<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
GLOBAL TELEPHONE COMMUNICATION, INC.
(Name of Small Business Issuers in Its Charter)
NEVADA 84-1100424
(State or Other Jurisdiction of (IRS. Employer
Incorporation or Organization) Identification No.)
3838 CAMINO DEL RIO NORTH, SUITE 333, SAN DIEGO CA 92108-1789
(Address of Principal Executive Offices) (Zip Code)
1-800-668-9880
(Registrant's Telephone Number)
Securities to be registered pursuant to Section 12(b) of the Act:
Title Of Each Class Name Of Each Exchange On Which
TO BE SO REGISTERED EACH CLASS IS TO BE REGISTERED
n/a n/a
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON EQUITY, PAR VALUE $.001
(Title of Class)
-1-
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
FORM 10-SB
TABLE OF CONTENTS
<TABLE>
<CAPTION>
No. Title Page
- --- ----- ----
No.
---
PART I
<S> <C> <C>
Item 1. Description of Business .............................................. 3
Item 2. Management's Discussion and Analysis or Plan of
Operations ........................................................... 6
Item 3. Description of Property .............................................. 11
Item 4. Security Ownership of Certain Beneficial Owners and
Management ........................................................... 11
Item 5. Directors, Executive Officers, Promoters and Control
Persons .............................................................. 12
Item 6. Executive Compensation ............................................... 13
Item 7. Certain Relationships and Related Transactions ....................... 14
Item 8. Description of Securities ............................................ 14
PART II
Item 1. Market Price of and Dividends on the Registrant's
Common Equity and Other Shareholder Matters .......................... 15
Item 2. Legal Proceedings .................................................... 16
Item 3. Changes in Disagreements with Accountants ............................ 16
Item 4. Recent Sales of Unregistered Securities .............................. 16
Item 5. Indemnification of Directors and Officers ............................ 19
PART F/S
Financial Statements ................................................. 19
PART III
Item 1. Index to Exhibit ..................................................... 20
Item 2. Description of Exhibits .............................................. 20
Signatures ........................................................... 23
</TABLE>
-2-
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
The Registrant was incorporated on March 10, 1970 for the purpose of
raising capital to develop and possibly mine certain oil and mineral
deposits. The Registrant was unable to raise development money and the
Registrant's operations ceased and the mineral deposits were abandoned.
On June 23, 1997, the Registrant bought all the outstanding shares of
Chow's Consulting Corporation by trading three common shares of the
corporation for each one common share of Chow's dated April 20th, 1997. The
aggregate consideration for the 180,000 common shares of Chow's consisted of
90,000 common shares in the capital stock of the Registrant. The only asset
of Chow's was a mining claim which has since been deemed worthless and Chow's
was dissolved.
On October 14, 1997 the Registrant changed its name to Global
Telephone Communication, Inc. The Registrant's main focus is to develop and
seek opportunities in the IT (Information Technology) and Internet related
businesses mainly in Asia, particularly China. Its goals are to provide
IT/Internet value-added products and services such as web-based e-mail, voice
over IP, systems integration, and other complementary leading edge
technologies to the growing demands in the Asian markets.
On February 9, 1998, the Registrant acquired all of the issued and
outstanding shares of an operating multimedia company, Planet City Graphics
Corp (Planet City), a private company incorporated under the laws of British
Columbia, Canada having its Office in Vancouver, BC. The Company issued a
total of 1,500,000 common shares in exchange for all the issued and
outstanding shares of Planet City.
On February 9, 1998, The Registrant also acquired all of the issued
and outstanding shares of another operating multimedia company, Webworks
Multimedia Corporation (Webworks), a private company incorporated under the
laws of British Columbia, Canada, having its office in Vancouver, BC. The
Registrant issued a total of 500,000 common shares in exchange for all the
issued and outstanding shares of Webworks.
-3-
<PAGE>
Both of these companies are in the businesses of Web-hosting, systems
integration, web graphics design. However, these entities failed to operate
profitably and the Registrant has decided that these operations do not
compliment its current business direction and plans to dispose of these
operations prior to the end of its current fiscal year.
On March 24, 1998 The Registrant changed its domicile from the State
of Utah to the State of Nevada.
On April 16, 1998, The Registrant entered into a Share Exchange
Agreement with Regent Luck Holdings Ltd., (Regent), a Hong Kong corporation,
with offices in Hong Kong, whereby the Company acquired all the issued and
outstanding shares of Regent by issuing and exchanging 4,950,000 shares of
the Registrant to the shareholders of Regent.
Regent has a ninety percent (90%) ownership and interest in a joint
venture company Shenzhen Global Net Computer Information Co. Ltd., (SGNCI)
organized under the laws of The Peoples Republic of China, with Shenzhen
Newsagent Co., Ltd.
On June 8, 1998, the joint venture (SGNCI) was given the approval in
accordance with the PRC Sino-Foreign Equity Joint Venture Enterprise Law and
the approval on June 8, 1999 by Shenzhen Foreign Investment Bureau (No. 1998
0520).
On March 9, 1999, the Registrant acquired 51% of the issued and
outstanding shares of Pacific Asset International Ltd., a Hong Kong
corporation (PAI). PAI is anticipated to provide the Registrant access to
institutional and banking e-commerce business in Asia.
Shenzhen Newsnet Co. Ltd. is a subsidiary of China Telecom and is the
biggest Internet service provider in the city of Shenzhen with a subscriber
base of over 40,000. It had entered into an exclusive agency agreement with
SCNCI which gives SCNCI the rights to act as exclusive agents to conduct all
telecommunications and internet business and services in Shenzhen Guangdong
Province and in six of the biggest cities in China over time. The term of the
agency agreement is for twelve years with options to renew subject to further
negotiations. Profits will be shared on a 69%-31% basis in favor of SCNCI for
the first eighteen months and 55%-45% subsequent to that. As part of the
Share Exchange
-4-
<PAGE>
Agreement with Regent, the Registrant agreed to provide funds as capital for
the joint venture (SCNCI) in the amount of $1,300,000. To date, the
Registrant has provided approximately $900,000.
The Registrant will be engaged in the delivery of value added
telephony products and services as well as internet access, content and
Internet value added applications.
These products and services will be delivered under licenses provided
directly from China Telecom, the dominant carrier in China, or through its
wholly owned subsidiaries. The services will be delivered to commercial,
residential and educational users through the Public Switched Telephone
network and will have their origin on Internet service platforms owned
jointly or independently by the Registrant. The Registrant is also in the
process of negotiating the acquisition a of controlling interest in a Hong
Kong based venture currently being formed that will be originating and
terminating international traffic into and out of greater China as well as
intra China long distance.
To date the Registrant has received business and product delivery
approvals for the subsidiary it controls.
The Registrant has structured activities in accordance with current
local and foreign government regulations.
While there can be no certainty, the Registrant believes that the
regulatory environment will continue to support the Registrant's current and
planned activities. However, any reversal of current government willingness
to continue to approve such activities could have a serious material negative
effect on the business prospects for the Registrant.
The Registrant has spent approximately $2,000,000 US over the past two
years in developing relationships, opportunities and in acquiring licenses
and approvals.
The available market is substantial and underserved. The Registrant
will not be reliant upon any small number of major customers in any of its
markets.
-5-
<PAGE>
The Registrant believes there is minimal, if any, cost to the
Registrant for compliance with current environmental laws.
The Registrant currently employs eight (8) full time employees and
expects the total number of employees to reach twenty (20) or more within six
(6) months.
The Registrant plans to market its products and services both directly
and indirectly.
The Registrant is not now fully reporting, but plans to make annual
audited financials available to its shareholders.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The Registrant's financial condition, changes in financial condition
and results of operations as of December 31, 1998 and 1997, and for the years
then ended, are not meaningful or indicative of the present condition or
future of the Registrant as they include results for companies purchased
during such periods and are being disposed of on or about September 30, 1999.
Refer to ITEM 1 for a history of the Business and its current focus.
During the year ended December 31,1997 the Registrant was engaged
primarily in fund raising activities.
During the year ended December 31, 1998, the Registrant acquired three
companies for the exchange of stock. Two of those companies, Webworks
Multimedia Corporation and Planet City Graphics Corp. had operations, and
accounted for all of the Registrant's revenues. However, these entities were
operating at a loss and the Registrant has determined that they do not fit in
with its current focus and direction and has decided to dispose of these
operations prior to the end of its current fiscal year. Accordingly, their
results are not meaningful in understanding the Registrant's prospects for
the future.
The third acquired company, Regent Luck Holdings Limited, has an
office in Hong Kong, but has no operations to date. The acquisition agreement
required the Registrant to provide $1,300,000 in development
-6-
<PAGE>
funds, $975,000 of which had been provided by June 30, 1999 and the balance
will be provided by December 31, 1999.
The Registrant's financial condition, changes in financial condition
and results of operations as of June 30, 1999 and 1998 are not meaningful or
indicative of the current or future of the Registrant as the business is
undergoing a significant change in focus and direction. Refer to ITEM 1 for a
history of the Business and its current focus.
During the six months ended June 30, 1998, the Registrant had revenues
of $100,000 and loss on the sale of securities of $100,000 which, after
operating expenses, resulted in a loss of $300,000. The revenue and loss on
sale of securities are from companies being sold as of September 30, 1999.
During the six months ended June 30, 1999, the Registrant had revenues
of $100,000 and a gain on the sale of securities of $100,000, which, after
operating expenses, resulted in a loss of $300,000. The revenues and gain on
sale of securities, and a portion of the operating expenses, are attributable
to companies that the Registrant plans to dispose of prior to the end of its
current fiscal year, and therefore are not meaningful in understanding trends
or prospects for the future of the business.
During the six months ended June 30, 1998, the Registrant raised
$400,000 from the sale of equity securities to fund the operations.
During the six months ended June 30, 1999, the Registrant raised
$1,000,000 from the sale of equity securities to fund current operations.
The Registrant's future financial condition will be determined by
sociopolitical factors and other variables. Primarily, China's imminent entry
into the World Trade Organization (WTO) and the liberalization of its telecom
markets to foreigners will have a direct effect on the Registrant and its
subsidiaries' business operations. Some of these factors are: the lowering of
tariff and nontariff barriers for IT products and services; more transparency
and clearer rules and regulations with respect to the telecom industry; an
increase in globalization and the free flow of information among trading
partners; access to more reliable market data; and other multilateral
arrangements and market reforms that are prerequisites for entry into the WTO.
-7-
<PAGE>
Present indications from Beijing point to the liberalization of
foreign investment in the mainland's Internet sector. There is widespread
consensus that by the end of this year the Chinese Government will put in
place new rules and regulations governing foreign participation in this
sector. The liberalization of the telecom sector will allow the Registrant to
provide capital and investment in other value-added products and services
within the IT/ Internet sector such as IP Telephone and Long Distance Calling
Cards that were previously prohibited from foreign participation.
In the meantime, there are certain inherent risks involved in
operating in this sector where the rules and regulations are still uncertain.
Opening of the IT/Internet sector to foreign participation will also mean an
increase in competition from multinational telecommunications companies in
China. The degree to which it will affect the Registrant's future operations
and financial results is uncertain and will depend on the competency of the
management team in executing its business plan and carrying out an effective
implementation of the core operations of the Joint Ventures.
The Registrant's viability is contingent upon its ability to raise
additional funds to support development efforts. There is no assurance the
company will obtain additional financing on terms it deems acceptable.
The implementation and expansion of the Registrant's and its
subsidiaries business, including acquisitions, will require a commitment of
substantial funds. At present, the Registrant is seeking a subordinated debt
funding of 12,000,000 which is anticipated to close by the second week of
October, 1999. Additional funding will be required in the future to satisfy
capital requirements for the Registrant and its subsidiaries. Issuing
additional equity will result in dilution to the existing shareholders. If
adequate funds are not available, the Registrant's business could be
adversely affected since internally generated funds are not expected to be
sufficient to fund the Registrant's expansion needs in the short and near
term.
The first debt facility for $12,000,000 is expected be available to
the Registrant by the second week of October, 1999. The Registrant believes
that this facility will provide sufficient funds for its operational
activities for the next 12 months. Nevertheless, the Registrant intends to
pursue additional funding in the form of direct equity. The Registrant does
-8-
<PAGE>
not intend to develop its own value-added products and services at this time.
It will, instead, purchase or license those products and services from
reliable third parties. The Registrant plans to expend capital currently
estimated at $3,000,000 US to $4,000,000 US during the next 12 months to
finance the purchase, installation and upgrading of new and existing network
facilities.
The strategic partnership with Newsnet (subsidiary of China Telecom)
gives the Registrant certain competitive advantages in the market place over
its competitors. It gives the Registrant's Joint Venture operation a direct
customer base of over 45,000, more favorable terms from China Telecom in
lease-line contracts, customer loyalty and skilled technical support. In
addition, the Registrant has entered into discussions with various
multi-national telecom companies to form strategic alliances and partnerships
in bringing their expertise and technologies to the Registrant's Joint
Venture operations. This eliminates the risk for the Registrant to develop
its own technologies and at the same time it can introduce mature and proven
products and technologies that are suitable for the Chinese markets.
In general, with respect to Year 2000 compliance, the Registrant's
operating subsidiaries are not reliant on software developed internally. The
Registrant will purchase products from third parties and these vendors have
represented to the Registrant that their products are year 2000 compliant.
The Registrant has purchased computers that are Year 2000 compliant and has
tested those of its subsidiaries and they have also shown to be Year 2000
compliant.
Exchange devaluation risks are inherent in having foreign operations,
which generate revenue in foreign countries. This is especially true in Asia
where currency fluctuations and devaluations are not only determined by
market forces but are also dependent on the foreign government's fiscal and
monetary policies. There are risks associated with repatriation of capital
when conversion of currency is required.
The success of the Registrant and its subsidiaries' business in China
is subjected to the political and economical uncertainties in that region.
These are characterized by unexpected changes in rules and regulations;
tariffs or other barriers; policy changes regarding foreign asset ownership;
changes in tax structure for foreign companies, unexpected changes in
-9-
<PAGE>
monetary or fiscal policies; market reforms, austerity programs enacted by
the government; government subsidies that are non-competitive in nature,
currency exchange regulations and lack of transparency in the financial
markets. These factors and more could have an adverse impact on the
Registrant's business and financial results in the future or require the
Registrant to modify its current business practice.
The market for information technology products and services is
characterized by rapidly changing technology, frequent introductions of new
products and evolving industry standards which result in product obsolescence
and short product life cycles. Accordingly, the Registrant's success is
dependent upon its ability to anticipate technological changes in the
industry and to continually identify, obtain and successfully market new
products and services that satisfy evolving technologies, customer
preferences and industry requirements within the markets which the Registrant
and its subsidiaries operate.
There can be no assurance that competitors will not market products
and services in the Chinese markets which have certain competitive advantages
over those of the Registrant and its subsidiaries.
There are also market uncertainties and risks due to the immature and
volatility in the Chinese IT markets. This market is still in a nascent stage
where sufficient data and market studies are not available for any thorough
analysis in determining the viability of the Registrant's business plan. The
Registrant and its subsidiaries mainly have to rely on the experiences of its
local Joint Venture partners and of its own management team to make strategic
decisions with respect to its operations. This lack of clear and reliable
market information dramatically increases the risks of the Registrant in
making the incorrect market assumptions.
The Registrant reported insignificant revenues to date from its two
multimedia subsidiaries that it anticipates selling as at October 1, 1999,
and its most recent audited financials through December 31, 1998 show a
cumulative operating loss of $1,558,346.
The Registrant believes that the size of the emerging market in China
contributes positively to its prospects of success and that current
availability of capital seems to support present and future needs of the
Registrant's operations. Any material change in the regulatory climate in
China could be materially damaging to the Registrant's future prospects for
success.
-10-
<PAGE>
The Registrant is presently interviewing qualified candidates for the
positions of CEO and CFO and expects to have those positions filled in the
very near future.
ITEM 3. DESCRIPTION OF PROPERTY.
The Registrant's principal office is located at 3838 Camino Del Rio
North, Suite 333, San Diego, CA 92108. This office acts as the Registrant's
U.S. office and is approximately 1,300 square feet and is shared with the
Issuer's U.S. Counsel at no cost to the Registrant.
The Registrant also operates offices in Vancouver, British Columbia,
Canada, Hong Kong and Shenzhen, Peoples Republic of China (PRC).
The Vancouver office occupies approximately 1,000 square feet and is
located at Suite 910-510 Burrard Street, Vancouver, BC V6C 3A8. The
Registrant leases this space for $3,000 US per month and is leased on a month
to month basis from an affiliate.
The Hong Kong office occupies approximately 1,000 square feet and is
located at 1601 Causeway Bay Plaza 1, 489 Hennessy Road, Hong Kong. The
Registrant leases this space for $800 US per month and is leased on a month
to month basis.
The Shenzhen office occupies approximately 2,000 square feet and is
located at Room 201, Tower B, Fujian Building, Caitain South Road, Fujian
District, Shenzhen City, Quondong Province, P.R. China 518026. The Registrant
leases this space for $1,500 US per month and is leased on a month to month
basis.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information as to the shares of common
stock owned as of August 31, 1999:
I. Each person who in so far as the Registrant has been able to
ascertain, beneficially owns more than five percent (5%) of the
outstanding 17,391,935 shares of the Registrant.
II. Each director.
-11-
<PAGE>
III. Each of the officers named in the summary compensation table.
IV. All the directors and officers as a group unless otherwise
indicated in the footnotes below on the table is subject to
community property laws where applicable, the persons as to whom
the information is given has sole investment power over the shares
of common stock.
<TABLE>
<CAPTION>
Name Number Percent
---- ------ -------
<S> <C> <C>
1. Sino Concourse Limited 1,875,000 10.8%
2. Sinoway Technology Ltd. 1,825,000 10.5%
3. Braveheart Inc. 1,494,000(1) 8.6%
4. Ricky Ming Wah Ng 1,250,000 7.2%
5. Terry Wong 588,000 3.4%
6. Thomas J. Kennedy -0- 0%
</TABLE>
(1) Shares were issued as collateral for a loan transaction and will be
cancelled upon the retirement of the loan, which has not been completed
to date.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
<TABLE>
<CAPTION>
Name Age Position Term Served Since
---- --- -------- ---- ------------
<S> <C> <C> <C> <C>
1. Terry Wong 40 President and 1 yr. 10/97
Director
2. Thomas J. Kennedy 50 Secretary, Treasurer 1 yr. 10/97
and Director
</TABLE>
TERRY WONG
Mr. Wong was the President of Fortune Maple Capital Ltd. (Hong
Kong/Canada) from 1989 to 1997. During this time he was instrumental in
setting up major telecommunications projects in North Eastern China and
-12-
<PAGE>
developing a strategic joint-venture partnership with China's Post and
Telecom real estate development projects in Canada and China in excess of $80
million. He was also involved in investments in high-growth, high-technology
companies in both Asia and North America. From 1984 to 1994, he held the
position of director of sales and marketing for Tak Kee Stevedoring and
Shipping (Hong Kong) where he was responsible for increasing sales for the
company at an annual average rate of 65% during the ten year period and
opened major markets for the company in both China and Malaysia. Mr. Wong
received a BA Commerce degree, with a focus on finance, from Simon Fraser
University, Vancouver, BC in 1982 and was enrolled in the Master of Economics
program the following year.
THOMAS J. KENNEDY
Mr. Kennedy has been practicing as a barrister and solicitor and
management consultant since 1991. Between 1981 and 1991, Mr. Kennedy was Vice
Chairman of the Workers Compensation Review Board. Prior to this, he served
as a prosecutor for the Federal Department of Justice, Vancouver regional
office. From 1991 to present, he has held the position of Director for three
public companies: Global Tree Technologies Inc., Rock Resources Inc. and
Nu-Lite Industries Ltd. Mr. Kennedy received a Bachelor of Commerce and
Business Administration degree in 1973 and a Bachelor of Law degree in 1974
from the University of BC in Vancouver and was admitted to the Law Society of
BC in 1975.
ITEM 6. EXECUTIVE COMPENSATION.
Mr. Terry Wong, the President and Mr. Thomas Kennedy, the Secretary
and Treasurer are currently the only full time executives of the Registrant
and are not in receipt of any salary at this time.
The Registrant at this time is currently interviewing for the
additional positions of Chief Executive Officer and Chief Financial Officer.
These positions are anticipated to be filled by the end of October, 1999.
SUMMARY COMPENSATION TABLE
There was no executive or director who received compensation in excess
of $100,000 for December 31, in the years of 1998 or 1997.
-13-
<PAGE>
The following sets forth information concerning all cash and non-cash
compensation to be awarded to the Registrant's officers in excess of $100,000
for the year to December 31, 1999.
Officer Salary Other Annual Compensation
------- ------ -------------------------
1. Terry Wong -0- -0-
2. Thomas Kennedy -0- -0-
The Registrant has no outstanding share purchase options at this time.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There was no transactions during the last two years, or proposed
transaction, to which the small business issuer was or is to be a party, in
which any director, executive officer, nominee for directorship, security
holder or immediate family member had a direct or indirect material interest
as defined by Rule 404 of Regulation S-B.
ITEM 8. DESCRIPTION OF SECURITIES.
(a) COMMON STOCK: At August 31, 1999, the Registrant had 17,391,935 of
the common stock outstanding. Registrant's certificate of Amendment of
Articles of Incorporation, filed March 24, 1998 authorized the issuance of up
to 25,000,000 of Registrant's common equity shares with a par value of
$0.001. Holders of shares of the common stock are entitled to one vote for
each share on all matters to be voted on by the shareholders. Holders of
common stock have no cumulative voting rights. Holders of shares of common
stock are entitled to share ratably in dividend, if any, as may be declared
from time to time by the Board of Directors in its discretion, from funds
legally available therefore.
In the event of a liquidation, dissolution or winding up of the
Registrant, the holders of shares of common stock are entitled to share pro
rata all assets remaining after payments in full of all liabilities. Holders
of common stock have no preemptive rights to purchase the Registrant's common
stock. All of the outstanding shares of common stock are fully paid and
non-assessable.
-14-
<PAGE>
(b) PREFERRED STOCK: The Registrant is also authorized to issue
5,000,000 shares of preferred stock with a par value of $0.01. The
Registrant's Board of Directors may fix and determine the designations,
rights, preferences or other rights, preferences or other variations of each
class or series of the preferred stock. At this time the Registrant has not
issued any preferred stock.
PART II
ITEM 1. MARKET PRICE AND DIVIDENDS ON REGISTRANT'S COMMON EQUITY
AND OTHER STOCKHOLDER MATTERS.
(a) MARKET INFORMATION: The Registrant's common stock trades on the
OTC Bulletin Board under the symbol GTCI. The Registrant's common stock price
as of the close of business on August 31, 1999 was $1.78 per share.
(b) PRICE RANGE: The following is the range of the high and low bids
for the Registrant's common stock for each quarter within the last two fiscal
years as determined by the over-the counter market quotations reflect
inter-dealer prices, without retail market, mark-down or commission and may
not represent actual transactions.
<TABLE>
<CAPTION>
1998 1997
Quarter High Bid Low Bid High Bid Low Bid
- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C>
March 9/16 3/8 $6.00 11/2
June 15/16 7/16 3.06 11/8
Sept. 3/16 5/16 11/12 11/8
Dec. 11/8 13/32 1 7/16
</TABLE>
(c) HOLDERS: The Registrant has approximately 325 common stock
shareholders.
(d) DIVIDENDS: The Registrant has never paid a cash dividend. It is
the present policy of the Registrant to retain any extra profits to finance
growth and development of the business. Therefore, the Registrant does
-15-
<PAGE>
not anticipate paying cash dividends on its common stock in the foreseeable
future.
ITEM 2. LEGAL PROCEEDINGS.
The Registrant is not involved in legal proceedings that would have a
material adverse effect on the Registrant's financial conditions or results
of the operations.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The accountant has not resigned, declined to stand for re-election,
nor were they dismissed. The principal accountant's report on the financial
statements for the next two years contains no adverse opinion or disclaimer
of opinion, nor were they modified as to uncertainty, audit scope, or
accounting principles. There have been no disagreements with any former
accountants or any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
(a) RECENT SALES: The Registrant had the following stock issuances as
described below. All such shares were sold by the officers and directors of
the Registrant and no underwriters were utilized.
1. On June 23, 1997, 90,000 shares of common stock were issued in
exchange for all of the issued and outstanding shares of Chow's
Consulting Corporation.
2. On October 23, 1997, 3,000,000 shares of common stock at $.01 per
share pursuant to Regulation D, Rule 504 Offering for a total
offering of $30,000.
3. On January 16, 1998, 1,140,142 shares of common stock at $.50 per
share pursuant to a Regulation D, Rule 504 Offering for a total
offering of $570,071. Of this offering, a total of $180,800 was
for cash and the balance of $389,271 was for the cancellation of
debt.
-16-
<PAGE>
4. On February 9, 1998, 1,500,000 shares of common stock were issued
in exchange for all of the issued and outstanding shares of Planet
City Graphics Corp.
5. On February 9, 1998, 500,000 shares of common stock were issued in
exchange for all of the issued and outstanding shares of Webworks
Multimedia Corporation.
6. On April 16, 1998, 4,950,000 shares of common stock were issued in
exchange for all of the issued and outstanding shares of Regent
Luck Holdings Limited. The Share Exchange Agreement called for the
issuance of a total of 5,000,000 shares, but due to an oversight
on the part of the Registrant's Stock Transfer Agent, only
4,950,000 shares were in fact issued. This shortfall of 50,000
shares will be corrected.
7. On January 16, 1999, 700,000 shares of common stock at $.25 per
share pursuant to a Regulation D, Rule 504 Offering for a total
offering of $175,000.
8. On January 20, 1999, 1,649,000 shares of common stock at $.50 per
share pursuant to a Regulation D, Rule 504 Offering for a total
offering of $824,500.
9. On March 9, 1999, 600,000 shares of common stock were issued in
exchange for 51 % of the issued and outstanding shares of Pacific
Asset International Ltd.
10. On March 15, 1999, 200,000 shares of common stock at $1.00 per
share for a total offering of $200,000.
11. On March 19, 1999, 200,000 shares of common stock at $1.00 per
share for a total offering of $200,000.
12. On March 26, 1999, 100,000 shares of common stock at $1.00 per
share for a total offering of $100,000.
13. On April 16, 1999, 200,000 shares of common stock at $1.00 per
share for a total offering of $200,000.
-17-
<PAGE>
14. On June 28, 1999, 1,494,000 shares were issued as collateral for a
loan amount to be determined by the Registrant's trading share
price at the time of funding. The loan has not yet been funded and
the loan amount is anticipated to be approximately $900,000. Upon
repayment of this loan, the collateral shares will be cancelled.
(b) EXEMPTIONS FROM REGISTRATION: With respect to the issuance of the
3,000,000 common shares listed at Item 4(a)2, the 1,140,142 shares listed at
Item 4(a)3, the 700,000 common shares listed at Item 4(a)7 and the 1,649,000
common share listed at Item 4(a)8, such issuances were made in reliance on
the private placement exemptions provided by Section 4(2) of the Securities
Act of 1933 as amended, (the "Act"), SEC Regulation D, Rule 504 of the Act
and Nevada Revised Statutes Sections 78.211, 78.215, 73.3784, 78.3785 and
78.3791 (collectively the "Nevada Statutes")
With respect to the issuance of the 90,000 common shares listed at Item
4(a)1, the 1,500,000 common shares listed at Item 4(a)4, the 500,000 common
shares listed at Item 4(a)5, the 4,950,000 common shares listed at Item 4(a)6,
the 600,000 common shares listed at Item 4(a)9, the 200,000 common shares listed
at Item 4(a)10, the 200,000 common shares listed at Item 4(a)11, the 100,000
common shares listed at Item 4(a)12, the 200,000 shares listed at Item 4(a)13
and the 1,494,000 shares listed at Item 4(a)14 such issuances were made in
reliance upon the private placement exemptions provided by Section 4(2) of the
Act and the Nevada Statutes.
In each instance, each of the share purchasers had access to sufficient
information regarding the Registrant so as to make an informed investment
decision. More specifically, each purchaser signed either written a Subscription
Agreement, a Share Exchange Agreement, a Share Purchase Agreement or a
Collateral Loan Agreement, with respect to their financial status and investment
sophistication wherein they warranted and represented, among other things, the
following:
1. That he had the ability to bear the economic risks of investing in
the shares of the Registrant.
-18-
<PAGE>
2. That he had sufficient knowledge in financial, business, or
investment matters to evaluate the merits and risks of the
investment.
3. That he had a certain net worth sufficient to meet the suitability
standards of the Registrant.
4. That the Registrant has made available to him, his counsel and his
advisors, the opportunity to ask questions and that he has been
given access to any information, documents, financial statements,
books and records relative to the Registrant and an investment in
the shares of the Registrant.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Incorporation and Bylaws of the Registrant provide for
indemnification of the Registrant's officers and directors for liabilities
arising due to certain acts performed on behalf of the Registrant that are not a
result of any act or omission on any such director or officer: provided,
however, that the foregoing provision shall not eliminate or limit the liability
of director or officer (1) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of the law, or (ii) the payment of
dividends in violation of section 78.300 of the Nevada Revised Status. Although
the state statutes allow for indemnification of officers and directors, the SEC
rules however, prohibit indemnification of officers and directors of publicly
held companies.
PART F/S
The following financial statements are submitted pursuant to the
information required by Item 310 of Regulation S-B:
FINANCIAL STATEMENTS
No. Description
--- -----------
FS-1 Global Telephone Communication, Inc.
and Subsidiaries Consolidated
Financial Statements for Years Ended
December 31, 1998 and 1997
-19-
<PAGE>
FS-2 Global Telephone Communication, Inc.
(A Development Stage Company)
Financial Statements December 31,
1997 and 1996
FS-3 Global Telephone Communication, Inc. and
Subsidiaries Statement of Operations &
Deficit. January 1 - June 30, 1999
(Unaudited, Prepared by Management).
FS-4 Global Telephone Communication, Inc. and
Statement of Changes in Financial Position -
6 months to June 30, 1999 and 1998
(Unaudited, Prepared by Management).
FS-5 Global Telephone Communication, Inc. Balance
Sheet - June 30, 1999 and 1998 (Unaudited,
Prepared by Management).
PART III
ITEM 1. INDEX TO EXHIBITS.
The exhibits listed and described below in Item 2 are filed herein as
the part of this Registration Statement.
ITEM 2. DESCRIPTION OF EXHIBITS.
The following documents are filed herein as Exhibit Numbers 2, 3, 5, 6
and 7 as required by Part III of Form 1-A:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2 CHARTER AND BY-LAWS
2.1 Articles of Merger Merging Global
Telephone Communication, Inc. (a Utah
Corporation) into Global Telephone
communication, Inc. (a Nevada
Corporation)
-20-
<PAGE>
2.2 Articles of Incorporation of Global
Telephone Communication, Inc.
2.3 Articles of Amendment and Restatement
to Articles of Incorporation of Dynasty
TMT Corp.
2.4 Articles of Amendment to Articles if
Incorporation of Dynasty TMT Corp.
2.5 Articles of Amendment to the Articles of
Incorporation of Dynasty TMT Corp.
2.6 Articles of Incorporation of Dynasty Ore
and Minerals Corporation
2.7 By-Laws of Global Telephone
Communication, Inc.
3-NONE INSTRUMENTS DEFINING THE RIGHTS OF
SECURITY HOLDERS
5-NONE VOTING TRUST AGREEMENTS
6 MATERIAL CONTRACTS
6.1 Share Exchange Acknowledgement -
of Webworks Multimedia Corp.
6.2 Share Exchange Acknowledgements -
Planet City Graphics Corp.
6.3 Share Exchange Agreement with Regent
Luck Holdings Ltd.
6.4 Amendment of Share Exchange
Agreement with Regent Luck Holdings
Ltd.
-21-
<PAGE>
6.5 Joint Venture Agreement between
Shenzhen Xun Yun Yun Da Electronics
Co. Ltd. and Regent Luck Holdings Ltd.
for Shenzhen Global Net Computer
Information Co. Ltd.
6.6 Agency Agreement between Shenzhen
Newsnet Information co. and Shenzhen
Global Net Computer Information Co.
Ltd.
6.7 Telecommunication Business Operation
Approval of Peoples Republic of China
for Shenzhen Newsagent Co. Ltd.
6.8 Share Exchange Agreement with Pacific
Asset International Ltd.
6.9 Consulting Agreement with Lions Peak
Capital Ltd.
6.10 Consulting Agreement with Milan
Financial Inc.
7-NONE MATERIAL FOREIGN PATENTS
27 FINANCIAL DATA SCHEDULE
</TABLE>
-22-
<PAGE>
SIGNATURES
In accordance with Section 12 the Securities and Exchange Act of 1934
the Registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
GLOBAL TELEPHONE
COMMUNICATION, INC.
DATED: October 7, 1999 BY: /s/ TERRY WONG
---------------------
TERRY WONG
President
-23-
<PAGE>
FINANCIAL STATEMENTS
NO. DESCRIPTION
FS-1 GLOBAL TELEPHONE COMMUNICATIONS,
INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS FOR YEARS ENDED
DECEMBER 31, 1998 AND 1997
FS-2 GLOBAL TELEPHONE COMMUNICATIONS,
INC. (A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS FOR YEARS ENDED
DECEMBER 31, 1997 AND 1996
FS-3 GLOBAL TELEPHONE COMMUNICATION, INC. AND
SUBSIDIARIES STATEMENT OF OPERATIONS & DEFICIT.
JANUARY 1 - JUNE 30, 1999 (UNAUDITED, PREPARED
BY MANAGEMENT).
FS-4 GLOBAL TELEPHONE COMMUNICATION, INC. AND
STATEMENT OF CHANGES IN FINANCIAL POSITION -
6 MONTHS TO JUNE 30, 1999 AND 1998 (UNAUDITED,
PREPARED BY MANAGEMENT).
FS-5 GLOBAL TELEPHONE COMMUNICATIONS, INC. BALANCE
SHEET - JUNE 30, 1999 AND 1998 (UNAUDITED,
PREPARED BY MANAGEMENT).
<PAGE>
EXHIBIT FS-1
GLOBAL TELEPHONE COMMUNICATIONS,
INC. AND SUBSIDIARIES CONSOLIDATED
FINANCIAL STATEMENTS FOR YEARS ENDED
DECEMBER 31, 1998 AND 1997
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1
<PAGE>
CONTENTS
Independent Auditors' Report .................................. 3
Balance Sheets ................................................ 4
Statements of Operations ...................................... 5
Statements of Stockholders' Equity (Deficit) .................. 6
Statements of Cash Flows ...................................... 7
Notes to the Financial Statements ............................. 9
2
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Global Telephone Communication, Inc.
Vancouver, British Columbia, Canada
We have audited the accompanying balance sheets of Global Telephone
Communication, Inc. (a development stage company) as of December 31, 1997 and
1996, and the related statements of operations, stockholders' equity (deficit)
and cash flows for the years ended December 31, 1997, 1996 and 1995 and from
inception on March 10, 1970 through December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and 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 Global Telephone Communication,
Inc. (a development stage company) as of December 31, 1997 and 1996 and the
results of its operations and its cash flows for the years ended December 31,
1997, 1996 and 1995 and from inception on March 10, 1970 through December 31,
1997 in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is a development stage company with no
significant operating results to date, which raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
June 30, 1998
3
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
December 31,
--------------------------------
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 154,241 $ 14,013
----------- -----------
Total Current Assets 154,241 14,013
----------- -----------
OTHER ASSETS
Deferred stock offering costs 8,204 -
----------- -----------
Total Other Assets 8,204 -
----------- -----------
TOTAL ASSETS $ 162,445 $ 14,013
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
CURRENT LIABILITIES
Accounts payable $ 7,015 $ -
Accrued interest payable (Note 3) 39,227 7,019
Notes payable (Note 3) 355,000 313,500
Shareholder payable (Note 4) 4,705 4,705
Deposit for 504 offering (Note 9) 170,780 -
Taxes payable 100 100
----------- -----------
Total Current Liabilities 576,827 325,324
----------- -----------
TOTAL LIABILITIES 576,827 325,324
----------- -----------
----------- -----------
COMMITMENTS (Note 10)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 5,000,000 shares authorized of
$1.00 par value, -0- shares issued and outstanding - -
Common stock: 25,000,000 shares authorized of
$0.001 par value, 4,155,793 and 1,065,834
shares issued and outstanding, respectively 4,156 1,066
Additional paid-in capital 717,183 689,273
Deficit accumulated during the development stage (1,135,721) (1,001,650)
----------- -----------
Total Stockholders' Equity (Deficit) (414,382) (311,311)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 162,445 $ 14,013
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
------------------------------------------ December 31,
1997 1996 1995 1997
------ ------ ------ ------------
<S> <C> <C> <C> <C>
REVENUES $ -- $ -- $ -- $ --
EXPENSES 46,642 -- -- 46,642
LOSS FROM DISCONTINUED
OPERATIONS (Note 5) 87,429 347,222 4,053 1,089,079
------------ ----------- ----------- -------------
NET LOSS $ (134,071) $ (347,222) $ (4,053) $ (1,135,721)
------------ ----------- ----------- -------------
------------ ----------- ----------- -------------
NET LOSS PER SHARE OF
COMMON STOCK $ (0.08) $ (0.70) $ (0.02)
------------ ----------- -----------
------------ ----------- -----------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 1,634,839 495,903 263,203
------------ ----------- -----------
------------ ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------ Paid-in Development
Shares Amount Capital Stage
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance, March 10, 1970 -- $ -- $ -- $ --
Common stock issued for cash at
$16.00 per share during 1970 1,906 2 30,498 --
Common stock issued for services
rendered at $6.40 per share
during 1970 1,578 1 10,099 --
Common stock issued for cash
at $32.00 per share during 1971 4,075 4 130,396 --
Common stock issued for services
rendered at $15.52 per share during
the period of inception through 1983 11,641 12 180,581 --
Common stock issued for services
rendered at $6.40 per share
during 1988 2,817 3 18,027 --
Net loss from inception on
March 10, 1970 through
December 31, 1991 -- -- -- (369,623)
Balance, December 31, 1991 22,017 22 369,601 (369,623)
Net loss for the year ended
December 31, 1992 -- -- -- (552)
--------- --------- --------- -----------
Balance, December 31, 1992 22,017 22 369,601 (370,175)
Net loss for the year ended
December 31, 1993 -- -- -- (100)
--------- --------- --------- -----------
Balance, December 31, 1993 22,017 22 369,601 (370,275)
Common stock issued for services
rendered at $6.40 per share on
August 1, 1994 43,750 44 279,956 --
Net loss for the year ended
December 31, 1994 -- -- -- (280,100)
--------- --------- --------- -----------
Balance, December 31, 1994 65,767 $ 66 $ 649,557 $ (650,375)
Net loss for the year ended
December 31, 1995 -- -- -- (4,053)
--------- --------- --------- -----------
Balance, December 31, 1995 65,767 $ 66 $ 649,557 $ (654,428)
Expenses paid on the Company's
behalf by a shareholder -- -- 716 --
Common stock issued for cash at
$0.01 per share on July 23, 1996 1,000,000 1,000 39,000
Fractional shares issued in
conjunction with a 1-for-80
reverse stock split 33 -- -- --
Fractional shares issued in
conjunction with a 3-for-1
forward stock split 34 -- -- --
Net loss for the year ended
December 31, 1996 -- -- -- (347,222)
--------- --------- --------- -----------
Balance, December 31, 1996 1,065,834 $ 1,066 $ 689,273 (1,001,650)
Common stock issued to acquire
Chow's Consulting Corporation
on April 30, 1997 90,000 90 (90)
Fractional shares canceled in
conjunction with a 1-for-6
reverse stock split (41) -- -- --
Common stock issued for cash at
$0.01 per share 3,000,000 3,000 28,000
Net loss for the year ended
December 31, 1997 -- -- -- (134,071)
--------- --------- --------- -----------
Balance, December 31, 1997 4,155,793 $ 4,156 $ 717,181 $(1,135,721)
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
------------------------------------------- December 31,
1997 1996 1995 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $ (134,071) $ (347,222) $ (4,053) $ (1,135,721)
Adjustments to reconcile net loss to net cash
used by operating activities:
Common stock issued for
services and expenses paid
on behalf of the Company -- 716 -- 489,439
Changes in operating assets and liabilities:
(increase) in stock offering costs (8,204) -- -- (8,204)
Increase in deposits for 504 170,780 -- -- 170,780
Increase in accounts payable 7,015 -- -- 7,015
Increase in accrued expenses 32,208 7,019 4,705 43,992
Increase (decrease) in taxes payable -- -- (652) 100
----------- ----------- ----------- ------------
Net Cash (Used) by
Operating Activities 67,728 (339,487) -- (432,599)
----------- ----------- ----------- ------------
CASH FLOWS FROM
INVESTING ACTIVITIES -- -- -- --
----------- ----------- ----------- ------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Increase in notes payable 41,500 313,500 -- 355,000
Common stock issued for cash 31,000 40,000 -- 231,840
----------- ----------- ----------- ------------
Net Cash Provided by
Financing Activities 72,500 363,500 -- 586,840
----------- ----------- ----------- ------------
NET INCREASE IN CASH AND
CASH EQUIVALENTS 140,228 14,013 -- 154,241
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 14,013 -- -- --
----------- ----------- ----------- ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 154,241 $ 14,013 $ -- $ 154,241
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
------------------------------------------- December 31,
1997 1996 1995 1997
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
CASH PAID FOR:
Interest $ -- $ -- $ -- $ --
Income taxes $ -- $ -- $ -- $ --
NON-CASH FINANCING
ACTIVITIES:
Common stock issued for
services rendered and expenses
paid on behalf of the Company $ -- $ 716 $ -- $ 489,439
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
The financial statements presented are those of Global Telephone
Communication, Inc. (a development stage company). The Company was
incorporated on March 10, 1970 for the purpose of raising capital to
develop and possibly mine certain oil and mineral deposits. The Company
was unable to raise development money and the Company's operations
ceased and the mineral deposits were abandoned. The Company has been
seeking new business opportunities believed to hold a potential profit.
The Company changed its name to Global Telephone Communications, Inc.
on October 14, 1997.
On June 23, 1997, the Company bought all of the outstanding shares of
Chow's Consulting Corporation (Chow's) by trading three common shares
of the corporation for each one common share of Chow's dated April 20,
1997. The aggregate consideration paid for the 180,000 common shares of
Chow's consisted of 90,000 common shares in the capital stock of the
Company. The only asset of Chow's was a mining claim which has since
been deemed worthless and Chow's was dissolved.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Loss Per Share
The computations of loss per share of common stock are based on the
weighted average number of shares outstanding during the period.
e. Provision for Taxes
At December 31, 1997, the Company has net operating loss carryforwards
totaling approximately $1,130,000 that may be offset against future
taxable income through 2012. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or
greater chance the loss carryforwards will expire unused. Accordingly,
the potential tax benefits of the loss carryforwards are offset by a
valuation allowance of the same amount.
9
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating costs
and to allow it to continue as a going concern. It is the intent of the
Company to enter the business of internet service in China. In the
interim, shareholders of the Company have committed to meeting its
minimal operating expenses.
NOTE 3 - NOTES PAYABLE
Notes payable consisted of the following at December 31, 1997 and 1996:
<TABLE>
<CAPTION>
December 31,
----------------------
1997 1996
--------- ----------
<S> <C> <C>
Promissory note to an individual, interest at
8%, due on January 30, 1998, unsecured $ 11,500 $ --
Promissory note to an individual, interest at
8%, due on January 30, 1998, unsecured 308,500 278,500
Promissory note to an individual, interest at
8%, due on January 30, 1998, unsecured 35,000 35,000
Total Notes Payable $355,000 $313,500
</TABLE>
Interest has been accrued for the above notes payable at their
respective rates:
<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1996
---------- -------
<S> <C> <C>
Accrued Interest Payable $ 39,227 $ 7,019
</TABLE>
10
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 4 - STOCKHOLDER PAYABLE
During 1995, an officer and shareholder of the Company incurred and
paid expenses on behalf of the Company. The officer and shareholder
also charged the Company $1,500 for services rendered to the Company.
At December 31, 1997 and 1996, the amount owed to the shareholder and
officer was $4,705.
NOTE 5 - LOSS FROM DISCONTINUED OPERATIONS
On September 24, 1997, the Board of Directors of the Company decided to
discontinue the operations of the Krystar International. The following
is the summary of the loss from the discontinued operations.
<TABLE>
<CAPTION>
From
Inception on
March 10,
December 31, 1970 Through
------------------------- December 31,
1997 1996 1997
--------- ---------- -------------
<S> <C> <C> <C>
Sales $ -- $ -- $ --
Operating expenses 87,429 347,222 1,089,079
--------- ---------- ------------
Loss from discontinued operations (87,429) $ (347,222) $ 1,089,079)
--------- ---------- ------------
--------- ---------- ------------
</TABLE>
The Company retains no assets which were attributable to prior
operations. No income tax benefit has been attributed to the loss from
discontinued operations.
NOTE 6 - STOCK TRANSACTIONS
On June 26, 1996, the shareholders of the Company approved a 1-for-80
reverse stock split. The financial statements have been restated to
reflect this change retroactively to inception.
On December 12, 1996, the shareholders of the Company approved a
3-for-2 forward stock split. The financial statements have been
restated to reflect this change retroactively to inception.
On October 14, 1997, the shareholders of the Company approved a 1-for-6
reverse stock split. The financial statements have been restated to
reflect this change retroactively to inception.
On June 26, 1996, the shareholders of the Company approved a change in
the par value of its common stock to $0.001 from $0.01. The financial
statements have been restated to reflect this change retroactively to
inception.
11
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to December 31, 1997, the Company negotiated an agreement
with the notes payable holders to convert the debt into shares of
common stock. As of the date of this audit report, the agreement has
been finalized and stock was issued at $0.50 per share.
Subsequent to December 31, 1997, the Company acquired the controlling
ownership of SINO Concourse Limited, a Hong Kong corporation, Sinoway
Technology Limited, a Hong Kong corporation and Regent Luck Holdings
Limited, a Hong Kong corporation, by issuing 5,000,000 shares of its
outstanding common stock.
Regent Luck Holdings Limited has a fifty-one percent (51 %) ownership
and interest in a joint venture company set up under the laws of The
Peoples Republic of China with Shenzhen Newsnet Co. Ltd. under the name
China Global Information Internet Co. Ltd.
Subsequent to December 31, 1997, the Company acquired two multimedia
companies, Planet City Graphics, a Vancouver B.C. company, and Webworks
Multimedia, a Vancouver B.C. company, by issuing 2,000,000 shares of
its outstanding common stock. The Company will use this base and its
in-house expertise to enter the worldwide multimedia and internet
markets.
Subsequent to December 31, 1997, the Company changed its domicile from
Utah to Nevada.
NOTE 8 - STOCK OPTION PLAN
On October 14, 1997, the Company adopted the 1997 Stock Option Plan
(the "Plan"), initially reserving an aggregate of 166,667 shares of the
Company's common stock (the "Available Shares") for issuance pursuant
to the exercise of stock options ("Options") which may be granted to
employees, officers, and directors of the Company and consultants to
the Company. The Plan provides for annual adjustment in the number of
Available Shares, commencing December 31, 1997, to a number equal to
10% of the number of shares outstanding on December 31 of the preceding
year or 166,667 shares, whichever is greater.
NOTE 9 - DEPOSIT FOR 504 OFFERING
On January 21, 1998, the Company completed a Rule 504 stock offering.
The Company had received $170,780 from investors in 1997. Subsequent to
the date of this audit, the $170,780 was converted to stock at $0.50
per share.
NOTE 10 - COMMITMENT
The Company is renting its office space for approximately $1,800 per
month on a month-to-month basis.
12
<PAGE>
EXHIBIT FS-2
------------
GLOBAL TELEPHONE COMMUNICATIONS,
INC. (A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS FOR YEARS ENDED
DECEMBER 31, 1997 AND 1996
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS
DECEMBER 31, 1998 AND 1997
1
<PAGE>
CONTENTS
Independent Auditors' Report ............................................... 3
Consolidated Balance Sheets ................................................ 4
Consolidated Statements of Operations ...................................... 6
Consolidated Statements of Stockholders' Equity (Deficit) .................. 7
Consolidated Statements of Cash Flows ......................................10
Notes to the Financial Statements ..........................................12
2
<PAGE>
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Global Telephone Communication, Inc. and Subsidiaries
Vancouver, British Columbia, Canada
We have audited the accompanying consolidated balance sheets of Global
Telephone Communication, Inc. and Subsidiaries as of December 31, 1998 and
1997, and the related consolidated statements of operations, stockholders'
equity (deficit) and cash flows for the years ended December 31, 1998, 1997
and 1996 and from inception on March 10, 1970 through December 31, 1998.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
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 consoidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Global Telephone Communication, Inc. and Subsidiaries as of December 31,
1998 and 1997 and the results of their consolidated operations and their cash
flows for the years ended December 31, 1998, 1997 and 1996 and from inception
on March 10, 1970 through December 31, 1998 in conformity with generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, the Company is a development
stage company with no significant operating results to date, which raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2.
The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
July 8, 1999
3
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
------
December 31,
-------------------------
1998 1997
--------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 16,390 $ 154,241
Accounts receivable 5,928 -
Marketable securities 81,876 -
Prepaid expenses 80 -
Loans to officers 8,450 -
---------- ----------
Total Current Assets 112,726 154,241
---------- ----------
FIXED ASSETS, NET (Note 10) 151,202 -
---------- ----------
OTHER ASSETS
Deferred stock offering costs - 8,204
---------- ----------
Total Other Assets - 8,204
---------- ----------
TOTAL ASSETS $ 263,928 $ 162,445
---------- ----------
---------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
December 31,
---------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 158,148 $ 7,115
Accrued interest payable (Note 3) 8,296 39,227
Notes payable (Note 3) 297,174 355,000
Shareholder payable (Note 4) - 4,705
Deposit for 504 offering (Note 8) - 170,780
Current portion of long-term lease (Note 11) 57,107 -
----------- -----------
Total Current Liabilities 520,725 576,827
----------- -----------
LONG-TERM DEBT
Lease obligations - long term (Note 11) 10,139 -
----------- -----------
Total Long-Term Debt 10,139 -
----------- -----------
TOTAL LIABILITIES 530,864 576,827
----------- -----------
COMMITMENTS (Note 9)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 5,000,000 shares authorized of
$1.00 par value, -0- shares issued and outstanding - -
Common stock: 25,000,000 shares authorized of
$0.001 par value, 12,245,935 and 4,155,793
shares issued and outstanding, respectively 12,246 4,156
Additional paid-in capital 1,279,164 717,183
Deficit accumulated during the development stage (1,558,346) (1,135,721)
----------- -----------
Total Stockholders' Equity (Deficit) (266,936) (414,382)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 263,928 $ 162,445
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
-------------------------------------------------------- December 31,
1998 1997 1996 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 180,973 $ - $ - $ 180,973
----------- ----------- ----------- -----------
OPERATING EXPENSES
General and administrative 630,569 46,642 - 677,211
Depreciation and amortization 57,836 - - 57,836
----------- ----------- ----------- -----------
Total Operating Expenses 688,405 46,642 - 735,047
----------- ----------- ----------- -----------
OPERATING LOSS (507,432) (46,642) - (554,074
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Gain on marketable securities 120,260 - - 120,260
Interest expense (35,453) - - (35,453)
----------- ----------- ----------- -----------
Total Other Income (Expense) 84,807 - - 84,807
----------- ----------- ----------- -----------
LOSS FROM DISCONTINUED
OPERATIONS (Note 5) - 87,429 347,222 1,089,079
----------- ----------- ----------- -----------
NET LOSS $ (422,625) $ (134,071) $ (347,222) $(1,558,346)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS PER SHARE OF
COMMON STOCK $ (0.05) $ (0.08) $ (0.70)
----------- ----------- -----------
----------- ----------- -----------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,836,836 1,634,839 495,903
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------------- Paid-in Development
Shares Amount Capital Stage
------ ------ ---------- -----------
<S> <C> <C> <C> <C>
Balance, March 10, 1970 - $ - $ - $ -
Common stock issued for cash at
$16.00 per share during 1970 1,906 2 30,498 -
Common stock issued for services
rendered at $6.40 per share
during 1970 1,578 1 10,099 -
Common stock issued for cash
at $32.00 per share during 1971 4,075 4 130,396 -
Common stock issued for services
rendered at $15.52 per share during
the period of inception through 1983 11,641 12 180,581 -
Common stock issued for services
rendered at $6.40 per share
during 1988 2,817 3 18,027 -
Net loss from inception on
March 10, 1970 through
December 31, 1991 - - - (369,623)
-------- --------- --------- ---------
Balance, December 31, 1991 22,017 22 369,601 (369,623)
Net loss for the year ended
December 31, 1992 - - - (552)
-------- --------- --------- ---------
Balance, December 31, 1992 22,017 22 369,601 (370,175)
Net loss for the year ended
December 31, 1993 - - - (100)
-------- --------- --------- ---------
Balance, December 31, 1993 22,017 22 369,601 (370,275)
Common stock issued for services
rendered at $6.40 per share on
August 1, 1994 43,750 44 279,956 -
Net loss for the year ended
December 31, 1994 - - - (280,100)
-------- --------- --------- ---------
Balance, December 31, 1994 65,767 $ 66 $ 649,557 $(650,375)
-------- --------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
7
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(CONTINUED)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
--------------------------------- Paid-in Development
Shares Amount Capital Stage
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 65,767 $ 66 $ 649,557 $ (650,375)
Net loss for the year ended
December 31, 1995 - - - (4,053)
--------- ----------- ----------- -----------
Balance, December 31, 1995 65,767 66 649,557 (654,428)
Expenses paid on the Company's
behalf by a shareholder - - 716 -
Common stock issued for cash at
$0.01 per share on July 23, 1996 1,000,000 1,000 39,000 -
Fractional shares issued in
conjunction with a 1-for-80 reverse
stock split 33 - - -
Fractional shares issued in conjunction
with a 3-for-1 forward stock split 34 - - -
Net loss for the year ended
December 31, 1996 - - - (347,222)
--------- ----------- ----------- -----------
Balance, December 31, 1996 1,065,834 1,066 689,273 (1,001,650)
Common stock issued to acquire
Chow's Consulting Corporation
on April 30, 1997 recorded at
predecessor cost of $0.00 90,000 90 (90) -
Fractional shares canceled in
conjunction with a 1-for-6
reverse stock split (41) - - -
Common stock issued for cash
at $0. 01 per share 3,000,000 3,000 28,000 -
Net loss for the year ended
December 31, 1997 - - - (134,071)
--------- ----------- ----------- -----------
Balance, December 31, 1997 4,155,793 $ 4,156 $ 717,183 $(1,135,721)
--------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
8
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
(CONTINUED)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
-------------------------------- Paid-in Development
Shares Amount Capital Stage
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 4,155,793 $ 4,156 $ 717,183 $(1,135,721)
Common stock issued to acquire
subsidiaries 6,950,000 6,950 (6,950)
Common stock issued for cash
at $0.50 per share 1,140,142 1,140 568,931
Net loss for the year ended
December 31, 1998 - - - (422,625)
Balance, December 31, 1998 12,245,935 $ 12,246 $ 1,279,164 $(1,558,346)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
9
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
---------------------------------------------- December 31,
1998 1997 1996 1998
------------ ----------- ----------- -------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $ (422,625) $ (134,071) $ (347,222) $(1,558,346)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation expense 57,836 - - 57,836
Common stock issued for
services and expenses paid
on behalf of the Company - - 716 489,439
Changes in operating assets and liabilities:
(Increase) decrease in stock
offering costs 8,204 (8,204) - -
(Increase) in accounts receivable (5,928) - - (5,928)
(Increase) in other assets (180,873) - - (180,873)
Increase (decrease) in deposits
for 504 (170,780) 170,780 - -
Increase in accounts payable 151,033 7,015 - 158,148
Increase (decrease) in accrued
expenses (30,931) 32,208 7,019 13,061
----------- ----------- ----------- -----------
Net Cash (Used) by
Operating Activities (594,064) 67,728 (339,487) (1,026,663)
----------- ----------- ----------- -----------
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of fixed assets (209,038) - - (209,038)
----------- ----------- ----------- -----------
Net Cash (Used) by
Investing Activities (209,038) - - (209,038)
----------- ----------- ----------- -----------
CASH FLOWS FROM
FINANCING ACTIVITIES
Increase in notes payable 95,180 41,500 313,500 450,180
Common stock issued for cash 570,071 31,000 40,000 801,911
Net Cash Provided by
Financing Activities $ 665,251 $ 72,500 $ 353,500 $ 1,252,091
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
10
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
From
Inception on
For the Years Ended March 10,
December 31, 1970 Through
------------------------------------------------ December 31,
1998 1997 1996 1998
--------- ---------- --------- ------------
<S> <C> <C> <C> <C>
NET INCREASE IN CASH AND
CASH EQUIVALENTS $(137,851) $ 140,228 $ 14,013 $ 16,390
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 154,241 14,013 - -
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 16,390 $ 154,241 $ 14,013 $ 16,390
--------- --------- --------- ---------
--------- --------- --------- ---------
CASH PAID FOR:
Interest $ 66,384 $ - $ - $ 66,384
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING
ACTIVITIES:
Common stock issued for
services rendered and expenses
paid on behalf of the Company $ - $ - $ 716 $ 489,439
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
11
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
The financial statements presented are those of Global Telephone
Communication, Inc. The Company was incorporated on March 10, 1970 for
the purpose of raising capital to develop and possibly mine certain oil
and mineral deposits. The Company was unable to raise development money
and the Company's operations ceased and the mineral deposits were
abandoned. The Company has been seeking new business opportunities
believed to hold a potential profit. The Company changed its name to
Global Telephone Communication, Inc. on October 14, 1997.
On June 23, 1997, the Company bought all of the outstanding shares of
Chow's Consulting Corporation (Chow's) by trading three common shares of
the corporation for each one common share of Chow's dated April 20, 1997.
The aggregate consideration paid for the 180,000 common shares of Chow's
consisted of 90,000 common shares in the capital stock of the Company.
The only asset of Chow's was a mining claim which has since been deemed
worthless and Chow's was dissolved. On March 24, 1998, the Company
changed its domicile from the State of Utah to the State of Nevada.
On February 9, 1998, the Company acquired all OF the issued and
outstanding shares of an operating multimedia company, Planet City
Graphics Corp. (Planet City), a private company incorporated under the
laws of British Columbia, Canada, having its office in Vancouver, B.C.
The Company issued a total of 1,500,000 common shares in exchange for all
the issued and outstanding shares of Planet City. There was no cash
consideration and the Company accounted for the acquisition of all the
shares of Planet City as a purchase and an acquisition of a wholly-owned
subsidiary. There was no adjustment to the carrying value of the assets
or liabilities of Planet City.
On February 9, 1998, the Company acquired all of the issued and
outstanding shares of an operating multimedia company, Webworks
Multimedia Corporation (Webworks), a private company incorporated under
the laws of British Columbia, Canada, having its office in Vancouver,
B.C. The Company issued a total of 500,000 common shares in exchange for
all the issued and outstanding shares of Webworks. There was no cash
consideration and the Company accounted for the acquisition of all the
shares as a purchase and an acquisition of a wholly-owned subsidiary.
There was no adjustment to the carrying value of the assets or
liabilities of Webworks.
On April 16, 1998, the Company entered into a Share Exchange Agreement
with Regent Luck Holdings Limited (Regent), a Hong Kong corporation, with
offices in Hong Kong, whereby the Company acquired all the issued and
outstanding shares of Regent by issuing and exchanging 4,950,000 shares
of the Company to the shareholders of Regent.
12
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
Regent has a ninety percent (90%) ownership and interest in a joint
venture company, Shenzhen Global Net Computer Information Co. Ltd.,
organized under the laws of The Peoples Republic of China, with Shenzhen
Newsnet Co. Ltd.
Shenzhen Newsnet Co. Ltd. has obtained the Telecommunications Business
Operation Approval (No. GDSZ P90007) which allows it to carry out
computer information internet service.
Shenzhen Newsnet Co. Ltd. and the joint venture company, Shenzhen Global
Net Computer Information Co. Ltd. had entered into and exclusive agency
agreement for Shenzhen Global Net Computer Information Co. Ltd. to act as
exclusive agents to conduct all telecommunications and internet business
and services in Shenzhen, Guangdong Province, PRC.
As part of the Share Exchange Agreement, the Company agreed to provide
funds as capital for the joint venture in the amount of $1,300,000. As of
the year end, the Company has provided $90,465 to the joint venture
through Regent.
The Company accounted for the acquisition of all the shares of Regent as
a purchase and an acquisition of a wholly-owned subsidiary. There was no
adjustment to the carrying value of the assets or liabilities of Regent.
b. Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting. The Company has elected a December 31 year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Basic Loss Per Share
The computations of basic loss per share of common stock are based on the
weighted average number of shares outstanding during the period.
e. Provision for Taxes
At December 31, 1998, the Company has net operating loss carryforwards
totaling approximately $1,500,000 that may be offset against future
taxable income through 2013. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or
greater chance the loss carryforwards will expire unused. Accordingly,
the potential tax benefits of the loss carryforwards are offset by a
valuation allowance of the same amount.
13
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
g. Principles of Consolidation
The consolidated financial statements include those of Global Telephone
Communication, Inc. and its wholly-owned subsidiaries, Planet City
Graphics Corp., Webworks Multimedia Corporation and Regent Luck Holdings
Limited. All material intercompany accounts and transactions have been
eliminated.
h. Marketable Securities
Marketable securities represent shares of stock which are classified as
trading securities and are carried at market value. Any change in market
value from period to period will be included in earnings.
There are no unrealized gains or losses in either trading securities at
December 31, 1998.
i. Advertising
The Company follows the policy of charging the costs of advertising to
expense as incurred.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern. It is the intent of the Company to enter the
business of internet service in China. In the interim, shareholders of
the Company have committed to meeting its minimal operating expenses.
14
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 3 - NOTES PAYABLE
Notes payable consisted of the following at December 31, 1998 and
1997:
<TABLE>
<CAPTION>
December 31,
---------------------------
1998 1997
---------- ---------
<S> <C> <C>
Promissory note to an individual, interest at
8%, due on January 30, 1998, unsecured $ - $ 11,500
Promissory note to an individual, interest at 8%, due on January
30, 1998, unsecured - 308,500
Promissory note to an individual, interest at
8%, due on January 30, 1998, unsecured - 35,000
Promissory note to an individual at 10%,
due on demand, unsecured 297,174 -
--------- ----------
Total Notes Payable $ 297,174 $ 355,000
--------- ----------
--------- ----------
</TABLE>
Interest has been accrued for the above notes payable at their respective
rates:
<TABLE>
<CAPTION>
December 31,
---------------------------
1998 1997
-------- ---------
<S> <C> <C>
Accrued Interest Payable $ 8,296 $ 39,227
</TABLE>
NOTE 4 - STOCKHOLDER PAYABLE
During 1995, an officer and shareholder of the Company incurred and paid
expenses on behalf of the Company. The officer and shareholder also
charged the Company $1,500 for services rendered to the Company. At
December 31, 1998 and 1997, the amount owed to the shareholder and
officer was $-0- and $4,705, respectively.
15
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 5 - LOSS FROM DISCONTINUED OPERATIONS
On September 24, 1997, the Board of Directors of the Company decided to
discontinue the operations of the Krystar International. The following is
the summary of the loss from the discontinued operations.
<TABLE>
<CAPTION>
From
Inception on
March 10,
December 31, 1970 Through
--------------------------------- December 31,
1997 1996 1997
----------- ----------- --------------
<S> <C> <C> <C>
Sales $ - $ - $ -
Operating expenses 87,429 347,222 1,089,079
----------- ----------- -----------
Loss from discontinued
operations $ (87,429) $ (347,222) $(1,089,079)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Company retains no assets which were attributable to prior
operations. No income tax benefit has been attributed to the loss from
discontinued operations.
NOTE 6 - STOCK TRANSACTIONS
On June 26, 1996, the shareholders of the Company approved a 1-for-80
reverse stock split. The financial statements have been restated to
reflect this change retroactively to inception.
On December 12, 1996, the shareholders of the Company approved a 3-for-2
forward stock split. The financial statements have been restated to
reflect this change retroactively to inception.
On October 14, 1997, the shareholders of the Company approved a 1-for-6
reverse stock split. The financial statements have been restated to
reflect this change retroactively to inception.
On June 26, 1996, the shareholders of the Company approved a change in
the par value of its common stock to $0.001 from $0.01. The financial
statements have been restated to reflect this change retroactively to
inception.
16
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 7 - STOCK OPTION PLAN
On October 14, 1997, the Company adopted the 1997 Stock Option Plan (the
"Plan"), initially reserving an aggregate of 166,667 shares of the
Company's common stock (the "Available Shares") for issuance pursuant to
the exercise of stock options ("Options") which may be granted to
employees, officers, and directors of the Company and consultants to the
Company. The Plan provides for annual adjustment in the number of
Available Shares, commencing December 31, 1997, to a number equal to 10%
of the number of shares outstanding on December 31 of the preceding year
or 166,667 shares, whichever is greater. No options have been granted as
of December 31, 1998.
NOTE 8 - DEPOSIT FOR 504 OFFERING
On January 21, 1998, the Company completed a Rule 504 stock offering. The
Company had received $170,780 from investors in 1997. During 1998,. the
$170,780 was converted to common stock at $0.50 per share.
NOTE 9 - COMMITMENTS
The Company is renting its office space for approximately $1,800 per
month on a month-to-month basis.
NOTE 10 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
December 31,
1998
-----------
<S> <C>
Computer equipment $287,900
Office equipment 25,942
----------
Subtotal 313,842
Accumulated depreciation (162,640)
----------
Net property and equipment $151,202
----------
----------
</TABLE>
Depreciation expense for the year ended December 31, 1998 was $57,836.
Depreciation is computed using the straight-line method over the
estimated useful lives as follows:
Computer equipment 5 years
Office equipment 7 years
17
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
December 31, 1998 and 1997
NOTE 11 - LEASES
All non-cancelable leases with an initial term greater than one year have
been categorized as capital leases in conformity with the definitions in
Financial Accounting Standards Board Statement No. 13, "Accounting for
Leases". At December 31, 1998, the Company is liable under the terms of
non-cancelable leases for the following minimum lease commitments
Period Ended Capital
December 31, Leases
1999 $ 57,107
2000 10,139
2001 -
2002
Later years -
Total minimum lease payments $ 67,246
NOTE 12 - SUBSEQUENT EVENTS (Unaudited)
Subsequent to the year end, the Company completed a regulation d stock
offering. The Company received proceeds of $999,500 from investors and in
exchange will issue a total of 2,349,000 common shares.
In addition, the Company completed a private placement with an investor
to purchase 400,000 common shares at a price of $1.00 per share for total
proceeds of $400,000. The shares are restricted and cannot be traded for
one year.
Furthermore, the Company completed a private placement with an investor
to purchase 500,000 common shares at a price of $1.00 per share for total
proceeds of $500,000. The shares are restricted and cannot be traded for
one year.
<PAGE>
EXHIBIT FS-3
------------
GLOBAL TELEPHONE COMMUNICATION, INC. AND
SUBSIDIARIES STATEMENT OF OPERATIONS & DEFICIT
JANUARY 1 - JUNE 30, 1999 (UNAUDITED, PREPARED
BY MANAGEMENT).
<PAGE>
Global Telephone Communication, Inc. and Subsidiaries
Statement of Operations & Deficit
January 1 - June 30, 1999
(Presented in U. S. Dollars)
(Unaudited, Prepared by Management)
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
<S> <C> <C>
REVENUE
Income from Operations $ 86,646 $ 90,470
Gain (Loss) on Sale of Marketable Securities $ 57,599 $ (132,660)
Miscellaneous Income $ 4,358 $ 4,705
------------ ------------
Total Income $ 148,603 $ (37,485)
------------ ------------
------------ ------------
EXPENSES $ -- $ --
Interest, Bank Charges & Foreign Exchange $ 12,672 $ 17,442
Office Expenses & Supplies $ 32,534 $ 18,624
Legal & Accounting Expenses $ 31,873 $ 42,172
Transfer Agents Fees $ 1,812 $ 35
Investor Relations $ 49,321 $ 969
Consulting Fees $ 138,719 $ 18,797
Directors Remuneration $ 23,954 $ --
Travel, Entertainment, Promotion & Marketing Expenses $ 145,912 $ 73,714
Salaries, Secretarial Services & Benefits $ 47,836 $ 19,779
General & Administrative Expenses $ 4,104 $ 174
Miscellaneous Expenses $ 2,525 $ 2,400
Rent & Related Costs $ 13,531 $ 7,535
Depreciation $ 45,854 $ 33,656
------------ ------------
Total Expenses $ 550,646 $ 235,297
------------ ------------
------------ ------------
NET LOSS (BEFORE PRIOR YEAR ADJUSTMENTS) $ 362,563
plus Prior Year Adjustments $ (50,083)
------------ ------------
NET LOSS FOR THE PERIOD $ 373,342 $ 272,782
------------ ------------
------------ ------------
DEFICIT, BEGINNING OF THE PERIOD $ 1,920,482 $ 1,491,076
------------ ------------
DEFICIT, END OF THE PERIOD $ 2,293,824 $ 1,763,858
------------ ------------
------------ ------------
NET LOSS PER SHARE OF COMMON STOCK $ 0.02 $ 0.03
------------ ------------
------------ ------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 15,109,896 8,804,265
------------ ------------
------------ ------------
</TABLE>
Page 1
<PAGE>
EXHIBIT FS-4
------------
GLOBAL TELEPHONE COMMUNICATIONS, INC. AND
STATEMENT OF CHANGES IN FINANCIAL POSITION -
6 MONTHS TO JUNE 30, 1999 AND 1998
(UNAUDITED, PREPARED BY MANAGEMENT).
<PAGE>
Global Telephone Communication, Inc. and Subsidiaries
Statement of Changes in Financial Position - 6 months to June 30, 1999 and 1998
(Presented in U. S. Dollars)
<TABLE>
<CAPTION>
(Unaudited, Prepared by Management) June 30, 1999 June 30, 1998
CASH PROVIDED BY (USED IN):
OPERATIONS:
<S> <C> <C>
Net Loss for the Period after Prior Yr. Adjust $ (373,342) $ (272,782)
Depreciation added back $ 24,131 $ 33,656
Changes in non-cash Working Capital
Advances & Deposits Recoverable $ (349,446) $ 29,686
Capital Leases $ (92,007) $ 58,415
Accounts Payable $ (90,908) $ (67,812)
----------- -----------
$ (881,572) $ (218,837)
----------- -----------
----------- -----------
FINANCING
Deferred Stock Offering Costs $ (8,204)
Deposit for 504 Offering $ (170,780)
Notes Payable & Accrued Interest $ 132,245 $ (410,530)
Issuance of Capital Stock $ 874,595
Additional Paid in Capital $ 1,908,313 $ 112,240
----------- -----------
$ 2,040,558 $ 397,321
----------- -----------
----------- -----------
INVESTMENTS
Office Equipment $ (35,188) $ (166,654)
Proceeds from Sale of Marketable Securities $ (85,455) $ (70,060)
----------- -----------
$ (120,643) $ (236,714)
----------- -----------
----------- -----------
INCREASE (DECREASE) IN CASH $ 1,038,343 $ (58,230)
CASH, Beginning of the Period $ 16,390 $ 154,241
----------- -----------
CASH, End of the Period $ 1,054,733 $ 96,011
----------- -----------
----------- -----------
</TABLE>
Page 3
<PAGE>
EXHIBIT FS-5
------------
GLOBAL TELEPHONE COMMUNICATIONS, INC. BALANCE
SHEET - JUNE 30, 1999 AND 1998 (UNAUDITED,
PREPARED BY MANAGEMENT).
<PAGE>
Global Telephone Communication, Inc. and Subsidiaries
Balance Sheet - June 30, 1999 and 1998
(Presented in U. S. Dollars)
<TABLE>
<CAPTION>
(Unaudited, Prepared by Management) June 30, 1999 June 30, 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash & Marketable Securities $ 1,054,733 $ 96,011
Advances & Deposits Receivable $ 349,903 $ 29,686
----------- -----------
Total Current Assets $ 1,404,636 $ 125,697
----------- -----------
----------- -----------
CAPITAL ASSETS
Capital Assets $ 197,604 $ 200,310
----------- -----------
TOTAL ASSETS $ 1,602,240 $ 326,006
----------- -----------
----------- -----------
LIABILITES & SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts Payable $ 76,112 $ 74,927
Notes Payable or due to Director $ 437,715 $ 122,035
Taxes Payable $ -- $ 100
Capital Leases Obligations $ 37,226 $ 58,415
----------- -----------
TOTAL CURRENT LIABILITIES $ 551,053 $ 255,478
----------- -----------
----------- -----------
LONG TERM LIABILITIES
Capital Leases Obligations $ 2,308
Due to Affiliate, other than Shareholder $ 87,010
----------- -----------
TOTAL LONG TERM LIABILITIES $ 89,318 $ 126,212
----------- -----------
TOTAL LIABILITIES $ 640,370 $ 381,690
----------- -----------
----------- -----------
SHAREHOLDERS' EQUITY
Common Stock $ 1,077,439 $ 878,751
Additional Paid in Capital $ 2,178,255 $ 829,423
----------- -----------
Deficit $(2,293,824) $(1,763,858)
----------- -----------
----------- -----------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) $ (59,059) $ (55,684)
----------- -----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 1,602,240 $ 326,006
----------- -----------
----------- -----------
</TABLE>
Page 2
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC. AND SUBSIDIARIES
NOTES TO THE JUNE 30, 1999 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED, PREPARED BY MANAGEMENT)
1. The condensed consolidated financial statements included herein have been
prepared by Global Telephone Communication, Inc. (the "Company"), without
audit and should be read in conjunction with the audited financial
statements of the Company. Certain information and footnote disclosures,
normally included in financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or omitted
although the Company believes the disclosures which are made are adequate
to make the information presented not misleading. Further, the consolidated
financial statements reflect, in the opinion of management, all adjustments
necessary to present fairly the financial position and results of
operations as of and for the periods indicated. The results of the
operations for the period ended June 30, 1999 are not necessarily
indicative of the results expected for the full year.
2. On January 22, 1999, the Company canceled the October 14, 1997 Stock Option
Plan.
3. The accountants for 2 wholly-owned subsidiaries, denominated in Canadian
funds, were unaware of the effective date for the acquisition. Any
alterations to the statements due to this adjustment will be made in the
3rd quarter, 1999.
<PAGE>
EXHIBITS
--------
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1 ARTICLES OF MERGER MERGING GLOBAL TELEPHONE
COMMUNICATION, INC. (A UTAH CORPORATION) INTO
GLOBAL TELEPHONE COMMUNICATION, INC. (A NEVADA
CORPORATION)
2.2 ARTICLES OF INCORPORATION OF GLOBAL TELEPHONE
COMMUNICATION, INC.
2.3 ARTICLES OF AMENDMENT AND RESTATEMENT TO ARTICLES
OF INCORPORATION OF DYNASTY TMT CORP.
2.4 ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF DYNASTY TMT CORP. DATED 1/2/97
2.5 ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF DYNASTY TMT CORP. DATED 7/25/96
2.6 ARTICLES OF INCORPORATION OF DYNASTY ORE AND
MINERALS CORPORATION
2.7 BY-LAWS OF GLOBAL TELEPHONE COMMUNICATION, INC.
6.1 SHARE EXCHANGE ACKNOWLEDGMENT - PLANET CITY
GRAPHICS CORP.
6.2 SHARE EXCHANGE ACKNOWLEDGMENTS - WEBWORKS
MULTIMEDIA CORPORATION
6.3 SHARE EXCHANGE AGREEMENT WITH REGENT LUCK HOLDINGS
LTD.
6.4 AMENDMENT OF SHARE EXCHANGE AGREEMENT WITH
REGENT LUCK HOLDINGS
6.5 JOINT VENTURE AGREEMENT BETWEEN SHENZHEN XUN
YUN YUN DA ELECTRONICS CO. LTD. AND REGENT LUCK
HOLDINGS LTD. FOR SHENZHEN GLOBAL NET COMPUTER
INFORMATION CO. LTD.
6.6 AGENCY AGREEMENT BETWEEN SHENZHEN NEWSNET
INFORMATION CO. AND SHENZHEN GLOBAL NET COMPUTER
INFORMATION CO. LTD.
<PAGE>
6.7 TELECOMMUNICATION BUSINESS OPERATION APPROVAL OF
PEOPLES REPUBLIC OF CHINA FOR SHENZHEN NEWSAGENT
CO. LTD.
6.8 SHARE EXCHANGE AGREEMENT WITH PACIFIC ASSET
INTERNATIONAL LTD.
6.9 CONSULTING AGREEMENT WITH LIONS PEAK CAPITAL LTD.
6.10 CONSULTING AGREEMENT WITH MILAN FINANCIAL INC.
27 FINANCIAL DATA SCHEDULE
</TABLE>
<PAGE>
EXHIBIT 2.1
ARTICLES OF MERGER MERGING GLOBAL
TELEPHONE COMMUNICATION, INC. (A UTAH
CORPORATION) INTO GLOBAL TELEPHONE
COMMUNICATION, INC. (A NEVADA CORPORATION)
<PAGE>
[SEAL]
I, DEAN HELLER, the duly elected and qualified Nevada Secretary of State,
do hereby certify that I am, by the laws of said State, the custodian of
the records relating to filings by corporations, limited-liability
companies, limited partnerships, and limited-liability partnerships
pursuant to Title 7 of the Nevada Revised Statutes which are either
presently in a status of good standing or were in good standing for a
time period subsequent of 1976 and am the proper officer to execute this
certificate.
I further certify that there was filed in this office on May 1, 1998
ARTICLES OF MERGER
merging
GLOBAL TELEPHONE COMMUNICATION, INC.
(A UTAH CORPORATION)
into
GLOBAL TELEPHONE COMMUNICATION, INC.
(A NEVADA CORPORATION)
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed the Great Seal of State, at my office, in
Carson City, Nevada, on May 4. 1998.
[SEAL]
/s/ Dean Heller
Secretary of State
By /s/ Mary M.N
Certification Clerk
<PAGE>
ARTICLES OF MERGER
OF
GLOBAL TELEPHONE COMMUNICATION, INC.
AND
GLOBAL TELEPHONE COMMUNICATION, INC.
[STAMP]
The undersigned, being first duly sworn, does hereby state as follows:
1. These Articles of Merger are being filed with the Nevada Secretary
of State and Utah Secretary of State pursuant to Section
92A.200 of the Nevada General Corporation Law and Section
16-10a-1105 of the Utah Business Corporation Act to reflect
the merger of GLOBAL TELEPHONE COMMUNICATION, INC., a Utah
corporation ("GLOBAL-UTAH"), into GLOBAL TELEPHONE COMMUNICATION,
INC., a Nevada corporation ("GLOBAL-NEVADA"), as the surviving
corporation.
2. A copy of the Agreement and Plan of Reincorporation and Merger
dated April 8, 1998 (the "Plan"), is attached hereto as Exhibit
"A."
3. The Plan was approved by the shareholders of GLOBAL-UTAH and
GLOBAL-NEVADA on April 22, 1998. The class, number of shares
outstanding at the record date for determining shareholders
entitled to vote on the Plan, and the number of votes cast for and
against the Plan are as follows:
<TABLE>
<CAPTION>
Number of
Number of Votes Number of Number of
Shares Entitled Votes Votes
Corporation Class Outstanding to be Cast Cast For Cast Against
- ----------- ----- ----------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
Global-Utah Common 7,295,935 7,295,935 4,124,521 0
Global-Nevada Common 100 100 100 0
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
4. The number of votes cast for the Plan by the shareholders of
GLOBAL-UTAH and the number of votes cast for the Plan by
GLOBAL-NEVADA were sufficient for approval of the Plan.
5. The principal office of GLOBAL-NEVADA, the surviving corporation,
is #910 - 510 Burrard Street, Vancouver, British Columbia V6C
3A8 Canada.
6. The merger is to be effective as of May 1, 1998.
[SEAL]
<PAGE>
Dated this 29th day of April, 1998.
GLOBAL TELEPHONE GLOBAL TELEPHONE
COMMUNICATION, INC. COMMUNICATION, INC.
a Utah corporation a Nevada corporation
By: /s/ George Delmas By: /s/ Terry Wong
---------------------- ----------------
George Delmas Terry Wong
Chairman of the Board President
By: /s/ Thomas Kennedy By: /s/ Thomas Kennedy
--------------------- -------------------
Thomas Kennedy Thomas Kennedy
Secretary Secretary
CITY OF VANCOUVER )
)
PROVINCE OF BRITISH COLUMBIA )
Before me, a notary public in and for the aforesaid Province, personally
appeared GEORGE DELMAS, Chairman of the Board of Global Telephone Communication,
Inc., known to me to be the person who executed the foregoing document this
29th day of April, 1998.
/s/ Paul C. MacNeill
-----------------------
Notary Public
[NOTARY STAMP]
CITY OF VANCOUVER )
)
PROVINCE OF BRITISH COLUMBIA )
Before me, a notary public in and for the aforesaid Province, personally
appeared TERRY WONG, President of Global Telephone Communication, Inc., known
to me to be the person who executed the foregoing document this 29th day of
April, 1998.
/s/ Paul C. MacNeill
-----------------------
Notary Public
[NOTARY STAMP]
<PAGE>
EXHIBIT "A"
AGREEMENT AND PLAN OF REINCORPORATION AND MERGER
This Agreement and Plan of Reorganization and Merger ("Reincorporation
Agreement") is made as of April 8,1998, by and between GLOBAL TELEPHONE
COMMUNICATION, INC., a Utah corporation ("Global-Utah"), and GLOBAL TELEPHONE
COMMUNICATION, INC., a Nevada corporation ("Global- Nevada"), (collectively, the
"Constituent Corporations").
The parties adopt the plan of merger encompassed by this Reincorporation
Agreement and agree that Global-Utah shall merge into Global-Nevada on the
following terms and conditions:
1. REINCORPORATION; SURVIVING CORPORATION; AND EFFECTIVE TIME.
1.1 REINCORPORATION. As soon as practicable following the fulfilment (or
waiver, to the extent permitted) of conditions specified in this
Reincorporation Agreement, Global-Utah shall be merged with and into
Global-Nevada (the "Reincorporation"), and Global-Nevada shall survive the
Reincorporation.
1.2 EFFECTIVE TIME. The Reincorporation shall be effective as of the latest of
the date and time when (i) Articles of Merger are duly filed with the
Secretary of State of the State of Utah as provided by the Utah Business
Corporation Act; (ii) Articles of Merger are duly filed with the Secretary
of State of the State of Nevada as provided in the Nevada General
Corporation Law; and (iii) May 1, 1998 ("Effective Time").
1.3 SURVIVING CORPORATION. At the Effective Time, Global-Nevada, as the
surviving corporation ("Surviving Corporation") shall continue its
corporate existence under the laws of the State of Nevada in the manner
and with the effect provided by the Nevada General Corporation Law, and
the separate existence of Global-Utah shall be terminated and shall cease.
2. TREATMENT OF SECURITIES.
2.1 Common Stock of Global-Utah and Global-Nevada. At the Effective Time, by
virtue of the Reincorporation and without any further action on the part of
the Constituent Corporations or their shareholders, (i) each share of
Common Stock of Global-Utah issued and outstanding immediately prior to the
Effective Time shall be changed and converted into one fully paid and
nonassessable share of the Common Stock of Global-Nevada, and (ii) each
share of Common Stock of Global-Nevada issued and outstanding immediately
prior to the Effective Time shall be cancelled.
2.2 STOCK CERTIFICATES. At and after the Effective Time, all of the outstanding
certificates that, prior to that time, represented shares of the common
Stock of Global-Utah shall be deemed for all purposes to evidence ownership
of and to represent an equal number of shares of the same class and series
of Common Stock of Global-Nevada and shall be so registered on the books
and records of Global-Nevada or its transfer agent. The registered owner of
any outstanding stock certificate shall, until such certificate shall have
been surrendered for transfer or conversion or otherwise accounted for to
Global-Nevada or its transfer agent, have
<PAGE>
and be entitled to exercise any voting and other rights with respect to
and to receive any dividend and other distributions upon, the shares of
Global-Nevada evidenced by such certificate as above provided. After the
Effective Time, whenever certificates which formerly represented shares
of Global-Utah are presented for exchange or registration of transfer, the
Surviving Corporation will cause to be issued in respect thereof
certificates representing the shares of Global-Nevada into which the
shares of Global-Utah were converted.
3. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS.
3.1 ARTICLES OF INCORPORATION. At the Effective Time, the articles of
incorporation of Global-Nevada then in effect shall be the articles of
incorporation of the Surviving Corporation until further amended or
repealed in the manner provided by law.
3.2 BYLAWS. At the Effective Time, the Bylaws of the Surviving Corporation
then in effect shall be the bylaws of the Surviving Corporation until
further amended in accordance with the provisions thereof and applicable
law.
3.3 DIRECTORS. The directors of Global-Utah immediately preceding the
Effective Time shall be the directors of the Surviving Corporation on
and after the Effective Time and shall serve until the expiration of
their terms and until their successors are elected and qualified.
3.4 OFFICERS. The officers of Global-Utah immediately preceding the Effective
Time shall be the officers of the Surviving Corporation on and after the
Effective Time and shall serve at the pleasure of its Board of Directors.
4. MISCELLANEOUS.
4.1 AMENDMENT. This Reincorporation Agreement may be amended by the Boards of
Directors of the Constituent Corporations at any time prior to the filing
of this Reincorporation Agreement with the Utah Secretary of State or the
Nevada Secretary of State, provided that an amendment made subsequent to
the adoption of the Reincorporation Agreement by the shareholders of
either Constituent Corporation, unless approved by such shareholders,
shall not (i) alter or change the amount or kind of shares to be received
upon conversion of the outstanding Common Stock of Global-Utah, or (ii)
alter or change any of the terms and conditions of the Reincorporation
Agreement if such alteration or change would adversely affect the holders
of the outstanding Common Stock of Global-Utah.
4.2 CONDITIONS TO REINCORPORATION. The obligation of the Constituent
Corporations to effect the transactions contemplated hereby is subject to
satisfaction of the following conditions (any or all of which may be
waived to the extent permitted by law in the sole discretion of the
Boards of Directors of the Constituent Corporations): (i) the
Reincorporation shall have been approved by the shareholders of
Global-Utah in accordance with the Utah Business
2
<PAGE>
Corporation Act; (ii) Global-Utah, as sole shareholder of Global-Nevada,
shall have approved the Reincorporation in accordance with the Nevada
General Corporation Law, and (iii) the parties shall have made all
filings and received all approvals of any governmental or regulatory
agency of competent jurisdiction necessary in order to consummate the
Reincorporation, and each of such approvals shall be in full force and
effect.
4.3 ABANDONMENT OR DEFERRAL. At any time before the Effective Time, this
Reincorporation Agreement may be terminated and the Reincorporation may
be abandoned by the Board of Directors of either or both of the
Constituent Corporations, notwithstanding the approval of this
Reincorporation Agreement by the shareholders of Global-Utah, or the
consummation of the Reincorporation may be deferred for a reasonable
period of time if, in the opinion of the Board of Directors of the
Constituent Corporations, such action would be in the best interests of
such corporations. In the event of termination of this Reincorporation
Agreement, this Reincorporation Agreement shall become void and of no
effect and there shall be no liability on the part of either Constituent
Corporation or its Board of Directors or shareholders with respect
thereto.
IN WITNESS WHEREOF, this Reincorporation Agreement, having first been fully
approved by the Boards of Directors of Global-Utah and Global-Nevada, is hereby
executed on behalf of each Constituent Corporation.
GLOBAL TELEPHONE COMMUNICATION, INC.
A Utah corporation
By: /s/ Terry Wong
-------------------------
Terry Wong, President
GLOBAL TELEPHONE COMMUNICATION, INC.
A Nevada corporation
By: /s/ Terry Wong
-------------------------
Terry Wong, President
3
<PAGE>
EXHIBIT 2.2
ARTICLES OF INCORPORATION OF GLOBAL TELEPHONE
COMMUNICATION, INC.
<PAGE>
ARTICLES OF INCORPORATION
OF
GLOBAL TELEPHONE COMMUNICATION, INC.
ARTICLE I
The name of the corporation is Global Telephone Communication, Inc. (the
"Corporation").
ARTICLE II
The amount of total authorized capital stock which the Corporation shall
have authority to issue is 25,000,000 shares of common stock, each with $0.001
par value, and 5,000,000 shares of preferred stock, each with $0.01 par value.
To the fullest extent permitted by the laws of the State of Nevada (currently
set forth in NRS 78.195), as the same now exists or may hereafter be amended or
supplemented, the Board of Directors may fix and determine the designations,
rights, preferences or other variations of each class or series within each
class of capital stock of the Corporation.
ARTICLE III
The business and affairs of the Corporation shall be managed by a Board of
Directors which shall exercise all the powers of the Corporation except as
otherwise provided in the Bylaws, these Articles of Incorporation or by the laws
of the State of Nevada. The number of members of the Board of Directors shall be
set in accordance with the Company's Bylaws; however, the initial Board of
Directors shall consist of three members. The names and addresses of the persons
who shall serve as the directors until the first annual meeting of stockholders
and until their successors are duly elected and qualified is as follows:
NAME ADDRESS
George Delmas #910 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
Canada
Terry Wong #910 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
1
<PAGE>
Canada
Thomas John Kennedy #910 - 510 Burrard Street
Vancouver, B.C. V6C 3A8
Canada
ARTICLE IV
The name and address of the incorporator of the Corporation is Craig A.
Stoner, 455 Sherman Street, Suite 300, Denver, Colorado 80203.
ARTICLE V
To the fullest extent permitted by the laws of the State of Nevada
(currently set forth in NRS 78.037), as the same now exists or may hereafter be
amended or supplemented, no director or officer of the Corporation shall be
liable to the Corporation or to its stockholders for damages for breach of
fiduciary duty as a director or officer.
ARTICLE VI
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person against all liability and
expense (including attorneys' fees) incurred by reason of the fact that he is or
was a director or officer of the Corporation, he is or was serving at the
request of the Corporation as a director, officer, employee, or agent of, or in
any similar managerial or fiduciary position of, another corporation,
partnership, joint venture, trust or other enterprise. The Corporation shall
also indemnify any person who is serving or has served the Corporation as a
director, officer, employee, or agent of the Corporation to the extent and in
the manner provided in any bylaw, resolution of the shareholders or directors,
contract, or otherwise, so long as such provision is legally permissible.
ARTICLE VII
The owners of shares of stock of the Corporation shall not have a
preemptive right to acquire unissued shares, treasury shares or securities
convertible into such shares.
ARTICLE VIII
2
<PAGE>
Only the shares of capital stock of the Corporation designated at issuance
as having voting rights shall be entitled to vote at meetings of stockholders of
the Corporation, and only stockholders of record of shares having voting rights
shall be entitled to notice of and to vote at meetings of stockholders of the
Corporation
ARTICLE IX
The initial resident agent of the Corporation shall be the Corporation
Trust Company of Nevada, whose street address is 1 East 1st Street, Reno,
Nevada 89501.
ARTICLE X
The provisions of NRS 78.378 to 78.3793 inclusive, shall not apply to the
Corporation.
ARTICLE XI
The purposes for which the Corporation is organized and its powers are as
follows:
To engage in all lawful business; and
To have, enjoy, and exercise all of the rights, powers, and privileges
conferred upon corporations incorporated pursuant to Nevada law, whether now
or hereafter in effect, and whether or not herein specifically mentioned.
ARTICLE XII
One-third of the votes entitled to be cast on any matter by each
shareholder voting group entitled to vote on a matter shall constitute a
quorum of that voting group for action on that matter by shareholders.
ARTICLE XIII
The holder of a bond, debenture or other obligation of the Corporation
may have any of the rights of a stockholder in the Corporation to the extent
determined appropriate by the Board of Directors at the time of issuance of
such bond, debenture or other obligation.
3
<PAGE>
IN WITNESS WHEREOF, the undersigned incorporator has executed these
Articles of Incorporation this 19th day of March, 1998.
By /s/ Craig A. Stoner
-----------------
Craig A. Stoner
Incorporator
STATE OF COLORADO)
CITY AND ) ss.
COUNTY OF DENVER )
Personally appeared before me this 19th day of March, 1998, Craig A.
Stoner who, being first duly sworn, declared that he executed the foregoing
Articles of Incorporation and that the statements therein are true and
correct to the best of his knowledge and belief.
Witness my hand and official seal.
/s/ Nancy J. Packs
-------------------
Notary Public
[SEAL]
My Commission expires: Address:
455 Sherman Street
September 26, 1998 Suite 300
Denver, CO 80237
4
<PAGE>
EXHIBIT 2.3
ARTICLES OF AMENDMENT AND RESTATEMENT TO
ARTICLES OF INCORPORATION OF DYNASTY TMT CORP.
<PAGE>
ARTICLES OF AMENDMENT AND RESTATEMENT
TO THE
ARTICLES OF INCORPORATION
OF
DYNASTY TMT CORP.
[SEAL]
Dynasty TMT Corp., a Utah corporation (hereinafter referred to as the
"Corporation"), hereby certifies to the Secretary of State of Utah that:
FIRST: The Corporation desires to amend and restate its Articles of
Incorporation as currently in effect as hereinafter provided.
SECOND: The provisions set forth in these Articles of Amendment and
Restatement supersede the original Articles of Incorporation and all
amendments thereto. These Articles of Amendment and Restatement correctly set
forth the provisions of the Articles of Incorporation, as amended, of the
Corporation.
THIRD: The Articles of Incorporation of the Corporation are hereby
amended by striking in their entirety Articles I through XV, inclusive, and
by substituting in lieu thereof the Articles set forth on Exhibit A attached
hereto.
FOURTH: The Board of Directors duly advised the Articles of Amendment and
Restatement, and such Articles were adopted by a vote of the shareholders.
FIFTH: At the shareholders' meeting held October 14, 1997 for the purpose
of adopting these Articles of Amendment and Restatement, there were, 6,935,011
shares of Common Stock of the Corporation issued and outstanding, each of
which was entitled to one vote. Of these, 4,265,948 shares were represented
at the meeting, and 4,265,948 shares voted in favor of the adoption of the
Articles of Restatement and Amendment, which number was sufficient for
approval by that voting group.
SIXTH: Six (6) shares of Common Stock, $.02 par value, will be exchanged
for one share of Common Stock, $.001 par value (the "Reverse Stock Split").
If the Reverse Stock Split results in a fractional share, the Corporation
will round up to the nearest whole share instead of issuing a fractional
share. Shareholders are not required to exchange their certificates of
pre-split Common Stock for post-split Common Stock. Without giving effect to
any rounding for fractional shares, there will be 1,155,835 shares of Common
Stock, $.001 par value, outstanding after the Reverse Stock Split.
SEVENTH: The effective date of these Articles of Amendment and
Restatement shall be October 15, 1997.
IN WITNESS WHEREOF, Dynasty TMT Corp. has caused these presents to be
signed in its name and on its behalf by its President on this 14th day of
October, 1997, and its President acknowledges that these Articles of
Amendment and Restatement are the act and deed of Dynasty
<PAGE>
TMT Corp., and, under the penalties of perjury, that the matters and facts
set forth herein with respect to authorization and approval are true in all
material respects to the best of his knowledge, information, and belief.
DYNASTY TMT CORP.
By: /s/ KEITH BALDERSON
----------------------------------------------
Keith Balderson, President
2
<PAGE>
Exhibit A
RESTATED AND AMENDED
ARTICLES OF INCORPORATION
OF
DYNASTY TMT CORP.
ARTICLE I
NAME
The name of the Corporation is Global Telephone Communication, Inc.
ARTICLE 11
AUTHORIZED CAPITAL
The Corporation shall have authority to issue 25,000,000 shares of Common
Stock, $.001 Par Value and 5,000,000 shares of Preferred Stock, $ 1. 00 Par
Value.
COMMON STOCK. After the requirements with respect to preferential
dividends on the preferred stock, if any, shall have been met, and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts, then, and not otherwise, the holders of the common stock
shall be entitled to receive such dividends as may be declared from time to
time by the Board of Directors of the Corporation.
After distribution in full of the preferential amount, if any, to be
distributed to the holders of the preferred stock in the event of voluntary
or involuntary liquidation, distribution, or sale of assets, dissolution, or
winding-up of the Corporation, the holders of the common stock shall be
entitled to receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to shareholders,
ratably in proportion to the number of shares of the common stock held by
them respectively.
Except as may otherwise be required by law, each holder of the common
stock shall have one vote in respect of each share of the common stock held
by such holder on all matters voted upon by the shareholders.
PREFERRED STOCK. Shares of preferred stock may be divided into such
series as may be established, from time to time, by the Board of Directors.
The Board of Directors, from time to time, may fix and determine the relative
rights and preferences of the shares of any series so established.
A-1
<PAGE>
ARTICLE III
REGISTERED AGENT AND OFFICE
The name of the current registered agent is Lane Clissold. The current
registered office of the Corporation, which is identical to the business
office of the registered agent in Utah, is: 135 West 900 South, Salt Lake
City, Utah 84101.
ARTICLE IV
PURPOSES
The purposes for which the Corporation is organized are to engage in any
lawful act or activity for which corporations may be organized under the Utah
Business Corporation Act.
ARTICLE V
BOARD OF DIRECTORS
The 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, a board of directors. The number of directors of the
Corporation shall be fixed in the manner specified by the Bylaws of this
Corporation.
The directors shall be elected at each annual meeting of shareholders,
provided that vacancies may be filled by election by the remaining directors,
though less than a quorum or by the shareholders at a special meeting called
for that purpose. Despite the expiration of his or her term, a director
continues to serve until his or her successor is elected and qualifies.
ARTICLE VI
CUMULATIVE VOTING
Cumulative voting shall not be permitted in the election of directors.
ARTICLE VII
PREEMPTIVE RIGHTS
No holder of any shares of the stock of the Corporation shall have any
preemptive right to purchase, subscribe for, or otherwise acquire any shares
of stock of the Corporation of any class now or hereafter authorized, or any
securities exchangeable for or convertible into such shares, or any warrants
or other instruments evidencing rights or options to subscribe for, purchase,
or otherwise acquire such shares.
A-2
<PAGE>
ARTICLE VIII
LIMITATION ON DIRECTOR LIABILITY
A director of the Corporation shall not be personally liable to the
Corporation or to its shareholders for monetary damages for any action taken
or any failure to take any action as a director, except that this provision
shall not eliminate or limit the liability of a director to the Corporation
or to its shareholders for monetary damages otherwise existing for (i) the
amount of a financial benefit received by a director to which he is not
entitled; (ii) an intentional infliction of harm on the Corporation or the
shareholders; (iii) a violation of Section 16-1Oa-842 of the Utah Business
Corporation Act; or (iv) an intentional violation of criminal law. This
provision shall not eliminate or limit the liability of a director for any
act or omission occurring prior to the date when this provision became
effective. If the Utah Business Corporation Act is hereafter amended to
eliminate or limit further the liability of a director, then, in addition to
the elimination and limitation of liability provided by the preceding
sentence, the liability of each director shall be eliminated or limited to
the fullest extent permitted by the Utah Business Corporation Act as so
amended. Any repeal or modification of this Article VIII shall not adversely
affect any right or protection of a director of the Corporation under this
Article VIII, as in effect immediately prior to such repeal or modification,
with respect to any liability that would have accrued, but for this Article
VIII prior to such repeal or modification.
ARTICLE IX
INDEMNIFICATION
The Corporation shall indemnify, to the fullest extent permitted by
applicable law in effect from time to time, any person, and the estate and
personal representative of any such person, against all liability and expense
(including attomeys' fees) incurred by reason of the fact that he is or was a
director or officer of the Corporation or, while serving as a director or
officer of the Corporation, he is or was serving at the request of the
Corporation as a director, officer, partner, trustee, employee, fiduciary, or
agent of, or in any similar managerial or fiduciary position of, another
domestic or foreign corporation or other individual or entity or of an
employee benefit plan. The Corporation shall also indemnify any person who is
serving or has served the Corporation as director, officer, employee,
fiduciary, or agent, and that person's estate and personal representative, to
the extent and in the manner provided in any bylaw, resolution of the
shareholders or directors, contract, or otherwise, so long as such provision
is legally permissible.
A-3
<PAGE>
EXHIBIT 2.4
ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF DYNASTY TMT CORP. DATED 1/2/97
<PAGE>
[SEAL]
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
DYNASTY TMT CORP.
The undersigned, being the duly constituted officer of Dynasty TMT
Corp. acting pursuant to applicable provisions of the Utah Revised Business
Corporation Act, do hereby adopt the following Articles of Amendment to the
Articles of Incorporation of Dynasty TMT Corp.
1. Article I of the original Articles of Incorporation is hereby
repealed in its entirety, and the following Article I is hereby substituted
therefor as if it had been set forth in the original Articles of Incorporation.
ARTICLE I.
NAME
The name of the corporation is DYNASTY TMT CORP.
2. The following Article IV-A shall be added to the Articles of
Incorporation as they are now constituted.
<PAGE>
IN WITNESS WHEREOF, we, Morgan Buckley and Al Russell, have
executed these Amended Articles of Incorporation in duplicate this 26th day
of June, 1996, and say:
That we are, respectively, the President and Secretary of the
corporation; that we have read the above and foregoing Amendment to the
Articles of Incorporation thereof; know the contents thereof and that the
same are true and correct of our personal knowledge excepting as to matters
herein alleged on information and belief, and as to those matters, we believe
them to be true.
[SEAL]
/s/ MORGAN BUCKELY
-------------------------------------------
MORGAN BUCKELY
/s/ AL RUSSELL
-------------------------------------------
AL RUSSEL
3
<PAGE>
[SEAL]
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
DYNASTY OIL AND MINERALS CORP.
The undersigned, being the duly constituted officer of Dynasty Oil
and Minerals Corp. acting pursuant to applicable provisions of the Utah
Revised Business Corporation Act, do hereby adopt the following Articles of
Amendment to the Articles of Incorporation of Dynasty Oil and Minerals Corp.
1. Article I of the original Articles of Incorporation is hereby
repealed in its entirety, and the following Article I is hereby substituted
therefore as if it had been set forth in the original Articles of
Incorporation.
ARTICLE I.
NAME
The name of the corporation is DYNASTY TMT CORP.
2. The foregoing amendment was duly adopted on June 26, 1996 by the
a vote of the majority of the outstanding shares of the corporation.
3. On the date the amendment was adopted, there were
(21,045,500) common shares of the corporation outstanding each of which was
entitled to one vote on the amendment. Of these, 18,579,250 voted in favor of
the Amendment. No shares were voted against.
4. The foregoing vote was sufficient under the Charter and Bylaws
of the Corporation to adopt the aforesaid
<PAGE>
Amendment to the Articles of Incorporation of the corporation.
/s/ MORGAN BUCKLEY
----------------------------------------
MORGAN BUCKELY
/s/ AL RUSSELL
----------------------------------------
AL RUSSEL
IN WITNESS WHEREOF, we, Morgan Buckley and Al Russell, have executed
these Amended Articles of Incorporation in duplicate this 26th day of June,
1996, and say:
That we are, respectively, the President and Secretary of the
corporation; that we have read the above and foregoing Amendment to the
Articles of Incorporation thereof; know the contents thereof and that the
same are true and correct of our personal knowledge excepting as to matters
herein alleged on information and belief, and as to those matters, we believe
them to be true.
/s/ MORGAN BUCKLEY
----------------------------------------
MORGAN BUCKELY
[SEAL]
/s/ AL RUSSELL
----------------------------------------
AL RUSSEL
<PAGE>
EXHIBIT 2.5
ARTICLES OF AMENDMENT TO THE ARTICLES OF
INCORPORATION OF DYNASTY TMT CORP. DATED 7/25/96
<PAGE>
[SEAL]
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
DYNASTY TMT CORP.
The undersigned, being the duly constituted officer of Dynasty Oil and
Minerals Corp. acting pursuant to applicable provisions of the Utah Revised
Business Corporation Act, do hereby adopt the following Articles of Amendment
to the Articles of Incorporation of Dynasty Oil and Minerals Corp.
1. Article I of the original Articles of Incorporation is hereby
repealed in its entirety, and the following Article I is hereby substituted
therefor as if it had been set forth in the original Articles of
Incorporation.
ARTICLE 1.
NAME
The name of the corporation is DYNASTY TMT CORP.
2. Article V of the original Articles of Incorporation is hereby
repealed in its entirety, and the following Article V is hereby substituted
therefor as if it had been set forth in the original Articles of
Incorporation.
ARTICLE V
PAR VALUE
The par value of all common shares of the corporation shall be one mil
($.001).
<PAGE>
3. The foregoing amendments were duly adopted on June 26, 1996 by the
a vote of the majority of the outstanding shares of the corporation.
3. On the date the amendment was adopted, there were (21,045,500) shares
of the corporation outstanding each of which was entitled to one vote on the
amendment. Of these, 18,579,250 voted in favor of the Amendment. No shares
were voted against.
4. The foregoing vote was sufficient under the Charter and Bylaws of
the Corporation to adopt the aforesaid Amendment to the Articles of
Incorporation of the corporation.
/s/ MORGAN BUCKLEY
--------------------------------------
MORGAN BUCKELY
/s/ AL RUSSELL
--------------------------------------
AL RUSSEL
2
<PAGE>
ARTICLE IV-A
FORWARD SPLIT OF SHARES
On the date these Articles of Amendment were adopted, there were
10,263,203 common shares of the corporation outstanding. Those shares are
hereby forward split three (3) shares for two (2) shares so that the total
number of shares outstanding immediately after this amendment goes into
effect shall be 15,394,804 shares. This forward split of shares shall not
affect the par value of the shares which are presently outstanding or any
authorized but unissued shares of the corporation.
3. The foregoing amendments were duly adopted on December 13, 1996 by
the a resolution adopted by the sole director of the corporation pursuant to
the provisions of ss.16-10a-1002(l)(c) of the Utah Business Corporations Act.
Shareholder approval not required.
4. The foregoing action of the Sole Director was sufficient under the
Charter and Bylaws of the Corporation and the laws of the State of Utah, to
adopt the aforesaid Amendment to the Articles of Incorporation of the
corporation.
Dated this 20 day of December, 1996.
[SEAL] /s/ KEITH BALDERSON
--------------------------------------
Keith Balderson
Sole Director
2
<PAGE>
IN WITNESS WHEREOF, I, Keith Balderson, have executed these Amended
Articles of Incorporation in duplicate this 20 day of December, 1996, and say:
That I am the sole officer and director of Dynasty TMT Corp., that I
have read the above and foregoing Articles of Amendment to the Articles of
Incorporation thereof, that I know the contents thereof and that the same are
true and correct of my personal knowledge excepting as to matters herein
alleged on information and belief, and as to those matters, I believe them to
be true.
[SEAL] /s/ KEITH BALDERSON
--------------------------------------
Keith Balderson
3
<PAGE>
EXHIBIT 2.6
ARTICLES OF INCORPORATION OF DYNASTY ORE AND
MINERALS CORPORATION
<PAGE>
[SEAL]
ARTICLES OF INCORPORATION
OF
DYNASTY OIL AND MINERALS CORPORATION,
WE, the undersigned natural persons of the age of twenty-one years
or more, acting as incorporators of a corporation under the Utah Business
Corporation Act, adopt the following Articles of Incorporation for Dynasty
Oil and Minerals Corporation.
ARTICLE I
CORPORATE NAME
The name of this corporation is: DYNASTY OIL AND MINERALS CORPORATION.
ARTICLE II
DURATION OF CORPORATION
The corporation is to have perpetual existence unless dissolved or
terminated according to law.
ARTICLE III
CORPORATE PURPOSES
The primary business which this corporation proposes to initially
engage is to explore, operate, and/or develop uranium mines and/or mining
claims either patented or unpatented, to explore, operate and/or develop
beryllium and/or mining claims either patented or unpatented, and any other
business incident to or auxiliary thereto.
(a) To engage in the leasing of lands believed to contain
petroleum, oils, and gas; the improving, mortgaging, leasing,
assigning, and otherwise disposing of the same; the prospecting,
drilling, pumping, piping, storing, refining, and selling, both at
wholesale and retail, of oils and gas;
<PAGE>
the buying, otherwise acquiring, selling, and otherwise disposing of
any and all real estate and personal property for use in the business
of the company; the construction of any and all buildings, pipe lines,
pumping stations, and storage tanks, and any and all other buildings
required in carrying on the business of the company; the acting as
trustee for holders of oil lands in the receiving and disbursement of
funds to be used in drilling for the common benefit of the land
holders; the doing of any and every act or thing, proper, necessary,
and incidental to the general purpose of this company.
(b) To buy, acquire, sell, retain, deal in, or otherwise dispose of,
absolutely or contingently, petroleum and/or gas properties and
interests (whether like or different), and any right, title, or
interest therein, and to do all other acts and things required to be
done in connection therewith.
(c) To purchase, sell, and own royalties in oil and gas lands and
leases; to pay mortgages, notes, taxes, assessments, and other charges
that are or may become a lien or charge against any lands or leases in
which this company may have a royalty interest.
(d) To carry on the business of mining milling, concentrating,
converting, smelting, treating, refining, preparing for market,
manufacturing, buying, selling, exchanging and otherwise producing and
dealing in uranium, beryllium, zinc, lead, gold, silver, copper,
brass, iron, steel, coal and in all kinds of ores, metals, and
minerals, oils, petroleum, natural gas, hydrocarbons, acids and
chemicals, and in the products and by-products of every kind and
description and by whatsoever process, the same can be or may
hereafter be produced.
(e) To purchase, lease, option, locate, or otherwise acquire, own,
exchange, sell, or otherwise dispose of, pledge, mortgage,
hypothecate, and deal in mines, mining claims, mineral lands, coal
lands, oil lands, timber lands, water, and water rights, and other
property, both real and personal.
(f) To carry on as principals, agents, commission merchants or
consignees the business of mining, milling, concentrating, converting
smelting, treating, refining, buying, selling, exchanging,
manufacturing, and dealing in the above specified products or any of
them and of materials used in the manufacture of each, any and all of
such articles and to carry on as such principals, agents, commission
merchants, or consignees any other business which in the judgment of
the board of directors of the corporation may be conveniently
conducted in conjunction with any of the matters aforesaid.
-2-
<PAGE>
(g) To buy and otherwise acquire, to own and hold, manage, operate,
improve, develop, and sell lands, mining claims, mineral rights, oil
wells, and other real estate and interests and rights in and to any of
the properties; to buy and sell oil royalties of every kind and
character; to rent and lease machinery of every kind and character.
(h) To invest the funds of this corporation in real estate, mortgages,
stocks, bonds, or any other type of investment, and to own real and
personal property necessary for the rendering of professional
services.
(i) To make all contracts necessary and proper to effect its purposes
and conduct its authorized business.
(j) To share profits with those employees who have been largely
responsible for the current year's profits and who will be primarily
responsible for its continued success, and also to create an incentive
in these employees to continue to give the best efforts of which they
are capable in their respective abilities to the future growth and
development of the company, and to provide a fund for the benefit of
those employees in case of retirement, disability, or illness, and for
their wives, children, and close dependents, upon their deaths.
(k) To purchase and acquire, at its option, any of its shares which
are owned and held by any such shareholder as should desire to sell,
transfer, or otherwise dispose of his shares; provided, however, that
the capital of this corporation shall not be impaired.
(1) To purchase and acquire, at its option, the shares owned and held
by any shareholder who dies; provided, however, that the capital of
this corporation shall not be impaired.
(m) To so all and everything necessary and proper for the
accomplishment of any of the purposes or the attaining of any of the
objects or the furtherance of any of the purposes enumerated in these
Articles of Incorporation or any amendment thereof, necessary or
incidental to the protection and benefit of the corporation, and in
general either along or in association with other corporations, firms,
or individuals to carry on any lawful pursuit necessary or incidental
to the accomplishment of the purposes or the attainment of the
objectives or the furtherance of such purposes or objects of this
corporation.
(n) To exercise all of the rights granted by Sections 16-10-4 of the
Utah Business Corporation Act of the state of Utah.
The foregoing paragraphs shall be construed as enumerating both
objects and purposes of this corporation; and it is hereby expressly
-3-
<PAGE>
provided that the foregoing enumeration of specific objects and purposes
shall not be held to limit or restrict in any manner the objects or purposes
of this corporation which are otherwise permitted by law.
ARTICLE IV
AUTHORIZED CAPITAL
The aggregate number of shares which the corporation shall have
authority to issue is TWENTY FIVE MILLION (25,000,000).
ARTICLE V
SHARE VALUE
The share value of all shares shall be TWO CENTS ($.02) per share.
ARTICLE VI
RIGHTS OF STOCK
All stock of the corporation shall be the same class and have the
same rights and preferences. Fully paid stock of this corporation shall not
be liable to any further call or assessment.
ARTICLE VII
PRE-EMPTIVE RIGHTS ABOLISHED
The authorized stock of this corporation may be issued at such
time, upon such terms, and condition, and for such consideration as the
Board of Directors shall determine. Stockholders shall have no pre-emptive
rights in issue of authorized stock.
ARTICLE VIII
COMMENCING BUSINESS
The corporation will not commence business until at least ONE
THOUSAND DOLLARS ($1,000.00) has been received by it as consideration for
the issuance of shares.
4
<PAGE>
ARTICLE IX
REGISTERED OFFICE AND AGENT
The address of this corporation's initial registered office is:
208 Boston Building
Salt Lake City, Utah
The name of this corporation's initial registered agent is:
Paul J. Angelos
208 Boston Building
Salt Lake City, Utah
ARTICLE X
ORIGINAL SHAREHOLDERS
The name and address of each of the original shareholders are as
follows:
NAME ADDRESS
Paul J. Angelos 208 Boston Building
Salt Lake City, Utah
John Landures 1405 Downington Avenue
Salt Lake City, Utah
G. Blaine Davis 716 Newhouse Building
Salt Lake City, Utah
Roger F. Cutler 716 Newhouse Building
Salt Lake City, Utah
ARTICLE XI
DIRECTORS
The Board of Directors shall consist of a variable number of three
(3) to nine (9) members, and the Board of Directors may itself from time to
time determine; until determination is made in the future by Directors until
the first annual meeting of shareholders or until their successors be elected
and qualify, are as follows:
-5-
<PAGE>
NAME ADDRESS
John Landures 1405 Downington Avenue
President Salt Lake City, Utah
Louis N. Strike 208 Boston Building
Vice President Salt Lake City, Utah
Paul J. Angelos 208 Boston Building
Secretary-Treasurer Salt Lake City, Utah
William Papanikolas 208 Boston Building
Director Salt Lake City, Utah
ARTICLE XII
INTERNAL AFFAIRS
The Directors shall adopt By-Laws for the regulation of the internal
affairs of the corporation, which By-Laws may be amended from time to time or
repealed pursuant to law.
ARTICLE XIII
INCORPORATORS
The name and address of each incorporator is as follows:
NAME ADDRESS
Paul J. Angelos 208 Boston Building
Salt Lake City, Utah
John Landures 1405 Downington Avenue
Salt Lake City, Utah
G. Blaine Davis 716 Newhouse Building
Salt Lake City, Utah
Roger F. Cutler 716 Newhouse Building
Salt Lake City, Utah
ARTICLE XIV
POWER TO SELL ASSETS AND CREATE INDEBTEDNESS
In carrying on the business of the corporation, the Board of
Directors is authorized and empowered to sell, exchange, mortgage, bond or
otherwise dispose of, deal with and encumber any or all of the property of
the corporation, upon such terms and conditions as such Board of Directors
may deem just and proper and for the best interests of the corporation,
without prior authorization or subsequent confirmation by a vote of the
stockholders or otherwise.
-6-
<PAGE>
ARTICLE XV
OFFICERS AND DIRECTORS CONTRACTS
No contract or other transaction between this corporation and any
other corporation shall be affected by the fact that a Director or officer of
this corporation is interested in or is a Director or officer of such other
corporation; and any Director, individually or jointly, may be a party to or
may be interested in any corporation or transaction of this corporation or in
which this corporation is interested; and no contract or other transaction of
this corporation with any person, firm or corporation shall be affected by
the fact that any Director of this corporation is a party to or is interested
in such contract, act or transaction or any way connected with such person,
firm or corporation, and every person who may become a Director of this
corporation is hereby relieved from the liability that might otherwise exist
from the contracting with corporation for the benefit of himself or any firm,
association or corporation in which he may be in any way interested, provided
said Director acts in good faith.
Whereas we have hereunto set our hands as the Incorporators of
Dynasty Oil and Minerals Corporation this 27th day of February, 1970
/s/ Paul J. Angelos
------------------------------------------
PAUL J. ANGELOS
/s/ John Landures
------------------------------------------
JOHN LANDURES
/s/ G. Blaine Davis
------------------------------------------
G. BLAINE DAVIS
/s/ Roger Cutler
------------------------------------------
ROGER CUTLER
7
<PAGE>
EXHIBIT 2.7
-----------
BY-LAWS
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
BYLAWS
- -------------------------------------
Adopted as of March 24, 1998
<PAGE>
GLOBAL TELEPHONE COMMUNICATION, INC.
BYLAWS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
ARTICLE I
OFFICES
<S> <C> <C>
1.1 Registered Office........................................... 1
1.2 Principal Office............................................ 1
ARTICLE II
STOCKHOLDERS
2.1 Annual Meeting.............................................. 1
2.2 Special Meetings............................................ 1
2.3 Place of Meeting............................................ 2
2.4 Notice of Meeting........................................... 2
2.5 Adjournment................................................. 2
2.6 Organization................................................ 2
2.7 Closing of Transfer Books or Fixing of Record Date.......... 3
2.8 Quorum...................................................... 3
2.9 Proxies..................................................... 3
2.10 Voting of Shares............................................ 3
2.11 Action Taken Without a Meeting.............................. 4
2.12 Meetings by Telephone....................................... 4
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
ARTICLE III
DIRECTORS
<S> <C> <C>
3.1 Board of Directors; Number; Qualifications; Election........ 4
3.2 Powers of the Board of Directors; Generally................. 4
3.3 Committees of the Board of Directors........................ 5
3.4 Resignation................................................. 5
3.5 Removal..................................................... 5
3.6 Vacancies................................................... 5
3.7 Regular Meetings............................................ 5
3.8 Special Meetings............................................ 6
3.9 Notice...................................................... 6
3.10 Quorum...................................................... 6
3.11 Manner of Acting............................................ 6
3.12 Compensation................................................ 6
3.13 Action Taken Without a Meeting.............................. 6
3.14 Meetings by Telephone....................................... 6
ARTICLE IV
OFFICERS AND AGENTS
4.1 Officers of the Corporation................................. 7
4.2 Election and Term of Office................................. 7
4.3 Removal..................................................... 7
4.4 Vacancies................................................... 7
4.5 President................................................... 8
4.6 Vice Presidents............................................. 8
4.7 Secretary................................................... 8
4.8 Treasurer................................................... 9
4.9 Salaries.................................................... 9
4.10 Bonds....................................................... 9
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
ARTICLE V
STOCK
<S> <C> <C>
5.1 Certificates................................................ 10
5.2 Record...................................................... 11
5.3 Consideration of Shares..................................... 11
5.4 Cancellation of Certificates................................ 11
5.5 Lost Certificates........................................... 11
5.6 Transfer of Shares.......................................... 11
5.7 Transfer Agents, Registrars, and Paying Agents.............. 12
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 Indemnification; Advancement of Expenses.................... 12
6.2 Insurance and Other Financial Arrangements Against
Liability of Directors, Officers, Employees, and
Agents.................................................... 12
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 Acquisition of Controlling Interest......................... 13
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 Execution of Instruments.................................... 13
8.2 Loans....................................................... 13
8.3 Checks and Endorsements..................................... 13
8.4 Deposits.................................................... 14
8.5 Proxies..................................................... 14
8.6 Contracts................................................... 14
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
SECTION PAGE
- ------- ----
ARTICLE IX
MISCELLANEOUS
<S> <C> <C>
9.1 Waivers of Notice........................................... 14
9.2 Corporate Seal.............................................. 14
9.3 Fiscal Year................................................. 15
9.4 Amendment of Bylaws......................................... 15
9.5 Uniformity of Interpretation and Severability............... 15
9.6 Emergency Bylaws............................................ 15
Secretary's Certification........................................... 16
</TABLE>
-iv-
<PAGE>
BYLAWS
OF
GLOBAL TELEPHONE COMMUNICATION, INC.
ARTICLE I
OFFICES
1.1 REGISTERED OFFICE. The registered office of the Corporation
required by the General Corporation Law of Nevada, Nevada Revised Statutes,
1957 ("NRS"), Chapter 78, to be maintained in Nevada may be, but need not be,
identical with the principal office if in Nevada, and the address of the
registered office may be changed from time to time by the Board of Directors.
1.2 PRINCIPAL OFFICE. The Corporation may have such other office or
offices either within or outside of the State of Nevada as the business of
the Corporation may require from time to time if so designated by the Board
of Directors.
ARTICLE II
STOCKHOLDERS
2.1 ANNUAL MEETING. Unless otherwise designated by the Board of
Directors, the annual meeting shall be held on the date and at the time and
place fixed by the Board of Directors; provided, however, that the first
annual meeting shall be held on a date that is within 18 months after the
date on which the Corporation first has stockholders, and each successive
annual meeting shall be held on a date that is within 18 months after the
preceding annual meeting.
2.2 SPECIAL MEETINGS. Special meetings of stockholders of the
Corporation, for any purpose, may be called by the Chairman of the Board, the
president, any vice president, any two members of the Board of Directors, or
the holders of at least 10% of all of the shares entitled to vote at such
meeting. Any holder or holders of not less than 10% of all the outstanding
shares of the Corporation who desire to call a special meeting pursuant to
this Section 2 of Article 11 shall notify the president that a special
meeting of the stockholders shall be called. Within 30 days after notice to
the president, the president shall set the date, time, and location of a
stockholders' meeting. The date set by the president shall be not less than
30 nor more than 120 days after the date of notice to the president. If the
president fails to set the date, time, and location of special meeting within
1
<PAGE>
the 30-day time period described above, the stockholder or stockholders
calling the meeting shall set the date, time, and location of the special
meeting. At a special meeting no business shall be transacted and no
corporate action shall be taken other than that stated in the notice of the
meeting.
2.3 PLACE OF MEETING. The Board of Directors may designate any place,
either within or outside the State of Nevada, as the place for any annual
meeting or special meeting called by the Board of Directors. If no
designation is made, or if a meeting shall be called otherwise than by the
Board, the place of meeting shall be the Company's principal offices, whether
within or outside the State of Nevada.
2.4 NOTICE OF MEETING. Written notice signed by an officer designated
by the Board of Directors, stating the place, day, and hour of the meeting
and the purpose for which the meeting is called, shall be delivered-
personally or mailed postage prepaid to each stockholder of record entitled
to vote at the meeting not less than 10 nor more than 60 days before the
meeting. If mailed, such notice shall be directed to the stockholder at his
address as it appears upon the records of the Corporation, and notice shall
be deemed to have been given upon the mailing of any such notice, and the
time of the notice shall begin to run from the date upon which the notice is
deposited in the mail for transmission to the stockholder. Personal delivery
of any such notice to any officer of a corporation or association, or to any
member of a partnership, constitutes delivery of the notice to the
corporation, association or partnership. Any stockholder may waive notice of
any meeting by a writing signed by him, or his duly authorized attorney,
either before or after the meeting.
2.5 ADJOURNMENT. When a meeting is for any reason adjourned to another
time or place, notice need not be given of the adjourned meeting if the,time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
2.6 ORGANIZATION. The president or any vice president shall call
meetings of stockholders to order and act as chairman of such meetings. In
the absence of said officers, any stockholder entitled to vote at that
meeting, or any proxy of any such stockholder, may call the meeting to order
and a chairman shall be elected by a majority of the stockholders entitled to
vote at that meeting. In the absence of the secretary or any assistant
secretary of the Corporation, any person appointed by the chairman shall act
as secretary of such meeting. An appropriate number of inspectors for any
meeting of stockholders may be appointed by the chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and take
charge of proxies and ballots, and will decide all questions as to the
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
2
<PAGE>
2.7 CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The directors
may prescribe a period not exceeding 60 days before any meeting of the
stockholders during which no transfer of stock on the books of the
Corporation may be made, or may fix a day not more than 60 days before the
holding of any such meeting as the day as of which stockholders entitled to
notice of and to vote at such meetings must be determined. Only stockholders
Of record on that day are entitled to notice or to vote at such meeting.
2.8 QUORUM. Unless otherwise provided by the Articles of
Incorporation, one third of the outstanding shares of the Corporation entitled
to vote, represented in person or by proxy, shall constitute a quorum at a
meeting of stockholders. If fewer than one-third of the outstanding shares
are represented at a meeting, a majority of the shares so represented may
adjourn the meeting without further notice for a period not to exceed 60 days
at any one ADJOURNMENT. 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 stockholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of stockholders so that less than a quorum
remains.
If a quorum is present, the affirmative vote of a majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the stockholders, unless the vote of a greater number or
voting by classes is required by law or the Articles of Incorporation.
2.9 PROXIES. At all meetings of stockholders, a stockholder may vote
by proxy, as prescribed by law. Such proxy shall be filed with the secretary
of the Corporation before or at the time of the meeting. No proxy shall be
valid after 6 months from the date of its creation, unless it is coupled with
an interest, or unless the stockholder specifies in it the length of time for
which it is to continue in force, which may not exceed 7 years from the date
of its creation.
2.10 VOTING OF SHARES. Each outstanding share, regardless of class,
shall be entitled to one vote, and each fractional share shall be entitled to
a corresponding fractional vote on each matter submitted to a vote at a
meeting of stockholders, except as may be otherwise provided in the Articles
of Incorporation or in the resolution providing for the issuance of the stock
adopted by the Board of Directors pursuant to authority expressly vested in
it by the provisions of the Articles of Incorporation. If the Articles of
Incorporation or any such resolution provide for more or less than one vote
per share for any class or series of shares on any matter, every reference in
the Articles of Incorporation, these Bylaws and the General Corporation Law
of Nevada to a majority or other proportion or number of shares shall be
deemed to refer to a majority or other proportion of the voting power of all
of the shares or those classes or series of shares, as may be required by the
Articles of Incorporation, or in the resolution providing for the issuance of
the stock adopted by the Board of Directors pursuant to authority expressly
vested in it by the
3
<PAGE>
Articles of Incorporation, or the General Corporation Law of Nevada.
Cumulative voting shall not be allowed. Unless the General Corporation Law of
Nevada, the Articles of Incorporation, or these Bylaws provide for different
proportions, an act of stockholders who hold at least a majority of the
voting power and are present at a meeting at which a quorum is present is the
act of the stockholders.
2.11 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted
to be taken at a meeting of the stockholders may be taken without a meeting
if a written consent thereto is signed by stockholders holding at least a
majority of the voting power, except that if a different proportion of voting
power is required for such an action at a meeting, then that proportion of
written consents is required. In no instance where action is authorized by
written consent need a meeting of stockholders be called or notice given. The
written consent must be filed with the minutes of the proceedings of the
stockholders.
2.12 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, stockholders may participate in a meeting of
stockholders by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE III
DIRECTORS
3.1 BOARD OF DIRECTORS; NUMBER; QUALIFICATIONS; ELECTION. The
Corporation shall be managed by a Board of Directors, all of whom must be
natural persons at least 18 years of age. Directors need not be residents of
the State of Nevada or stockholders of the Corporation. The number of
directors of the Corporation shall be not less than one nor more than twelve.
Subject to such limitations, the number of directors may be increased or
decreased by resolution of the Board of Directors, but no decrease shall have
the effect of shortening the term of any incumbent director. Subject to the
provisions of Article III of the Corporation's Articles of Incorporation,
each director shall hold office until the next annual meeting of shareholders
or until his successor has been elected and qualified.
3.2 POWERS OF THE BOARD OF DIRECTORS: GENERALLY. Subject only to such
limitations as may be provided by the General Corporation Law of Nevada or
the Articles of Incorporation, the Board of Directors shall have full control
over the affairs of the Corporation.
4
<PAGE>
3.3 COMMITTEES OF THE BOARD OF DIRECTORS. The Board of Directors may,
by resolution or resolutions passed by a majority of the whole Board,
designate one or more committees, each committee to consist of one or more
directors, which, to the extent provided in the resolution or resolutions or
in these Bylaws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the Corporation,
and may have power to authorize the seal of the Corporation to be affixed to
all papers on which the Corporation desires to place on a seal. Such
committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Unless the
Articles of Incorporation or these Bylaws provide otherwise, the Board of
Directors may appoint natural persons who are not directors to serve on
committees.
3.4 RESIGNATION. Any director of the Corporation may resign at any
time by giving written notice of his resignation to the Board of Directors,
the president, any vice president, or the secretary of the Corporation. Such
resignation shall take effect at the date of receipt of such notice or at any
later time specified therein and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
When one or more directors shall resign from the Board, effective at a future
date, a majority of the directors then in office.
3.5 REMOVAL. Except as otherwise provided in the Articles of
Incorporation, any director may be removed, either with or without cause, at
any time by the vote of the stockholders representing not less than
two-thirds of the voting power of the issued and outstanding stock entitled
to voting power.
3.6 VACANCIES. All vacancies, including those caused by an increase in
the number of directors, may be filled by a majority of the remaining
directors, though less than a quorum, unless it is otherwise provided in the
Articles of Incorporation. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office. A director
elected to fill a vacancy caused by an increase in the number of directors
shall hold office until the next annual meeting of stockholders and until his
successor has been elected and has qualified.
3.7 REGULAR MEETINGS. 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 stockholders. The Board of Directors
may provide by resolution the time and place, either within or outside the
State of Nevada, for the holding of additional regular meetings without other
notice than such resolution.
5
<PAGE>
3.8 SPECIAL MEETINGS. Special meetings of the Board of Directors may
be called by or at the request of the president or a one-third of the
directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or
outside Nevada, as the place for holding any special meeting of the Board of
Directors called by them.
3.9 NOTICE. Notice of any special meeting shall be given at least two
days previously thereto by written notice delivered personally or mailed to
each director at his business address. Any director may waive notice of any
meeting. A director's presence at a meeting shall constitute a waiver of
notice of such meeting if the director's oral consent is entered on the
minutes or by taking part in the deliberations at such meeting without
objecting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
3.10 QUORUM. A majority of the number of directors elected and
qualified at the time of the meeting shall constitute a quorum for the
transaction of business at any such meeting of the Board of Directors, but if
less than such majority is present at a meeting, a majority of the directors
present may adjourn the meeting from time to time without further notice.
3.11 MANNER OF ACTING. If a quorum is present, the affirmative vote of
a majority of the directors present at the meeting and entitled to vote on
that particular matter shall be the act of the Board, unless the vote of a
greater number is required by law or the Articles of Incorporation.
3.12 COMPENSATION. By resolution of the Board of Directors, any
director may be paid any one or more of the following: his expenses, if any,
of attendance at meetings; a fixed sum for attendance at such meeting; or a
stated salary as director. No such payment shall preclude any director from
serving the Corporation in any other capacity and receiving compensation
therefor.
3.13 ACTION TAKEN WITHOUT A MEETING. Unless otherwise provided in the
Articles of Incorporation or these Bylaws, any action required or permitted
to be taken at a meeting of the Board of Directors or a committee thereof may
be taken without a meeting if, before or after the action, a written consent
thereto is signed by all the members of the Board or of the committee. The
written consent must be filed with the minutes of the proceedings of the
Board or committee.
6
<PAGE>
3.14 MEETINGS BY TELEPHONE. Unless other restricted by the Articles of
Incorporation or these Bylaws, members of the Board of Directors or of any
committee designated by the Board, may participate in a meeting of the Board
or committee by means of a telephone conference or similar method of
communication by which all persons participating in the meeting can hear each
other. Participation in a meeting pursuant to this Section constitutes
presence in person at the meeting.
ARTICLE IV
OFFICERS AND AGENTS
4.1 OFFICERS OF THE CORPORATION. The Corporation shall have a
president, a secretary, and a treasurer, each of whom shall be elected by the
Board of Directors. The Board of Directors may appoint one or more vice
presidents and such other officers, assistant officers, committees, and
agents, including a chairman of the board, assistant secretaries, and
assistant treasurers, as they may consider necessary, who shall be chosen in
such manner and hold their offices for such terms and have such authority and
duties as from time to time may be determined by the Board of Directors. One
person may hold any two or more offices. The officers of the Corporation
shall be natural persons 18 years of age or older. In all cases where the
duties of any officer, agent, or employee are not prescribed by the Bylaws or
by the Board of Directors, such officer,.agent, or employee shall follow the
orders and instructions of (a) the president, and if a chairman of the board
has been elected, then (b) the chairman of the board.
4.2 ELECTION AND TERM OF OFFICE. The officers of the Corporation shall
be elected by the Board of Directors annually at the first meeting of the
Board held after each annual meeting of the stockholders. If the election of
officers shall not be held at such meeting, such election shall be held as
soon thereafter as may be convenient. Each officer shall hold office until
the first of the following occurs: until his successor shall have been duly
elected and shall have qualified; or until his death; or until he shall
resign; or until he shall have been removed in the manner hereinafter
provided.
4.3 REMOVAL. Any officer or agent may be removed by the Board of
Directors or by the executive committee, if any, whenever in its judgment the
best interests of the Corporation will be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed. Election or appointment of an officer or agent shall not of itself
create contract rights.
4.4 VACANCIES. A vacancy in any office, however occurring, may be
filled by the Board of Directors for the unexpired portion of the term.
7
<PAGE>
4.5 PRESIDENT. The president shall, subject to the direction and
supervision of the Board of Directors, be the chief executive officer of the
Corporation and shall have general and active control of its affairs and
business and general supervision of its officers, agents, and employees. He
shall, unless otherwise directed by the Board of Directors, attend in person
or by substitute appointed by him, or shall execute, on behalf of the
Corporation, written instruments appointing a proxy or proxies to represent
the Corporation, at all meetings of the stockholders of any other corporation
in which the Corporation shall hold any stock. He may, on behalf of the
Corporation, in person or by substitute or by proxy, execute written waivers
of notice and consents with respect to any such meetings. At all such
meetings and otherwise, the president, in person or by substitute or proxy as
aforesaid, may vote the stock so held by the Corporation and may execute
written consents and other instruments with respect to such stock and may
exercise any and all rights and powers incident to the ownership of said
stock, subject however to the instructions, if any, of the Board of
Directors. The president shall have custody of the treasurers bond, if any.
If a chairman of the board has been elected, the chairman of the board shall
have, subject to the direction and modification of the Board of Directors,
all the same responsibilities, rights, and obligations as described in these
Bylaws for the president.
4.6 VICE PRESIDENTS. The vice presidents, if any, shall assist the
president and shall perform such duties as may be assigned to them by the
president or by the Board of Directors. In the absence of the president, the
vice president designated by the Board of Directors or (if there be no such
designation) the vice president designated in writing by the president shall
have the powers and perform the duties of the president. If no such
designation shall be made, all vice presidents may exercise such powers and
perform such duties.
4.7 SECRETARY. The secretary shall perform the following: (a) keep the
minutes of the proceedings of the stockholders, executive committee, and the
Board of Directors; (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 the seal of the Corporation and affix the
seal to all documents when authorized by the Board of Directors; (d) keep, at
the Corporation's registered office or principal place of business within or
outside Nevada, a record containing the names and addresses of all
stockholders and the number and class of shares held by each, unless such a
record shall be kept at the office of the Corporation's transfer agent or
registrar; (e) sign with the president or a vice president, certificates for
shares of the Corporation, the issuance of which shall have been authorized
by resolution of the Board of Directors; (f) have general charge of the stock
transfer books of the Corporation, unless the Corporation has a transfer
agent; and (g) in general, 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. Assistant secretaries, if any,
shall have the same duties and powers, subject to supervision by the
secretary.
8
<PAGE>
4.8 TREASURER. The treasurer shall be the principal financial officer
of the Corporation and shall have the care and custody of all funds,
securities, evidences of indebtedness, and other personal property of the
Corporation, and shall deposit the same in accordance with the instructions
of the Board of Directors. He shall receive and give receipts and
acquittance for monies paid in or on account of the Corporation, and shall
pay out of the funds on hand all bills, payrolls, and other just debts of the
Corporation of whatever nature upon maturity. He shall perform all other
duties incident to the office of the treasurer and, upon request of the
Board, shall make such reports to it as may be required at any time. He
shall, if required by the Board, give the Corporation a bond in such sums and
with such sureties as shall be satisfactory to the Board, conditioned upon
the faithful performance of his duties and for the restoration to the
Corporation of all books, papers, vouchers, money, and other property of
whatever kind in his possession or under his control belonging to the
Corporation. He shall have such other powers and perform such other duties as
may be from time to time prescribed by the Board of Directors or the
president. The assistant treasurers, if any, shall have the same powers and
duties, subject to the supervision of the treasurer.
The treasurer shall also be the principal accounting officer of the
Corporation. He shall prescribe and maintain the methods and systems of
accounting to be followed, keep complete books and records of account,
prepare and file all local, state, and federal tax returns, prescribe and
maintain an adequate system of internal audit, and prepare and furnish to the
president and the Board of Directors statements of account showing the
financial position of the Corporation and the results of its operations.
4.9 SALARIES. Officers of the Corporation shall be entitled to such
salaries, emoluments, compensation, or reimbursement as shall be fixed or
allowed from time to time by the Board of Directors.
4.10 BONDS. If the Board of Directors by resolution shall so require,
any officer or agent of the Corporation shall give bond to the Corporation in
such amount and with such surety as the Board of Directors may deem
sufficient, conditioned upon the faithful performance of that officer's or
agent's duties and offices.
9
<PAGE>
ARTICLE V
STOCK
5.1 CERTIFICATES. The shares of stock shall be represented by
consecutively numbered certificates signed in the name of the Corporation by
its president or a vice president and by the treasurer or an assistant
treasurer or by the secretary or an assistant secretary, and shall be sealed
with the seal of the Corporation, or with a facsimile thereof. Whenever any
certificate is countersigned or otherwise authenticated by a transfer agent
or transfer clerk, and by a registrar, then a facsimile of the signatures of
the officers or agents, the transfer agent or transfer clerk or the registrar
of the Corporation may be printed or lithographed upon the certificate in
lieu of the actual signatures. If the Corporation uses facsimile signatures
of its officers and agents on its stock certificates, it cannot act as the
registrar of its own stock, but its transfer agent and registrar may be
identical if the institution acting in those dual capacities countersigns or
otherwise authenticates any stock certificates in both capacities. In case
any officer who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer before such certificate
is delivered by the Corporation, the certificate or certificates may
nevertheless be adopted by the Corporation and be issued and delivered as
though the person or persons who signed the certificates, or whose facsimile
signature has been used thereon, had not ceased to be an officer of the
Corporation. If the Corporation is authorized to issue shares of more than
one class or more than one series of any class, each certificate shall set
forth upon the face or back of the certificate or shall state that the
Corporation will furnish to any stockholder upon request and without charge a
full statement of the designations, preferences, limitations, and relative
rights of the shares of each class authorized to be issued and, if the
Corporation is authorized to issue any preferred or special class in series,
the variations in the relative rights and preferences between the shares of
each such series, so far as the same have been fixed and determined, and the
authority of the Board of Directors to fix and determine the relative rights
and preferences of subsequent series.
Each certificate representing shares shall state the following upon
the face thereof: the name of the state of the Corporation's organization;
the name of the person to whom issued; the number and class of shares and the
designation of the series, if any, which such certificate represents; the par
value of each share represented by such certificate or a statement that the
shares are without par value. Certificates of stock shall be in such form
consistent with law as shall be prescribed by the Board of Directors. No
certificate shall be issued until the shares represented thereby are fully
paid.
10
<PAGE>
5.2 RECORD. A record shall be kept of the name of each person or other
entity holding the stock represented by each certificate for shares of the
Corporation issued, the number of shares represented by each such
certificate, the date thereof and, in the case of cancellation, the date of
cancellation. The person or other entity in whose name shares of stock stand
on the books of the Corporation shall be deemed the owner thereof, and thus a
holder of record of such shares of stock, for all purposes as regards the
Corporation.
5.3 CONSIDERATION FOR SHARES. Shares shall be issued for such
consideration, expressed in dollars (but not less than the par value thereof)
as shall be fixed from time to time by the Board of Directors. That part of
the surplus of the Corporation which is transferred to stated capital upon
the issuance of shares as a share dividend shall be deemed the consideration
for the issuance of such dividend shares. Such consideration may consist, in
whole or in part, of money, promissory notes, other property, tangible or
intangible, or in labor or services actually performed for the Corporation,
contracts for services to be performed or other securities of the Corporation.
5.4 CANCELLATION OF CERTIFICATES. All certificates surrendered to the
Corporation for transfer shall be canceled and no new certificates shall be
issued in lieu thereof until the former certificate for a like number of
shares shall have been surrendered and canceled, except as herein provided
with respect to lost, stolen, or destroyed certificates.
5.5 LOST CERTIFICATES. In case of the alleged loss, destruction, or
mutilation of a certificate of stock, the Board of Directors may direct the
issuance of a new certificate in lieu thereof upon such terms and conditions
in conformity with law as it may prescribe. The Board of Directors may in its
discretion require a bond, in such form and amount and with such surety as it
may determine, before issuing a new certificate.
5.6 TRANSFER OF SHARES. Upon surrender to the Corporation or to a
transfer agent of the Corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment, or authority to
transfer, and such documentary stamps as may be required by law, it shall be
the duty of the Corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate. Every such transfer of stock shall
be entered on the stock book of the Corporation which shall be kept at its
principal office or by its registrar duly appointed.
The Corporation shall be entitled to treat the holder of record of any
share of stock as the holder in fact thereof, and accordingly shall not be
bound to recognize any equitable or other claim to or interest in such share
on the part of any other person whether or not it shall have express or other
notice thereof, except as may be required by the laws of Nevada.
11
<PAGE>
5.7 TRANSFER AGENTS, REGISTRARS, AND PAYING AGENTS. The Board may at
its discretion appoint one or more transfer agents, registrars, and agents
for making payment upon any class of stock, bond, debenture, or other
security of the Corporation. Such agents and registrars may be located either
within or outside Nevada. They shall have such rights and duties and shall be
entitled to such compensation as may be agreed.
ARTICLE VI
INDEMNIFICATION OF OFFICERS AND DIRECTORS
6.1 INDEMNIFICATION; ADVANCEMENT OF EXPENSES. To the fullest extent
permitted by the laws of the State of Nevada (currently set forth in NRS
78.751), as the same now exists or may hereafter be amended or supplemented,
the Corporation shall indemnify its directors and officers, including payment
of expenses as they are incurred and in advance of the final disposition of
any action, suit, or proceeding. Employees, agents, and other persons may be
similarly indemnified by the Corporation, including advancement of expenses,
in such case or cases and to the extent set forth in a resolution or
resolutions adopted by the Board of Directors. No amendment of this Section
shall have any effect on indemnification or advancement of expenses relating
to any event arising prior to the date of such amendment.
6.2 INSURANCE AND OTHER FINANCIAL ARRANGEMENTS AGAINST LIABILITY OF
DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS. To the fullest extent permitted
by the laws of the State of Nevada (currently set forth in NRS 78.752), as
the same now exists or may hereafter be amended or supplemented, the
Corporation may purchase and maintain insurance and make other financial
arrangements on behalf of any person who is or was a director, officer,
employee, or agent of the Corporation, or is or was serving at the request of
the Corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise, for any
liability asserted against such person and liability and expense incurred by
such person in its capacity as a director, officer, employee, or agent, or
arising out of such person's status as such, whether or not the Corporation
has the authority to indemnify such person against such liability and
expenses.
12
<PAGE>
ARTICLE VII
ACQUISITION OF CONTROLLING INTEREST
7.1 ACQUISITION OF CONTROLLING INTEREST. The provisions of the General
Corporation Law of Nevada pertaining to the acquisition of a controlling
interest (currently set forth NRS 78.378 to 78.3793, inclusive), as the same
now exists or may hereafter be amended or supplemented, shall not apply to
the Corporation.
ARTICLE VIII
EXECUTION OF INSTRUMENTS; LOANS, CHECKS AND ENDORSEMENTS;
DEPOSITS; PROXIES
8.1 EXECUTION OF INSTRUMENTS. The president or any vice president
shall have the power to execute and deliver on behalf of and in the name of
the Corporation any instrument requiring the signature of an officer of the
Corporation, except as otherwise provided in these Bylaws or where the
execution and delivery thereof shall be expressly delegated by the Board of
Directors to some other officer or agent of the Corporation. Unless
authorized to do so by these Bylaws or by the Board of Directors, no officer,
agent, or employee shall have any power or authority to bind the Corporation
in any way, to pledge its credit, or to render it liable pecuniarily for any
purpose or in any amount.
8.2 LOANS. The Corporation may lend money to, guarantee the
obligations of, and otherwise assist directors, officers, and employees of
the Corporation, or directors of another corporation of which the Corporation
owns a majority of the voting stock, only upon compliance with the
requirements of the General Corporation Law of Nevada.
No loans shall be contracted on behalf of the Corporation and no
evidence of indebtedness shall be issued in its name unless authorized by a
resolution of the Board of Directors. Such authority may be general or
confined to specific instances.
8.3 CHECKS AND ENDORSEMENTS. All checks, drafts, or other orders for
the payment of money, obligations, notes, or other evidences of indebtedness,
bills of lading, warehouse receipts, trade acceptances, and other such
instruments shall be signed or endorsed by such officers or agents of the
Corporation as shall from time to time be determined by resolution of the
Board of Directors, which resolution may provide for the use of facsimile
signatures.
8.4 DEPOSITS. All funds of the Corporation not otherwise employed
shall be deposited from time to time to the Corporation's credit in such
banks or other depositories as shall from time to time be determined by
resolution of the Board of Directors, which
13
<PAGE>
resolution may specify the officers or agents of the Corporation who shall
have the power, and the manner in which such power shall be exercised, to
make such deposits and to endorse, assign, and deliver for collection and
deposit checks, drafts, and other orders for the payment of money payable to
the Corporation or its order.
8.5 PROXIES. Unless otherwise provided by resolution adopted by the
Board of Directors, the president or any vice president may from time to time
appoint one or more agents or attorneys-in-fact of the Corporation, in the
name and on behalf of the Corporation, to cast the votes which the
Corporation may be entitled to cast as the holder of stock or other
securities in any other corporation, association, or other entity any of
whose stock or other securities may be held by the Corporation, at meetings
of the holders of the stock or other securities of such other corporation,
association, or other entity or to consent in writing, in the name of the
Corporation as such holder, to any action by such other corporation,
association, or other entity, and may instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent, and
may executor cause to be executed in the name and on behalf of the
Corporation and under its corporate seal, or otherwise, all such written
proxies or other instruments as he may deem necessary or proper in the
premises.
8.6 CONTRACTS. The Board of Directors may authorize any officer or
officers, agent or agents, to enter into any contract or execute and deliver
any instrument in the name of and on behalf of the Corporation, and such
authority may be general or confined to specific instances.
ARTICLE IX
MISCELLANEOUS
9.1 WAIVERS OF NOTICE. Whenever notice is required by the General
Corporation Law of Nevada, by the Articles of Incorporation, or by these
Bylaws, a waiver thereof in writing signed by the director, stockholder, or
other person entitled to said notice, whether before, at, or after the time
stated therein, or his appearance at such meeting in person or (in the case
of a stockholders' meeting) by proxy, shall be equivalent to such notice.
9.2 CORPORATE SEAL. The Board of Directors may adopt a seal circular
in form and bearing the name of the Corporation, the state of its
incorporation, and the word "Seal" which, when adopted, shall constitute the
seal of the Corporation. The seal may be used by causing it or a facsimile of
it to be impressed, affixed, manually reproduced, or rubber stamped with
indelible ink.
9.3 FISCAL YEAR. The Board of Directors may, by resolution, adopt a
fiscal year for the Corporation.
14
<PAGE>
9.4 AMENDMENT OF BYLAWS. The provisions of these Bylaws may at any
time, and from time to time, be amended, supplemented or repealed by the
Board of Directors.
9.5 UNIFORMITY OF INTERPRETATION AND SEVERABILITY. These Bylaws shall
be so interpreted and construed as to conform to the Articles of
Incorporation and the laws of the State of Nevada or of any other state in
which conformity may become necessary by reason of the qualification- of the
Corporation to do business in such state, and where conflict between these
Bylaws, the Articles of Incorporation or the laws of such a state has arisen
or shall arise, these Bylaws shall be considered to be modified to the
extent, but only to the extent, conformity shall require. If any provision
hereof or the application thereof shall be deemed to be invalid by reason of
the foregoing sentence, such invalidity shall not affect the validity of the
remainder of these Bylaws without the invalid provision or the application
thereof, and the provisions of these Bylaws are declared to be severable.
9.6 EMERGENCY BYLAWS. Subject to repeal or change by action of the
stockholders, the Board of Directors may adopt emergency bylaws in accordance
with and pursuant to the provisions of the laws of the State of Nevada.
15
<PAGE>
SECRETARY'S CERTIFICATION
The undersigned Secretary of Global Telephone Communication, Inc. (the
"Corporation") hereby certifies that the foregoing Bylaws are the Bylaws of the
Corporation adopted by the Board of Directors as of the 24th day of March, 1998.
By /s/ Thomas John Kennedy
------------------------------
Thomas John Kennedy
Secretary
16
<PAGE>
EXHIBIT 6.1
SHARE EXCHANGE ACKNOWLEDGMENT -
PLANET CITY GRAPHICS CORP.
<PAGE>
Global Telephone Communication, Inc,:
The undersigned hereby acknowledges to you that (1) the 500,000 shares of the
common stock of Global Telephone Communication, Inc. (the "Company") (the
"Securities") which were acquired in exchange for the undersigned's shares of
PLANET CITY GRAPHICS were acquired for the undersigned's own account, for
investment, and not with a view to the distribution thereof, (2) prior to
purchase, because of a preexisting business or personal relationship with the
Company, its officers or directors, or by reason of the undersigned's business
or financial experience, the undersigned was capable of evaluating the merits
and risks of an investment in the Securities; (3) the undersigned will not
offer, sell, transfer or otherwise dispose of the Securities except in a
transaction which does not violate the Securities Act of 1933, as amended (the
"Act"); and (4) the Securities are "restricted securities" as that term is
defined in Rule 144 of the General Rules and Regulations under the Art.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Company is the only person which may register its Securities under the Act.
Furthermore, the Company has not made any representations, warranties, or
covenants to the undersigned regarding the registration of the Securities or
compliance with Regulation A or any other exemption under the Act.
The undersigned further acknowledges that it is fully aware of the applicable
limitations on the resale of the Securities. Rule 144 permits sales of
"restricted securities" upon compliance with certain requirements. If Rule 144
is available for the resale of the Securities, the undersigned may sell the
Securities only in accordance with its limitations.
Any and all certificates representing the Securities, and any certificates
issued in replacement or exchange therefor, shall bear the following legend,
which the undersigned has read and understands:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold, or otherwise transferred except
pursuant to an effective registration statement under the Act, or
pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company."
The undersigned further agrees that the Company shall have the right to issue
stop transfer instructions to its transfer agent to bar the transfer of any of
the undersigned's certificates except in accordance with the Act . The
undersigned acknowledges that the Company has informed the undersigned of its
intention to issue such instructions.
(Signature)
Dated ____________ 1998
/s/ Charles Malette
---------------------
Charles Malette
155 West 35th Avenue
Vancouver, BC V6M 1H2
<PAGE>
EXHIBIT 6.2
SHARE EXCHANGE ACKNOWLEDGMENTS
WEBWORKS MULTIMEDIA CORPORATION
<PAGE>
Global Telephone Communication, Inc.;
The undersigned hereby acknowledges to you that (1) the 500,000 shares of the
common stock of Global Telephone Communication, Inc. (the "Company") (the
"Securities") which were acquired in exchange for the undersigned's shares of
WEBWORKS MULTIMEDIA were acquired for the undersigned's own account, for
investment and not with a view to the distribution thereof, (2) prior to
purchase, because of a pre-existing business or personal relationship with the
Company, its officers or directors, or by reason of the undersigned's business
or financial experience, the undersigned was capable of evaluating the merits
and risks of an investment in the securities; (3) the undersigned will not
offer, sell, transfer or otherwise dispose of the Securities except in a
transaction which does not violate the Securities Act of 1933, as amended (the
"Act"); and (4) the Securities are "restricted securities" as that term is
defined in Rule 144 of the General Rules and Regulations under the Act.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Company is the only person which may register its Securities under the
Act. Furthermore, the Company has not made any representations, warranties, or
covenants to the undersigned regarding the registration of the Securities or
compliance with Regulation A or any other exemption under the Act.
The undersigned further acknowledges that it is fully aware of the applicable
limitations on the resale of the Securities. Rule 144 permits sales of
"restricted securities" upon compliance with certain requirements. If Rule 144
is available for the resale of the Securities, the undersigned may sell the
Securities only in accordance with its limitations.
Any and all certificates representing the Securities, and any
certificates issued in replacement or exchange therefor, shall bear the
following legend, which the undersigned has read and understands.
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold, or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company."
The undersigned further agrees that the Company shall have the right to issue
stop transfer instructions to its transfer agent to bar the transfer of any
of the undersigned's certificates except in accordance with the Act. The
undersigned acknowledges that the Company has informed the undersigned of
its intention to issue such instructions.
Dated April 3, 1998 /s/ Lance Morginn
---------------------
(Signature)
Lance Morginn
400 West Hastings
Vancouver BC V6B 1L2
<PAGE>
Global Telephone Communication, Inc.-
The undersigned hereby acknowledges to you that (1) the 500,000 shares of the
common stock of Global Telephone Communication, Inc. (the "Company") (the
"Securities") which were acquired in exchange for the undersigned's shares of
PLANET CITY GRAPHICS were acquired for the undersigned's own account, for
investment, and not with a view to the distribution thereof; (2) prior to
purchase, because of a pre-existing business or personal relationship with
the Company, its officers or directors, or by reason of the undersigned's
business or financial experience, the undersigned was capable of evaluating
the merits and risks of an investment in the Securities; (3) the undersigned
will not offer, sell, transfer or otherwise dispose of the Securities except
in a transaction which does not violate the Securities Act of 1933, as
amended (the "Act"); and (4) the Securities are "restricted securities" as
that term is defined in Rule 144 of the General Rules and Regulations under
the Act.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such registration is available.
The Company is the only person which may register its Securities under the
Act. Furthermore, the Company has not made any representations, warranties,
or covenants to the undersigned regarding the registration of the Securities
or compliance with Regulation A or any other exemption under the Act.
The Undersigned further acknowledges that it is fully aware of the applicable
limitations on the resale of the Securities. Rule 144 permits sales of
"restricted securities" upon compliance with certain requirements. If Rule
144 is available for the resale of the Securities, the undersigned may sell
the Securities only in accordance with its limitations.
Any and all certificates representing the Securities, and any certificates
issued in replacement or exchange therefor, shall bear the following legend
which the undersigned has read and understands.
"The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act the
shares may not be offered for sale, sold, or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the act, the
availability of which is to be established to the satisfaction of the
Company."
The undersigned further agrees that the Company shall have the right to issue
stop transfer instructions to its transfer agent to bar the transfer of any
of the undersigned's certificates except in accordance with the Act. The
undersigned acknowledges that the Company informed the undersigned of its
intention to issue such instructions.
Dated, , 1998 /s/ James Griffin
--------------- ---------------------------
James Griffin
445 21st Street East
North Vancouver, BC V7L 3C1
<PAGE>
Global Telephone Communication, Inc.:
The undersigned hereby acknowledges to you that (1) the 500,000 shares of the
common stock of Global Telephone Communication, Inc. (the "Company") (the
"Securities") which were acquired in exchange for the undersigned's shares of
PLANET CITY GRAPHICS were acquired for the undersigned's own account, for
investment, and not with a view to the distribution thereof; (2) prior to
purchase, because of a pre-existing business or personal relationship with
the Company, its officers or directors, or by reason of the undersigned's
business or financial experience, the undersigned was capable of evaluating
the merits and risks of an investment in the Securities; (3) the undersigned
will not offer, sell, transfer or otherwise dispose of the Securities except
in a transaction which does not violate the Securities Act of 1933, as
amended (The "Act"); and (4) the Securities are "restricted securities" as
that term is defined in Rule 144 of the General Rules and Regulations under
the Act.
The undersigned acknowledges and understands that the Securities are
unregistered and must be held indefinitely unless they am subsequently
registered under the Act or an exemption from such registration is available.
The Company is the only person which may register its Securities under the
Act. Furthermore, the Company has not made any representations, warranties,
or covenants to the undersigned regarding the registration of the Securities
or compliance with Regulation A or any other exemption under the Act.
The undersigned further acknowledges that it is fully aware of the applicable
limitations on the resale of the Securities. Rule 144 permits sales of
"restricted securities" upon compliance with certain requirements. If Rule 144
is available for the resale of the Securities, the undersigned may sell the
Securities only in accordance with its limitations.
Any and all certificates representing the Securities, and any certificates
issued in replacement or exchange therefor, shall bear the following legend,
which the undersigned has read and understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and are "restricted
securities" as that term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold, or otherwise transferred
except pursuant to an effective registration statement under the Act
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company."
The undersigned further agrees that the company shall have the right to issue
stop transfer instructions to its transfer agent to bar the transfer of any of
the undersigned's certificates except in accordance with the Act. The
undersigned acknowledges that the Company has informed the undersigned of its
intention to issue such instructions.
Dated , 1998 /s/ Richard Appleby
--------------- ------------------------
Richard Appleby
1168 Hamilton, Suite 403
Vancouver, BC V6B 2S2
<PAGE>
EXHIBIT 6.3
SHARE EXCHANGE AGREEMENT WITH
REGENT LUCK HOLDINGS LTD.
<PAGE>
EXECUTION COPY
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "AGREEMENT") is entered into and
effective as of April 16th, 1998, by and between RICKY MING WAH NG, SINO
CONCOURSE LIMITED, a Hong Kong corporation, SINOWAY TECHNOLOGY LIMITED, a Hong
Kong corporation (collectively the "SHAREHOLDERS"), REGENT LUCK HOLDINGS
LIMITED, a Hong Kong corporation ("RLH") and GLOBAL TELEPHONE CONMUNICATION,
INC. a Utah corporation which is in the process of changing its domicile to the
State of Nevada ("GTC or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation of
the following facts, circumstances and representations:
1. RLH shall upon Closing have fifty-one percent (51%) ownership
and interest in a joint venture company set up in the Peoples'
Republic of China ("PRC") with SHENZHEN NEWSNET CO. LTD. ("SNC")
as a joint venture partner organized under the laws of PRC under
the name of China Global Information Internet Co. Ltd. (the "JOINT
VENTURE").
2. SNC has obtained the Telecommunication Business Operation Approval
(the "APPROVAL") (No.GDSZ P0007) which allows SNC to carry out
Computer Information Internet Service.
3. The JOINT VENTURE shall be established to act as the exclusive
agent for SNC to conduct all telecommunication and internet
business and services in Shenzhen, Guangdong Province, PRC for
SNC.
4. SNC shall enter into an Exclusive Agency Agreement (the "AGENCY
AGREEMENT") with the JOINT VENTURE for the purpose of Clause 3
above and SNC shall obtain all license, permits and approvals
necessary for the validity and implementation of the AGENCY
AGREEMENT.
5. The SHAREHOLDERS are the owners of 10,000 ordinary shares of RLH
which represent all of the issued share capital of RLH (THE "RLH
Shares").
6. GTC desires to issue a total of 5,000,000 shares of its common
stock (the "GTC Shares") to the SHAREHOLDERS in exchange for the
RLH Shares.
7. The SHAREHOLDERS desire to exchange the RLH Shares for the
<PAGE>
GTC Shares in accordance with the terms and conditions of this
Agreement.
8. GTC desires to provide funds for the JOINT VENTURE concurrent with
its acquisition of the RLH Shares.
9. RLH desires that this transaction be consummated.
2. EXCHANGE AND ISSUANCE OF SHARES
2.1 EXCHANGE OF GTC SHARES: GTC shall exchange and deliver to the
SHAREHOLDERS, a total of 5,000,000 restricted shares of GTC common stock in
accordance with the allocation set forth in the attached Schedule "A".
2.2 EXCHANGE OF RLH SHARES: At the Closing, the SHAREHOLDERS shall
exchange and deliver to GTC a total of 10,000 ordinary shares of RLH which
represent one hundred percent (100%) of the issued share capital of RLH.
2.3 NATURE OF GTC SHARES: The SHAREHOLDERS shall be issued the GTC Shares
which unless otherwise contractually restricted, shall be subject to a one (1)
year holding period before the GTC Shares are eligible for sale to U.S. persons
or in the U.S. public market. The sale of the GTC Shares will be further limited
by the resale provisions of SEC Rule 144.
2.4 RESTRICTED NATURE OF GTC SHARES: Notwithstanding the one (1) year
holding period for the GTC Shares, each of the SHAREHOLDERS who become
"affiliates" or "control persons" of GTC will be subject to certain limitations
with respect to the sale of their respective GTC Shares. Accordingly, as a
result of such a designation, the sale of the GTC Shares will be limited by SEC
Rule 144.
2.5 PRIVATE SALE ACKNOWLEDGMENT: The parties acknowledge and agree that
the exchange and issuance of the GTC Shares is being undertaken as a private
sale pursuant to Section 4 of the Securities Act of 1933, as amended and Nevada
Revised Statutes Chapters 78 and 90 and is not being transacted via a
broker-dealer and/or in the public market place.
2.6 STATUS OF PRESENT SHARE OWNERSHIP AND CONTEMPLATED SHARE ISSUANCE BY
GTC: The parties hereto acknowledge and agree that in addition to the issuance
of the 5,000,000 GTC Shares, that the parties listed below own certain shares in
GTC and that pursuant to the share exchange contemplated by this Agreement, that
the following will be the resulting share ownership of GTC:
<TABLE>
<CAPTION>
NAME NO. SHARES % OWNERSHIP
<S> <C> <C> <C>
1. RLH Shareholders 5,000,000 42.4%
2. Present GTC
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NAME NO. SHARES % OWNERSHIP
<S> <C> <C>
Shareholders 6,795,935 57.6%
--------- -----
TOTALS 11,795,935 100%
========== =====
</TABLE>
2.7 ADDITIONAL SHARE ISSUANCE: The parties further acknowledge and agree
that in further addition to the GTC Shares and the shares held by the present
GTC Shareholders, additional shares will be issued by GTC pursuant to the
financing of the JOINT VENTURE by GTC (the "Additional Shares"). Accordingly,
the percentage share ownership of the parties will be diluted on a pro-rata
basis.
2.8 FUNDS FOR JOINT VENTURE: Concurrent with the exchange of the subject
shares and as a condition thereof, GTC hereby agrees to provide funds as capital
for the JOINT VENTURE in the amount of ONE MILLION THREE HUNDRED THOUSAND
DOLLARS ($1,300,000) U.S. (the "FUNDS").
2.9 DEPOSIT AND RELEASE OF FUNDS IN ESCROW: Prior to the close of the
transaction and as more specifically described herein at paragraph 6, GTC agrees
to deposit the Funds into the Client Trust Account of the named Escrow Holder.
Upon satisfaction of the conditions of the escrow, the Escrow Holder will be
instructed to release and deliver the FUNDS via wire to the account of the JOINT
VENTURE.
3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The COMPANY represents and warrants to the SHAREHOLDERS and RLH as
follows:
3.1 ORGANIZATION: GTC is a corporation duly incorporated and validly
existing under the laws of Utah and is in good standing with respect to all of
its regulatory filings, or in the alternative with the State of Nevada.
3.2 CAPITALIZATION: The authorized capital of GTC consists of 25,000,000
common shares with a par value $.001 and of which a total of 6,795,935 common
shares are validly authorized and issued by the COMPANY. Said outstanding shares
are fully paid and non-assessable shares and have been issued in full compliance
with all federal and state securities laws. Such issued and outstanding shares
are hereinafter referred to as the "Existing GTC Shares". The authorized capital
of GTC also consists of 5,000,000 shares of preferred stares with a par value of
$.01 per share. No preferred shares are issued and outstanding.
3.3 BOOKS AND RECORDS: All material transactions of GTC have been
promptly and properly recorded or filed in or with its books and records and the
Minute Book of GTC contains records of all meetings and proceeds o the
shareholders and directors thereof.
3.4 LEGAL COMPLIANCE: To the best of its knowledge, GTC is not in breach
of any laws, ordinances, statues, regulations, by-laws, orders or decrees to
<PAGE>
which GTC is subject or which apply to it or any of its assets.
3.5 TAX RETURNS: All tax returns and reports of GTC required by law to be
filed prior to the date hereof have been filed and are substantially true,
complete and correct and all taxes and governmental charges have been paid.
3.6 ADVERSE FINANCIAL EVENTS: GTC has not experienced nor is it aware of
any occurrence of event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
3.7 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of GTC threatened against or affecting GTC at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency.
3.8 EMPLOYEE LIABILITIES: GTC has no liability to former employees or any
liability to any governmental authorities with respect to current or former
employees.
3.9 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of GTC or of any agreement to which GTC is a party and will
not vie any person or company a right to terminate or cancel any agreement or
right enjoyed by GTC and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of GTC.
3.10 VALIDLY ISSUED AND AUTHORIZED SHARES: That the GTC Shares will be
validly authorized and issued by the COMPANY, they will be fully paid and
nonassessable and that they will be issued in full compliance with all federal
and state securities laws.
3.11 RESTRICTIVE LEGEND: That the GTC Shares will have a restrictive
legend imposed thereon identifying them as "Restricted Shares" which are subject
to the conditions and limitations of SEC Rule 144 with respect to their sale in
the U.S. public market place.
3.12 CORPORATE AUTHORITY: The officers or representatives of the COMPANY
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to a resolution of the Board of Directors of the
COMPANY.
3.13 PUBLICLY TRADED COMPANY: THE COMPANY is listed on the NASD OTC
Bulletin Board with the trading symbol "GTCI."
<PAGE>
4. REPRESENTATIONS OF SHAREHOLDERS AND RLH
THE SHAREHOLDERS and RLH collectively and individually hereby represent
and warrant to GTC as follows:
4.1 SHARE OWNERSHIP: That the SHAREHOLDERS are the owners, beneficially
and of record, of the RLH Shares and said shares are free and clear of all
liens, encumbrances, claims, charges and restrictions.
4.2 TRANSFERABILITY OF RLH SHARES: That the SHAREHOLDERS have full power
to transfer the RLH Shares to GTC without obtaining the consent or approval of
any other person or governmental authority.
4.3 VALIDLY ISSUED AND AUTHORIZED SHARES: That the RLH Shares are validly
authorized, issued and fully paid, and the RLH Shares have been so issued in
full compliance with the laws of Hong Kong.
4.4 ORGANIZATION: RLH is a corporation duly incorporated and validly
existing under the laws of Hong Kong and is in good standing with respect to all
of its regulatory filings.
4.5 CAPITALIZATION: The authorized capital of RLH consists of 10,000
ordinary shares with a par value of HK$ 1.00 each and all are fully paid
shares.
4.6 BOOKS AND RECORDS: All material transactions of RLH have been
promptly and properly recorded or filed in or with its books and records and the
Minute Book of RLH contains records of all meetings and proceeds of the
shareholders and directors thereof. Save for the entry into the JOINT VENTURE,
RLH has not carried on any business nor incurred any liability to any person.
4.7 LEGAL COMPLIANCE: RLH is not in breach of any laws, ordinances,
statues, regulations, by-laws, orders or decrees to which RLH is subject or
which apply to it or any of its assets.
4.8 TAX RETURNS: All tax returns and reports of RLH required by law to be
filed prior to the date hereof have been filed and are subsequently true,
complete and correct and all taxes and governmental charges have been paid.
4.9 ADVERSE FINANCIAL EVENTS: RLH has not experienced nor is it aware of
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
4.10 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge or RLH threatened against or affecting RLH at law or in
equity or
<PAGE>
before or by any federal, provincial, municipal or other governmental
department, commission, board, bureau or agency.
4.11 EMPLOYEE LIABILITIES: RLH has no liability to former employees or
any liability to any government authorities with respect to current or former
employees.
4.12 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
memorandum and articles of associations of RLH or of any agreement to which RLH
is a party and will not give any person or company a right to terminate or
cancel any agreement or right enjoyed by RLH and will not result in the creation
or imposition of any lien, encumbrances or restriction of any nature whatsoever
in favor of a third party upon or against the assets of RLH.
4.13 NO LIENS: That RHL has not received a notice of any assignment,
lien, encumbrance, claim or charge against the RLH Shares.
4.14 CORPORATE AUTHORITY: The officers or representatives of RLH and the
corporate SHAREHOLDERS who are parties to this Agreement represent that they
have been authorized to execute this Agreement pursuant to resolutions of their
respective Boards of Directors.
5. REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS ALONE
THE SHAREHOLDERS alone further represent and warrant to GTC as follows
with respect to the GTC Shares:
5.1 FINANCIALLY RESPONSIBLE: That they are financially responsible, able
to meet their obligations and acknowledge that this investment will be
speculative.
5.2 INVESTMENT EXPERIENCE: That they have had experience in the business
of investments in one or more of the following: (i) investment experience with
securities such as stock and bonds; (ii) ownership of interests in partnerships,
new ventures and start-up companies; (iii) experience in business and financial
dealings; and that they can protect their own interests in an investment of
this nature and they do not have an "Investor Representative", as that term is
defined in Regulation D of the Securities Act of 1933 and do not need such an
Investor Representative.
5.3 INVESTMENT RISK: That they are capable of bearing the high degree of
economic risk and burdens of this investment, including but not limited to the
possibility of complete loss of all its investment capital and the lack of
a liquid market, such that it may not be able to liquidate readily the
investment whenever desired or at the then current asking price.
5.4 ACCESS TO INFORMATION: That they have had access to the information
<PAGE>
regarding the financial condition of the COMPANY and they were able to request
copies of such information, ask questions of and receive answers from the
COMPANY regarding such information and any other information they desire
concerning the GTC Shares, and all such questions have been answered to their
full satisfaction.
5.5 PRIVATE TRANSACTION: That at no time were they presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
5.6 INVESTMENT INTENT: The GTC Shares are not being purchased with a view
to or for the resale or distribution thereof and they have no present plans to
enter into any contract, undertaking, agreement or arrangement for such resale
or distribution.
5.7 DUE DILIGENCE: That the SHAREHOLDERS shall have completed a due
diligence review of the affairs of GTC and are satisfied with the results of
that review.
6. CLOSING, ESCROW HOLDER AND
CONDITIONS TO CLOSING
6.1 EXCHANGE CLOSING: The closing of the share exchange as
contemplated by this Agreement (the "Closing") shall take place in Hong Kong,
at such time and place as may be agreed among by the parties, but in no event
later than , unless otherwise extended in writing by the parties.
All tax and duties payable in respect of the share exchange, including but not
limited to stamp duty payable pursuant to laws of Hong Kong shall be borne by
the SHAREHOLDERS and the COMPANY in equal shares.
6.2 APPOINTMENT OF ESCROW HOLDER: The parties hereby appoint CARMINE J.
BUA, III, ESQ. of San Diego, California as the Escrow Holder pursuant to this
Agreement.
6.3 ESTABLISHMENT OF JOINT VENTURE: The SHAREHOLDERS and RLH shall
deliver to the COMPANY certified true copy of the following documents in
relation the JOINT VENTURE:
1 The Feasibility study;
2. Duly signed Joint Venture Contract and Joint Venture Articles;
3. Letter of Approval issued by the relevant PRC Ministry of Foreign
Trade and Economic Cooperation ("MOFTEC") approving establishment
of the JOINT VENTURE and its Joint Venture Contract and Articles;
<PAGE>
4. Certificate of Approval issued by MOFTEC; and
5. Business License of the JOINT VENTURE.
6.4 OPINION OF COUNSEL FOR GTC: The SHAREHOLDERS AND RLH shall have
received an opinion from the legal counsel for GTC, in form and substance
reasonably satisfactory to the SHAREHOLDERS and RLH to the effect that:
1 GTC is a corporation duly organized and legally existing under the
laws of the State of Utah and is in good standing with respect to
all of its regulatory filings, or in the alternative with the
State of Nevada, and
2. This Agreement when duly executed and delivered by GTC,
constitutes a legal, valid and binding obligation of GTC
enforceable against it in accordance with its terms, and
3. The Shares delivered pursuant to the Agreement have been validly
issued are fully paid and nonassessable, and
4. The Existing GTC Shares, the Additional Shares and the GTC Shares
have been legally and validly issued and are in compliance with
all federal and state securities laws including but not limited to
Section 4 of the Securities Act of 1933, as amended, and Nevada
Revised Statutes Chapters 78 and 90.
6.5 OPINION OF COUNSEL FOR SHAREHOLDERS AND RLH WITH RESPECT TO CORPORATE
STATUS AND RLH SHARES: GTC shall have received an opinion from the legal counsel
for the SHAREHOLDERS and RLH in form and substance reasonably satisfactory to
GTC, to the effect that:
1. RLH is a corporation duly organized and legally existing under the
laws of Hong Kong and is in good standing with respect to all of
its regulatory filings.
2. the RLH Shares delivered pursuant to this Agreement have been
validly issued and fully paid and have been originally issued in
full compliance with the laws of the Hong Kong.
3. The SHAREHOLDERS have the fully power to
<PAGE>
transfer the RLH Shares to GTC without obtaining the consent or
approval of any other person or governmental agency.
6.6 OPINION OF COUNSEL FOR SHAREHOLDERS AND RLH WITH RESPECT TO JOINT
VENTURE AND LICENSE: GTC shall have received an opinion from the legal counsel
along with the relevant supporting documentation, in form and substance
reasonably satisfactory to GTC, to the effect:
1 The JOINT VENTURE is a joint venture company duly organized and
legally existing under the laws of the Peoples Republic of China
and is in good standing with respect to all of its regulatory
filings.
2. That GTC as a foreign corporation is permitted under the laws of
Hong Kong to be the legal and beneficial owner of the RLH Shares.
3. The JOINT VENTURE has the legal ability to carry out the business
contemplated under to the AGENCY AGREEMENT in Shenzhen, Guangdong
Province, PRC.
4. That SNC is the permitted user of the APPROVAL and said APPROVAL
is free of any and all liens or encumbrances.
5. That SNC has obtained all governmental and regulatory agency
approvals to utilize the APPROVAL and to do business as an
Internet Service Provider.
6. That SNC is permitted to utilize the APPROVAL including appointing
the JOINT VENTURE as an exclusive agent to carry out the business
contemplated to be carried out by SNC under the APPROVAL.
7. That the JOINT VENTURE has obtained all governmental and
regulatory agency approvals to carry out the business as an agent
of SNC pursuant to the AGENCY AGREEMENT.
8. That the ownership of RLH as a subsidiary corporation of GTC will
not affect the ability of the JOINT VENTURE to enter into and
carry out the Agency Agreement.
<PAGE>
6.7 ESCROW CONDITIONS AND CLOSING: Prior to the Closing, the following
will be required:
1. DELIVERY OF RLH SHARES: The SHAREHOLDERS shall deliver to the
Escrow Holder the certificate or certificates representing the
10,000 RLH Shares registered in the name of GTC, together with
instruments of transfer and bought and sold notes and such other
documents/information required for effecting transfer of the RLH
Shares as reasonably required by GTC to GTC or its nominee.
2. DELIVERY OF GTC SHARES: GTC shall deliver to the Escrow Holder a
total of 5,000,000 of the GTC Shares registered in the names of
the SHAREHOLDERS as set forth in Schedule "A".
3. DEPOSIT OF FUNDS: GTC shall cause the Funds to be deposited into
the Client Trust Account of the Escrow Holder with instructions to
the Escrow Holder to release the Funds to the JOINT VENTURE upon
the close of the transaction.
4. LEGAL OPINIONS AND DOCUMENTS: Both parties shall deliver to the
Escrow Holder such legal opinions and other documents as are
required by the terms and conditions of this Agreement.
5. REQUISITE CORPORATE RESOLUTIONS: Each party shall deliver to the
Escrow Holder certified copies of resolutions from their
respective Boards of Directors authorizing the subject transaction
and for the RLH such further resolutions for the transfer of the
RLH Shares to GTC or its nominee and for change of
directors/officers of RLH as required by GTC.
6. SHAREHOLDER APPROVAL: GTC shall deliver to the Escrow Holder
documentation evidencing the GTC shareholder approval of the
subject transaction.
6.8 Close of TRANSACTION: The subject transaction shall "close" upon the
satisfaction of the above conditions.
7. COOPERATION, ARBITRATION, INTERPRETATION,
MODIFICATION AND ATTORNEY FEES
<PAGE>
7.1 COOPERATION OF PARTIES: The parties further agree that they will do
all things necessary to accomplish and facilitate the purpose of this Agreement
and that they will sign and execute any and all documents necessary to bring
about and perfect the purposes of this Agreement.
7.2 ARBITRATION: The parties hereby submit all controversies, claims and
maters of difference arising out of this Agreement to arbitration in Las Vegas,
Nevada according to the rules and practices of the American Arbitration
Association from time to time in force. This submission and agreement to
arbitrate shall be specifically enforceable. The Agreement shall further be
governed by the laws of the State of Nevada.
7.3 INTERPRETATION OF AGREEMENT: The parties agree that should any
provision of this Agreement be found to be ambiguous in any way, such ambiguity
shall not be resolved by construing such provisions or any part of or the entire
Agreement in favor of or against any party herein, but rather by construing the
terms of this Agreement fairly and reasonable in accordance with their generally
accepted meaning.
7.4 MODIFICATION OF AGREEMENT: This Agreement may be amended or modified
in any way at any time by an instrument in writing stating the manner in which
it is amended or modified and signed by each of the parties hereto. Any such
writing amending or modifying this Agreement shall be attached to and kept with
this Agreement.
7.5 ATTORNEY FEES: If any legal action or any arbitration or other
proceedings is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action of proceedings, in addition to any other relief to which it may be
entitled.
7.6 ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement and
understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
7.7 COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
7.8 FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant to a
facsimile transmission shall be sufficient to bind a party to this Agreement.
<PAGE>
DATED. April 16, 1998 /s/ RICKY MING WAH NG
---------------------------------
RICKY MING WAH NG
SINO CONCOURSE LIMITED
FOR AND ON BEHALF OF
SINO CONCOURSE LIMITED
DATED: April 20, 1998 By: /s/ LI HO SHAN
---------------------------------
Authorized Signature(s)
LI HO SHAN
Director
SINOWAY TECHNOLOGY LIMITED
FOR AND ON BEHALF OF
SINOWAY TECHNOLOGY LMITED
DATED: April 20, 1998 By: /s/ LI HO SHAN
------------------------------
Authorized Signature(s)
LI HO SHAN
Director
REGENT LUCK HOLDINGS LIMITED
DATED: April 16, 1998 By: /s/ RICKY MING WAH NG
------------------------
RICKY MING WAH NG
Director
GLOBAL TELEPHONE
COMMUNICATION, INC.
DATED: April 16, 1998 By: /s/ TERRY WONG
------------------------
TERRY WONG
President
<PAGE>
SCHEDULE "A"
<TABLE>
<CAPTION>
NAME RLH SHARES GTC SHARES
<S> <C> <C> <C>
1. Ricky Ming Wah Ng 2,500 1,250,000
2. Sino Concourse
Limited 3,750 1,875,000
3. Sinoway Technology
Limited 3,750 1,875,000
------ ---------
TOTALS 10,000 5,000,000
====== =========
</TABLE>
<PAGE>
EXHIBIT 6.4
AMENDMENT OF SHARE EXCHANGE AGREEMENT
WITH REGENT LUCK HOLDINGS
<PAGE>
3287K
AMENDMENT OF
SHARE EXCHANGE AGREEMENT
THIS AMENDMENT OF SHARE EXCHANGE AGREEMENT (the "Amendment") is entered
into and effective as of August 10, 1998, by and between RICKY MING WAH NG, SINO
CONCOURSE LIMITED, a Hong Kong corporation, SINOWAY TECHNOLOGY LIMITED, a Hong
Kong corporation (collectively the "SHAREHOLDERS"), REGENT LUCK HOLDINGS
LIMITED, a Hong Kong corporation ("RLH") and GLOBAL TELEPHONE COMMUNICATION,
INC., a Nevada corporation ("GTC" or the "COMPANY").
1. RECITALS
This Amendment is entered into with reference to and in contemplation of
the following facts, circumstances and representations:
1. The parties hereto had earlier entered into that certain "Share
Exchange Agreement" effective as of April 16, 1998 (the "Original
Agreement").
2. The parties wish to amend the Original Agreement as more
specifically set forth herein and in consideration of the mutual
obligations set forth in this Amendment.
2. AMENDMENT OF ORIGINAL RECITALS
This Amendment is further entered into with reference to and in
contemplation of the following different facts, circumstances and
representations:
1. RLH shall, upon closing, have a ninety percent (90%) ownership in a
joint venture company established in the Peoples' Republic of
China ("PRC") with SHENZEN SHENZHEN XUN YUN DA ELECTRONICS CO.
LTD., ("SXY") as a joint venture partner organized under the laws
of PRC under the name of "Shenzhen Global Net Computer Information
Co. Ltd. (the "Joint Venture").
Page 1 of 4
<PAGE>
2. The Joint Venture shall be established to act as the exclusive
agent for Shenzhen Newsnet Co. Ltd. ("SNC") to conduct certain
telecommunications and internet business and services in Shenzhen,
Guaugdong Province, PRC for SNC.
3. SNC has obtained the Telecommunication Business Operation Approval
(the "Approval") (No. GPSZ P0007) which allows SNC to carry out a
Computer Information Internet Service.
4. SNC shall enter into an Agency Agreement (the "Agency Agreement")
with the Joint Venture for the purpose of Clause 2 above and SNC
shall obtain all license, permits and approvals necessary for the
validity and implementation of the Agency Agreement.
5. GTC desires to provide funds for the Joint Venture and as
specifically set forth herein.
6. All of the other Recitals of the Original Agreement shall remain
the same and are reaffirmed.
3. AMENDED PROVISIONS OF ORIGINAL AGREEMENT
3.1 Paragraph 2.8 of the Original Agreement is modified to read in its
entirety as follows:
"2.8 FUNDS FOR JOINT VENTURE: GTC hereby agrees to provide funds as
capital for the Joint Venture in the amount of ONE MILLION THREE HUNDRED
THOUSAND DOLLARS ($1,300,000.00) US (the "Funds") no later than December 1,
1998.
3.2 Paragraph 6.7.3 Deposit of Funds of the Original Agreement is
deleted in its entirety.
Page 2 of 4
<PAGE>
4. MISCELLANEOUS PROVISIONS
4.1 CONTINUED EFFECT OF ORIGINAL AGREEMENT: All provisions of the
Original Agreement except as modified by this Amendment shall remain in full
force and effect and are reaffirmed.
4.2 INTERPRETATION OF AMENDMENT: In the event of any conflict,
inconsistency, or incongruity between any provision of this Amendment and any
provision of the Original Agreement, the provision of this Amendment shall
govern and control.
4.3 COUNTERPARTS: This Amendment may be signed in one or more
counterparts.
4.4 FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant
to a facsimile transmission shall be sufficient to bind a party to this
Amendment.
DATED: August 28, 1998 /s/ RICKY MING WAH NG
---------------------
RICKY MING WAH NG
SINO CONCOURSE LIMITED
DATED: August 28, 1998 BY: /s/ LI HO SHAN
-----------------------
LI HO SHAN
SINOWAY TECHNOLOGY LIMITED
For and on behalf of
SINOWAY TECHNOLOGY LIMITED
DATED: August 28, 1998 By: /s/ LI HO SHAN
------------------------
LI HO SHAN
Page 3 of 4
<PAGE>
REGENT LUCK HOLDINGS LIMITED
DATED: August 28, 1998 By: /s/ RICKY MING WAH NG
-------------------------
RICKY MING WAH NG
Director
GLOBAL TELEPHONE
COMMUNICATION INC.
DATED: August 28, 1998, By: /s/ TERRY WONG
------------------------
TERRY WONG
President
Page 4 of 4
<PAGE>
EXHIBIT 6.5
JOINT VENTURE AGREEMENT BETWEEN
SHENZHEN XUN YUN YUN DA ELECTRONICS CO. LTD.
AND REGENT LUCK HOLDINGS LTD. FOR
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD.
<PAGE>
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD
SUPPLEMENTAL ARTICLES
Shenzhen Xun Yun Da Electronics Co. Ltd. and Regent Luck Holdings Limited
signed the "Shenzhen Global Net Computer Information Co. Ltd. Articles"
(hereinafter called the "Articles") on 13th May 1997 and established equity
joint venture enterprise, Shenzhen Global Net Computer Information Co. Ltd.
(hereinafter called the "JV") in accordance with the PRC Sino-foreign Equity
Joint Venture Enterprise Law and the approval on 8th June 1998 by Shenzhen
Foreign Investment Bureau (Shenwaizhifu No. [1998]0520). The scope of business
of JV are: develop computer software, develop industrial products and related
technology and information service and computer network construction.
For the purpose of clarification of both parties' rights and obligation,
Shenzhen Xun Yun Da Electronics Co. Ltd. and Regent Luck Holdings Limited,
through friendly discussions, agree to enter into this Supplemental Article
and amend and supplement the Articles.
Article 1 The parties to this Supplemental Articles are:
(1) Party A: SHENZHEN XUN YUN DA ELECTRONICS CO. LTD.,
registered in Shenzhen, PRC having its
legal address at Block D, 25/F, Gaoya
Court, Gaokeli Huayuan Daxia, Fulian
District, Shenzhen City
Legal representative: Liu Guo Cheng
Occupation: General Manager
Nationality: Chinese
Phone Number: 377 6634
(2) Party B: REGENT LUCK HOLDINGS LIMITED, registered
in Hong Kong, PRC having its registered
address at 1601 Causeway Bay Plaza I, 489
Hennessy Road, Hong Kong.
Legal representative: Ng Ming Wah
Nationality: Chinese (Hong Kong)
Phone Number: 00852-917 86281
Article 2 The words "Annual production of $4,000,000" in paragraph (1) of
Article 8
<PAGE>
of the Articles is replaced by the words "Annual production of
approximately $4,000,000."
Article 3 Article 11 of the Articles is replaced by the following:
"The Parties shall contribute by means of the following:
Party A: HK$1,000,000 in cash and equipment.
Party B: HK$9,000,000 in cash and equipment."
Article 4 Article 19 of the Articles is amended. The number of directors of
the Board is changed from 6 directors to 4 directors. The number
of directors appointed by Party A is changed from 4 directors to
1 director and the number of directors appointed by Party B is
changed from 2 directors to 3 directors. Other terms of Article
19 of the Articles remain unchanged.
Article 5 Article 20 of the Articles is amended. The number of Deputy
Managing Director is changed from 3 Deputy Managing Directors to
1 Deputy Managing Director and such Deputy Managing Director
shall be appointed by Party A. Other terms of Article 20 of the
Articles remain unchanged.
Article 6 This Supplemental Articles is signed by authorised
representatives of both parties and chopped by their company's
chop on 1998. This Supplemental Articles shall become
effective after the approval by the original approving authority.
Party A: sign and chop
Party B: sign and chop
<PAGE>
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD
ARTICLES
CHAPTER 1 GENERAL PRINCIPLES
Article 1 Shenzhen Xun Yun Da Electronics Co. Ltd. (hereinafter called
"Party A") and Regent Luck Holdings Limited (hereinafter called
"Party B") agree to enter into the Joint Venture Contract in
accordance with the PRC Sino-foreign Equity Joint Venture
Enterprise Law and other relevant laws and rules and jointly
invest and establish equity joint venture enterprise and compile
this Articles.
Article 2 The joint venture enterprise is called: Shenzhen Global Net
Computer Information Co. Ltd. (hereinafter called the "JV")
having its legal address at Room 2201, Block B, Fujian Building,
Futian District, Shenzhen City.
Article 3 The names, addresses and legal representatives of parties to this
Articles are:
(1) Party A: SHENZHEN XUN YUN DA ELECTRONICS CO. LTD.
Legal address: Flat D, 25th Floor, Gaoya Court, Gaokeli
Huayuan Daxia, Futian District, Shenzhen
(illegible)
Legal representative: Liu Guo Cheng
Occupation: General Manager
Nationality: Chinese
(2) Party B: REGENT LUCK HOLDINGS LIMITED
Legal Address: 1601 Causeway Bay Plaza I, 489 Hennessy
Road, Hong Kong.
Legal representative: Ng Ming Wah
Occupation: Managing Director
Nationality: Chinese (Hong Kong)
Article 4 The JV is a limited liability company.
Article 5 The JV is a Chinese legal entity which shall obey all the PRC laws,
directives and relevant regulations and shall be governed by and
be protected by PRC laws.
CHAPTER 2 OBJECTS, SCOPE AND BUSINESS OF THE JV
1
<PAGE>
Article 6 The objects of the JV are: the JV strives to improve quality of
products and develop new products through advance and applicable
technology and scientific management so that the products can be
more competitive in international market in terms of quality and
price, increase economic efficiency so that the investors shall
have satisfactory economic return.
Article 7 Scope of business of JV: develop computer software, develop
industrial products and related technology and information
service, computer network construction.
Article 8 (1) The annual production capacity of the JV after it commences
production: Annual production of $4,000,000.
(2) The sale of production can be increased along with the
development of productivity and operation.
The choice of location of the factory and the environmental
protection plan and fire precaution action during production and
operation must be approved by environmental protection department
and fire regulation department of Shenzhen.
Article 9 The ratio between sales of JV products within China and abroad:
sales abroad amounts to 70%, sales within China amounts to 30%.
CHAPTER 3 TOTAL INVESTMENT AND REGISTERED CAPITAL
Article 10 Total investment of the JV is HK$10,000,000 and the Registered
Capital of the JV is HK$10,000,000:
Party A contributes HK$1,000,000, amounts to 10%
Party B contributes HK$9,000,000, amounts to 90%
Article 11 The parties shall contribute by means of the following:
Party A: HK$1,000,000 in cash
Party B: HK$9,000,000 in cash
Article 12 Parties to the JV shall contribute their respective registered
capital in accordance with the timing as stated in the JV
Contract.
Article 13 Within 30 days after the contribution of capital by each party, a
capital verification report shall be prepared by Chinese
registered accountant firm and capital injection certificates
shall be issued by the JV accordingly. The capital injection
certificates shall include: the name of the JV, the date
2
<PAGE>
of establishment, the parties to the JV, information about
capital contribution by both parties together with relevant
appendices, the capital contribution amount, the date of capital
contribution, the serial number and the approval date of the
capital injection certificates, etc. Capital injection
certificates shall be recorded by the original approving
authority and the Administration for Industry and Commerce
Department.
Article 14 During the continuance of the JV period, parties to the JV cannot
retrieve the registered capital.
Article 15 If any party wishes to transfer all or part of its registered
capital to any third party, it has to obtain consent from the
other JV party. If any JV party transfers all or part of its
registered capital, the other JV party has a right of first
refusal.
Article 16 Any change of business, extension of scope of business,
separation of business, merger of business, increase and transfer
in registered capital, and changes in other important matters of
the JV shall be effective upon obtaining unanimous approval by
the Board of Directors and each of the parties to the JV,
approval by the original approval authority and completion of the
procedures for registration of amendments with administration for
industry and commerce bureau, taxation authority, customs
department and relevant authorities, etc.
CHAPTER 4 BOARD OF DIRECTORS
Article 17 The JV shall set up a Board of Directors (the "Board"). The Board
is the body with highest authority in the JV.
Article 18 The Board shall decide all important matters of the JV, including:
(1) the information and amendment of the structure of the JV and the
personnel planning;
(2) the appointment of the General Manager, Deputy General Manager,
Chief Engineer, Chief Accountant, Auditor and any other senior
executives, and their rights, responsibilities and salary;
(3) the central direction of the JV, development plan, production and
management proposal and implementation of any building plan (of
infrastructure), approval of the proposals of General Manager or
management department;
(4) the amendment of the Articles of the JV;
(5) the inspection of the operation status of the JV, the approval of
the annual financial proposal and report (including the balance
sheet and the profit and loss account, etc.);
(6) the proposals concerning enterprise expansion fund, reserve fund,
3
<PAGE>
employee benefit and bonus fund;
(7) annual proposals for distribution of profit and the remedy of
loss;
(8) approving the labour contract of the JV and any important rules
and regulations;
(9) the increase or transfer of capital, the division, merger of
business, cessation of business, continuation, termination and
dismissal of the JV;
(10) responsible for the audit at termination or at the end of the
term of the JV;
(11) any other important matters which shall be decided by the Board.
Article 19 The Board shall consist of 6 directors. Party A shall appoint 4
directors and Party B shall appoint 2 directors. The term of
service for directors is 4 years. However, consecutive term maybe
served if directors or Managing Directors continued to be
appointed by their respective appointing party.
Article 20 The Board has 1 Managing Director and 3 Deputy Managing
Directors. The Managing Director shall be appointed by Party B.
Party A shall appoint 2 Deputy Managing Directors while Party B
shall appoint 1. The Board shall be informed in writing of any
appointment and change of directors by either parties.
Article 21 Board Meetings shall be convened at least once every year.
Provisional Board Meetings may be called if petitioned by more
than 1/3 of the directors.
Article 22 Generally, Board Meetings shall be held in the legal address of
the JV.
Article 23 Board Meetings shall be called and chaired by the Managing
Director. If the Managing Director is absent, Board Meetings
shall be called and chaired by the Deputy Managing Director.
Article 24 Managing Director shall give Notice of Board Meetings which shall
include the agenda, time and venue of the Board Meetings to each
director five days before the Board Meetings.
Article 25 If a director is not able to attend a Board Meeting, he can
appoint a representative by an appointment letter to represent
him. But above-mentioned representative cannot represent two or
more than two directors. If a director cannot be present and
cannot appoint a representative to represent him at the Board
Meetings, he shall be regarded as giving up his right.
Article 26 Board Meetings may only be convened if more than 2/3 of the
directors are present. Any resolution passed in a meeting which
is convened by less than 2/3 of the directors shall be invalid.
Article 27 Minutes of meeting shall be taken and signed by all the directors
present in the meeting (or representative of the directors, if
any). Minutes of meeting shall be recorded in Chinese or both
Chinese and English. A copy of
4
<PAGE>
minutes of meeting and resolution, after signing by the
representative of the meeting, shall be copied to each director.
The minutes of meeting and resolution together with any
appointment letter shall be subsequently filed for record and
kept by the person specified by the Board. During the term of the
JV, no one may amend or destroy any of the above documents.
During the vacation of the Board Meetings, any matters which
require the decision of the Board shall be resolved by the Board
through electronic communication and writing. Any resolution
passed in writing by directors shall be treated as a resolution
duly passed at a Board Meeting.
Article 28 The following important issues have to be resolved by all
directors present in the Board Meeting:
(a) amendments to the JV articles;
(b) termination or dissolution of the JV;
(c) increase, transfer or adjustment of registered capital of
the JV;
(d) the charge of the assets of the JV; and
(e) merger with any other economic entity by the JV, division of
the the JV or change in its form of establishment.
Article 29 Matters other than those specified in Article 28 shall be
resolved by 2/3 majority of the Board.
CHAPTER 5 MANAGEMENT ORGANISATION
Article 30 The JV shall set up a management organisation ("Management
Organisation"). The details of its set up shall be decided by the
Board.
Article 31 The JV shall have a General Manager and a Deputy General Manager.
The General Manager and the Deputy General Manager shall be
recruited by the Board. The first General Manager shall be
appointed by Party B and the first Deputy General Manager shall
be appointed by Party A.
Article 32 The General Manager shall be directly responsible to the Board.
The duty of the General Manager is to execute all resolutions of
the Board, organises and to lead the daily production, technology
and management of the JV. The Deputy General Manager shall assist
the General Manager. If the General Manager is absent or is not
able to work, the Deputy General Manager shall be responsible for
the duty of the General Manager.
Article 33 Decision on all important matters of daily operation of the JV
shall be valid after signing by both the General Manager and
Deputy General Manager. Those matters which require signature of
the General Manager and the Deputy General Manager shall be
decided by the Board.
5
<PAGE>
Article 34 The General Manager and Deputy General Manager shall be recruited
by the Board for a term of 4 years. Consecutive term maybe served
if the General Manager and the Deputy General Manager continued to
be appointed by the Board.
Article 35 If appointed by the Board, members of the Board can also act as
the General Manager or Deputy General Manager or any senior post
of the JV.
Article 36 The General Manager and Deputy General Manager shall always live
in the accommodations provided by the JV. They shall not become
the general manager, deputy general manager or any senior
executives of any economic organisation. They shall not
participate in any commercial activity of any economic
organisation which is in competition with the JV.
If any staff works for his own benefits, engages in fraud or is
grossly negligent when performing the duties, the Board can
resolve to or according to the managing rules and regulations
dismiss him at any time. Such staff shall be economically or
legally responsible for any economic losses or legal liability of
the JV.
Article 37 The JV shall have 1 Chief Engineer, 1 Chief Accountant and 1
Auditor and they shall be recruited by the Board.
Article 38 Chief Engineer, Chief Accountant and Auditor shall be led by the
General Manager.
The duty of the Chief Accountant is to lead all the financial and
account operation of the JV, to organise the financial audit of
the JV and to implement the economic responsibility system.
The Auditor is responsible for the internal audit of the JV, and
the inspection and audit of the financial income account of the
JV. The auditor shall report to the General Manager and the
Board.
Article 39 The resignation of the General Manager, Deputy General Manager,
Chief Engineer, Chief Accountant or Auditor shall be in writing. The
resignation letter shall be given to the Board 60 days before the
date of resignation. The resignation is subject to the approval
of the Board.
CHAPTER 6 FINANCIAL ACCOUNT
Article 40 The JV's financial accounts should be formulated in accordance
with the PRC Rules on Accounting System and Financial
Administration of Foreign Investment Enterprises promulgated by
the Department of Finance as well as relevant rules and
regulations of the Shenzhen Special Economic Zone.
6
<PAGE>
The JV shall file the statistic report concerning with the use of
foreign investment in accordance with the rules and regulations
of the statistics and the statistic system concerning with the
use of foreign investment of the PRC and Shenzhen City.
Article 41 The financial year of the JV shall use the Gregorian calendar
which shall commence from 1st January of a year to 31st December of
the same year.
Article 42 Any evidence, account book or report shall be written in Chinese.
English may be added upon request.
Article 43 RMB shall be used as the unit in the account book of the JV. The
exchange rate declared by the State Administration of Foreign
Exchange on the actual date of exchange shall be used as the
exchange rate.
Article 44 The JV shall open a RMB account and a foreign currency account at
the Bank of China or other banks which are approved by the State
Administration of Foreign Exchange.
Article 45 The JV shall use international rights and obligations occurrence
system and loans recording method to record the account.
Article 46 The JV shall record the following matters in the financial
account book:
(1) all the income and expenses in cash of the JV;
(2) the sale and purchase status of all the assets of the JV;
(3) the registered capital and indebtedness status of the JV; and
(4) the time of contribution, increase and transfer of the registered
capital of the JV.
Article 47 The management department of the JV shall, within first three
months of a financial year, prepare the balance sheet and the
profit and loss account of the JV of the previous financial year
which shall, upon the inspection and signing by the auditor, be
presented to and passed by the Board.
Article 48 Each party shall have the right to employ its own auditor to
inspect the account book of the JV on its own cost. The JV shall
assist during the inspection.
Article 49 The JV shall pay taxes in accordance with "PRC Foreign Investment
Enterprises and Foreign Enterprises Income Tax Law" and the Board
shall decide the depreciation period of the fixed assets of the
JV.
Article 50 All the foreign exchange matters of the JV shall be in accordance
with the "PRC Foreign Exchange Regulation", relevant control
rules and rules in the JV Contract.
7
<PAGE>
CHAPTER 7 PROFITS DISTRIBUTION
Article 51 The JV shall draw the reserve fund, enterprise development fund
and employee benefit and bonus fund in accordance with relevant
laws and regulations of the PRC. The above fund shall be drawn
from the profit of the JV after the payment of income taxes by
the JV. The drawing ratio shall be decided by the Board.
Article 52 The profit of the JV, after the payment of income taxes of the JV
in accordance with the laws and the drawing of the above funds,
shall be distributed to the parties to the JV according to the
ratio of their respective contribution of registered capital.
Article 53 The JV shall distribute profit once every year. The JV shall
declare the proposal of profit distribution and the amount of
profit for each party within the first three months of every
financial year.
Article 54 Before the remedy of loss of the previous financial year of the
JV, no profit may be distributed. The non-distributed profit of
the previous year shall be distributed together with the profit
of this financial year.
CHAPTER 8 LABOUR
Article 55 The JV shall decide its departmental and personal structure in
accordance with the production and operation requirement. The JV
shall, in accordance with the recruitment plan approved by the
Department of Labour, recruit, interview and select the required
staff.
Article 56 The JV shall recruit staff within the territories of the PRC. The
JV and the staff shall obey the "PRC Labour Law" and other
relevant PRC laws, regulations and relevant rules of Shenzhen
City and shall enter into labour contract in accordance with the
laws. The labour contract shall specify the duties, the term of
the labour contract, the labour conditions and protections,
labour disciplines, salaries, social insurance, benefit and the
dismissal, resignation, amendment, termination and dissolution of
the contract, the liability in case of breach of the contract and
other agreed terms, etc. After signing of the labour contract,
the contract shall be filed to Labour Bureau for record and all
related procedures for employment shall be attended to.
Article 57 The JV shall have the rights to warn, record the fraud and reduce
the salary of the staff who has breached the rules and labour
discipline of the JV. If the case is serious, the staff can be
dismissed by the JV. The name of the staff who has been dismissed
or disciplined shall be recorded in the Shenzhen Labour Bureau.
8
<PAGE>
Article 58 The salary and benefit of the staff shall comply with the
relevant regulations of Shenzhen Special Economic Zone and shall
be confirmed by the Board in accordance with the circumstances
and shall be specified in the labour contract.
The JV shall increase the salary along the line with the
development in production, the improvement of the ability and
technology of the employees.
Article 59 The JV shall set up rules for staff benefit, bonus, labour
protection and labour insurance in order to ensure that the staff
can work properly under normal circumstances.
CHAPTER 9 LABOUR TRADE UNION
Article 60 Staff of the JV can set up grass-root level labour trade union
according to the "PRC Trade Union Law" and carry out activities
of trade union.
Article 61 Labour trade union is the representative of the staff and its
mission is: according to the laws and regulations of the PRC, to
protect the legitimate right of the staff, to assist the JV in
the arrangement and reasonable use of the benefit and bonus fund,
to assist the JV and the staff in conflict mediation, to
organise the staff to study, to develop culture and sport
activities, to teach the staff to obey the labour discipline, to
work hard in order to complete the economic mission of the JV.
Article 62 Labour trade union of the JV can advise and assists the staff in
signing the labour contract with the JV, or represent the staff
to sign a collective labour contract with the JV and supervise
the execution of the contract.
Article 63 When the JV discusses and decides issues relating to personal
benefit of the employees such as the bonus and penalty of the
staff, salary system, living benefit, labour protection and
insurance, etc., representatives of the labour trade union shall
have the right to be present at the meeting (with no voting
right) in order to reflect the suggestion and request of the
staff.
Article 64 The JV shall provide 2% of the actual salary of the staff to the
labour trade union as the operation fund. The labour trade union
shall use the operation fund in accordance with the relevant
rules concerning with the management of trade union operation
fund of the PRC National Trade Union.
CHAPTER 10 TERM, TERMINATION AND DISSOLUTION
9
<PAGE>
Article 65 The term of the JV shall be 15 years from the date of the
issuance of the business licence.
Article 66 Each of the parties of the JV can propose to extend the term of
the JV. If such proposal is unanimously resolved by the Board of
Directors, the JV can apply in writing to the original approval
authority for approval of extension of its term. The JV shall
register the amendment at relevant industrial and commercial,
taxation and customs authority.
Article 67 If the parties to the JV unanimously believe that termination is
the most beneficial to both parties to the JV, the parties can
propose early termination of the JV.
The decision of early termination of the JV shall be resolved by
all members in Board Meeting and shall be approved by the
original approval authority.
Article 68 In any of the following cases, the JV shall be dissolved:
(1) the term of the JV expires;
(2) the JV suffers serious loss or the JV becomes unable to conduct
its business because of the serious loss due to force majeure;
(3) one or more than one party to the JV fails to perform its
obligation under the JV Contract or this Articles and causes the
JV unable to conduct its business;
(4) the JV cannot achieve its business goals and does not have any
possibility to develop its business in future;
(5) the occurrence of dissolution events as specified in the JV
Contract or this Articles;
(6) the JV terminates in accordance with order made according to law
because the JV breaches the laws or administration rules.
The events stated in paragraph (2), paragraph (4) and paragraph
(5) of this article shall be decided by the Board and approved by
the original approval authority. In case of paragraph (3) of this
article, the party in breach shall be responsible for any loss
suffered by the innocent party and the innocent party shall also
be entitled to apply to the original approval authority for
approval to early terminate the JV.
Article 69 When the term of the JV comes to an end or the JV period
terminates before the expiry of its term, the JV shall publicise
its termination. The JV shall form a winding up committee to wind
up the JV in accordance with PRC Sino-foreign Equity Joint
Venture Enterprise Law, relevant foreign investment enterprise
winding up rules and relevant rules of Shenzhen Special Economic
Zone. The investors shall not transfer any capital of the JV
outside PRC and shall not deal with any assets of the JV.
10
<PAGE>
Article 70 The duty of the winding up committee is to audit the assets,
indebtedness, creditors' right, and also compile the balance
sheet, the list of assets and winding up proposal and execute
such proposal upon approval by the Board.
Article 71 Within the period of winding up, the winding up committee shall
represent the JV and the representative of the JV to bring or
defend any action.
Article 72 The cost of winding up and the salary of the member of the
winding up committee shall be paid from the present assets of
the JV in priority of other debts.
Article 73 In winding up, the assets of the JV shall depreciate according to
the book value of the assets and shall be re-valued according to
the market price.
Article 74 After the settlement of all the debts and liabilities of the JV,
the remaining assets shall be distributed to each parties to the
JV in accordance with the ratio of their contribution to the
registered capital.
Article 75 After the winding up, the winding up committee shall compile a
winding up report and, upon the confirmation by the Board, shall
be filed to the original approval authority. It shall also
register the dissolution of the JV with administration of
industry and commerce, taxation and customs authority, and revoke
the business licence and publicise the dissolution.
Article 76 After the dissolution of the JV, any account books and documents
shall be kept by the original Chinese party of the JV.
CHAPTER 11 REGULATIONS
Article 77 The JV shall pass the following regulations which are compiled by
the Board:
(1) operation and management regulations including the regulations
which manage the duties and running rules of each department;
(2) staff regulations;
(3) labour salary system;
(4) staff examination, promotions, bonus and penalty system;
(5) staff benefit system;
(6) financial system;
(7) winding up procedures of the JV; and
(8) other necessary rules and regulations.
CHAPTER 12 MISCELLANEOUS
Article 78 Any amendments and supplement to this Articles shall, upon the
unanimous
11
<PAGE>
approval of the Board of Directors be approved by the original
approval authority.
Article 79 This Article is written in Chinese.
Article 80 If there is any inconsistency between this Articles and the PRC
laws and regulations, the PRC laws and regulations shall prevail.
Article 81 This Articles shall be effective after the approval of the
approval authority of the Shenzhen People's Government.
Article 82 This Articles is executed by the legal representative of each of
the JV parties for and on their behalf in Shenzhen, Guangdong,
the PRC on 13th May 1998.
Party A: signed by legal representative and chop
Party B: signed by legal representative and chop
In Shenzhen on 13th May 1998.
12
<PAGE>
EXHIBIT 6.6
AGENCY AGREEMENT BETWEEN
SHENZHEN NEWSNET INFORMATION CO. AND
SHENZHEN GLOBAL NET COMPUTER INFORMATION CO. LTD.
<PAGE>
AGENCY AGREEMENT
For the purpose of promoting information technology in Shenzhen, developing the
market of information industry and alleviating the tension caused by the
insufficient supply of Newsnet equipment to meet the increasing market demand,
Shenzhen Newsnet Information Co. (Address: 1O/F., Xinghua Da Xia, No.22 Shen
Nan Zong Lu, Shenzhen City, PRC; Fax Number: 86 755 326 2902) (the "Party A")
and Shenzhen Global Net Computer Information Co. Ltd. (Address: Room 2201, Block
B, Fujian Da Xia, Futian District, Shenzhen City, PRC; Fax Number: )
(the "Party B"), through cordial negotiations, enter into this agreement (the
"Agreement") to introduce foreign advanced technology, equipment and management
experience in joint effort, the details of which are stated as follows:
I. OBJECTIVES
In view of the fact that INTERNET business and related information value-added
business in PRC are still in an initial stage or even have not yet commenced
development in some areas, the parties intend to select Shenzhen as the place
where they will start to expand the economic power of Newsnet in Shenzhen by
utilizing Party B's strong financial capacity and the advanced technology and
equipment and scientific management experience of its overseas sister companies,
and promptly enhance the business capability of Newsnet in Shenzhen by
allocating the foreign labour and material resources. All these measures are
believed to be attributable to the future success of Shenzhen's information
industry in catching up with the international level.
Party A is also the holder of a Telecommunication Business Operation Approval
(Approval Number: GD SZ P0007) (the "Approval") issued by the Guangdong
Provincial Telecommunication Business Management Office, allowing it to carry
out computer information internet services in Shenzhen, Guangdong Province, PRC.
The parties will, on the above basis, progressively expand the information
services of large cities such as Beijing, Shanghai, Wuhan, Guangzhou and
Chongqing, making an effort to develop Newsnet into one of the most influential
INTERNETS in PRC.
II. PROJECTS OF COOPERATION
1
<PAGE>
1. Party A hereby appoints Party B as its sole agent of the following business.
Thereupon Party B may provide service under the brandname of Party A to society
and Party A has assigned the Designated Code of 96341 to Party B for use:
(a) ISP agency business and valued-added business related to INTERNET which
is subject to the government regulations.
(b) Development and marketing of IT industry
(c) System integration service.
(d) Customer training and technical support services.
III. RESPONSIBILITIES OF BOTH PARTIES
PARTY A'S RESPONSIBILITIES:
1. obtaining all licenses, permits approvals and all procedures necessary for
Party B to operate business it intends to carry out in Shenzhen and similar
business in territories outside Shenzhen;
2. assigning its technical staff to participate in areas as network
construction, project design and implementation, operation management and
business control;
3. Applying to the relevant authorities for all license and approvals necessary
for the operation of Party B's business and for the use of relays required for
operation;
2
<PAGE>
4. providing the sites and power supply necessary for wiring equipment when
the business commences operation;
5. supply any information and documents required by Party B for its business
operation;
6. comply with all applicable laws and regulations;
7. provide support and assistance to Party B requested by Party B from time to
time relating to the operation of Party B's business; and
8. honour all contracts and agreements entered into with other third parties
introduced by Party B.
PARTY B'S RESPONSIBILITIES:
1. providing capital investment on the setting up of wiring equipment of Line
1000 and providing the capital needed in the related businesses;
2. providing public information services and introducing advanced technology
and equipment from other countries;
3. exploring actively the market of Newsnet to attract users and providing
quality before-sale and after-sale services to the users;
4. operating the business in accordance with the laws and complying with the
rules and regulations governing telecommunications in China so as not to
damage the reputation of the industry; and
5. delivering timely the relevant statements of business and the details of
the users to Party A.
IV. AGENCY EES
Party A agrees that for the first eighteen months from the commencement of the
agency business, Party B shall have 69% of the net profits gained (i.e. after
tax and all
3
<PAGE>
operating expenses including operating expenses of Party B) as agency fees.
From the nineteenth months onwards, Party B shall have 55% of the net profits
gained (i.e. after tax and all operating expenses including operating expenses
of Party B) as agency fees.
Manner and time of appropriation: Party A agrees that Party B shall collect all
payments from customers on behalf of Party A. Agency fees calculated in
accordance with the above shall be deducted and be retained by Party B at the
end of every financial year. The remaining sum shall then be returned to Party
A.
V. TERM OF COOPERATION
This Agreement shall be effective from the signing date of this Agreement and
shall continue for a term of 12 years unless an early termination is agreed in
writing by both parties. Upon the expiry of the term, the continuance of
cooperation will be subject to further negotiation.
VI. DEFAULT
(1). Any contravention to any term of this Agreement other than due to factors
relating to force majeure or policies shall be deemed as a default.
(2). The party in default shall accept all financial and legal liabilities
arising therefrom.
VII. AMENDMENT AND SUPPLEMENT OF THE AGREEMENT
Matters not contained herein shall be negotiated separately by both parties and
be included in a supplement in writing, which shall then be signed by both
parties. The supplement shall have the same force and effect as this Agreement.
VIII. SETTLEMENT OF DISPUTES
This Agreement is governed by the laws of People's Republic of China and any
4
<PAGE>
dispute arisen between the parties during its performance shall be initially
settled through cordial negotiations and be, only when necessary, brought before
the Shenzhen sub-commission of China Foreign Economic and Trade Arbitration
Commission for arbitration. The judgment of the arbitration shall be conclusive
and binding on both parties and all the relevant costs thereof shall be borne by
the party which loses the case.
IX. This Agreement is executed in both English and Chinese and in triplicates.
Each copy shall have same legal effect. In case of any inconsistency between
English and Chinese version, Chinese version shall prevail.
Party A: (chop) Party B: (chop)
Authorized Representative: Authorized Representative:
Date: ,1998 Date: ,1998
5
<PAGE>
EXHIBIT 6.7
TELECOMMUNICATION BUSINESS OPERATION APPROVAL
OF PEOPLES REPUBLIC OF CHINA FOR SHENZHEN NEWSAGENT CO. LTD.
<PAGE>
TELECOMMUNICATION BUSINESS OPERATION APPROVAL
OF
PEOPLE'S REPUBLIC OF CHINA
APPROVAL NUMBER: GD SZ POOO7
According to the regulations of State Ministry of PRC and Temporary Audit and
Management Method for Open, Telecommunication Service publicized by PTT.
After a series of audit, your company is authorized to operate open
telecommunication services. Herein an approval is issued.
NAME OF OPERATION COMPANY: SHENZHEN Newsnet Co.Ltd.
Representative: Xu Wen Yan
ADDRESS:
Room 105, 9th Building, 3rd Compound, No. 1 Hongfu Street, Luofu district,
Shenzhen.
TELECOMMUNICATION SERVICES TYPE:
Computer Information Internet Service
SERVICE SCOPE: Shenzhen
Valid period of this approval from December 26th, 1996
to December 26th, 2001
Addition: If the approval is due, Party A should be responsible for the renewal
action.
<PAGE>
EXHIBIT 6.8
SHARE EXCHANGE AGREEMENT WITH
PACIFIC ASSET INTERNATIONAL LTD.
<PAGE>
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (the "Agreement") is entered into and
effective as of March ____, 1999, by and between T.O. YIP (the "SHAREHOLDER"),
PACIFIC ASSET INTERNATIONAL LTD., a Hong Kong corporation, ("PAI") and GLOBAL
TELEPHONE COMMUNICATION, INC. a Nevada corporation ("GTC or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation
of the following facts, circumstances and representations:
1. PAI and its principals have extensive contacts and business
opportunities with the Asia Pacific banking community.
2. GTC has the non-exclusive licensing rights for Asia for Year 2000
compliance software for personal computers known as "Y2K
Solutions."
3. PAI desires to be granted the exclusive marketing and sale rights
for Y2K Solutions in Asia, excluding the Peoples Republic of
China, both generally and for its banking community clients and
friends in particular (collectively the "Marketing Rights").
4. The SHAREHOLDER is the owner of 10,000 shares of the common stock
of PAI which represents all of the issued and outstanding shares
of common stock of PAI.
5. In consideration of the granting of the Marketing Rights to PAI
BY GTC, and the issuing of certain GTC common shares to the
SHAREHOLDER, the SHAREHOLDER will transfer a total of 5,100 of
its PAI shares to GTC which will represent a total of fifty one
percent (51%) of the issued and outstanding common shares of PAI
(the "PAI Shares").
6. GTC desires to issue a total of 600,000 shares of its common
stock (the "GTC Shares") to the SHAREHOLDER in exchange for the
PAI Shares.
PAGE 1 OF 12
<PAGE>
7. The SHAREHOLDER desires to exchange the PAI Shares for the GTC
Shares in accordance with the terms and conditions of this
Agreement.
8. GTC desires to provide assistance to PAI with respect to the
business growth and development of PAI and to further assist in
the development of strategic relationships with the Asian banking
community.
9. PAI desires that this transaction be consummated.
2. EXCHANGE AND ISSUANCE OF SHARES
2.1 EXCHANGE OF GTC SHARES: GTC shall exchange and deliver to the
SHAREHOLDER, a total of 600,000 restricted shares of GTC common stock.
2.2 EXCHANGE OF PAI SHARES: At the Closing, the SHAREHOLDER shall
exchange and deliver to GTC a total of 5,100 shares of PAI common stock which
represent fifty one percent (51%) of the issued and outstanding shares of PAI.
2.3 NATURE OF GTC SHARES: The SHAREHOLDER shall be issued the GTC
Shares which unless otherwise contractually restricted, shall be subject to a
one (1) year holding period before the GTC Shares are eligible for sale to U.S.
persons or in the U.S. public market. The sale of the GTC Shares will be further
limited by the resale provisions of SEC Rule 144.
2.4 RESTRICTED NATURE OF GTC SHARES: Notwithstanding the one (1) year
holding period for the GTC Shares, if the SHAREHOLDER becomes an "affiliate" or
"control person" of GTC, he will be subject to certain limitations with respect
to the sale of his GTC Shares. Accordingly, as a result of such a designation,
the sale of the GTC Shares will be limited by SEC Rule 144.
2.5 PRIVATE SALE ACKNOWLEDGMENT: The parties acknowledge and agree that
the exchange and issuance of the GTC Shares is being undertaken as a private
sale pursuant to Section 4(1) of the Securities Act of 1933, as amended and
Nevada Revised Statutes Chapters 78 and 90 and is not being transacted via a
broker-dealer and/or in the public market place.
2.6 STATUS OF PRESENT SHARE OWNERSHIP AND CONTEMPLATED SHARE ISSUANCE
BY GTC: The parties hereto acknowledge and agree that in addition to the
issuance of the 600,000 GTC Shares, that the parties listed below
PAGE 2 OF 13
<PAGE>
own certain shares in GTC and that pursuant to the share exchange contemplated
by this Agreement, that the following will be the resulting share ownership of
GTC:
<TABLE>
<CAPTION>
Name NO. SHARES % OWNERSHIP
- -----------------------------------------------------------------------
<S> <C> <C>
1 . PAI Shareholder 600,000 3.84%
2. Present GTC
Shareholders 14,994,935 96.16%
---------- ------
TOTALS 15,594,935 100%
---------- ------
---------- ------
</TABLE>
2.7 ADDITIONAL SHARE ISSUANCE: The parties further acknowledge and
agree that in further addition to the GTC Shares and the shares held by the
present GTC Shareholders, additional shares will be issued by GTC pursuant to
the financing requirements of GTC (the "Additional Shares"). Accordingly, the
percentage share ownership of the parties will be diluted on a pro-rata basis.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The COMPANY represents and warrants to the SHAREHOLDER and PAI as
follows:
3.1 ORGANIZATION: GTC is a corporation duly incorporated and validly
existing under the laws of the State of Nevada and is in good standing with
respect to all of its regulatory filings.
3.2 CAPITALIZATION: The authorized capital of GTC consists of
25,000,000 common shares with a par value $.001 and of which a total of
14,994,935 common shares are validly authorized and issued by the COMPANY. Said
outstanding shares are fully paid and non-assessable shares and have been issued
in full compliance with all federal and state securities laws. Such issued and
outstanding shares are hereinafter referred to as the "Existing GTC Shares". The
authorized capital of GTC also consists o 5,000,000 shares of preferred stares
with a par value of $.01 per share. No preferred shares are issued and
outstanding.
PAGE 3 OF 13
<PAGE>
3.3 BOOKS AND RECORDS: All material transactions of GTC have been promptly
and properly recorded or filed in or with its books and records and the Minute
Book of GTC contains records of all meetings and proceeds of the shareholders
and directors thereof.
3.4 LEGAL COMPLIANCE: To the best of its knowledge, GTC is not in breach of
any laws, ordinances, statutes, regulations, by-laws, orders or decrees to which
GTC is subject or which apply to it or any of its assets.
3.5 TAX RETURNS: All tax returns and reports of GTC required by law to be
filed prior to the date hereof have been filed and are substantially true,
complete and correct and all taxes and governmental charges have been paid.
3.6 ADVERSE FINANCIAL EVENTS: GTC has not experienced nor is it aware of
any occurrence or event which has had or might reasonably be expected to have a
material adverse effect on its financial condition.
3.7 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes, claims,
actions, suits, judgments, investigations or proceedings outstanding or pending
or to the knowledge of GTC threatened against or affecting GTC at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, bureau or agency.
3.8 EMPLOYEE LIABILITIES: GTC has no liability to former employees or any
liability to any governmental authorities with respect to current or former
employees.
3.9 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of GTC or of any agreement to which GTC is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by GTC and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the asset of GTC.
3.10 VALIDLY ISSUED AND AUTHORIZED SHARES: That the GTC Shares will be
validly authorized and issued by the COMPANY, they will be fully paid and
non-assessable and that they will be issued in full compliance with all federal
and state securities laws.
3.11 RESTRICTIVE LEGEND: That the GTC Shares will have a restrictive legend
imposed thereon identifying them as "Restricted Shares" which are subject to the
conditions and limitations of SEC Rule 144 with respect to their sale in the
U.S. public market place.
PAGE 4 OF 13
<PAGE>
3.12 CORPORATE AUTHORITY: The officers or representatives of the COMPANY
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to a resolution of the Board of Directors of the
COMPANY.
3.13 PUBLICLY TRADED COMPANY: The COMPANY is listed on the NASD OTC
Bulletin Board with the trading symbol "GTCI".
4. REPRESENTATIONS OF SHAREHOLDER AND PAI
THE SHAREHOLDER and PAI collectively and individually hereby represent
and warrant to GTC as follows:
4.1 SHARE OWNERSHIP: That the SHAREHOLDER is the owner, beneficially
and of record, of the PAI Shares and said shares are free and clear of all
liens, encumbrances, claims, charges and restrictions.
4.2 TRANSFERABILITY OF PAI SHARES: That the SHAREHOLDER have full power
to transfer the PAI Shares to GTC without obtaining the consent or approval of
any other person or governmental authority.
4.3 VALIDLY ISSUED AND AUTHORIZED SHARES: That the PAI Shares are
validly authorized and issued, fully paid, and nonassessable, and the PAI Shares
have been so issued in full compliance with all Hong Kong securities laws.
4.4 ORGANIZATION: PAI is a corporation duly incorporated and validly
existing under the laws of Hong Kong and is in good standing with respect to all
of its regulatory filings.
4.5 CAPITALIZATION: The authorized capital of PAI consists of _______
common shares with a par value of $ _______ and of which 10,000 common shares
are issued and outstanding as fully paid and non-assessable shares.
4.6 BOOKS AND RECORDS: All material transactions of PAI have been
promptly and properly recorded or filed in or with its books and records and the
Minute Book of PAI contains records of all meetings and proceeds of the
shareholders and directors thereof.
4.7 LEGAL COMPLIANCE: PAI is not in breach of any laws, ordinances,
statutes, regulations, by-laws, orders or decrees to which PAI is subject or
which apply to it or any of its assets.
PAGE 5 OF 13
<PAGE>
4.8 TAX RETURNS: All tax returns and reports of PAI required by law to
be filed prior to the date hereof have been filed and are subsequently true,
complete and correct and all taxes and governmental charges have been paid.
4.9 ADVERSE FINANCIAL EVENTS: PAI has not experienced nor is it aware
of any occurrence or event which has had or might reasonably be expected to have
a material adverse effect on its financial condition.
4.10 DISPUTES, CLAIMS AND INVESTIGATIONS: There are no disputes,
claims, actions, suits, judgments, investigations or proceedings outstanding or
pending or to the knowledge of PAI threatened against or affecting PAI at law or
in equity or before or by any federal, provincial, municipal or other
governmental department, commission, board, bureau or agency.
4.11 EMPLOYEE LIABILITIES: PAI has no liability to former employees or
any liability to any government authorities with respect to current or former
employees.
4.12 NO CONFLICTS OR AGREEMENT VIOLATIONS: The execution, delivery and
performance of this Agreement will not conflict with or be in violation of the
articles or by-laws of PAI or of any agreement to which PAI is a party and will
not give any person or company a right to terminate or cancel any agreement or
right enjoyed by PAI and will not result in the creation or imposition of any
lien, encumbrances or restriction of any nature whatsoever in favor of a third
party upon or against the assets of PAI.
4.13 NO LIENS: That PAI has not received a notice of any assignment,
lien, encumbrance, claim or charge against the PAI Shares.
4.14 CORPORATE AUTHORITY: The officers or representatives of PAI
executing this Agreement represent that they have been authorized to execute
this Agreement pursuant to resolution of the respective Boards of Directors of
PAI.
5. REPRESENTATIONS AND
WARRANTIES OF SHAREHOLDER ALONE
The SHAREHOLDER alone further represents and warrants to GTC as follows
with respect to the GTC Shares:
PAGE 6 OF 13
<PAGE>
5.1 FINANCIALLY RESPONSIBLE: That he is financially responsible, able
to meet his obligations and acknowledges that this investment will be
speculative.
5.2 INVESTMENT EXPERIENCE. That he has experience in the business of
investments in one or more of the following: (i) investment experience with
securities such as stock and bonds; (ii) ownership of interests in partnerships,
new ventures and start-up companies; (iii) experience in business and financial
dealings; and that they can protect his own interests in an investment of this
nature and he does not have an "Investor Representative", as that term is
defined in Regulation D of the Securities Act of 1933 and does not need such an
Investor Representative.
5.3 INVESTMENT RISK. That he is capable of bearing the high degree of
economic risks and burdens of this investment, including but not limited to the
possibility of complete loss of all his investment capital and the lack of a
liquid market, such that he may not be able to liquidate readily the investment
whenever desired or at the then current asking price.
5.4 ACCESS TO INFORMATION: That he has had access to the information
regarding the financial condition of the COMPANY and he was able to request
copies of such information, ask questions of and receive answers from the
COMPANY regarding such information and any other information they desire
concerning the GTC Shares, and all such questions have been answered to his full
satisfaction.
5.5 PRIVATE TRANSACTION: That at no time was he presented with or
solicited by any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising.
5.6 INVESTMENT INTENT: The GTC Shares are not being purchased with a
view to or for the resale or distribution thereof and he has no present plans to
enter into any contract, undertaking, agreement or arrangement for such resale
or distribution.
5.7 DUE DILIGENCE: That the SHAREHOLDER has completed a due diligence
review of the affairs of GTC and is satisfied with the results of that review.
PAGE 7 OF 13
<PAGE>
6. CLOSING, ESCROW HOLDER AND
CONDITIONS TO CLOSING
6.1 EXCHANGE CLOSING: The closing of the share exchange as contemplated
by this Agreement (the "Closing") shall take place in Vancouver, British
Columbia, at such time and place as may be agreed among by the parties, but in
no event later than 11 MARCH, 1999, unless otherwise extended in writing by
the parties.
6.2 APPOINTMENT OF ESCROW HOLDER: The parties hereby appoint CARMINE J.
BUA, III, ESQ. of San Diego, California as the Escrow Holder pursuant to this
Agreement.
6.3 OPINION OF COUNSEL FOR GTC: The SHAREHOLDER and PAI shall have
received an opinion from the legal counsel for GTC, in form and substance
reasonably satisfactory to the SHAREHOLDER and PAI, to the effect that:
1. GTC is a corporation duly organized and legally
existing under the laws of the State of Nevada and is in good
standing with respect to all of its regulatory filings, and
2. This Agreement when duly executed and delivered by
GTC, constitutes a legal, valid and binding obligation of GTC
enforceable against it in accordance with its terms, and
3. The Shares delivered pursuant to the Agreement have
been validly issued are fully paid and nonassessable, and
4. The Existing GTC Shares, the Additional Shares and
the GTC Shares have been legally and validly issued and are in
compliance with all federal and state securities laws including
but not limited to Section 4(1) of the Securities Act of 1933,
as amended, and Nevada Revised Statutes Chapters 78 and 90.
PAGE 8 OF 13
<PAGE>
6.4 OPINION OF COUNSEL FOR SHAREHOLDER AND PAI WITH RESPECT TO
CORPORATE STATUS AND PAI SHARES: GTC shall have received an opinion from the
legal counsel for the SHAREHOLDER and PAI, in form and substance reasonably
satisfactory to GTC, to the effect that:
1 . PAI is a corporation duly organized and legally
existing under the laws of Hong Kong and is in good standing
with respect to all of its regulatory filings.
2. The PAI Shares delivered pursuant to this Agreement
have been validly issued, fully paid, nonassessable, and have
been originally issued in full compliance with all federal and
state securities laws.
3. The SHAREHOLDER has the full power to transfer the
PAI Shares to GTC without obtaining the consent or approval of
any other person or governmental agency.
6.5 OPINION OF COUNSEL FOR SHAREHOLDER AND PAI WITH RESPECT TO THE
OWNERSHIP AND OPERATION OF PAI: GTC shall have received an opinion from the
legal counsel for the SHAREHOLDER and PAI along with the relevant supporting
documentation, in form and substance reasonably satisfactory to GTC, to the
effect that:
1 . That GTC as a foreign corporation is permitted
under Hong Kong law to be the legal and beneficial owner of the
PAI Shares which represents a controlling interest of PAI.
2. The PAI has the legal ability to operate and
utilize the Marketing Rights in those geographical areas
provided by the Marketing Rights.
PAGE 9 OF 13
<PAGE>
3. That the ownership of PAI as a subsidiary
corporation of GTC will not affect the ability of PAI to utilize
the Marketing Rights with respect to the marketing and sale of
the Y2K Solutions as contemplated by the Marketing Rights.
6.6 ESCROW CONDITIONS AND CLOSING: Prior to the Closing, the following
will be required:
1. DELIVERY OF PAI SHARES: The SHAREHOLDER shall
deliver to the Escrow Holder the certificate or certificates
representing the 5,100 PAI Shares registered in the name of GTC,
duly endorsed for transfer accompanied by a duly executed
assignment of the PAI Shares to GTC.
2. DELIVERY OF GTC SHARES: GTC shall deliver to the
Escrow Holder a total of 600,000 of the GTC Shares registered in
the name of the SHAREHOLDER.
3. LEGAL OPINIONS AND DOCUMENTS: Both parties shall
deliver to the Escrow Holder such legal opinions and other
documents as are required by the terms and conditions of this
Agreement.
4. REQUISITE CORPORATE RESOLUTIONS: Each party shall
deliver to the Escrow Holder certified copies of resolutions
from their respective Boards of Directors authorizing the
subject transaction.
6.7 CLOSE OF TRANSACTION: The subject transaction shall "close" upon
the satisfaction of the above conditions.
PAGE 10 OF 13
<PAGE>
7. COOPERATION, ARBITRATION, INTERPRETATION, MODIFICATION AND ATTORNEY FEES
7.1 COOPERATION OF PARTIES: The parties further agree that they will do
all things necessary to accomplish and facilitate the purpose of this Agreement
and that they will sign and execute any and all documents necessary to bring
about and perfect the purposes of this Agreement.
7.2 ARBITRATION: The parties hereby submit all controversies, claims
and matters of difference arising out of this Agreement to arbitration in San
Diego, California according to the rules and practices of the American
Arbitration Association from time to time in force. This submission and
agreement to arbitrate shall be specifically enforceable. The Agreement shall
further be governed by the laws of the State of Nevada.
7.3 INTERPRETATION OF AGREEMENT: The parties agree that should any
provision of this Agreement be found to be ambiguous in any way, such ambiguity
shall not be resolved by construing such provisions or any part of or the entire
Agreement in favor of or against any party herein, but rather by construing the
terms of this Agreement fairly and reasonable in accordance with their generally
accepted meaning.
7.4 MODIFICATION OF AGREEMENT: This Agreement may be amended or
modified in any way at any time by an instrument in writing stating the manner
in which it is amended or modified and signed by each of the parties hereto. Any
such writing amending or modifying this Agreement shall be attached to and kept
with this Agreement.
7.5 ATTORNEY FEES: If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs incurred in that
action or proceeding, in addition to any other relief to which it may be
entitled.
7.6 ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
and understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
7.7 COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
PAGE 11 OF 13
<PAGE>
7.7 COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
7.8 FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant
to a facsimile transmission shall be sufficient to bind a party to this
Agreement.
For and on behalf of
APEX DIRECTORATE LIMITED
/s/ [ILLEGIBLE]
---------------------------------
DATED: March _____, 1999 Authorized Signature(s)
---------------------------------
AUTHORIZED SIGNATURE
For Apex Directorate Limited
For and on behalf of
APEX SECRETARIAL CORPORATION
/s/ [ILLEGIBLE]
---------------------------------
DATED: March _____, 1999 Authorized Signature(s)
---------------------------------
AUTHORIZED SIGNATURE
For Apex Secretarial corporation
For and on behalf of
Apex Management Limited
/s/ [ILLEGIBLE]
---------------------------------
DATED: March _____, 1999 Authorized Signature(s)
---------------------------------
AUTHORIZED SIGNATURE
For APEX MANAGEMENT LIMITED
PACIFIC ASSET
INTERNATIONAL, LTD.
For and on behalf of
PACIFIC ASSET INTERNATIONAL LIMITED
DATED: March _____, 1999 BY: /s/ T.O. YIP
---------------------------------
Authorized Signature(s)
---------------------------------
T.O. YIP
CEO
GLOBAL TELEPHONE
COMMUNICATIONS, INC.
DATED: March _____, 1999 BY: /s/ George Delmas
---------------------------------
George Delmas
CEO
PAGE 12 OF 13
<PAGE>
EXHIBIT 6.9
CONSULTING AGREEMENT WITH LIONS PEAK CAPITAL LTD.
<PAGE>
CONSULTING AGREEMENT
This Agreement has been entered into this 30th day of November, 1998.
BY AND BETWEEN
BY: GLOBAL TELEPHONE COMMUNICATION INC.
Suite 910-510 Burrard Street
Vancouver, BC V6C 3A8
Hereinafter called "Global"
AND: LIONS PEAK CAPITAL LTD.
1463 Haro Street
Vancouver, BC V6G 1G2
Hereinafter called "Lions Peak"
Who declare under the penalty of perjury that they have full corporate and legal
authority trusted in them to enter this Agreement.
Whereas, it is understood that Global has a need for consulting and Lions
Peak provides consulting services for public companies;
Therefore, in consideration of their mutual promises, assertions and covenants
set forth herein, the parties mentioned above are desirous of establishing an
Agreement for their common benefit and agree to abide by the following terms and
conditions:
TERM:
The term of this Agreement shall be for one year commencing on December 1, 1998
with provisions for extensions on a monthly basis mutually acceptable to both
parties.
Lions Peak shall provide the following consulting services:
1. Liaison with principal market makers and coordinate instructions for
trading activity.
2. Coordinate and prepare documentation for inclusion into Standard and
Poors, a full corporate manual listing to qualify for secondary
trading exemptions in several states.
<PAGE>
-2-
3. Liaison with Carmine Bua and other outside counsel to coordinate and
assist in the preparation of required regulatory filings (15c-211,
Form 10 etc) within the appropriate timetable as mandated by the SEC
and NASD.
4. Liaison with Corporate auditors to assist in the document production
required for annual audits.
5. Design and implement corporate office filing system to conform to the
prototype designed and utilized by Carmine Bua.
6. Liaison with principals in Hong Kong, China and Vancouver to advise on
corporate matters and specific business transactions.
7. Assist in the preparation of news releases and coordinate the public
dissemination of news.
8. Make introduction to contacts of Lions Peak including but not limited
to private investors, bankers, investment bankers, members of the
securities industry and corporate officers. Fee agreements for
successfully concluded business would be covered under separate
agreements.
EXPENSES
All expenses are to be paid by Global including but not limited to regulatory
filing fees, legal and accounting fees, transfer agent fees, office supplies,
rent and telephone, additional staff, travel and entertainment. All expenses
will be properly documented and invoiced to Global for management review and
approval.
COMPENSATION
1. Global will pay Lions Peak a monthly consulting fee of Five Thousand
Canadian Dollars ($5,000.00 USD) per month commencing on December 1,
1998 by either a wire transfer to Lions Peak's CDN account (See Exhibit
A) or by a check drawn off a Vancouver located bank. Payments are due
on the 30th of every month for one (1) year with provisions for
extending the contract.
2. Global will give Lions Peak the option to purchase twenty thousand
(20,000) free trading GTCI common shares at a price of twenty-five
cents (.25) per share pursuant to a Reg D Rule 504 stock offering.
Global directors will set options for Lion Peak on the 1999 round of
options with the amount to negotiated between both parties.
<PAGE>
-3-
INDEMNIFICATION
Global agrees to indemnify Lions Peak and hold harmless with regard to
information supplied to Lions Peak by Global for news releases, corporate
filings and all the information disseminated to the public.
The term of this Agreement is for one (1) year with provisions for extensions
and beginning December 1, 1998 and shall be binding on the parties hereto
their heirs, successors, administrators, executors and assigns.
A facsimile copy of this Agreement shall serve as the original and shall be
legally binding on the parties.
In witness whereof, the parties have executed this Consulting Agreement,
effective December 1, 1998.
FOR AND ON BEHALF OF GLOBAL TELEPHONE COMMUNICATION INC.
(ILLEGIBLE)
- --------------------
AUTHORIZED SIGNATORY
FOR AND ON BEHALF OF LIONS PEAK CAPITAL LTD.
/s/ MARK A. HOLDEN
- -----------------
MARK A. HOLDEN
PRESIDENT
<PAGE>
EXHIBIT 6.10
CONSULTING AGREEMENT WITH MILAN FINANCIAL INC.
<PAGE>
CONSULTING AGREEMENT
This Agreement has been entered into this 30th day of November, 1998.
BY AND BETWEEN
BY: GLOBAL TELEPHONE COMMUNICATION INC.
Suite 910-510 Burrard Street
Vancouver, BC V6C 3A8
Hereinafter called "Global"
AND: MILAN FINANCIAL INC.
1505-1200 Alberni Street
Vancouver, BC V6C 1A6
Hereinafter called "Milan"
Who declare under the penalty of perjury that they have full corporate and legal
authority trusted in them to enter this Agreement.
Whereas, it is understood that Global has a need for consulting and Milan
provides consulting services for public companies;
Therefore, in consideration of their mutual promises, assertions and covenants
set forth herein, the parties mentioned above are desirous of establishing an
Agreement for their common benefit and agree to abide by the following terms and
conditions:
TERM:
- ------
The term of this Agreement shall be for one year commencing on December 1, 1998
with provisions for extensions on a monthly basis mutually acceptable to both
parties.
Milan shall provide the following consulting services:
1. Liaison with principal market makers and coordinate instructions for
trading activity.
2. Coordinate and prepare documentation for inclusion into Standard and Poors,
a full corporate manual listing to qualify for secondary trading exemptions
in several states.
<PAGE>
-2-
3. Liaison with Carmine Bua and other outside counsel to coordinate and assist
in the preparation of required regulatory filings (15c-211, Form 10 etc)
within the appropriate timetable as mandated by the SEC and NASD.
4. Liaison with Corporate auditors to assist in the document production
required for annual audits.
5. Design and implement corporate office filing system to conform to the
prototype designed and utilized by Carmine Bua.
6. Liaison with principals in Hong Kong, China and Vancouver to advise on
corporate matters and specific business transactions.
7. Assist in the preparation of news releases and coordinate the public
dissemination of news.
8. Make introduction to contacts of Milan including but not limited to private
investors, bankers, investment bankers, members of the securities industry
and corporate officers. Fee agreements for successfully concluded business
would be covered under separate agreements.
EXPENSES
- ----------
All expenses are to be paid by Global including but not limited to regulatory
filing fees, legal and accounting fees, transfer agent fees, office supplies,
rent and telephone, additional staff, travel and entertainment. All expenses
will be properly documented and invoiced to Global for management review and
approval.
COMPENSATION
- -------------
1. Global will pay Milan a monthly consulting fee of Three Thousand Canadian
Dollars ($3,000.00 USD) per month commencing on December 1, 1998 by either
a wire transfer to Milan's CDN account (See Exhibit A) or by a check drawn
off A Vancouver located bank. Payments are due on the 15th and 30th of
every month for one (1) year with provisions for extending the contract.
2. Global will give Milan the option to purchase twenty thousand (5,000) free
trading GTCI common shares at a price of twenty-five cents (.25) per share
pursuant to a Reg D Rule 504 stock offering. Global directors will set
options for Milan on the 1999 round of options with the amount to
negotiated between both parties.
<PAGE>
-3-
INDEMNIFICATION
- ----------------
Global agrees to indemnify Milan and holds harmless with regard to information
supplied to Milan by Global for news releases, corporate filings all the
information disseminated to the public.
The term of this Agreement is for one (1) year with provisions for extensions
and beginning December 1, 1998 and shall be binding on the parties hereto their
heirs, successors, administrators, executors and assigns.
A facsimile copy of the Agreement shall serve as the original and shall be
legally binding on the parties.
In witness whereof, the parties have executed this Consulting Agreement,
effective December 1, 1998
FOR AND ON BEHALF OF GLOBAL TELEPHONE COMMUNICATION INC.
/s/ [ILLEGIBLE]
- --------------------------------
AUTHORIZED SIGNATORY
FOR AND ON BEHALF OF MILAN FINANCIAL INC..
/s/ Shadi Khazei
- -------------------------------
Shadi Khazei
PRESIDENT
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PLANET CITY
GRAPHICS CORPORATION, WEBWORKS MULTIMEDIA CORP., REGENT LUCK HOLDINGS LIMITED &
PACIFIC ASSET INTERNATIONAL LIMITED AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1999 JAN-01-1999
<PERIOD-END> DEC-31-1998 JUN-30-1999
<CASH> 16,390 1,054,733
<SECURITIES> 81,878 0
<RECEIVABLES> 14,458 349,903
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 112,726 1,404,636
<PP&E> 151,202 197,604
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 263,928 1,602,240
<CURRENT-LIABILITIES> 520,725 551,053
<BONDS> 0 0
0 0
0 0
<COMMON> 12,246 1,077,439
<OTHER-SE> 1,279,164 2,178,255
<TOTAL-LIABILITY-AND-EQUITY> 263,928 1,602,240
<SALES> 0 0
<TOTAL-REVENUES> 180,973 148,603
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 688,405 550,646
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 35,453 0
<INCOME-PRETAX> (422,625) (373,342)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (422,625) (373,342)
<EPS-BASIC> (0.05) (0.02)
<EPS-DILUTED> (0.05) (0.02)
</TABLE>
