As filed with the Securities and Exchange Commission on May 27, 1999.
Registration File No. 333-79405
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM SB-2/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NATALMA INDUSTRIES, INC.
(Name of small business issuer in its charter)
Nevada 1081 88-0409369
- ------------------ ----------------- ------------------
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Classifi- Identification No.)
Organization) cation Code)
Natalma Industries, Inc. Michael J. Morrison, Esq.
1550 Ostler Court 1495 Ridgeview Drive, Suite 220
N.Vancouver, B.C., Canada V7G 2P1 Reno, Nevada 89509
(604) 929-6437 (775) 827-6300
- -------------------------------- ---------------------------------
(Address and telephone of registrant's (Name, address and telephone
principal executive offices number of agent for service)
and principal place of business)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If this Form is filed to register additional common stock for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities . . . . Amount To Be Offering Price Aggregate Registration
To Be Registered . . Registered Per Share Offering Price Fee (1)
- -------------------------------------------------------------------------------
Common stock:. . . .350,000 Shares $1.00 $350,000 $97.30
- -------------------------------------------------------------------------------
(1) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(c).
</TABLE>
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<PAGE>
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE
ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
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PROSPECTUS
==========
350,000 SHARES OF COMMON STOCK
NATALMA INDUSTRIES, INC.
We are offering up to a total of 350,000 shares of common stock on a
"best efforts-no minimum" basis, (the "Shares"), at an initial public
offering price of $1.00 per Share (the "Offering"). No fractional Shares
may be purchased. There is no minimum number of shares which we must sell in
this Offering and We will commence the Offering on the effective date of this
prospectus and continue for a period of 120 days, unless we extend for an
additional 90 days, or until we complete the Offering, whichever occurs sooner.
(See "Offering.")
The purchase of shares in this offering is highly risky and you should
very carefully and thoroughly read the "Risk Factors" section of this
prospectus, beginning on Page 8.
These securities have not been approved or disapproved by the Securities
and Exchange Commission (the "Commission") or the securities division of any
state, nor has the Commission or any state passed upon the accuracy or adequacy
of this prospectus. Any representation to the contrary is a criminal
offense.
Prior to this Offering, there has been no public market for our common stock
and there is no assurance that a public market will result following the sale
of the Shares being offered in this prospectus, or that any Shares purchased in
this Offering can be sold at or near the offering price, or at all.
The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with
the Commission is effective. This prospectus is not an offer to sell the
Shares and it is not a solicitation of an offer to buy the Shares in any
state where the offer or sale is not permitted.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Price Per Aggregate Proceeds to Us
Share Offering Price (1)(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock . . . . . .$1.00 $350,000 $350,000
- -------------------------------------------------------------------------------
</TABLE>
Subject to Completion, Dated: 1999
3
<PAGE>
1. Derick Sinclair, our sole officer and director, will act as our sales
agent in this Offering, but he will receive no commissions for any Shares he
sells. He also will not register as a broker-dealer pursuant to Section 15 of
the Securities Exchange Act of 1934, in reliance upon Rule 3a4-1,
which sets forth those conditions under which a person associated with an Issuer
may participate in the Offering of the Issuer's securities and not be deemed to
be a broker-dealer.
2. We calculated the net proceeds we will receive from this Offering after
deducting $50,000 as the estimated costs for filing, printing, legal, accounting
and other miscellaneous expenses relating to the Offering, which we will pay out
of the proceeds of this Offering.
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page No.
<S> <C>
SUMMARY OF PROSPECTUS. . . . . . . . . . . . . . . . . . . . . . . . . . 7
Information about Our Company. . . . . . . . . . . . . . . . . . . .7
The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7
Summary Financial Data. . . . . . . . . . . . . . . . . . . . . . . 8
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
RISKS ASSOCIATED WITH OUR COMPANY:. . . . . . . . . . . . . . . . . 8
We Lack an Operating History . . . . . . . . . . . . . . . . . . . . 8
The Mineral Exploration Industry is Highly Speculative . . . . . . . 8
Our Mining Claims Have No Known Ore Reserves . . . . . . . . . . . 9
Our Mining Claims May Be Invalid . . . . . . . . . . . . . . . . . 9
Fluctuation in the Price of Precious Metals and Ores . . . . . . . 9
Transportation Difficulties and Weather Interruptions
in the Yukon Territory. . . . . . . . . . . . . . . . . . . . . . 9
Government Regulation, Permits and Environmental Impact
on our Operations . . . . . . . . . . . . . . . . . . . . . . . . 9
Supplies Needed for Exploration May Not Always be Available . . . . 10
We Must Be Able to Attract and Retain Key Personnel . . . . . . . . 10
RISKS ASSOCIATED WITH THIS OFFERING . . . . . . . . . . . . . . . . . . 10
The Risks of Buying Low-Priced Stocks . . . . . . . . . . . . . . . 10
Possible Restrictions on the Resale of Your Shares. . . . . . . . . 10
We Cannot Assure a Public Trading Market for the Shares . . . . . . 11
You Will Incur Immediate and Substantial Dilution . . . . . . . . . 11
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS. . . . . . . . 11
AVAILABLE INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . 11
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DETERMINATION OF OFFERING PRICE. . . . . . . . . . . . . . . . . . . . . 12
CAPITALIZATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES. . . . . . . . . . . . . . 13
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING. . . . . . . . . . . . . . . 14
Offering Will be Sold by Our Officer and Director . . . . . . . . . 14
Offering Period and Expiration Date. . . . . . . . . . . . . . . . . 15
Procedures for Subscribing . . . . . . . . . . . . . . . . . . . . . 15
Right to Reject Subscriptions. . . . . . . . . . . . . . . . . . . . 15
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Description of Properties . . . . . . . . . . . . . . . . . . . . . 15
Historical Background of Whitehorse Mining District . . . . . . . . 16
Our Proposed Exploration Program. . . . . . . . . . . . . . . . . . 16
Environmental Regulations . . . . . . . . . . . . . . . . . . . . . 17
Government Regulations. . . . . . . . . . . . . . . . . . . . . . . 18
Year 2000 Computer Problems . . . . . . . . . . . . . . . . . . . . 18
Employees and Employment Agreements . . . . . . . . . . . . . . . . 18
Office Facilities . . . . . . . . . . . . . . . . . . . . . . . . . 19
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . 19
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . 19
Limited Operating History; Need for Additional Capital . . . . . . 20
Results of Operations . . . . . . . . . . . . . . . . . . . . . . . 22
Liquidity and Capital Resources . . . . . . . . . . . . . . . . . . 22
5
<PAGE>
Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . 22
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Officers and Directors. . . . . . . . . . . . . . . . . . . . . . . 22
Background of Officer and Director. . . . . . . . . . . . . . . . . 23
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . 23
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 23
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . 23
Future Sales by Present Stockholders. . . . . . . . . . . . . . . . 24
DESCRIPTION OF SECURITIES. . . . . . . . . . . . . . . . . . . . . . . . 24
Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Non-Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . 25
Cash Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Stock Transfer Agent. . . . . . . . . . . . . . . . . . . . . . . . 25
CERTAIN TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
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<PAGE>
SUMMARY OF PROSPECTUS
=======================
Information about Our Company
- --------------------------------
Our company was incorporated in the State of Nevada on July 9, 1998 and we are
engaged in the exploration of mining properties. In March 1999, we
acquired 10 mining claims in the Whitehorse Mining District, Yukon
Territory, Canada and following completion of this Offering, we intend to
implement an exploration program on the claims. Presently, we are only in the
research stage and have no assurances that any commercially viable ore
deposits exist, or will be found, on these properties until such time as
appropriate exploration work can be done on the properties and a
comprehensive economic evaluation based upon such work is concluded.
(See the "Business" section for a more detailed description of our business
operations.)
On March 10, 1999, we closed a public offering of 8,000,000 shares of our common
stock, at a price of $.01 per share, under Regulation D, Rule 504,
made effective in the State of New York on January 13, 1999 and raised a
total of $80,000.
Our administrative office is located at 1550 Ostler Court, N. Vancouver,
British Columbia, Canada V7G 2P1, telephone (604) 929-6437 and our registered
Statutory office is located at 1495 Ridgeview Drive, Suite 220, Reno, Nevada
89509. Our fiscal year end is December 31.
The Offering
- -------------
Following is a brief summary of this Offering. Please see the "Plan
Of Distribution; Terms of the Offering" section for a more detailed
Description of the terms of the Offering.)
<TABLE>
<CAPTION>
<S> <C>
Securities Being Offered Up to 350,000 Shares of common stock,
par value $.001.
Offering Price per Share $ 1.00
Offering Period The Shares are being offered for a period
not to exceed 120 days, unless extended by
our Board of Directors for an additional
90 days.
Net Proceeds to Our Company Approximately $300,000 (See "Use of
Proceeds".)
Use of Proceeds We intend to use the proceeds to pay for
offering expenses, research and exploration
and to generally expand our business
operations. (See "Use of Proceeds".)
Number of Shares
Outstanding Before
the Offering: 11,500,000 (See "Description of Securities".)
Number of Shares
Outstanding
After the Offering: 11,850,000 (See "Description of Securities".)
</TABLE>
7
<PAGE>
Summary Financial Data
- ------------------------
The following table provides selected financial data about our Company for the
year ended December 31, 1998 and the period ended March 15, 1999 . For detailed
historical financial information, see the "Financial Statements" included in
this prospectus .
<TABLE>
<CAPTION>
<S> <C> <C>
Balance Sheet Data:. 3/15/99 12/31/98
- ------------------ ------- --------
Cash . . . . . . . . $ 84,177 $ 4,490
Total assets . . . . $ 97,483 $ 17,500
Total liabilities. . $ 14,483 $ 14,500
Shareholders' equity $ 83,000 $ 3,000
</TABLE>
RISK FACTORS
=============
An investment in these securities involves an exceptionally high degree
Of risk and is extremely speculative in nature. In addition to the
other information regarding our company contained in this prospectus,
you should consider many important factors in determining whether to
purchase the Shares. Following are what we believe are all of the material
risks involved if you decide to purchase Shares in this Offering.
RISKS ASSOCIATED WITH OUR COMPANY:
- -=====================================
We Lack an Operating History
- -----------------------------------
Our Company was incorporated in July 1998 and we have not yet commenced
our proposed business operations or realized any revenues. We have only a
limited operating history upon which an evaluation of our future prospects
can be made. Such prospects must be considered in light of the substantial
risks, expenses and difficulties encountered by new entrants into the
competitive mining industry. The mining business is, by nature, extremely
speculative. Our ability to achieve and maintain profitability and
positive cash flow is highly dependent upon a number of factors,
including our ability to locate profitable mineral properties and generate
revenues, while reducing exploration costs. Based upon current plans, we
expect to incur operating losses in future periods as we incur significant
expenses associated with the research, exploration of our mineral properties.
We cannot guarantee that we will be successful in realizing revenues or
achieving or sustaining positive cash flow in the future and any such
failure could have a material adverse effect on our business, financial
condition and results of operations. (See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business".)
The Mineral Exploration Industry is Highly Speculative
- -----------------------------------------------------------------------------
Gold, silver and strategic metals exploration is highly speculative in nature,
8
<PAGE>
involving many risks which even a combination of scientific knowledge and
experience cannot overcome, often resulting in unproductive efforts. We are in
the very early exploration stage and are dependent on the proceeds to be
realized from the sale of Shares in this Offering for the funds necessary
to carry out our planned exploration program. We cannot guarantee
that our explorations will be successful or that any minerals will be found or
that any production of minerals will be realized . Although we believe
there is a sufficient basis to engage in exploration on our properties, it may
not result in the discovery of any known minerals or revenues.(See
"Business".)
Our Mining Claims Have No Known Ore Reserves
- ------------------------------------------------
We do not claim any known ore reserves on our properties. (See "Business".)
Our Mining Claims May Be Invalid
- ------------------------------------
The validity of certain mining claims depends upon numerous circumstances
and factual matters, many of which are discoverable of record or by other
available means, and is subject to many uncertainties of existing law and
its applications. While we believe our properties could contain minerals,
further exploration and mineral assessments performed by government agencies
may indicate that our claims are not sufficiently mineralized and may later be
abandoned or determined to be invalid because of insufficient mineralization.
(See "Business".)
Fluctuation in the Price of Precious Metals and Ores
- ----------------------------------------------------
Our continued existence is highly dependent upon the price of precious metals
and ores. Currently, the price of gold is at its lowest point in the last 20
years. The economic viability of our minerals exploration program will be
highly dependent on, among many other factors, political issues and
general economic conditions. During periods of economic downturn
or slow economic growth, coupled with eroding consumer confidence or rising
inflation, the price and/or sale of precious metals could be severely
impacted. Such factors would likely have an immediate effect on our business
operations and/or profitability. Currently, the mining industry is depressed
and mineral values have been very low over the last several years, making it
difficult to conduct operations profitably in the mining industry.
(See "Business".)
Transportation Difficulties and Weather Interruptions in the Yukon Territory
- -----------------------------------------------------------------------------
While some mining concerns operate 12 months per year, our proposed exploration
work can only be performed for approximately 8 months out of the year
(under normal circumstances) due to heavy snowfall in the Yukon
Territory of Canada, where our properties are located. Also, the existing
roads leading to our properties are rough-graded dirt and, during rainy
weather, are sometimes unusable or washed out. Such factors would likely
have an immediate adverse effect on our operations and/or profitability.
(See "Business.")
Government Regulation, Permits and Environmental Impact on our Operations
- ------------------------------------------------------------------------------
Any mineral exploration programs we undertake will be subject to extensive
Canadian laws, rules and regulations. Various governmental permits are
Required for our proposed operations. We are not assured of receiving such
permits as and when we need them for our operations, or at all. In addition,
9
<PAGE>
existing, as well as future legislation and regulations could cause
additional expense, capital expenditures, restrictions and delays in the
exploration of our properties. The extent to which future
legislation and/or regulations might affect our operations cannot be
predicted. There is no assurance environmental or safety standards more
stringent than those presently in effect may not be enacted, which could
adversely affect our exploration program. Also, the industry often
finds itself in conflict with the interests of private
environmental groups which often have an adverse effect on the mining industry
(See "Business".)
Supplies Needed for Exploration May Not Always be Available
- --------------------------------------------------------------
Competition and unforeseen limited sources of supplies we need for our
exploration programs could result in occasional spot shortages of
supplies of certain products, equipment or materials. We cannot guarantee we
will be able to obtain certain products, equipment and/or materials which we
require, without interruption, as and when needed, or on terms favorable to
us. (See "Business".)
We Must Be Able to Attract and Retain Key Personnel
- -------------------------------------------------------------
Our business operations will be highly dependent upon our ability to attract
And maintain key employees and management personnel with experience in the
research and exploration of mineral properties. The process of hiring
employees with the combination of skills and attributes required to carry
out our business strategy is extremely competitive and time-consuming. We
cannot guarantee that we will be able to identify and/or hire qualified
personnel as and when they are needed for our operations. The loss of the
services of key
personnel, or the inability to attract qualified personnel, could materially
adversely affect our business, financial condition and results of operations
(See "Management".)
RISKS ASSOCIATED WITH THIS OFFERING:
========================================
The Risks of Buying Low-Priced Stocks
- ------------------------------------------
The Shares are defined as a "penny stock" under the Securities and
Exchange Act of 1934 (the "Exchange Act"), and rules of the Commission.
The Exchange Act and such penny stock rules generally impose additional
sales practice and disclosure requirements on broker-dealers who sell
our securities to persons other than certain "accredited investors"
(generally, institutions with assets in excess of $5,000,000 or
individuals with net worth in excess of $1,000,000 or annual income
exceeding $200,000, or $300,000 jointly with spouse), or in
transactions not recommended by the broker-dealer. For transactions covered
by the penny stock rules, a broker-dealer must make a suitability
determination for each purchaser and receive the purchaser's written
agreement prior to the sale. In addition, the broker-dealer must make
certain mandated disclosures in penny stock transactions, including the actual
sale or purchase price and actual bid and offer quotations, the compensation
to be received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the Commission. Consequently, the penny stock
rules may affect the ability of broker-dealers to make a market in or trade
our common stock and may also affect your ability to resell any Shares
you may purchase in this offering in the public markets.
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Possible Restrictions on the Resale of Your Shares
- ---------------------------------------------------------
Except for shares we sold in the State of New York and certain jurisdictions
outside of the United States under a Regulation D, Rule 504 offering, which
are unrestricted, all other shares of our common stock issued and outstanding
are restricted securities and cannot be resold publicly, except in compliance
with the registration or exemption from registration requirements of the
applicable state securities laws, rules and regulations. (See "Plan of
Distribution; Terms of the Offering".)
We Cannot Assure a Public Trading Market for the Shares
- ----------------------------------------------------------------
There is currently no active trading in our Shares and we cannot guarantee
you that an active trading market in our Shares will develop in the near future,
even if this Offering is successfully completed; or, if a trading market is
developed, that it can or will be sustained for any period of time. There is a
high risk that you not be able to be resell any Shares you purchase in this
Offering at or near the Offering price, and in fact, we cannot guarantee that
you will be able to sell your Shares at all in the future. ("See "Plan of
Distribution; Terms of the Offering".)
You Will Incur Immediate and Substantial Dilution
- -------------------------------------------------------
Our existing Stockholders acquired their shares at a cost substantially less
than that which you will pay for Shares you purchase in this Offering.
Accordingly, any investment you make in these Shares will result in the
immediate and substantial dilution of the net tangible book value of those
Shares from the $1.00 you pay for them to $.03 per Share immediately after
the offering. (See "Dilution of the Price you Pay for Your Shares" and
"Financial Statements".)
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
=============================================================
Some discussions in this prospectus may contain forward-looking statements
that involve risks and uncertainties. A number of important factors could
cause our actual results to differ materially from those expressed in
any forward-looking statements made by us in this prospectus. Such factors
include, but are not limited to, those discussed in "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business", as well as those discussed elsewhere in this
prospectus. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar
expressions, or words which, by their nature, refer to future events
AVAILABLE INFORMATION
======================
We have filed this registration statement on Form SB-2, of which this
prospectus is a part, with the Commission . Upon completion of this
registration, we will be subject to the informational requirements of
the Exchange Act and, in accordance therewith, will file all requisite
reports, such as Forms 10-KSB, 10-QSB and 8-KSB, proxy statements, under Sec.
14 of the Exchange Act, and other information with the Commission.
Such reports, proxy statements, this registration statement and other
information, may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street N.W., Judiciary
Plaza, Washington, D.C. 20549. Copies of all materials may be obtained
11
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from the Public Reference Section of the Commission's Washington, D.C.
office at prescribed rates. The Commission also maintains a Web site
that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission
at http://www.sec.gov.
USE OF PROCEEDS
=================
We have estimated the net proceeds from this Offering to be approximately
$300,000, assuming all Shares are sold, which we can't guarantee, after
deducting $50,000, for estimated offering expenses, including legal and
accounting fees. We expect to disburse the proceeds from this Offering in the
priority set forth below, during the first 12 months after successful
completion of this offering:
<TABLE>
<CAPTION>
<S> <C>
Total Proceeds . . . . . . . . . . . . . . . . . $ 350,000
Less Offering Expenses:
Legal and Accounting Fees and Offering Exp. 50,000
----------
Net Proceeds From This Offering. . . . . . . . . $ 300,000
</TABLE>
We estimate that we will allocate the following sums during the three
phases of our proposed exploration program; however, these figures may be
adjusted by our joint venture partner, when one is obtained:
<TABLE>
<CAPTION>
<S> <C>
Phase 1: Legal, Accounting, Administrative $160,000
and Working Capital
Salaries and Wages:
1 Senior Geologist @$500/day and
3 Junior Geologists @$300/day for
30 days $ 42,000
Assays (1,000 @ $25/sample) $ 25,000
Equipment Rentals (Bulldozer, 4x4
truck, 2 ATV's, radios, geophysical
equipment and helicopter) $ 35,000
Blasting crew and equipment for 15
days @ $1000/day $ 15,000
Camp expenses (food and lodging) $ 30,000
Geological Report, including
Recommendation to continue to Phase II $ 10,000
Contingency Fund $ 43,000
--------
Total Use of Proceeds $300,000
</TABLE>
Phase 2 will be contingent on the success of the Phase 1 exploration work.
Assuming Phase 1 is successful, we will need to raise an additional $300,000
Either through sales of our common stock or loans from banks or third parties.
Phase 2 would consist of additional trenching and diamond drilling with a
joint venture partner.
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Phase 2: Legal, Accounting, Administrative $ 30,000
and Working Capital
Salaries and Wages:
1 Senior Geologist @$500/day and
3 Junior Geologists @$300/day for
30 days $ 42,000
Assays (1,000 @ $25/sample) $ 25,000
Equipment Rentals (Bulldozer, 4x4
truck, 2 ATV's, radios, geophysical
equipment and helicopter) $ 35,000
Diamond drilling (Approx. 1000
Meters @$100/meter) $100,000
Blasting crew and equipment for 15
days @ $1000/day $ 15,000
Camp expenses (food and lodging) $ 30,000
Geological Report, including
recommendation to continue to Phase 3 $ 10,000
Contingency Fund $ 13,000
--------
Estimated Total Required to Complete Phase 2 $300,000
</TABLE>
Phase 3 will be contingent on the success of Phases 1 and 2. Assuming
Phases 1 and 2 are successful and minerals are located on our properties, of
which we have no assurance or guarantee, we estimate we will need to raise an
additional $1,000,000 either through sales of our common stock or loans from
banks or third parties to implement our proposed Phase 3 operations with a
joint venture partner.
<TABLE>
<CAPTION>
<S> <C>
Phase 3 : Legal, Accounting, Administrative $ 60,000
and Working Capital
Salaries and Wages:
1 Senior Geologist @$500/day and
6 Junior Geologists @$300/day for
30 days $ 69,000
Assays (Approx. 5,000 @ $25/sample) $ 125,000
Equipment Rentals (Bulldozer, 4x4
truck, 6 ATV's, radios, geophysical
equipment and helicopter) $ 75,000
Diamond drilling(Approx. 5,000 meters
@ $100/meter $ 500,000
Blasting crew and equipment for 30
days @ $1000/day $ 30,000
Camp expenses (food and lodging) $ 60,000
Geological Reports $ 25,000
Contingency Fund $ 43,000
----------
Estimated Total Required to Complete Phase 3 $1,000,000
</TABLE>
In the event we raise less than the maximum offering proceeds, we intend to
seek other financing through bank or third party loans to complete our proposed
exploration program.
13
<PAGE>
While we currently intend to use the proceeds of this Offering substantially in
the manner set forth above, we reserve the right to reassess and reassign such
use if, in the judgement of our Board of Directors, such changes are necessary
or advisable. At present, no material changes are contemplated. Should there be
any material changes in the above projected use of proceeds in connection with
this Offering, we will issue an amended prospectus reflecting the same.
There is no definitive use, at present, for the working capital, other than for
possible cost overruns caused by inflation and/or under-estimation of costs
for research and exploration. Until used, the working capital proceeds may be
invested in short-term certificates of deposit or U.S. Treasury Notes.
DETERMINATION OF OFFERING PRICE
================================
The price of the Shares we are offering was arbitrarily determined in order for
us to raise up to a total of $350,000 in this Offering. The Offering price
bears no relationship whatsoever to our assets, earnings, book value or other
criteria of value. Among the factors considered were our limited operating
history, the proceeds to be raised by the Offering, the amount of capital to be
contributed by purchasers in this Offering in proportion to the amount of stock
to be retained by our existing Stockholders, and our relative cash requirements.
(See "Plan of Distribution; Terms of the Offering".)
CAPITALIZATION
==============
The following table sets forth our capitalization at March 15, 1999, (i) on a
historical basis and (ii) as adjusted to reflect the sale of the Shares we are
offering in this prospectus at an assumed initial public offering price of $1.00
per share, and the application of the estimated net proceeds we will receive,
assuming sale of all Shares, which we cannot guarantee. (See "Use of Proceeds".)
This table should be read in conjunction with the section entitled,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" our Financial Statements and Notes; and other financial and
operating data included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
<S> <C> <C>
3/15/99 As Adjusted
Actual. . . . . . After Offering (1)
------- --------------
Stockholder's Equity:. . . . . . . $ 83,000 $ 383,000
Common stock:
25,000,000 shares authorized,
par value $.001, Issued and
outstanding . . . . . 11,500,000 11,850,000
(1) These adjusted figures assume that all Shares will be sold in this
Offering, which we cannot guarantee.
</TABLE>
14
<PAGE>
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
=====================================================
"Dilution" represents the difference between the Offering price and the net
tangible book value per Share immediately after completion of this Offering.
"Net tangible book value" is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as a
result of our arbitrary determination of the offering price of the Shares being
offered. Dilution of the value of the Shares you purchase is also a result of
the lower book value of the shares held by our existing Stockholders.(See
"Risk Factors-You Will Incur Immediate and Substantial Dilution" and
"Principal Stockholders".)
As of March 15, 1999, the net tangible book value of our Shares (total assets,
excluding intangible assets, less total liabilities, excluding contingent
liabilities) was $69,694, or approximately $.01 per share (based upon 11,500,000
shares outstanding).
The following table illustrates the per Share dilution to new investors,
assuming we sell all the Shares offered, and does not give any effect to
the results of any operations subsequent to March 15, 1999:
<TABLE>
<CAPTION>
<S> <C>
Public Offering Price per Share $ 1.00
Net Tangible Book Value at March 15, 1999 $ .01
Increase in Net Tangible Book Value per Share
Attributable to New Investors $ .02
Net Tangible Book Value After Offering $ .03
Immediate Dilution per Share to New Investors . . . . $ .97
</TABLE>
The following table summarizes the number and percentage of Shares
purchased, the amount and percentage of consideration paid and the
average price per Share paid by our existing stockholders and by
new investors in this Offering:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Total
Price Number of Percent of Consideration
Per Share Shares Held Ownership Paid
--------- ----------- ---------- -------------
Existing
Stockholders $ .01 11,500,000 97% $ 83,000
Investors in
This Offering $1.00 350,000 3% $350,000
</TABLE>
15
<PAGE>
PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
================================================
Offering Will Be Sold By Our Officer and Director
- ---------------------------------------------------------
We intend to sell the Shares in this Offering through Derick Sinclair, our sole
officer and director, who will receive no commission from the sale of any
Shares. He will not register as a broker-dealer pursuant to Section 15 of the
Securities Exchange Act of 1934, in reliance upon Rule 3a4-1, which sets forth
those conditions under which a person associated with an Issuer may
participate in the Offering of the Issuer's securities and not be deemed to be a
broker-dealer.
1. None of such persons are subject to a statutory disqualification, as that
term is defined in Section 3(a)(39) of the Act, at the time of his
participation; and,
2None of such persons are compensated in connection with his or her
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities; and
3. None of such persons are, at the time of his participation, an associated
person of a broker-dealer; and
4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1
of the Exchange Act, in that they (A) primarily perform, or are intended
primarily to perform at the end of the Offering, substantial duties for or on
behalf of the Issuer otherwise than in connection with transactions in
securities; and (B) are not a broker or dealer, or an associated person of a
broker or dealer, within the preceding twelve (12) months; and (C) do not
participate in selling and offering of securities for any Issuer more than once
every twelve (12) months other than in reliance on Paragraphs (a)(4)(i) or
(a)(4)(iii).
We intend to advertise and hold investment meetings in various states where the
Offering will be registered and will distribute this Prospectus to potential
investors at the meetings and to our friends and relatives who are interested in
our Company and a possible investment in the Offering.
We are offering the Shares subject to prior sale and subject to approval of
certain matters by our legal counsel.
Offering Period and Expiration Date
- ---------------------------------------
This Offering will commence on the date of this Prospectus and continue for a
period of 120 days, unless we extend the Offering period for an additional 90
days, or unless the Offering is completed or otherwise terminated by us (the
"Expiration Date").
Procedures for Subscribing
- ----------------------------
If you decide to subscribe for any Shares in this Offering, you will be
required to execute a Subscription Agreement and tender it, together with a
check or certified funds, to us for acceptance or rejection.
All checks for subscriptions should be made payable to "Natalma Industries,
Inc."
16
<PAGE>
Right to Reject Subscriptions
- --------------------------------
We have the right to accept or reject subscriptions in whole or in part, for
any reason or for no reason. All monies from rejected subscriptions will be
returned immediately by us to the subscriber, without interest or deductions.
Subscriptions for securities shall be accepted or rejected within 48 hours after
we receive them.
BUSINESS
========
General
- -------
Our Company was incorporated in the State of Nevada on July 9, 1998. We are
engaged in the acquisition, research and exploration of mining properties.
We maintain our statutory registered agent's office at 1495 Ridgeview Drive,
Suite 220, Reno, Nevada 89509 and our business offices at the home of our sole
officer and director in British Columbia, Canada. (See "Office Facilities" in
this section.)
Description of Properties
- ---------------------------
In December, 1998, we entered into an Option to Purchase Agreement with John
Martin, an unrelated third party, to acquire 100% of the rights, titles and
interests in and to a total of 10 mining claims in the Whitehorse
Mining District, Yukon Territory, Canada, in exchange for $55,000 U.S. in cash
and 500,000 shares of our restricted common stock. On December 1,
1998, Mr. Martin obtained an option to the claims from Costas Takkas, an
unrelated third party. The terms of the options are identical except Mr. Martin
received an additional $5,000 for his assignment to us. On March 16, 1999,
we exercised our Option and acquired the mining claims. We have also agreed to
pay a 2% net smelter return, as that term is defined in the Purchase
Agreement, to Mr. Martin, which he, in turn, must pay to Mr. Takkas ,on
any and all minerals located and produced on the properties. In addition, we
were required to complete a minimum of $80,000 Cdn. exploration and
development work on the properties on or before September 1, 1999; however,
since we have not yet raised the money to commence any on-site exploration work
on the properties, this date has been extended by an amendment to the Assignment
of Option to Purchase Agreement between the parties to September 1, 2000.
The current exchange rate is approximately $1.00 U.S. equals $1.50 Canadian.
(See "Use of Proceeds" and "Certain Transactions".)
The existing roads leading to our properties in the Yukon Territory are
rough-graded dirt and, during rainy weather, are sometimes inaccessible or
washed out. To date, we have not performed any geological work on any of our
claims.
Historical Background of Whitehorse Mining District
- --------------------------------------------------------
There is no known history of any operations on our mining claims; however,
adjacent claims have been staked and excavated.
The main rock units historically found in the area include limestone, limestone
conglomerate, black siltstone and several phases of felsic to intermediate dykes
cross-cutting the sedimentary stratigraphy. Elevated gold and arsenic values
obtained from the mining district occur proximal to felsic dykes. Highly
anomalous copper values were found in chalcopyrite/malachite samples taken from
a garnet skarn outcrop in the area. Magnetic surveys have revealed linear
17
<PAGE>
structures, possibly magnetic dykes and/or sills, which may be associated with
skarn-type mineralization and/or mesothermal gold-arsenic mineralization. We do
not know if there is any mineralization on our properties.
Our Proposed Exploration Program
- -----------------------------------
Previous exploration work on adjacent properties since 1959 has
indicated that mineral occurrences exist in the area of our properties;
however, further exploration is needed to determine what amount of minerals,
if any, exist on our properties and if any minerals which are found
can be economically extracted and profitably processed.
We believe there are numerous valuable unexplored and sometimes unclaimed
prospects in the Whitehorse Mining District where our properties are located.
Our exploration program will be designed to economically explore, evaluate and
acquire properties which, in our opinion, may merit exploration.
We do not claim to have any ores or reserves whatsoever at this time on any of
our properties; however, between 1959 and 1980, claims adjacent to ours were
staked and excavated. Our research data reveals that in 1995, several rock
samples were collected from claims adjacent to ours by Kennecott Canada, Hemlo
Gold Mines, Inc. and some individuals, which revealed possible gold reserves
in the area. Based on this, we believe there is a sufficient basis to engage
in exploration activities, and we anticipate finding some possible gold
reserves.
Upon completion of this Offering, in approximately late 1999 , we intend
to implement an exploration program, which we anticipate will cost
approximately $50,000 US. We intend to proceed in the following three
phases:
Phase 1 will begin with research of the available geologic literature, personal
interviews with geologists, mining engineers and others familiar with the
prospect sites. We have recently begun this Phase of the exploration process on
our properties and anticipate continuing this Phase through late Spring 2000.
When the research is completed, our initial work will be augmented with
geologic mapping, geophysical testing and geochemical testing of our claims.
When available, existing workings, such as trenches, prospect pits, shafts or
tunnels will be examined. If an apparent mineralized zone is identified and
narrowed down to a specific area by the studies, we intend to begin trenching
the area. Trenches are generally approximately 150 ft. in length and 10-20 ft.
wide. These dimensions allow for a thorough examination of the surface of
the vein structure types generally encountered in the area. They also allow
for efficient reclamation, re-contouring and re-seeding of disturbed areas
Once excavation of a trench is completed, a channel of samples are taken
and then analyzed for economically potential minerals that are known to have
occurred in the area. Careful interpretation of this available data collected
from the various tests aid in determining whether or not the prospect, as
viewed by our experts, has current economic potential and whether further
exploration is warranted.
Phase 2 will involve an initial examination of the underground characteristics
of the vein structure that was identified by Phase 1 of exploration. Phase 2
will be aimed at identifying any mineral deposits of potential economic
importance. The methods which will be employed are more extensive trenching,
18
<PAGE>
more advanced geophysical work and ultimately drift driving to aid in the
determination of subsurface characteristics of the structure. The geophysical
work is designed to give a general understanding of the location and extent
of mineralization at depths that are unreachable by surface excavations and
provide a target for more extensive trenching and core drilling. The
trenching will identify the continuity and extent of mineralization, if any,
below the surface. After a thorough analysis of the data collected in Phase 2,
a determination will be made as to whether or not the properties
warrant a Phase 3 study. This Phase will commence, if warranted by
results of Phase I activities, in early Summer 2000.
Phase 3 will be aimed at precisely defining the depth, the width, the length,
the tonnage and the value per ton of any ore body, assuming any are located on
our properties, so that they can be considered proven ore bodies within the
stringent industry standards. This is accomplished through extensive drift
driving. An ore body is not a proven ore body until it has been technically,
economically and legally proven. This Phase will commence, if warranted by
results of Phase 2 activities, approximately 60 days after results of Phase 2
activities have been analyzed.
Environmental Regulations
- --------------------------
Environmental laws and regulations relating to public lands in Canada are
expected to be tightly enforced. We intend to explore and, when required,
develop all of our properties in strict compliance with all environmental
requirements applicable to the mineral processing and mining industry. We will
secure all the necessary permits for exploration and, if development is
warranted on any property, will file final Plans of Operation prior to the
commencement of any mining operations. We anticipate no discharge of water into
any active stream, creek, river, lake or any other body of water regulated by
environmental law or regulation. No significant endangered species will be
disturbed. Re-contouring and re-vegetation of disturbed surface areas will be
completed pursuant to all Canadian provincial and local legal requirements. Any
portals, adits or shafts will be sealed upon abandonment of a property. It is
difficult to estimate the cost of compliance with environmental laws since
the full nature and extent of our proposed activities cannot be determined until
we commence our operations and know what that will involve from an environmental
standpoint.
Government Regulations
- -----------------------
We will be subject to all the laws, rules and regulations which govern the
mineral processing and mining industry in Canada. We intend to fully comply with
all environmental, health and safety laws, rules, regulations and statutes.
It is unknown at this time what governmental regulations will be applicable
to our proposed mineral processing and mining operations. We will rely on our
joint venture partner(s) to determine and comply with all laws, rules and
regulations governing operations prior to commencement of same.
Year 2000 Computer Problems
- ------------------------------
We are heavily engaged in and dependent on computer technology in our
operations. Many existing computer programs use only two digits to identify a
year in the date field, e.g., "98" instead of "1998". These programs were
designed and developed without considering the impact of the upcoming change in
the century, i.e., Year 2000. We use a significant number of computer software
programs and embedded operating systems hat are essential to our business
operations. If not corrected, many computer applications could fail or create
19
<PAGE>
erroneous results by or at the Year 2000. We have diagnosed and repaired the
anticipated Year 2000 problems in our computer software and systems; we have
reviewed the possible contingent liabilities we may have to third parties as a
result of non-compliant systems; and we have examined the extent we depend on
third parties whose systems may not be Year 2000 compliant. However, there may
be untold numbers of unforseen circumstances or unknown factors which we have
not yet identified, determined or anticipated regarding the Year 2000 computer
problems, and such problems could have a material adverse affect on our business
operations and financial condition. (See "Management's Discussion and Analysis -
Year 2000 Compliance".)
Employees and Employment Agreements
- --------------------------------------
At present, we have no employees, other than Derick Sinclair, our sole officer
and director, who is not compensated for his services and does not have an
employment agreement with us. Initially, we intend to use the services of
subcontractors for all research and exploration work on our properties. We
presently do not have pension, health, annuity, insurance, stock options,
profit sharing or similar benefit plans; however, we may adopt such plans in
the future. There are presently no personal benefits available to any
employees.
Office Facilities
- --------------------
We currently conduct our business operations from the home of our sole officer
and director, Mr. Derick Sinclair, in North Vancouver, B.C., Canada, on a rent-
free basis. If this Offering is successful, we intend to set up a remote
office trailer near our properties and begin exploration activities.
Legal Proceeding
- -----------------
We are not involved in any pending legal proceeding.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
==================================================
This registration statement contains forward-looking statements that involve
risks and uncertainties. The statements contained in this registration statement
that are not purely historical are forward-looking statements, including without
limitation statements regarding our expectations, projections, beliefs,
intentions or strategies regarding the future. All forward-looking
statements included in this document are based on information available to us on
the date hereof, and we assume no obligation to update any such forward-
looking statements. Our actual results may differ materially as a result
of certain factors, including those set forth in the "Risk Factors" section
of this registration statement. Potential investors should consider carefully
the following factors, as well as the more detailed information contained
elsewhere in this registration statement, before making a decision to invest
in our Shares. The following discussion and analysis should be read in
conjunction with our Financial Statements and Notes included in this
Prospectus.
Selected Financial Data
- -------------------------
We are a start-up, development stage company and have not yet generated or
realized any revenues from our business operations.
20
<PAGE>
The following historical financial data for the year ended December 31, 1998
and for the period ended March 15, 1999 was derived from our financial
statements, audited by Mark Bailey & Co., Ltd., independent certified public
accountants (the "Financial Statements").
<TABLE>
<CAPTION>
<S> <C> <C>
Balance Sheet Data
- ------------------ 3/15/99 12/31/98
======= ========
Assets:
Cash . . . . . . . . . . . . . . . . . . . . $ 84,177 $ 4,490
Organizational costs . . . . . . . . . . . . 13,306 13,010
------------ -----------
Total Assets . . . . . . . . . . . . . . . . $ 97,483 $ 17,500
Liabilities:
Stockholder Advances . . . . . . . . . . . . $ 14,483 $ 14,500
------------ -----------
Total Liabilities. . . . . . . . . . . . . . $ 14,483 $ 14,500
Total Shareholders' Equity . . . . . . . . . $ 83,000 $ 3,000
Statements of Operations Data:
Revenues . . . . . . . . . . . . . . . . . . $ 0 $ 0
General and Administrative Expenses. . . . . $ 0 $ 0
Net Income/Loss. . . . . . . . . . . . . . . $ 0 $ 0
Net Income/Loss per common share . . . . . . $ 0 $ 0
Weighted average common shares outstanding 11,500,000 11,500,000
</TABLE>
Limited Operating History; Need for Additional Capital
- ------------------------------------------------------------
There is little to no historical financial information about our Company upon
which to base an evaluation of our performance or to make a decision regarding
an investment in the Shares. We are still in the organizational stages and
have not yet generated or realized any revenues from operations. We cannot
guarantee we will be successful in our business operations or will
achieve significant levels of market acceptance for our proposed business. Our
business could be subject to any or all of the problems, expenses, delays and
risks inherent in the establishment of a new business enterprise, including
limited capital resources, possible delays in the exploration and/or development
of our properties, possible cost overruns due to price and cost increases in raw
products and manufacturing processes, and the absence of an operating history.
Therefore, we cannot guarantee we will be able to achieve or maintain profitable
operations. Further, there is no assurance that we will not encounter unforeseen
difficulties that may deplete our capital resources more rapidly than
anticipated.
21
<PAGE>
To become and remain profitable and competitive, upon successful completion
of this Offering, we intend to immediately seek a joint venture partner who is
experienced in the type of exploration activities we propose and immediately
commence operations. Upon successful completion of this Offering, and until
we find a joint venture partner, our monthly expenses will be minimal (less
than $1,500 per month), and these monies will be used only in our efforts to
find a joint venture partner. We anticipate this search will take only 1-2
months. At that time, we will likely be required to make significant
investments into the research and exploration of our properties before we
would able to commence production of any minerals we may find; however;
until the Offering is completed and a joint venture partner is located,
it is not possible to estimate how long our current cash reserves and funds
raised in this Offering will last. We may need to seek additional
financing to provide for the capital we will require to implement our
proposed joint venture research and exploration program.
The timing and total amount of capital requirements cannot be predicted at this
time and we have no assurance that any financing will be available to us on
acceptable terms, as and when we need it, if at all. If such financing is not
available on satisfactory terms, as and when needed, we may be unable to
continue our research or to explore , develop or expand our operations
and our operating results may be adversely affected. Equity financing could
also result in additional dilution to then existing shareholders.
We do not plan to purchase any significant equipment in the next 12 months.
Results of Operations
- -----------------------
Period Ended March 15, 1999
We are a development stage company and have not yet generated or realized any
revenues since inception. We just recently acquired our first property (10
claims) and are commencing the research and exploration stage of our mining
operations on that property at this time.
Since inception, we have used our common stock to raise money for our
property acquisition and to repay outstanding indebtedness. Net cash provided
by financing activities for the period ended March 15, 1999 was $ 83,000, as a
result of proceeds received from sales of our common stock.
Liquidity and Capital Resources
- ----------------------------------
As of the date of this registration statement, we have yet to generate any
revenues from our business operations due to the preliminary nature of our
operations, substantial ongoing investment in research and exploration efforts,
and expenditures incurred to build the appropriate infrastructure to support our
proposed operations. Consequently, we have been substantially dependent on
public and private placements of our equity securities and shareholder loan
financing to fund our cash requirements.
We issued 8,000,000 Shares at $.01 per share through a Rule 504 Regulation D
offering in March, 1999. The total proceeds we received from the offering
were $80,000 in cash.
As of March 15, 1999, our total assets were $97,483 and our total liabilities
were $14,483.
22
<PAGE>
During 1999, we expect to incur additional costs for research and exploration of
our properties and for subcontractors, professional and legal fees. Significant
additional funding will be required to meet any additional operating and/or
expansion requirements.
We are taking steps to raise equity capital; however, we cannot guarantee that
any new capital will be available to us or that adequate funds for operations,
whether from our revenues, financial markets, collaborative or other
arrangements with corporate partners or from other sources, will be available as
or when needed, or on terms satisfactory to us. Our failure to obtain adequate
additional financing may require us to delay, curtail or scale back some or all
of our exploration programs, sales and marketing efforts and, potentially,
to cease our operations. Any additional equity financing may involve
substantial dilution to our then-existing shareholders.
Year 2000 Compliance
- ----------------------
The Year 2000 issue is the result of computer programs using two digits rather
than four to define the applicable year. Date-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
system failures or miscalculations, causing disruptions of operations,
including, among others, a temporary inability to process transactions, send
invoices or engage in similar normal business activities.
We do not feel that the Year 2000 issue is at all material or even relevant
to our operations. We do not own computers, use computers or expect to own or
use computers. Nor do we rely in our current business activities on anyone who
does. Our future anticipated activities involve mechanical mining procedures,
without the use of computers. In the event our joint venture partner uses
computers, we will have to analyze the Year 2000 issue at that time. It is too
speculative to do so at this time. We do recognize that people feel the Year
2000 issue could interrupt or adversely affect power, telephone and other
utility services, and to that extent, we would be affected like the rest of the
world.
MANAGEMENT
===========
Officers and Directors
- ------------------------
Each of our directors is elected by the Stockholders to a term of one (1) year
and serves until his or her successor is elected and qualified. Each of our
officers is elected by the Board of Directors to a term of one (1) year and
serves until his or her successor is duly elected and qualified, or until he or
she is removed from office. The Board of Directors has no nominating, auditing
or compensation committees.
The name, address, age and position of our present sole officer and director is
set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
Name and Address. . . . Age Position(s)
- ----------------- ----- -------------
Derick Sinclair . . . . 42 President, Secretary,
1550 Ostler Court . . . Treasurer and Chairman
N. Vancouver, B.C., . . of the Board
Canada V7G 2P1
</TABLE>
23
<PAGE>
The person named above has held his office/position since inception of our
Company and is expected to hold his office/position until the next annual
meeting of our stockholders.
Background of Officer and Director
- --------------------------------------
Derick Sinclair has been the President, Secretary, Treasurer and Chairman of the
Board of Directors of the Company since inception. Since March 1997, he has also
been the President of Cosmah Industries, Inc., a privately-held exploratory
mining company in Vancouver, Canada. Since March, 1996, he has also been the
Vice President of Finance and Administration for Westel Telecommunications/RSL
COM Canada, Inc. in Vancouver, B.C. From December, 1992 to March, 1996, he
was Director of Fleet Management for BC Rail, Ltd., a freight train service
in Vancouver, B.C., Canada. He received a Bachelors Degree in Commerce from the
University of Windsor, Canada in 1982. Mr. Sinclair devotes his time as required
to the business of the Company.
EXECUTIVE COMPENSATION
========================
Derick Sinclair, our sole officer and director, has not been compensated for his
services and there are no plans to compensate him in the near future, unless and
until we begin to realize revenues and become profitable in our business
operations.
Indemnification
- ---------------
Pursuant to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. In certain cases, we
may advance expenses incurred in defending any such proceeding. To the extent
that the officer or director is successful on the merits in any such proceeding
as to which such person is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a derivative
action, indemnity may be made only for expenses actually and reasonably incurred
in defending the proceeding, and if the officer or director is judged liable,
only by a court order. The indemnification is intended to be to the fullest
extent permitted by the laws of the State of Nevada.
As regards indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors or officers pursuant to the
foregoing provisions, we are informed that, in the opinion of the
Commission, such indemnification is against public policy, as expressed in
the Act and is, therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
=======================
The following table sets forth, as of the date of this Prospectus, the total
number of shares owned beneficially by each of our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The table also reflects what such ownership will
be assuming completion of the sale of all Shares in this Offering, which we
can't guarantee. The stockholder listed below has direct ownership of his
shares and possesses sole voting and dispositive power with respect to the
shares.
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Name and Address . . . . No. of No. of Percentage of
Beneficial . . . . . . . Shares Shares of Ownership
Owner (1). . . . . . . . Before After Offering Before After
Offering - Offering Offering
- ----------------------- -------- -------------- --------------------
Derick Sinclair. . . . . 3,000,000 3,000,000 26% 25%
1550 Ostler Court
N. Vancouver, B.C.
Canada V7G 2P1
- ------------------
All Officers and
Directors as a Group . . 3,000,000 3,000,000 26% 25%
<FN>
(1) The person named above may be deemed to be a "parent" and
"promoter" of our Company, within the meaning of such terms under the
Securities Act of 1933, by virtue of his/its direct and indirect stock
holdings. Mr. Sinclair is the only "promoter" of our Company.
</FN>
</TABLE>
Future Sales by Existing Stockholders
- -----------------------------------------
A total of 11,500,000 Shares have been issued to the existing Stockholders,
3,500,000 of which are "restricted securities", as that term is defined in
Rule 144 of the Rules and Regulations of the SEC promulgated under the Act
("Rule 144"). Under Rule 144, such shares can be publicly sold, subject to
volume restrictions and certain restrictions on the manner of sale,
commencing one (1) year after their acquisition. 8,000,000 of the issued
and outstanding shares were sold in a public offering pursuant to Regulation D,
Rule 504, and are "unrestricted securities", as that term is defined in Rule 144
Of the Rules and Regulations of the SEC promulgated under the Act, and may be
publicly sold at any time, without restriction.
Shares purchased in this Offering, which will be immediately resalable, and
sales of all of our other shares after applicable restrictions expire, could
have a depressive effect on the market price, if any, of our common stock and
the Shares we are Offering. (See "Dilution of the Price You Pay for Your
Shares-Restricted Shares Eligible for Future Sale".)
DESCRIPTION OF SECURITIES
===========================
Common Stock
- -------------
Our authorized capital stock consists of 25,000,000 shares of common stock, par
value $.001 per share. The holders of our common stock (i) have equal ratable
rights to dividends from funds legally available therefor, when, as and if
declared by our Board of Directors; (ii) are entitled to share ratably in all of
our assets available for distribution to holders of common stock upon
liquidation, dissolution or winding up of our affairs; (iii) do not have
preemptive, subscription or conversion rights and there are no redemption
or sinking fund provisions or rights; and (iv) are entitled to one non-
cumulative vote per share on all matters on which stockholders may vote.
Prior to this Offering, there was a total of 11,500,000 shares of common
stock issued and outstanding, held by 28 shareholders of record . All these
outstanding shares are fully paid for and non-assessable and all Shares subject
25
<PAGE>
of this Offering, when issued, will be fully paid for and non-assessable.
We refer you to our Articles of Incorporation, By-Laws and the applicable
statutes of the State of Nevada for a more complete description of the rights
and liabilities of holders of our securities.
Non-cumulative Voting
- ----------------------
Holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than 50% of the outstanding shares, voting
for the election of directors, can elect all of the directors to be elected, if
they so choose, and, in such event, the holders of the remaining shares will
not be able to elect any of our directors. After this Offering is completed, the
present stockholders will own approximately 97% of our outstanding shares.
(See "Principal Stockholders" and "Certain Transactions".)
Cash Dividends
- ---------------
As of the date of this Memorandum, we have not paid any cash dividends to
stockholders. The declaration of any future cash dividend will be at the
discretion of our Board of Directors and will depend upon our earnings, if any,
our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to
pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, in our business operations.
Reports
- -------
After we complete this Offering, we will be subject to certain reporting
requirements and will furnish annual financial reports to our stockholders,
certified by our independent accountants, and may, in our discretion, furnish
unaudited quarterly financial reports.
Stock Transfer Agent
- ----------------------
The stock transfer agent for our securities is Transfer Online, 227 S.W. Pine,
Suite 300, Portland, Oregon 97204
CERTAIN TRANSACTIONS
=====================
In October, 1998, a total of 2,500,000 shares were issued to Derick Sinclair,
the sole officer and director of our Company, in exchange for $.001 (par value)
per share, or $2,500. On December 1, 1998, an additional 500,000 shares of
restricted common stock were issued to Mr. Sinclair in exchange for $.001
(par value) per share, or $500.
Since inception of our Company, Derick Sinclair, the sole officer, director and
a principal shareholder, advanced loans to us in the total sum of $14,500,
which were used for organizational and start-up costs and operating capital. The
loans did not bear interest and were paid in full on March 16, 1999.
In December, 1998, we entered into an Option to Purchase Agreement with John
Martin, an unrelated third party, and acquired 100% of the rights, titles and
interests in and to a total of 10 mining claims in the Whitehorse Mining
District, Yukon Territory, Canada, in exchange for $55,000 in cash and
500,000 shares of our restricted common stock. On December 1, 1998, Mr.
Martin entered into an option to acquire the rights from Costas Takkas, an
26
<PAGE>
unrelated third party. Pursuant to the terms of the Agreement, we agreed to
pay a 2% net smelter return, as that term is defined in the Purchase Agreement,
to Mr. Martin on all minerals produced on the properties, if any. In
addition, the Option Agreement required us to complete a minimum of $80,000 Cdn.
in exploration and development work on the properties on or before September 1,
1999; however, the time period for completion of this exploration and
development work has been extended by an Amendment to the Assignment of Option
to Purchase Agreement between the parties to September 1, 2000 in order to
allow us time to complete this Offering and raise the money necessary to
complete the required exploration work. On March 16, 1999, we exercised
the Option and acquired the mining claims.
LITIGATION
==========
We are not a party to any pending litigation and, to the best of our knowledge,
none is contemplated or threatened.
EXPERTS
=======
Our consolidated financial statement for the year ended December 31, 1999 and
the period ended March 15, 1999, included in this Prospectus have been audited
by Mark Bailey & Co., Ltd., Independent Certified Public Accountants, 1495
Ridgeview Drive, Suite 200, Reno, Nevada 89509. We include the financial
statements in reliance on the report of Mark Bailey & Co., Ltd., given upon
Their authority as experts in accounting and auditing.
LEGAL MATTERS
==============
The law office of Michael J. Morrison, Chartered, 1495 Ridgeview Drive, Suite
220, Reno, Nevada 89509, telephone (702) 827-6300, fax number (702) 827-6311,
Mr. Morrison has passed upon the validity of the shares offered and certain
other legal matters and has represented us in connection with this Offering.
FINANCIAL STATEMENTS
=====================
Our fiscal year end is December 31. We will provide audited financial
statements to our stockholders on an annual basis; the statements will be
prepared by an Independent Certified Public Accountant. Our audited financial
statement for the year ended December 31, 1999 and the period ended March 15,
1999, immediately follows.
NATALMA INDUSTRIES, INC.
------------------------
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 1998
AND
FOR THE 74 DAYS ENDED
MARCH 15, 1999
WITH
AUDIT REPORT OF
CERTIFIED PUBLIC ACCOUNTANTS
27
<PAGE>
MARK BAILEY & CO. LTD.
Certified Public Accountants
Management Consultants
Phone: 775/332-4200
Fax: 775/332-4210
Office Address: Mailing Address:
1495 Ridgeview Drive, Suite 200 P.O. Box 6060
Reno, Nevada 89509-6634 Reno, Nevada 89513
Independent Auditors' Report
- ------------------------------
Board of Directors
Natalma Industries
We have audited the accompanying balance sheets of Natalma Industries (a
subchapter "S" corporation) as of December 31 , 1998 and March 15, 1999 and the
related statements of income, changes in stockholders' equity and cash flows for
the year and seventy-four days then ended. These financial statements are there
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statement are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Natalma Industries as of
December 31, 1998 and March 15, 1999, and the results of its operations and its
cash flows for the year and the seventy-four days then ended in conformity with
generally accepted accounting principles.
Reno, Nevada
March 31, 1999
28
<PAGE>
NATALMA INDUSTRIES, INC.
BALANCE SHEETS
DECEMBER 31, 1998 AND MARCH 15,1999
<TABLE>
<CAPTION>
March 15, 1999 December 31, 1998
------------------- ------------------
<S> <C> <C>
Current Assets
Cash. . . . . . . . . . . . . . .$ 84,177 $ 4,490
-------------- --------------
Other Assets . . . . . . . . . . 13,306 13,010
-------------- --------------
Organization costs (Note 3). . . . . . . 13,306 13,010
-------------- --------------
Total other assets . . . . . . . . . . . 13,306 13,010
-------------- --------------
Total assets . . . . . . . . . . 97,483 17,500
============== ==============
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Current Liabilities
- --------------------
<S> <C> <C>
Stockholder advances (Note 4). . . . . . $ 14,483 $ 14,500
--------------- -----------
Total liabilities. . . . . . . . . . . . 14,483 14,500
--------------- -----------
</TABLE>
<TABLE>
<CAPTION>
Stockholders' Equity
<S> <C> <C>
Common stock, $.001 par value,
25,000,000 shares authorized,
11,000,000 and 3,000,000 shares issued 11,000 3,000
Additional paid-in capital . . . . . . 72,000 -
Accumulated earnings . . . . . . . . . - -
--------- ---------
Total stockholders' equity . . . . . . $ 83,000 $ 3,000
--------- ---------
Total liabilities and
stockholders' equity . . . . . . . . . $ 97,483 $ 17,500
========= =========
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
NATALMA INDUSTRIES, INC.
STATEMENTS OF INCOME
-------------------------
For the Year Ended December 31, 1998 and the 74 Days ended March 15, 1999
March 15, 1999 December 31,1998
---------------- -----------------
<S> <C> <C>
Revenue . . . . . . . . . . . . . . . .$ - $ -
General and administrative
expenses. . . . . . . . . . . . . . . . . . . . . - -
----------------- --------------
Net income. . . . . . . . . . . . . . $ - $ -
============= =============
Earnings per share. . . . . . . . . . $ - $ -
</TABLE>
<TABLE>
<CAPTION>
NATALMA INDUSTRIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
--------------------------------------------------
For the Year Ended December 31, 1998 and the 74 Days Ended March 15, 1999
Additional
Common Stock Paid-in Retained Total
Shares Amount Capital Earnings Equity
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance
July 1, 1998 - $ - - - -
Issuance of
common stock . 3,000,000 3,000 - - $ 3,000
-----------------------------------------------------------
Balance
12/31/98 3,000,000 3,000 - - $ 3,000
Issuance of
common stock. . .8,000,000 8,000 $ 72,000 - $80,000
Net income at
March 15, 1999. . . .- - - - -
------------------------------------------------------------
Balance at
March 15, 1999. 11,000,000 $ 11,000 $ 72,000 $ - $83,000
============================================================
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NATALMA INDUSTRIES
STATEMENTS OF CASH FLOWS
---------------------------
For the Year Ended December 31, 1998 and the 74 Days Ended March 15, 1999
<S> <C> <C>
March 15, 1999 December 31, 1998
--------------- -----------------
Cash Flows from
Operating Activities
- --------------------------
Net income . . . . . . . . . . . . . . $ 0 $ 0
Adjustments to reconcile
net income to net cash
provided by operating activities:. . . 0 0
-------------- ---------------
Net cash provided by
operating activities . . . . . . . . . 0 0
-------------- --------------
Cash Flows from
Investing Activities
- --------------------
Increase in organizational costs . . . (296) (13,010)
---------------- --------------
Net cash used in investing activities. (296) (13,010)
---------------- ---------------
Cash Flows from
Financing Activities
- --------------------
Proceeds received from
stockholder advance.. . . . . 0 14,500
Proceeds received from
issuance of stock. . . . . . . . . . . 79,983 3,000
---------------- --------------
Net cash provided by
Financing activities 79,983 17,500
---------------- --------------
Net increase in cash and
cash equivalents (Note 1). . . . . . . 79,687 4,490
Cash and cash equivalents
at December 31, 1998 and
January 1, 1998. . . . . . . . . . . . 4,490 0
---------------- -------------
Cash and cash equivalents at
March 15, 1999 and
December 31, 1998. . . . . . . . . . . $ 84,177 $ 4,490
=============== ==============
</TABLE>
31
<PAGE>
Supplementary Schedule of Non-cash Activities
- -------------------------------------------------
No amounts were actually paid for either interest or income taxes during the
year ended December 31, 1998 or the seventy-four days ended March 15,
1999.
NATALMA INDUSTRIES
NOTES TO FINANCIAL STATEMENTS
---------------------------------
December 31, 1998 and March 15, 1999
1. Summary of Significant Accounting Policies
----------------------------------------------
The Company is a Nevada corporation with facilities in Vancouver, British
Columbia. It is in the organizational phase and was formed to engage in the
exploration of mining properties. The date of incorporation was July 9, 1998.
The preparation of financial statements in conformity with generally accepted
Accounting principals requires management to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
Cash and Cash Equivalents
- ----------------------------
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
2. Income Taxes
-------------
The Company will be taxed as a Subchapter C Corporation of the Internal Revenue
Service Code for its U. S. operations.
3. Organization Costs
-------------------
The Company has incurred legal, accounting and other formation costs. These
costs were capitalized and will be amortized over a five-year period when
the Company begins its operations. Because the Company had not yet begun
operations as of either December 31,1998 or March 15, 1999, no amortization
expense has been recognized.
4. Related Party Transactions
----------------------------
During 1998, the Company's principal shareholder advanced the Company a total of
$14,500, which was used to pay organizational and start-up costs. The advances
bear no interest and are due made payable in full within thirty days after
receipt of the proceeds from a stock offering. In March, 1999 the
shareholder remitted proceeds from the Company's stock offering, less $17.
The amount the Company owes the shareholder, therefore, was reduced by $17
As of March 15, 1999, the balance due was $14,483 (see Note 7).
5. Fair Value of Financial Instruments
---------------------------------------
Financial Accounting Standards Board ("FASB") Statement No.107, "Disclosure
About Fair Value of Financial Instruments" is a part of a continuing process
by the FASB to improve information on financial statements. The following
32
<PAGE>
method and assumptions were used by the Company in estimating its fair
value disclosures for such financial instruments as defined by the Statement.
The carrying amounts reported in the balance sheets for cash approximate fair
values at both December 31, I998 and March 15, 1999.
The carrying amounts reported in the balance sheets for shareholder advances
approximate fair values at both December 31, 1998 and March 15, I999 because the
maturity is less than one year in duration.
6. Stockholders' Equity
---------------------
The Company has authorized 25,000,000 shares of common stock for issuance at a
Par value of $.001 per share. At December 31, 1998 and March 1,1999, the number
Of common shares issued and outstanding was 3,000,000 and 11,000,000,
Respectively.
7. Subsequent Events
-------------------
In December, 1998, the Company entered into an Option to Purchase Agreement with
An unrelated third party, ("Seller") wherein the Company would acquire 100% of
The rights, title and interests in and to a total of 10 mining claims in
the Whitethorse Mining District, Yukon Territory, Canada. The Agreement
called for the Company to pay $55,000 U. S. in cash and to issue 500,000 shares
of its Common stock. On March 16, 1999, the Company consummated the Agreement
by paying the Seller $55,000 U. S. in cash. In addition, the Company has agreed
to pay a 2% net smelter return on all minerals produced by the properties to
the Seller, and to complete a minimum of $80,000, Canadian, exploration and
development work on the properties on or before September 1, 1999. This
time period was extended to September 1, 2000 by an Amendment to the Assignment
of Option to Purchase Agreement. (See"Business".)
On March 16, 1999, the Company paid off the advance from one of its shareholders
in the amount of $14,483.
33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
==========================================
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant has authority under Nevada General Corporation Law to indemnify
its directors and officers to the extent provided in such statute. The
Registrant's Articles of Incorporation, as amended, provide that the Registrant
shall indemnify its executive officers and directors to the fullest extent
permitted by law either now or hereafter.
At present, there is no pending litigation or proceeding involving a director or
officer of the Registrant as to which indemnification is being sought, nor is
the Registrant aware of any threatened litigation that may result in claims for
indemnification by any officer or director.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses payable by the Registrant in connection
with the Offering described in this registration statement will be as follows:
33
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee . . . . . $ 97.30
NASD filing fee . . . . . . . . . . . . . . . . . . . . . . . 505.00
Printing expenses . . . . . . . . . . . . . . . . . . . . . . 1,500.00
Accounting fees and expenses. . . . . . . . . . . . . . . . . 10,000.00
Legal fees and expenses . . . . . . . . . . . . . . . . . . . 25,000.00
Fees and expenses (including legal fees) for qualification 5,000.00
under state securities laws
Registrar and Transfer Agent's fees and expenses. . . . . . . 3,500.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . 4,397.70
----------
Total . . . . . . . . . . . . . . . . . . . . . . . .$50,000.00
==========
</TABLE>
All amounts except the Securities and Exchange Commission registration fee
and the NASD filing fee are estimated.
The Company is paying all of the expenses related to the sale of common stock
offered by the Company.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In October, 1998, a total of 2,500,000 shares of our restricted common stock
were sold to Derick Sinclair, the sole officer and director of our Company, in
exchange for $.001 par value per share, for a total of $2,500.
On December 1, 1998, an additional 500,000 shares of our restricted common
stock were sold to Mr. Sinclair in exchange for $.001 par value per share, for
a total of $500.
In March, 1999, in connection with exercise of the Option to Purchase
Agreement, and pursuant to the terms of the Agreement by which the Company
acquired 10 mining claims, 500,000 shares of restricted common stock
were issued to John Martin, an unrelated third party.
The three transactions described above were conducted in reliance upon an
exemption from registration provided under Section 4(2) of the Securities Act
of 1933, based upon the fact that the sales were made by the Issuer in
transactions not involving any public offering. In addition, the sales to
Derick Sinclair involved transactions with an accredited investor and would
also be exempt under Section 4(6).
In March, 1999, we also sold a total of 8,000,000 shares of our common stock at
a price of $.01 per share, pursuant to an Offering Memorandum filed with and
made effective by the State of New York Securities Division under an exemption
from registration for limited offerings not exceeding $1,000,000, as provided
by Rule 504 of Regulation D of the Securities Act of 1933.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT. . . DESCRIPTION
- -------- ------------
3.1. . . . Articles of Incorporation
34
<PAGE>
3.2. . . . Bylaws
5 (23) . . Opinion and Consent of Michael J. Morrison, Esq.
10.1 . . . . Option to Purchase Agreement
10.2 . . . . Assignment of Option To Purchase Agreement
10.3 Amendment to Assignment of Option to Purchase Agreement
23 . . . . Consent of Mark Bailey & Co. Ltd., Certified Public Accountants
27 . . . . . Financial Data Schedule
</TABLE>
ITEM 28. UNDERTAKINGS
I. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) To reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) To include any additional or changed material information with respect to
the plan of distribution; and
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Offering.
(b) The undersigned Registrant hereby undertakes to provide to the purchasers in
this Offering certificates in such denominations and registered in such names
as required to permit prompt delivery to each purchaser.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable."
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
35
<PAGE>
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(d) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of Prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1), or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
SIGNATURES
===========
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, Province of British Columbia,
Canada, on August 21, 1999.
NATALMA INDUSTRIES, INC.
/s/ Derick Sinclair, President and
Chairman of the Board
36
<PAGE>
EXHIBIT 3.1
FILED IN THE OFFICE
OF THE SECRETARY OF
STATE OF THE STATE OF
NEVADA July 9, 1998
No. C 16160-98
/s/ Dean Heller,
Secretary of State
ARTICLES OF INCORPORATION
OF
NATALMA INDUSTRIES, INC.
The undersigned, to form a Nevada corporation, CERTIFIES THAT:
I.NAME: The name of the corporation is: NATALMA INDUSTRIES, INC.
II. REGISTERED OFFICE; RESIDENT AGENT: The location of the
registered office of this corporation within the State of Nevada is 1495
Ridgeview Drive, Ste. 220, Reno, Nevada; this corporation may maintain an office
or offices in such other place inside or outside the State of Nevada as may be
from time to time designated by the Board of Directors or by the By-Laws of the
corporation; and the corporation may conduct all corporation business of every
kind or nature, including the holding of any meetings of directors or
shareholders, inside or outside the State of Nevada.
The Resident Agent for the corporation shall be Michael J.
Morrison, 1495 Ridgeview Drive, Ste. 220, Reno, Nevada, 89509.
III. PURPOSE: The purpose for which this corporation is formed is:
To engage in any lawful activity.
IV. AUTHORIZATION OF CAPITAL STOCK: The amount of the total
authorized capital stock of the corporation shall be Twenty Five Thousand
Dollars ($25,000), consisting of Twenty Five Million (25,000,000) shares of
Common Stock, par value $.001 per share.
V. INCORPORATOR: The name and post office address of the
Incorporator signing these Articles of Incorporation is as follows:
NAME POST OFFICE ADDRESS
Rita S. Dickson 1495 Ridgeview Drive
Suite 220
Reno, Nevada 89509
VI. DIRECTORS: The governing board of this corporation shall be
known as directors, and the first Board shall consist of one (1) director.
The number of directors may, pursuant to the By-Laws, be increased or
decreased by the Board of Directors, provided there shall be no less than one
(1) nor more than nine (9) Directors.
The name and post office address of the directors constituting the
first Board of Directors is as follows:
NAME ADDRESS
Derick Sinclair 1550 Ostler Court
N. Vancouver, BC, Canada V7G 2P7
VII. STOCK NON-ASSESSABLE: The capital stock, or the holders
thereof, after the amount of the subscription price has been paid in, shall not
be subject to any assessment whatsoever to pay the debts of the corporation.
VIII. TERM OF EXISTENCE: This corporation shall have
perpetual existence.
IX. CUMULATIVE VOTING: No cumulative voting shall be permitted in
the election of directors.
X. PREEMPTIVE RIGHTS: Shareholders shall not be entitled to
preemptive rights.
XI. LIMITED LIABILITY: No officer or director of the Corporation
shall be personally liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as an officer or director, except for
liability (i) for any breach of the officer or director's duty of loyalty to the
Corporation or its Stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, or (iii) for
any transaction from which the officer or director derived any improper personal
benefit. If the Nevada General Corporation Law is amended after the date of
incorpora-tion to authorize corporate action further eliminating or limiting the
personal liability of officers or directors, then the liability of an officer
or director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Nevada General Corporation Law, or amendments thereto.
No repeal or modification of this paragraph shall adversely affect any right or
protection of an officer or director of the Corporation existing at the time of
such repeal or modification.
XII. INDEMNIFICATION: Each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
for whom he or she is the legal representative, is or was an officer or
director of the Corporation or is or was serving at the request of the
Corporation as an officer or director of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans whether the basis of such proceeding is
alleged action in an official capacity as an officer or director or in any other
capacity while serving as an officer or director shall be indemnified and held
harmless by the Corporation to the fullest extent authorized by the Nevada
General Corporation Law, as the same exists or may hereafter be amended, (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts to be paid in settlement) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be an officer or
director and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided herein with respect
to proceedings seeking to enforce rights to indemnification, the Corporation
shall indemnify any such person seeking indemnification in connection with a
proceeding (or part thereof) initiated by such person only if such proceeding
(or part thereof) was authorized by the Board of Directors of the Corporation.
The right to indemnification conferred in this Section shall be a contract right
and shall include the right to be paid by the Corporation the expenses incurred
in defending any such proceeding in advance of its final disposition; provided
however, that, if the Nevada General Corporation Law requires the payment of
such expenses incurred by an officer or director in his or her capacity as an
officer or director (and not in any other capacity in which service was or is
rendered by such person while an officer or director, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a proceeding, payment shall be made only upon delivery to the
Corporation of an undertaking, by or on behalf of such officer or director, to
repay all amounts so advanced if it shall ultimately be determined that such
officer or director is not entitled to be indemnified under this Section or
otherwise. If a claim hereunder is not paid in full by the Corporation within
ninety days after a written claim has been received by the Corporation, the
claimant may, at any time thereafter, bring suit against the Corporation to
recover the unpaid amount of the claim and, if successful, in whole or in part,
the claimant shall be entitled to be paid the expense of prosecuting such claim.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending any proceeding in advance of
its final disposition where the required undertaking, if any, is required, has
been tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the Nevada General Corporation Law for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
Nevada General Corporation Law, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
The right to indemnification and the payment of expenses incurred in
defending a proceeding in advance of its final disposition conferred in this
Section shall not be exclusive of any other right which any person may have or
hereafter acquire under any statute, provision of the Certificate of
Incorporation, By-Law, agreement, vote of Stockholders or disinterested
directors or otherwise.
The Corporation may maintain insurance, at its expense, to protect itself
and any officer, director, employee or agent of the Corporation or another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Nevada General Corporation Law.
The Corporation may, to the extent authorized from time to time by the
Board of Directors, grant rights to indemnification to any employee or agent of
the Corporation to the fullest extent of the provisions of this section with
respect to the indemnification and advancement of expenses of officers and
directors of the Corporation or individuals serving at the request of the
Corporation as an officer, director, employee or agent of another corporation or
of a partnership, joint venture, trust or other enterprise.
THE UNDERSIGNED, being the Incorporator hereinbefore named for the purpose
of forming a corporation pursuant to the General Corporation Law of the State
of Nevada, does make and file these Articles of Incorporation, hereby declaring
and certifying the facts herein stated are true, and, accordingly, has hereunto
set her hand this 8th day of July, 1998.
/s/ Rita S. Dickson
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this 8th day of July, 1998, before me, a Notary Public, personally
appeared Rita S. Dickson, who acknowledged to me that she executed the above
instrument.
/s/ Michael J. Morrison,
Notary Public
CERTIFICATE OF ACCEPTANCE
OF APPOINTMENT BY RESIDENT AGENT
In the above-referenced, I, Michael J. Morrison, hereby accept the
appointment as Resident Agent of the above-entitled
corporation in accordance with NRS 78.090.
Furthermore, that the mailing address for the above
registered office is 1495 Ridgeview Drive, Ste. 220, Reno, Nevada
89509.
IN WITNESS WHEREOF, I hereunto set my hand this 8th day of July, 1998.
/s/ Michael J. Morrison, Resident Agent
20
EXHIBIT 3.2
- -----------------
BYLAWS
OF
NATALMA INDUSTRIES INC.
ARTICLE 1. OFFICES
1.1 Business Office
The principal business office ("principal office") of the
corporation shall be located at any place either inside or outside the State of
Nevada as designated in the corporation's most current Annual Report filed with
the Nevada Secretary of State. The corporation may have such other offices,
either inside or outside the State of Nevada, as the Board of Directors may
designate or as the business of the corporation may require from time to time.
The corporation shall maintain at its principal office a copy of certain
records, as specified in Section 2.14 of Article 2.
1.2 Registered Office
The registered office of the corporation shall be located within Nevada and
may be, but need not be, identical with the principal office, provided the
principal office is located within Nevada. The address of the registered office
may be changed from time to time by the Board of Directors.
ARTICLE 2. SHAREHOLDERS
2.1 Annual Shareholder Meeting
The annual meeting of the shareholders shall be held on or about the 9th
day of July, each year, beginning with the year 1999, or at such other time on
such other day within such month as shall be fixed by the Board of Directors,
for the purpose of electing directors and for the transaction of such other
business as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday in the State of Nevada, such meeting shall be
held on the next succeeding business day.
If the election of directors shall not be held on the day designated herein
for any annual meeting of the shareholders, or at any subsequent continuation
after adjournment thereof, the Board of Directors shall cause the election to be
held at a special meeting of the shareholders as soon thereafter as convenient.
2.2 Special Shareholder Meetings.
Special meetings of the shareholders, for any purpose or purposes described
in the notice of meeting, may be called by the president, or by the Board of
Directors, and shall be called by the president at the request of the holders of
not less than one-tenth of all outstanding shares of the corporation entitled to
vote on any issue at the meeting.
2.3 Place of Shareholder Meetings
The Board of Directors may designate any place, either inside or outside
the State of Nevada, as the place for any annual or any special meeting of the
shareholders, unless by written consent, which may be in the form of waivers of
notice or otherwise, all shareholders entitled to vote at the meeting designate
a different place, either inside or outside the State of Nevada, as the place
for the holding of such meeting. If no designation is made by either the Board
of Directors or unanimous action of the voting shareholders, the place of
meeting shall be the principal office of the corporation in the State of Nevada.
2.4 Notice of Shareholder Meeting
(a) Required Notice. Written notice stating the place, day and hour of any
annual or special shareholder meeting shall be delivered not less than 10 nor
more than 60 days before the date of the meeting, either personally or by mail,
by or at the direction of the president, the Board of Directors, or other
persons calling the meeting, to each shareholder of record entitled to vote at
such meeting and to any other shareholder entitled by the laws of the State of
Nevada governing corporations (the "Act") or the Articles of Incorporation to
receive notice of the meeting. Notice shall be deemed to be effective at the
earlier of: (1) when deposited in the United States mail, addressed to the
shareholder at his/her/its address as it appears on the stock transfer books of
the corporation, with postage thereon prepaid; (2) on the date shown on the
return receipt if sent by registered or certified mail, return receipt
requested, and the receipt is signed by or on behalf of the addressee; (3) when
received; or (4) 5 days after deposit in the United States mail, if mailed
postpaid and correctly addressed to an address, provided in writing by the
shareholder, which is different from that shown in the corporation's current
record of shareholders.
(b) Adjourned Meeting. If any shareholder meeting is adjourned to a
different date, time, or place, notice need not be given of the new date, time,
and place if the new date, time, and place is announced at the meeting before
adjournment. But if a new record date for the adjourned meeting is, or must be
fixed (see Section 2.5 of this Article 2) then notice must be given pursuant to
the requirements of paragraph (a) of this Section 2.4, to those persons who are
shareholders as of the new record date.
(c) Waiver of Notice. A shareholder may waive notice of the meeting (or
any notice required by the Act, Articles of Incorporation, or Bylaws), by a
writing signed by the shareholder entitled to the notice, which is delivered to
the corporation (either before or after the date and time stated in the notice)
for inclusion in the minutes of filing with the corporate records.
A shareholder's attendance at a meeting:
(i) waives objection to lack of notice or defective notice of the meeting
unless the shareholder, at the beginning of the meeting, objects to holding the
meeting or transacting business at the meeting; and
(i) waives objection to consideration of a particular matter at the meeting
that is not within the purpose or purposes described in the meeting notice,
unless the shareholder object to consideration of the matter when it is
presented.
(d) Contents of Notice. The notice of each special shareholder meeting
shall include a description of the purpose or purposes for which the meeting is
called. Except as provided in this Section 2.4(d), or as provided in the
corporation's articles, or otherwise in the Act, the notice of an annual
shareholder meeting need not include a description of the purpose or purposes
for which the meeting is called.
If a purpose of any shareholder meeting is to consider either: (1) a proposed
amendment to the Articles of Incorporation (including any restated articles
requiring shareholder approval); (2) a plan of merger or share exchange; (3)
the sale, lease, exchange or other disposition of all, or substantially all of
the corporation's property; (4) the dissolution of the corporation; or (5)
the removal of a director, the notice must so state and be accompanied by,
respectively, a copy or summary of the: (a) articles of amendment; (b) plan of
merger or share exchange; and (c) transaction for disposition of all, or
substantially all, of the corporation's property. If the proposed corporate
action creates dissenters' rights, as provided in the Act, the notice must state
that shareholders are, or may be entitled to assert dissenters' rights, and must
be accompanied by a copy of relevant provisions of the Act. If the corporation
issues, or authorizes the issuance of shares for promissory notes or for
promises to render services in the future, the corporation shall report in
writing to all the shareholders the number of shares authorized or issued, and
the consideration received with or before the notice of the next shareholder
meeting. Likewise, if the corporation indemnifies or advances expenses to an
officer or a director, this shall be reported to all the shareholders with or
before notice of the next shareholder meeting.
2.5 Fixing of Record Date
For the purpose of determining shareholders of any voting group entitled to
notice of or to vote at any meeting of shareholders, or shareholders entitled to
receive payment of any distribution or dividend, or in order to make a
determination of shareholders for any other proper purpose, the Board of
Directors may fix in advance a date as the record date. Such record date shall
not be more than 70 days prior to the date on which the particular action
requiring such determination of shareholders entitled to notice of, or to vote
at a meeting of shareholders, or shareholders entitled to receive a share
dividend or distribution. The record date for determination of such
shareholders shall be at the close of business on:
(a) With respect to an annual shareholder meeting or any special shareholder
meeting called by the Board of Directors or any person specifically authorized
by the Board of Directors or these Bylaws to call a meeting, the day before the
first notice is given to shareholders;
(b) With respect to a special shareholder meeting demanded by the
shareholders, the date the first shareholder signs the demand;
(c) With respect to the payment of a share dividend, the date the Board of
Directors authorizes the share dividend;
(d) With respect to actions taken in writing without a meeting pursuant to
Article 2, Section 2.12), the first date any shareholder signs a consent; and
(e) With respect to a distribution to shareholders, (other than one
involving a repurchase or reacquisition of shares), the date the Board of
Directors authorizes the distribution. When a determination of shareholders
entitled to vote at any meeting of shareholders has been made, as provided in
this section, such determination shall apply to any adjournment thereof unless
the Board of Directors fixes a new record date, which it must do if the meeting
is adjourned to a date more than 120 days after the date fixed for the original
meeting.
If no record date has been fixed, the record date shall be the date the written
notice of the meeting is given to shareholders.
2.6 Shareholder List
The officer or agent having charge of the stock transfer books for shares
of the corporation shall, at least ten (10) days before each meeting of
shareholders, make a complete record of the shareholders entitled to vote at
each meeting of shareholders, arranged in alphabetical order, with the address
of and the number of shares held by each. The list must be arranged by class or
series of shares. The shareholder list must be available for inspection by any
shareholder, beginning two business days after notice of the meeting is given
for which the list was prepared and continuing through the meeting. The list
shall be available at the corporation's principal office or at a place in the
city where the meeting is to be held, as set forth in the notice of meeting. A
shareholder, his/her/its agent, or attorney is entitled, on written demand, to
inspect and, subject to the requirements of Section 2.14 of this Article 2, to
copy the list during regular business hours and at his/her/its expense, during
the period it is available for inspection. The corporation shall maintain the
shareholder list in written form or in another form capable of conversion into
written form within a reasonable time.
2.7 Shareholder Quorum and Voting Requirements
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
shareholders. If less than a majority of the outstanding shares are represented
at a meeting, a majority of the shares so represented may adjourn the meeting
from time to time without further notice. At such adjourned meeting at which a
quorum shall be present or represented, any business may be transacted which
might have been transacted at the meeting as originally notified. The
shareholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.
Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting, unless a new record date is or must be set for that
adjourned meeting.
If a quorum exists, a majority vote of those shares present and voting at a
duly organized meeting shall suffice to defeat or enact any proposal unless the
Statutes of the State of Nevada, the Articles of Incorporation or these Bylaws
require a greater-than-majority vote, in which event the higher vote shall be
required for the action to constitute the action of the corporation.
2.8 Increasing Either Quorum or Voting Requirements
For purposes of this Section 2.8, a "supermajority" quorum is a requirement
that more than a majority of the votes of the voting group be present to
constitute a quorum; and a "supermajority" voting requirement is any requirement
that requires the vote of more than a majority of the affirmative votes of a
voting group at a meeting.
The shareholders, but only if specifically authorized to do so by the
Articles of Incorporation, may adopt, amend, or delete a Bylaw which fixes a
"supermajority" quorum or "supermajority" voting requirement.
The adoption or amendment of a Bylaw that adds, changes, or deletes a
"supermajority" quorum or voting requirement for shareholders must meet the same
quorum requirement and be adopted by the same vote required to take action under
the quorum and voting requirement then if effect or proposed to be adopted,
whichever is greater.
A Bylaw that fixes a supermajority quorum or voting requirement for
shareholders may not be adopted, amended, or repealed by the Board of Directors.
2.9 Proxies
At all meetings of shareholders, a shareholder may vote in person, or vote
by written proxy executed in writing by the shareholder or executed by
his/her/its duly authorized attorney-in fact. Such proxy shall be filed with
the secretary of the corporation or other person authorized to tabulate votes
before or at the time of the meeting. No proxy shall be valid after eleven (11)
months from the date of its execution unless otherwise specifically provided in
the proxy or coupled with an interest.
2.10 Voting of Shares
Unless otherwise provided in the articles, each outstanding share entitled
to vote shall be entitled to one vote upon each matter submitted to a vote at a
meeting of shareholders.
Shares held by an administrator, executor, guardian or conservator may be
voted by him, either in person or by proxy, without the transfer of such shares
into his/her/its name. Shares standing in the name of a trustee may be voted by
him, either in person or by proxy, but trustee shall be entitled to vote shares
held by him without transfer of such shares into his/her/its 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/her/its name if authority to do
so is contained in an appropriate order of the Court by which such receiver was
appointed.
A shareholder whose shares are pledged shall be entitled to vote such
shares until the shares are transferred into the name of the pledgee, 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.
Redeemable shares are not entitled to vote after notice of redemption is
mailed to the holders and a sum sufficient to redeem the shares has been
deposited with a bank, trust company, or other financial institution under an
irrevocable obligation to pay the holders the redemption price on surrender of
the shares.
2.11 Corporation's Acceptance of Votes
(a) If the name signed on a vote, consent, waiver, or proxy appointment
corresponds to the name of a shareholder, the corporation, if acting in good
faith, is entitled to accept the vote, consent, waiver, or proxy appointment and
give it effect as the act of the shareholder.
(b) If the name signed on a vote, consent, waiver, or proxy appointment does
not correspond to the name of its shareholder, the corporation, if acting in
good faith, is nevertheless entitled to accept the vote, consent, waiver, or
proxy appointment and give it effect as the act of the shareholder if:
(i) the shareholder is an entity, as defined in the Act, and the name signed
purports to be that of an officer or agent of the entity;
(ii) the name signed purports to be that of an administrator, executor,
guardian or conservator representing the shareholder and, if the corporation
requests, evidence of fiduciary status acceptable to the corporation has been
presented with respect to the vote, consent, waiver, or proxy appointment;
(iii) the name signed purports to be that of a receiver or trustee in
bankruptcy of the shareholder and, if the corporation requests, evidence of
this/her/its status acceptable to the corporation has been presented with
respect to the vote, consent, waiver or proxy appointment;
(iv) the name signed purports to be that of a pledgee, beneficial owner, or
attorney-in-fact of the shareholder and, if the corporation requests, evidence
acceptable to the corporation of the signatory's authority to sign for the
shareholder has been presented with respect to the vote, consent, waiver, or
proxy appointment; or
(v) the shares are held in the name of two or more persons as co-tenants or
fiduciaries and the name signed purports to be the name of at least one of the
co-owners and the person signing appears to be acting on behalf of all the
co-owners.
(vi) The corporation is entitled to reject a vote, consent, waiver, or proxy
appointment if the secretary or other officer or agent authorized to tabulate
votes, acting in good faith, has reasonable basis for doubt about the validity
of the signature on it or about the signatory's authority to sign for the
shareholder.
(vii) The corporation and its officer or agent who accepts or rejects a
vote, consent, waiver, or proxy appointment in good faith and in accordance with
the standards of this Section 2.11 are not liable in damages to the shareholder
for the consequences of the acceptance or rejection.
(viii) Corporation action based on the acceptance or rejection of a vote,
consent, waiver, or proxy appointment under this section is valid unless a court
of competent jurisdiction determines otherwise.
2.12 Informal Action by Shareholders
Any action required or permitted to be taken at a meeting of the
shareholders may be taken without a meeting if one or more written consents,
setting forth the action so taken, shall be signed by shareholders holding a
majority of the shares entitled to vote with respect to the subject matter
thereof, unless a "supermajority" vote is required by these Bylaws, in which
case a "supermajority" vote will be required. Such consent shall be delivered
to the corporation secretary for inclusion in the minute book. A consent signed
under this Section has the effect of a vote at a meeting and may be described
as such in any document.
2.13 Voting for Directors
Unless otherwise provided in the Articles of Incorporation, directors are
elected by a plurality of the votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present.
2.14 Shareholders' Rights to Inspect Corporate Records
Shareholders shall have the following rights regarding inspection of
corporate records:
(a) Minutes and Accounting Records - The corporation shall keep, as
permanent records, minutes of all meetings of its shareholders and Board of
Directors, a record of all actions taken by the shareholders or Board of
Directors without a meeting, and a record of all actions taken by a committee of
the Board of Directors in place of the Board of Directors on behalf of the
corporation. The corporation shall maintain appropriate accounting records.
(b) Absolute Inspection Rights of Records Required at Principal Office - If
a shareholder gives the corporation written notice of this demand at least five
business days before the date on which he wishes to inspect and copy, he, or
his/her/its agent or attorney, has the right to inspect and copy, during regular
business hours, any of the following records, all of which the corporation is
required to keep at its principal office:
(i) its Articles or restated Articles of Incorporation and all amendments to
them currently in effect;
(ii) its Bylaws or restated Bylaws and all amendments to them
currently in effect;
(iii) resolutions adopted by its Board of Directors creating one or more
classes or series of shares, and fixing their relative rights, preferences and
imitations, if shares issued pursuant to those resolutions are outstanding;
(iv) the minutes of all shareholders' meetings, and records of all action
taken by shareholders without a meeting, for the past three years;
(v) all written communications to share- holders within the past three
years, including the financial statements furnished for the past three years to
the shareholders;
(vi) a list of the names and business addresses of its current directors and
officers; and
(vii) its most recent annual report delivered to the Nevada
Secretary of State.
(c) Conditional Inspection Right - In addition, if a shareholder gives the
corporation a written demand, made in good faith and for a proper purpose, at
least five business days before the date on which he wishes to inspect and copy,
describes with reasonable particularity his/her/its purpose and the records he
desires to inspect, and the records are directly connected to his/her/its
purpose, a shareholder of a corporation, or his/her/its duly authorized agent or
attorney, is entitled to inspect and copy, during regular business hours at a
reasonable location specified by the corporation, any of the following records
of the corporation:
(i) excerpts from minutes of any meeting of the Board of Directors; records
of any action of a committee of the Board of Directors on behalf of the
corporation; minutes of any meeting of the shareholders; and records of action
taken by the shareholders or Board of Directors without a meeting, to the extent
not subject to inspection under paragraph (a) of this Section 2.14;
(ii) accounting records of the corporation; and
(iii) the record of shareholders (compiled no earlier than the date of the
shareholder's demand.
(c) Copy Costs - The right to copy records includes, if reasonable, the
right to receive copies made by photographic, xerographic, or other means. The
corporation may impose a reasonable charge, to be paid by the shareholder on
terms set by the corporation, covering the costs of labor and material incurred
in making copies of any documents provided to the shareholder.
(e) "Shareholder" Includes Beneficial Owner - For purposes of this Section
2.14, the term "shareholder" shall include a beneficial owner whose shares are
held in a voting trust or by a nominee on his/her/its behalf.
2.15 Financial Statements Shall Be Furnished to the Shareholders.
(a) The corporation shall furnish its shareholders annual financial
statements, which may be consolidated or combined statements of the corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of changes in shareholders' equity for the year, unless that
information appears elsewhere in the financial statements. If financial
statements are prepared for the corporation on the basis of generally accepted
accounting principles, the annual financial statements for the shareholders must
also be prepared on that basis.
(b) If the annual financial statements are reported upon by a public
accountant, his/her/its report must accompany them. If not, the statements must
be accompanied by a statement of the president or the person responsible for the
corporation's accounting records:
(i) stating his/her/its reasonable belief that the statements were prepared
on the basis of generally accepted accounting principles and, if not, describing
the basis of preparation; and
(ii) describing any respects in which the statements were not prepared on a
basis of accounting consistent with the statements prepared for the preceding
year.
(c) A corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year. Thereafter, on
written request from a shareholder who was not mailed the statements, the
corporation shall mail him the latest financial statements.
2.16 Dissenters' Rights.
Each shareholder shall have the right to dissent from and obtain payment
for his/her/its shares when so authorized by the Act, Articles of Incorporation,
these Bylaws, or a resolution of the Board of Directors.
2.17 Order of Business.
The following order of business shall be observed at all meetings of the
shareholders, as applicable and so far as practicable:
(a) Calling the roll of officers and directors present and determining
shareholder quorum requirements;
(b) Reading, correcting and approving of minutes of previous meeting;
(c) Reports of officers;
(d) Reports of Committees;
(e) Election of Directors;
(f) Unfinished business;
(g) New business; and
(h) Adjournment.
ARTICLE 3. BOARD OF DIRECTORS
3.1 General Powers.
Unless the Articles of Incorporation have dispensed with or limited the
authority of the Board of Directors by describing who will perform some or all
of the duties of a Board of Directors, all corporate powers shall be exercised
by or under the authority of, and the business and affairs of the corporation
shall be managed under the direction of the Board of Directors.
3.2 Number, Tenure and Qualification of Directors.
Unless otherwise provided in the Articles of Incorporation, the authorized
number of directors shall be not less than 1 (minimum number) nor more than 9
(maximum number). The initial number of directors was established in the
original Articles of Incorporation. The number of directors shall always be
within the limits specified above, and as determined by resolution adopted by
the Board of Directors. After any shares of this corporation are issued,
neither the maximum nor minimum number of directors can be changed, nor can a
fixed number be substituted for the maximum and minimum numbers, except by a
duly adopted amendment to the Articles of Incorporation duly approved by a
majority of the outstanding shares entitled to vote. Each director shall hold
office until the next annual meeting of shareholders or until removed. However,
if his/her/its term expires, he shall continue to serve until his/her/its
successor shall have been elected and qualified, or until there is a decrease in
the number of directors. Unless required by the Articles of Incorporation,
directors do not need to be residents of Nevada or shareholders of the
corporation.
3.3 Regular Meetings of the Board of Directors.
A regular meeting of the Board of Directors shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual
meeting of shareholders. The Board of Directors may provide, by resolution, the
time and place for the holding of additional regular meetings without other
notice than such resolution. (If permitted by Section 3.7, any regular meeting
may be held by telephone).
3.4 Special Meeting of the Board of Directors.
Special meetings of the Board of Directors may be called by or at the
request of the president or any one director. The person or persons authorized
to call special meetings of the Board of Directors may fix any place, either
within or without the State of Nevada, as the place for holding any special
meeting of the Board of Directors or, if permitted by Section 3.7, any special
meeting may be held by telephone.
3.5 Notice of, and Waiver of Notice of, Special Meetings of the Board of
Directors.
Unless the Articles of Incorporation provide for a longer or shorter
period, notice of any special meeting of the Board of Directors shall be given
at least two days prior thereto, either orally or in writing. If mailed, notice
of any director meeting shall be deemed to be effective at the earlier of: (1)
when received; (2) five days after deposited in the United States mail,
addressed to the director's business office, with postage thereon prepaid; or
(3) the date shown on the return receipt, if sent by registered or certified
mail, return receipt requested, and the receipt is signed by or on behalf of the
director. Notice may also be given by facsimile and, in such event, notice shall
be deemed effective upon transmittal thereof to a facsimile number of a
compatible facsimile machine at the director's business office. Any director may
waive notice of any meeting. Except as otherwise provided herein, the waiver
must be in writing, signed by the director entitled to the notice, and filed
with the minutes or corporate records. 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 and at the beginning of the meeting, or promptly
upon his/her/its arrival, objects to holding the meeting or transacting business
at the meeting, and does not thereafter vote for or assent to action taken at
the meeting. Unless required by the Articles of Incorporation or the Act,
neither the business to be transacted at, nor the purpose of, any special
meeting of the Board of Directors need be specified in the notice or waiver of
notice of such meeting.
3.6 Director Quorum.
A majority of the number of directors fixed, pursuant to Section 3.2 of
this Article 3, shall constitute a quorum for the transaction of business at any
meeting of the Board of Directors, unless the Articles of Incorporation or the
Act require a greater number for a quorum.
Any amendment to this quorum requirement is subject to the provisions of
Section 3.8 of this Article 3.
Once a quorum has been established at a duly organized meeting, the Board
of Directors may continue to transact corporate business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
3.7 Actions By Directors.
The act of the majority of the directors present at a meeting at which a
quorum is present when the vote is taken shall be the act of the Board of
Directors, unless the Articles of Incorporation or the Act require a greater
percentage. Any amendment which changes the number of directors needed to take
action is subject to the provisions of Section 3.8 of this Article 3.
Unless the Articles of Incorporation provide otherwise, any or all
directors may participate in a regular or special meeting by, or conduct the
meeting through the use of, any means of communication by which all directors
participating may simultaneously hear each other during the meeting. Minutes of
any such meeting shall be prepared and entered into the records of the
corporation. A director participating in a meeting by this means is deemed to
be present in person at the meeting.
A director who is present at a meeting of the Board of Directors or a
committee of the Board of Directors when corporate action is taken is deemed to
have assented to the action taken unless: (1) he objects at the beginning of
the meeting, or promptly upon his/her/its arrival, to holding it or transacting
business at the meeting; or (2) his/her/its dissent or abstention from the
action taken is entered in the minutes of the meeting; or (3) he delivers
written notice of his/her/its dissent or abstention to the presiding officer of
the meeting before its adjournment or to the corporation within 24 hours after
adjournment of the meeting. The right of dissent or abstention is not available
to a director who votes in favor of the action taken.
3.8 Establishing a "Supermajority" Quorum or Voting Requirement for the
Board of Directors.
For purposes of this/her/its Section 3.8, a "supermajority" quorum is a
requirement that more than a majority of the directors in office constitute a
quorum; and a "supermajority" voting requirement is one which requires the vote
of more than a majority of those directors present at a meeting at which a
quorum is present to be the act of the directors.
A Bylaw that fixes a supermajority quorum or supermajority voting
requirement may be amended or repealed:
(i) if originally adopted by the shareholders, only by the shareholders
(unless otherwise provided by the shareholders); or
(ii) if originally adopted by the Board of Directors, either by the
shareholders or by the Board of Directors.
A Bylaw adopted or amended by the shareholders that fixes a supermajority
quorum or supermajority voting requirement for the Board of Directors may
provide that it may be amended or repealed only by a specified vote of either
the shareholders or the Board of Directors.
Subject to the provisions of the preceding paragraph, action by the Board
of Directors to adopt, amend, or repeal a Bylaw that changes the quorum or
voting requirement for the Board of Directors must meet the same quorum
requirement and be adopted by the same vote required to take action under the
quorum and voting requirement then in effect or proposed to be adopted,
whichever is greater.
3.9 Director Action Without a Meeting.
Unless the Articles of Incorporation provide otherwise, any action required
or permitted to be taken by the Board of Directors at a meeting may be taken
without a meeting if all the directors sign a written consent describing the
action taken. Such consents shall be filed with the records of the corporation.
Action taken by consent is effective when the last director signs the consent,
unless the consent specifies a different effective date. A signed consent has
the effect of a vote at a duly noticed and conducted meeting of the Board of
Directors and may be described as such in any document.
3.10 Removal of Directors.
The shareholders may remove one or more directors at a meeting called for
that purpose if notice has been given that a purpose of the meeting is such
removal. The removal may be with or without cause unless the Articles of
Incorporation provide that directors may only be removed for cause. If
cumulative voting is not authorized, a director may be removed only if the
number of votes cast in favor of removal exceeds the number of votes cast
against removal.
3.11 Board of Director Vacancies.
Unless the Articles of Incorporation provide otherwise, if a vacancy occurs
on the Board of Directors, excluding a vacancy resulting from an increase in the
number of directors, the director(s) remaining in office shall fill the vacancy.
If the directors remaining in office constitute fewer than a quorum of the Board
of Directors, they may fill the vacancy by the affirmative vote of a majority
of all the directors remaining in office.
If a vacancy results from an increase in the number of directors, only the
shareholders may fill the vacancy.
A vacancy that will occur at a specific later date (by reason of a
resignation effective at a later date) may be filled by the Board of Directors
before the vacancy occurs, but the new director may not take office until the
vacancy occurs.
The term of a director elected to fill a vacancy expires at the next
shareholders' meeting at which directors are elected. However, if his/her/its
term expires, he shall continue to serve until his/her/its successor is elected
and qualifies or until there is a decrease in the number of directors.
3.12 Director Compensation.
Unless otherwise provided in the Articles of Incorporation, by resolution
of the Board of Directors, each director may be paid his/her/its expenses, if
any, of attendance at each meeting of the Board of Directors, and may be paid a
stated salary as director or a fixed sum for attendance at each meeting of the
Board of Directors, or both. No such payment shall preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
3.13 Director Committees.
(a) Creation of Committees. Unless the Articles of Incorporation provide
otherwise, the Board of Directors may create one or more committees and appoint
members of the Board of Directors to serve on them. Each committee must have
two or more members, who serve at the pleasure of the Board of Directors.
(b) Selection of Members. The creation of a committee and appointment of
members to it must be approved by the greater of (1) a majority of all the
directors in office when the action is taken, or (2) the number of directors
required by the Articles of Incorporation to take such action.
(c) Required Procedures .Sections 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of this
Article 3 apply to committees and their members.
(d) Authority. Unless limited by the Articles of Incorporation or the Act,
each committee may exercise those aspects of the authority of the Board of
Directors which the Board of Directors confers upon such committee in the
resolution creating the committee. Provided, however, a committee may not:
(i) authorize distributions to shareholders;
(ii) approve or propose to shareholders any action that the Act requires be
approved by shareholders;
(iii) fill vacancies on the Board of Directors or on any of its
committees;
(iv) amend the Articles of Incorporation;
(v) adopt, amend, or repeal Bylaws;
(vi) approve a plan of merger not requiring shareholder approval;
(vii) authorize or approve reacquisition of shares, except according to a
formula or method prescribed by the Board of Directors; or
(vii) authorize or approve the issuance or sale, or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations of a class or series of shares; except that the Board of Directors
may authorize a committee to do so within limits specifically described by the
Board of Directors.
ARTICLE 4. OFFICERS
4.1 Designation of Officers.
The officers of the corporation shall be a president, a secretary, and a
treasurer, each of whom shall be appointed by the Board of Directors. Such
other officers and assistant officers as may be deemed necessary, including any
vice-presidents, may be appointed by the Board of Directors. The same
individual may simultaneously hold more than one office in the corporation.
4.2 Appointment and Term of Office.
The officers of the corporation shall be appointed by the Board of
Directors for a term as determined by the Board of Directors. If no term is
specified, they shall hold office until the first meeting of the directors held
after the next annual meeting of shareholders. If the appointment of officers
is not made at such meeting, such appointment shall be made as soon thereafter
as is convenient. Each officer shall hold office until his/her/its successor
has been duly appointed and qualified, until his/her/its death, or until he
resigns or has been removed in the manner provided in Section 4.3 of this
Article 4.
The designation of a specified term does not grant to the officer any
contract rights, and the Board of Directors can remove the officer at any time
prior to the termination of such term.
Appointment of an officer shall not of itself create any contract rights.
4.3 Removal of Officers.
Any officer may be removed by the Board of Directors at any time, with or
without cause. Such removal shall be without prejudice to the contract rights,
if any, of the person so removed.
4.4 President.
The president shall be the principal executive officer of the corporation
and, subject to the control of the Board of Directors, shall generally supervise
and control all of the business and affairs of the corporation. He shall, when
present, preside at all meetings of the shareholders. He may sign, with the
secretary or any other proper officer of the corporation thereunto duly
authorized by the Board of Directors, certificates for shares of the corporation
and deeds, mortgages, bonds, contracts, or other instruments which the Board of
Directors has authorized to be executed, except in cases where the signing and
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the corporation, or shall be
required by law to be otherwise signed or executed. The president shall
generally perform all duties incident to the office of president and such other
duties as may be prescribed by the Board of Directors from time to time.
4.5 Vice-President.
If appointed, in the absence of the president or in the event of the
president's death, inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their appointment) shall perform the duties of the
president, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the president. If there is no vice-president, then
the treasurer shall perform such duties of the president. Any vice-president
may sign, with the secretary or an assistant secretary, certificates for shares
of the corporation the issuance of which have been authorized by resolution of
the Board of Directors. A vice-president shall perform such other duties as
from time to time may be assigned to him by the president or by the Board of
Directors.
4.6 Secretary.
The secretary shall (a) keep the minutes of the proceedings of the
shareholders and of the Board of Directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these Bylaws or as required by law; (c) be custodian of the
corporate records and of any seal of the corporation and, if there is a seal of
the corporation, see that it is affixed to all documents, the execution of which
on behalf of the corporation under its seal is duly authorized; (d) when
requested or required, authenticate any records of the corporation; (e) keep a
register of the post office address of each shareholder, as provided to the
secretary by the shareholders; (f) sign with the president, or a vice-resident,
certificates for shares of the corporation, the issuance of which has been
authorized by resolution of the Board of Directors; (g) have general charge of
the stock transfer books of the corporation; and (h) generally perform all
duties incident to the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the Board of Directors.
4.7 Treasurer.
The treasurer shall (a) have charge and custody of and be responsible for
all funds and securities of the corporation; (b) receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in such banks, trust
companies, or other depositaries as may be selected by the Board of Directors;
and (c) generally perform all of the duties incident to the office of treasurer
and such other duties as from time to time may be assigned to him by the
president or by the Board of Directors.
If required by the Board of Directors, the treasurer shall give a bond for
the faithful discharge of his/her/its duties in such sum and with such surety or
sureties as the Board of Directors shall determine.
4.8 Assistant Secretaries and Assistant Treasurers.
The assistant secretaries, when authorized by the Board of Directors, may
sign with the president, or a vice-president, certificates for shares of the
corporation, the issuance of which has been authorized by a resolution of the
Board of Directors. The assistant treasurers shall respectively, if required by
the Board of Directors, give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall determine. The
assistant secretaries and assistant treasurers, generally, shall perform such
duties as may be assigned to them by the secretary or the treasurer,
respectively, or by the president or the Board of Directors.
4.9 Salaries.
The salaries of the officers, if any, shall be fixed from time to time by
the Board of Directors.
ARTICLE 5. INDEMNIFICATION OF DIRECTORS, OFFICERS, AGENTS, AND EMPLOYEES
5.1 Indemnification of Officers, Directors, Employees and Agents.
Unless otherwise provided in the Articles of Incorporation, the corporation
shall indemnify any individual made a party to a proceeding because he is or was
an officer, director, employee or agent of the corporation against liability
incurred in the proceeding, all pursuant to and consistent with the provisions
of NRS 78.751, as amended from time to time.
5.2 Advance Expenses for Officers and Directors.
The expenses of officers and directors incurred in defending a civil or
criminal action, suit or proceeding shall be paid by the corporation as they are
incurred and in advance of the final disposition of the action, suit or
proceeding, but only after receipt by the corporation of an undertaking by or on
behalf of the officer or director on terms set by the Board of Directors, to
repay the expenses advanced if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation.
5.3 Scope of Indemnification.
The indemnification permitted herein is intended to be to the fullest
extent permissible under the laws of the State of Nevada, and any amendments
thereto.
ARTICLE 6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
6.1(a) Certificates for Shares.
(a) Content
Certificates representing shares of the corporation shall at minimum, state on
their face the name of the issuing corporation; that the corporation is formed
under the laws of the State of Nevada; the name of the person to whom issued;
the certificate number; class and par value of shares; and the designation of
the series, if any, the certificate represents. The form of the certificate
shall be as determined by the Board of Directors. Such certificates shall be
signed (either manually or by facsimile) by the president or a vicepresident and
by the secretary or an assistant secretary and may be sealed with a corporate
seal or a facsimile thereof. Each certificate for shares shall be consecutively
numbered or otherwise identified.
(b) Legend as to Class or Series
If the corporation is authorized to issue different classes of shares or
different series within a class, the designations, relative rights, preferences,
and limitations applicable to each class and the variations in rights,
preferences, and limitations determined for each series (and the authority of
the Board of Directors to determine variations for future series) must be
summarized on the front or back of the certificate indicating that the
corporation will furnish the shareholder this information on request in writing
and without charge.
(c) Shareholder List
The name and address of the person to whom the shares are issued, with the
number of shares and date of issue, shall be entered on the stock transfer books
of the corporation.
(d) Transferring Shares
All certificates surrendered to the corporation for transfer shall be canceled
and no new certificate shall be issued until the former certificate for a like
number of shares shall have been surrendered and canceled, except that in case
of a lost, destroyed, or mutilated certificate, a new one may be issued therefor
upon such terms as the Board of Directors may prescribe, including
indemnification of the corporation and bond requirements.
6.2 Registration of the Transfer of Shares.
Registration of the transfer of shares of the corporation shall be made
only on the stock transfer books of the corporation. In order to register a
transfer, the record owner shall surrender the share certificate to the
corporation for cancellation, properly endorsed by the appropriate person or
persons with reasonable assurances that the endorsements are genuine and
effective. Unless the corporation has established a procedure by which a
beneficial owner of shares held by a nominee is to be recognized by the
corporation as the owner, the person in whose name shares stand on the books of
the corporation shall be deemed by the corporation to be the owner thereof for
all purposes.
6.3 Restrictions on Transfer of Shares Permitted.
The Board of Directors may impose restrictions on the transfer or
registration of transfer of shares, including any security convertible into, or
carrying a right to subscribe for or acquire shares. A restriction does not
affect shares issued before the restriction was adopted unless the holders of
the shares are parties to the restriction agreement or voted in favor of the
restriction.
A restriction on the transfer or registration of transfer of shares may be
authorized:
(i) to maintain the corporation's status when it is dependent on the number
or identity of its shareholders;
(ii) to preserve exemptions under federal or state securities law;
or
(iii) for any other reasonable purpose.
A restriction on the transfer or registration of transfer of shares may:
(i) obligate the shareholder first to offer the corporation or other persons
(separately, consecutively, or simultaneously) an opportunity to acquire the
restricted shares;
(ii) obligate the corporation or other persons (separately, consecutively,
or simultaneously) to acquire the restricted shares;
(ii) require the corporation, the holders or any class of its shares, or
another person to approve the transfer of the restricted shares, if the
requirement is not manifestly unreasonable; or
(iv) prohibit the transfer of the restricted shares to designated persons or
classes of persons, if the prohibition is not manifestly unreasonable.
A restriction on the transfer or registration of transfer of shares is
valid and enforceable against the holder or a transferee of the holder if the
restriction is authorized by this Section 6.3 and its existence is noted
conspicuously on the front or back of the certificate. Unless so noted, a
restriction is not enforceable against a person without knowledge of the
restriction.
6.4 Acquisition of Shares.
The corporation may acquire its own shares and unless otherwise provided in
the Articles of Incorporation, the shares so acquired constitute authorized but
unissued shares.
If the Articles of Incorporation prohibit the reissue of shares acquired by
the corporation, the number of authorized shares is reduced by the number of
shares acquired, effective upon amendment of the Articles of Incorporation,
which amendment shall be adopted by the shareholders, or the Board of Directors
without shareholder action (if permitted by the Act). The amendment must be
delivered to the Secretary of State and must set forth:
(i) the name of the corporation;
(ii) the reduction in the number of authorized shares, itemized by class and
series; and;
(iii) the total number of authorized shares, itemized by class and
series, remaining after reduction of the shares.
ARTICLE 7. DISTRIBUTIONS
7.1 Distributions.
The Board of Directors may authorize, and the corporation may make,
distributions (including dividends on its outstanding shares) in the manner and
upon the terms and conditions provided by law.
ARTICLE 8. CORPORATE SEAL
8.1 Corporate Seal.
The Board of Directors may adopt a corporate seal which may be circular in
form and have inscribed thereon any designation, including the name of the
corporation, Nevada as the state of incorporation, and the words "Corporate
Seal."
ARTICLE 9. EMERGENCY BYLAWS
9.1 Emergency Bylaws.
Unless the Articles of Incorporation provide otherwise, the following
provisions shall be effective during an emergency, which is defined as a time
when a quorum of the corporation's directors cannot be readily assembled because
of some catastrophic event. During such emergency:
(a) Notice of Board Meetings
Any one member of the Board of Directors or any one of the following officers:
president, any vice-president, secretary, or treasurer, may call a meeting of
the Board of Directors. Notice of such meeting need be given only to those
directors whom it is practicable to reach, and may be given in any practical
manner, including by publication and radio. Such notice shall be given at least
six hours prior to commencement of the meeting.
(b) Temporary Directors and Quorum
One or more officers of the corporation present at the emergency board meeting,
as is necessary to achieve quorum, shall be considered to be directors for the
meeting, and shall so serve in order of rank, and within the same rank, in order
of seniority. In the event that less than a quorum (as determined by Section
3.6 of Article 3) of the directors are present (including any officers who are
to serve as directors for the meeting), those directors present (including the
officers serving as directors) shall constitute a quorum.
(c) Actions Permitted To Be Taken
The Board of Directors, as constituted in paragraph (b), and after notice as set
forth in paragraph (a), may:
(i) Officers' Powers Prescribe emergency powers to any officer of the
corporation;
(ii) Delegation of Any Power Delegate to any officer or director, any of the
powers of the Board of Directors;
(iii) Lines of Succession Designate lines of succession of officers and
agents, in the event that any of them are unable to discharge their duties;
(iv) Relocate Principal Place of Business Relocate the principal place of
business, or designate successive or simultaneous principal places of business;
(v) All Other Action Take any other action which is convenient, helpful, or
necessary to carry on the business of the corporation.
ARTICLE 10. AMENDMENTS
10.1 AMENDMENTS
The Board of Directors may amend or repeal the corporation's Bylaws unless:
(i) The Articles of Incorporation or the Act reserve this power exclusively
to the shareholders, in whole or part; or
(ii) the shareholders, in adopting, amending, or repealing a particular
Bylaw, provide expressly that the Board of Directors may not amend or repeal
that Bylaw; or
(iii) the Bylaw either establishes, amends or deletes a "supermajority"
shareholder quorum or voting requirement, as defined in Section 2.8 of Article
2.
Any amendment which changes the voting or quorum requirement for the Board
of Directors must comply with Section 3.8 of Article 3, and for the
shareholders, must comply with Section 2.8 of Article 2.
The corporation's shareholders may also amend or repeal the corporation's Bylaws
at any meeting held pursuant to Article 2.
CERTIFICATE OF SECRETARY
I hereby certify that I am the Secretary of Natalma Industries Inc., and
that the foregoing Bylaws, consisting of twenty-two (22) pages, constitutes the
Code of Natalma Industries Inc., as duly adopted by the Board of Directors of
the corporation on this 22nd day of July,1998.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 22nd day of
July,1998.
/s/ DERICK SINCLAIR, Secretary
May 19, 1999
Mr. Derick Sinclair
Natalma Industries, Inc.
1550 Ostler Court
N. Vancouver, B.C., Canada V7G 2P1
RE: Form SB-2
Dear Mr. Sinclair:
I have acted as counsel to Natalma Industries, Inc. (the "Company") in
connection with registration of the Company's securities pursuant to filing of
a Form SB-2 registration statement. You have requested my opinion as to certain
matters in connection with the Form SB-2 filing.
In my capacity as counsel to the Company, I have examined and am familiar with
the originals and/or copies, the authenticity of which has been established to
my satisfaction, of all documents, corporate records and other instruments which
I have deemed necessary to express the opinions hereinafter set forth.
Based upon my examination and upon consideration of applicable laws, rules and
regulations, it is my opinion that the shares to be registered by the Company
described in the Form SB-2 registration statement have been validly issued,
fully paid and non-assessable.
Further, I consent to the use of this opinion as an Exhibit to the registration
statement and to the use of my name in such registration statement and
prospectus.
Very truly yours,
/s/ Michael J. Morrison, Esq.
MJM:rsd
OPTION TO PURCHASE AGREEMENT
-------------------------------
Between:
Costas Takkas
P.O. Box 1426
Georgetown, Grand Cayman
BWI Cayman Islands
(hereinafter referred to as the "Optionor")
And:
John Martin
Suite 133-800, 15355 B 24th Ave
Surrey, BC V4A 2H9
(hereinafter referred to as the "Optionee")
Re: Option to Purchase a 100% interest in the North Mt. Lorne Properties Per
1-10 mineral claims. Grant Nos. YC 08501-YC08510, Whitehorse Mining District,
Yukon Territory
This Agreement concerns the North Mt. Lorne Properties as defined in Schedule
A.
The title is registered in the name of Costas Takkas (Optionor). Optionor
owns 100% interest in and to the Title. John Martin (Optionee) wishes to
acquire the Title under the terms and conditions of this Agreement. Optionor
wishes to sell a 100% interest in the Title, net of a 2% NSR, to Optionee.
Optionor warrants that it has the legal right to enter into and consummate this
Agreement.
Optionee warrants that he has the legal right and authorization to enter into
and consummate this Agreement.
As partial consideration for the rights and responsibilities granted by the
Optionor, Optionee agrees to pay to the Optionor the following cash payments:
US$30,000 deemed paid upon signing of this Agreement
(b) US$25,000 September 1, 2000
5. Optionee shall complete a minimum $80,000 CDN Phase One work program on
or before September 1, 1999.
6. Optionee will have the obligation to pay all government taxes and fees
related to the Title as they become due.
7. Optionor shall retain a 2% net smelter royalty (the ANSR@), defined in
standard industry terms, in all metal production from the property controlled by
the Title.
8. At such time as Optionee has made US$55,000 in cash payments and financed
all work as contemplated in this Agreement, the ownership to the Title shall be
delivered to Optionee and Optionee shall become the sole owner of the Title,
subject only to the NSR and the annual advanced royalty payment.
9. Optionee shall be responsible for all legal costs involved with the
interpretation of this Agreement, or the execution of a more formal Agreement,
and the transfer of Title.
10. Prior to receiving 100% unencumbered right, title and interest in the
Title, Optionee shall have the right to deal with its potential right, title and
interest in the Title as long as all obligations to Optionor remain
uninterrupted.
11. This Agreement shall be governed by the laws of British Columbia,
Canada. Any disagreements between the parties, which cannot be settled
amicably, shall be governed by a court of competent jurisdiction in British
Columbia.
12. The parties hereto agree that, should it be deemed appropriate, they
will execute a more formal agreement covering the terms of this Agreement.
13. Time shall be of the essence in this Agreement.
14. This Agreement supersedes all other agreements and arrangements among
the parties, whether written or verbal.
Should the terms of this agreement meet your approval, kindly acknowledge with
your signature below.
/s/ Costas Takkas /s/ John Martin
Dated: December 1, 1998 Dated : December 1, 1998
<PAGE>
SCHEDULE A
NORTH MT. LORNE PROPERTIES
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Claim Name. . . Grant # Units Expiry Date
- --------------- --------- ------- -------------
Per 1 . . . . . YC08501 1 12/12/1999
Per 2 . . . . . YC08502 1 12/12/1999
Per 3 . . . . . YC08503 1 12/12/1999
Per 4 . . . . . YC08504 1 12/12/1999
Per 5 . . . . . YC08505 1 12/12/1999
Per 6 . . . . . YC08506 1 12/12/1999
Per 7 . . . . . YC08507 1 12/12/1999
Per 8 . . . . . YC08508 1 12/12/1999
Per 9 . . . . . YC08509 1 12/12/1999
Per 10. . . . . YC085010 1 12/12/1999
</TABLE>
The claims are located in the Whitehorse Mining District, Yukon Territory,
Canada.
EXHIBIT 10.2
=============
ASSIGNMENT OF OPTION TO PURCHASE
------------------------------------
WHEREAS Natalma Industries Inc. ("Natalma") a Nevada Corporation, desires to
obtain an interest in mineral claims located in British Columbia; and
WHEREAS John Martin ("Martin") with an option to purchase a 100% interest in
the North Mt. Lorne Properties, Per 1-10 mineral claims, Grant No.
YC08501-YC08510, Whitehorse Mining District, Yukon Territory, Canada (the
"Title").
This Agreement concerns the North Mt. Lorne Properties as defined in Exhibit
"A".
NOW THEREFORE it is agreed between the parties hereto as follows:
1. The Title is registered to Costas Takkas pursuant to an Option to
Purchase Agreement between Costas Takkas ("Takkas") and John Martin ("Martin").
Takkas granted Martin an option to purchase a 100% ownership interest in the
Title, subject to a 2% Net Smelter Royalty ("NSR") payable to Takas (the
"Option"), a copy of which is attached hereto as Exhibit "A". Natalma wishes to
acquire the Option to the Title under the terms and conditions of this
Agreement. Martin wishes to assign its interest in the Option to Natalma.
2. Martin warrants that he has the legal right and authorization to enter
into and consummate this Agreement.
3. Natalma warrants that it has the legal right and authorization to
enter into and consummate this Agreement.
4. As partial consideration for the rights and responsibilities granted by
Martin, Natalma agrees to make the following cash payments and issuance of
shares:
(a) US$30,000 within 30 days of signing the Agreement.
(b) 500,000 shares of Natalma common stock to be issued upon
completion of Natalma's first offering.
(c) US$25,000 September 1 1, 1999
5. Natalma shall complete a minimum $80,000 CDN Phase One work program on or
before September 1, 1999.
6. Natalma will have the obligation to pay all government taxes related to
the Title as they become due.
7. Natalma shall pay Takkas a 2% NSR, defined in standard industry terms, in
all metal production from the property controlled by the Title, directly to
Takkas.
8. At such time as Natalma has made US$55,000 in cash payments, issued
500,000 shares of its common stock to Martin and financed all work as
contemplated in this Agreement, the ownership to the Title shall be delivered to
Natalma and Natalma shall become the sole owner of the Title, subject only to
the NSR and the annual advanced royalty payment.
9. Natalma shall be responsible for all legal costs involved with the
interpretation of this Agreement, or the execution of a more formal Agreement,
and the transfer of Title.
10. Prior to receiving 100% unencumbered right, title and interest in the
Title, Natalma shall have the right to deal with its potential right, title and
interest in the Title as long as all obligations to Martin and Takkas remain
uninterrupted.
11. This Agreement shall be governed by the laws of British Columbia,
Canada. Any disagreements between the parties, which cannot be settled
amicably, shall be governed by a court of competent jurisdiction in British
Columbia.
12. The parties hereto agree that, should it be deemed appropriate, they
will execute a more formal agreement covering the terms of this Agreement.
13. Time shall be of the essence in this Agreement.
14. This Agreement supersedes all other agreements and arrangements among
the parties, whether written or verbal.
15. This Agreement may only be amended in writing and signed by both
parties hereto.
Should the terms of this agreement meet your approval, kindly acknowledge with
your signature below.
NATALMA INDUSTRIES INC.
/s/ Derick Sinclair, President /s/ John Martin
Dated: December 11, 1998 Dated: December 11, 1998
SCHEDULE "A"
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Claim Name. . . Grant # Units Expiry Date
- --------------- --------- ------- -------------
Per 1 . . . . . YC08501 1 12/12/1999
Per 2 . . . . . YC08502 1 12/12/1999
Per 3 . . . . . YC08503 1 12/12/1999
Per 4 . . . . . YC08504 1 12/12/1999
Per 5 . . . . . YC08505 1 12/12/1999
Per 6 . . . . . YC08506 1 12/12/1999
Per 7 . . . . . YC08507 1 12/12/1999
Per 8 . . . . . YC08508 1 12/12/1999
Per 9 . . . . . YC08509 1 12/12/1999
Per 10. . . . . YC085010 1 12/12/1999
</TABLE>
The claims are located in the Whitehorse Mining District, Yukon Territory,
Canada.
EXHIBIT NO. 10.3
================
AMENDMENT TO ASSIGNMENT TO OPTION TO PURCHASE AGREEMENT
- -------------------------------------------------------
The Option to Purchaser Agreement entered into between
Natalma Industries, Inc., a Nevada corporation, and John
Martin, an individual, on December 11, 1998, is hereby
amended as follows:
5. Natalma shall complete a minimum $80,000 Cdn.
Phase One work program on or before September 1, 2000.
Dated this 21st day of August, 1999.
Natalma Industries, Inc.
By:/s/ Derick Sinclair,
President and Chairman of the Board
/s/ John Martin
MARK BAILEY & CO. LTD.
Certified Public Accountants
Management Consultants
1495 Ridgeview Drive, Suite 200
Reno, Nevada 89509-6634
Phone: 775-332-4200
Fax: 774-332-4210
May 19, 1999
Securities and Exchange Commission
Washington, D.C. 20549
RE: Natalma Industries, Inc.
Form SB-2
To whom it may concern:
We hereby authorize and consent to the use of our report, dated March 31, 1999
as an Exhibit to the above-referenced filing and to the use of our name as it
appears therein.
Sincerely,
/s/ Mark Bailey, CPA/ABV
Mark Bailey & Co., Ltd.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> FEB-15-1999
<CASH> 84177
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 84177
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 97483
<CURRENT-LIABILITIES> 14483 <F1>
<BONDS> 0
<COMMON> 11000
0
0
<OTHER-SE> 72000
<TOTAL-LIABILITY-AND-EQUITY> 83000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
<FN>
<F1> During 1998, the Company's principal shareholder advanced the Company a
total of $14,500 which was used to pay organizational and start-up costs.
As of March 15, 1999, the balance due to the shareholder was $14,483. (See
Notes 4 and 7 to the Financial Statements.)
</TABLE>
