U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_________________________________
FORM 10-SB
_________________________________
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(g) of
The Securities Exchange Act of 1934
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MULLY CORP.
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(Name of Small Business Issuer in its charter)
Nevada 84-1381946
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2851 S. Parker Road
Suite 720
Aurora, Colorado 80014
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(Address of principal executive offices) (Zip code)
Issuer's telephone number: (303) 671-8920
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Securities to be registered pursuant to Section 12(b) of the Act:
none
Securities to be registered pursuant to Section
12(g) of the Act:
Common Stock
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(Title of Class)
Page One of Seventy Three Pages
Exhibit Index is Located at Page Forty
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TABLE OF CONTENTS
Page
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PART I
Item 1. Description of Business . . . . . . . . . . . . . 3
Item 2. Plan of Operation. . . . . . . . . . . . . . . . . 8
Item 3. Description of Property. . . . . . . . . . . . . . 14
Item 4. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . . . 15
Item 5. Directors, Executive Officers, Promoters
and Control Persons. . . . . . . . . . . . . . . 16
Item 6. Executive Compensation . . . . . . . . . . . . . . 21
Item 7. Certain Relationships and
Related Transactions. . . . . . . . . . . . . . 22
Item 8. Description of Securities. . . . . . . . . . . . . 22
PART II
Item 1. Market for Common Equities and Related Stockholder
Matters . . . . . . . . . . . . . .. . . . . . . 24
Item 2. Legal Proceedings. . . . . . . . . . . . . . . . . 26
Item 3. Changes in and Disagreements with Accountants. . . 26
Item 4. Recent Sales of Unregistered Securities. . . . . . 26
Item 5. Indemnification of Directors and Officers. . . . . 27
PART F/S
Financial Statements . . . . . . . . . . . . . . . 29
PART III
Item 1. Index to Exhibits. . . . . . . . . . . . . . . . . 40
Item 2. Description of Exhibits. . . . . . . . . . . . . . 42
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PART I
Item 1. Description of Business
Mully Corp. (the "Company"), was incorporated on November 4,
1996 under the laws of the State of Nevada, to engage in any lawful
corporate undertaking, including, but not limited to, selected
mergers and acquisitions. The Company has been in the
developmental stage since inception and has no operations to date.
Other than issuing shares to its original shareholders, the Company
never commenced any operational activities. As such, the Company
can be defined as a "shell" company, whose sole purpose at this
time is to locate and consummate a merger or acquisition with a
private entity. The Board of Directors of the Company has elected
to commence implementation of the Company's principal business
purpose, described below under "Item 2 - Plan of Operation".
The Company is filing this Registration Statement on a
voluntary basis because the primary attraction of the Company as a
merger partner or acquisition vehicle will be its status as a
public company. Any business combination or transaction will
likely result in a significant issuance of shares and substantial
dilution to present stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities or undertake any
offering of the Company's securities, either debt or equity, until
such time as the Company has successfully implemented its business
plan described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. Andrew I. Telsey is
also an officer, director and principal shareholder of the Company.
However, while management believes that the procedures established
to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no
assurances that the procedures established relevant herein will
unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
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The Company's business is subject to numerous risk factors,
including the following:
Going Concern; No Operating History or Revenue and Minimal
Assets. The Company's financial statements accompanying this
Registration Statement have been prepared assuming that the Company
will continue as a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal
course of business. The financial statements do not include any
adjustment that might result from the outcome of this uncertainty.
The Company has had no operating history nor any revenues or
earnings from operations. The Company has no significant assets or
financial resources. The Company will, in all likelihood, sustain
operating expenses without corresponding revenues, at least until
the consummation of a business combination. This may result in the
Company incurring a net operating loss which will increase
continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no
assurance that the Company can identify such a business opportunity
and consummate such a business combination.
Speculative Nature of Company's Proposed Operations. The
success of the Company's proposed plan of operation will depend to
a great extent on the operations, financial condition and
management of the identified business opportunity. While
management intends to seek business combination(s) with entities
having established operating histories, there can be no assurance
that the Company will be successful in locating candidates meeting
such criteria. In the event the Company completes a business
combination, of which there can be no assurance, the success of the
Company's operations may be dependent upon management of the
successor firm or venture partner firm and numerous other factors
beyond the Company's control.
Scarcity of and Competition for Business Opportunities and
Combinations. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with,
joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed
entities, including venture capital firms, are active in mergers
and acquisitions of companies which may be desirable target
candidates for the Company. Nearly all such entities have
significantly greater financial resources, technical expertise and
managerial capabilities than the Company and, consequently, the
Company will be at a competitive disadvantage in identifying
possible business opportunities and successfully completing a
business combination. Moreover, the Company will also compete in
seeking merger or acquisition candidates with numerous other small
public companies.
No Agreement for Business Combination or Other Transaction-No
Standards for Business Combination. The Company has no
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arrangement, agreement or understanding with respect to engaging in
a merger with, joint venture with or acquisition of, a private or
public entity. There can be no assurance the Company will be
successful in identifying and evaluating suitable business
opportunities or in concluding a business combination. Management
has not identified any particular industry or specific business
within an industry for evaluation by the Company. There is no
assurance the Company will be able to negotiate a business
combination on terms favorable to the Company. The Company has not
established a specific length of operating history or a specified
level of earnings, assets, net worth or other criteria which it
will require a target business opportunity to have achieved, and
without which the Company would not consider a business combination
in any form with such business opportunity. Accordingly, the
Company may enter into a business combination with a business
opportunity having no significant operating history, losses,
limited or no potential for earnings, limited assets, negative net
worth or other negative characteristics.
Continued Management Control, Limited Time Availability.
While seeking a business combination, management anticipates
devoting up to twenty hours per month to the business of the
Company. None of the Company's officers has entered into a written
employment agreement with the Company and none is expected to do so
in the foreseeable future. The Company has not obtained key man
life insurance on any of its officers or directors.
Notwithstanding the combined limited experience and time commitment
of management, loss of the services of any of these individuals
would adversely affect development of the Company's business and
its likelihood of continuing operations. See "Item 5 - Directors,
Executive Officers, Promoters and Control Persons."
Conflicts of Interest - General. Officers and directors of
the Company may in the future participate in business ventures
which could be deemed to compete directly with the Company.
Additional conflicts of interest and non-arms length transactions
may also arise in the future in the event the Company's officers or
directors are involved in the management of any firm with which the
Company transacts business. Management has adopted a policy that
the Company will not seek a merger with, or acquisition of, any
entity in which management serve as officers, directors or
partners, or in which they or their family members own or hold any
ownership interest.
Reporting Requirements May Delay or Preclude Acquisition.
Sections 13 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), require companies subject thereto to provide
certain information about significant acquisitions, including
certified financial statements for the company acquired, covering
one, two, or three years, depending on the relative size of the
acquisition. The time and additional costs that may be incurred by
some target entities to prepare such statements may significantly
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delay or essentially preclude consummation of an otherwise
desirable acquisition by the Company. Acquisition prospects that
do not have or are unable to obtain the required audited statements
may not be appropriate for acquisition so long as the reporting
requirements of the 1934 Act are applicable.
Lack of Market Research or Marketing Organization. The
Company has neither conducted, nor have others made available to
it, results of market research indicating that market demand exists
for the transactions contemplated by the Company. Moreover, the
Company does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger
or acquisition contemplated by the Company, there is no assurance
the Company will be successful in completing any such business
combination.
Lack of Diversification. The Company's proposed operations,
even if successful, will in all likelihood result in the Company
engaging in a business combination with a business opportunity.
Consequently, the Company's activities may be limited to those
engaged in by business opportunities which the Company merges with
or acquires. The Company's inability to diversify its activities
into a number of areas may subject the Company to economic
fluctuations within a particular business or industry and therefore
increase the risks associated with the Company's operations.
Regulation. Although the Company will be subject to
regulation under the Securities Exchange Act of 1934, management
believes the Company will not be subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be
engaged in the business of investing or trading in securities. In
the event the Company engages in business combinations which result
in the Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would
be required to register as an investment company and could be
expected to incur significant registration and compliance costs.
The Company has obtained no formal determination from the
Securities and Exchange Commission as to the status of the Company
under the Investment Company Act of 1940 and, consequently, any
violation of such Act would subject the Company to material adverse
consequences.
Probable Change in Control and Management. A business
combination involving the issuance of the Company's Common Shares
will, in all likelihood, result in shareholders of a private
company obtaining a controlling interest in the Company. Any such
business combination may require management of the Company to sell
or transfer all or a portion of the Company's Common Shares held by
them, or resign as members of the Board of Directors of the
Company. The resulting change in control of the Company could
result in removal of one or more present officers and directors of
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the Company and a corresponding reduction in or elimination of
their participation in the future affairs of the Company.
Reduction of Percentage Share Ownership Following Business
Combination. The Company's primary plan of operation is based
upon a business combination with a private concern which, in all
likelihood, would result in the Company issuing securities to
shareholders of any such private company. The issuance of
previously authorized and unissued Common Shares of the Company
would result in reduction in percentage of shares owned by present
and prospective shareholders of the Company and may result in a
change in control or management of the Company.
Disadvantages of Blank Check Offering. The Company may enter
into a business combination with an entity that desires to
establish a public trading market for its shares. A business
opportunity may attempt to avoid what it deems to be adverse
consequences of undertaking its own public offering by seeking a
business combination with the Company. Such consequences may
include, but are not limited to, time delays of the registration
process, significant expenses to be incurred in such an offering,
loss of voting control to public shareholders and the inability or
unwillingness to comply with various federal and state laws enacted
for the protection of investors.
Taxation. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the
Company may undertake. Currently, such transactions may be
structured so as to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such
business combination will meet the statutory requirements of a tax-
free reorganization or that the parties will obtain the intended
tax-free treatment upon a transfer of stock or assets. A non-
qualifying reorganization could result in the imposition of both
federal and state taxes which may have an adverse effect on both
parties to the transaction.
Requirement of Audited Financial Statements May Disqualify
Business Opportunities. Management of the Company believes that
any potential business opportunity must provide audited financial
statements for review, for the protection of all parties to the
business combination. One or more attractive business
opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses
associated with preparing audited financial statements.
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Item 2. Plan of Operation
The Company intends to seek to acquire assets or shares of an
entity actively engaged in business which generates revenues, in
exchange for its securities. The Company has no particular
acquisitions in mind and has not entered into any negotiations
regarding such an acquisition. None of the Company's officers,
directors, promoters or affiliates have engaged in any preliminary
contact or discussions with any representative of any other company
regarding the possibility of an acquisition or merger between the
Company and such other company as of the date of this Registration
Statement.
The Company has no full time employees. The Company's
President and Secretary have agreed to allocate a portion of their
time to the activities of the Company, without compensation. These
officers anticipate that the business plan of the Company can be
implemented by their devoting minimal time per month to the
business affairs of the Company and, consequently, conflicts of
interest may arise with respect to the limited time commitment by
such officers. See "Item 5 - Directors, Executive Officers,
Promoters and Control Persons - Resumes."
The Company's officers and directors were formerly involved
with other "blank check" companies. The Company's officers and
directors may, in the future, become involved with other companies
who have a business purpose similar to that of the Company. As a
result, additional potential conflicts of interest may arise in the
future. If such a conflict does arise and an officer or director of
the Company is presented with business opportunities under
circumstances where there may be a doubt as to whether the
opportunity should belong to the Company or another "blank check"
company they are affiliated with, they will disclose the
opportunity to all such companies. If a situation arises in which
more than one company desires to merge with or acquire that target
company and the principals of the proposed target company has no
preference as to which company will merger or acquire such target
company, the company which first filed a registration statement
with the Securities and Exchange Commission will be entitled to
proceed with the proposed transaction. See "Item 5 - Directors,
Executive Officers, Promoters and Control Persons - Prior 'Blank
Check' Experience."
The Articles of Incorporation of the Company provides that the
Company shall possess and may indemnify officers and/or directors
of the Company for liabilities, which can include liabilities
arising under the securities laws. Therefore, assets of the
Company could be used or attached to satisfy any liabilities
subject to such indemnification. See "Part II - Item 5 -
Indemnification of Directors and Officers."
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General Business Plan
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. The Company will not restrict its search
to any specific business, industry, or geographical location and
the Company may participate in a business venture of virtually any
kind or nature. This discussion of the proposed business is
purposefully general and is not meant to be restrictive of the
Company's virtually unlimited discretion to search for and enter
into potential business opportunities. Management anticipates that
it may be able to participate in only one potential business
venture because the Company has nominal assets and limited
financial resources. See "Part F/S - Financial Statements." This
lack of diversification should be considered a substantial risk to
shareholders of the Company because it will not permit the Company
to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities
which have recently commenced operations, or which wish to utilize
the public marketplace in order to raise additional capital in
order to expand into new products or markets, to develop a new
product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly owned subsidiaries in
various businesses or acquire existing businesses as subsidiaries.
The Company anticipates that the selection of a business
opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available
capital, management believes that there are numerous firms seeking
the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms
on which additional equity financing may be sought, providing
liquidity for incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of
applicable statutes), for all shareholders and other factors.
Potentially, available business opportunities may occur in many
different industries and at various stages of development, all of
which will make the task of comparative investigation and analysis
of such business opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with
which to provide the owners of business opportunities with any
significant cash or other assets. However, management believes the
Company will be able to offer owners of acquisition candidates the
opportunity to acquire a controlling ownership interest in a
publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the
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business opportunities will, however, incur significant legal and
accounting costs in connection with acquisition of a business
opportunity, including the costs of preparing Form 8-K's, 10-K's or
10-KSB's, agreements and related reports and documents. The
Securities Exchange Act of 1934 (the "34 Act") specifically
requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited
financial statements to be included within the numerous filings
relevant to complying with the 34 Act. Nevertheless, the officers
and directors of the Company have not conducted market research and
are not aware of statistical data which would support the perceived
benefits of a merger or acquisition transaction for the owners of
a business opportunity.
The analysis of new business opportunities will be undertaken
by, or under the supervision of, the officers and directors of the
Company, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary
prospective business opportunities which may be brought to its
attention through present associations of the Company's officers
and directors, or by the Company's shareholders. In analyzing
prospective business opportunities, management will consider such
matters as the available technical, financial and managerial
resources; working capital and other financial requirements;
history of operations, if any; prospects for the future; nature of
present and expected competition; the quality and experience of
management services which may be available and the depth of that
management; the potential for further research, development, or
exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the
Company; the potential for growth or expansion; the potential for
profit; the perceived public recognition of acceptance of products,
services, or trades; name identification; and other relevant
factors. Officers and directors of the Company expect to meet
personally with management and key personnel of the business
opportunity as part of their investigation. To the extent
possible, the Company intends to utilize written reports and
personal investigation to evaluate the above factors. The Company
will not acquire or merge with any company for which audited
financial statements cannot be obtained within a reasonable period
of time after closing of the proposed transaction.
Management of the Company, while not especially experienced in
matters relating to the new business of the Company, shall rely
upon their own efforts and, to a much lesser extent, the efforts of
the Company's shareholders, in accomplishing the business purposes
of the Company. It is not anticipated that any outside consultants
or advisors will be utilized by the Company to effectuate its
business purposes described herein. However, if the Company does
retain such an outside consultant or advisor, any cash fee earned
by such party will need to be paid by the prospective merger/
acquisition candidate, as the Company has no cash assets with which
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to pay such obligation. There have been no contracts or agreements
with any outside consultants and none are anticipated in the
future.
The Company will not restrict its search for any specific kind
of firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially
any stage of its corporate life. It is impossible to predict at
this time the status of any business in which the Company may
become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek
other perceived advantages which the Company may offer. However,
the Company does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully
consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses
in the implementation of its business plan described herein.
Because the Company has no capital with which to pay these
anticipated expenses, present management of the Company will pay
these charges with their personal funds, as interest free loans to
the Company. However, the only opportunity which management has to
have these loans repaid will be from a prospective merger or
acquisition candidate. Management has agreed among themselves that
the repayment of any loans made on behalf of the Company will not
impede, or be made conditional in any manner, to consummation of a
proposed transaction.
Acquisition of Opportunities
In implementing a structure for a particular business
acquisition, the Company may become a party to a merger,
consolidation, reorganization, joint venture, or licensing
agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a
transaction, it is probable that the present management and
shareholders of the Company will no longer be in control of the
Company. In addition, the Company's directors may, as part of the
terms of the acquisition transaction, resign and be replaced by new
directors without a vote of the Company's shareholders or may sell
their stock in the Company. Any terms of sale of the shares
presently held by officers and/or directors of the Company will be
also afforded to all other shareholders of the Company on similar
terms and conditions. Any and all such sales will only be made in
compliance with the securities laws of the United States and any
applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws.
In some circumstances, however, as a negotiated element of its
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transaction, the Company may agree to register all or a part of
such securities immediately after the transaction is consummated or
at specified times thereafter. If such registration occurs, of
which there can be no assurance, it will be undertaken by the
surviving entity after the Company has successfully consummated a
merger or acquisition and the Company is no longer considered a
"shell" company. Until such time as this occurs, the Company will
not attempt to register any additional securities. The issuance of
substantial additional securities and their potential sale into any
trading market which may develop in the Company's securities may
have a depressive effect on the value of the Company's securities
in the future, if such a market develops, of which there is no
assurance.
While the actual terms of a transaction to which the Company
may be a party cannot be predicted, it may be expected that the
parties to the business transaction will find it desirable to avoid
the creation of a taxable event and thereby structure the
acquisition in a so-called "tax-free" reorganization under Sections
368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In
order to obtain tax-free treatment under the Code, it may be
necessary for the owners of the acquired business to own 80% or
more of the voting stock of the surviving entity. In such event,
the shareholders of the Company, would retain less than 20% of the
issued and outstanding shares of the surviving entity, which would
result in significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors
of the Company will meet personally with management and key
personnel, may visit and inspect material facilities, obtain
independent analysis of verification of certain information
provided, check references of management and key personnel, and
take other reasonable investigative measures, to the extent of the
Company's limited financial resources and management expertise.
The manner in which the Company participates in an opportunity will
depend on the nature of the opportunity, the respective needs and
desires of the Company and other parties, the management of the
opportunity and the relative negotiation strength of the Company
and such other management.
With respect to any merger or acquisition, negotiations with
target company management is expected to focus on the percentage of
the Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold
a substantially lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
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significant dilutive effect on the percentage of shares held by the
Company's then shareholders.
The Company will participate in a business opportunity only
after the negotiation and execution of appropriate written
agreements. Although the terms of such agreements cannot be
predicted, generally such agreements will require some specific
representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing
and the conditions which must be satisfied by each of the parties
prior to and after such closing, will outline the manner of bearing
costs, including costs associated with the Company's attorneys and
accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge
with any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
reporting requirements included in the 34 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's
audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements
of the 34 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable, at the
discretion of the present management of the Company. If such
transaction is voided, the agreement will also contain a provision
providing for the acquisition entity to reimburse the Company for
all costs associated with the proposed transaction.
Forward Looking Statements
This registration statement contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") concerning the Company's operations,
economic performance and financial condition, including, in
particular, the likelihood of the Company's success in merging with
an established privately held company or acquiring assets. These
statements are based upon a number of assumptions and estimates
which are inherently subject to significant uncertainties and
contingencies, many of which are beyond the control of the Company
and reflect future business decisions which are subject to change.
Some of these assumptions inevitably will not materialize and
unanticipated events will occur which will affect the Company's
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results. Consequently, actual results will vary from the
statements contained herein and such variance may be material.
Prospective investors should not place undue reliance on this
information. However, the relevant legislation (the Litigation
Reform Act) does not apply to initial public offerings. This
registration statement, while not intending to raise any capital
for the Company, could be construed as the Company's initial public
offering.
Year 2000 Disclosure
Many existing computer programs use only two digits to
identify a year in the date field. These programs were designed
and developed without considering the impact of the upcoming change
in the century. If not corrected, many computer applications could
fail or create erroneous results by or at the Year 2000. As a
result, many companies will be required to undertake major projects
to address the Year 2000 issue. Because the Company has no assets,
including any personal property such as computers, it is not
anticipated that the Company will incur any negative impact as a
result of this potential problem. However, it is possible that
this issue may have an impact on the Company after the Company
successfully consummates a merger or acquisition. Management
intends to address this potential problem with any prospective
merger or acquisition candidate. There can be no assurances that
new management of the Company will be able to avoid a problem in
this regard after a merger or acquisition is so consummated.
Competition
The Company will remain an insignificant participant among the
firms which engage in the acquisition of business opportunities.
There are many established venture capital and financial concerns
which have significantly greater financial and personnel resources
and technical expertise than the Company. In view of the Company's
combined extremely limited financial resources and limited
management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's
competitors.
Item 3. Description of Property
The Company has no properties and at this time has no
agreements to acquire any properties. The Company intends to
attempt to acquire assets or a business in exchange for its
securities which assets or business is determined to be desirable
for its objectives.
The Company operates from its offices at 2851 S. Parker Road,
Suite 720, Aurora, Colorado 80014. This space is provided to the
Company on a rent free basis by Andrew I. Telsey, the sole officer
and director and a principal shareholder of the Company and it is
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<PAGE>
anticipated that this arrangement will remain until such time as
the Company successfully consummates a merger or acquisition.
Management believes that this space will meet the Company's needs
for the foreseeable future.
Item 4. Security Ownership of Certain Beneficial Owners and
Management
The table below lists the beneficial ownership of the
Company's voting securities by each person known by the Company to
be the beneficial owner of more than 5% of such securities, as well
as the securities of the Company beneficially owned by all
directors and officers of the Company. Unless otherwise indicated,
the shareholders listed possess sole voting and investment power
with respect to the shares shown.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent of
Title of Class Owner Owner Class
- -------------- --------------------- ---------- ----------
<S> <C> <C> <C>
Common Andrew I. Telsey 260,000 52%
6198 S. Moline Ct.
Englewood, CO 80111
Common All Officers and 260,000 52%
Directors as a
Group (1 person)
</TABLE>
The balance of the Company's outstanding Common Shares are
held by 10 persons.
(b) Security Ownership of Management.
The following table sets forth the beneficial ownership for
each class of equity securities of Mully Corp. beneficially owned
by all directors and officers of the Company.
<TABLE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ------------------- ---------- --------
<S> <C> <C> <C>
Common Andrew I. Telsey 260,000 52%
6198 S. Moline Ct.
Englewood, CO 80111
15
<PAGE>
<CAPTION>
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
- -------------- ------------------- ---------- --------
Common All Officers and 260,000 52%
Directors as a
Group (1 person)
</TABLE>
Item 5. Directors, Executive Officers, Promoters and Control
Persons.
The directors and officers of the Company are as follows:
Name Age Position
Andrew I. Telsey 45 President, Secretary,
Treasurer and Director
The above listed officers and directors will serve until the
next annual meeting of the shareholders or until their death,
resignation, retirement, removal, or disqualification, or until
their successors have been duly elected and qualified. Vacancies
in the existing Board of Directors are filled by majority vote of
the remaining Directors. Officers of the Company serve at the will
of the Board of Directors. There is no family relationship between
any executive officer and director of the Company.
Resumes
Andrew I. Telsey, President, Secretary, Treasurer and a
director. Mr. Telsey has held his positions with the Company since
its inception. From 1984 through the present, Mr. Telsey has been
employed by Andrew I. Telsey, P.C., Aurora, Colorado, a
professional corporation engaged in the practice of law,
emphasizing securities law, mergers, acquisitions and general
business matters. This firm is also legal counsel to the Company.
Mr. Telsey received a Juris Doctor degree from Syracuse University
College of Law in 1979 and a Bachelor of Arts degree from Ithaca
College in 1975. He devotes only such time as necessary to the
business of the Company, which time is expected to be nominal.
Prior "Blank Check" Experience
Mr. Telsey is presently an officer and director of Mathy
Corporation ("Mathy"), a "blank check" public reporting company.
Mathy filed a Registration Statement on Form 10-SB in June 1998,
which became effective in August 1998, wherein it registered its
common stock pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended. As of the date of this Registration
Statement, Mathy has signed a letter of intent with The Cooper
Memphis Group, Inc. ("CMG"), a privately held California
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<PAGE>
corporation, whereby Mathy has agreed in principle to acquire all
of the issued and outstanding shares of CMG in exchange for
issuance by Mathy of previously unissued "restricted" common stock.
The relevant terms of the proposed transaction require Mathy to
undertake a forward split of its issued and outstanding common
stock, whereby 3.5 shares of common stock shall be issued for every
one (1) share presently outstanding and, thereafter, issue to the
CMG shareholders an aggregate of 15,750,000 "restricted" common
shares, representing 90% of Mathy's then outstanding common stock,
in exchange for all of the issued and outstanding shares of CMG.
In addition, CMG is currently undertaking a private offering of
convertible notes, and Mathy has agreed to reserve an aggregate of
364,964 additional shares (post forward split) upon conversion of
the minimum financing referenced in the applicable letter of
intent. However, there can be no assurances that this proposed
transaction will be successfully consummated.
Mr. Telsey was formerly an officer and director of Tarcyn
Corporation ("Tarcyn"), a "blank check" public reporting company.
Tarcyn filed a Registration Statement on Form 10-SB in May 1997,
which became effective in July 1997, wherein it registered its
common stock pursuant to Section 12(g) of the Securities Exchange
Act of 1934, as amended. Effective February 16, 1999, pursuant to
a definitive agreement, Tarcyn acquired all of the issued and
outstanding securities of CreditCo, Inc. ("Creditco"), a Delaware
corporation. The terms of the transaction involved Tarcyn
undertaking a forward split of its issued and outstanding common
stock whereby 3.5 shares of common stock were issued in exchange
for every share of common stock outstanding immediately prior to
the closing of the transaction in order to establish the number of
issued and outstanding common shares of Tarcyn at closing to be
1,750,000. Thereafter, Tarcyn issued an aggregate of 15,750,000
shares of its "restricted" common stock to the former shareholders
of Creditco in exchange for all of their stock in Creditco.
Creditco did not survive the transaction. Tarcyn also changed its
name to "MerchantOnline.com, Inc." ("MOL"). Mr. Telsey resigned
his positions with Tarcyn upon closing of the aforesaid
transaction. See "Conflicts of Interest."
MOL's principal business is to provide a diverse selection of
services which it has developed to allow Internet merchants to
quickly and easily establish a method of conducting business on the
Internet with a minimal initial investment and with low transaction
costs. MOL intends to attempt to take advantage of the anticipated
enormous growth of the Internet by providing an electronic payment
solution for merchants that market and sell their products and
services on the Internet. The electronic commerce services ("E-
commerce") provided by MOL include allowing merchants to accept
credit cards, debit cards and online checks from customers in a
secure, technologically advanced environment. MOL is currently a
single source of customer service which offers a variety of
Internet services including electronic shopping carts, web site
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<PAGE>
development and hosting, merchant accounts and real-time credit
card processing in a single package for one installation fee and
only one, combined monthly billing.
During 1998, its initial year of operations, Creditco
generated revenues of approximately $507,000, with a net loss of
approximately $225,000. As of the date of this Registration
Statement, MOL has filed an application to list its common stock
for trading on the OTC Bulletin Board. There can be no assurance
that this application will be approved.
Mr. Telsey was also an officer and director of Euro-Tel, Inc.
("ETI"), a "blank check" public reporting company. ETI filed a
Registration Statement on Form 10-SB in December 1996, which became
effective in February 1997, wherein it registered its common stock
pursuant to Section 12(g) of the Securities Exchange Act of 1934,
as amended. In June 1997, ETI consummated a merger with
PharmaSystems Cost Containment Corp., a Florida corporation
("Pharma"), engaged in the delivery of pharmacy contract services,
including mail service and retail pharmacy networks. The terms of
this transaction included ETI undertaking a forward split of its
issued and outstanding Common Stock, whereby 4 shares of Common
Stock were issued in exchange for each share of Common Stock then
issued and outstanding and, thereafter, the Pharma shareholders
exchanged all of the issued and outstanding Pharma Stock owned by
them for an aggregate of 18,000,000 "restricted" Common Shares of
ETI (post forward split), with ETI emerging as the surviving
company and Pharma being dissolved by operation of law. As of the
date of this Registration Statement management of Pharma has caused
the Company to become non-reporting under the Securities Exchange
Act of 1934, as amended. To the best knowledge of Mr. Telsey,
there is no active market for the securities of Pharma as of the
date of this Registration Statement.
For the three month period ended March 31, 1997, the unaudited
financial statements of Pharma showed assets of $1,564,003,
liabilities of $2,605,052, revenues of $1,179,487 and a net loss of
$(703,401).
Mr. Telsey was also an officer and/or director of SDT Holding
Corporation ("SDT"), a "blank check" public reporting company. SDT
filed a Registration Statement on Form 10-SB in July 1994, which
became effective in December 1994, wherein it registered its common
stock pursuant to Section 12(g) of the Securities Exchange Act of
1934, as amended. Effective October 30, 1996, SDT successfully
consummated a share exchange agreement with European Business Group
(UK), Plc., an English corporation ("EBG") with its principal place
of business located in Surrey, England. The terms of the
transaction involved SDT undertaking a forward split of its issued
and outstanding common shares whereby 8 shares of common stock were
issued in exchange for every one (1) share of common stock and,
thereafter, SDT issued an aggregate of 18,000,000 shares of its
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<PAGE>
"restricted" common stock (post forward split) to the former
shareholders of EBG in exchange for all of the issued and
outstanding stock of EBG. EBG remains in existence as a wholly
owned foreign subsidiary of SDT.
EBG is a leasing company doing business through 16 wholly
owned subsidiary companies. For purposes herein, all references to
EBG shall include EBG and its subsidiaries. EBG's business is
centered around two specific segments of the leasing industry,
including (i) marine containers; and (ii) the sale of licensing
rights to city information billboards worldwide (primarily in the
U.S.). Based upon management of the Company's review of available
SEC filings undertaken by current management of SDT, it appears
that SDT has ceased filing reports pursuant to the Securities
Exchange Act of 1934, as amended and as a result, no current
financial information relating to SDT is readily available. As of
the date of this Registration Statement, there is no active market
for SDT's securities.
Mr. Telsey was also formerly an officer and director of
Ashland Capital Group, Inc. ("Ashland"), a public reporting
company. Ashland obtained effectiveness of a registration
statement filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, in May 1989.
Ashland successfully closed its initial public offering on February
16, 1990, whereby 5,000,000 units were sold to the public at a
price of $.01 per unit. Ashland derived approximately $41,000 in
net proceeds as a result of the offering.
On October 9, 1990, pursuant to a definitive agreement,
Ashland acquired all of the issued and outstanding shares of Visual
Presentation Products, Inc., a Florida corporation ("VPP"), in
exchange for the issuance of common stock equal to approximately
80% of Ashland's issued and outstanding common shares. At the
closing of the transaction, Ashland had available approximately
$37,000 in cash, remaining from the proceeds derived from its
initial public offering. Mr. Telsey resigned his positions with
Ashland upon the closing of this agreement and was replaced by the
then management of VPP pursuant to the affirmative vote of the
Ashland shareholders.
After closing of the transaction with VPP, Ashland changed its
name to "Visual Design Industries, Inc." ("VDI"). VDI subsequently
filed a registration statement with the SEC, undertaking a
secondary offering of its securities. Prior to effectiveness of
the registration statement, VDI's underwriter, Nutmeg Securities,
Inc., abandoned the proposed offering. To date, no market in VDI's
securities has ever developed.
Additionally, Mr. Telsey's practice of law emphasizes
corporate and securities transactions, including mergers and
acquisitions. As a result, Mr. Telsey has had additional
experience in identifying private merger candidates. Other than as
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<PAGE>
disclosed hereinabove, no other member of the Company's management
has had any experience in identifying and examining private
business candidates.
The foregoing is a complete description of all "blank check"
companies with whom management of the Company has been, or is,
involved.
Conflicts of Interest
Members of the Company's management are associated with other
firms involved in a range of business activities. Consequently,
there are potential inherent conflicts of interest in their acting
as officers and directors of the Company. Insofar as the officers
and directors are engaged in other business activities, management
anticipates it will devote only a minor amount of time to the
Company's affairs.
The officers and directors of the Company are now and may in
the future become shareholders, officers or directors of other
companies which may be formed for the purpose of engaging in
business activities similar to those conducted by the Company.
Accordingly, additional direct conflicts of interest may arise in
the future with respect to such individuals acting on behalf of the
Company or other entities. Moreover, additional conflicts of
interest may arise with respect to opportunities which come to the
attention of such individuals in the performance of their duties or
otherwise. The Company does not currently have a right of first
refusal pertaining to opportunities that come to management's
attention insofar as such opportunities may relate to the Company's
proposed business operations.
The officers and directors are, so long as they are officers
or directors of the Company, subject to the restriction that all
opportunities contemplated by the Company's plan of operation which
come to their attention, either in the performance of their duties
or in any other manner, will be considered opportunities of, and be
made available to the Company and the companies that they are
affiliated with on an equal basis. A breach of this requirement
will be a breach of the fiduciary duties of the officer or
director. If the Company or the companies in which the officers
and directors are affiliated with both desire to take advantage of
an opportunity, then said officers and directors would abstain from
negotiating and voting upon the opportunity. However, all
directors may still individually take advantage of opportunities if
the Company should decline to do so. Except as set forth above,
the Company has not adopted any other conflict of interest policy
with respect to such transactions.
20
<PAGE>
Investment Company Act of 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company
will not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such
event, the Company would be required to register as an investment
company and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination
from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject the Company to material
adverse consequences. The Company's Board of Directors unanimously
approved a resolution stating that it is the Company's desire to be
exempt from the Investment Company Act of 1940 via Regulation 3a-2
thereto.
Item 6. Executive Compensation.
None of the Company's officers and/or directors receive any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
They all have agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation
of a merger or acquisition. As of the date of this Registration
Statement, the Company has no funds available to pay directors.
Further, none of the directors are accruing any compensation
pursuant to any agreement with the Company.
It is possible that, after the Company successfully
consummates a merger or acquisition with an unaffiliated entity,
that entity may desire to employ or retain one or a number of
members of the Company's management for the purposes of providing
services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a
policy whereby the offer of any post-transaction remuneration to
members of management will not be a consideration in the Company's
decision to undertake any proposed transaction. Each member of
management has agreed to disclose to the Company's Board of
Directors any discussions concerning possible compensation to be
paid to them by any entity which proposes to undertake a
transaction with the Company and further, to abstain from voting on
such transaction. Therefore, as a practical matter, if each member
of the Company's Board of Directors is offered compensation in any
form from any prospective merger or acquisition candidate, the
proposed transaction will not be approved by the Company's Board of
21
<PAGE>
Directors as a result of the inability of the Board to
affirmatively approve such a transaction.
It is possible that persons associated with management may
refer a prospective merger or acquisition candidate to the Company.
In the event the Company consummates a transaction with any entity
referred by associates of management, it is possible that such an
associate will be compensated for their referral in the form of a
finder's fee. It is anticipated that this fee will be either in
the form of restricted common stock issued by the Company as part
of the terms of the proposed transaction, or will be in the form of
cash consideration. However, if such compensation is in the form
of cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has insufficient cash available.
The amount of such finder's fee cannot be determined as of the date
of this Registration Statement, but is expected to be comparable to
consideration normally paid in like transactions. No member of
management of the Company will receive any finders fee, either
directly or indirectly, as a result of their respective efforts to
implement the Company's business plan outlined herein.
No retirement, pension, profit sharing, stock option or
insurance programs or other similar programs have been adopted by
the Company for the benefit of its employees.
Item 7. Certain Relationships and Related Transactions.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
Item 8. Description of Securities.
The Company's authorized capital stock consists of 125,000,000
shares, of which 25,000,000 shares are Preferred Shares, par value
$0.001 per share, and 100,000,000 are Common Shares, par value
$0.0001 per share. There are 500,000 Common Shares issued and
outstanding as of the date of this filing. There are no preferred
shares issued or outstanding.
Common Stock. All shares of Common Stock have equal voting
rights and, when validly issued and outstanding, are entitled to
one vote per share in all matters to be voted upon by shareholders.
The shares of Common Stock have no preemptive, subscription,
conversion or redemption rights and may be issued only as fully-
paid and nonassessable shares. Cumulative voting in the election
of directors is not permitted, which means that the holders of a
majority of the issued and outstanding shares of Common Stock
represented at any meeting at which a quorum is present will be
able to elect the entire Board of Directors if they so choose and,
in such event, the holders of the remaining shares of Common Stock
will not be able to elect any directors. In the event of
liquidation of the Company, each shareholder is entitled to receive
22
<PAGE>
a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All
shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are
entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of
Directors out of funds legally available therefor.
Preferred Shares. Shares of Preferred Stock may be issued
from time to time in one or more series as may be determined by the
Board of Directors. The voting powers and preferences, the
relative rights of each such series and the qualifications,
limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall
have preemptive rights. The Company has no shares of Preferred
Stock outstanding, and the Board of Directors does not plan to
issue any shares of Preferred Stock for the foreseeable future,
unless the issuance thereof shall be in the best interests of the
Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions.
Management does not intend to undertake any efforts to cause a
market to develop in the Company's securities until such time as
the Company has successfully implemented its business plan
described herein. Relevant thereto, each shareholder of the
Company has executed and delivered a "lock-up" letter agreement,
affirming that they shall not sell their respective shares of the
Company's common stock until such time as the Company has
successfully consummated a merger or acquisition and the Company is
no longer classified as a "blank check" company. In order to
provide further assurances that no trading will occur in the
Company's securities until a merger or acquisition has been
consummated, each shareholder has agreed to place their respective
stock certificate with the Company's legal counsel, Andrew I.
Telsey, P.C., who will not release these respective certificates
until such time as legal counsel has confirmed that a merger or
acquisition has been successfully consummated. Mr. Telsey is also
an officer, director and principal shareholder of the Company.
However, while management believes that the procedures established
to preclude any sale of the Company's securities prior to closing
of a merger or acquisition will be sufficient, there can be no
assurances that the procedures established relevant herein will
unequivocally limit any shareholder's ability to sell their
respective securities before such closing.
23
<PAGE>
PART II
Item 1. Market Price for Common Equity and Related Stockholder
Matters.
There is no trading market for the Company's Common Stock at
present and there has been no trading market to date. Management
has not undertaken any discussions, preliminary or otherwise, with
any prospective market maker concerning the participation of such
market maker in the aftermarket for the Company's securities and
management does not intend to initiate any such discussions until
such time as the Company has consummated a merger or acquisition.
There is no assurance that a trading market will ever develop or,
if such a market does develop, that it will continue.
a. Market Price. The Company's Common Stock is not quoted at
the present time.
The Securities and Exchange Commission adopted Rule 15g-9,
which established the definition of a "penny stock," for purposes
relevant to the Company, as any equity security that has a market
price of less than $5.00 per share or with an exercise price of
less than $5.00 per share, subject to certain exceptions. For any
transaction involving a penny stock, unless exempt, the rules
require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive
from the investor a written agreement to the transaction, setting
forth the identity and quantity of the penny stock to be purchased.
In order to approve a person's account for transactions in penny
stocks, the broker or dealer must (i) obtain financial information
and investment experience and objectives of the person; and (ii)
make a reasonable determination that the transactions in penny
stocks are suitable for that person and that person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny
stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth
the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a
signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer
and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in
cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for
the penny stock held in the account and information on the limited
market in penny stocks.
The National Association of Securities Dealers, Inc. (the
"NASD"), which administers NASDAQ, has established criteria for
24
<PAGE>
continued NASDAQ eligibility. In order to continue to be included
on NASDAQ, a company must maintain $2,000,000 in total assets, a
$200,000 market value of its publicly-traded securities and
$1,000,000 in total capital and surplus. In addition, continued
inclusion requires two market-makers and a minimum bid price of
$1.00 per share, provided, however, that if a company falls below
such minimum bid price it will remain eligible for continued
inclusion on NASDAQ if the market value of its publicly-traded
securities is at least $1,000,000 and the Company has $2,000,000 in
capital and surplus. The NASD is presently considering increasing
these standards, but as of the date of this Registration Statement,
no definitive action has been taken in this regard.
Management intends to strongly consider undertaking a
transaction with any merger or acquisition candidate which will
allow the Company's securities to be traded without the aforesaid
limitations. However, there can be no assurances that, upon a
successful merger or acquisition, the Company will qualify its
securities for listing on NASDAQ or some other national exchange,
or be able to maintain the maintenance criteria necessary to insure
continued listing. The failure of the Company to qualify its
securities or to meet the relevant maintenance criteria after such
qualification in the future may result in the discontinuance of the
inclusion of the Company's securities on a national exchange. In
such events, trading, if any, in the Company's securities may then
continue in the non-NASDAQ over-the-counter market. As a result,
a shareholder may find it more difficult to dispose of, or to
obtain accurate quotations as to the market value of, the Company's
securities.
b. Holders. There are eleven (11) holders of the Company's
Common Stock. In November 1996, the Company issued 500,000 of its
Common Shares for an aggregate of $500 in cash and services ($.001
per share). All of the issued and outstanding shares of the
Company's Common Stock were issued in accordance with the exemption
from registration afforded by Section 4(2) of the Securities Act of
1933.
As of the date of this Registration Statement, 500,000 shares
of the Company's Common Stock are eligible for sale under Rule 144
promulgated under the Securities Act of 1933, as amended, subject
to certain limitations included in said Rule. In general, under
Rule 144, a person (or persons whose shares are aggregated), who
has satisfied a one year holding period, under certain
circumstances, may sell within any three-month period a number of
shares which does not exceed the greater of one percent of the then
outstanding Common Stock or the average weekly trading volume
during the four calendar weeks prior to such sale. Rule 144 also
permits, under certain circumstances, the sale of shares without
any quantity limitation by a person who has satisfied a two-year
holding period and who is not, and has not been for the preceding
three months, an affiliate of the Company.
25
<PAGE>
c. Dividends. The Company has not paid any dividends to date
and has no plans to do so in the immediate future.
Item 2. Legal Proceedings.
There is no litigation pending or threatened by or against the
Company.
Item 3. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.
The Company has not changed accountants since its formation
and there are no disagreements with the findings of said
accountants.
Item 4. Recent Sales of Unregistered Securities.
In November 1996 the Company issued 500,000 shares of its
common stock to 11 persons at a price of $.001 per share. These
shares were issued pursuant to exemption from the registration
requirements included under the Securities Act of 1933, as amended,
including but not necessarily limited to Section 4(2) of said Act.
Each shareholder was either an "accredited investor" (as that term
is defined in the 1933 Act), or were provided all information
necessary in order to allow each investor to exercise their
respective business judgment as to the merits of the investment.
All of the shares of Common Stock of the Company previously issued
have been issued for investment purposes in a "private transaction"
and are "restricted" shares as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Act"). These shares may
not be offered for public sale except under Rule 144, or otherwise,
pursuant to the Act.
As of the date of this Registration Statement, all of the
issued and outstanding shares of the Company's Common Stock are
eligible for sale under Rule 144 promulgated under the Securities
Act of 1933, as amended, subject to certain limitations included in
said Rule. However, all of the shareholders of the Company have
executed and delivered a "lock-up" letter agreement which provides
that each such shareholder shall not sell their respective
securities until such time as the Company has successfully
consummated a merger or acquisition. Further, each shareholder has
placed their respective stock certificate with the Company's legal
counsel, Andrew I. Telsey, P.C., who has agreed not to release any
of the certificates until the Company has closed a merger or
acquisition. Mr. Telsey is also an officer, director and principal
shareholder of the Company. Any liquidation by the current
shareholders after the release from the "lock-up" selling
limitation period may have a depressive effect upon the trading
prices of the Company's securities in any future market which may
develop.
26
<PAGE>
In general, under Rule 144, a person (or persons whose shares
are aggregated) who has satisfied a one year holding period, under
certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent
of the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two
year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
Item 5. Indemnification of Directors and Officers.
The Company's Articles of Incorporation incorporate the
provisions of the Nevada Revised Statutes providing for the
indemnification of officers and directors and other persons against
expenses, judgments, fines and amounts paid in settlement in
connection with threatened, pending or completed suits or
proceedings against such persons by reason of serving or having
served as officers, directors or in other capacities, except in
relation to matters with respect to which such persons shall be
determined not to have acted in good faith and in the best
interests of the Company. With respect to matters as to which the
Company's officers and directors and others are determined to be
liable for misconduct or negligence, including gross negligence in
the performance of their duties to the Company, Nevada law provides
for indemnification only to the extent that the court in which the
action or suit is brought determines that such person is fairly and
reasonably entitled to indemnification for such expenses which the
court deems proper.
Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, the Company has
been informed that in the opinion of the U.S. Securities and
Exchange Commission such indemnification is against public policy
as expressed in the 1933 Act, and is therefore unenforceable.
In accordance with the laws of the State of Nevada, the
Company's Bylaws authorize indemnification of a director, officer,
employee, or agent of the Company for expenses incurred in
connection with any action, suit, or proceeding to which he or she
is named a party by reason of his having acted or served in such
capacity, except for liabilities arising from his own misconduct or
negligence in performance of his or her duty. In addition, even a
director, officer, employee, or agent of the Company who was found
liable for misconduct or negligence in the performance of his or
her duty may obtain such indemnification if, in view of all the
circumstances in the case, a court of competent jurisdiction
determines such person is fairly and reasonably entitled to
indemnification. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be
permitted to directors, officers, or persons controlling the
27
<PAGE>
issuing Company pursuant to the foregoing provisions, the Company
has been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy
as expressed in the Act and is therefore unenforceable.
28
<PAGE>
PART F/S
Financial Statements.
The following financial statements are attached to this
Registration Statement and filed as a part thereof. See page 30.
1) Table of Contents - Financial Statements
2) Independent Auditors' Report
3) Balance Sheet
4) Statement of Operations
5) Statement of Cash Flows
6) Statement of Shareholders' Equity
7) Notes to Financial Statements
29
<PAGE>
MULLY CORP.
Audited Financial Statements
For the Years Ended December 31, 1998 and 1997
and the Period November 4, 1996 (Inception)
through December 31, 1998
30
<PAGE>
Mully Corp.
TABLE OF CONTENTS
Page
----
Independent Auditors' Report F-1
Financial Statements
Balance Sheet F-2
Statement of Operations F-3
Statement of Cash Flow F-4
Statement of Shareholders' Equity F-5
Notes to the Financial Statements F-6 to F-8
31
<PAGE>
HORTON & COMPANY
Certified Public Accountants and Business Consultants, L.L.C.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Mully Corp.
Aurora, Colorado
We have audited the accompanying consolidated balance sheets of Mully
Corp. as of December 31, 1998 and 1997, and the related statements
of operations, stockholders' equity and cash flows for the years then
ended and for the period November 4, 1996 (inception) 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 audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Mully Corp. as of December
31, 1998 and 1997, and the results of its operations and its cash flows for
years then ended, and for the period November 4, 1996 (inception) through
December 31, 1998, 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 5 to the
financial statements, the Company has suffered losses from operations and has
a lack of net capital that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 5. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
s/Horton & Company, LLC
HORTON & COMPANY, L.L.C.
March 8, 1999
1680 ROUTE 23, SUITE 110, WAYNE, NEW JERSEY 07470
TEL: 973-305-9800, FAX: 973-305-8213
A Member of the Division for CPA firms;
American Institute of Certified Public Accountants
F-1
32
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Balance Sheet
______________________________________________________________________________
<CAPTION>
December
31, 1998
--------
<S> <C>
ASSETS $ 0
========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES - Accounts Payable 0
--------
SHAREHOLDERS' EQUITY
Preferred Stock, .001 Par Value
Authorized 25,000,000 Shares; Issued 0
And Outstanding -0- Shares
Common Stock, $.0001 Par Value
Authorized 100,000,000 Shares; Issued
And Outstanding 500,000 Shares 500
Additional Paid In Capital On Common Stock 0
Deficit Accumulated During The Development Stage (500)
TOTAL SHAREHOLDERS' EQUITY 0
--------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 0
========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-2
33
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Operations
______________________________________________________________________________
<CAPTION>
January
30, 1996
(Inception)
Through
December December December
31, 1998 31, 1997 31, 1998
-------- -------- --------
<S> <C> <C> <C>
Revenue $ 0 $ 0 $ 0
-------- -------- --------
Expenses:
Office 0 0 500
-------- -------- --------
Total 0 0 500
-------- -------- --------
Net (Loss) $ 0 $ 0 $ (500)
======== ======== ========
Basic (Loss) Per Common Share $ 0.00 $ 0.00 $ (0.00)
======== ======== ========
Basic Common Shares Outstanding 500,000 500,000 500,000
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-3
34
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Cash Flows
______________________________________________________________________________
<CAPTION>
November
4, 1996
(Inception)
Through
December December December
31, 1998 31, 1997 31, 1998
-------- -------- --------
<S> <C> <C> <C>
Net (Loss) Accumulated During
The Development Stage $ 0 $ 0 $ (500)
Issuance Of Common Stock For
Cash Advances & Services 0 0 500
-------- -------- --------
Cash Flows From Operations 0 0 0
-------- -------- --------
Cash Flows From Financing
Activities:
Issuance Of Common Stock 0 0 0
-------- -------- --------
Cash Flows From Financing 0 0 0
-------- -------- --------
Net Increase In Cash 0 0 0
Cash At Beginning Of Period 0 0 0
-------- -------- --------
Cash At End Of Period $ 0 $ 0 $ 0
======== ======== ========
Non - Cash Activities:
Stock Issued For Cash Advances & Services $ 0 $ 0 $ 500
======== ======== ========
<FN>
The Accompanying Notes Are An Integral Part Of These Financial
Statements.
</TABLE>
F-4
35
<PAGE>
<TABLE>
Mully Corp.
(A Development Stage Company)
Statement Of Shareholders' Equity
____________________________________________________________________________________
<CAPTION>
Deficit
Accumulated
Number Of Number Of During The
Common Preferred Common Preferred Development
Shares Shares Stock Stock Stage Total
------- ------ ------ ----- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance At
November 4, 1996 0 0 $ 0 $ 0 $ 0 $ 0
Issuance Of Common Stock:
November 4, 1996 for Cash
Advances Made on Behalf
of the Company &
Services at $.001
Per Share 500,000 0 500 0 0 500
Net (Loss) (500) (500)
------- ------ ------ ----- ----- -----
Balance At December 31,
1996, 1997, and 1998 500,000 0 $ 500 $ 0 $(500) $ 0
======= ====== ====== ===== ===== =====
<FN>
The Accompanying Notes Are An Integral Part Of These Financial Statements.
</TABLE>
F-5
36
<PAGE>
Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1998 and 1997
- -----------------------------------------------------
Note 1 - Organization and Summary of Significant Accounting Policies
- --------------------------------------------------------------------
Organization:
On November 4, 1996, Mully Corp. (the "Company") was incorporated under the
laws of Nevada to engage in any lawful business or activity for which
corporations may be organized under the laws of the State of Nevada.
Development Stage:
The Company entered the Development stage in accordance with SFAS No. 7 on
November 4, 1996. Its purpose is to evaluate, structure and complete a merger
with, or acquisition a privately owned corporation.
Statement of Cash Flows:
For the purpose of the statement of cash flows, the Company considers demand
deposits and highly liquid-debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Cash paid for interest in fiscal years ended December 31, 1998 and 1997 was
$-0-. Cash paid for income taxes in fiscal years ended December 31, 1998 and
1997 was $-0-.
Basic (Loss) per Common Share:
Basic (Loss) per common share is computed by dividing the net loss for the
period by the weighted average number of shares outstanding at December 31,
1998 and December 31, 1997. (See Note 6)
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. Actual results could differ from those
estimates.
F-6
37
<PAGE>
Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1998 and 1997
- -----------------------------------------------------
Note 2 - Capital Stock and Capital in Excess of Par Value
- ---------------------------------------------------------
The Company initially authorized 100,000,000 shares of $.0001 par value common
stock and 25,000,000 shares of $.001 par value preferred stock. On November
4, 1996, the Company issued 500,000 shares of common stock for services valued
at $350 and for cash advances paid on behalf of the Company of $150 for a
total of $500.
Note 3 - Related Party Events
- -----------------------------
The Company maintains a mailing address at an officer's place of business.
This address is located at 2851 S Parker Road, Suite 720, Aurora, Colorado.
At this time the Company has no need for an office. As of December 31, 1998
management has incurred a minimal amount of time and expense on behalf of the
Company.
Note 4 - Income Taxes
- ---------------------
At December 31, 1998, the Company had net operating loss carryforwards
available for financial statement and Federal income tax purposes of
approximately $500 which, if not used, will expire in the year 2011.
The Company follows Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes" (SFAS #109), which requires, among other things,
an asset and liability approach to calculating deferred income taxes. As of
December 31, 1998, the Company has a deferred tax asset of $10 primarily for
its net operating loss carryforward which has been fully reserved through a
valuation allowance. The change in the valuation allowance for 1998 is $-0-.
Note 5 - Basis of Presentation
- ------------------------------
In the course of its development activities the Company has sustained
continuing losses and expects such losses to continue for the foreseeable
future. The Company's management plans on advancing funds on an as needed
basis and in the longer term, revenues from the operations of a merger
candidate, if found. The Company's ability to continue as a going concern is
dependent on these additional management advances, and, ultimately, upon
achieving profitable operations through a merger candidate.
F-7
38
<PAGE>
Mully Corp.
(A Development Stage Company)
Notes to Financial Statements
For The Fiscal Years Ended December 31, 1998 and 1997
- -----------------------------------------------------
Note 6 - New Accounting Pronouncement
- -------------------------------------
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share ("SFAS No. 128").
SFAS No. 128 specifies the computation, presentation, and disclosure
requirements of earnings per share and supersedes Accounting Principles Board
Opinion No. 15, Earnings Per Share. SFAS No. 128 requires dual presentation
of basic and diluted earnings per share. Basic earnings per share, which
excludes the impact of common stock equivalents, replaces primary earnings per
share. Diluted earnings per share, which utilizes the average market price
per share as opposed to the greater of the average market price per share or
ending market price per share when applying the treasury stock method in
determining common stock equivalents, replaces fully-diluted earnings per
share. SFAS No. 128 is effective for the Company for periods ending after
December 15, 1997. However, the Company has a simple capital structure for
the periods presented and therefore, there is no affect on the earnings per
share presented due to the Company's adoption of SFAS No. 128.
Note 7 - Subsequent Events
- --------------------------
The Company will be filing a Form 10-SB with the Securities and Exchange
Commission to become a 34 Act reporting company.
F-8
39
<PAGE>
PART III
Item 1. Exhibit Index
No. Sequential
- --- Page No.
--------
(3) Articles of Incorporation and Bylaws
3.1 Articles of Incorporation 42
3.2 Bylaws 51
(4) Instruments Defining the Rights of Holders
4.1 Form of Lock-up Agreements Executed
by the Company's Shareholders 70
(27) Financial Data Schedule
27.1 Financial Data Schedule 72
___________________
40
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
MULLY CORP.
(Registrant)
Date: March 19, 1999
By:/s/ Andrew I. Telsey
---------------------------
Andrew I. Telsey,
President
41
<PAGE>
MULLY CORP.
_______________________________
EXHIBIT 3.1
_______________________________
ARTICLES OF INCORPORATION
_______________________________
42
<PAGE>
FILED ARTICLES OF INCORPORATION Filing fee:
IN THE OFFICE OF THE (Pursuant to NRS 78) Receipt #:
SECRETARY OF STATE OF THE STATE OF NEVADA
STATE OF NEVADA Secretary of State
NOV - 4 1996
No. C227171-96
-----------
s/Dean Heller
DEAN HELLER, SECRETARY OF STATE
(For filing office use) (For filing office use)
- ------------------------------------------------------------------------------
______________________________________________________________________________
IMPORTANT: Read instructions on reverse side before completing this form.
TYPE OR PRINT (BLANK INK ONLY)
1. NAME OF CORPORATION: Mully Corp.
------------------------------------------------------
2. RESIDENT AGENT:(designated resident agent his STREET ADDRESS in Nevada
where process may be served)
Name of Resident Agent: State Agent & Transfer Syndicate, Inc.
---------------------------------------------------
Street Address: 318 North Carson Street, Suite 214, Carson City, Nevada 89701
-----------------------------------------------------------
Street No. Street Name City Zip
3. SHARES:(number of shares the corporation is authorized to issue)
Number of shares with par value: 100,000,000 Common Par Value: .0001
25,000,000 Preferred .001
------------------------ ------
Number of shares without par value: _______________________________________
4. GOVERNING BOARD: shall be styled as (check one): X Directors Trustees
---- ---
The FIRST BOARD OF DIRECTORS shall consist of 3 members and the names and
addresses are as follows (attach additional pages if necessary):
Andrew I. Telsey 2851 S. Parker Road, Suite 720, Aurora, Colorado 80014
------------------- ------------------------------------------------------
Name Address
R. Michel Perlmutter 13693 E. Iliff Avenue, Suite 112, Aurora, Colorado 80014
Brad Weiman 821 17th Street, Suite 300, Denver, Colorado 80202
------------------- ------------------------------------------------------
Name Address
5. PURPOSE (optional-see reverse side): The purpose of the corporation shall be:
___________________________________________________________________________
6. OTHER MATTERS: This form includes the minimal statutory requirements to
incorporate under NRS 78. You may attach additional information pursuant
to NRS 78.037 or any other information you deem appropriate. If any of the
additional information is contradictory to this form it cannot be filed and
will be returned to you for correction. Number of pages attached 6 .
--------
7. SIGNATURES OF INCORPORATORS: The names and addresses of each of the
incorporators signing the articles: (Signatures must be notarized) (Attach
additional pages if there are more than two incorporators.)
Andrew I. Telsey
---------------------------------- -------------------------------------
Name (print) Name (print)
2851 S. Parker Road, Suite 720,
Aurora, CO 80014
---------------------------------- -------------------------------------
Address City/State/Zip Address City/State/Zip
s/Andrew I. Telsey
---------------------------------- -------------------------------------
Signature Signature
43
<PAGE>
State of Colorado State of ____________________________
County of Arapahoe County of ___________________________
This instrument was acknowledged This instrument was acknowledged
before me on before me on
October 25 19 96 , by
----------------------- --- -------------------------------------
Andrew I. Telsey
---------------------------------- -------------------------------------
Name of Person Name of Person
as incorporator as incorporator
of Mully Corp. of
-------------------------------- -----------------------------------
(name of party on behalf of whom (name of party on behalf of whom
instrument was executed) instrument was executed)
s/Darlene D. Kell
---------------------------------- -------------------------------------
Darlene D. Kell
Notary Public Signature Notary Public Signature
(affix notary stamp or seal) (affix notary stamp or seal)
8. CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT
I, State Agent & Transfer Syndicate, Inc. hereby accept appointment as
-----------------------------------------------
Resident Agent for the above named corporation.
s/John A. McQuirk 10-28-96
- -------------------------------------- --------------------------
Signature of Resident Agent Date
44
<PAGE>
ARTICLES OF INCORPORATION
OF
MULLY CORP.
The undersigned, being the original incorporator herein named, for the
purpose of forming a corporation to do business both within and without the
State of Nevada, and in pursuance of the corporation laws of the State of
Nevada, being Chapter 78 of the Nevada Revised Statutes, do make and file
these Articles of Incorporation hereby declaring and certifying that the
facts herein stated are true:
1. The name of the corporation is Mully Corp.
2. Its principal office in the County of Independent City, State of
Nevada, is located at 318 North Carson Street, Suite 214, Carson City, Nevada
89701. The name of its Resident Agent is State Agent & Transfer Syndicate,
Inc.
3. The purposes for which the corporation is organized are to engage in
any activity or business not in conflict with the laws of the State of Nevada
or of the United States of America, and without limiting the generality of the
foregoing, specifically:
A. To have and to exercise all the powers now or hereafter
conferred by the laws of the State of Nevada upon corporations organized
pursuant to the laws under which the corporation is organized and any and
all acts amendatory thereof and supplemental thereto.
B. To discount and negotiate promissory notes, drafts, bills of
exchange and other evidences of debt, and to collect for others money due
them on notes, checks, drafts, bills of exchange, commercial paper or
other evidence of indebtedness.
C. To purchase or otherwise acquire, own, hold, lease, sell,
exchange, assign, transfer, mortgage, pledge, or otherwise dispose of, to
guarantee, to invest, trade, and deal in and with personal property of
every class and description.
D. To enter into any kind of contract or agreement, cooperative or
profit sharing plan with its officers or employees that the corporation
may deem fit.
E. To purchase, lease, or otherwise acquire, in whole or in part,
the business, goodwill, rights, franchises and property of every kind,
and to undertake the whole or any part of the assets or liabilities, of
any person, firm, association, non-profit or profit corporation, or own
property necessary or suitable for its purposes, and to pay the same in
cash, in the stocks or bonds of the corporation or otherwise, to hold or
in any manner dispose of the whole or any part of the business or
property so acquired and to exercise all of the powers necessary or
incidental to the conduct of such business.
1
45
<PAGE>
F. To lend or borrow money and to negotiate and make loans, either
on its own account or as agent or broker for others.
G. To enter into, make, perform and carry out contracts of every
kind and for any lawful purpose, without limit as to amount with any
person, firm, association, cooperative, profit or non-profit corporation,
municipality, state or government or any subdivision, district or
department thereof.
H. To buy, sell, exchange, negotiate, or otherwise deal in, or
hypothecate securities, stocks, bonds, debentures, mortgages, notes or
other collateral or securities, created or issued by any corporation
wherever organized including this corporation, within such limits as may
be provided by law, and while owner of any such stocks or other
collateral to exercise all rights, powers and privileges of ownership,
including the right to vote the same, and to subscribe for stock of any
corporation to be organized, other than to promote the organization
thereof.
I. To purchase or otherwise acquire, own, hold, lease, sell,
exchange, assign, transfer, mortgage, pledge, license or otherwise
dispose of any letters, patents, copyrights, or trademarks of every class
and description.
J. To do any and all other such acts, things, business or
businesses in any manner connected with or necessary, incidental,
convenient or auxiliary to do any of these objectives hereinbefore
enumerated, or calculated, directly or indirectly, to promote the
interest of the corporation; and in carrying on its purposes, or for the
purpose of obtaining or furthering any of its businesses, to do any and
all acts and things, and to exercise any and all other powers which a
natural person could do or exercise, and which now or hereafter may be
authorized by law, here and in any other part of the world.
K. The several clauses contained in this statement of powers shall
be construed in each of these clauses and shall be in no way limited or
restricted by reference to or inference from the terms of any other
clauses, but shall be regarded as independent purposes and powers; and no
recitation, expression or declaration of specific or special powers or
purposes herein enumerated shall be deemed to be exclusive, but is hereby
expressly declared that all other lawful powers not inconsistent herewith
are hereby included.
4. The total number of shares of all classes which the corporation
shall have authority to issue is 125,000,000 of which 25,000,000 shall be
Preferred Shares, par value $.001 per share, and 100,000,000 shall be Common
Shares, par value $.0001 per share, and the designations, preferences,
limitations and relative rights of the shares of each class are as follows:
A. Preferred Shares. The corporation may divide and issue the
Preferred Shares in series. Preferred Shares of each series when issued
shall be designated to distinguish it from the shares of all other
series. The Board of Directors is hereby expressly vested with authority
to divide the class of Preferred Shares into series and to fix and
determine the relative rights and preferences of the shares of any such
series so
2
46
<PAGE>
established to the full extent permitted by these Articles of
Incorporation and the laws of the State of Nevada in respect to the
following:
(1) The number of shares to constitute such series, and the
distinctive designations thereof;
(2) The rate and preference of dividends, if any, the time of
payment of dividends, whether dividends are cumulative and the date
from which any dividend shall accrue;
(3) Whether shares may be redeemed and, if so, the redemption
price and the terms and conditions of redemption;
(4) The amount payable upon shares in event of involuntary
liquidation;
(5) The amount payable upon shares in event of voluntary
liquidation;
(6) Sinking fund or other provisions, if any, for the
redemption or purchase of shares;
(7) The terms and conditions on which shares may be
converted, if the shares of any series are issued with the
privilege of conversion;
(8) Voting powers, if any; and
(9) Any other relative rights and preferences of shares of
such series, including, without limitation, any restriction on an
increase in the number of shares of any series theretofore
authorized and any limitation or restriction of rights or powers to
which shares of any further series shall be subject.
B. Common Shares.
(1) The rights of holders of Common Shares to receive
dividends or share in the distribution of assets in the event of
liquidation, dissolution or winding up of the affairs of the
corporation shall be subject to the preferences, limitations and
relative rights of the Preferred Shares fixed in the resolution or
resolutions which may be adopted from time to time by the Board of
Directors or the corporation providing for the issuance of one or
more series of the Preferred Shares.
(2) The holders of the Common Shares shall be entitled to one
vote for each share of Common Shares held by them of record at the
time for determining the holders thereof entitled to vote.
No holder of shares of the corporation of any class shall have any
preemptive or preferential right in or preemptive or preferential right to
subscribe to or for or acquire any new
3
47
<PAGE>
or additional shares, or any subsequent issue of shares, or any unissued or
treasury shares of the corporation, whether now or hereafter authorized, or
any securities convertible into or carrying a right to subscribe to or for or
acquire any such shares, whether nor or hereafter authorized. All shares are
to be non-assessable.
5. The governing board shall be styled "directors" and the number of
directors of the corporation shall be fixed by the bylaws, or if the bylaws
fail to fix such a number, then by resolution adopted from time to time by the
board of directors, provided that the number of directors shall not be more
than seven (7) nor less than one (1). Three (3) directors shall constitute
the initial board of directors.
The names and addresses of the first Board of Directors are as
follows:
Name Address
--------------------- ---------------------------------
Andrew I. Telsey 2851 S. Parker Road, Suite 720,
Aurora, Colorado 80014
R. Michel Perlmutter 13693 E. Iliff Avenue, Suite 112,
Aurora, Colorado 80014
Brad Weiman 821 17th Street, Suite 300,
Denver, Colorado 80202
6. The name and address of the incorporator of the corporation is as
follows:
Name Address
--------------------- ---------------------------------
Andrew I. Telsey 2851 S. Parker Road, Suite 720,
Aurora, Colorado 80014
7. The period of the corporation's duration is perpetual.
8. The corporation may:
A. Indemnify any person who was or is a party to or is threatened
to be made a party to any threatened, pending, or completed action, suit,
or proceeding, whether civil, criminal, administrative, or investigative
(other than an action by or in the right of the corporation), by reason
of the fact that he is or was a director, officer, employee, fiduciary
or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust, or other
enterprise, against expenses (including attorney fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding, if he acted in good
faith and in a manner he reasonably believed to be in the best interest
of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct as unlawful.
The termination of any action, suit, or proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, shall not of itself create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in the best interest of the corporation and, with respect to any criminal
action or proceeding, had reasonable cause to believe his conduct was
unlawful.
4
48
<PAGE>
B. The corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorney
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in the best interest of the
corporation; but no indemnification shall be made in respect of any
claim, issue, or matter as to which such person has been adjudged to be
liable for negligence or misconduct in the performance of his duty to
the corporation unless and only to the extent that the court in which
such action or suit was brought determines upon application that, despite
the adjudication of liability but in view of all the circumstances of the
case, such person is fairly and reasonably entitled to indemnification
for such expenses which such court deems proper.
C. To the extent that a director, officer, employee, fiduciary, or
agent of the corporation has been successful on the merits in defense of
any action, suit, or proceeding referred to in subparagraph A or B of
this Article 8, or in defense of any claim, issue or matter therein, he
shall be indemnified against expenses (including attorney fees) actually
and reasonably incurred by him in connection therewith.
D. Any indemnification under subparagraph A or B of this Article 8
(unless ordered by a court) and as distinguished from subparagraph C of
this Article shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee, fiduciary or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subparagraph A or B above. Such determination shall be made by the Board
of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit, or proceeding, or, if the Board of
Directors so direct, by independent legal counsel in a written opinion,
or by the shareholders.
E. Expenses (including attorney fees) incurred in defending a
civil or criminal action, suit, or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit, or
proceeding as authorized in subparagraph C or D of this Article 8 upon
receipt of an undertaking by or on behalf of the director, officer,
employee, fiduciary or agent to repay such amount unless it is
ultimately determined that he is entitled to be indemnified by the
corporation as authorized in this Article 8.
F. The corporation may purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee, fiduciary or
agent of the corporation, or who is or was serving at the request of the
corporation as a director, officer, employee, fiduciary or agent of
another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or
not the corporation would have the power to indemnify him against such
liability under the provisions of this Article 8.
9. Provisions for the regulation of the internal affairs of the
corporation are contained in the Bylaws of this corporation.
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DATED this 25th day of October, 1996.
s/Andrew I. Telsey
-------------------------------------------
Andrew I. Telsey
STATE OF COLORADO )
: ss.
COUNTY OF ARAPAHOE )
On this 25th day of October, 1996, personally appeared before me, a
Notary Public, Andrew I. Telsey, who acknowledged that he executed the above
instrument.
Witness my hand and official seal.
My commission expires: March 3, 1998.
s/Darlene D. Kell
-------------------------------------------
Darlene D. Kell
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MULLY CORP.
________________________________
EXHIBIT 3.2
________________________________
BYLAWS
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INDEX TO THE BYLAWS OF
MULLY CORP.
ARTICLE 1 - OFFICES ...................................................... 1
Section 1.1 Principal Office ....................................... 1
Section 1.2 Registered Office ...................................... 1
ARTICLE 2 - SHAREHOLDERS ................................................. 1
Section 2.1 Annual Meeting ......................................... 1
Section 2.2 Special Meetings ....................................... 1
Section 2.3 Place of Meetings ..................................... 1
Section 2.4 Notice of Meeting ...................................... 2
Section 2.5 Meeting of All Shareholders ............................ 2
Section 2.6 Closing of Transfer Books or
Fixing of Record Date .......................................... 2
Section 2.7 Voting Record .......................................... 2
Section 2.8 Quorum ................................................. 3
Section 2.9 Manner of Acting ....................................... 3
Section 2.10 Proxies ............................................... 3
Section 2.11 Voting of Shares ...................................... 3
Section 2.12 Voting of Shares by Certain Shareholders .............. 3
Section 2.13 Informal Action by Shareholders ....................... 4
Section 2.14 Voting by Ballot ...................................... 4
Section 2.15 Cumulative Voting ..................................... 4
ARTICLE 3 - BOARD OF DIRECTORS ........................................... 4
Section 3.1 General Powers ......................................... 4
Section 3.2 Performance of Duties .................................. 4
Section 3.3 Number, Tenure and Qualifications ...................... 5
Section 3.4 Regular Meetings ....................................... 5
Section 3.5 Special Meetings ....................................... 5
Section 3.6 Notice ................................................. 5
Section 3.7 Quorum ................................................. 6
Section 3.8 Manner of Acting ....................................... 6
Section 3.9 Informal Action by Directors ........................... 6
Section 3.10 Participation by Electronic Means ..................... 6
Section 3.11 Vacancies ............................................. 6
Section 3.12 Resignation ........................................... 6
Section 3.13 Removal ............................................... 6
Section 3.14 Committees ............................................ 7
Section 3.15 Compensation .......................................... 7
Section 3.16 Presumption of Assent ................................. 7
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ARTICLE 4 - OFFICERS ..................................................... 7
Section 4.1 Number ................................................. 7
Section 4.2 Election and Term of Office ............................ 7
Section 4.3 Removal ................................................ 7
Section 4.4 Vacancies .............................................. 8
Section 4.5 President .............................................. 8
Section 4.6 Vice President ......................................... 8
Section 4.7 Secretary .............................................. 8
Section 4.8 Treasurer .............................................. 8
Section 4.9 Assistant Secretaries and Assistant Treasurers ......... 9
Section 4.10 Bonds ................................................. 9
Section 4.11 Salaries .............................................. 9
ARTICLE 5 - CONTRACTS, LOANS, CHECKS AND DEPOSITS ........................ 9
Section 5.1 Contracts .............................................. 9
Section 5.2 Loans .................................................. 9
Section 5.3 Checks, Drafts, Etc. ................................... 9
Section 5.4 Deposits ............................................... 9
ARTICLE 6 - SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF
SHARES ........................................................ 10
Section 6.1 Regulation ............................................. 10
Section 6.2 Certificates for Shares ................................ 10
Section 6.3 Cancellation of Certificates ........................... 10
Section 6.4 Lost, Stolen or Destroyed Certificates ................. 10
Section 6.5 Transfer of Shares ..................................... 11
ARTICLE 7 - FISCAL YEAR .................................................. 11
ARTICLE 8 - DIVIDENDS .................................................... 11
ARTICLE 9 - CORPORATE SEAL ............................................... 11
ARTICLE 10 - WAIVER OF NOTICE ............................................ 11
ARTICLE 11 - AMENDMENTS .................................................. 11
ARTICLE 12 - EXECUTIVE COMMITTEE ......................................... 12
Section 12.1 Appointment ........................................... 12
Section 12.2 Authority ............................................. 12
Section 12.3 Tenure and Qualifications ............................. 12
Section 12.4 Meetings .............................................. 12
Section 12.5 Quorum ................................................ 12
Section 12.6 Informal Action by Executive Committee ................ 12
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Section 12.7 Vacancies ............................................. 13
Section 12.8 Resignations and Removal .............................. 13
Section 12.9 Procedure ............................................. 13
ARTICLE 13 - INDEMNIFICATION ............................................. 13
Section 13.1 Indemnification ....................................... 13
Section 13.2 Right to Indemnification .............................. 14
Section 13.3 Groups Authorized to Make Indemnification
Determination .................................................. 14
Section 13.4 Payment and Advance of Expenses ....................... 14
CERTIFICATE .............................................................. 15
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BYLAWS
OF
MULLY CORP.
ARTICLE 1 - OFFICES
Section 1.1 Principal Office
The initial principal office of the corporation in the state of
Nevada shall be located in Carson City. The corporation may have such other
offices, either within or outside of the state of Nevada as the board of
directors may designate, or as the business of the corporation may require
from time to time.
Section 1.2 Registered Office
The registered office of the corporation, required by Chapter 78 of
the Nevada Revised Statutes to be maintained in the state of Nevada, may be,
but need not be, identical with the principal office in the state of Nevada,
and the address of the registered office may be changed from time to time by
the board of directors.
ARTICLE 2 - SHAREHOLDERS
Section 2.1 Annual Meeting
The annual meeting of the shareholders shall be held on the 4th day
of November of each year, commencing with the year 1997, at the hour of 10:00
a.m., or at such other time on such other day as shall be fixed by the board
of directors for the purpose of electing directors and for the transaction of
such other business as may come before the meeting. If the day fixed for the
annual meeting shall be a legal holiday in the state of Nevada, such meeting
shall be held on the next succeeding business day. If the election of
directors shall not be held on the day designated herein for any annual
meeting of the shareholders, or at any adjournment thereof, the board of
directors shall cause the election to be held at a special meeting of the
shareholders as soon thereafter as may be convenient.
Section 2.2 Special Meetings
Special meetings of the shareholders, for any purpose or purposes,
unless otherwise prescribed by statute, may be called by the president or by
the board of directors, and shall be called by the president at the request of
the holders of not less than one-tenth of all outstanding shares of the
corporation entitled to vote at the meeting.
Section 2.3 Place of Meetings
The board of directors may designate any place, either within or
outside of the state of Nevada, as the place of meeting for any annual meeting
or for any special meeting called by the board of directors. If no
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designation is made, or if a special meeting be otherwise called, the place of
meeting shall be the principal office of the corporation in the state of Nevada.
Section 2.4 Notice of Meeting
Written notice stating the place, day and hour of the meeting of
shareholders and, in case of a special meeting, the purpose or purposes for
which the meeting is called, shall, unless otherwise prescribed by statute, be
delivered not less than ten nor more than sixty days before the date of the
meeting, either personally or by mail, by or at the direction of the
president, or the secretary, or the officer or other persons calling the
meeting, to each shareholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, addressed to the shareholder at his or her address as it
appears on the stock transfer books of the corporation, with postage thereon
prepaid.
Section 2.5 Meeting of All Shareholders
Except as provided by law, if a majority of the shareholders meet at
any time and place, either within or outside of the state of Nevada, and
consent to the holding of a meeting at such time and place, such meeting shall
be valid without call or notice, and at such meeting any corporate action may
be taken.
Section 2.6 Closing of Transfer Books or Fixing of Record Date
For the purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment thereof, or
shareholders entitled to receive payment of any dividend, or in order to make
a determination of shareholders for any other purpose, the board of directors
of the corporation may provide that the share transfer books shall be closed
for a stated period but not to exceed, in any case, sixty days. If the share
transfer books shall be closed for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of shareholders, such books
shall be closed for at least ten days immediately preceding such meeting. In
lieu of closing the share transfer books, the board of directors may fix in
advance a date as the record date for any such determination of shareholders,
such date in any case to be not more than sixty days and, in case of a meeting
of shareholders, not less than ten days prior to the date on which the
particular action, requiring such determination of shareholders, is to be
taken. If the share transfer books are not closed and no record date is fixed
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or shareholders entitled to receive payment of a
dividend, the date on which notice of the meeting is mailed or the date on
which the resolution of the board of directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
Section 2.7 Voting Record
The officer or agent having charge of the stock transfer books for
shares of the corporation shall make, at least ten days before such meeting of
shareholders, a complete record of the shareholders entitled to vote at each
meeting of shareholders or any adjournment thereof, arranged in alphabetical
order, with the address of and the number of shares held by each. The record,
for a period of ten days prior to such meeting, shall be kept on file at the
principal office of the corporation, whether within or outside of the state of
Nevada, and shall be subject to inspection by any shareholder for any purpose
germane to the meeting at any time during usual business hours. Such record
shall be produced and kept open at the time and place of the meeting and shall
be subject to the inspection of any shareholder during the whole time of the
meeting for the purposes thereof.
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The original stock transfer books shall be the prima facie evidence
as to who are the shareholders entitled to examine the record or transfer
books or to vote at any meeting of shareholders.
Section 2.8 Quorum
A majority of the outstanding shares of the corporation entitled to
vote, represented in person or by proxy, shall constitute a quorum at any
meeting of shareholders, except as otherwise provided by Chapter 78 of the
Nevada Revised Statutes and the Articles of Incorporation. In the absence of
a quorum at any such meeting, a majority of the shares so represented may
adjourn the meeting from time to time for a period not to exceed sixty days
without further notice. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed. The shareholders present at
a duly organized meeting may continue to transact business until adjournment,
notwithstanding the withdrawal during such meeting of that number of
shareholders whose absence would cause there to be less than a quorum.
Section 2.9 Manner of Acting
If a quorum is present, the affirmative vote of the majority of the
shares represented at the meeting and entitled to vote on the subject matter
shall be the act of the shareholders, unless the vote of a greater proportion
or number or voting by classes is otherwise required by statute or by the
Articles of Incorporation or these bylaws.
Section 2.10 Proxies
At all meetings of shareholders a shareholder may vote in person or
by proxy executed in writing by the shareholder or by a duly authorized
attorney-in-fact. 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 six months from the date of its execution, unless otherwise provided in
the proxy.
Section 2.11 Voting of Shares
Unless otherwise provided by these bylaws or the Articles of
Incorporation, each outstanding share entitled to vote shall be entitled to
one vote upon each matter submitted to vote at a meeting of shareholders, and
each fractional share shall be entitled to a corresponding fractional vote on
each such matter.
Section 2.12 Voting of Shares by Certain Shareholders
Shares standing in the name of another corporation may be voted by
such officer, agent or proxy as the bylaws of such corporation may prescribe,
or, in the absence of such provision, as the board of directors of such other
corporation may determine.
Shares standing in the name of a deceased person, a minor ward or
an incompetent person, may be voted by an administrator, executor, court
appointed guardian or conservator, either in person or by proxy without a
transfer of such shares into the name of such administrator, executor, court
appointed guardian or conservator. Shares standing in the name of a trustee
may be voted by him, either in person or by proxy, but no trustee shall be
entitled to vote shares held by him or her without a transfer of such shares
into his or her name.
Shares standing in the name of a receiver may be voted by such
receiver and shares held by or under the control of a receiver may be voted
by such receiver without the transfer thereof into the trustee name if
authority so to do be contained in an appropriate order of the court by which
such receiver was appointed.
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A shareholder whose shares are pledged shall be entitled to vote
such shares until the shares have been transferred into the name of the
pledgee, and thereafter the pledgee shall be entitled to vote the shares so
transferred.
Neither shares of its own stock belonging to this corporation, nor
shares of its own stock held by it in a fiduciary capacity, nor shares of its
own stock held by another corporation if the majority of shares entitled to
vote for the election of directors of such corporation is held by this
corporation may be voted, directly or indirectly, at any meeting and shall not
be counted in determining the total number of outstanding shares at any given
time.
Redeemable shares which have been called for redemption shall not be
entitled to vote on any matter and shall not be deemed outstanding shares on
and after the date on which written notice of redemption has been mailed to
shareholders and a sum sufficient to redeem such shares has been deposited
with a bank or trust company with irrevocable instruction and authority to pay
the redemption price to the holders of the shares upon surrender of
certificates therefor.
Section 2.13 Informal Action by Shareholders
Except as provided by law, any action required or permitted to be
taken at a meeting of the shareholders may be taken without a meeting if a
consent in writing, setting forth the action so taken, shall be signed by a
majority of the shareholders entitled to vote with respect to the subject
matter thereof.
Section 2.14 Voting by Ballot
Voting on any question or in any election may be by voice vote
unless the presiding officer shall order or any shareholder shall demand that
voting be by ballot.
Section 2.15 Cumulative Voting
Cumulative voting shall not be permitted in the election of officers
or directors, or in any other matter.
ARTICLE 3 - BOARD OF DIRECTORS
Section 3.1 General Powers
The business and affairs of the corporation shall be managed by its
board of directors.
Section 3.2 Performance of Duties
A director of the corporation shall perform his or her duties as a
director, including his or her duties as a member of any committee of the
board upon which he or she may serve, in good faith, in a manner he or she
reasonably believes to be in the best interests of the corporation, and with
such care as an ordinarily prudent person in a like position would use under
similar circumstances. In performing his or her duties, a director shall be
entitled to rely on information, opinions, reports, or statements, including
financial statements and other financial data, in each case prepared or
presented by persons and groups listed in paragraphs A, B, and C of this
Section 3.2; but he or she shall not be considered to be acting in good faith
if he or she has knowledge concerning the matter in question that would cause
such reliance to be unwarranted. A person who so performs his or her duties
shall not have any liability by reason of being or having been a director of
the corporation. Those persons and groups on whose information, opinions,
reports, and statements a director is entitled to rely upon are:
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A. One or more officers or employees of the corporation whom the
director reasonably believes to be reliable and competent in the matter
presented;
B. Counsel, public accountants, or other persons as to matters
which the director reasonably believes to be within such persons' professional
or expert competence; or
C. A committee of the board upon which he or she does not serve,
duly designated in accordance with the provision of the Articles of
Incorporation or the bylaws, as to matters within its designated authority,
which committee the director reasonably believes to merit confidence.
Section 3.3 Number, Tenure and Qualifications
The number of directors of the corporation shall be fixed from time
to time by resolution of the board of directors, but in no instance shall
there be less than one director or that number otherwise required by law.
Each director shall hold office until the next annual meeting of shareholders
or until his or her successor shall have been elected and qualified.
Directors need not be residents of the state of Nevada nor shareholders of
the corporation.
There shall be a chairman of the board, who has been elected from
among the directors. He or she shall preside at all meetings of the
stockholders and of the board of directors. He or she shall have such other
powers and duties as may be prescribed by the board of directors.
Section 3.4 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 shareholders. The board of directors may provide, by
resolution, the time and place, either within or without the state of Nevada,
for the holding of additional regular meetings without other notice than such
resolution.
Section 3.5 Special Meetings
Special meetings of the board of directors may be called by or at
the request of the president or any two directors. The person or persons
authorized to call special meetings of the board of directors may fix any
place, either within or without the state of Nevada, as the place for holding
any special meeting of the board of directors called by them.
Section 3.6 Notice
Written notice of any special meeting of directors shall be given as
follows:
By mail to each director at his or her business address at least
three days prior to the meeting; or
By personal delivery or telegram at least twenty-four hours prior to
the meeting to the business address of each director, or in the event such
notice is given on a Saturday, Sunday or holiday, to the residence address of
each director. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, so addressed, with postage thereon
prepaid. If notice be given by telegram, such notice shall be deemed to be
delivered when the telegram is delivered to the telegraph company. Any
director may waive notice of any meeting. The attendance of a director at
any meeting shall constitute a waiver of notice of such meeting, except where
a director attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting is not lawfully called or
convened. 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.
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Section 3.7 Quorum
A majority of the number of directors fixed by or pursuant to
Section 3.2 of this Article 3 shall constitute a quorum for the transaction
of business at any meeting of the board of directors, 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.
Section 3.8 Manner of Acting
Except as otherwise required by law or by the Articles of
Incorporation, the act of the majority of the directors present at a meeting
at which a quorum is present shall be the act of the board of directors.
Section 3.9 Informal Action by Directors
Any action required or permitted to be taken by the board of
directors or by a committee thereof at a meeting may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all of the directors or all of the committee members entitled to
vote with respect to the subject matter thereof.
Section 3.10 Participation by Electronic Means
Any members of the board of directors or any committee designated
by such board may participate in a meeting of the board of directors or
committee by means of telephone conference or similar communications equipment
by which all persons participating in the meeting can hear each other at the
same time. Such participation shall constitute presence in person at the
meeting.
Section 3.11 Vacancies
Any vacancy occurring in the board of directors may be filled by
the affirmative vote of a majority of the remaining directors though less than
a quorum of the board of directors. A director elected to fill a vacancy
shall be elected for the unexpired term of his or her predecessor in office.
Any directorship to be filled by reason of an increase in the number of
directors may be filled by election by the board of directors for a term of
office continuing only until the next election of directors by the
shareholders.
Section 3.12 Resignation
Any director of the corporation may resign at any time by giving
written notice to the president or the secretary of the corporation. The
resignation of any director shall take effect upon receipt of notice thereof
or at such later time as shall be specified in such notice; 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, including those who have so resigned, shall have power to fill such
vacancy or vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective.
Section 3.13 Removal
Any director or directors of the corporation may be removed at any
time, with or without cause, in the manner provided in Chapter 78 of the
Nevada Revised Statutes.
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Section 3.14 Committees
By resolution adopted by a majority of the board of directors, the
directors may designate two or more directors to constitute a committee, any
of which shall have such authority in the management of the corporation as the
board of directors shall designate and as shall be prescribed by Chapter 78 of
the Nevada Revised Statutes.
Section 3.15 Compensation
By resolution of the board of directors and irrespective of any
personal interest of any of the members, each director may be paid his or her
expenses, if any, of attendance at each meeting of the board of directors, and
may be paid a stated salary as director or a fixed sum for attendance at each
meeting of the board of directors or both. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 3.16 Presumption of Assent
A director of the corporation who is present at a meeting of the
board of directors at which action on any corporate matter is taken shall be
presumed to have assented to the action taken unless his or her dissent shall
be entered in the minutes of the meeting or unless he or she shall file his or
her written dissent to such action with the person acting as the secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a
director who voted in favor of such action.
ARTICLE 4 - OFFICERS
Section 4.1 Number
The officers of the corporation shall be a president, a secretary
and a treasurer, each of whom shall be elected by the board of directors.
Such other officers and assistant officers as may be deemed necessary may be
elected or appointed by the board of directors. Any two or more offices may
be held by the same person.
Section 4.2 Election and Term of Office
The officers of the corporation to be elected by the board of
directors shall be elected annually by the board of directors at the first
meeting of the board of directors held after the annual meeting of the
shareholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as practicable. Each officer
shall hold office until his or her successor shall have been duly elected and
shall have qualified or until his or her death or until he or she shall resign
or shall have been removed in the manner hereinafter provided.
Section 4.3 Removal
Any officer or agent may be removed by the board of directors
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.
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Section 4.4 Vacancies
A vacancy in any office because of death, resignation, removal,
disqualification or otherwise, may be filled by the board of directors for
the unexpired portion of the term.
Section 4.5 President
The president shall be the chief executive officer of the
corporation and, subject to the control of the board of directors, shall in
general supervise and control all of the business and affairs of the
corporation. He or she shall, when present, and in the absence of a chairman
of the board, preside at all meetings of the shareholders and of the board of
directors. He or she may sign, with the secretary or any other proper officer
of the corporation thereunto authorized by the board of directors,
certificates for shares of the corporation and deeds, mortgages, bonds,
contracts, or other instruments which the board of directors has authorized
to be executed, excepted in cases where the signing and execution thereof
shall be expressly delegated by the board of directors or by these bylaws to
some other officer or agent of the corporation, or shall be required by law
to be otherwise signed or executed; and in general shall perform all duties
incident to the office of president and such other duties as may be prescribed
by the board of directors from time to time.
Section 4.6 Vice President
If elected or appointed by the board of directors, the vice
president (or in the event there be more than one vice president, the vice
presidents in the order designated at the time of their election, or in the
absence of any designation, then in the order of their election) shall, in the
absence of the president or in the event of his or her death, inability or
refusal to act, perform all duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. Any vice president may sign, with the treasurer or an assistant
treasurer or the secretary or an assistant secretary, certificates for shares
of the corporation; and shall perform such other duties as from time to time
may be assigned to him or her by the president or by the board of directors.
Section 4.7 Secretary
The secretary shall: (a) keep the minutes of the proceedings of the
shareholders and of the board of directors in one or more books provided for
that purpose; (b) see that all notices are duly given in accordance with the
provisions of these bylaws or as required by law; (c) be custodian of the
corporate records and of the seal of the corporation and see that the seal of
the corporation is affixed to all documents the execution of which on behalf
of the corporation under its seal is duly authorized; (d) keep a register of
the post office address of each shareholder which shall be furnished to the
secretary by such shareholder; (e) sign with the chairman or vice chairman of
the board of directors, or 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; 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 or her by the president or by the board of
directors.
Section 4.8 Treasurer
The treasurer shall: (a) have charge and custody of and be
responsible for all funds and securities of the corporation; (b) receive and
give receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in such
banks, trust companies or other depositories as shall be selected in
accordance with the provisions of Article 5 of these bylaws; and (c) in
general
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perform all of the duties incident to the office of treasurer and such other
duties as from time to time may be assigned to him or her by the president or
by the board of directors.
Section 4.9 Assistant Secretaries and Assistant Treasurers
The assistant secretaries, when authorized by the board of
directors, may sign with the chairman or vice chairman of the board of
directors or the president or a vice president certificates for shares of the
corporation the issuance of which shall have been authorized by a resolution
of the board of directors. The assistant secretaries and assistant
treasurers, in general, shall perform such duties as shall be assigned to
them by the secretary or the treasurer, respectively, or by the president or
the board of directors.
Section 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 their respective duties and
offices.
Section 4.11 Salaries
The salaries of the officers shall be fixed from time to time by the
board of directors and no officer shall be prevented from receiving such
salary by reason of the fact that he or she is also a director of the
corporation.
ARTICLE 5 - CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 5.1 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.
Section 5.2 Loans
No loans shall be contracted on behalf of the corporation and no
evidences of indebtedness shall be issued in its name unless authorized by a
resolution of the board of directors. Such authority may be general or
confined to specific instances.
Section 5.3 Checks, Drafts, Etc.
All checks, drafts or other orders for the payment of money, notes
or other evidences of indebtedness issued in the name of the corporation shall
be signed by such officer or officers, agent or agents of the corporation and
in such manner as shall from time to time be determined by resolution of the
board of directors.
Section 5.4 Deposits
All funds of the corporation not otherwise employed shall be deposited
from time to time to the credit of the corporation in such banks,
trust companies or other depositories as the board of directors may select.
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ARTICLE 6 - SHARES, CERTIFICATES FOR SHARES AND TRANSFER OF SHARES
Section 6.1 Regulation
The board of directors may make such rules and regulations as it may
deem appropriate concerning the issuance, transfer and registration of
certificates for shares of the corporation, including the appointment of
transfer agents and registrars.
Section 6.2 Certificates for Shares
Certificates representing shares of the corporation shall be
respectively numbered serially for each class of shares, or series thereof, as
they are issued, shall be impressed with the corporate seal or a facsimile
thereof, and shall be signed by the chairman or vice-chairman of the board of
directors or by the president or a vice president and by the treasurer or an
assistant treasurer or by the secretary or an assistant secretary; provided
that such signatures may be facsimile if the certificate is counter-signed by
a transfer agent, or registered by a registrar other than the corporation
itself or its employee. Each certificate shall state the name of the
corporation, the fact that the corporation is organized or incorporated under
the laws of the state of Nevada, the name of the person to whom issued, the
date of issue, the class (or series of any class), the number of shares
represented thereby and the par value of the shares represented thereby or a
statement that such shares are without par value. A statement of the
designations, preferences, qualifications, limitations, restrictions and
special or relative rights of the shares of each class shall be set forth in
full or summarized on the face or back of the certificates which the
corporation shall issue, or in lieu thereof, the certificate may set forth
that such a statement or summary will be furnished to any shareholder upon
request without charge. Each certificate shall be otherwise in such form as
may be prescribed by the board of directors and as shall conform to the rules
of any stock exchange on which the shares may be listed.
The corporation shall not issue certificates representing fractional
shares and shall not be obligated to make any transfers creating a fractional
interest in a share of stock. The corporation may, but shall not be obligated
to, issue scrip in lieu of any fractional shares, such scrip to have terms and
conditions specified by the board of directors.
Section 6.3 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.
Section 6.4 Lost, Stolen or Destroyed Certificates
Any shareholder claiming that his or her certificate for shares is
lost, stolen or destroyed may make an affidavit or affirmation of that fact
and lodge the same with the secretary of the corporation, accompanied by a
signed application for a new certificate. Thereupon, and upon the giving of
a satisfactory bond of indemnity to the corporation not exceeding an amount
double the value of the shares as represented by such certificate (the
necessity for such bond and the amount required to be determined by the
president and treasurer of the corporation), a new certificate may be issued
of the same tenor and representing the same number, class and series of shares
as were represented by the certificate alleged to be lost, stolen or destroyed.
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<PAGE>
Section 6.5 Transfer of Shares
Subject to the terms of any shareholder agreement relating to the
transfer of shares or other transfer restrictions contained in the Articles of
Incorporation or authorized therein, shares of the corporation shall be
transferable on the books of the corporation by the holder thereof in person
or by his or her duly authorized attorney, upon the surrender and cancellation
of a certificate or certificates for a like number of shares. Upon
presentation and surrender of a certificate for shares properly endorsed and
payment of all taxes therefor, the transferee shall be entitled to a new
certificate or certificates in lieu thereof. As against the corporation, a
transfer of shares can be made only on the books of the corporation and in the
manner hereinabove provided, and the corporation shall be entitled to treat
the holder of record of any share as the owner thereof and 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, save as expressly provided by the statutes of the state of Nevada.
ARTICLE 7 - FISCAL YEAR
The fiscal year of the corporation shall end on the last day of
December in each calendar year. The fiscal year of the corporation may be
changed by the affirmative vote of a majority of the board of directors.
ARTICLE 8 - DIVIDENDS
The board of directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the manner and
upon the terms and conditions provided by law and its Articles of
Incorporation.
ARTICLE 9 - CORPORATE SEAL
The board of directors shall provide a corporate seal which shall
be circular in form and shall have inscribed thereon the name of the
corporation and the state of incorporation and the words "CORPORATE SEAL."
ARTICLE 10 - WAIVER OF NOTICE
Whenever any notice is required to be given under the provisions of
these bylaws or under the provisions of the Articles of Incorporation or under
the provisions of the Chapter 78 of the Nevada Revised Statutes, or otherwise,
a waiver thereof in writing, signed by the person or persons entitled to such
notice, whether before or after the event or other circumstance requiring such
notice, shall be deemed equivalent to the giving of such notice.
ARTICLE 11 - AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may
be adopted by a majority of the directors present at any meeting of the board
of directors of the corporation at which a quorum is present.
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<PAGE>
ARTICLE 12 - EXECUTIVE COMMITTEE
Section 12.1 Appointment
The board of directors by resolution adopted by a majority of the
full board, may designate two or more of its members to constitute an
executive committee. The designation of such committee and the delegation
thereto of authority shall not operate to relieve the board of directors, or
any member thereof, of any responsibility imposed by law.
Section 12.2 Authority
The executive committee, when the board of directors is not in
session, shall have and may exercise all of the authority of the board of
directors except to the extent, if any, that such authority shall be limited
by the resolution appointing the executive committee and except also that the
executive committee shall not have the authority of the board of directors in
reference to amending the Articles of Incorporation, adopting a plan of merger
or consolidation, recommending to the shareholders the sale, lease or other
disposition of all or substantially all of the property and assets of the
corporation otherwise than in the usual and regular course of its business,
recommending to the shareholders a voluntary dissolution of the corporation
or a revocation thereof, or amending the bylaws of the corporation.
Section 12.3 Tenure and Qualifications
Each member of the executive committee shall hold office until the
next regular annual meeting of the board of directors following his or her
designation and until his or her successor is designated as a member of the
executive committee and is elected and qualified.
Section 12.4 Meetings
Regular meetings of the executive committee may be held without
notice at such time and places as the executive committee may fix from time to
time by resolution. Special meetings of the executive committee may be called
by any member thereof upon not less than one day's notice stating the place,
date and hour of the meeting, which notice may be written or oral, and if
mailed, shall be deemed to be delivered when deposited in the United States
mail addressed to the member of the executive committee at his or her business
address. Any member of the executive committee may waive notice of any
meeting and no notice of any meeting need be given to any member thereof who
attends in person. The notice of a meeting of the executive committee need
not state the business proposed to be transacted at the meeting.
Section 12.5 Quorum
A majority of the members of the executive committee shall
constitute a quorum for the transaction of business at any meeting thereof,
and action of the executive committee must be authorized by the affirmative
vote of a majority of the members present at a meeting at which a quorum is
present.
Section 12.6 Informal Action by Executive Committee
Any action required or permitted to be taken by the executive
committee at a meeting may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the directors
entitled to vote with respect to the subject matter thereof.
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Section 12.7 Vacancies
Any vacancy in the executive committee may be filled by a resolution
adopted by a majority of the full board of directors.
Section 12.8 Resignations and Removal
Any member of the executive committee may be removed at any time
with or without cause by resolution adopted by a majority of the full board of
directors. Any member of the executive committee may resign from the
executive committee at any time by giving written notice to the president or
secretary of the corporation, and unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 12.9 Procedure
The executive committee shall elect a presiding officer from its
members and may fix its own rules of procedure which shall not be inconsistent
with these bylaws. It shall keep regular minutes of its proceedings and
report the same to the board of directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
ARTICLE 13 - INDEMNIFICATION
Section 13.1 Indemnification
The corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative, or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including
attorneys' fees, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with the action, suit or proceeding
if he acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct as unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or
its equivalent, does not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, and that, with respect
to any criminal action or proceeding, he had reasonable cause to believe his
conduct was unlawful.
The corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of the
corporation. Indemnification may not be made for any claim, issue or matter
as to which such person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation, unless
and only to the extent that the court in which the action or suit was brought
or other competent jurisdiction determines upon application that in view of
all the
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circumstances of the case, the person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 13.2 Right to Indemnification
To the extent that a director, officer, employee or agent of the
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 13.1 and 13.2 of this
Article 13, or in defense of any claim, issue or matter therein, the
corporation shall indemnify him against expenses, including attorneys' fees,
actually and reasonably incurred by him in connection with the defense.
Section 13.3 Groups Authorized to Make Indemnification Determination
Any indemnification under Sections 13.1 or 13.2 of this Article 13,
unless ordered by a court or advanced pursuant to Section 13.2, may be made by
the corporation only as authorized in the specific case upon a determination
that indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made: (a) by the stockholders;
(b) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding; (c) if a
majority vote of a quorum consisting of directors who were not parties to the
action, suite or proceeding so orders, by independent legal counsel in a
written opinion; or (d) if a quorum consisting of directors who were not
parties to the action, suit or proceeding cannot be obtained, by independent
legal counsel in a written opinion.
Section 13.4 Payment and Advance of Expenses
The expenses of officers and directors incurred in defending a civil
or criminal action, suit or proceeding must be paid by the corporation as they
are incurred and in advance of the final disposition of such action, suit or
proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of
competent jurisdiction that he is not entitled to be indemnified by the
corporation. The provisions of this Section do not affect any rights to
advancement of expenses to which corporate personnel other than directors or
officers may be entitled under any contract or otherwise by law.
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<PAGE>
CERTIFICATE
I hereby certify that the foregoing bylaws, consisting of 15 pages,
including this page, constitute the bylaws of MULLY CORP., adopted by the
board of directors of the corporation as of November 4, 1996.
s/Andrew I. Telsey
--------------------------------------------
Andrew I. Telsey, Secretary
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<PAGE>
MULLY CORP.
_______________________________
EXHIBIT 4.1
_______________________________
FORM OF
SHAREHOLDER LOCK-UP LETTER
_______________________________
70
<PAGE>
, 1999
-----------------------
Board of Directors
Mully Corp.
2851 S. Parker Road
Suite 720
Aurora, Colorado 80014
Gentlemen:
The undersigned, a beneficial owner of the common stock of
Mully Corp. (the "Company"), par value $.0001 per share (the
"Common Stock"), understands that the Company has filed with the
U.S. Securities and Exchange Commission a registration statement on
Form 10-SB (File No. ) (the "Registration
Statement"), for the registration of the Company's Common Stock.
As part of the disclosure included in the Registration Statement,
the Company has affirmatively stated that there will be no trading
of the Company's securities until such time as the Company
successfully implements its business plan as described in such
Registration Statement, consummating a merger or acquisition.
In order to insure that the aforesaid disclosure is adhered
to, the undersigned agrees, for the benefit of the Company, that
he/she will not offer to sell, assign, pledge, hypothecate, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, any shares of the Common Stock of the Company owned by
him/her, or subsequently acquired through the exercise of any
options, warrants or rights, or conversion of any other security,
grant options, rights or warrants with respect to any such shares
of Common Stock, until the Company successfully closes a merger or
acquisition. Furthermore, the undersigned will permit all
certificates evidencing his/her shares to be endorsed with the
appropriate restrictive legends and will consent to the placement
of appropriate stop transfer orders with the transfer agent of the
Company.
Very truly yours,
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
[Signature of Holder]
_______________________________
[Please Print Name(s)]
_______________________________
[Number of Shares of Common
Stock Owned]
71
<PAGE>
MULLY CORP.
____________________________
EXHIBIT 27.1
____________________________
FINANCIAL DATA SCHEDULE
____________________________
72
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITED
FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 500
<OTHER-SE> (500)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
