of the corporation. Unless otherwise specified in
the notice, the resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not be necessary to
make it effective.
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SECTION 11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services,
but by resolution of the board a fixed sum and expenses for actual attendance at
each regular or special meeting of the board may be authorized. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor.
SECTION 12. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive
committee and other committees, each consisting of one (l) or more directors.
Each such committee shall serve at the pleasure of the board.
ARTICLE IV
OFFICERS
SECTION 1. NUMBER.
The officers of the corporation shall be the president, a secretary and a
treasurer, each of whom shall be elected by the directors. Such other officers
and assistant officers as may be deemed necessary may be elected or appointed by
the directors.
SECTION 2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be
elected annually at the first meeting of the directors held after each annual
meeting of the stockholders. Each officer shall hold office until his successor
shall have been duly elected and shall have qualified or until his death or
until he shall resign or shall have been removed in the manner hereinafter
provided. In the event that no election of officers be held by the directors at
that time, the existing officers shall be deemed to have been confirmed in
office by the directors.
SECTION 3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed
by the directors whenever in their judgement the best interest of the
corporation would be served thereby, but such removal shall be without prejudice
to contract rights, if any, of the person so removed.
SECTION 4. VACANCIES.
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the directors for the unexpired
portion of the term.
SECTION 5. PRESIDENT.
The president shall be the principal executive officer of the corporation
and, subject to the control of the directors, shall in general supervise and
control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the stockholders and of the directors. He
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may sign, with the secretary or any other proper officer of the corporation
thereunto authorized by the directors, certificates for shares of the
corporation, any deeds, mortgages, bonds, contracts, or other instruments which
the directors have authorized to be executed, except in cases where the
directors or by these by-laws to some other officer or agent of the corporation,
or shall be required by law to be otherwise signed or executed; and in general
shall perform all duties incident to the office of president and such other
duties as may be prescribed by the directors from time to time.
SECTION 6. CHAIRMAN OF THE BOARD.
In the absence of the president or in the event of his death, inability or
refusal to act, the chairman of the board of directors shall perform the duties
of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The chairman of the board of
directors shall perform such other duties as from time to time may be assigned
to him by the directors.
SECTION 7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the
directors' meetings in one or more books provided for that purpose, see that all
notices are duly given in accordance with the provisions of these by-laws or as
required, be custodian of the corporate records and of the seal of the
corporation and keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder, have general
charge of the stock transfer books of the corporation and in general perform all
the duties incident to the office of secretary and such other duties as from
time to time may be assigned to him by the president or by the directors.
SECTION 8. TREASURER.
If required by the directors, the treasurer shall give a bond for the
faithful discharge of his duties in such sum and with such surety or sureties as
the directors shall determine. He shall have charge and custody of and be
responsible for all funds and securities of the corporation; receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in accordance
with these by-laws and in general perform all of the duties incident to the
office of treasurer and such other duties as from time to time may be assigned
to him by the president or by the directors.
SECTION 9. SALARIES.
The salaries of the officers shall be fixed from time to time by the
directors and no officer shall be prevented from receiving such salary by reason
of fact that he is also a director of the corporation.
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ARTICLE V
CONTRACTS, LOANS, CHECKS AND DEPOSITS
SECTION 1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents to
enter into any contract or execute and deliver any instrument in the name of and
on behalf of the corporation, and such authority may be general or confined to
specific instances.
SECTION 2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences
of indebtedness shall be issued in its name unless authorized by a resolution of
the directors. Such authority may be general or confined to specific instances.
SECTION 3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation, shall be signed
by such officer or officers, agent or agents of the corporation and in such
manner as shall from time to time be determined by resolution of the directors.
SECTION 4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from
time to time to the credit of the corporation in such banks, trust companies or
other depositories as the directors may select.
ARTICLE VI
FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January in
each year, or on such other day as the Board of Directors shall fix.
ARTICLE VII
DIVIDENDS
The directors may from time to time declare, and the corporation may pay,
dividends on its outstanding shares in the manner and upon the terms and
conditions provided by law.
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ARTICLE VIII
SEAL
The directors may provide a corporate seal which shall have inscribed
thereon the name of the corporation, the state of incorporation, year of
incorporation and the words, "Corporate Seal".
ARTICLE IX
WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be
given to any stockholder or director of the corporation under the provisions of
these by-laws or under the provisions of the articles of incorporation, a waiver
thereof in writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed equivalent to
the giving of such notice.
ARTICLE X
AMENDMENTS
These by-laws may be altered, amended or repealed and new by-laws may be
adopted in the same manner as their adoption, by the Board of Directors if so
adopted; by a vote of the stockholders representing a majority of all the shares
issued and outstanding, if so adopted or adopted by the Board of Directors; or,
in any case, at any annual stockholders' meeting or at any special stockholders'
meeting when the proposed amendment has been set out in the notice of such
meeting.
CERTIFICATION
THE SECRETARY of the Corporation hereby certifies that the foregoing is a
true and correct copy of the By-Laws of the Corporation named in the title
thereto and that such By-Laws were duly adopted by the Board of Directors of
said Corporation on the date set forth below.
EXECUTED, AND CORPORATE SEAL AFFIXED, this day of December 16, 1997.
/s/J. Dan Sifford
J. Dan Sifford
Secretary
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