As filed with the Securities and Exchange Commission on October 1, 1998
REGISTRATION NO. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SPORTSMAN'S WHOLESALE COMPANY
(Name of Registrant as Specified in its Charter)
Nevada 5490 84-1408762
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
Incorporation or Organization) Classification Code) Tax Identification No.)
55 West 200 North, #3
Provo, Utah 84601
(801) 377-1758
(Address and Telephone Number of Registrant's Principal Place of Business)
Fred L. Hall
President, Sportsman's Wholesale Company
55 West 200 North
Provo, Utah 84601
(801) 377-1758
(Name, Address and Telephone Number of Agent for Service)
Copies to:
A. Robert Thorup, Esq.,
RAY QUINNEY & NEBEKER
7th Floor, 79 South Main Street
Salt Lake City, Utah 84111
(801) 323-3359
Approximate Date of Proposed Sale to the Public: As soon as practicable from
time to time after this
registration statement
becomes effective.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. If delivery of the prospectus is expected to be
made pursuant to Rule 434, please check the following box.
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CALCULATION OF REGISTRATION FEE
- --------------------------------- -------------------- --------------------- --------------------- ------------------
Title of Each Class of Number of Shares Proposed Maximum Proposed Maximum Amount of
Securities to Be Registered to be Registered offering Price Per Aggregate Offering Registration Fee
Unit
- --------------------------------- -------------------- --------------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Common Stock 100,000 $1.50 $150,000.00 $44.25
- --------------------------------- -------------------- --------------------- --------------------- ------------------
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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P R O S P E C T U S
100,000 Shares
Sportsman's Wholesale Company
Common Stock
Sportsman's Wholesale Company (the "Company") is offering 100,000 shares of its
$.0001 par value common stock, (the "Common Stock" or the "Shares") to the
public at a price of $1.50 per Share, on an "all or nothing" basis. Prior to
this offering, there has been no public market for the Shares of Common Stock,
and there can be no assurance that a market will develop upon completion of this
offering or, if a market should develop, that it will continue. The initial
public offering price has been arbitrarily determined by the Company and bears
no necessary relationship to assets, shareholders equity or any other recognized
criteria of value.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. INVESTORS SHOULD EXPECT
IMMEDIATE SUBSTANTIAL DILUTION. (SEE "THE COMPANY - DILUTION") EVEN IF THE
COMPANY SUCCEEDS IN RAISING THE MAXIMUM AMOUNT IN THE OFFERING, THE AMOUNT OF
CAPITAL AVAILABLE TO THE COMPANY WILL BE EXTREMELY LIMITED AND MAY NOT BE
SUFFICIENT TO ENABLE THE COMPANY TO FULLY COMMENCE ITS PROPOSED BUSINESS
OPERATIONS WITHOUT ADDITIONAL FUND RAISING. (SEE "RISK FACTORS," PAGE 5) THE
SECURITIES OFFERED HEREIN SHOULD NOT BE PURCHASED BY ANY INVESTOR WHO CANNOT
AFFORD TO SUSTAIN THE TOTAL LOSS OF THEIR INVESTMENT.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY NOR HAS THE COMMISSION OR ANY
AGENCY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Price to Underwriting Discounts and Proceeds to
Public(1)(3) Commissions(1)(3) Company(2)(3)
------------ ----------------- -------------
Per Share $ 1.50 $.00 $ 1.50
Total $150,000.00 $.00 $150,000.00
- --------------
(1) The offering will be managed by the Company and the Shares will be offered
and sold by officers of the Company, without any discounts or other commissions.
See "Plan of Distribution."
(2) Proceeds to the Company are shown before deducting offering expenses payable
by the Company estimated at $25,000, including legal and accounting fees and
printing costs.
(3) The offering is being conducted by the Company on an "all or nothing" basis.
If the entire 100,000 shares are not sold, no shares will be sold and all
proceeds received from investors will be returned without interest or deduction
of any kind.
The date of this Prospectus is October __, 1998
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If the Company is unable to sell the full 100,000 shares offered
hereby, any and all of the funds received by the Company will be returned to the
investors. Investor funds will be deposited no later than noon of the next
business day after receipt into an escrow account at First Security Bank, N.A.
maintained by A. Robert Thorup, Esq. of the Ray Quinney & Nebeker law firm, 79
South Main Street, Salt Lake City, Utah 84111, pending receipt of subscriptions
totaling the full $150,000 offering. If subscriptions for the full 100,000
shares have not been received within 120 days from the date of this Prospectus,
the Offering will terminate (unless extended by the Company by public notice for
up to 30 additional days) and all proceeds will be promptly refunded to
subscribers without interest or deduction.
Subscribers will have no right to return or use of their funds during
the offering period, which may last up to 150 days.
The Shares are being offered by the Company subject to prior sale,
receipt and acceptance by the Company, approval of certain matters by counsel,
and certain other conditions. The Company reserves the right to withdraw or
cancel this offering and may reject any order, in whole or in part.
AVAILABLE INFORMATION
The Company has filed with the United States Securities and Exchange
Commission (the "Commission") a Registration Statement on Form SB-2, under the
Securities Act of 1933, as amended (the "Securities Act), with respect to the
securities offered hereby. As permitted by the rules and regulations of the
Commission, this Prospectus does not contain all of the information contained in
the Registration Statement. For further information regarding both the Company
and the securities offered hereby, reference is made to the Registration
Statement, including all exhibits and schedules thereto, which may be inspected
without charge at the public reference facilities of the Commission's
Washington, D.C. office, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
may be obtained from the Washington, D.C. office upon request and payment of the
prescribed fee. The Company is an electronic filer. The Commission maintains a
Web site that contains a copy of this Prospectus and the related Registration
Statement, reports, proxy and information statements and other information
regarding issuers that file reports with the Commission. The Commission's Web
site address is (http:/www.sec.gov).
The Company intends to furnish its stockholders with annual reports
containing consolidated financial statements audited and reported upon by its
independent accounting firm and such other periodic reports as the Company may
determine to be appropriate or as may be required by law. As of the date of this
Prospectus, the Company became subject to the informational requirements of the
Exchange Act and, in accordance therewith, will file reports and other
information with the Commission. The Company will not file a Form 8-A or other
Registration Statement under the Securities Exchange Act in the near future, and
will only be subject to Section 15(d) of the Exchange Act following the
effective date of the Registration Statement. Therefore the Commission's proxy
rules, short-swing profits regulations, beneficial ownership reporting
regulations and the bulk of the tender offer regulations will not be applicable
to the Company.
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Reports and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act will be available
for inspection and copying at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,and at
the following regional offices of the Commission: New York Regional Office,
Seven World Trade Center, 13th Floor, New York, New York 10048; Chicago Regional
Office,500 West Madison Street, Chicago, Illinois 60661. Copies of such material
may be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Copies of the
Company's Annual, Quarterly and other Reports which will be filed by the Company
with the Commission commencing with the Quarterly Report for the first quarter
ended after the date of this Prospectus (due 45 days after the end of such
quarter).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY STATE
SECURITIES AGENCY, AND NO SUCH AGENCY HAS PASSED UPON THE TERMS OF THIS OFFERING
OR APPROVED THE MERITS THEREOF. INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF
THE COMPANY AND THE TERMS OF THIS OFFERING IN EVALUATING THE MERITS AND RISKS OF
THE OFFERING AND MAKING AN INVESTMENT DECISION. THIS PROSPECTUS SHOULD BE READ
IN ITS ENTIRETY BY ANY PROSPECTIVE INVESTOR PRIOR TO HIS OR HER INVESTMENT.
[This Space Left Blank Intentionally]
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information and consolidated financial statements, including the notes
thereto, appearing elsewhere in this Prospectus. Each prospective investor is
urged to read this Prospectus in its entirety, and particularly the information
set forth in "RISK FACTORS."
The Company Sportsman's Wholesale Company (the "Company") was
organized as a Nevada corporation in 1996 to engage
in the wholesale sporting goods business. To date,
the Company has not commenced operations nor has it
received any revenues from its intended operations,
nor has the Company otherwise engaged in any other
business.
In April, 1998, the Company acquired all of the
outstanding stock of Cap's Sporting Goods Wholesale,
Inc., a Utah corporation ("Cap's") organized for the
same purpose as the Company. To date, Cap's has also
not engaged in any serious business operations nor
earned any meaningful revenues. The Company intends
to develop and operate its wholesale sporting goods
business through Cap's. (The Company and Cap's, as a
consolidated operating group, are referred to as "the
Company" except where the context dictates
otherwise.)
The Offering 100,000 shares of the Company's Common Stock,
$.0001 par value ("Common Stock") are being offered
at $1.50 per share on an "all or nothing" basis. All
of the shares offered hereby must be subscribed
during the Offering period or all Investor funds will
be refunded and the Offering will be terminated (See
"Terms of the Offering" and "Description of
Securities".
Plan of
Distribution This Offering will be managed by the Company and
the shares offered will be sold by officers of the
Company, without any discounts or other commissions.
Subscription funds from investors will be placed in
escrow pending completion or termination of the
offering. The offering will terminate 120 days from
the date hereof (or 150 days, if extended by the
Company in writing for an additional 30 days), and
funds held in escrow will be promptly returned to
subscribers, unless the entire 100,000 shares
($150,000) is subscribed on or before that date. See
"Terms of the Offering."
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Escrow Agent A. Robert Thorup, Esq. of the Ray Quinney & Nebeker
law firm in Salt Lake City, Utah will serve as escrow
agent for receipt of the proceeds from this offering
and will maintain those funds in a separate account
at First Security Bank, N.A. in Salt Lake City, Utah.
Use of Proceeds Management intends to use the net proceeds from
this offering primarily for the purposes of acquiring
supplies and equipment, marketing and advertising the
Company's products and services, covering the initial
operating expenses and providing the Company with a
modest level of working capital.
Transfer Agent Interwest Transfer Company, Inc., 1981 East
Murray-Holladay Road, Salt Lake City, Utah 84117,
Telephone (801) 272-9294 is transfer agent for the
Company's Common Stock.
Securities
Outstanding The Company presently has 1,503,500 shares of Common
Stock issued and outstanding at the date of this
Prospectus. Upon the successful completion of this
Offering, 1,603,500 shares will be issued and
outstanding.
The Company is also authorized to issue up to
5,000,000 shares of preferred stock, the rights and
preferences of which may be designated in series by
the Board of Directors. To the extent of such
authorization, such designations may be made without
shareholder approval. The Board of Directors has not
designated any series or issued any shares of
preferred stock. The designation and issuance of
series of preferred stock in the future would create
additional securities which would have dividend and
liquidation preferences over the Common Stock offered
hereby.
Risk Factors The Company is a start up company with no operating
history. Consequently, an investment in the Company
is highly speculative. Investors will suffer
substantial dilution in the book value per share of
the Common Stock compared to the purchase price. In
seeking to implement its proposed business, the
Company could incur substantial losses during the
development stage, and require additional funding for
which it has no commitments.
Management of the Company will serve on a part-time
basis and will have other interests which may
conflict with the interests of the Company. Until
such time, if ever, that the Company generates
sufficient revenue to pay management salaries,
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members of management will not be employed full time
and will only devote a minimal amount of time to the
affairs of the Company.
No person should invest in the Company who cannot
afford to risk loss of the entire investment. See
"Risk Factors."
Summary Selected
Financial Data The Company is a development stage company and has
no revenues or earnings from operations. As of June
30, 1998, total assets were $5,048 compared with
total liabilities of $10,443. Shareholder equity was
a negative ($5,395) at the same date, with a per
share book value of a negative ($0.01).
RISK FACTORS
An investment in the shares offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information set forth elsewhere in this
Prospectus, including the Consolidated Financial Statements and the Notes
thereto, prior to making an investment in the Company.
Risks Inherent in a New Start Up Company
1. No Operating History/Doubts as to Going Concern. The Company will
not commence business operations until after the proceeds of this Offering are
available. The Company has no operating history. Businesses which are starting
up or which are in their initial stages of development present substantial
business and financial risks and may suffer significant losses in the
development of their business from which they can not recover. The Company will
face all of the challenges of a new business enterprise, including but not
limited to, locating suitable office space, engaging the services of qualified
support personnel and consultants, establishing budgets, implementing
appropriate financial controls and internal operating policies and procedures.
However, the Company does not have significant cash and has not had significant
operations since the inception of its development stage. As noted in the
Independent Auditors' opinion, there is substantial doubt about the Company's
ability to continue as a going concern without the realization of additional
adequate financing.
2. Limited Capital/Need for Additional Capital. The Company presently
has no significant operating capital and is totally dependent upon receipt of
the proceeds of the Offering to commence its wholesale sporting goods business.
The level of marketing activities. inventory and staff will depend on both the
amount taken in through this Offering and the ongoing revenues of the Company's
business. Upon completion of the Offering, even if the entire Offering amount is
raised, the amount of capital available to the Company will be extremely
limited, and may not be sufficient to enable the Company to fully commence its
proposed business operations without additional fund raising. The Company has no
commitments for additional cash funding beyond the proceeds expected to be
received from this Offering.
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3. Dependence on the Efforts of Management. The success of the Company
will depend in large measure on the efforts and assistance of its management.
The officers and directors have experience in financial analysis and economics
which will be important to the Company's success. As compared to many other
public companies, however, the Company lacks a depth of managerial and technical
personnel. Accordingly, there is a greater likelihood that the loss of the
services of current management would impair the ability of the Company to
effectively carry out its operations. The Company has no plans to obtain Key Man
insurance for any of its officers or directors.
4. Conflicts of Interest. All of the officers and directors will
maintain part to full time employment outside the Company and may not be able to
devote sufficient attention to the Company to ensure its success until earnings
justify additional time be devoted to the Company. Such outside employment may
also create conflicts of interest. There is no assurance such conflicts could be
resolved favorably for the Company. Nevada corporate law requires all officers
and directors of the Company to act according to their fiduciary duties to the
stockholders.
It is contemplated that the Company may enter into non-arms length
transactions with members of the Company's management, and the management of
other potential subcontractors, including but not limited to, the leasing or use
of facilities and the possible purchase of various assets. Management intends
that such transactions be entered into on a fair and reasonable basis to the
Company; however, due to the non-arms length nature of such transactions there
is no assurance of this. Nevada law requires all officers and directors of the
Company to act according to their fiduciary duties to the shareholders.
5. Payment of Dividends. The Company has not paid dividends on its
Common Stock and does not anticipate paying dividends on its Common Stock in the
foreseeable future. There is no assurance that the Company's operations will
generate net profits from which to pay cash dividends. Investors who anticipate
the need of immediate income from an investment should not purchase the shares
being offered hereby.
6. Limited Liability of Officers and Directors. The Nevada Revised
Statutes provides that the Company shall provide indemnification of officers and
directors and certain employees under certain circumstances and payment of
expenses outlined in the statute. The Bylaws of the Company provide that the
officers and directors of the Company shall be indemnified to the fullest extent
allowable under the statute.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being offered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
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submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Risks Related to the Nature of the Proposed Business
7. Uncertain Market Acceptance. The Company's proposed business is
based on the Company's belief that the increasing interest in shooting sports in
the western United States will support a wholesale sporting goods operation like
that contemplated by the Company. The Company also sees the advent of Internet
advertising and infomercial advertising as media that will benefit the marketing
of the Company's inventories and services. There is no assurance of market
acceptance of the Company and its product offerings, and the Company's business
will be subject to all the risks associated with introducing a new competitor
into an established market. The Company has undertaken no independent third
party market study to determine the feasibility of its business plan.
8. Competition. The Company will operate in a highly competitive
environment. Competition will come from a variety of larger, national and
regional sporting goods wholesalers, as well as large sporting goods retail
chains and other mass market stores (like Wal-Mart) with significant buying
power that approximates the pricing of a traditional wholesaler. Most of the
Company's competitors are larger and have significantly greater financial
resources, operating experience, management experience, and other capabilities
than the Company.
9. Reliance on Short Term Terminable Leases for Office Space. The
Company is leasing office and limited warehouse space on a month to month basis
so as not to incur excessive long term liabilities. It is foreseeable that this
lease could be terminated by the lessor as soon as the lessor found someone
willing to lease the property on a longer term basis. Should this be the case,
the Company will likely incur significant expense in searching for and
configuring new office space to meet its needs. Also, the Company could incur
significant inconvenience, loss of time and income, disruption of marketing and
customer service as well as loss of customer confidence if it is required to
change office and/or warehouse space on a frequent basis.
Risks Related to the Offering
10. All or Nothing Offering. The shares covered by this Prospectus are
offered by the Company on an "all or nothing" basis. There is no underwriter and
no firm commitment from anyone to purchase all or any of the Shares offered. No
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assurance can be given that all of the Shares will be sold. If the Company is
unable to sell all of the 100,000 shares offered hereby, all of the Investor
funds received by the Company will be returned to the Investors and the Company
will have no funds available for operations.
11. Uncertain Public Market for Shares/Shares not Listed on Any
Exchange or NASDAQ. At present, the Company's shares are not traded publicly.
There is no assurance that a trading market will develop, or, if developed, that
it will be sustained. The Company will not list the securities on any exchange
or NASDAQ because it will not be able to meet the financial criteria for any
such listing. Therefore, any investment in the shares will be very non-liquid.
However, the Company does intend to apply for listing on the Over-the-Counter
Bulletin Board (OTCBB). A purchaser of shares may, therefore, find it difficult
to resell the securities offered herein should he or she desire to do so.
Furthermore, the shares are not marginable and it is unlikely that a lending
institution would accept the Company's Common Stock as collateral for a loan.
12. Arbitrary Offering Price. The offering price of the shares was
arbitrarily determined by the Company. There is no relationship between the
offering price of the shares and the Company's assets, earnings, book value, net
worth or other economic or recognized criteria or future value of the Company's
shares.
13. Volatility of Stock Price. If a public market develops for the
Shares, many factors will influence the market prices. The Shares will be
subject to significant fluctuation in response to variations in operating
results of the Company, investor perceptions of the Company, supply and demand,
interest rates, general economic conditions and those specific to the industry,
developments with regard to the Company's activities, future financial condition
and management.
14. Uncertain Sufficiency of Funds. The Company believes that the net
proceeds from the sale of the shares offered hereby (assuming that all shares
offered hereby are sold) will provide the Company with sufficient capital to
fund the initial marketing and operating costs of the Company. If the offering
amount ($150,000) is raised, the Company believes it will have sufficient
resources to commence and continue limited operations for twelve months. Many
factors may, however, affect the Company's cash needs, including the Company's
possible failure to generate revenues from the sale of its products and
services.
15. Broad Discretion as to Use of Proceeds. The Company's Management
shall have wide discretion as to the exact allocation and priority and timing of
the allocation of funds raised from this Offering. The allocation of the
Proceeds of the Offering may vary significantly depending upon numerous factors,
including the success that the Company has marketing its products and services.
Accordingly, management will have broad discretion with respect to the
expenditure of the net proceeds of the Offering. Investors purchasing the shares
offered hereby will be entrusting their funds to the Company's management, upon
whose judgement the Subscribers must depend. See "Use of Proceeds."
16. Continuation of Management Control. The Company's present
officers, directors and principal shareholders own a majority of the Company's
outstanding Common Stock and they may purchase shares in the Offering. Even if
the officers, directors and principal shareholders do not purchase any of the
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securities offered hereby, such persons will still own a majority of the
outstanding voting stock of the Company. Therefore, the Company's present
management and principal stockholders will continue to be able to elect all the
directors and otherwise absolutely control the Company, and investors in the
Offering will have no ability to remove, control or direct such management. See
"Principal Stockholders."
17. Applicability of Low Priced Stock Risk Disclosure Requirements.
The shares will be considered low priced securities under rules promulgated
under the Exchange Act. Under these rules, broker-dealers participating in
transactions in low priced securities must first deliver a risk disclosure
document which describes the risks associated with such stocks, the
broker-dealer's duties, the customer's rights and remedies, and certain market
and other information, and make a suitability determination approving the
customer for low priced stock transactions based on the customer's financial
situation, investment experience and objectives. Broker-dealers must also
disclose these restrictions in writing to the customer and obtain specific
written consent of the customer, and provide monthly account statements to the
customer. The likely effect of these restrictions will be a decrease in the
willingness of broker-dealers to make a market in the stock of the Company,
decreased liquidity of the stock and increased transaction costs for sales and
purchases of the stock as compared to other securities.
18. Limited Reporting Requirements. Because the Company is only
subject to Section 15(d) of the Securities Exchange Act, it will not be subject
to the proxy rules, short-swing profits regulations, beneficial ownership report
regulations and the bulk of the tender offer regulations. Therefore, the Company
may only be required to file periodic reports for a limited period of time. The
Company does intend to provide its shareholders with annual reports containing
audited financial statements from independent accountants and other periodic
reports as the Company feels necessary. However, in view of the fact that the
Company may have limited reporting requirements, the investor will have less
information available with which to assess the status of the Company.
19. Benefits to Present Stockholders/Disproportionate Risks.
Collectively the existing shareholders own 1,503,500 shares of the Company's
presently outstanding Common Stock, for which they paid an aggregate total of
$4,125 in cash. If this offering ($150,000) is sold and closed, upon completion
of the Offering present stockholders will own approximately 94% of the then
outstanding Common Stock, and Investors in the Offering will own the other 6%,
for which they will have paid $150,000 cash. Thus, Investors in the Offering
will contribute to the capital of the Company a disproportionately greater
percentage than the ownership they receive. Present stockholders will benefit
from a greater share of the Company if successful, while investors in the
Offering risk a greater loss of cash invested if the Company is not successful.
See "DILUTION --Comparative Data."
20. Dilution. Investors who purchase shares in this Offering will
experience immediate dilution in the book value of the Common Stock which they
acquire. The present shareholders of the Company acquired their Common Stock at
an aggregate average cost of $0.002 per share, substantially less than the $1.50
per Share to be paid by investors in this Offering. Dilution may also occur if
the Company issues additional shares at a price lower than the offering price
stated herein. A substantial portion of the 50,000,000 authorized shares of
Common Stock of the Company will remain unissued if all shares offered hereby
are sold. The Board of Directors has the authority to issue such shares without
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shareholder approval. Following the Offering, any additional issuances of shares
by the Company from its authorized but unissued shares would have the effect of
further diluting the book value of shares and the percentage ownership interest
of investors in this Offering.
21. Potential Issuance of Additional Common and Preferred Stock. The
Company is authorized to issue up to 50,000,000 shares of Common Stock, of which
no more than 1,603,500 shares will be issued and outstanding upon completion of
the Offering. To the extent of such authorization, the Board of Directors of the
Company will have the ability, without seeking shareholder approval, to issue
additional shares of Common Stock in the future for such consideration as the
Board of Directors may consider sufficient. The issuance of additional Common
Stock in the future will reduce the proportionate ownership and voting power of
the Common Stock offered hereby.
The Company is also authorized to issue up to 5,000,000 shares of
preferred stock, the rights and preferences of which may be designated in series
by the Board of Directors. To the extent of such authorization, such
designations may be made without shareholder approval. The Board of Directors
has not designated any series or issued any shares of preferred stock. The
designation and issuance of series of preferred stock in the future would create
additional securities which would have dividend and liquidation preferences over
the Common Stock offered hereby. See "Description of Securities."
22. Shares Eligible for Future Sale. Of the 1,503,500 common shares
presently outstanding, 500,000 shares were acquired by Fred Hall in a private
placement early in 1998. Mr. Hall acquired another 1,000,000 shares when his
company, Cap's, was acquired by the Company in April 1998. 3,500 additional
common shares were acquired by several other investors in a private offering in
late June 1998. All of these shares are "restricted securities" subject to the
resale limitations imposed by Rule 144. While these shares are not being offered
for sale presently, they may at some time in the future be sold, pursuant to
Rule 144, into any public market that may develop for the Company's Common
Stock. Future sales by current shareholders could depress the market prices of
the Common Stock in any such market.
23. Cumulative Voting and Pre-emptive Rights. There are no pre-emptive
rights in connection with the Company's Common Stock. Cumulative voting in the
election of directors is not permitted. Accordingly, the holders of a majority
of the shares of Common Stock, present in person or by proxy, will be able to
elect all of the Company's Board of Directors. Even if all the shares offered in
this Offering are sold, the current shareholders will own a majority interest in
the Company. Accordingly, the present shareholders will continue to elect all of
the Company's directors and generally control the affairs of the Company. See
"Description of Securities."
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USE OF PROCEEDS
The following table sets forth management's present estimate of the
allocation of net proceeds expected to be received from this Offering. Actual
expenditures may vary from these estimates. Pending such uses, the Company will
invest the net proceeds in investment-grade, short-term, interest bearing
securities.
If All Shares
Are Sold
-------------
Total Proceeds: $ 150,000
Less: Estimated Offering Expenses 25,000
Net Proceeds Available: $ 125,000
Use of Net Proceeds
Acquisition of Supplies $ 7,500
and Equipment(1)
Marketing (2) 25,000
Operating Expenses 25,000
Working Capital(3) 67,500
Total Use of Net Proceeds $125,000
(1) This is the approximate amount of net proceeds of the Offering
which the Company estimates will be used to purchase the equipment and
supplies necessary to operate the Company.
(2) This represents the amount the Company estimates it will expend
producing marketing literature, contacting potential clients, including
the placement of advertising materials indirect mail.
(3) The Company intends to use a significant portion of the net
proceeds to cover operating expenses and provide working capital during
the initial development phase of operations. The Company believes this
amount is sufficient to provide the operating capital necessary to
operate the business for the first six months at the Minimum level and
for the first 18 months at the Maximum level.
ORGANIZATION WITHIN LAST FIVE YEARS
The Company is a start-up company organized in 1996. It has no
operating history. As soon as the money from this Offering is made available,
the Company expects to make all arrangements necessary so that it can commence
operations.
DESCRIPTION OF BUSINESS
Company History
The Company was incorporated under the laws of the state of Nevada on
March 13, 1996 for the purpose of becoming a wholesaler of sporting goods,
primarily associated with the shooting sports. Because of a lack of funding, the
Company has not been able to commence operations. In April 1998, the Company
acquired all of the outstanding stock of Cap's Sporting Goods Wholesale, Inc.,
13
<PAGE>
and acquired access to the cash then held in Cap's. The Company has concluded to
begin its wholesale sporting goods business through its new operating
subsidiary, Cap's. Since acquiring Cap's and undertaking to begin business
operations, the Company has raised a net $2,625 in new equity capital in private
offering in late June, 1998. The present Offering will provide further needed
start-up and working capital to get the Company started on its business plan.
There is no assurance that the Company can successfully commence operations or
successfully implement its business plan.
The Sporting Goods Industry
According to the National Sporting Goods Association (the "NSGA"),
total U.S. retail sales of sporting goods (including sporting equipment,
athletic footwear and apparel, but excluding recreational transportation
products) were approximately $41.6 billion in 1996, an increase from $39.2
billion in 1995. The retail sporting goods industry is comprised of four
principal categories of retailers: (i) large format sporting goods stores, which
typically range from 30,000 to 80,000 square feet in size and emphasize high
sales volumes and a large number of SKUs in a warehouse-style store, (ii)
traditional sporting goods stores, which typically range in size from 5,000 to
20,000 square feet and carry a more limited assortment of merchandise and are
often viewed by their customers as convenient neighborhood stores, (iii)
specialty sporting goods stores, consisting of specialty stores and pro shops,
generally specializing in one product category of sporting goods, and (iv) mass
merchandisers, including discount retailers, warehouse clubs and department
stores, which although generally price competitive, have limited customer
service and a more limited selection.
Business Strategy
The Company is aiming its wholesale supplier concept at the third
category, the specialty stores and pro shops, particularly the organized
shooting sports and hunting clubs in the Western United States, initially
focusing on Utah, Wyoming and Nevada. The Company will likely offer a broad
selection of hunting and shooting supplies and accessories, including such top
brand names as: Laport, Benelli, Fiochi, Outlaw, Bushnell, Remington and
Winchester.
Management Issues
It is anticipated that the management of the Company will maintain
outside employment and devote only part time to the affairs of the Company
during the initial phases of the Company's business plan. The President
initially will be employed part time for a regular salary of $2,500 per month.
Officers and directors will be entitled to reimbursement of any reasonable out
of pocket expenses actually incurred on behalf of the Company. Assuming the
success of the Company's business plan, Fred Hall will eventually work full time
for the Company. The Company intends to hire other full- and part-time employees
as needed, but will not do so unless and until the Company's business operations
so justify. The exact amount of any compensation to be paid has not been
determined but management intends, to the extent possible, to only pay
compensation out of revenues and to keep payments to a minimum until operations
have fully commenced.
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<PAGE>
Competition
The Company intends to supply shooting clubs and hunting clubs with
ammunition, clay targets and related accessories and products. These clubs
resell such products to their members and guests, much in the way a golf course
or tennis court pro shop operates. Shooting and hunting clubs generally purchase
relatively small quantities of products because of their size. Thus they are an
economic combination of a wholesale purchaser and a retail customer. However the
Company believes that the small size of the hunting club and shooting club
market has discouraged competitors aiming to service that market, like the
Company.
In many product areas, large mass merchandisers, like Wal-Mart, Costco,
Sam's Club and the like can offer products in bulk and at prices competitive
with traditional wholesalers. The study of the hunting and shooting club
industry informally conducted by the Company, indicates that not enough
purchasing of clay targets and other shooting sports products takes place at
mass retailers to allow for supplies and pricing that otherwise comes with such
mass retailers. The Company believes that service relationships and wholesale
pricing it intends to offer can effectively compete with mass retailers.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
Overview of Business Plan
The Company's purpose is to engage in the business of wholesale
sporting goods, primarily catering to the private shooting sports clubs by
providing high quality and cost-effective supplies of ammunition, clay targets
and related products such as shooting clothing. The Company believes that the
growth in organized shooting sports, particularly in the form of shooting clubs,
hunting clubs, etc. in the Western United States has not been met with the level
of organized wholesale marketing of shooting sports products that exists in the
Eastern United States, where organized shooting sports clubs is an older
industry.
The Company's own informal investigation indicates that several
manufacturers of shooting sports products and supplies are willing to sell to
new entrants into the wholesale market like the Company, although other
manufacturers require credit histories and financial support that the Company
will be unable to deliver at the beginning of its business operations.
Initially the Company has leased a small office with limited
warehousing space at a reasonable rate (currently $750 per month) from which to
operate its business. The Company plans on using shipment of products to its
customers directly from manufacturers, and therefore the Company does not
anticipate needing large warehouse space.
Inasmuch as there is no assurance that the Offering will be successful
or that the Company will receive any net proceeds therefrom, to date, the
Company has not entered into any contracts or commitments for leasing of
offices, purchasing of equipment, and buying customer databases. Therefore,
15
<PAGE>
there is no assurance the Company will be able, with the proceeds of this
Offering, to lease adequate office space, acquire sufficient equipment, or
purchase sufficient potential client databases to commence operations.
Results of Operations
The Company has made no sales to date, and has earned no operating
revenues since its inception in early 1998. Still in it organizational stage,
the Company has used shareholder equity and borrowed funds to provide cash to
pay ongoing expenses. This has resulted in an operating loss of ($9,520) as June
30, 1998, which equates to a loss of ($0.01) per share.
Financial Condition
The Company had cash of $3,510 at June 30, 1998, far less than it
requires to pay the expenses of this Offering and other operating costs
currently being incurred. The expenditure of borrowed funds on operating costs
has resulted in a negative shareholders equity of ($5,395) at June 30, 1998. If
the Company is unsuccessful at raising the $150,000 sought from this Offering,
it appears to be unable to continue in the development of its business without
some other source of equity funding. Without revenues it is unlikely that
further debt funding will be possible except from the limited resources of
Management.
DESCRIPTION OF PROPERTY
The Company owns no real property. The Company currently leases a small
office at 55 West 200 North in Provo, Utah. The Company will likely use this or
a similar size office as its principal executive offices until the Company's
business requires more extensive administrative facilities. At all times, the
Company intends to locate appropriate office space and negotiate agreements to
lease office space as business operations require and will support such action.
MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
At present, the Company's Common Stock is not traded publicly. There is
no assurance that a trading market will develop, or, if developed, that it will
be sustained. A purchaser of Shares may, therefore, find it difficult to resell
such Shares should he or she desire to do so when eligible for public resales.
Furthermore, shares of the Company's Common Stock are not marginable, and it is
unlikely that a lending institution would accept the Company's Common Stock as
collateral for a loan.
Through this Prospectus, the Company proposes to publicly offer 100,000
shares of the Company's Common Stock. To date, no shares of Common Stock are
subject to outstanding options, warrants to purchase or securities convertible
into Common Stock. No shares of the Company's Common Stock have been sold
pursuant to Rule 144 of the Securities Act. The Registrant has agreed to
register no shares of Common Stock held by existing security holders for resale.
16
<PAGE>
EXECUTIVE COMPENSATION
To date, Fred Hall has been paid $1785 per month by Cap's since
February 1998. The Company presently has no formal employment agreements. The
Company has agreed informally with Fred Hall to pay him $2,500 per month for his
services as Chief Executive Officer if this Offering is successful.
DETERMINATION OF OFFERING PRICE
The offering price of the shares was arbitrarily determined by the
Company. There is no relationship between the offering price of the shares and
the Company's assets, earnings, book value, net worth or other economic or
recognized criteria or future value of the Company's shares.
DILUTION
As of the date of this Prospectus, the Company has 1,503,500 shares of
Common Stock issued and outstanding and a book value of a negative ($5,395) or a
negative ($0.01) per share. This Offering will bring the outstanding shares of
Common Stock to 1,603,500. The net proceeds to the Company from this Offering,
after deducting the estimated offering costs of $25,000, will be $125,000.
Adding the net offering proceeds to the current book value of the Company
results in an anticipated book value after this Offering of $119,605. Dividing
the total book value of the Company by the number of shares outstanding after
the Offering discloses a per share book value of approximately $0.07. Therefore,
the Investors who purchase in this Offering will suffer an immediate dilution in
the book value of their shares of approximately $1.43 or approximately 95%, and
the present shareholders will receive an immediate book value increase of $0.08
per share.
"Dilution" means the difference between the price of the Shares
purchased by Investors in this Offering from the book value per share after
giving effect to the offering. "Book value" is obtained by subtracting the total
liabilities from the total assets and offering expenses). Book value per share
is determined by dividing the number of shares outstanding into the book value
of shares immediately after the Offering.
Comparative Data
The following table illustrates the pro forma proportionate ownership
in the Company, upon completion of this Offering, of present stockholders and of
investors in the Offering, compared to the relative amounts paid and contributed
[This Space Left Blank Intentionally]
17
<PAGE>
to the capital of the Company by present stockholders and by investors in this
Offering, assuming no changes in net tangible book value other than those
resulting from the Offering.
Shares Percent Cash
Owned Paid Price/share
Present Shareholders 1,503,500 0.029% $0.002
New Investors 100,000 99.97% $1.500
TERMS OF THE OFFERING
The Offering will not be sold through selling agents. The officers and
directors of the Company will sell the shares offered hereunder on a "best
efforts" basis. If the total 100,000 shares of Common Stock are not sold within
the 150 days possible under this Offering, all Investor funds will be refunded
to the subscribing Investors without interest or deduction of any kind.
Pending the closing of the Offering, all Investor funds will be held in
escrow by A. Robert Thorup of Ray Quinney & Nebeker, 79 South Main Street, Salt
Lake City, Utah 84111.
The Company will only accept cash which must be accompanied by a
completed subscription agreement in the form attached to this Prospectus as
Appendix A.
LEGAL PROCEEDINGS
To the knowledge of the officers and directors of the Company, neither
the Company nor any of its officers or directors is a party to any material
legal proceeding or litigation and such persons know of no material legal
proceeding or litigation contemplated or threatened. There are no judgments
against the Company or its officers or directors. None of the officers or
directors has been convicted of a felony or misdemeanor relating to securities
or performance in corporate office.
[This Space Left Blank Intentionally]
18
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following table sets forth the directors, executive officers
promoters and control persons of the Company, their ages, and all offices and
positions held within the Company. Directors are elected for a period of one
year and thereafter serve until their successor is duly elected by the
stockholders and qualified. Officers and other employees serve at the will of
the Board of Directors.
Name of Officer or Director Age Term Served Positions with the
as Officer/Director Company
Fred L. Hall 32 3/96 - present President, Secretary,
Treasurer and Director;
President, Secretary
and Director of Cap's
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table provides information known to the Company
concerning those persons who, as of the date of this Prospectus, were the
beneficial owners of 5% or more of the Company's Common Stock, which is the only
type of security the Company currently has issued and outstanding.
Name and Address Amount & Nature of % of After Offering
Beneficial Ownership(1) Class
- ----------------- ----------------------- ----- --------------
Fred L. Hall 1,500,000 common shares 99.7% 93.5%
All officers and
directors as a group
(1 person) 1,500,000 common shares 99.7% 93.5%
(1) The term "beneficial owner" refers to both the power of investment
(the right to buy and sell) and rights of ownership (right to receive
distributions from the Company and proceeds from the sales of shares). Inasmuch
as these rights may be held or shared by more than one person, each person who
has a beneficial ownership interest in shares is deemed to be the beneficial
owners of the same shares because there is shared power of investment or shared
rights of ownership.
DESCRIPTION OF THE SECURITIES OFFERED
The following summary describes the material provisions of the
Company's Articles of Incorporation and Bylaws relating to the securities being
offered hereby, copies of which documents will be furnished to an investor upon
written request therefor. Pursuant to Article XI of the Company's Articles of
Incorporation, no director or officer shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such person as a director or officer. Notwithstanding the foregoing
19
<PAGE>
sentence, a director or officer shall be liable to the extent provided by
applicable law, (I) for acts or omissions which involve intentional misconduct,
fraud or a knowing violation of law, or (ii) for the payment of dividends in
violation of NRS 78.300. The foregoing limitations do not affect the standards
to which directors must conform in discharging their duties to stockholders or
modify the availability of equitable relief for breach of duty. Further, the
foregoing limitations do not affect the availability of relief under causes of
action based on Federal law, including the Federal securities laws. The shares
being registered pursuant to the registration statement of which this prospectus
is a part are shares of Common Stock, all of the same class, and entitled to the
same rights and privileges as all other shares of Common Stock.
Description of Common Stock.
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock with a $.0001 par value. As of the date of this Registration
Statement, the Company has outstanding 1,503,500 shares of its Common Stock, all
of which have been validly issued, fully paid and nonassessable.
Holders of the Company's Common Stock are entitled to receive dividends
when declared by the Board of Directors out of funds legally available
therefore. Any such dividends may be paid in cash, property or shares of the
Company's Common Stock. The Company has not paid any dividends since its
inception. All dividends will be subject to the discretion of the Company's
Board of Directors, and will depend upon, among other things, the operating and
financial conditions of the Company, its capital requirements and general
business conditions. Therefore, there can be no assurance that any dividends on
the Company's Common Stock will be paid in the future.
All shares of the Company's Common Stock have equal voting rights and,
when validly issued and outstanding, will have one vote per share on all matters
to be voted upon by the shareholders. Cumulative voting in the election of
directors is not allowed, and a quorum for shareholder meetings shall result
from a majority of the issued and outstanding shares present in person or by
proxy. Accordingly, the holders of a majority of the shares of Common Stock
present, in person or by proxy at any legally convened shareholders' meeting at
which the Board of Directors is to be elected, will be able to elect all
directors and the minority shareholders will not be able to elect a
representative to the Board of Directors.
Shares of the Company's Common Stock have no pre-emptive or conversion
rights, no redemption or sinking fund provisions, and are not liable for further
call or assessment.
Each share of the Company's Common Stock is entitled to share pro rata
any assets available for distribution to holders of its equity securities upon
liquidation of the Company. During the pendency of the offering, subscribers
will have no rights as stockholders of the Company until the offering has been
completed and the Shares have been issued to them.
20
<PAGE>
Description of Preferred Stock.
The Company is also presently authorized to issue 5,000,000 shares of
$.0001 par value Preferred Stock. Under the Company's Articles of Incorporation,
as amended, the Board of Directors has the power, without further action by the
holders of the Common Stock, to designate the relative rights and preferences of
the preferred stock, and issue the Preferred Stock in one or more series as
designated by the Board of Directors. The designation of rights and preferences
could include preferences as to liquidation, redemption and conversion rights,
voting rights, dividends or other preferences, any of which may be dilutive of
the interest of the holders of the Common Stock or the Preferred Stock of any
other series.
The issuance of Preferred Stock may have the effect of delaying or
preventing a change in control of the Company without further shareholder action
and may adversely effect the rights and powers, including voting rights, of the
holders of Common Stock. In certain circumstances, the issuance of Preferred
Stock could depress the market price of the Common Stock. The Board of Directors
effects a designation of each series of Preferred Stock by filing with the
Nevada Secretary of State a Certificate of Designation defining the rights and
preferences of each such series. Documents so filed are matters of public record
and may be examined in accordance with procedures of the Nevada Secretary of
State, or copies thereof may be obtained from the Company.
Transfer Agent.
Interwest Transfer Company, Inc., 1981 East Murray-Holladay Road, Salt
Lake City, Utah 84117, Telephone (801) 272-9294 is the transfer agent and
registrar for the Company's outstanding securities.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The statements that follow, to the extent such statements refer to
matters of tax law, are solely the opinions of Company management. Management
has not sought or obtained any formal legal opinion as to such matters, and no
conclusion of counsel is binding on the Internal Revenue Service or the courts
in any event. There can be no assurance that the Internal Revenue Service or the
courts will not reach different conclusions regarding the transactions
contemplated hereby.
This discussion does not address certain Federal income tax
consequences that are the result of special rules, such as those that apply to
life insurance companies, tax exempt entities, foreign corporations, and
non-resident alien individuals. In addition, the discussion does not address
alternative minimum tax considerations and is limited to investors who will hold
Common Stock as" capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Internal Revenue Code of 1986, as
amended (the "Code"). This discussion also assumes that the Common Stock will be
traded on an established securities market. This discussion is based on relevant
provisions of the Code, the Treasury Regulations promulgated thereunder (the
"Regulation"), revenue rulings published in the Internal Revenue Bulletin and
21
<PAGE>
judicial decisions in effect at the date of this Prospectus. There can be no
assurance that future changes in applicable law or administrative and judicial
interpretations thereof will not adversely affect the tax consequences discussed
herein.
The tax treatment to a holder of Common Stock may vary depending on
such holder's particular situation. Potential investors should consult their own
tax advisors as to the tax treatment that may be anticipated to result from the
ownership or disposition of common stock in their particular circumstances,
including the application of foreign, state or local tax laws or estate and gift
tax considerations.
State and Local Income Taxes.
A holder of Common Stock may be liable for state and local income taxes
with respect to dividends paid or gain from the sale, exchange or redemption of
Common Stock. Many states and localities do not allow corporations a deduction
analogous to the Federal dividends received deduction. Prospective investors are
advised to consult their own tax advisors as to the state, local and other tax
consequences of acquiring, holding and disposing of Common Stock.
INTEREST OF NAMED EXPERTS AND COUNSEL
None of the experts named herein was or is a promoter, underwriter,
voting trustee, director, officer or employee of the Company. Further, none of
the experts was hired on a contingent basis and none of the experts named herein
will receive a direct or indirect interest in the Company.
Legal Matters
Certain legal matters will be passed upon for the Company by Ray
Quinney & Nebeker, of Salt Lake City, Utah. Attorneys at Ray Quinney & Nebeker
hold no shares in the Company and have no rights to acquire any such shares.
Accounting Matters
The financial statements included in this Prospectus and elsewhere in
the Registration Statement have been audited by Tanner & Co., Certified
Independent Public Accountants, located in Salt Lake City, Utah, as indicated in
their report with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in accounting and auditing in giving said
reports.
[This Space Left Blank Intentionally]
22
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons for the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that any
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the small business issuer
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
FINANCIAL STATEMENTS
The audited financial statements of the Company appearing in the
Registration Statement have been examined by Tanner + Co., Certified Public
Accountants, as indicated in its report contained herein. The financial
statements are included in the Registration Statement in reliance upon the
report of that firm as an expert in auditing and accounting.
[This Space Left Blank Intentionally]
23
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
- --------------------------------------------------------------------------------
Index to Consolidated Financial Statements
- --------------------------------------------------------------------------------
Page
Report of Tanner + Co. F-2
Consolidated balance sheet F-3
Consolidated statement of operations F-4
Consolidated statement of stockholders' deficit F-5
Consolidated statement of cash flows F-6
Notes to consolidated financial statements F-7
F-1
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
and Stockholders of
Sportsman's Wholesale Company
We have audited the accompanying consolidated balance sheet of Sportsman's
Wholesale Company and Subsidiary (a development stage company), as of June 30,
1998 and the related consolidated statements of operations, stockholders'
deficit and cash flows for the period February 5, 1998 (date of inception) to
June 30, 1998. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Sportsman's
Wholesale Company, as of June 30, 1998 and the results of their operations and
their cash flows for the period February 5, 1998 (date of inception) to June 30,
1998, in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 1 to the
consolidated financial statements, there is substantial doubt about the ability
of the Company to continue as a going concern. Management's plans in regard to
that matter are also described in note 1. The consolidated financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
August 14, 1998
F-2
<PAGE>
<TABLE>
<CAPTION>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Consolidated Balance Sheet
June 30, 1998
- -------------------------------------------------------------------------------------------------------------------
Assets
Current assets:
<S> <C>
Cash $ 3,510
Related party receivable 127
------------------
Total current assets 3,637
Vehicle, net of accumulated depreciation of $89 1,411
------------------
$ 5,048
------------------
Liabilities and Stockholders' Deficit
Current liabilities:
Accrued expenses $ 943
Related party notes payable 9,500
------------------
Total current liabilities 10,443
------------------
Commitments -
Stockholders' deficit:
Preferred stock, $.0001 par value, 5,000,000 shares
authorized, no shares issued or outstanding -
Common stock, $.0001 par value, 50,000,000 shares
authorized, 1,503,500 shares issued and outstanding 150
Additional paid-in capital 3,975
Accumulated deficit (9,520)
------------------
Total stockholders' deficit (5,395)
------------------
$ 5,048
------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Consolidated Statement of Operations
Period February 5, 1998 (Date of Inception) to June 30, 1998
<S> <C>
Revenue $ -
General and administrative expenses 9,175
Interest expense 345
------------------
Loss before income taxes (9,520)
Income tax benefit -
------------------
Net loss $ (9,520)
------------------
Loss per share $ (.01)
------------------
Weighted average number of shares outstanding 921,000
------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit
February 5, 1998 (Date of Inception) to June 30, 1998
Additional
Preferred Stock Common Stock Paid-In Accumulated
-------------------------------------------------------
Shares Amount Shares Amount Capital Deficit
-------------------------------------------------------------------------------------
Balance at
<S> <C> <C> <C> <C> <C> <C>
February 5, 1998 - $ - - $ $ - $ -
Issuance of
common stock for
cash - - 503,500 50 3,075 -
Issuance of
common stock in
exchange for
subsidiary - - 1,000,000 100 900 -
Net loss - - - - - (9,520)
-------------------------------------------------------------------------------------
Balance at
June 30, 1998 - $ - 1,503,500$ 150 $ 3,975 $ (9,520)
-------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
<TABLE>
<CAPTION>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Consolidated Statement of Cash Flows
Period February 5, 1998 (Date of Inception) to June 30, 1998
Cash flows from operating activities:
<S> <C>
Net loss $ (9,520)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 89
Increase in accrued expenses 943
------------------
Net cash used in
operating activities (8,488)
------------------
Cash flows from investing activities:
Purchase of vehicle (1,500)
Increase in related party receivable (127)
------------------
Net cash used in
investing activities (1,627)
------------------
Cash flows from financing activities:
Proceeds from related notes payable 9,500
Issuance of common stock 4,125
------------------
Net cash provided by
financing activities 13,625
------------------
Net increase in cash 3,510
Cash, beginning of period -
------------------
Cash, end of period $ 3,510
------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Notes to Financial Statements
June 30, 1998
1. Summary of Significant Accounting Policies
Organization and Principles of Consolidation
Sportsman's Wholesale Company (Sportsmans) was Incorporated under the laws of
the state of Nevada in March of 1996. Cap's Sporting Goods Wholesale, Inc.
(Caps) was incorporated under the laws of the state of Utah in February 1998.
From March 1996 until February 5, 1998 (date of inception) Sportsmans was an
inactive company. On February 5, 1998, Sportsmans became a development stage
enterprise as defined in Statement of Financial Accounting Standards No. 7,
"Auditing and Reporting by Development Stage Enterprises."
On April 30, 1998, Sportsmans and Caps entered into an agreement and plan of
share exchange, whereby the sole shareholder of Caps would exchange all of the
issued and outstanding common stock held in Caps, for common stock of
Sportsmans. At the time of the exchange both Sportsmans and Caps were owned by
the same individual. The exchange resulted in 1,000,000 shares of Caps common
stock being exchanged for 1,000,000 shares of Sportsmans common stock.
The consolidated financial statements consists of Sportsmans and its wholly
owned subsidiary Caps (the Company), from February 5, 1998 (date of inception)
to June 30, 1998, as any transactions from February 5, 1998 to April 30, 1998
for the companies were immaterial. All significant intercompany balances and
transactions have been eliminated.
Going Concern
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As of June 30, 1998, the
Company had a deficit in working capital of $6,806, and an accumulated deficit
of $9,520 and incurred a loss of $9,520 for the period February 5, 1998 (date of
inception) to June 30, 1998. These conditions raise substantial doubt about the
ability of the Company to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
F-7
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Notes to Financial Statements
Continued
1. Summary of Significant Accounting Policies Continued
Going Concern - Continued
The Company's ability to continue as a going concern is subject to the
attainment of profitable operations or obtaining necessary funding from outside
sources. Management is in the process of pursuing business opportunities to
provide sufficient cash flows to meet the Company's obligations. It is not know
whether management will be successful in these endeavors.
Concentration of Credit Risk
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
Cash and Cash Equivalents
For purposes of the statement of cash flows, cash includes all cash and
investments with original maturities to the Company of three months or less.
Vehicle
The Company's vehicle is recorded at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over the estimated
useful life. Expenditures for maintenance and repairs are expensed when incurred
and betterments are capitalized.
Income Taxes
Deferred income taxes are provided in amounts sufficient to give effect to
temporary differences between financial and tax reporting.
Loss Per Common and Common Equivalent Share
The computation of basic loss per common share is computed using the weighted
average number of common shares outstanding during the year.
The computation of diluted loss per common share is based on the weighted
average number of shares outstanding during the year plus common stock
equivalents which would arise from the exercise of stock options and warrants
outstanding using the treasury stock method and the average market price per
share during the year. Common stock equivalents are not included in the diluted
loss per share calculation when their effect is antidilutive.
F-8
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Notes to Financial Statements
Continued
1. Summary of Significant Accounting Policies Continued
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements.
Actual results could differ from those estimates.
2. Income Taxes
The benefit for income taxes is different than amounts which would be provided
by applying the statutory federal income tax rate to loss before benefit for
income taxes for the following reasons:
Federal income tax benefit at statutory rate $ 1,000
Change in valuation allowance (1,000)
-----------------
$ -
-----------------
Deferred tax assets (liabilities) are comprised of the following:
Net operating loss carryforwards $ 1,000
Valuation allowance (1,000)
-----------------
$ -
-----------------
At June 30, 1998, the Company has a net operating loss carryforward available to
offset future taxable income of approximately $9,000, which will begin to expire
in 2018. The utilization of the net operating loss carryforward is dependent
upon the tax laws in effect at the time the net operating loss carryforwards can
be utilized. The Tax Reform Act of 1986 significantly limits the annual amount
that can be utilized for certain of these carryforward as a result of the change
in ownership.
F-9
<PAGE>
SPORTSMAN'S WHOLESALE COMPANY
(A Development Stage Company)
Notes to Financial Statements
Continued
3. Related Party Transactions
The related party receivable consists of an unsecured note from an
officer/shareholder. The note is due on demand and bears interest at 12%.
The related party notes payable consists of notes payable to an entity owned by
the spouse of an officer/shareholder. The notes are due on demand and bear
interest at 12%. At June 30, 1998, the Company had accrued interest payable and
recognized interest expense of $345 related to these notes.
4. Supplemental Cash Flow Disclosure
There were no amounts paid for interest or income taxes for the period February
5, 1998 (date of capital contribution) to June 30, 1998.
5. Common Stock Offering
The Company is attempting to offer 100,000 shares of common stock for $1.50 per
share in a public offering.
F-10
<PAGE>
No dealer, salesman or other person is authorized to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any of the securities covered hereby in any jurisdiction or
to any person to whom it is unlawful to make such offer or solicitation in such
jurisdiction. Neither the delivery of this Prospectus nor any sale made
hereunder shall, in any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION..........................................................3
PROSPECTUS SUMMARY.............................................................5
RISK FACTORS...................................................................7
USE OF PROCEEDS...............................................................13
ORGANIZATION WITHIN LAST FIVE YEARS...........................................13
DESCRIPTION OF BUSINESS.......................................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION...........................15
DESCRIPTION OF PROPERTY.......................................................16
MARKET FOR THE COMPANY'S COMMON STOCK
AND RELATED STOCKHOLDER MATTERS............................................16
EXECUTIVE COMPENSATION........................................................17
DETERMINATION OF OFFERING PRICE...............................................17
DILUTION......................................................................17
TERMS OF THE OFFERING.........................................................18
LEGAL PROCEEDINGS.............................................................18
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS........................................................18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT......................................................19
DESCRIPTION OF THE SECURITIES OFFERED.........................................19
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS.....................................21
INTEREST OF NAMED EXPERTS AND COUNSEL.........................................22
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.............................22
FINANCIAL STATEMENTS..........................................................23
Sportsman's Wholesale Company
100,000 Shares of Common Stock
PROSPECTUS
October __, 1998
24
<PAGE>
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. Indemnification of Directors and Officers
The statutes, charter provisions, bylaws, contracts or other
arrangements under which controlling persons, directors or officers of the
registrant are insured or indemnified in any manner against any liability which
they may incur in such capacity are as follows:
(a) Section 78.751 of the Nevada Business Corporation Act provides that
each corporation shall have the following powers:
1. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the corporation; and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, does not, of
itself create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction, determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding refereed to in subsections 1 and 2, above, or in
25
<PAGE>
defense of any claim, issue or matter therein, he must be indemnified by the
corporation against expenses, including attorneys' fees, actually and reasonably
incurred by him in connection with the defense.
4. Any indemnification under subsections 1 and 2, above, unless
ordered by a court or advanced pursuant to subsection 5, must be made by the
corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made: (a) By the stockholders; (b) By
the board of directors by majority vote of a quorum consisting of directors who
were not parties to the act, suit or proceeding; (c) If a majority vote of a
quorum consisting of directors who were not parties to the act, suit or
proceeding so orders, by independent legal counsel, in a written opinion; or (d)
If a quorum consisting of directors two were not parties to the act, suit or
proceeding cannot be obtained, by independent legal counsel in a written
opinion.
5. The certificate or articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers and
directors incurred in defending a civil or criminal action, suit or proceeding
must be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an undertaking by
or on behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to be
indemnified by the corporation. The provisions of this subsection do not affect
any rights to advancement of expenses to which corporate personnel other than
directors or officers may be entitled under any contract or otherwise by law.
6. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section: (a) Does not exclude any other
rights to which a person seeking indemnification or advancement of expenses may
be entitled under the certificate or articles of incorporation or any bylaw,
agreement, vote of stockholders of disinterested directors or otherwise, for
either an action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a court
pursuant to subsection 2, above, or for the advancement of expenses made
pursuant to this subsection 5, may not be made to or on behalf of any director
or officer if a final adjudication establishes that his acts or omissions
involved intentional misconduct, fraud or a knowing violation of the law and was
material to the cause of action; (b) Continues for a person who has ceased to be
a director, officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
7. The registrant's Articles of Incorporation limit liability of
its Officers and Directors to the full extent permitted by the Nevada Business
Corporation Act.
26
<PAGE>
ITEM 25. Other Expenses of Issuance and Distribution*
The following table sets forth the estimated costs and expenses to be
paid by the Company in connection with the Offering described in the
Registration Statement.
Amount
SEC registration fee $ 44.25
Blue sky fees and expenses $ 3,000.00
Printing and shipping expenses $ 2,500.00
Legal fees and expenses $ 15,000.00
Accounting fees and expenses $ 5,000.00
Transfer, Escrow and Miscellaneous expenses $ 1,000.00
Total $ 26,544.25
* All expenses except SEC registration fee are estimated.
ITEM 26. Recent Sales of Unregistered Securities
On June 30, 1998, the Company sold 3,500 shares of unregistered Common
Stock to investors at the offering price of $0.75 per share. This offering was
conducted in reliance on Section 4(2) of the Securities Act and state corollary
exemptions.
On May 25, 1998, 1,000,000 shares of unregistered Company Common Stock
were issued to Fred Hall in exchange for 1,000,000 shares of Cap's common stock,
in a one share per one share exchange pursuant to the Agreement and Plan of
Reorganization. These shares were issued in reliance on the exemption found in
Section 4(2) of the Securities Act and corollary state exemptions.
On February 5, 1998, 500,000 shares of unregistered Company common
stock were issued to Fred Hall for cash at $0.001 per share. This transaction
took place in reliance on Section 4(2) of the Securities Act and corollary state
law exemptions.
[This Space Left Blank Intentionally]
27
<PAGE>
ITEM 27. Exhibits
Index SEC Reference
Exhibit No. Document
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Agreement and Plan of Reorganization with Cap's
5 Opinion on Legality
10.1 Escrow Agreement
21 Subsidiaries of the small business issuer
24.1 Consent of Tanner + Co.
24.2 Consent of Counsel to Issuer (included in Exhibit 5)
27 Financial Data Schedule
99.1 Subscription Agreement
ITEM 28. Undertakings
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred to that section.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to its Articles of Incorporation or provisions of the
Nevada Revised Statutes, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question, whether or not such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The Registrant hereby undertakes to:
28
<PAGE>
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to: (i)
Include any prospectus required by section 10(a)(3) of the Securities Act; (ii)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and (iii) Include any additional
or changed material information on the plan of distribution.
(2) For determining liability under the Securities Act treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it has met
all of the requirements of filing on Form SB-2 and has authorized this
Registration Statement to be signed on its behalf by the undersigned, in Salt
Lake City, Utah, on September , 1998.
Sportsman's Wholesale Company
By: /s/ Fred L. Hall
--------------------------------------
Fred L. Hall, Chief Executive Officer,
Sole Director and President
Pursuant to the requirements of the Securities Act of 1933, this
amendment to Registration Statement has been signed by the following persons in
the capacities and on the date indicated.
Signatures Title Date
/s/ Fred L. Hall President, Sole Director and September , 1998
- ---------------- Chief Executive Officer
Fred L. Hall (Principal Executive and
Financial/Accounting Officer)
29
ARTICLES OF INCORPORATION
OF
SPORTSMAN'S WHOLESALE COMPANY.
WE, THE UNDERSIGNED natural persons of the age of eighteen (18) years
or more, acting as incorporators of a corporation under the Nevada Business
Corporation Act, adopt the following Articles of Incorporation.
ARTICLE I
NAME
The name of the corporation is: Sportsman's Wholesale Company.
ARTICLE II
DURATION
The duration of the corporation is perpetual.
ARTICLE III
PURPOSES
The purpose or purposes for which this corporation is engaged are:
(a) To pursue the business of wholesaling sporting goods and other
outdoor related sporting equipment. Also, to acquire, develop, explore, and
otherwise deal in and with all kinds of real and personal property and all
related activities, and for any and all other lawful purposes.
(b) To acquire by purchase, exchange, gift, bequest, subscription, or
otherwise; and to hold, own mortgage, pledge, hypothecate, sell, assign,
transfer, exchange, or otherwise dispose of or deal in or with its own corporate
securities or stock or other securities including, without limitations, any
shares of stocks, bonds, debentures, notes, mortgages, or other obligations, and
any certificates, receipts or other instruments representing rights or interests
therein on any property or assets created or issued by any person, firm,
associate, corporation, or instrumentalities thereof, to make payment therefor
in any lawful manner or to issue in exchange therefor in any lawful manner or to
issue in exchange therefor its unreserved earned surplus for the purchase of its
own shares, and to exercise as owner or holder of any securities, any and all
rights, powers, and privileges in respect thereof.
<PAGE>
(c) To do each and everything necessary, suitable, or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated, or which may, at any time, appear conducive to
or expedient for the protection or benefit of this corporation, and to do said
acts as fully and to the same extent as natural persons might, or could do in
any part of the world as principals, agents, partners, trustees, or otherwise,
either alone or in conjunction with any other person, association, or
corporation.
(d) The foregoing clauses shall be construed both as purposes and
powers and shall not be held to limit or restrict in any manner the general
powers of the corporation, and the enjoyment and exercise thereof, as conferred
by the laws of the State of Nevada: and it is the intention that the purposes
and powers specified in each of the paragraphs of this Article III shall be
regarded as independent purposes and powers.
ARTICLES IV
STOCK
(a) Common Stock. The aggregate number of shares of Common Stock which
the Corporation shall have authority to issue is 50,000,000 shares at a par
value of $.001 per share. All stock when issued shall be fully paid and
non-assessable, shall be of the same class and have the same rights and
preferences.
No holder of shares of Common Stock of the Corporation shall
be entitled, as such, to any pre-emptive or preferential rights to subscribe to
any unissued stock or any other securities which the Corporation may now or
thereafter be authorized to issue.
Each share of Common Stock shall be entitled to one vote at a
stockholders meetings, either in person or by proxy. Cumulative voting in
elections of directors and all other matters brought before stockholders
meeting, whether they be annual or special, shall not be permitted.
(b) Preferred Stock. The aggregate number of shares of Preferred Stock
which the Corporation shall have authority to issue is 5,000,000 shares, par
value $.001, which may be issued in series, with such designations, preferences,
stated values, rights, qualifications or limitations as determined solely by the
Board of Directors of the Corporation.
ARTICLE V
AMENDMENT
These Articles of Incorporation may be amended by the affirmative Vote
of "a majority" of the shares entitled to vote on each such amendment.
2
<PAGE>
ARTICLE VI
AMENDMENT
The authorized and treasury stock of this corporation may be issued at
such time, upon such terms and conditions and for such consideration as the
Board of Directors shall determine. Shareholders shall not have pre-emptive
rights to acquire unissued shares of the stock of this corporation.
ARTICLE VII
INITIAL OFFICE AND AGENT
The registered office of the Corporation in the State of Nevada is 3230
E. Flamingo Road, suite 156, Las Vegas, NV 89121. The registered agent in charge
thereof at such address is Gateway Enterprises, Inc.. (See attachment)
ARTICLE VIII
DIRECTORS
The directors are hereby given the authority to do any act on behalf of
the corporation by law and in each instance where the Business corporation act
provides that the directors may act in certain instances where the Articles of
Incorporation authorize such action by the directors, the directors are hereby
given authority to act in such instances without specifically numerating such
potential action or instance herein.
The directors are specifically given the authority to mortgage or
pledge any or all assets of the business with shock holder's approval.
The number of directors constituting the initial Board of Directors of
this corporation is one (1). The names and addresses of persons who are to serve
as Directors until the first annual meeting of stockholders or until their
successors are elected and qualify are:
NAME ADDRESS
David N. Nemelka 899 South Artistic Circle
Springville, UT 84663
ARTICLE IX
INCORPORATORS
The name and address of each incorporator is:
NAME ADDRESS
David N. Nemelka 899 South Artistic Circle
Springville, UT 84663
3
<PAGE>
ARTICLE X
COMMON DIRECTORS- TRANSACTIONS BETWEEN CORPORATIONS
No contract or other transaction between this corporation and any one
or more of its directors or any other corporation, firm, association, or entity
in which one or more of its directors or officers are financially interested,
shall be either void or voidable because of such relationship or interest, or
because such director or directors are present at the meeting of the Board of
Directors, or a committee thereof, which authorizes, approves , or ratifies such
contract or transaction, or because his or their votes are counted for such
purpose if: (a) the fact of such relationship or interest is disclosed or known
to the Board of Directors or committee which authorizes, approves, or ratifies
the contract or transaction by vote or consent sufficient of the purpose without
counting the votes or consents of such interested director; or (b) the fact of
such relationship or interest is disclosed or known to the stockholders entitled
to vote and they authorize, approve, or ratify such contract or transaction by
vote or written consent, or (c) the contract or transaction is fair and
reasonable to the corporation.
Common or interested directors may be counted in determining the
presence of a quorum at a meeting of the Board of Directors or committee there
of which authorizes, approves or ratifies such contract or transaction.
ARTICLE XI
LIABILITY OF DIRECTORS AND OFFICERS
No director or officer shall be personally liable to the Corporation or
its stockholders for monetary damages for any breach of fiduciary duty by such
person as a director or officer. Notwithstanding the foregoing sentence, a
director or officer shall be liable to the extent provided by applicable law,
(`I) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) for the payment of dividends in violation of
NRS 78.300.
The provisions hereof shall not apply to or have any effect on the
liability or alleged liability of any officer or director of the Corporation for
or with respect to any acts or omissions of such person occurring prior to such
amendment.
Under penalties of perjury, I declare that these Articles of
Incorporation have been examined by me and are, to the best of my knowledge and
belief, true, correct and complete.
Dated this 7th day of March, 1996.
/s/ David N. Nemelka
----------------------
David N. Nemelka
4
<PAGE>
STATE OF UTAH )
) ss.
COUNTY OF )
On the 7th day of MARCH, 1996, personally appeared before me, David N.
Nemelka, who being by me first duly sworn, declared that he was the person who
signed the foregoing document as incorporator and that the statements therein
contained are true.
IN WITNESS THEREOF, I have hereunto set my hand and seal this 7th day
of March,
/s/ Brenda M. Hall
-----------------------
NOTARY PUBLIC
Residing at 1415 W. Spring Creek Place
Springville, UT 84663
My commission expires:
5/5/97
BY-LAWS
of
SPORTSMAN'S WHOLESALE COMPANY
A NEVADA CORPORATION
ARTICLE I
OFFICES
Section I. The principal office of the Corporation shall be at 899 South
Artistic Circle located in Springville, Utah 84663. The Corporation may have
such other offices, either within or without the State of Utah as the Board of
Directors may designate or as the business of the Corporation may require from
time to time.
The registered office of the Corporation required by the Nevada Business
Corporation Act to be maintained in the State of Nevada may be, but need not be,
identical with the principal offices in the State of Nevada, and the address of
the registered office may be changed, from time to time, by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
Section 1. ANNUAL MEETING. The annual meeting of stockholders shall be held
at the principal office of the Corporation, at 899 South Artistic Circle located
in Springville, Utah 84663 or at such other places on the third Friday of April,
or at such other times as the Board of Directors may, from time to time,
determine. If the day so designated falls upon a legal holiday then the meeting
shall be held upon the first business day thereafter. The Secretary shall serve
personally or by mail a written notice thereof, not less than ten (10) nor more
than fifty (50) days previous to such meeting, addressed to each stockholder at
his address as it appears on the stock book; but at any meeting at which all
stockholders shall be present, or of which all stockholders not present have
waived notice in writing, the giving of notice as above required may be
dispensed with.
Section 2. SPECIAL MEETINGS. Special meetings of stockholders other than
those regulated by statute, may be called at any time by a majority of the
Directors. Notice of such meeting stating the place, day and hour and the
purpose for which it is called shall be served personally or by mail, not less
than ten (10) days before the date set for such meeting. If mailed, it shall be
directed to a stockholder at his address as it appears on the stock book; but at
any meeting at which all stockholders shall be present, or of which stockholders
not present have waived notice in writing, the giving of notice as above
described may be dispensed with. The Board of Directors shall also, in like
manner, call a special meeting of stockholders whenever so requested in writing
by stockholders representing not less than ten percent (10%) of the capital
stock of the Corporation entitled to vote at the meeting. The President may in
his discretion call a special meeting of stockholders upon ten (10) days notice.
No business other than that specified in the call for the meeting shall be
transacted at any special meeting of the stockholders, except upon the unanimous
consent of all the stockholders entitled to notice thereof.
1
<PAGE>
Section 3. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. For the
purpose of determining stockholders entitled to receive 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 Board of Directors of the
Corporation may provide that the stock transfer books shall be closed for a
stated period not to exceed, in any case, fifty (50) days. If the stock transfer
books shall be closed for the purpose of determining stockholders entitled to
notice of or to vote at a meeting of stockholders, such books shall be closed
for a least ten (10) days immediately preceding such meeting. In lieu of closing
the stock transfer books, the Board of Directors may fix in advance a date as
the record date for any such determination of stockholders, such date in any
case to be not more than fifty (50) days, and in case of a meeting of
stockholders, not less than ten (10) days prior to the date on which the
particular action, requiring such determination of stockholders, is to be taken.
If the stock transfer books are not closed, and no record date is fixed for the
determination of stockholders entitled to receive notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on which
the resolution of the Board of Directors declaring such dividend is adopted, as
the case may be, shall be the record date for such determination as to
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
Section 4. VOTING. At all meetings of the stockholders of record having the
right to vote, subject to the provisions of Section 3, each stockholder of the
Corporation is entitled to one (1) vote for each share of stock having voting
power standing in the name of such stockholder on the books of the Corporation.
Votes may be cast in person or by written authorized proxy.
Section 5. PROXY. Each proxy must be executed in writing by the stockholder
of the Corporation or his duly authorized attorney. No proxy shall be valid
after the expiration of eleven (11) months from the date of its execution unless
it shall have specified therein its duration.
Every proxy shall be revocable at the discretion of the person executing it
or of his personal representatives or assigns.
Section 6. VOTING OF SHARES BY CERTAIN HOLDERS. Shares standing in the name
of another corporation may be voted by such officer, agent or proxy as the
by-laws of such corporation may prescribe, or, in the absence of such provision,
as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
noted by him either in person or by proxy without a transfer of such shares into
his name. Shares standing in the name of a trustee may be voted by him either in
person or by proxy, but no trustee shall be entitled to vote shares held by him
without a transfer of such shares into his name.
Shares standing in the name of a receiver may be voted by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate Order of the Court by which such receiver was
appointed.
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A stockholder whose shares are pledged shall be entitled to vote such
shares until the shares have been transferred into the name of the pledge, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 7. ELECTION OF DIRECTORS. At each election for Directors every
stockholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him for as many persons as
there are Directors to be elected and for whose election he has a right to vote.
There shall be no cumulative voting.
Section 8. QUORUM. A majority of the outstanding shares of the Corporation
entitled to vote, represented in person or by proxy, shall constitute a quorum
at a meeting of the stockholders.
If a quorum shall not be present or represented, the stockholders entitled
to vote thereat, present in person or by proxy, shall have the power to adjourn
the meeting, from time to time, until a quorum shall be present or represented.
At such rescheduled meeting at which a quorum shall be present or represented
any business or any specified item of business may be transacted which might
have been transacted at the meeting as originally notified.
The number of votes or consents of the holders of stock having voting power
which shall be necessary for the transaction of any business or any specified
item of business at any meeting of stockholders, or the giving of any consent,
shall be a majority of the outstanding shares of the Corporation entitled to
vote.
Section 9. INFORMAL ACTION BY STOCKHOLDERS. Any action required or
permitted to be taken by the stockholders of the Corporation may be effected by
any consent in writing by such holders, signed by holders of not less than that
number of shares of Common Stock required to approve such action.
ARTICLE III
DIRECTORS
Section 1. NUMBER. The affairs and business of this Corporation shall be
managed by a Board of Directors. The present Board of Directors shall consist of
one (1) member. Thereafter the number of Directors may be increased to not more
than nine (9) by resolution of the Board of Directors. Directors need not be
residents of the State of Utah and need not be stockholders of the Corporation.
Section 2. ELECTION. The Directors shall be elected at each annual meeting
of the stockholders, but if any such annual meeting is not held, or the
Directors are not elected thereat, the Directors may be elected at any special
meeting of the stockholders held for that purpose.
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Section 3. TERM OF OFFICE. The term of office of each of the Directors
shall be one (1) year, which shall continue until his successor has been elected
and qualified.
Section 4. DUTIES. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, regularly convened, and may adopt
such rules and regulations for the conduct of meetings and the management of the
Corporation, as may be deemed proper, so long as it is not inconsistent with
these By-Laws and the laws of the State of Nevada.
Section 5. DIRECTORS' MEETINGS. Regular meetings of the Board of Directors
shall be held immediately following the annual meeting of the stockholders, and
at such other time and places as the Board of Directors may determine. Special
meetings of the Board of Directors may be called by the President or the
Secretary upon the written request of one (1) Director.
Section 6. NOTICE OF MEETINGS. Notice of meetings other than the regular
annual meeting shall be given by service upon each Director in person, or by
mailing to him at his last known address, at least three (3) days before the
date therein designated for such meeting, of a written notice thereof specifying
the time and place of such meeting, and the business to be brought before the
meeting, and no business other than that specified in such notice shall be
transacted at any special meeting. At any Directors' meeting at which a quorum
of the Board of Directors shall be present (although held without notice), any
and all business may be transacted which might have been transacted if the
meeting had been duly called if a quorum of the Directors waive or are willing
to waive the notice requirements of such meeting.
Any Directors may waive notice of any meeting under the provisions of
Article XII. 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 convened or called.
Section 7. VOTING. At all meetings of the Board of Directors, each Director
is to have one (1) vote. The act of a majority of the Directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
Section 8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES. Newly created
directorships resulting from any increase in the number of Directors and any
vacancies on the Board of Directors resulting from death, resignation,
disqualification, removal or other cause shall be filled only by the affirmative
vote of a majority of the remaining Directors then in office, even though less
than a quorum of the Board of Directors. No decrease in the number of Directors
constituting the Board of Directors shall shorten the term of any incumbent
Director.
Section 9. REMOVAL OF DIRECTORS. Any Director may be removed from office,
with or without cause, at any time, by a vote of the stockholders holding a
majority of the stock, at any special meeting called for that purpose.
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Section 10. QUORUM. The number of Directors who shall be present at any
meeting of the Board of Directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be a
majority.
The number of votes of Directors that shall be necessary for the
transaction of any business of any specified item of business at any meeting of
the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the Board of Directors,
those present may adjourn the meeting, from time to time, until a quorum shall
be present.
Section 11. COMPENSATION. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or each may be paid a stated salary as Director. No such
payment shall preclude any Director from serving the Corporation in any other
capacity and receiving compensation therefore.
Section 12. PRESUMPTION OF ASSENT. A Director of the Corporation who is
present at a meeting of the Board of Directors at which action on any corporate
matter is taken shall be presumed to have assented to the action taken unless
his dissent is entered in the minutes of the meeting or unless he shall file his
written dissent to such action with the person acting as the Secretary of the
meeting before the adjournment thereof or shall forward such dissent by
registered or certified mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to a
Director who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 1. NUMBER. The officers of the Corporation shall be: President,
Vice-President, Secretary, and Treasurer, and such assistant Secretaries as the
President shall determine.
Any officer may hold more than one (1) office.
Section 2. ELECTION. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately following the
meeting of stockholders, and shall hold office for the term of one (1) year or
until their successors are duly elected. Officers need not be members of the
Board of Directors.
The Board may appoint such other officers, agents and employees as it shall
deem necessary who shall have such authority and shall perform such duties as,
from time to time, shall be prescribed by the Board.
Section 3. DUTIES OF OFFICERS. The duties and powers of the officers of the
Corporation shall be as follows:
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PRESIDENT
The President shall preside at all meetings of the stockholders. He shall
present at each annual meeting of the stockholders and Directors a report of the
condition of the business of the Corporation. He shall cause to be called
regular and special meetings of these stockholders and Directors in accordance
with these By-Laws. He shall appoint and remove, employ and discharge, and fix
the compensation of all agents, employees, and clerks of the Corporation other
than the duly appointed officers, subject to the approval of the Board of
Directors. He shall sign and make all contracts and agreements in the name of
the Corporation, subject to the approval of the Board of Directors. He shall see
that the books, reports, statements and certificates required by the statutes
are properly kept, made and filed according to law. He shall sign all
certificates of stock, notes, drafts, or bills of exchange, warrants or other
orders for the payment of money duly drawn by the Treasurer; and he shall
enforce these By-Laws and perform all the duties incident to the position and
office, and which are required by law.
VICE-PRESIDENT
During the absence or inability of the President to render and perform his
duties or exercise his powers, as set forth in these By-Laws or in the statutes
under which the Corporation is organized, the same shall be performed and
exercised by the Vice-President; and when so acting, he shall have all the
powers and be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the stockholders in appropriate books. He shall give and serve
all notices of the Corporation. He shall be custodian of the records and of the
corporate seal and affix the latter when required. He shall keep the stock and
transfer books in the manner prescribed by law, so as to show at all times the
amount of capital stock issued and outstanding; the manner and the time
compensation for the same was paid; the names of the owners thereof,
alphabetically arranged; the number of shares owned by each; the time at which
each person became such owner; and the amount paid thereon; and keep such stock
and transfer books open daily during the business hours of the office of the
Corporation, subject to the inspection of any stockholder of the Corporation,
and permit such stockholder to make extracts from said books to the extent
prescribed by law. He shall sign all certificates of stock. He shall present to
the Board of Directors at their meetings all communications addressed to him
officially by the President or any officer or stockholder of the Corporation;
and he shall attend to all correspondence and perform all the duties incident to
the office of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible for all
the funds and securities of the Corporation, and deposit all such funds in the
name of the Corporation in such bank or banks, trust company or trust companies
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or safe deposit vaults as the Board of Directors may designate. He shall exhibit
at all reasonable times his books and accounts to any Director or stockholder of
the Corporation upon application at the office of the Corporation during
business hours. He shall render a statement of the conditions of the finances of
the Corporation at each regular meeting of the Board of Directors, and at such
other times as shall be required of him, and a full financial report at the
annual meeting of the stockholders. He shall keep, at the office of the
Corporation, correct books of account of all its business and transactions and
such other books of account as the Board of Directors may require. He shall do
and perform all duties appertaining to the office of Treasurer. The Treasurer
shall, if required by the Board of Directors, give to the Corporation such
security for the faithful discharge of his duties as the Board may direct.
Section 4. BOND. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the Board may direct.
Section 5. VACANCIES, HOW FILLED. All vacancies in any office shall be
filled by the Board of Directors without undue delay, either at its regular
meeting or at a meeting specifically called for that purpose. In the case of the
absence of any officer of the Corporation or for any reason that the Board of
Directors may deem sufficient, the Board may, except as specifically otherwise
provided in these By-Laws, delegate the power or duties of such officers to any
other officer or Director for the time being; provided, a majority of the entire
Board concur therein.
Section 6. COMPENSATION OF OFFICERS The officers shall receive such salary
or compensation as may be determined by the Board of Directors.
Section 7. REMOVAL OF OFFICERS. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. DESCRIPTION OF STOCK CERTIFICATES. The certificates of stock
shall be numbered and registered in the order in which they are issued. They
shall be bound in a book and shall be issued in consecutive order therefrom, and
in the margin thereof shall be entered the name of the person owning the shares
therein represented, with the number of shares and the date thereof. Such
certificates shall exhibit the holder's name and number of shares. They shall be
signed by the President or Vice President, and countersigned by the Secretary or
Treasurer and sealed with the Seal of the Corporation.
Section 2. TRANSFER OF STOCK. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, his legal representatives or by his duly
authorized agent. In case of transfer by attorney, the power of attorney, duly
executed and acknowledged, shall be deposited with the Secretary. In all cases
of transfer the former certificate must be surrendered up and canceled before a
new certificate may be issued. No transfer shall be made upon the books of the
Corporation within ten (10) days next preceding the annual meeting of the
stockholders.
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Section 3. LOST CERTIFICATES. If a stockholder shall claim to have lost or
destroyed a certificate or certificates of stock issued by the Corporation, the
Board of Directors may, at its discretion, direct a new certificate or
certificates to be issued, upon the making of an affidavit of that fact by the
person claiming the certificate of stock to be lost or destroyed, and upon the
deposit of a bond or other indemnity in such form and with such sureties if any
that the Board may require.
ARTICLE VI
SEAL
Section 1. SEAL. The seal of the Corporation shall be as follows:
NO SEAL IN USE AT THIS TIME
ARTICLE VII
DIVIDENDS
Section 1. WHEN DECLARED. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient for
such dividends to be declared.
Section 2. RESERVE. The Board of Directors may set aside, out of the net
profits of the Corporation available for dividends, such sum or sums (before
payment of any dividends) as the Board, in their absolute discretion, think
proper as a reserve fund, to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and they may abolish or modify any such reserve in the manner in
which it was created.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved in any civil, criminal or
administrative action, suit or proceeding by reason of the fact that he or his
testator or intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal thereon, except
with respect to matters as to which it is adjudged in such action, suit or
proceeding that such officer, Director, or employee was liable to the
Corporation, or to such other corporation, for negligence or misconduct in the
performance of his duty. As used herein the term "expense" shall include all
obligations incurred by such person for the payment of money, including without
limitation attorney's fees, judgments, awards, fines, penalties, and amounts
paid in satisfaction of judgment or in settlement of any such action, suit, or
proceedings, except amounts paid to the Corporation or such other corporation by
him.
A judgment of conviction whether based on plea of guilty or nolo contendere
or its equivalent, or after trial, shall not of itself be deemed an adjudication
that such Director, officer or employee is liable to the Corporation, or such
other corporation, for negligence or misconduct in the performance of his
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duties. Determination of the rights of such indemnification and the amount
thereof may be made at the option of the person to be indemnified pursuant to
procedure set forth, from time to time, in the By-Laws, or by any of the
following procedures: (a) order of the Court or administrative body or agency
having jurisdiction of the action, suit, or proceeding; (b) resolution adopted
by a majority of the quorum of the Board of Directors of the Corporation without
counting in such majority any Directors who have incurred expenses in connection
with such action, suit or proceeding; (c) if there is no quorum of Directors who
have not incurred expense in connection with such action, suit, or proceeding,
then by resolution adopted by a majority of the committee of stockholders and
Directors who have not incurred such expenses appointed by the Board of
Directors; (d) resolution adopted by a majority of the quorum of the Directors
entitled to vote at any meeting; or (e) Order of any Court having jurisdiction
over the Corporation. Any such determination that a payment by way of indemnity
should be made will be binding upon the Corporation. Such right of
indemnification shall not be exclusive of any other right which such Directors,
officers, and employees of the Corporation and the other persons above mentioned
may have or hereafter acquire, and without limiting the generality of such
statement, they shall be entitled to their respective rights of indemnification
under any By-Law, Agreement, vote of stockholders, provision of law, or
otherwise in addition to their rights under this Article. The provision of this
Article shall apply to any member of any committee appointed by the Board of
Directors as fully as though each person and been a Director, officer or
employee of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. HOW AMENDED. These By-Laws may be altered, amended, repealed or
added to by the vote of the Board of Directors of the Corporation at any regular
meeting of said Board, or at a special meeting of Directors called for that
purpose provided a quorum of the Directors as provided by law and by the
Articles of Incorporation, are present at such regular meeting or special
meeting. These By-Laws and any amendments thereto and new By-Laws added by the
Directors may be amended, altered or replaced by the stockholders at any annual
or special meeting of the stockholders.
ARTICLE X
FISCAL YEAR
Section 1. FISCAL YEAR. The fiscal year shall end on the 31st day of
DECEMBER.
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ARTICLE XI
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any shareholders
or directors of the Corporation under the provisions of these By-Laws, under the
Articles of Incorporation or under the provisions of the Utah Business
Corporation Act, 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.
ADOPTED this 8th day of March, 1996.
SPORTSMAN'S WHOLESALE COMPANY
A Nevada Corporation,
/s/ Fred L. Hall
-----------------------
Fred L. Hall
President
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary\Treasurer of SPORTSMAN'S
WHOLESALE COMPANY, A Nevada Corporation: and
2. That the foregoing By-Laws, comprising Nine (9) pages, constitute the
By-Laws of said Corporation as duly adopted at a meeting of the Board of
Directors thereof duly held on the 8th day of March, 1996.
/s/ Fred L. Hall
------------------------------------
Fred L. Hall, Secretary\Treasurer
(SEAL)
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AGREEMENT AND PLAN OF SHARE EXCHANGE
This Agreement and Plan of Share Exchange (the "Agreement"), dated as
of the 30th day of April, 1998, by and between Sportsman's Wholesale Company, a
Nevada corporation ("SPORTSMAN") AND Cap's Sporting Goods Wholesale, Inc., a
Utah corporation ("CAP'S") and the shareholders of CAP'S ("Shareholders"), who
execute this Agreement and the Investment Letter as set forth in Exhibit A of
this Agreement, with reference to the following:
A. SPORTSMAN is a privately held corporation organized under the
laws of Nevada on March 6, 1996. SPORTSMAN has authorized
capital stock of 55,000,000 shares, $.0001 par value,
50,000,000 Common Stock and 5,000,000 Preferred Stock. There
are 500,000 common shares outstanding.
B. CAP'S is a privately held corporation organized under the laws
of the State of Utah, on February 3, 1998. CAP'S has
authorized capital stock of 55,000,000 shares, including
50,000,000 shares of common stock, $0.001 par value and
5,000,000 shares of preferred stock. There are 1,000,000
common shares outstanding.
C. The respective Boards of Directors of SPORTSMAN and CAP'S have
deemed it advisable and in the best interest of SPORTSMAN and
CAP'S that CAP'S be acquired by SPORTSMAN, pursuant to the
terms and conditions set forth in this Agreement.
D. SPORTSMAN and CAP'S propose to enter into this Agreement which
provides among other things that all of the outstanding shares
of CAP'S be acquired by SPORTSMAN, in exchange for shares of
SPORTSMAN and such items as are more fully described in the
Agreement.
E. The parties desire the transaction to qualify as a tax-free
organization under Section 368 (a)(1)(B) of the Internal
Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.1 At the Closing, a total of 1,000,000 common shares, which
represents all of the outstanding shares of CAP'S, shall be
acquired by SPORTSMAN in exchange for 1,000,000 shares of
Sportsman common stock which shall be issued to the CAP'S
shareholders as set forth on the signature page of this
Agreement.
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1.2 At the Closing, the CAP'S shareholder will deliver
certificates for the outstanding shares of CAP'S, duly
endorsed so as to make SPORTSMAN the sole holder thereof, free
and clear of all claims and encumbrances and SPORTSMAN shall
deliver a transmittal letter directed to the transfer agent of
SPORTSMAN directing the issuance of shares to the shareholder
of CAP'S set forth on the signature page of this Agreement.
1.3 Following the Share Exchange, there will be a total of
1,500,000 shares of common stock, $.001 par value issued and
outstanding in SPORTSMAN.
ARTICLE 2
THE CLOSING
2.1 The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place in the offices of
Ray, Quinney & Nebeker, 79 South Main Street, Salt Lake City,
UT 84145-0385 at 10:00 am, on May 22, 1998, or at such other
place or date and time as may be agreed to in writing by the
parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SPORTSMAN'S WHOLESALE COMPANY
SPORTSMAN and its officers and directors hereby represent and warrant
to CAP'S as follows:
3.1 SPORTSMAN shall deliver to CAP'S, on or within a reasonable
time after Closing, each of the following:
(a) Financial Statements. Financial statements of
SPORTSMAN, including, but not limited to, balance
sheet and income statement as of December 31, 1997.
(Schedule A)
(b) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether
of real or personal property) and each contract,
promissory note, mortgage, license, franchise, or
other written agreement to which SPORTSMAN is a party
which involves or can reasonably be expected to
involve aggregate future payments or receipts by
SPORTSMAN (whether by the terms of such lease,
contract, promissory note, license, franchise or
other written agreement or as a result of a guarantee
of the payment of or indemnity against the failure to
pay same) of $1,000.00 or more annually during the
twelve (12) months period ended December 31, 1997, or
any consecutive 12-month period thereafter, except
any of said instruments which terminate or are
cancelable without penalty during such 12-month
period. (Schedule B)
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(c) Loan Agreements. Complete and accurate copies of all
loan agreements and other documents with respect to
obligations of SPORTSMAN for the repayment of
borrowed money. (Schedule C)
(d) Articles and Bylaws. Complete and accurate copies of
the Articles of Incorporation and Bylaws of SPORTSMAN
together with all amendments thereto to the date
hereof. (Schedule D)
(e) Shareholders. A complete list of all persons or
entities holding capital stock of SPORTSMAN or any
rights to subscribe for, acquire, or receive shares
of the capital stock of SPORTSMAN (whether warrants,
calls, options, or conversion rights), including
copies of all stock option plans whether qualified or
nonqualified, and other similar agreements.
(Schedule E)
(f) Officers and Directors. A complete and current list
of all officers and Directors of SPORTSMAN. (Schedule
F)
(g) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current
salary rate for each present employee of SPORTSMAN
who received $1,000.00 or more in aggregate
compensation from SPORTSMAN whether in salary, bonus
of otherwise, during the year 1997, or who is
presently scheduled to received from SPORTSMAN salary
in excess of $1,000.00 during the year ending
December 31, 1998, including in each case the amount
of compensation received or scheduled to be received,
and a schedule of the hourly rates of all other
employees listed according to departments (Schedule
G)
(h) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal
administrative, arbitration or other such proceedings
or investigations (including without limitations
unfair labor practice matters, labor organization
activities, environmental matters and civil rights
violations) pending or, to the knowledge of SPORTSMAN
threatened, which may materially and adversely affect
SPORTSMAN.
(Schedule H)
(i) Tax Returns. Accurate copies of all federal and
state tax returns for SPORTSMAN for the last fiscal
year. (Schedule I)
(j) Jurisdictions Where Qualified. A list of all
jurisdictions wherein SPORTSMAN is qualified to do
business and is in good standing. (Schedule J)
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(k) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant
contracts which SPORTSMAN may have. (Schedule K)
3.2 Organization, Standing and Power. SPORTSMAN is a corporation
duly organized, validly existing and in good standing under
the laws of the State of Nevada with all requisite corporate
power to own or lease its properties and carry on its
businesses as is now being conducted.
3.3 Qualification. SPORTSMAN is duly qualified and is licensed as
a foreign corporation authorized to do business in each
jurisdiction wherein it conducts its business operations. Such
jurisdictions, which are the only jurisdictions in which
SPORTSMAN is duly qualified and licensed as a foreign
corporation, are shown in Schedule J.
3.4 Capitalization of SPORTSMAN. The authorized capital stock of
SPORTSMAN consists of 50,000,000 shares of Common Stock, $.001
par value, and 5,000,000 shares of Preferred Stock, $.001 par
value, of which the only shares issued and outstanding are
1,500,000 shares of common stock issued to the shareholders
listed on Schedule E, which shares were duly authorized,
validly issued and fully paid and nonassessable. There are no
preemptive rights with respect to the SPORTSMAN stock.
3.5 Authority. The execution delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action, including
but not limited to duly and validly authorized action and
approval by the Board of Directors, on the part of SPORTSMAN.
This Agreement constitutes the valid and binding obligation of
SPORTSMAN enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the
availability of the remedy of specific performance. This
Agreement has been duly executed by SPORTSMAN and the
execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement shall not
result in any breach of any terms or provisions of SPORTSMAN
Articles of Incorporation or Bylaws or of any other agreement,
court order or instrument to which SPORTSMAN is a party or is
bound.
3.6 Absence of Undisclosed Liabilities. SPORTSMAN has no material
liabilities of any nature, whether fixed, absolute, contingent
or accrued, which were not reflected on the financial
statements set forth in Schedule A nor otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached
hereto.
3.7 Absence of Changes. Since December 31, 1997, there has not
been any material adverse change in the condition (financial
or otherwise), assets, liabilities, earnings or business of
SPORTSMAN, except for changes resulting from completion of
transactions described in Section 5.1.
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3.8 Tax Matters. All taxes and other assessments and levies which
SPORTSMAN is required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to
the proper government authorities or are held by SPORTSMAN in
separate bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and
employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes for
any periods and further, the representations and warranties as
to absence of undisclosed liabilities contained in Section 3.6
includes any and all tax liabilities of whatsoever kind or
nature (including, without limitation, all federal, state,
local and foreign income, profit, franchise, sales, use and
property taxes) due or to become due, incurred in respect of
or measured by SPORTSMAN income or business prior to the
Closing Date.
3.9 Options, Warrants, Etc. There are no outstanding options,
warrants, calls, commitments or agreements of any character to
which SPORTSMAN or its shareholders are a party or by which
SPORTSMAN or its shareholders are bound calling for the
issuance of shares of capital stock of SPORTSMAN or securities
representing the right to purchase or receive any such capital
stock of SPORTSMAN.
3.10 Title to Assets. Except for liens set forth in Schedule C,
SPORTSMAN is the sole unconditional owner of, with good and
marketable title to, all assets listed int he schedules as
owned by it and all other property and assets are free and
clear of any mortgages, lines, pledges, charges or
encumbrances of nay nature whatsoever.
3.11 Agreements in Force and Effect. All material contracts,
agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which
SPORTSMAN is a party are valid and in full force and effect on
the date hereof and SPORTSMAN has not breached any material
provision of, and is not in default in any material respect
under the terms of any such contract, agreement, plan,
promissory note, mortgage, lease, policy, license, franchise
or similar instrument which breach or default would have a
material adverse effect upon the business, operations or
financial condition of SPORTSMAN.
3.12 Legal Proceedings, Etc. There are no civil, criminal,
administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either
SPORTSMAN or the shareholders thereof threatened, in which,
individually or in the aggregate, an adverse determination
would materially and adversely affect the assets, properties,
business or income of SPORTSMAN. SPORTSMAN has substantially
complied with, and is not in default in any material respect
under, any laws, ordinances, requirements, regulations or
orders applicable to its businesses.
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3.13 Governmental Regulation. To the knowledge of SPORTSMAN, the
company is not in violation of or in default with respect to
any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission,
board, bureau, agency or instrumentality, or delinquent with
respect to any report required to be filed with any
governmental commission, board, bureau, agency or
instrumentality which violation or default could have a
material adverse effect upon the business, operations or
financial condition of SPORTSMAN.
3.14 Accuracy of Information. No representation or warranty by
SPORTSMAN contained int his Agreement and no statement
contained in any certificate or other instrument delivered or
to be delivered to CAP'S pursuant hereto or in connection with
the transaction contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the
statement contained herein or therein not misleading.
3.15 Subsidiaries. SPORTSMAN does not currently have any
subsidiaries or own capital stock representing ten percent
(10%) or more of the issued and outstanding stock of any other
corporation.
3.16 Consents. No consent or approval of, or registration,
qualification or filing with any governmental authority or
other person is required to be obtained or accomplished by
SPORTSMAN or any shareholder thereof in connection with the
consummation of the transactions contemplated hereby.
3.17 Improper Payments. Neither SPORTSMAN, nor any person acting on
behalf of SPORTSMAN has made any payment or otherwise
transmitted anything of value, directly or indirectly, to (a)
any official or any government or agency or political
subdivision there of for the purpose of influencing any
decision affecting the business of SPORTSMAN, (b) any
customer, supplier or competitor of SPORTSMAN or employee of
such customer, supplier or competitor, for the purpose of
obtaining, retailing or directing business for SPORTSMAN, or
(c) any political party or any candidate for elective
political office nor has any fund or other asset of SPORTSMAN
been maintained that was not fully and accurately recorded on
the books or account of SPORTSMAN.
3.18 Copies of Documents. SPORTSMAN has made available for
inspection and copying to CAP'S and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with
any governmental agencies which are material to the terms and
conditions contained in this Agreement.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
CAP'S WHOLESALE SPORTING GOODS, INC.
CAP'S and its officers and directors hereby represent and warrant to
SPORTSMAN as follows:
4.1 CAP'S shall deliver to SPORTSMAN, on or within a reasonable
time after Closing, each of the following:
(a) Financial Statements. Financial statements of CAP'S,
including, but not limited to, balance sheet and
income statement as of December 31, 1997. (Schedule
A)
(b) Leases and Contracts. A complete and accurate list
describing all material terms of each lease (whether
of real or personal property) and each contract,
promissory note, mortgage, license, franchise, or
other written agreement to which CAP'S is a party
which involves or can reasonably be expected to
involve aggregate future payments or receipts by
CAP'S (whether by the terms of such lease, contract,
promissory note, license, franchise or other written
agreement or as a result of a guarantee of the
payment of or indemnity against the failure to pay
same) of $1,000.00 or more annually during the twelve
(12) months period ended December 31, 1997, or any
consecutive 12-month period thereafter, except any of
said instruments which terminate or are cancelable
without penalty during such 12-month period.
(Schedule B)
(c) Loan Agreements. Complete and accurate copies of all
loan agreements and other documents with respect to
obligations of CAP'S for the repayment of borrowed
money. (Schedule CC)
(d) Articles and Bylaws. Complete and accurate copies
of the Articles of Incorporation and Bylaws of CAP'S
together with all amendments thereto to the date
hereof. (Schedule DD)
(e) Shareholders. A complete list of all persons or
entities holding capital stock of CAP'S or any rights
to subscribe for, acquire, or receive shares of the
capital stock of CAP'S (whether warrants, calls,
options, or conversion rights), including copies of
all stock option plans whether qualified or
nonqualified, and other similar agreements. (Schedule
EE)
(f) Officers and Directors. A complete and current list
of all officers and Directors of CAP'S. (Schedule FF)
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(g) Salary Schedule. A complete and accurate list (in
all material respects) of the names and the current
salary rate for each present employee of CAP'S who
received $1,000.00 or more in aggregate compensation
from SPORTSMAN whether in salary, bonus of otherwise,
during the year 1997, or who is presently scheduled
to received from CAP'S salary in excess of $1,000.00
during the year ending December 31, 1998, including
in each case the amount of compensation received or
scheduled to be received, and a schedule of the
hourly rates of all other employees listed according
to departments (Schedule GG)
(h) Litigation. A complete and accurate list (in all
material respects) of all material civil, criminal
administrative, arbitration or other such proceedings
or investigations (including without limitations
unfair labor practice matters, labor organization
activities, environmental matters and civil rights
violations) pending or, to the knowledge of CAP'S
threatened, which may materially and adversely affect
CAP'S. (Schedule HH)
(i) Tax Returns. Accurate copies of all federal and
state tax returns for CAP'S for the last fiscal year.
(Schedule II)
(j) Jurisdictions Where Qualified. A list of all
jurisdictions wherein CAP'S is qualified to do
business and is in good standing. (Schedule JJ)
(k) Employee and Consultant Contracts. A complete and
accurate list of all employee and consultant
contracts which CAP'S may have. (Schedule KK)
4.2 Organization, Standing and Power. CAP'S is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Utah with all requisite corporate power
to own or lease its properties and carry on its businesses as
is now being conducted.
4.3 Qualification. CAP'S is duly qualified and is licensed as a
foreign corporation authorized to do business in each
jurisdiction wherein it conducts its business operations. Such
jurisdictions, which are the only jurisdictions in which CAP'S
is duly qualified and licensed as a foreign corporation, are
shown in (Schedule JJ).
4.4 Capitalization of CAP'S. The authorized capital stock of CAP'S
consists of 55,000,000 shares of Capital Stock, 50,000,000
which are Common Stock, par value $0.001 and 5,000,000 of
which are preferred stock, of which the only shares issued and
outstanding are 1,000,000 shares of Common Stock issued to the
shareholder listed on Schedule EE, which shares were duly
authorized, validly issued and fully paid and nonassessable.
There are no preemptive rights with respect to the CAP'S
stock.
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4.5 Authority. The execution delivery of this Agreement and
consummation of the transactions contemplated herein have been
duly authorized by all necessary corporate action, including
but not limited to duly and validly authorized action and
approval by the Board of Directors, on the part of CAP'S. This
Agreement constitutes the valid and binding obligation of
CAP'S enforceable against it in accordance with its terms,
subject to the principles of equity applicable to the
availability of the remedy of specific performance. This
Agreement has been duly executed by CAP'S and the execution
and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement shall not result
in any breach of any terms or provisions of CAP'S Articles of
Incorporation or Bylaws or of any other agreement, court order
or instrument to which CAP'S is a party or is bound.
4.6 Absence of Undisclosed Liabilities. CAP'S has no material
liabilities of any nature, whether fixed, absolute, contingent
or accrued, which were not reflected on the financial
statements set forth in Schedule AA nor otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached
hereto.
4.7 Absence of Changes. Since December 31, 1997, there has not
been any material adverse change in the condition (financial
or otherwise), assets, liabilities, earnings or business of
CAP'S, except for changes resulting from completion of
transactions described in Section 5.1.
4.8 Tax Matters. All taxes and other assessments and levies which
CAP'S is required by law to withhold or to collect have been
duly withheld and collected, and have been paid over to the
proper government authorities or are held by CAP'S in separate
bank accounts for such payment or are represented by
depository receipts, and all such withholdings and collections
and all other payments due in connection therewith (including,
without limitation, employment taxes, both the employee's and
employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such
purpose. There are no known deficiencies in income taxes for
any periods and further, the representations and warranties as
to absence of undisclosed liabilities contained in Section 4.6
includes any and all tax liabilities of whatsoever kind or
nature (including, without limitation, all federal, state,
local and foreign income, profit, franchise, sales, use and
property taxes) due or to become due, incurred in respect of
or measured by CAP'S income or business prior to the Closing
Date.
4.9 Options, Warrants, Etc. There are no outstanding options,
warrants, calls, commitments or agreements of any character to
which CAP'S or its shareholders are a party or by which CAP'S
or its shareholders are bound calling for the issuance of
shares of capital stock of CAP'S or securities representing
the right to purchase or receive any such capital stock of
CAP'S.
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4.10 Title to Assets. Except for liens set forth in Schedule CC,
CAP'S is the sole unconditional owner of, with good and
marketable title to, all assets listed int he schedules as
owned by it and all other property and assets are free and
clear of any mortgages, lines, pledges, charges or
encumbrances of nay nature whatsoever.
4.11 Agreements in Force and Effect. All material contracts,
agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which
CAP'S is a party are valid and in full force and effect on the
date hereof and CAP'S has not breached any material provision
of, and is not in default in any material respect under the
terms of any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar
instrument which breach or default would have a material
adverse effect upon the business, operations or financial
condition of CAP'S.
4.12 Legal Proceedings, Etc. There are no civil, criminal,
administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either CAP'S or
the shareholders thereof threatened, in which, individually or
in the aggregate, an adverse determination would materially
and adversely affect the assets, properties, business or
income of CAP'S. CAP'S has substantially complied with, and is
not in default in any material respect under, any laws,
ordinances, requirements, regulations or orders applicable to
its businesses.
4.13 Governmental Regulation. To the knowledge of CAP'S, the
company is not in violation of or in default with respect to
any applicable law or any applicable rule, regulation, order,
writ or decree of any court or any governmental commission,
board, bureau, agency or instrumentality, or delinquent with
respect to any report required to be filed with any
governmental commission, board, bureau, agency or
instrumentality which violation or default could have a
material adverse effect upon the business, operations or
financial condition of CAP'S.
4.14 Accuracy of Information. No representation or warranty by
CAP'S contained int his Agreement and no statement contained
in any certificate or other instrument delivered or to be
delivered to SPORTSMAN pursuant hereto or in connection with
the transaction contemplated hereby (including without
limitation all Schedules and Exhibits hereto) contains or will
contain any untrue statement of material fact or omits or will
omit to state any material fact necessary in order to make the
statement contained herein or therein not misleading.
4.15 Subsidiaries. CAP'S does not currently have any subsidiaries
or own capital stock representing ten percent (10%) or more of
the issued and outstanding stock of any other corporation.
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4.16 Consents. No consent or approval of, or registration,
qualification or filing with any governmental authority or
other person is required to be obtained or accomplished by
CAP'S or any shareholder thereof in connection with the
consummation of the transactions contemplated hereby.
4.17 Improper Payments. Neither CAP'S, nor any person acting on
behalf of CAP'S has made any payment or otherwise transmitted
anything of value, directly or indirectly, to (a) any official
or any government or agency or political subdivision there of
for the purpose of influencing any decision affecting the
business of CAP'S, (b) any customer, supplier or competitor of
CAP'S or employee of such customer, supplier or competitor,
for the purpose of obtaining, retailing or directing business
for CAP'S, or (c) any political party or any candidate for
elective political office nor has any fund or other asset of
CAP'S been maintained that was not fully and accurately
recorded on the books or account of CAP'S.
4.18 Copies of Documents. CAP'S has made available for inspection
and copying to SPORTSMAN and its duly authorized
representatives, and will continue to do so at all times, true
and correct copies of all documents which it has filed with
any governmental agencies which are material to the terms and
conditions contained in this Agreement.
4.19 Investment Intent of Shareholders. Each shareholder of CAP'S
represents and warrants to SPORTSMAN that the shares of
SPORTSMAN being acquired pursuant to this Agreement are being
acquired for her own account and for investment and not with a
view to the public resale or distribution of such shares and
further acknowledges that the shares being issued have not
been registered under the Securities Act and are "restricted
securities" as that term is defined in rule 144 promulgated
under the Securities Act and must be held indefinitely unless
they are subsequently registered under the Securities Act or
an exemption from such registration as available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.1 Conduct and Transactions of SPORTSMAN. During the period from
the date hereof to the date of Closing, SPORTSMAN shall:
(a) Conduct its operations in the ordinary course of
business, including but not limited to, paying all
obligations as they mature, complying with any
applicable tax laws, filing all tax returns required
to be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner
that fairly and correctly reflect its income,
expenses, assets and liabilities.
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5.2 SPORTSMAN shall not during such period, except in the ordinary
course of business, without the prior written consent of
CAP'S:
(a) Except as otherwise contemplated or required by this
Agreement, sell, dispose of or encumber any of its
properties or assets;
(b) Declare or pay any dividends on shares of its capital
stock or make any other distribution of assets to the
holders thereof;
(c) Issue, reissue or sell or issue options or tights to
subscribe to, or enter into any contract or
commitment to issue, reissue or sell any shares of
its capital stock or acquire or agree to acquire any
shares of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or
merge or consolidate with or into any other
corporation with or into any other corporation or
sell all or substantially all of its assets or change
in any manner the rights of its capital stock or
other securities;
(e) Except as contemplated or required by this Agreement,
pay or incur any obligation or liability, direct or
contingent more than $1,000;
(f) Incur and indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible
for obligations of any other party, or make loans or
advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or
indirect, of any of its officers or executive
employees, except in accordance with existing
employment contracts;
(I) Enter into any agreement of make any commitment to
any labor union or organization;
(j) Make any capital expenditures.
5.3 Conduct and Transactions of CAP'S. During the period from the
date hereof to the date of closing, CAP'S shall:
(a) Obtain an investment letter from each shareholder of
CAP'S in a form substantially like that attache
hereto as Exhibit A.
(b) Conduct the operations of CAP'S in the ordinary
course of business.
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(c) Issue, reissue or sell, or issue options or rights to
subscribe to, or enter into any contract or
commitment to issue, reissue or sell, any shares of
its capital stock or acquire or agree to acquire any
share of its capital stock;
(d) Except as otherwise contemplated and required by this
Agreement, amend its Articles of Incorporation or
merge or consolidate with or into any other
corporation or sell all or substantially all of its
assets or change in any manner the rights of its
capital stock or other securities;
(e) Except as otherwise contemplated and required by this
Agreement, pay or incur any obligation or liability,
direct or contingent;
(f) Incur any indebtedness for borrowed money, assume,
guarantee, endorse or otherwise become responsible
for obligations of any other party, or make loans or
advances to any other party;
(g) Make any material change in its insurance coverage;
(I) Enter into any agreement or make any commitment to
any labor union or organization;
(j) Make any material capital expenditures;
(k) Allow any of the foregoing actions to be taken by any
subsidiary of CAP'S.
ARTICLE 6
RIGHTS OF INSPECTION
6.1 During the period from the date of this Agreement to the date
of Closing of the acquisition, SPORTSMAN and CAP'S agree to
use their best efforts to give the other party, including its
representatives and agents, full access to the premises, books
and records of each of the entities, and to furnish the other
with such financial and operation data and other information
including, but not limited to, copies of all legal documents
and instruments referred to on any schedule or exhibit hereto,
with respect to the business and properties of SPORTSMAN or
CAP'S, as the case may be, as the other shall from time to
time request; provided, however, if there are any such
investigations: (1) they shall be conducted in such manner as
not to unreasonably interfere with the operation of the
business of the other parties and (2) such right of inspection
shall not affect in any way whatsoever any of the
representation or warranties given by the respective parties
hereunder. In the event of termination of this Agreement,
SPORTSMAN and CAP'S will each return to the other all
documents, work papers and other material obtained from the
other party in connection with the transactions contemplated
hereby, and will take such other steps necessary to protect
the confidentiality of such material.
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ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of SPORTSMAN. The obligation of
SPORTSMAN to perform this Agreement is subject to the
satisfaction of the following conditions on or within a
reasonable time after Closing unless waived in writing by
CAP'S.
7.2 Representations and Warranties. There shall be no information
disclosed in the schedules delivered by SPORTSMAN which in the
opinion of CAP'S would materially adversely affect the
proposed transaction and intent of the parties as set forth in
this Agreement. The representations and warranties of
SPORTSMAN set forth in Article 3 hereof shall be true and
correct in all material respects as of the date of this
Agreement and as of the Closing as though made on and as of
the Closing, except as otherwise permitted by this Agreement.
(a) Performance of Obligations. SPORTSMAN shall have in
all material respects performed all agreements
required to be performed by it under this Agreement
and shall have performed in all material respects any
actions contemplated by this Agreement prior to or on
the Closing and SPORTSMAN shall have complied in all
material respects with the course of conduct required
by this Agreement.
(b) Corporate Action. Minutes, certified copies of
corporate resolutions and/or other documentary
evidence satisfactory to counsel for CAP'S that
SPORTSMAN submitted this Agreement and any other
documents required hereby to such parties for
approval as provided by applicable law.
(c) Consents. Execution of this Agreement by the
shareholders of SPORTSMAN and any consents necessary
for or approval is required pursuant thereto shall
have been obtained.
(d) Financial Statements. CAP'S shall have been furnished
with financial statements of SPORTSMAN including, but
not limited to, balance sheets and profit and loss
statements as of December 31,1997. Such financial
statements shall have been prepared in conformity
with generally accepted accounting principles on a
basis consistent with those of prior periods and
fairly present the financial position of SPORTSMAN as
of December 31,1997.
(e) Statutory Requirements. All statutory requirements
for the valid consummation by SPORTSMAN of the
transactions contemplated by this Agreement shall
have been obtained.
(f) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and
state governmental agencies required to be obtained
by SPORTSMAN for consumption of the transactions
contemplated by this Agreement shall have been
obtained.
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(g) Changes in Financial Condition of SPORTSMAN. There
shall not have occurred any material adverse change
in the financial condition or in the operations of
the business of SPORTSMAN, except expenditures in
furtherance of this Agreement.
(h) Absence of Pending Litigation. SPORTSMAN is not
engaged in or threatened with any suit, action, or
legal administrative or other proceedings or
governmental investigations pertaining to this
Agreement or the condition of the transactions
contemplated hereunder.
(I) Authorization for Issuance of Stock. CAP'S shall have
received in from and substance satisfactory to
counsel for CAP'S a letter instructing and
authorizing the Registrar and Transfer Agent for the
shares of common stock of SPORTSMAN to issue stock
certificates representing ownership of SPORTSMAN
common stock to the shareholders of CAP'S in
accordance with the terms of this Agreement.
7.3 Conditions and Obligations of CAP'S. The obligation of CAP'S
to perform this Agreement is subject to the satisfaction of
the following conditions on or before the Closing unless
waived in writing by SPORTSMAN.
(a) Representations and Warranties. There shall be no
information disclosed in the schedules delivered by
CAP'S which in the opinion of SPORTSMAN would
materially adversely affect the proposed transaction
and intent of the parties as set forth in this
Agreement. The representations and warranties of
CAP'S set forth in Article 4 hereof shall be true and
correct in all material respects as of the date of
this Agreement and as of the Closing as though made
on and as of the Closing, except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. CAP'S shall have in all
material respects performed all agreements required
to be performed by it under this Agreement and shall
have performed in all material respects any actions
contemplated by this Agreement prior to or on the
Closing and CAP'S shall have complied in all material
respects with the course of conduct required by this
Agreement.
(c) Corporate Action. Minutes, certified copies of
corporate resolutions and/or other documentary
evidence satisfactory to counsel for SPORTSMAN that
CAP'S submitted this Agreement and any other
documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the
shareholders of CAP'S and any consents necessary for
or approval is required pursuant thereto shall have
been obtained.
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(e) Financial Statements. SPORTSMAN shall have been
furnished with financial statements of CAP'S
including, but not limited to, balance sheets and
profit and loss statements as of December 31,1997.
Such financial statements shall have been prepared in
conformity with generally accepted accounting
principles on a basis consistent with those of prior
periods and fairly present the financial position of
CAP'S as of December 31,1997.
(f) Statutory Requirements. All statutory requirements
for the valid consummation by CAP'S of the
transactions contemplated by this Agreement shall
have been obtained.
(g) Governmental Approval. All authorizations, consents,
approvals, permits and orders of all federal and
state governmental agencies required to be obtained
by CAP'S for consumption of the transactions
contemplated by this Agreement shall have been
obtained.
(h) Employment Agreements. Existing CAP'S employment
agreements will have been delivered to counsel for
SPORTSMAN.
(I) Changes in Financial Condition of CAP'S. There shall
not have occurred any material adverse change in the
financial condition or in the operations of the
business of CAP'S, except expenditures in furtherance
of this Agreement.
(j) Absence of Pending Litigation. CAP'S is not engaged
in or threatened with any suit, action, or legal
administrative or other proceedings or governmental
investigations pertaining to this Agreement or the
condition of the transactions contemplated hereunder.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.1 Covenant of Further Assurance. The parties covenant and agree
that they shall, from time to time, execute and deliver or
cause to be executed and delivered all such further
instruments of conveyance, transfer, assignments, receipts and
other instruments, and shall take or cause to be taken such
further of other actions as the other party or parties to this
Agreement may reasonably deem necessary in order to carry out
the purposes and intent of the Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.1 All statements contained in any written certificate, schedule,
exhibit or other written instrument delivered by SPORTSMAN or
CAP'S pursuant hereto, or otherwise adopted by SPORTSMAN, by
its written approval or by CAP'S by its written approval or in
connection with the transaction contemplated hereby, shall be
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deemed representations and warranties by SPORTSMAN or CAP'S as
the case may be. All representations, warranties and
agreements made by either party shall survive for the period
of the applicable statute of limitations and until the
discovery of any claim, loss, liability or other matter based
on fraud, if longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF SHARE EXCHANGE
10.1 Termination. Anything here into the contrary notwithstanding,
this Agreement and any agreement executed as required
hereunder and the acquisition contemplated hereby may be
terminated at any time before the closing date as follows:
(a) By mutual written consent of the Boards of Directors
of SPORTSMAN and CAP'S.
(b) By the Board of Directors of SPORTSMAN if any of the
conditions set forth in Section 7.2 shall not have
been satisfied.
(c) By the Board of Directors of CAP'S if any conditions
set forth in Section 7.1 shall not have been
satisfied.
10.2 Termination of Obligations and Waiver of Conditions; Payment
of Expenses. In the event this Agreement and the Share
Exchange are terminated and abandoned pursuant to this Article
10 hereof this Agreement shall become void and of no force and
effect and there shall be no liability on the part of any of
the parties hereto, or their respective directors, officers,
shareholders of controlling persons to each other. Each party
hereto will pay all costs and expenses incident to its
negotiation and preparation of this agreement and any of the
documents evidencing the transactions contemplated hereby,
including fees, expenses and disbursements of counsel.
ARTICLES 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.1 Exchange of Shares. At the Closing, SPORTSMAN shall issue a
letter to the transfer agent of SPORTSMAN with a copy of the
resolution of the Board of Directors of SPORTSMAN authorizing
and directing the issuance of SPORTSMAN shares as set forth on
the signature page of this Agreement.
11.2 Restrictions on Shares Issued to CAP'S. Due to the fact that
CAP'S will receive shares of SPORTSMAN common stock in
connection with the acquisition which have not been registered
under the 1933 Act by virtue of the exemption provided in
Section 4(2) of such Act, those shares SPORTSMAN contain the
following legend:
The shares represented by this certificate have not
been registered under the Securities Act of 1933. The
shares have been acquired for investment and may not
be sold or offered for sale in the absence of an
effective Registration Statement for the shares under
the Securities Act of 1933 or an opinion of counsel
to the Corporation that such registration is
required.
17
<PAGE>
ARTICLE 12
MISCELLANEOUS
12.1 Construction. This Agreement shall be construed and enforced
in accordance with the laws of the Sate of Utah excluding the
conflicts of laws.
12.2 Notices. All notices necessary or appropriate under this
Agreement shall be effective when personally delivered to
deposited in the United States mail postage prepaid, certified
or registered, return receipt requested, and addressed to the
parties' last known address which addresses are currently as
follow:
If to "Sportsman" If to "Cap's"
Sportsman Wholesale Company Cap's Sporting Goods
899 Artistic Circle Wholesale, Inc
Springville, UT 84663 157 South 880 East
Springville, UT 84663
12.3 Amendment and Waiver. The parties hereby may, by mutual
agreement in writing signed by each party, amend this
Agreement in any respect. Any term or provision of this
agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof such waiver fight
shall include, bu not be limited to, the right of either party
to:
(a) Extend time for the performance of any of the
obligations of the other;
(b) Waive any inaccuracies in representations by the
other contained in this Agreement or in any document
delivered pursuant hereto;
(c) Waiver compliance by the other with any of the
covenants contained in this Agreement, and
performance of any obligations by the other; and
(d) Waive the fulfillment of any condition that is
precedent to the performance by the party so waiving
of any of its obligations under this Agreement. Any
writing on the part of a party relating to such
amendment, extension or waiver as provided in this
Section 12.03 shall valid if authorized or ratified
by the board of directors of such party.
12.4 Remedies Not Exclusive. No remedy conferred by any of the
specific provision of this Agreement is intended of this
Agreement is intended to be exclusive of any other remedy, and
each and every remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute or
otherwise. The election of any one or more remedies by
SPORTSMAN or CAP'S shall not constitute a waiver of the right
to pursue available remedies.
12.5 Counterparts. This agreement may be executed in one or
counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
18
<PAGE>
12.6 Benefit. This Agreement shall be binding upon, and inure to
the benefit of, the respective successors and assigns of
SPORTSMAN and CAP'S.
12.7 Entire Agreement. This Agreement and the Schedules and
Exhibits attached hereto represent the entire agreement of the
undersigned regarding the subject matter hereof, and
supersedes all prior written or oral understandings or
agreements between the parties.
12.8 Each Party to Bear Its Own Expense. SPORTSMAN and CAP'S shall
each bear their own respective expenses incurred in connection
with the negotiation, execution, closing, and performance of
this Agreement, including counsel fees and accountant fees.
12.9 Captions and Section Headings. Captions and section headings
used herein are for convenience only and shall not control or
affect the meaning or construction of any provision of this
Agreement.
SPORTSMAN'S WHOLESALE COMPANY
BY:/s/ Fred Hall
----------------
President
CAP'S SPORTING GOODS WHOLESALE, INC.
BY: /s/ Fred Hall
----------------
President
CAP'S SHAREHOLDERS:
/s/ Fred Hall
-------------------
Fred Hall
1,000,000 SHARE OF COMMON STOCK
19
October __,1998
Sportsman's Wholesale Company
Attn: Fred L. Hall, President
55 West 200 North, Suite 3
Provo, Utah 84601
Re: Registration and Issuance of Sportsman's Wholesale
Company Common Stock To Public Investors
Dear Mr. Hall:
This Firm has acted as counsel to Sportman's Wholesale Company, a
Nevada corporation ("the Company), in connection with its registration of
100,000 shares of its common stock ("the Shares") for sale to the public through
the Company's Prospectus included within its Registration Statement on Form SB-2
as filed with the Securities and Exchange Commission on October __, 1998.
In connection with this representation, we have examined the originals,
or copies identified to our satisfaction, of such minutes, agreements, corporate
records and filings and other documents necessary to our opinion contained in
this letter. We have also relied as to certain matters of fact upon
representations made to us by officers and agents of the Company. Based upon and
in reliance on the foregoing, it is our opinion that:
1. the Company has been duly incorporated and is validly existing and
in good standing as a corporation under the laws of the State of
Nevada; and has full corporate power and authority to own its
properties and conduct its business as described in the Prospectus
referred to above.
2. When issued and distributed to the purchasers thereof, the Shares
will be duly and validly issued and will be fully paid and
nonassessable.
3. The shareholders of the Company have no pre-emptive rights to
acquire additional shares of the Company's Common Stock or other
securities in respect of the Shares.
<PAGE>
Fred L. Hall
October __, 1998
Page 2
We hereby consent to the use of our name in the Prospectus and
therein being disclosed as counsel to the Company in this matter.
Very truly yours,
RAY, QUINNEY & NEBEKER
By:/s/ A. R. Thorup
-----------------------
A. Robert Thorup, a Shareholder and
Director of the Firm
THE OFFICERS AND DIRECTORS OF SPORTSMAN'S WHOLESALE COMPANY HEREBY
AGREE TO DELIVER, BY NOON OF THE BUSINESS DAY AFTER RECEIPT, and with names and
addresses of investors at time deposit is made, funds to be applied to an escrow
account up to a maximum amount of $150,000 to be maintained at First Security
Bank, N.A. by A. Robert Thorup of the law firm of Ray Quinney & Nebeker, 7th
floor, 79 South Main Street, Salt Lake City, Utah 84111, who will act as escrow
agent, and who will maintain all papers, money, or property hereinafter
described, to be held and disposed of by said escrow agent in accordance with
the duties, instructions, and upon the terms and conditions hereinafter set
forth to which the undersigned hereby agree:
1. The above named bank (hereinafter called the "Bank") is not a party to, or
bound by any agreement which may be evidenced by or arises out of the following
instructions.
2. The Escrow Agent and the Bank and its officers, agents, and employees, are
not responsible or liable in any manner whatever in this matter or for the
sufficiency, correctness, genuineness or validity of any instrument deposited
with it hereunder, or with respect to the form or execution of the same, or the
identity, authority, or rights of any person executing or depositing the same.
3. The Escrow Agent and the Bank shall not be required to take or be bound by
notice of any default by any person, or to take any action with respect to such
default involving any expense or liability, unless written notice is given to
the Escrow Agent or to an officer of the Bank of such default by the undersigned
or any of them, and unless it is indemnified in a manner satisfactory to it
against any such expense or liability.
4. The Bank and the Escrow Agent shall be protected in acting upon any notice,
request, waiver, consent, receipt or other paper or document believed by the
Escrow Agent or the Bank to be genuine and to be signed by the proper party or
parties.
5. The Bank and the Escrow Agent shall not be liable for any error in judgment
or for any act done or step taken or omitted by it in good faith or for any
mistake or fact or law, or for anything which it may do or refrain from doing in
connection herewith, except its or his own willful misconduct.
6. The Bank and the Escrow Agent shall not be answerable for the default or
misconduct of any agent, attorney, or employee acting on behalf of the Issuer.
7. In the event of any disagreement between the undersigned(s) or any of them,
and/or the person or persons named in the foregoing instructions, and/or any
other person, resulting in adverse claims and demands being made in connection
with or for any papers, money or property involved herein or affected hereby,
the Escrow Agent shall be entitled at its option to refuse to comply with any
such claim or demand, so long as such disagreement shall continue, and in so
refusing the Escrow Agent may make no delivery or other disposition of any
money, papers or property involved herein or affected hereby and in so doing the
Escrow Agent shall not be or become liable to the undersigned or any of them or
to any person named in the foregoing instructions for its failure or refusal to
comply with such conflicting or adverse demands; and the Escrow Agent shall be
entitled to continue so to refrain and refuse so to act until:
a. The rights of the adverse claimants have been finally adjudicated in
the court assuming and having jurisdiction of the parties and the money, papers
and property involved herein or affected hereby; and/or
b. All differences shall have been adjusted by agreement and the Bank
shall have been notified thereof in writing signed by all of the interested
parties.
8. The papers, documents, money or property subject to this escrow (if other
than already named) are as described on attached schedules.
9. The other duties of Escrow Agent under the terms of this agreement are as
follows:
None
10. The Escrow Agent has not passed in any way upon the merits or qualifications
of the security and makes no recommendation with regard to its purchase. The
Escrow Agent does not authorize the use of its name by any person for the
promotion or sale of the security.
11. Special requirements:
12. Fees for the usual services of the Escrow Agent under terms of this
agreement are set forth below. All such fees shall be computed on a fiscal or
calendar year period adjusted for any fractional part thereof except that a fee
for any period shall not be less than the minimum fee indicated.
a. In the event the fees charged and due the Escrow Agent remain unpaid
for a period of one year, the Escrow Agent shall have the right, and is hereby
authorized in its role and absolute discretion to discontinue the escrow,
terminate all duties hereunder, close all accounting or other records, and to
destroy all documents, records and files or to retain such items in a dormant
account status subject to the escheat laws of the State of Utah.
b. All fees charged shall be paid as follows:
(1). The initial escrow fee shall be $70.00
(2). The minimum escrow fee shall be $4.00 PER DEPOSIT
(3). For fee for any check issued in refunding to subscribers
see (13b).
<PAGE>
c. In addition to the escrow fee paid or agreed upon at the inception
of this escrow, the parties agree to pay a reasonable compensation for any extra
services rendered or incurred by the Escrow Agent including a reasonable
attorney's fee if disputes arise or litigation is threatened or commences which
requires the Escrow Agent to refer such dispute to its attorneys.
13. If a minimum of $150,000 is not deposited with the Escrow Agent by the date
nine months after the effective date of the Offering or within an additional
period of sixty days if extended by the Company.
a. Issuer shall request termination of escrow and the Escrow Agent
shall refund to investors the full amount of investment.
b. Issuer agrees to pay a fee of $4.00 per check for this service if
returned to investors or $36.00 for one check made to SPORTSMAN'S WHOLESALE
COMPANY.
14. When 100% of $150,000 or more has been deposited with the Escrow Agent, and
all escrow requirements have been met, the issuer shall request a release of
funds, setting forth how funds are to be released pursuant to the terms of the
Offering.
15. After release of escrow, the duties, responsibilities and liability of every
kind and character of the Escrow Agent under this escrow agreement shall cease
and terminate.
Signed: Sportsman's Wholesale Company (Issuer)
By: /s/ Fred Hall
----------------
Its President
Escrow Agent:
/s/ A. R. Thorup
- ----------------
Cap's Sporting Goods Wholesale, Inc. (wholly-owned)
CONSENT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
We hereby consent to the use in this Registration Statement on Form
SB-2 of our report dated August 14, 1998, relating to the financial statements
of Sportsman's Wholesale Company, and to the reference to our Firm under the
caption "Experts" in the Prospectus.
TANNER + CO.
Salt Lake City, Utah
October 1, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 30,
1998 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 3,510
<SECURITIES> 0
<RECEIVABLES> 127
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,637
<PP&E> 1,500
<DEPRECIATION> 89
<TOTAL-ASSETS> 5,048
<CURRENT-LIABILITIES> 10,443
<BONDS> 0
0
0
<COMMON> 150
<OTHER-SE> (5,545)
<TOTAL-LIABILITY-AND-EQUITY> 5,048
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 9,175
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 345
<INCOME-PRETAX> (9,520)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,520)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,520)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
SPORTSMAN'S WHOLESALE COMPANY
SUBSCRIPTION AGREEMENT
FOR PURCHASERS OF SHARES OF COMMON STOCK
CASHIER'S CHECKS MUST BE MADE PAYABLE TO: A. ROBERT THORUP, ESCROW AGENT
FOR SPORTSMAN'S WHOLESALE
COMPANY
FOR IRA OR PENSION INVESTORS: INCLUDE BANK CUSTODIAL DOCUMENTS
ALL CHECKS AND DOCUMENTS MUST BE DELIVERED TO: A. ROBERT THORUP, ESCROW AGENT
RAY QUINNEY & NEBEKER
7TH FLOOR
79 SOUTH MAIN STREET
SALT LAKE CITY, UTAH 84111
1. SHARES PURCHASED:
This subscription is for __________ SHARES in the total purchase amount
of $______________, to be registered as follows:
2. FORM OF OWNERSHIP: Mark only one box:
|_| SINGLE PERSON--one signature required
|_| JOINT TENANTS WITH RIGHT OF SURVIVORSHIP--all parties must sign
|_| HUSBAND AND WIFE, AS COMMUNITY PROPERTY--two signatures required
|_| TENANTS IN COMMON--all parties must sign
|_| CORPORATION
|_| CUSTODIAN UGTM--custodian signature required
|_| MARRIED PERSON/SEPARATE PROPERTY--one signature required
|_| TRUST--trustee signature(s) required. ALL SECTIONS MUST BE FILLED IN
Print Trustee name(s) (sign in Signature Section)
Trust Date | | | | | | | | |
Month Day Year
For the benefit of: ________________________________
|_| TENANTS BY THE ENTIRETIES--two signatures required
|_| PARTNERSHIP
|_| CUSTODIAN (for Taxable Person)--custodian signature required
<PAGE>
3. INVESTOR INFORMATION: Please print name(s) in which Notes are to be
registered. All interest and principal payments and correspondence will
go to this address unless another address is listed in Section 4.
Name (1st)| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name (2nd)| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
City | | | | | | | | | | | | | || | | | | | State | | | Zip Code | | | | | | |
Daytime Phone Number | | | |-| | | |-| | | | |
State of Residence | | | How Long? Since | | | | |
Enter the Taxpayer identification number in the appropriate box. Note:
If the account is in more than one name, the number should be that of
the first person listed.
Social Security No. | | | |-| | |-| | | | | and/or
Taxpayer Identification No. | | |-| | | | | |
| | |-| | |-| | | $| | | | | | | | $| | | | | | | | | | | M | | F Date of Birth
Gross Income for Estimated Net Worth Sex
Past 12 Months as of This Date
If Subscription is a trust, date of trust formation | | |-| | |-| | |
4. OTHER MAILING ADDRESS: If you want shareholder mailings sent to an
address other than in Section 3, please fill in below (REQUIRED FOR IRA
OR PENSION ACCOUNTS).
Account Number | | |-| | | | | | |
Name of Custodian | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Address | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
City | | | | | | | | | | | | | || | | | | | State | | | Zip Code | | | | | | |
<PAGE>
5. SIGNATURES:
The undersigned Investor, hereby certifies that a current copy of the
Sportsman's Wholesale Company Prospectus dated October , 1998 has been
delivered to, and received by the Investor prior to making any
investment decision, and the Investor has had a full opportunity to ask
questions of, and receive information responsive to his questions from,
Sportsman's Wholesale Company prior to investing in the Shares.
NOT TO BE EXECUTED UNTIL
RECEIPT OF PROSPECTUS
X ________________________________ __/__/__
Authorized Signature of Investor Date
X ___________________________________ __/__/__
Signature of Joint Investor (if any) Date
