UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-SB
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities and Exchange Act of 1934
SOFTWALL EQUIPMENT CORP.
(Name of Small Business in its charter)
UTAH 87-0624752
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11602 Colchester Drive, Sandy, Utah 84092
(Address of principal executive offices) (Zip Code)
Issuer's Telephone number: ( 801 ) 572-4724
Securities to be registered Under Section 12(b) of the Act:
Title of each Class Name of each
to be so registered exchange on which
be registered each class is to
Common OTC
Securities to be registered under Section 12(g) of the Act:
Common
(Title of Class)
INFORMATION REQUIRED IN REGISTRATION STATEMENT
PART I
Item 1. Description of Business.
The Company Softwall Equipment Corp. (the "Company") was organized as a Utah
corporation on October 5, 1998. Its offices are located in the President's
home at 11602 Colchester Drive, Sandy, Utah 84092.
The Company was incorporated under the laws of the State of Utah to engage in
the manufacturing of mining equipment and research and development of mining
equipment.
The Company's President is the inventor of softwall mining technology methods
which are the subject of a patent pending. His invention is a novel device
and method for mining soft shallow deposit. He has granted the rights to
develop and exploit such technology to the Company. However, his rights are
subject to interest by a third party, IMC Agrico Company ("IMCA") a Delaware
partnership and an international producer of phosphate fertilizer products.
IMCA and Mr. Peterson have entered into a Letter of Intent whereby IMCA has
agreed to grant him an exclusive license to develop and market his invention
in "non-phosphate" areas throughout the world in exchange for the ownership of
the patent.
The company's President is also the inventor of the Surface-Assisted
Continuous Underground Mine Conveyor (SACUM). SACUM is a system in
methodology for extending the tail loading end of a conveyor operation. The
patent was granted to Mr. Randall Peterson on December 7, 1999as Patent No.
5,997,101. The primary goal of the invention is to provide a method of mining
underground coal that does not require the conventional in-seam support
infrastructure of underground operations. Ownership rights to the SACUM
patent were assigned to the company in exchange for 5,000,000 shares of
restricted 144 common stock issued to Peterson and 10,000 shares issued to the
company's Vice President Roger Brockbank for his private contribution toward
Peterson's patent expenses.
Financial highlights: The following schedule sets forth certain information as
December 31, 1998 and for the interim period ended September 30, 1999. See
part F/S for the companies financial statements for those periods, the
auditors report and related notes.
September 30, 1999 December 31, 1998
(Unaudited)
Total Assets................ $36,637 $13,150
Total Liabilities........... $2,500 $ 100
Stockholders Equity......... $36,367 $13,150
Registration Statement: The company has elected to file this Form 10-SB
Registration Statement on a voluntary basis in order to become subject to the
reporting requirements of Section 13 of the Securities and Exchange Act of
1934 as amended. The companies primary purpose for filing this Registration
Statement is to apply for listing on the National Association of Securities
Dealers Over-The-Counter Bulletin Board. Current National Association of
Securities Dealers rules provide, "An issuer cannot maintain a listing unless
it is current in it reporting obligations under Section 13 or 15(d) of the
1934 Act.
Principal Products or Services:
Softwall is a new extraction method combining hydraulic mining and longwall
mining principles. It has several applications both in mining and in other
industries involving extraction or removal of bulk materials and earth.
Softwall is specifically intended for use in shallow, soft or earthy type
ground landsoil conditions.
As of today, one bench scale model of the Softwall System has been
manufactured by Brigham Young University ("BYU") in Provo, Utah. The
construction of the bench scale model began as an academic exercise in
September of 1998 and was completed in April 1999. The bench scale model is
sufficient for certain functional tests. The preliminary work at BYU included
mechanical evaluation of the concept and provided mechanical engineering
design and CAD draftings for both a bench scale model and a ½ scale
model. Subsequent work involved the actual fabrication of the bench scale
model which is 1/6th scale of a full scale production module. Although not
intended for production, the bench model is equipped with hydraulic and water
systems which demonstrate the machines operating functions.
On behalf of the company, Peterson has executed two additional agreements with
IMCA. The first is an agreement to share costs on the completion of the bench
scale model or 1/6th scale prototype and the other agreement is to share in
the continued development with the construction of a second prototype. Both
agreements are attached.
Distribution Methods of the Products:
Since the Company has not yet finished manufacturing and testing its Softwall
System, it has not established any definitive methods for distribution. The
Company however, will initially market directly to targeted end users in
certain industries and may also use the service of established distribution
services.
Status of any Publicly Announced product or services:
The Company has made no public announcements regarding its Softwall System,
although it does have a website on the internet, for education and
information.
Competition
The Softwall System is an alternative to strip mining and the Company will be
in heavy competition with conventional strip mining methods. It believes its
Softwall System is a unique and revolutionary system for shallow earth mining
and that no similar product/method exists, the Company will be in direct
competition with companies which market equipment for use in traditional
dragline methods to end users which are also target markets for the Company.
Sources and availability of raw materials and the name of principal suppliers:
The Company will rely on a variety of manufacturers for production of the
Softwall System. There are numerous manufacturers in the United States with
the capability to manufacture the Softwall System. The Company has received
numerous vendor quotes from various manufactures/suppliers for the production
of the Softwall System but has not as of yet signed any agreements with
them.
Patents, Trademarks, licenses, franchises, concessions, royalty agreements or
labor contracts:
The Softwall System has a patent pending pursuant to application made to the
United States Patent and Trademark office on May 6, 1997. The Application
notes Mr. Peterson as the inventor and IMCA as the assignee. The application
covers both the method and the device. The patent, when issued will be
assigned to IMCA as part of a contemplated license agreement between IMCA and
Peterson.
The issuer obtained the ownership interest in United States Patent No.
5,997,101 for the Surface-Assisted Continuous Underground Mine Conveyor. Said
system will assist extending the tail loading end of a conveyor. The patent
was granted on the 7th day of December, 1999 from Mr. Randall Peterson, the
President of the issuer for 5,000,000,000 restricted 144 common shares and
10,000 restricted 144 shares to the companies Vice-President, Roger Brockbank.
Neither the Company nor Mr. Peterson have applied for a trademark. A
trademark has been issued for "Softwall" for an unrelated company involved in
interior decorating.
Need for Governmental approval of Principal Products:
The Company will be required to receive governmental approval on either the
methodology or technology in the Softwall System. The Softwall System will be
subject, as any mining operation, to high safety and environmental impact
standards by such federal regulatory agencies as the Offices of Surface
Mining, Mine Safety and Health Administration, the National Institute of
Occupational Safety and Health as well as state agencies having jurisdiction
over mining activities.
Effect of Existing or Probable Governmental regulations on the Business:
The Company believes that its product/methodology will comply with existing
regulations, and in fact, that it will actually provide a safer method of
mining because there will be less personnel involved in the actual mining
process. The heavy regulations of the mining industry combined with the fact
that the Softwall System is a new method which does not fit into standard
industry classification could make the marketing of the system difficult
especially if initial attempts to use the system result in the need for a new
regulations and amendment of existing regulations.
The company presently has no employees and does not plan on having any
employees for the next 12 months. Peterson will be retained on a contract
basis to continue with the work at BYU according to the agreements with IMCA.
When machinery is sold and/or sub-licensed for use, and manufacturing is
required, the company will contract manufacturing to be done by others.
Y2K Compliance: The company does not anticipate any problems with Y2K
compliance in development of mining equipment and distribution of the same.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
The Company has had little or no operational history other than organizational
activity. It intends to operate in the product development mode financed
initially by a public offering which was recently completed. Accordingly, the
Company has solicited interest from certain end-users but has no firm orders
for any of its Softwall System. The Company intend to utilize the first
proceeds from the offering for development, manufacture and testing of the
Softwall System. The Company does not anticipate any revenues from operations
within the next 12 months.
Dependance on a few major customers: The company presently has no customers as
of this date and has to depend upon a few customers involved in mining
operations.
The following Financial Statements are included herewith: The companies
financial statements for the year end December 31, 1998 and the unaudited
financial statements for the interim period ending September 30, 1999.
September 30, 1999 December 31, 1998
(Unaudited)
Total Assets................ $36,637 $13,150
Total Liabilities........... $ 2,500 $ 100
Stockholders Equity.... $36,367 $13,150
ITEM 3. DESCRIPTION OF PROPERTY.
The Company currently is doing business operations from an office in the home
of two of the Company's officers and directors, Randall and Sally Peterson.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the amount and nature of beneficial ownership
of each of the executive officers and directors of the Company and each person
known to be a beneficial owner of more than three percent of the issued and
outstanding shares of the Company as of November 24, 1999. The table sets
forth the information based on 14,135,000 common shares issued and outstanding
as of November 24, 1999.
Title Name and Address Amount and Nature Percent of
of class of Beneficial Owner of Beneficial Owner Class
Common Roger Brockbank 510,000 3.61%
5984 South 900 East
Salt Lake City, UT
Common Randall D. Peterson 12,398,000* 87.71%
11602 Colchester Drive
Sandy, UT 84092
Common Officers and Directors 12,908,000 91.32%
as a Group
* of this amount 5,746,000 shares are held jointly with Sally W. Peterson in
Joint Tenn with Randall Peterson with 6,648,000 owned by Randall Peterson and
4,000 shares are held by Randall & Sally Peterson's children
None of the foregoing have any right to acquire other or additional shares of
the Company. There is no existing arrangement which may result in a change
in control of the Company. However, if an active business is found with which
to enter into some form of corporate reorganization, a change in control of
the Company will be contemplated as part of such reorganization.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The names, addresses, ages and respective positions of the current directors
and officers of the Company are as follows:
Name Age Position Date
Held
Randall D. Peterson 45 President October 5, 1998
11602 Colchester Drive Director
Sandy, UT 84092
Roger Brockbank 50 Vice President October 5, 1998
5984 South 900 East Director
Salt Lake City, UT
Sally W. Peterson 36 Secretary/Treasurer October 5, 1998
11602 Colchester Dr Director
Sandy, UT 84092
Randall Peterson is 45 years of age and is the President, CEO and a
Director of the Company and has over 18 years of experience in working for
mining companies in underground coal and trona and surface metal mining. He is
currently working as a professional engineer and an independent mining
consultant which he has been doing since 1998. During this time he has
provided engineering and consulting services to Union Pacific Resources -
Minerals, IMC Agrico, Westmoreland Coal Company, Calcium Springs Water
Company, Clean Air Engineering and Combined Plastics Company. From 1997 to
1998 he acted as Managing Director, Engineer and Principal Consultant to South
East International of Camden Australia and Salt Lake City, Utah. Mr. Peterson
provided consulting services to numerous companies including Shell Coal of
Brisbane, Australia; Allied Bellambi Colleries, Wollongong, Australia; Savage
Togara North of Brisbane, Qld, Australia; IMC Agrico Technology Development
Group, Mulberry, Florida; in addition to Union Pacific Resources. His
consultation services for the foregoing companies covered a wide range
including evaluations of mining methods and options, mine training services,
mine plan and project evaluations, and economic feasibility evaluations and
mine care and maintenance. From 1995 through 1997, Mr. Peterson was Project
Manager for NorWest Mines Services, Inc., Salt Lake City, Utah where he acted
as project manager, coordinator, engineer and consultant for a wide variety of
underground mine design, improvement and feasibility evaluation projects.
These projects involved assignments with numerous mining ventures throughout
the world. During this time he was also a contracted Instructor of Mining
Engineering for the University of Utah where he taught senior mine layout
design courses for the Department of Mining and Engineering. From 1990
through 1995, Peterson acted as Superintendent of Mine Engineering for General
Chemical Soda Ash Partners in Green River Wyoming. His position included
acting as Mine Manager on weekends; supervision and management of an
engineering department; mine planning, technical and design support services
for underground operations; planning, coordinating and coordination of new
mine shaft construction, among other technical and administrative
responsibilities. From 1989 to 1990, he was Chief Engineer and Technical
Services Manager for Sunnyside Mines, Sunnyside, Utah and from 1988-89, he was
a mine shift supervisor for Barneys Canyon Mine, Kennecott Gold, Bingham,
Utah. He was project engineer for the Twentymile Park Project, Getty Mining
Company in Salt Lake City from 1983-1985. Peterson was Mine Engineer for
Plateau Mining Company, a subsidiary of Getty Mining Company, in Price, Utah,
from 1981 through 1983 and from 1979 through 1981 he was Section Foreman and
Mine Engineer for Hawks Nest Mines, Western Slope Carbon (a subsidiary of
Northwest Pipeline Corporation) of Somerset, Colorado.
Peterson's education includes a Master of Science in Mining Engineering
from the University of Utah in 1988 where he graduated at the top of his
class. He also received a Master of Business Administration from University
of Utah in 1988 with Honors and is a member of the Beta Gamma Signa Honor
Society for collegiate Schools of Business. He received his Bachelors of
Science in Mining Engineering from that same university in 1979 and has
completed continuing education courses at Western Wyoming Community College in
Auto CAD in 1993. He is a Registered Professional Engineer in Utah, Colorado
and Wyoming. He is a certified MSHA Instructor for Underground Metal and Non
Metal Mines. He is also a Certified Underground Coal Mine Foreman in
Colorado, Utah and Wyoming; and a Certified Underground Trona Foreman in
Wyoming. He is a member of the American Institute of Mining Engineers and the
Society of Mining Engineers (SME)
Peterson has been published on numerous occasions since 1988 and is the
author of Softwall Mining - New Mining Technology for Mining Phosphatic Clay
Beds and other deposits in soft shallow conditions, which was presented at the
mechanical mining session of the SME/AIME Annual Convention in Orlando,
Florida USA in March 1998. He is also the inventor of several mining
innovations including two which have US and International patents pending: the
Surface Assisted Underground Mine Conveyor for Coal and Hard Strata-bound Rock
Deposits and the Softwall Mining Process for Phosphatic Clays, and one which
has been awarded a patent, a wall-to-wall mining method for surface mining
transition to longwall.
Sally Peterson - The wife of Randall Peterson is 37, is the Company's
Secretary/Treasurer and a Director. Although Sally Peterson currently is a
mother and homemaker, and has not been employed since 1990, she currently
serves as ARP committee chair for the PTA at Lone Peak Elementary School where
her children attend. She was a Kindergarten Teacher from 1987 through 1990 at
Uintah Elementary School, in Salt Lake City, Utah. In 1986, she worked as a
Clerk for Mountain Fuel Supply Company, in Salt Lake City. From 1979 through
1983, Mrs. Peterson was an Insurance Rater/Underwriter for American National
General Agencies also in Salt Lake City, Utah. Mrs. Peterson has a Bachelor
of Science in Elementary Education from the University of Utah which she
received in 1986. She has also completed continuing education and training
associated with her Elementary Education in 1989 and 1998.
Roger Brockbank - 50, is a director of the Company with a great deal of
experience in real estate development and construction. From 1997 to the
present date, he is building a 10,000 square foot office space and a 10,500
foot strip center along with a 13 lot Industrial Subdivision in Lindon, Utah.
From 1996-97 he built an I 1,000 square foot strip center in Riverton, Utah
which is now leased. He also developed 54 lots in Tooele that have sold out
and purchased an 18,000 square foot building in Tooele which is now 80%
leased. During 1994 and 1995, Mr. Brockbank developed 36 lots in Riverton,
Utah which have sold out, he developed three subdivisions with, 64 lots in
Riverton, and 32 lots in Murray all of which have sold out. From 1987 through
1990, he remodeled and sold 15 homes on the open market and bought 30
apartments which he sold as condos. Mr. Brockbank managed and did tenant
improvements at a shopping center at 90th South Redwood Road from 1984 - 1987;
and he also did the same for a 50 unit apartment building and other commercial
space, and developed 20 lots during that time period. In 1980 through 1984,
Roger Brockbank developed 30 lots and built 15 homes. From 1969 on, having
completed a mission for the LDS Church, Roger Brockbank owned and ran a
painting business and completed a multitude of building projects. He attended
Brigham Young University for 31/2 years. Roger Brockbank is a licensed
general contractor doing business as R.B Construction.
Randall Peterson, President, CEO and Director is the husband of Sally
Peterson, Secretary, Treasurer and Director. Mr. Peterson is also a second
cousin to Roger Brockbank, Vice President and director.
None of the officers or directors of the Company are officers,
directors or affiliates of any reporting companies.
To the knowledge of the Company, no present or former
director, executive officer or person nominated to become a director or
executive of the Company has ever:
1) Filed a bankruptcy petition by or against any business of
which such person was a general partner or executive officer either at the
time of the bankruptcy or with two years prior to that time;
2) Had any conviction in a criminal proceeding or been subject
to a pending criminal proceeding (excluding traffic violations and other minor
offenses);
3) Been subject to any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and
4) Been found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has not been reversed, suspended or vacated.
ITEM 6. EXECUTIVE COMPENSATION.
The Company currently is not now paying, and has not since inception,
paid any compensation to officers, directors or executives. It does not have
any pension, profit-sharing, stock bonus, or other benefit plans. Such plans
may be adopted in the future at the discretion of the Board of Directors.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The company issued 1,625,000 common shares to its founding shareholders, which
include 1,500,000 shares to Mr. Peterson who is both President and a director
of the Company in addition to being the company's majority shareholder. Such
shares were transferred to Peterson for the transfer of ownership of a vehicle
From Peterson to the Company values at approximately $13,000.00 and the
assignment of his rights to the Softwall System.
The Company's President, and Chairman of the board, Randall Peterson, assigned
ownership of the SACUM patent to the company valued at $5,010 for 5,010,000
shares of common stock, with Randall Peterson receiving 5,000,000 shares and
Roger Brockbank receiving 10,000.
On April 23, 1999 the company preformed a 5:1 forward stock split.
ITEM 8. DESCRIPTION OF SECURITIES.
The aggregate number of shares which the Company shall be authorized to issue
is 50,000,000 shares of non-assessable voting common stock having par value
of $0.001per share. All stock of the Company shall be of the same class
common and shall have the same rights and preferences, fully paid stock of
this Company shall not be liable to any further call or assessment.
The holders of the Company common stock are entitled to one vote per share in
each matter submitted to vote at any meeting of shareholders. Share of common
stock do not carry cumulative voting rights.
PART II
ITEM 1. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON
EQUITY AND OTHER SHAREHOLDER MATTERS.
At the present time there is no public trading market for the Company's
common shares.
ITEM 2. LEGAL PROCEEDINGS.
To the best of the Company's knowledge it is not a party to any pending legal
proceedings.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
The company knows of no changes in or disagreements with accountants on
accounting and financial disclosure.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
In 1999 the company issued 200,000 shares in a 504 public offering at an
offering price of $.15 per share for a total purchase price of $30,000.00.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Articles of Incorporation contain no provisions regarding
indemnification of officers and directors. However, Article VIII of the
Company's By-Laws state the indemnification as follows:
"Section 1. Any person made a party to or involved in any civil, criminal
or administrative action, suit or proceeding by reason of the fact that he or
his testator or intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal thereon, except
with respect to matters as to which it is adjudged in such action, suit or
proceeding that such officer, Director, or employee was liable to the
Corporation, or to such other corporation, for negligence of misconduct in the
performance of his duty. As used herein the term "expense" shall include all
obligations incurred by such person for the payment of money, including
without limitation, attorney's fees, judgments, awards, fines, penalties, and
amounts paid in satisfaction of judgment or in settlement of any such action,
suit, or proceedings, except amounts paid to the Corporation or such other
corporation by him.
A judgment or conviction whether based on plea of guilty or nolo
contenders or its equivalent, or after trial, shall not of itself be deemed an
adjudication that such Director, officer or employee is liable to the
Corporation, or such other corporation, for negligence of misconduct in the
performance of his duties. Determination of the rights of such
indemnification and the amount thereof may be made at the option of the person
to be indemnified pursuant to procedure set forth, from time to time, in the
By-laws or by any of the following procedures:
a) order of the Court or administrative body or agency having jurisdiction
on the action, suit, or proceeding
b) resolution adopted by a majority of the quorum of the Board of
Directors of the Corporation without counting in such majority any Directors
who have incurred expenses in connection with such action, suit or proceeding
c) if there is no quorum of Directors who have not incurred expense in
connection with such action, suit, or proceeding, then by resolution adopted
by a majority of the committee of stockholders and Directors who have not
incurred such expenses appointed by the Board of Directors
d) resolution adopted by a majority of the quorum of the Directors
entitled to vote at any meeting; or
e) order of any Court having jurisdiction over the Corporation.
Any such determination that a payment by way of indemnification should be
made will be binding upon the Corporation. Such right of indemnification
shall not be exclusive of any other right which such Directors, officers and
employees of the Corporation and other person above mentioned may have or
hereafter acquire, and without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any
By-law, Agreement, vote of stockholders, provision of law, or otherwise in
addition to their rights under this Article. The provisions of this Article
shall apply to any member of any committee appointed by the Board of Directors
as fully as though each person had been Director, officer or employee of the
Corporation."
PART F/S
Softwall Equipment Corporation
(a Development Stage Company)
Financial Statements
September 30, 1999 and December 31, 1998
CONTENTS
Accountants' Report 3
Balance Sheets 4
Statements of Operations 5
Statements of Stockholders' Equity 6
Statements of Cash Flows 7
Notes to the Financial Statements 8
NEPHI BIERWOLF
50 WEST BROADWAY
SALT LAKE CITY, UT 84101
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Softwall Equipment Corporation
We have audited the accompanying balance sheet of Softwall Equipment
Corporation (a Development Stage Company) (A Utah Corporation) as of 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Softwall Equipment Corporation as
of December 31, 1998 in conformity with generally accepted accounting
principles.
The balance sheet, statement of operations, statement of cash flows and
statement of stockholders' equity for the period ended September 30, 1999 were
not audited by us, accordingly we do not express an opinion or any other form
of assurance on them.
/S/ NEPHI BIERWOLF
Salt Lake City, Utah
October 19, 1999<PAGE>Softwall Equipment Corporation
(a Development Stage Company)
Balance Sheets
Assets
September 30, December 31,
1999 1998
Current Assets
Cash 1,392 150
Total Current Assets 1,392 150
Property Plant and Equipment(net)(Note 3) 13,436 13,000
Other Assets
Patent (Note 4) 21,809 -
Total Assets 36,637 13,150
Liabilities and Stockholders' Equity
Current Liabilities
Taxes Payable 14,135 100
Note Payable 26,732 -
Total Current Liabilities (6,730) 100
34,137
Stockholders' Equity
Common Stock, authorized 50,000,000
shares of $.001 par value, issued and
outstanding 14,135,000 and
1,625,000, respectively 1,624
Additional Paid in Capital 11,575
Deficit Accumulated During the
Development Stage (150)
Total Stockholders' Equity 13,050
Total Liabilities and
Stockholders' Equity 13,150
The accompanying notes are an integral part of these financial statements
Softwall Equipment Corporation
(a Development Stage Company)
Statement of Operations
(Unaudited)
For the October 5, 1998
Period (inception of the
January 1, development
1999 to stage) to
September 30, September 30,
1999 1999
Revenues:
Expenses:
General and administrative 4,731 4,881
Depreciation expense 1,849 1,849
Total Expenses 6,580 6,730
Net (Loss) (6,580) (6,730)
Net (Loss) Per Share - -
Weighted average shares outstanding 5,266,852 1,675,000
Softwall Equipment Corporation
(a Development Stage Company)
Statement of Stockholders' Equity
From October 5, 1998 (Inception) through
September 30, 1999 (unaudited)
Deficit
Accumulated
Additional During the
Common Stock paid-in Development
Shares Amount capital Stage
Inception at October 5, 1998 - $ - $ - $ -
Shares issued for Equipment
and Cash at $.0081 per share 1,625,000 1,625 11,575 -
Net Loss, December 31, 1998 - - - (150)
Balance, December 31, 1998 1,625,000 1,625 11,575 (150)
Shares issued for Cash
at $.15 per share 200,000 200 29,800 -
Less: Offering costs - - (7,343) -
Stock split 5:1 7,300,000 7,300 (7,300) -
Shares issued for Patent 5,010,000 5,010 - -
Net Loss for the period
January 1, 1999
to September 30, 1999 - - - (6,580)
Balance, September 30, 1999 14,135,000 $14,135 $26,732 $(6,730)
<PAGE>
Softwall Equipment Corporation
(a Development Stage Company)
Statement of Cash Flows
(Unaudited)
October 5, 1998
For the Period (inception of the
January 1, 1999 development
1999 to stage) to
September 30, September 30,
1999 1998
Cash Flows from Operating
Activities
Net Loss (6,580) (6,730)
Add depreciation expense 1,849 1,849
Decrease in Taxes Payable (100) -
Net cash flows provided
(used) by operating activities (4,831) (4,881)
Cash Flows from Investing
Activities:
Equipment (2,285) (2,285)
Patent Costs (16,799) (16,799)
Net cash flows provided
(used) by Investing activities (19,084) (19,084)
Cash Flows from Financing
Activities:
Issuance of common stock 22,657 22,857
Note Payable 2,500 2,500
Net cash flows provided
(used) by financing activities 25,157 25,357
Net increase (decrease) in cash 1,242 1,392
Cash, beginning of period 150 -
Cash, end of period 1,392 1,392
Supplementary Cash Flow Information:
Cash Paid for:
Interest $- $-
Taxes $100 $100
The company issued 1,625,309 shares of its common stock for equipment valued
at $13,000.
The company issued 5,010,000 shares of its common stock for Patent valued at
$5,010.
Softwall Equipment Corporation
(a Development Stage Company)
Notes to the Financial Statements
September 30, 1999
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Softwall Equipment Corporation (the "Company") was incorporated under
the laws of the State of Utah on October 5, 1998 for the purpose of
manufacturing mining equipment. The Company has yet to begin operations and
generate revenue.
The Company is in the development stage according to Financial
Accounting Standards Board Statement No. 7
b. Accounting Method
The Company recognizes income and expense on the accrual basis of
accounting.
c. Earnings (Loss) Per Share
The computation of earnings (loss) per share of common stock is based on
the weighted average number of shares outstanding at the date of the financial
statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of
three months or less to be cash equivalents.
e. Provision for Income Taxes
The Company adopted Statement of Financial Standards No. 109 "Accounting for
Income Taxes" for the current fiscal year.
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" requires an asset and liability approach for financial accounting and
reporting for income tax purposes. This statement recognizes (a) the amount
of taxes payable or refundable for the current year and (b) deferred tax
liabilities and assets for future tax consequences of events that have been
recognized in the financial statements or tax returns.
Deferred income taxes result from temporary differences in the recognition of
accounting transactions for tax and financial reporting purposes. There were
no temporary differences for the current year accordingly, no deferred tax
liabilities have been recognized.
No provision for income taxes has been recorded due to net operating loss
carryforward totaling approximately $150 that will be offset against future
taxable income. The NOL carryforward begins to expire in the year 2014. No
tax benefit has been reported in the financial statements.
Deferred tax assets and the valuation account at December 31, 1998 is
as follows:
Deferred tax asset:
NOL carryforward $ 150
Valuation allowance $ (150)
Total $ -
Softwall Equipment Corporation
(a Development Stage Company)
Notes to the Financial Statements
September 30, 1999
NOTE 1 - Summary of Significant Accounting Policies (continued)
f. Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the time of the financial statements
and revenues and expenses during the reporting period. In these financial
statements, assets involve reliance on management's estimates.
NOTE 2 - Development Stage Company
The Company is a development stage company as defined in Financial
Standards Board Statement No. 7. It is concentrating substantially all of its
efforts in raising capital and developing its business operations in order to
generate significant revenues.
NOTE 3 - Property, Plant and Equipment
Property, plant and equipment are stated at cost. Major renewals and
betterments are capitalized while expenditures for maintenance and repairs are
charged to operations as incurred.
Property, Plant and Equipment consist of the following:
September 30, December 31,
1999 1998
Computer $ 2,285 $ -
Vehicle 13,000 13,000
Total property, plant and equipment 15,285 13,000
Less: accumulated depreciation ( 1,849) -
Net Property, Plant and Equipment$ 13,436 13,000
Depreciation - The cost of the equipment will be depreciated using the
straight-line method. The depreciation periods are prescribed based on the
type of property. The vehicle and computer will be depreciated over the
property's estimated useful life of 5 years. Depreciation expense is $1,849
for the nine months ended September 30, 1999.
NOTE 4 - Patent
The Company purchased ½ interest in a patent. The Sacum patent will
be amortized over 15 years, commencing in the year it becomes operational.
NOTE 5 - Related Party Transactions
The Company's President, and Chairman of the board, Randall Peterson,
contributed a vehicle at his cost of $13,000 and $200 cash to the Company for
1,625,000 shares of the Company's common stock.
The Company's Vice President, and Director, Roger Brockbank, sold his
½ interest in a patent to the Company for $14,700.
The Company's President, and Chairman of the board, Randall Peterson,
contributed ½ interest in a patent at his cost of $5,010 to the Company
for 5,010,000 shares of common stock.
PART III
Item 1. Index to Exhibits
2 Confidential Offering Memorandum
3.i Articles of Incorporation
3.ii By-laws
10.i Agreement from Softwall Equipment Corp
10.ii Assignment of Roger Brockbanks interest to Softwall
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
SOFTWALL EQUIPMENT CORP.
By:/S/RANDALL PETERSON
Randall Peterson, President
EXHIBIT 2
Confidential Offering Memorandum
SOFTWALL EQUIPMENT, CORP.
11602 Colchester Drive
Sandy, Utah 84092
(801)572-4724
Minimum -- 200,000 Shares of Common Stock - $30,000
Maximum - 1,000,000 Shares of Common Stock- $150,000
SOFTWALL EQUIPMENT, CORP. (the "Company") hereby offers a maximum of
200,000 Shares and a maximum of 1,000,000 Shares of its $0.001 par value
common stock at an offering price of Fifteen Cents ($0.15) per share (the
"Common Stock" or the "Shares") on a "best efforts" basis. Prior to this
offering, there has been no public market for the Company's Shares and there
can be no assurance that a market will develop after the close of this
offering.
The Company is a newly formed corporation, has never conducted business,
has generated no revenue and has limited assets. The Company's business
purpose is to commercially develop novel, energy efficient and
environmentally compatible mining equipment for the extraction of minerals,
improvement of soils, and removal of waste and mine tailings. The Company
will use the proceeds from this offering to produce a prototype module mining
machine, which will form a complete mining system when combined with suitable
electrical, hydraulic and water systems currently in use with many mining
companies. The Company will utilize the prototype for demonstration and
marketing to potential customers in the mining industry. An investment in the
Company should be deemed to be an investment in a development venture and
should be considered extremely risky. (See "Proposed Business" and "Risk
Factors").
THE SHARES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION AND ARE BEING OFFERED IN RELIANCE UPON THE EXEMPTIONS FROM FEDERAL
REGISTRATION PROVIDED IN SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") AND/OR RULE 504 OF REGULATION PROMULGATED THEREUNDER
AND CERTAIN EXEMPTIONS FROM REGISTRATION REQUIREMENTS OF APPLICABLE STATE LAWS
OR CERTAIN OTHER QUALIFICATIONS OR CLEARANCES THEREUNDER.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IT IS HIGHLY PROBABLE
THAT THE PROCEEDS FROM THIS OFFERING WILL BE INSUFFICIENT FOR SUSTAINED, ON
GOING OPERATION AND THERE IS A SUBSTANTIAL POSSIBILITY THAT THE COMPANY MAY BE
UNSUCCESSFUL. THE PURCHASE HEREOF SHOULD BE CONSIDERED ONLY BY PERSONS WHO
CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. (See "Risk Factors.")
Offering Price (1) Proceeds to Company (1),(2),(,3)
Per Share $ 0.15 $ 0.15
Minimum Offering ( 4) $ 30,000.00 $ 30,000.00
Maximum Offering (4) $ 150,000.00 $ 150,000.00
(1) The public offering price has been arbitrarily determined and bears no
relationship to the assets or book value of the Company or any other
recognized criteria of value.
(2) The Shares will be offered and sold by officers, directors, and/or
agents of the Company on a best efforts basis. These individuals will
receive no commission and will be responsible for their own costs in
connection with the sale of the Shares offered.
(3) The proceeds to the Company are shown before the deductions of
offering expenses which are estimated to be approximately $7,000 if the
offering closes. The offering expenses include legal and accounting fees,
filing fees, printing costs, and other expenses (See "Use of Proceeds and
Terms of the Offering.")
(4) The Shares are being sold on the basis of a minimum of 200,000
shares and maximum of 1,000,000 shares. The proceeds received under this
offering will be promptly deposited (by noon of the next business day after
the receipt, if practicable) in an escrow account with Central Bank of
American Fork, Utah. The minimum proceeds of $30,000 (minimum proceeds for
sale of 200,000 shares) must be deposited within 180 days from the effective
date of this offering, although the term of the offering may be extended.
In the event that less
than the minimum proceeds of $30,000 is received by the Company, and deposited
into the escrow account within 180 days from the effective date of this
offering, or if extended, by the expiration of the extended period, all
proceeds received will be promptly refunded to purchasers without any
deduction or commissions or other expenses and without interest thereon. All
checks for the subscription of Shares must be made payable to "Softwall
Equipment, Corp." Investors in this offering will not have the use of their
funds during the escrow period which may last up to 180 days, or longer if the
term of the offering is extended. If the Company raises the minimum of
$30,000, it will not be required to escrow the remaining $120,000 if the
maximum number of shares are sold. (See "Risk Factors" and "Plan of
Distribution.")
THE SHARES ARE OFFERED SUBJECT TO PRIOR SALE, ACCEPTANCE OF AN OFFER TO
PURCHASE, AND TO WITHDRAWAL, CANCELLATION, OR MODIFICATION OF THE OFFERING
WITHOUT NOTICE.
WITH THE EXCEPTION OF WRITTEN STATEMENTS MADE BY THE DIRECTORS, EXECUTIVE
OFFICERS, DULY AUTHORIZED AGENTS, ACCOUNTANTS OR ATTORNEYS FOR THE COMPANY
RESPONDING TO QUESTIONS REGARDING THE INFORMATION PRESENTED IN THIS
MEMORANDUM, NO PERSON IS AUTHORIZED TO GIVE OR MAKE ANY STATEMENT OR
REPRESENTATION FOR OR ON BEHALF OF THE COMPANY, AND IF ANY SUCH STATEMENT IS
MADE OR GIVEN, SUCH STATEMENT SHALL NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY.
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY ANYONE
TO ANY PERSON IN ANY STATE, TERRITORY, OR POSSESSION OF THE UNITED STATES IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED BY THE LAWS THEREOF, OR TO
ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
THE SHARES ARE OFFERED ONLY TO ACCREDITED INVESTORS AND SOPHISTICATED
INVESTORS WHO MEET CERTAIN SUITABILITY STANDARDS DESCRIBED ELSEWHERE IN THIS
MEMORANDUM AND WHO ARE DEEMED CAPABLE OF PROTECTING THEMSELVES OR DEMANDING
THE TYPE OF INFORMATION FROM THE COMPANY THAT THE COMPANY WOULD HAVE BEEN
REQUIRED TO PROVIDE IF THE OFFER AND SALE OF THE SHARES HAD BEEN REGISTERED
WITH THE SECURITIES AND EXCHANGE COMMISSION. FAILURE OF ANY SUBSCRIBER TO
DILIGENTLY INVESTIGATE THE PROSPECTS OF AN INVESTMENT IN THE SHARES MAY BE
USED AS A DEFENSE BY THE COMPANY ALLEGING THE MISSTATEMENT OR OMISSION OF ANY
MATERIAL FACT IN THIS MEMORANDUM RELATED TO THE MATTERS COVERED HEREBY.
EACH SUBSCRIBER IS HEREBY GIVEN THE OPPORTUNITY TO ASK QUESTIONS OF AND
RECEIVE ANSWERS FROM THE DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY OR
ANY PERSON DULY AUTHORIZED IN WRITING TO ACT ON THEIR BEHALF CONCERNING THE
TERMS AND CONDITIONS OF THIS OFFERING AND TO OBTAIN SUCH ADDITIONAL
INFORMATION TO THE EXTENT THE COMPANY POSSESSES SUCH INFORMATION (OR CAN
ACQUIRE IT WITHOUT UNREASONABLE EFFORT AND EXPENSE) NECESSARY TO VERIFY THE
ACCURACY OF THE INFORMATION CONTAINED IN THIS MEMORANDUM. THE COMPANY HAS OR
WILL HAVE VARIOUS DOCUMENTS CONNECTED WITH ITS BUSINESS, ALL OF WHICH ARE
AVAILABLE TO ANY SUBSCRIBER. IF YOU HAVE ANY QUESTIONS WHATSOEVER REGARDING
THIS OFFERING, OR DESIRE ANY ADDITIONAL INFORMATION OR DOCUMENTS TO VERIFY OR
SUPPLEMENT THE INFORMATION CONTAINED IN THIS MEMORANDUM, PLEASE WRITE OR CALL
THE COMPANY AT THE ADDRESS AND TELEPHONE NUMBER SHOWN ON THE COVER PAGE OF
THE MEMORANDUM, OR ANY DIRECTOR, EXECUTIVE OFFICER, ACCOUNTANT OR ATTORNEY
WHOSE NAME, ADDRESS AND TELEPHONE NUMBER APPEAR BELOW UNDER THE CAPTION
"ADDITIONAL INFORMATION."
ADDITIONAL INFORMATION
For clarification of any information presented in this Memorandum or
answers to any questions you may have, please consult the directors, executive
officers, accountants, or attorneys for the Company listed below:
Randall Peterson Gerald M. Conder Nephi Bierwolf*
President and Director Attorney Crouch, Bierwolf, &
Chisholm
11602 Colchester Dr. 466 South 500 East 50 West Broadway,
Suite 1130
Sandy, Utah 84092 Salt Lake City, Utah Salt Lake City. Utah
84101
(801) 572-4724 (801) 359-8622 (801) 363-1175
*Accounting questions only
NOTICE TO RESIDENTS OF CERTAIN STATES
Subject to the availability of an exemption from registration, the
Company has made the initial determination to offer and sell the Shares
offered hereby in the States of Nevada (to no more than 25 persons), Colorado
(to no more than 25 persons) and Florida (to no more than 35 persons). Of
these three states, only the State of Colorado and Florida require any
specific notice to be inserted on offering materials related to securities
offered within their borders. The notices required by these states are:
COLORADO
THE FACT THAT THE SECURITIES SUBJECT TO THIS SUBSCRIPTION ARE BEING OFFERED BY
MEANS OF AN EXEMPTION FROM REGISTRATION DOES NOT MEAN THAT THE COLORADO
SECURITIES COMMISSIONER HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR GIVEN APPROVAL TO, THE SECURITIES BEING OFFERING
HEREBY.
FLORIDA
THESE SECURITIES HAVE NOT BEEN REGISTERED, APPROVED OR DISAPPROVED BY THE
STATE OF FLORIDA NOR HAS THE STATE OF FLORIDA PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. IN ADDITION, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES INVOLVED HEREIN INVOLVE
A HIGH DEGREE OF RISK. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF THIS STATE, BY REASON OF A SPECIFIC EXEMPTION THEREUNDER
RELATING TO THE LIMITED AVAILABILITY OF THIS OFFERING. THESE SECURITIES CANNOT
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF TO ANY PERSON OR ENTITY UNLESS
SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
FLORIDA, IF SUCH REGISTRATION IS REQUIRED.
NOTICE IS HEREBY GIVEN THAT IF SALES ARE MADE TO FIVE OR MORE PERSONS IN THE
STATE OF FLORIDA, ANY SALE MADE PURSUANT TO SUBSECTION 517.061(11) OF THE
FLORIDA SECURITIES ACT AND THE REGULATIONS THERETO SHALL BE VOIDABLE BY ANY
SUCH FLORIDA PURCHASER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF
CONSIDERATION IS MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER,
OR AN ESCROW AGENT, OR WITHIN THREE (3) DAYS AFTER AVAILABILITY OF THAT
PRIVILEGE IS COMMUNICATED TO SUCH FLORIDA PURCHASER, WHICHEVER OCCURS LATER.
NOTICE TO RESIDENTS OF OTHER STATES
In the event the Company determines to offer the Shares in any other
state of jurisdiction, and such state or jurisdiction requires a similar
notice to residents of such other state or jurisdiction, such notice shall be
inserted here.
TABLE OF CONTENTS
MEMORANDUM SUMMARY -1-
RISK FACTORS -2-
SELECTED FINANCIAL INFORMATION AS OF JANUARY 31, 1999 -8-
PROPOSED BUSINESS -9-
History and Organization -9-
General -9-
Principal Products: the Softwall System -9-
Market for the Company's Softwall System -14-
Distribution Methods of the Softwall System -16-
State of Any Publicly Announced New Product - the Softwall System -17-
Sources and Availability of Raw Materials and Principal Suppliers -17-
Dependence on a Few Major Customers -17-
Patents, Trademarks, Licenses, Franchises, Concessions,
Royalty Agreements -17-
Need for Government Approval of Principal Product or Service -18-
Effect of Existing Government Regulation on Business -19-
Research and Development -19-
Cost and Effects of Compliance with Environmental Laws -19-
Competitive Business Conditions -19-
Number of Employees - Full and Part -20-
Facilities -20-
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION -20-
Plan of Operation -20-
Results of Operation -20-
Liquidity -21-
SOURCES AND USES OF PROCEEDS -21-
MANAGEMENT-22-
Biographical Information.-22-
Executive Compensation. -23-
Familial Relationships-24-
Involvement in Other Corporations-24-
Involvement in Certain Legal Proceedings-24-
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.-24-
CERTAIN TRANSACTIONS-25-
DILUTION-25-
COMPARATIVE DATA-26-
THE OFFERING-27-
Determination of Offering Price-27-
General.-27-
Nature of the Offering-27-
Authorization For The Offering.-28-
Plan of Distribution-28-
How To Subscribe.-28-
Suitability Requirements-28-
Representations and Warranties of Subscribers-30-
Acceptance Guidelines of the Company -30-
Opportunity to Make Inquiries-31-
Restrictions on Transferability of Securities-31-
Escrow of Stock Subscription Funds-31-
SALES MATERIAL-31-
CAPITALIZATION -- DESCRIPTION OF SECURITIES.-31-
SHARES ELIGIBLE FOR A FUTURE SALE.-31-
MARKET PRICE AND DIVIDENDS ON THE COMPANY'S COMMONEQUITY AND
RELATED
STOCKHOLDER MATTERS-32-
Market Information-32-
Holders-32-
Dividends-32-
FIDUCIARY RESPONSIBILITY AND INDEMNIFICATION OF THE OFFICERS AND
DIRECTORS-32-
LEGAL MATTERS-33-
LEGAL PROCEEDINGS-34-
EXPERTS-34-
FINANCIAL STATEMENTS-34-
EXHIBITS-34-
MEMORANDUM SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere in this Memorandum.
Each prospective investor is urged to read this Memorandum in its entirety.
This Memorandum contains forward looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from
those anticipated in these forward looking statements as a result of certain
factors, including those set forth under "Risk Factors" and elsewhere in this
Memorandum.
THE COMPANY
The Company was formed under the laws of the State of Utah on October 5, 1998,
for the purpose of engaging in the research, development and manufacture of
mining equipment. The Company is authorized to issue up to 50,000,000 shares
of common stock with a par value of $0.001 per share. The Company maintains
its principal place of business at 11602 Colchester Drive, Sandy, Utah, 84092
and the Company's telephone number is (801) 572-4724.
THE OFFERING
The Company is offering up to 1,000,000 Shares of Common Stock at $0.15 per
share for maximum gross proceeds of $150,000 and a minimum of 200,000 shares
for minimum gross proceeds of $30,000. The Company has made a provision to
escrow up to $30,000 in Central Bank of American Fork, Utah, with all funds
being escrowed on the next business day after receipt, if practicable.
However, after $30,000 dollars is reached, no additional provision has been
made for the escrow of funds and the Company will be in a position to utilize
the funds for the proposed business purpose anytime after the close of the
minimum offering amount of $30,000.
MINIMUM OFFERING - 200,000 Shares - $30,000
MAXIMUM OFFERING - 1,000,000 Shares - $150,000
The price and amount of shares offered by the Company has been established
arbitrarily and bears
no relationship to its asset value, book value, net worth, or any other
established criteria of value.
THE COMPANY'S BUSINESS
The Company was formed for the purpose of research, development, manufacture
and marketing of mining and excavation equipment. The Company's President, Mr.
Randall Peterson (hereinafter referred to as "Peterson"), is the inventor of
certain mining technology/methods which are the subject of a patent pending,
and he has granted the rights to develop and exploit such technology to the
Company. His rights, however, are subject to interest by a third party, IMC
Agrico Company, a Delaware partnership and an international producer of
phosphate fertilizer products (hereinafter referred to as "IMCA"). Peterson
has a Letter of Intent from IMCA whereby IMCA has agreed to grant him an
exclusive license to develop and market his invention in "non-phosphate"
areas. Peterson, pursuant to his agreement with the Company, will assign such
license to the Company. Peterson's invention is a novel device and method for
mining slurryable, shallow mineral deposits with earthy overburden in a
longwall fashion. The entire device and method as developed by Peterson shall
hereinafter be called the "Softwall System"; the mining equipment associated
therewith shall be called the Softwall Equipment". The term "softwall" is a
new term applicable to this type of mining. See the numerous headings under
"BUSINESS" for a full discussion of the Softwall System. Specifically note
the discussion under the heading "Patents, Trademarks, Licenses, Franchises,
Concessions, Royalty Agreements" for a full discussion on the Company's rights
to exploit the Softwall System.
The Softwall System is a composite of the following subsystems: Softwall Face
Support Modules; Winch Anchor Unit; Portable Electric Power System; Portable
Control Center; Hydraulic System; Mine Water Pressure System; and the Slurry
Collection, Pumping and Injection System. The proceeds of this offering will
be utilized to complete only the first stage of the Company's business plan
that is to construct, develop and market a prototype Softwall System which can
be tested in the field. The first Softwall Machine prototype will be
specifically manufactured for use by mining companies which already have
suitable electric, hydraulic and water slurry systems with their current
mining methods, or which have the capital necessary to purchase those systems.
Initially, therefore, the Company will manufacture modules only. The modules
will be sold or leased to end-user excavation or mining companies which will
complete the system with electrical, hydraulic and water/slurry systems.
These end-user companies will be licensed to use such equipment and technology
and will pay the Company a production royalty for the rights to use it. (For
a complete discussion on the Company's prototype, see "BUSINESS, The
Softwall System -- Prototype.")
RISK FACTORS
INVESTMENT IN THE COMPANY SHOULD BE CONSIDERED HIGHLY SPECULATIVE. NO
INVESTOR SHOULD PARTICIPATE IN THE OFFERING UNLESS SUCH INVESTOR CAN AFFORD A
COMPLETE LOSS OF HIS OR HER ENTIRE INVESTMENT. IT IS LIKELY THAT AN ACTIVE
MARKET FOR THE COMPANY'S SHARES WILL NOT DEVELOP IN THE FORESEEABLE FUTURE.
ALSO, THE COMPANY MAY REQUIRE ADDITIONAL CAPITAL. (SEE "RISK FACTORS".)
TRANSFER AGENT
The Company's transfer agent is Colonial Stock Transfer Company, 455 East 400
South, Suite 100, Salt Lake City, Utah, 84111. Telephone: (801) 355-5740.
RISK FACTORS
A purchase of the Shares issued by the Company involves various risk
factors, including, but not limited to, those set forth below. Prospective
Investors should read the entire Memorandum and consider, among other things,
the following risk factors before making a decision to purchase the stock.
PROSPECTIVE INVESTORS MAY NOT RELY UPON THE LIST OF RISKS SET FORTH
BELOW AS COMPLETE.
1. NO OPERATING HISTORY/START-UP COMPANY. The Company has been
operational only since October 5, 1998. The Company has conducted only
organizational business and has no operating history from which an evaluation
of its business can be made. The likelihood of success must be considered in
view of all of the risks, expenses and delays inherent in the commencing of a
new business including, but not limited to, slower than forecasted marketing
activities, competition with other better capitalized and more experienced
companies providing traditional equipment, lack of market assimilation or the
Company's product, failure of the Company's product to perform as forecasted,
and other unseen factors. There can be no assurance that the Company's
business as described herein will prove successful or operate profitably.
2. DEVELOPMENT STAGE COMPANY; UNCERTAINTY OF PRODUCT DEVELOPMENT; LIMITED
RELEVANT OPERATING HISTORY. The Company's long term viability, profitability
and growth will depend on successful commercialization of products, methods
and technologies based upon the patent pending technology of the Softwall
System as currently developed, as well as ongoing research and product
development. Further, as a development stage company, the Company has no
relevant operating history upon which an evaluations of its prospects can be
made. Such prospects must be considered in light of the risks, expenses and
difficulties frequently encountered in establishing a new business.
Significant challenges are often encountered in shifting from development to
commercialization of new products.
3. SPECULATIVE INVESTMENT. The Softwall System is based upon innovative
concepts which have not yet been tested in practice nor in the marketplace.
There has been no mass commercial manufacturing or marketing of the Softwall
System and engineering is still in the initial stages. There can be no
assurance that such system will function as intended, that it will be readily
accepted in the market, that it can be produced at a commercially reasonable
price or that it will function in a manner and at a cost which is superior to
existing technologies and mining systems. An investment in the Company should
be looked at as a research and development investment with all the risks
inherent in such type of investment. Many research and development projects
do not result in profits to investors and, in fact, many result in a total
loss to investors. No person should invest in the Company unless such a person
can afford the entire loss of his or her investment.
4. LACK OF LONG TERM MARKETING PLAN, MANUFACTURING, SALES AND
DISTRIBUTION
CAPABILITIES. Commercial acceptance of the Company's Softwall System will
require the Company to, among other things, successfully develop a long-term
marketing plan, establish and maintain significant sales and distribution
channels, and hire and retain key marketing and sales personnel. A long-term
marketing plan is not currently in effect and likely will not be developed
until the initial marketing efforts are undertaken and the Softwall System is
tested in the market place. Currently, there are not sufficient sales and
marketing personnel to adequately support extensive sales of its products, nor
have manufacturing, sales and distribution relationships been established with
any third parties. The Company will be entirely dependent on Randall
Peterson, its President, for initial marketing of its Softwall Systems.
Peterson will have little or no assistance. If initial marketing of Softwall
System modules and on-site usage proves successful, the Company intends to
raise additional capital to implement a long-term sales and marketing plan.
There can be no assurance that the Company will be able to recruit the
required personnel or successfully establish and maintain significant sales
and distribution channels to market the Softwall System.
5. PROPRIETARY RIGHTS/PATENT PROTECTION The Company intends to rely upon
patent protection and a contemplated license agreement to protect its
proprietary rights. The patent on the Softwall System is pending and there
can be no assurance that such patent will issue from the pending application,
or if a patent does issue, that the claims allowed will be sufficiently broad
to protect the Softwall System. In addition, there can be no assurance that
any patent(s) issued will not be challenged, invalidated or circumvented, or
that the right granted thereunder will provide proprietary protection to the
Company. Furthermore, there can be no assurance that a competitor will not
independently develop or patent a system that is substantially equivalent or
superior to the Softwall System. Even assuming that the Randall Peterson is
issued a patent on the Softwall System, he has agreed to assign the patent to
IMCA. IMCA has agreed to grant an exclusive license to Peterson to exploit
the same. The Company will, therefore, be dependent upon IMCA to defend any
violation or infringement of the patent. There can be no assurance that IMCA
will defend such an infringement, or, if it does defend such violation and/or
infringement, that it will do so with sufficient vigor to prevent a negative
effect on the Company. In addition, the Company must rely on the execution of
a final definitive exclusive license agreement between Peterson and IMCA and
the assignment of the same to the Company to protect its exclusive rights to
develop and market the Softwall System. Although Peterson has granted his
rights to the Company, such rights have not been fully defined and no
exclusive license agreement has as of yet been consummated with IMCA. (See
"Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements".)
6. FOREIGN PATENT ISSUES. Patent applications for the Softwall System
have been filed in the United States and internationally in accordance with
the international PCT treaty. There can be no assurance, however, that any US
or foreign patent will ever issue. The failure of the Company to obtain
patent protection in foreign countries could have an adverse effect on the
Company's prospects. The possibility arises that without patent protection,
numerous competitors could use the Softwall System technology/methodology in
competing products. Such competitors could have the financial resources
necessary to bring products to market earlier than the Company.
7. NO FORMAL LICENSE AGREEMENT IN EFFECT. The Company's business purpose
is based upon the grant of certain rights to exploit the Softwall System to
the Company by the Company's President, Mr. Randall Peterson. Peterson is a
party to a Letter of Intent with IMCA whereby he has agreed to assign the
patent to IMCA and IMCA has agreed to grant an exclusive license to Peterson
for the development, manufacture, marketing and distribution of the Softwall
System to Peterson, not to include phosphate applications. The Letter of
Intent contemplates that the parties will enter into a formal Exclusive
License Agreement setting forth the various terms and conditions of the
license. Peterson will assign such license agreement to the Company based on
the rights heretofore granted to the Company by Peterson. Although Peterson
and IMCA have certain understandings, have entered into preliminary
negotiations, and have executed a Letter of Intent regarding the contemplated
transaction, no final license agreement has been consummated. If a final
license agreement is not entered into, or if Peterson fails to assign the same
to the Company, the Company could fail to acquire the license to develop and
market the Softwall System. The Company would then be in a situation where it
would be forced to take legal action against one of those parties for breach
of contract. Such litigation would be extremely costly and is likely the
Company would not have sufficient funds to effectively pursue such a suit.
There is no guarantee, therefore, that the Company would be successful in a
breach of contract suit and the Company's business could fail entirely. If the
Company chooses to pursue the development and marketing of the Softwall System
without entering into an agreement in effect between Peterson and IMCA, IMCA
could elect to take legal action against the Company alleging that the right
to exploit the same belongs to IMCA. Furthermore, there is always the
possibility that the company Peterson was employed by at the time he performed
the consulting services for IMCA could assert an interest in the Softwall
System. Any dispute over the rights to utilize the Softwall System could
cause a complete failure of the Company's business purpose and the loss of an
investor's entire investment.
8. NEGATIVE IMPACT OF CERTAIN POTENTIAL LIMITATIONS OF LICENSE
AGREEMENT.
When and if a definitive exclusive license agreement is executed between
Peterson and IMCA, the phosphate industry application will not be included.
Such rights will be retained by IMCA. Although the Company believes that the
Softwall System will ultimately have a multitude of applications both in the
mining industry and elsewhere, phosphate mining is an ideal application for
the Softwall System and one of the applications foremost in the inventor's
mind while designing the system. Because IMCA is a corporation with large
name recognition in the mining industry, its retention of the phosphate rights
could prove beneficial to the Company provided it actually markets the same to
that market segment. However, IMCA has indicated that it has no intent of
marketing the same. The Company, therefore, has lost a market segment which
may have proven to be one of the easier segments to penetrate initially.
9. PRODUCT LIABILITY. The Company believes that the Softwall System will
perform safely on particular mining sites when properly installed and
utilized. However, there is always the possibility of product liability
claims in the use of the Softwall Mining Process. No attempt has been made as
of the date hereof to obtain product liability insurance and there can be no
assurance that product liability insurance can be obtained or if it is
available that the Company can afford to pay for such insurance. A product
liability claim against any new company with limited capital could result in a
significant loss.
10. NEED FOR THE PROCEEDS FROM THIS OFFERING. The Company has a need for
the proceeds from this offering to provide capital for its business purpose.
While Management believes that the net maximum proceeds from the offering will
be sufficient to meet the Company's cash requirements for a least 12 months
and to manufacture and market a prototype, there can be no assurance of the
same. In addition, if only the minimum proceeds are received, such proceeds
will be insufficient to carry out the Company's operations for the next 12
months. The Company may be required to obtain additional financing especially
if only minimum proceeds are realized, or, if maximum proceeds are realized
but it wishes to expand its business. If the Company is forced to seek
additional funding, there is no assurance that it will be successful in doing
so. An investor's interest may be diluted if additional funding is needed. In
addition, the Company is entitled to close the offering at any time once the
minimum proceeds are received.
11. USE OF PROCEEDS NOT SPECIFIC. The proceeds of this offering have been
allocated only generally, and will be allocated to producing a prototype of
the Softwall Equipment, working capital and/or administrative expenses.
Accordingly, investors will entrust their funds with Management in whose
judgment investors must depend on with only limited information about
Management's ability to successfully manage a business.
12. MANAGEMENT - POTENTIAL CONFLICTS OF INTEREST. Each of the officers
and directors have other employment and anticipate utilizing such time as is
necessary to effectuate the Company's business. A potential for conflicts of
interest exists. Should a conflict of interest arise, there is no guarantee
that such conflict will be resolved in favor of the Company. In addition,
Mr. Randall Peterson, the inventor of the Softwall System, and an officer and
director of the Company, invented the same while performing services as a
consultant to IMCA. Although Peterson owns the technology and is the patent
applicant, IMCA has certain interests in the Softwall Technology and he has
agreed to assign the patent, when and if issued, to IMCA in exchange for the
grant of the exclusive licence to market the Softwall System which license
will be assigned to the Company. Peterson has not been paid for his invention
and continues to perform consulting services for IMCA. Because of these
various relationships, Peterson could face potential issues of conflicts of
interest especially if a dispute over the rights to the Softwall System
occurs. There can be no assurance that any conflict of interest will be
resolved in favor of the Company.
13. DEPENDENCE ON RANDALL PETERSON. The Company will be primarily
dependent on the active participation of Mr. Randall Peterson, the President
, CEO, and a Director of the Company, as the developer of the Softwall
System. The potential for the Company's growth and future success is
dependent upon Peterson's continued, active involvement in the Company. The
Company will rely on his expertise in the mining industry, his ability to
manage the Company's business operations, his abilities for continued
research and development of the Softwall Systems, and for the production and
demonstration of the initial prototype, as well as production and initial
marketing of Softwall Systems modules. It will also rely on Peterson's contact
s and reputation in the mining industry to help introduce the Company's
product. The Company will be almost entirely dependent on Peterson's expertise
in the field, his ability to see the completion of the prototypes, the sale or
lease of the same to the appropriate mining companies, and his ability to
solve any potential problems and/or to customize the equipment for use with
existing systems. The failure of Peterson to successfully complete the
Company's business objectives, especially the initial manufacture and
placement of the module equipment, could result in a total loss for the
Company and any investor in this offering.
14. COMPETITION BY THE CORPORATION WITH OTHER AFFILIATED
CORPORATIONS
Management may engage for its own account, or for the account of others,
including other public or private entities, in other business ventures, and
neither the Company nor its Shareholders shall be entitled to any interest
therein. Affiliates of the Company are involved with other entities and
Management may form other entities in the future, some of which may have the
same investment objectives as the Company. The Company is highly dependent on
Mr. Randall Peterson's services and such potential competition with affiliated
corporations may create a situation which is adverse to the Company.
15. CONTROL OF THE COMPANY. The corporation specifically prohibits
cumulative voting. The three current shareholders will own approximately 89%
of the outstanding shares of common stock in the event only the minimum
amount of Shares are sold, and approximately 62% of the outstanding shares
if the maximum number of shares are sold. In addition, the Board of Directors
is empowered to authorize the issuance of additional shares to Peterson in
lieu of cash for services rendered, and or as additional compensation for the
assignment of the exclusive license agreement, which could alter his
percentage control of the Company. The initial shareholders will maintain
control even if the maximum number of Shares are sold. Because the Board of
Directors can be elected by a majority of the Company's outstanding shares,
investors in this offering will have little say in the election of directors.
In addition, of the current shares issued and outstanding, the majority are
owned by Peterson, which gives Peterson effective control of the Company.
Peterson will own 57% of the Company even if the maximum Shares are sold.
16. LIMITED DIVERSIFICATION OF BUSINESS. The Company's business will not
be diversified in that it will use substantially all of the proceeds from this
offering to invest in the manufacture and marketing of a Softwall System
prototype. Therefore, the Company will be unable to diversify its business
activities which creates the possibility of a total loss to the Company and
its shareholders should the manufacture and marketing of the prototype
equipment prove unprofitable.
17. BUSINESS DEVELOPMENT AND EXPANSION RISKS. The Company does intend to
expand its business, although the same will be dependent on the successful
production, sale and use of Softwall Equipment modules. Expansion, however,
could adversely affect the Company's ability to pay a dividend.
18. OPERATING HAZARDS, UNINSURED RISKS, LIABILITIES. The Company will
carry such insurance policies as normal and usual in the business. There is
no guarantee, however, that the Company will be able to obtain insurance
policies that will cover all possible liabilities.
19. NO ECONOMIC FEASIBILITY STUDY MADE. Although Peterson has
performed a preliminary economic evaluation on the Softwall System for IMCA,
and has made certain hypothetical analyses by applying a model system to a
model ore body, a formal study of the economics potential of the business the
Company intends to pursue has not been made, nor has the Company engaged a
third party to do so, and, therefore, the Company can give no assurance that
it will be able to produce any earnings from the sale of Softwall Equipment
modules.
20. COMPETITION The Company's proposed business will center around a
highly competitive field which is already dominated by other similar companies
most of which have significantly greater name recognition, expertise in the
business, assets, resources, experiences, financial reserves, research and
development talent, and managerial talent than the Company. Although the
Company's technology is unique in the field, it will be competing for market
share with known technology and methodology in an industry which is slow to
change and accept new methodology. Although the Company will be developing and
marketing a mining system which it believes to have certain competitive
advantages over other systems, there is no assurance that the Company will be
able to produce and market the product successfully, that the system will
function on site successfully, or that it will be able to gain market
acceptance. There is no assurance that another company will not develop
similar or better technology. Although Peterson has applied for patent
protection in both the United States and internationally, there can be no
assurance that such patents will be issued or that if issued, will adequately
protect the Company's product. In addition, the Company will be competing
with existing methodology which has been utilized for years and does not
require the payment of production royalty such as the Company will require.
The Company will, therefore, will also suffer an additional handicap when
competing for market share.
21. ARBITRARY OFFERING PRICE. Prior to the offering being made hereby
there has been no market for the Company's common stock. The offering price
of the stock has been arbitrarily determined by the Company and bears no
relationship to assets, book value, net worth, earnings, actual results of
operations, or other established investment criteria. Among the factors
considered in determining such offering price were the Company's current
financial condition, the degree of control which the current shareholders
desire to retain, and an evaluation of the prospects for the Company's
growth. The offering price set forth on the cover page of this document
should not be considered an indication of the actual value of the common stock
of the Company.
22. DILUTION. A purchaser of the Shares offered hereby will suffer an
immediate dilution of the value of his shares in the amount of $0.09 per share
if the maximum number of shares are sold, and $0.13 per share providing the
minimum number of shares are sold. If the maximum number of shares are sold,
it would mean that investors own approximately 38% of the outstanding shares
of the Company although the price paid by investors in the offering is equal
to approximately 92% of the purchase price of the outstanding shares. If the
minimum number of Shares are sold, investors in the offering will own
approximately 11% of the Company's outstanding shares although new investors
will have provided approximately 69% of the purchase price of the outstanding
shares of the Company. A total of 1,625,000 shares have been sold to the
Company's organizers since inception at an average aggregate price of $.008
per share or a total of $13,200. The current/initial shareholders of the
Company will show an increase in the book value of his shares in the amount of
approximately $.05 per share if a maximum number of shares are sold and
approximately $0.01 per share in the event the minimum number of shares are
sold. Accordingly a proportionately greater risk of loss will be born by
investors purchasing shares in this offering who will contribute most of the
Company's capital, than by the three initial shareholders.
23. NO MARKET; LIMITED TRANSFERABILITY OF SHARES No public or other
market for the Shares exists and it is highly unlikely that one will develop
in the future. Because the Shares are subject to certain restrictions on their
transfer and because there is a lack of a market for the Shares, Shareholders
should purchase the Shares only as a long term investment, as they may not be
able to liquidate their investment in the Shares in the event of an emergency
or for some other reason. Although the Company does not anticipate that it
will establish a market for its common stock, it reserves the right to do so,
which could include an offering conducted through a registration statement or
pursuant to an applicable exemption or the registration of one or more classes
of its outstanding securities, or both. The recent adoption of new listing
requirements by the National Association of Securities Dealers, Inc. may
have a substantial impact on the Company's ability to obtain a listing on the
Over-the-Counter NASD Bulletin Board.
24. NO UNDER WRITING AGREEMENT. The Company will sell the Shares offered
hereunder on a best efforts basis through the efforts of certain individuals
including Peterson, the President and Chief Executive Officer of Company.
These individuals are all officers, directors and/or sales agents for the
Company and will act for the Company pursuant to Sales Agent Agreements with
the Company. The Company may experience difficulty in completing the maximum
sale of the Shares and the Company may not be able to complete its' business
plan as successfully as it might if a maximum number of Shares are sold. No
commitment exists by anyone to purchase all or a portion of the Shares. The
Company's officers and directors may purchase some of the shares offered
hereby and may do so for the purpose of assisting the Company in closing the
offering. Such shares would be purchased for investment purposes only and not
with a view to distribution. A purchase of any of Shares offered hereby would
give officer(s) and director(s) a greater control of the Company. (See
"Plan of Distribution")
25. ONLY SIX MONTHS TO COMPLETE THE OFFERING. The Company has only six
(6) months in which to sell the minimum number of shares offered pursuant to
this offering although the term may be extended for six (6) additional
months, and will close the offering in any event at the expiration of 12
months from the date of this offering, which may not be sufficient for the
Company to sell the minimum shares offered pursuant hereto.
26. POTENTIAL IMPACT OF PROPOSED RULE CHANGES BY THE SECURITIES AND
EXCHANGE COMMISSION. Proposed changes to certain exemptions which the Company
intends to rely upon in the conduct of the within offering, that is proposed
changes to Rule 504 of Regulation D, may have a substantial negative impact on
the Company's ability to raise funds in this offering. If such rule changes
are effected, the Company may not be able to rely upon the exemption as it is
currently in effect, and may either be required to close its offering prior to
the six month completion date, or amend the offering to meet the new
provisions of Rule 504, if adopted. If the Company is required to close the
offering due to amendments to current rules, the Company may fail to realize
even minimum proceeds from the offering.
27. POTENTIAL FOR OTHER SECURITIES OFFERINGS. Investors in this offering
should beware that the Company reserves the right to make additional offerings
of its securities, either debt or equity, pursuant to various registration
provisions of state and federal securities laws, or exemptions therefrom. If
the Company offered and sold additional shares of its common stock, an
investor's interest may be diluted.
28. SECURITIES LAW LIABILITIES. Management of the Corporation may in the
future organize offerings similar to the offering being made hereby. Such
offerings may not be registered or qualified under federal or state
securities laws. There is no assurance that Management and its affiliates may
not incur liabilities in the future as a result of such activities, in which
event, they may not be able to carry out the management functions assumed
with respect to the Company and the capital of the Company might also be
adversely affected.
29. NO CASH DIVIDENDS. At the present time, the Company does not
anticipate paying any cash dividends on its common stock in the foreseeable
future. Future cash dividends will depend on earnings, if any, of the Company
and its financial requirements, among other factors. Even if the Company does
ultimately operate at a profitable level, it is likely that it will retain its
earnings. Investors who anticipate the need for immediate income from their
investment should refrain from a purchase of the within Shares.
30. CLASSIFICATION OF COMMON STOCK AS PENNY STOCK The Securities and
Exchange Commission has adopted rules that regulate broker dealer practices in
connection with penny stocks. Penny stock are generally equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided current
price and volume information with respect to transactions in such securities
is provided by the exchange system.) The penny stock rule requires that a
broker/dealer, prior to a transaction in a penny stock not otherwise exempt
under the rules, to deliver a standardized risk disclosure document prepared
by the SEC that provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker dealer must also provide
the customer with bid and offer quotations for the penny stock, the
compensation to the broker dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held
in the customer account. In addition, the penny stock rules require that
prior to a transaction in a penny stock not otherwise exempt from such rules,
the broker dealer must make a special written determination that a penny stock
is a suitable investment for the purchase and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for
a stock that becomes subject to the penny stock rules. If a market is
effected in the Company's common shares, the shares will likely be subject to
the penny stock rules, and accordingly, investors in this offering may find it
difficult to sell their shares if at all.
31. POTENTIAL FUTURE SALES PURSUANT TO RULE 144 All of the shares of stock
which are presently issued and outstanding, 1,625,000 shares, are "restricted
securities" as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended. In general, under Rule 144, a person who
has satisfied a one year holding period may sell within any three month period
a number of shares which does not exceed the greater of 1% of the then issued
and outstanding shares of common stock of the average weekly volume during the
four calendar weeks prior to such sale. Rule 144 permits the sale of shares
without any quantity limitation by a person who is not an affiliate of the
Company who has beneficially owned the shares for a minimum of two years.
Therefore, the possible sale of these restricted shares may, in the future,
dilute an investor's percentage of free-trading shares and may have a
depressive effect on the price of the Company's common stock in the
over-the-counter market, if there is a market. All 1,625,000 shares presently
issued were authorized for issuance in October 5, 1998 although not issued
until January of 1999. For purposes of Rule 144, the holding period may be
considered to be October 5, 1998. The initial shareholders may begin selling
their restricted shares pursuant to Rule 144 as early as October 5, 1999. (See
"Present Shareholders")
*Note: In addition to the above risks, businesses are often subject to
risks not foreseen or fully appreciated by management. In reviewing this
Disclosure Document potential investors should keep in mind other possible
risks that could be important to the specific investor.
SELECTED FINANCIAL INFORMATION AS OF JANUARY 31, 1999
The Company is a start up company and has no operating history. The
Company was only recently formed and has no revenues or earnings from
operations. There is no assurance it will ever have material revenues or that
its operations will be profitable. (See the Financial Statements attached
hereto.)
Total Assets$ 13,150
Total Liabilities$ 0
Shareholders Equity$ 13,150
Net Tangible Book Value$ 13,150
Net Tangible Book Value per share$ 0.008
PROPOSED BUSINESS
History and Organization
The Company was formed under the laws of the State of Utah on October 5,
1998, for the purpose of engaging in the research, development and
manufacture of mining equipment. The Company is authorized to issue up to
50,000,000 shares of common stock with a par value of $0.001 per share. The
Company maintains its principal place of business at 11602 Colchester Drive,
Sandy, Utah, 84092 and the Company's telephone number is (801) 572-4724.
One of the express reasons for the founding of the Company is to develop and
market the Softwall System. The Softwall System was invented by Randall
Peterson, an officer and director of the Company, to adapt the methods of
longwall mining to the conditions found in shallow, soft ore deposits such as
those found in the phosphatic clays of North Central Florida. Peterson
invented the system while acting as a consultant for IMC-Agrico Company's
Technology Development Group in Mulberry, Florida and has a patent pending on
the system. He has granted the rights to exploit the Softwall System to the
Company, although the extent of Peterson's rights to the system are subject to
certain restrictions. Pursuant to a Letter of Intent, dated January ??, 1999,
Peterson has agreed to assign the patent to IMCA conditioned on the
consummation of an exclusive license agreement between IMCA and Peterson. In
the Letter of Intent IMCA agreed to license the rights to use of the system to
Peterson on an exclusive basis, subject to certain conditions and
restrictions to Peterson. One of the restrictions will be that Peterson will
not have the right to use the Softwall System in the phosphate industry.
Peterson will, pursuant to his assignment of is rights to the Softwall System
to the Company, assign the Company the license when consummated. For a full
discussion on the Letter of Intent, and contemplated license agreement with
IMCA, see "Patents, Trademarks, Licenses, Franchises, Concessions, Royalty
Agreements ."
General
The Company has developed a two phase business plan in connection with
the licensing of the rights to the Softwall System. Phase One will be to
build module shells with all the fabricated mechanical parts to demonstrate
how the equipment works. These modules will be marketed to mining companies
who will install the operating systems with their current mining methods
utilizing their own electrical, hydraulic, and water slurry systems. The
purpose of Phase One will be to (1) build and test the system, and (2)
provide a system that can be used in combination with existing systems. Phase
Two of the business plan is to make the system fully functional by including
all electrical, hydraulic, water, slurry and control systems. Phase Two of
the business plan will only be implemented upon the successful completion of
Phase One although preliminary engineering designs have been completed. The
proceeds of this offering will be utilized to initiate Phase One by building
10 - 20 modules of the Softwall Mining Face (equal to 50 - 100 feet of
softwall face) which will be built on smaller scale than would be used in
most actual situations to minimize costs and test the same. The primary
purpose of the prototype will be demonstrate how the concept works and provide
an operable machine when fitted with existing systems. Ultimately, the
Company intends to build and assemble Softwall Systems to sell to the mining
industry and other potential users in real estate development and
construction, environmental clean-up, waste disposal and other suitable
applications that may arise. The prototype will be a small scale version which
would be used for clean up and other uses where low production volumes can be
tolerated. If the Company succeeds in the production of its prototype and the
marketing of its Softwall Systems modules, it hopes to generate revenues both
from the proceeds of such sales, and from production royalties generated from
the use of its Softwall Equipment, as well as by sub-licensing the rights to
market the Softwall System in specific territories or to specific industries.
Principal Products: the Softwall System
Background Softwall is a new extraction method combining hydraulic
mining and longwall mining principles. It has several applications both in
mining and in other industries involving extraction or deposition of bulk
materials and earth. Softwall is specifically intended for use in shallow,
soft or earthy type ground conditions. In mining, these types of deposits are
conventionally extracted with mobile surface equipment using batch stripping
methods. Softwall is a different surface extraction method in that it is
underground and extracts only ore and eliminates most of the need for removing
or stripping overburden which is the major cost for most strip mines. The
Softwall System will not work for hard rock mining nor will it work for deep
mining. Existing systems are available for those applications and the Company
does not intend to compete with them. The Company believes that the prospects
for this type of mining are encouraging. Adaption of longwall mining methods
to satisfy the conditions of soft and shallow mining environments promises to
extend theses highly productive and cost effective methods into new ore
bodies. Softwall offers the potential for increased profits by mining ore
with less surface disturbance, lower operating costs, reduced reclamation, and
an environmentally suitable means of tailings disposal and tailings clean-up.
Although the method was originally invented for phosphatic clay ore in from
beds in North Central Florida, it is also suited for a number of other
minerals including, placers, disseminated deposits in sands and soft rocks,
bauxite, soft coals and lignite deposits, and other deposits where overburden
will subside readily and where the ore can be hydraulically broken and
slurried. The design and implementation of the test mining contemplated by
the Company to initiate its business plan is needed to fully delineate the
operating methods and equipment design of the Softwall System.
Composition of Softwall System. The Softwall System * is a composite of
the following subsystems:
•Softwall Face Support Modules - consisting of the fabricated shell,
support and mechanical components of the Face Sluicing Chamber ("FSC") and
Rear Bearing Support ("RBS") units, rolling support mechanism, the hydraulic
plunging cylinder, the end cap and constant tension rope, and the vertical rotat
ion cylinder.
•Winch Anchor Unit - consisting of a mobile platform with winch mount
and with hydraulic stabilization cylinders for anchoring the unit between the
trench sides.
•Portable Electrical Power System - consisting of power center
transformer, starters and controls for electric motors for hydraulic pumping
units and for mining water and other electrical components.
•Portable Control Center - consisting of computer, electronics, wiring,
and gauges to monitor and control position and state of equipment.
•Hydraulic System - consisting of pumps, control valves, and hoses to
power the cylinders in the softwall modules and the winch anchor unit
equipment and recovery water system. The mechanical components are actuated
with hydraulic cylinders or rams. The cylinders are fed high pressure
hydraulic fluids from the hydraulic pumping unit.
•Mine Water Pressure System - consisting of trailer mounted centrifugal
water pump pulled by a water truck and powered by electrical motor. This
system also includes hoses, fittings and nozzles to provide water to
injection points located inside the FSC. The prototype softwall system will
produce a design slurry of solids and water. This will require the water
system deliver water to each of the sluicing nozzles in the FSC chamber at
specified psi.
•Slurry Collection, Pumping and Injection System - consisting of slurry
pump, hydraulic motor and slurry collection vessel. This system contains all
hoses, valves, and fittings required to connect the pump with parallel exit
ports located in the rear of the softwall module. The prototype system is
designed to dispose of all material extracted and is done through injection
behind the RBS unit. This is precisely the way the machine would be used in
insitu soil washing. In mining, where the prototype would be used to recover
minerals for processing, only the process tailings would be injected. Once
slurry is extruded from the mining face at the open ends of the FSC it is fed
to the slurry pump. The slurry pump feeds a common hose line connected to
the injection ports located at the rear and bottom of the RBS. Slurry is
injected underground, behind the RBS unit through parallel port openings
fitted with check valves.
* The prototype Softwall System which will be built with the
proceeds from this offering will consist of only Softwall Support Face
Modules; existing systems of the end user will be adapted to work with the
modules.
Softwall System - Bench Scale Model. As of the date hereof, a bench
scale model of the Softwall System is currently being manufactured by Brigham
Young University in Provo, Utah ("BYU"). The construction of the bench scale
model began as an academic exercise in September of 1998 as a result of the
efforts of Peterson and contributions from IMCA. The bench scale model will
be sufficient for certain development tests and will provide a CAD design of
the system. The bench test model is strictly for testing and demonstration
purposes and is not considered a prototype.
The Softwall System Prototype- The initial prototype Softwall System
which the Company intends to manufacture and market will not include
electronic, hydraulic and slurry systems, but will be built to be utilized in
conjunction with such systems either specified or existing. For a diagram of
the "Softwall System Prototype", see Exhibit "E".
In order to accomplish the building of a Softwall System prototype, the
Company will make an effort to reduce costs associated with building and
operation of the same by reducing the scale and function of the initial
prototype. In order to keep costs at a minimum, the initial prototype being
constructed and tested through proceeds of this offering, will be limited to
10 - 20 modules or 50 -100 feet in total length. The softwall face assembly
will consist of 5' modules. The prototype will also be kept at a minimum 2'
cutting height. This will allow the demonstration of the prototype without
the full capital outlay required for a longer/taller face. The prototype
equipment, therefore, will be purposefully smaller in height than a full scale
model to minimize manufacturing costs. The actual height of a full scale
model will depend on the specific geometry of the deposit or application. The
Company recognizes that the each deposit will likely warrant suitable
customization. The prototype's primary purpose is to demonstrate how the
concept works and prove a machine that will operate when fitted with existing
systems. Initially, therefore, the Company believes that the size of the
machine is less important than the function.
The number of modules has been limited to between ten and twenty 5' wide
modules to reduce costs. At a total assembled length of 100', the prototype
will be capable of sustainable production levels and operational study to
gather data for extrapolation to larger scale. Test mining with the of the
prototype system will be utilized to address elements of technical uncertainty
in situ as well as induced hydraulic factors having to do with slumping and
slurry mechanics of hydration as well as sluicing control within the face
sluicing chamber
The prototype will be a useful piece of equipment in its own right. It
will be capable of excavating a rectangular cross section 2-ft. high by 50 to
100 ft. wide, and will be capable of backfilling the same void. Thus, it
could be used to install linings beneath the surface of the ground to protect
water systems or to prepare areas for leaching or to accommodate waste
disposal. It can also be used for reworking tailings or for mining
applications where production requirements are low. Its multiple lift
capability enables it to be used to extract thick deposits as well as thin
ones.
If the prototype is successfully built and tested with positive results,
the Company intends to continue with Phase One of its business plan by
marketing the prototype modules to end-users who will utilize their own
electrical, hydraulic and slurry systems with the Company's system or to
companies which would purchase such systems. The Company will customize the
same to the type of deposit. The Company will likely required additional
funding once it reaches this stage.
Estimated Costs of the Prototype - The estimated cost for manufacturing a
Softwall System prototype with 100' of softwall mining face are as follows.
Steel fabrication is estimated on the basis of design weight using $1.20 per
pound of fabricated steel. This is 20% higher cost than is currently
available according to bids received by the Company. The cost estimates are
comprised of the major identifiable machinery elements and an estimate of
unidentified miscellaneous items. The fabrication costs of the FSC and the
RBS are primarily dependent on the weight of the steel required as the
fabrication itself is not complex. This value is calculated on assumed values
for canopy diameter, fore pole length, plate thickness, and face length.
Total fabrication costs are calculated by applying the assumed unit cost of
fabrication to the FSC and RBS weights. Additional costs were estimated for
fabrication of the advance mechanism for each RBS unit. The majority of the
proceeds generated from this offering will be utilized for this purpose. If
the Company is only able to raise minimum proceeds of $30,000, it will build
only 50 feet of softwall for approximately $23,041. The following estimates
are based on 100' of Softwall Mining Face. (See: "USE OF PROCEEDS".)
Estimated Costs for Module Fabrication
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Cost Estimate for Manufacturing
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100' of Softwall Mining Face
Phase One- Module Fabrication Only
STEEL FABRICATION WORK
Assumed Fabrication Cost/# = $1.201
Steel Fab
MODULE FABRICATION - STEP ONE Vol. cu. ft.2 Wt. # Unit Cost Total
Quantity Total Cost
Face Sluicing Camber (FSC) 0.81 402.50 $483.00
20 $ 9,660
FSC Struts 0.06 31.00 37.20
20 744
Rear Bearing Support (RBS) 1.48 738.50 886.20
20 17,724
RBS Struts 0.05 22.50 27.00
20 540
Stationary Guides 0.03 15.00 18.00
20 360
Tail Pipe 0.03 15.00 18.00
20 360
Rolling Support Assembly 0.22 108.50 130.20
20 2,604
Horizontal Beam 0.04 22.00 26.40
20 520
Rotating Guide 0.05 24.00 28.80
20 576
Connections for FSC and RBS 0.43 215.00 258.00
20 5,160
Subtotal 3.19 1,594.00 $1,912.00 20 $
38,256
Misc. Parts @ 10% 0.32 159.40 191.28
20 3,826
Engineering & Design for Module N.A. N.A.
N.A. 1 4,000
Module Fabrication 3.51 1,753.40 $ 2,104.08 20 $
46,082
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1 Mark Steel of Salt Lake City, Utah telephone conversation
2 Calculated based upon prototype design
dimensions
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The Company has also estimated the cost of adding the operating systems
to the prototype although such systems would not be added until Phase Two of
the Company's business plan. The Company has based its estimates on the
prototype design and size. The Company has estimated that the Cost for adding
power, control and ancillary systems to support 100' of Softwall Mining Face @
100tph to be $499,000. These estimates are based on various bids from
vendors/manufacturers around the United States This includes the following:
Hydraulic Systems bid by Interstate Hydraulics (Aug. 7, 1998) $
222,000
Ancillary Components
Recovery Water System 8,941
Slurry Tank and Pump System 8,541
Winch Anchor Skid fabrication 4,500
Mining Water System Estimates 39,675
Computer Center and Control Room 20,000
Mining Engineering Design and Testing 150,000
Total Operating System Phase Two $ 453,657
The Company does not contemplate adding the operating system to the
Softwall System modules until and unless it is successful in marketing the
modules to end users who will utilize their own operating systems or agree to
purchase such systems to complete the Softwall System.
The Softwall Process - The basic purpose of the invention of the
Softwall System is to improve the mining or excavation and/or disposal
process. Strip mining with draglines and other surface equipment has
traditionally been the method of choice for mining shallow deposits that
require little or no blasting. These methods have a high level of
productivity and low operating costs as well as the ability to incrementally
expand production levels by adding equipment units. These methods, however,
can be improved. Strip mining methods are batch processes not well suited to
steady state ore flow required for efficient mineral processing plants and is
encumbered by unnecessary overburden removal, energy loss, ore and overburden
rehandling, reclamation expense, and human inefficiencies. The Softwall
System is intended to be an improvement over standard methods.
In the softwall process, the softwall face is set up in a trench
specifically prepared for it, that is, more or less parallel elongated
trenches are formed to the bottom of the mineral seam.. These trenches are
spaced at least several times the width of the trench apart. A trench more or
less perpendicular to a trench or to parallel trenches and at the trench ends
is formed to the bottom of the mineralization or excavation limit. A
plurality of softwall mining devices, supported by surface equipment are
placed in the perpendicular trench. The devices slurry material and move into
the mineral seam. Overburden sloughs behind the mining devices. The subsided
overburden is supplemented as necessary with injected material. Slurried
mineral flows to the parallel trenches for removal to the surface. After the
softwall devices have advanced the length of the parallel trenches, the
devices are withdrawn and placed in additionally developed trenches elsewhere
on the ore reserve.
The Softwall Equipment and How it Functions - The softwall face
equipment consists mainly of two concentric C-sections. The inner C-section,
called the Face Sluicing Chamber ("FSC") is used for cutting the ore from the
face. The outer C-section, called the Rear Bearing Support ("RBS") provides
ground support and protects the hydraulic/mechanical equipment. Operation of
the Softwall System involves mechanisms to move these two sections relative to
each other and to inject high pressure cutting fluids into the FSC.
The extension and contraction of a hydraulic plunging ram connected
between the FSC and the RBS causes the FSC to move outward and inward relative
to the RBS. Since there is always subsided material to the rear of the RBS,
extension of the ram causes the forward thrust or plunging of the FSC into
the mining face. Hydraulic mining in the chamber, with the injection of water
or other cutting fluids, breaks the ore into slurry and causes a volumetric
displacement of it along the longitudinal axis of the chamber toward the open
end. Retraction of the ram acting between the FSC and the RBS either causes
movement to the rear bearing support forward, in the direction of the advance,
or the rearward retraction of the FSC. The difference depends upon the
coordinated actuation of the rams in the adjacent RBS sections to determine
the direction of the resultant forces between them and the FSC assembly.
When the rams in adjacent units are coordinated in extension to push the snake
forward, for example, a cutting force is performed plunging the FSC into the
ore. As the cutting stroke progresses from one end of the FSC to the other,
it bends incrementally to conform to the displacement. The portion of the FSC
in motion is called the "snake" and the "snake" is the active minimum zone of
the face The "snake" wave propagates along the mining face and high pressure
water nozzles are cycled on to cut and sluice the fresh face of ore in contact
with the rear wall of the FSC at the snake. Once the snake has passed a point
on the face injection ceases. Thus, a steady flow of slurried ore is cut and
pushed by volumetric displacement and pressure inside the FSC.
The rate of chamber advance and volume of water injected into the chamber
for cutting determines and controls the rate of production. Once the snake of
the cutting stroke has passed a point on the face the plunging rams are
retracted individually to perform a partial retraction of the FSC or "back strok
e". This provides the conduit for fluid to travel ahead of the snake or the
next cutting stroke.
The rate of production that can be expected from a Softwall System is
based on the critical geologic and equipment design parameters. The
production rate of the system is dependent on three variables: (1) the
diameter of the FSC which will determine the mining height on each pass; (2)
the average advance rate of the chamber stroke which will determine the output
rate per unit length of face; and (3) the snake length which is the total
length of the FSC in simultaneous motion at any given time and determines the
total system instantaneous output rate.
Market for the Company's Softwall System
Initial Market - Although the Company hopes to market its Softwall
System to the industries set forth below (excepting the phosphate industry)
under the sub-section captioned "Target Markets for the Softwall System",
both in the United States and internationally, due to the limited capital
available to it, and the uncertainty of the product's success and
marketability, management intends to attempt to prove the commercial viability
of the Softwall System by building, testing, and demonstrating a prototype
system; and, if the system proves successful, building and selling Softwall
Systems modules to a limited number of mining and/or excavating companies,
excluding companies which produce phosphates. Management has had limited
ability to aggressively investigate its opportunities other than to target
markets and believes it would be premature to do so until the product is
tested. If successful it the testing, the Company hopes to find an
appropriate property where the system can be demonstrated, and install the
prototype Softwall System so potential end-users can be brought to a site
where the Softwall System can be observed in operation. The Company will
rely on Peterson's connections and contacts in the industry, as well as his
reputation, to initiate discussions and demonstrations with potential
end-users. At a cost to build a Softwall System (without electrical, hydraulic
and slurry) for use by any given mining company of approximately $2,500 per
20' module of softwall face, customized to for the particular end user, the
Company will require large amounts of capital to go into actual production and
marketing of its product, or, it may be forced to seek a joint venture
partner.
Sales and Marketing. As stated previously, the Company is dependent on
the success of the prototype in order to proceed with marketing. A detailed,
long term marketing plan has not been developed and initial marketing efforts
will be directed to end-users. Early sales will likely be to the mining
industry and in geographical areas close to production so the management of
the Company will be available to customize the system, observe operation, and
make adjustments as needed. As the Softwall Mining System is further
refined and accepted in the market as a commercially viable alternative to
drag line mining, among other applications, the Company will develop a long
term marketing plan. Some of the industries the Company has targeted for
eventual marketing are set forth below as are some of the marketing advantages
of the Company's Softwall System. An investor should keep in mind, however,
that the testing of the prototype may not prove successful, and, if
successful, the Company may not have the financing or the ability to market
the Softwall System as it intends.
Target Sectors for the Marketing of the Softwall System The target
sector of the mining industry for softwall are companies with reserves in soft
shallow conditions. The following is an abbreviated list of the mineral
industry sectors where softwall is expected to have application:
•Phosphatic clays (1)
•Kaolin Clays
•Other Clay Deposits
•Mineral Sands
•Placer Sands
•Industrial Sands and Aggregates
•Tar Sands
•Tailings Sands
•Soft Gypsum Deposits
•Soft Coal and Lignite Deposits
•Weathered Laterite Deposits
•Diamond Deposits
•Bauxite
•Magnesite
_________________________________________
(1) The Company does not have the right to market the Softwall System to
the phosphate industry which right has been retained by IMCA; IMCA is a
large international producer of phosphate fertilizer products.
The mining market will include mining companies with operating mines and
also mining companies with reserves that could be suitable for softwall
currently not being exploited. There are many deposits that are currently
judged to be sub-economic with present mining methods where softwall could
have an economic application. These types of deposits offer the greatest
potential for softwall and the Company expects that these owners will be most
receptive to considering new methods.
Marketing Advantages of the Softwall System - The Softwall System
advantages are its high rate of productivity, control and automation of the
mining/excavation process, reduction of dilution and waste, and operational
cost savings to end-users. The Company believes that the Softwall System will
prove to have some of the following advantages in the marketplace and hopes
to demonstrate the same through the production and use of its prototype.
•In General -- In each of the above listed mining sectors, softwall is
expected to have the advantage of a steady state ore production and the
elimination of the majority of stripping and reclamation. In some cases, such
as tar sands, softwall may offer the opportunity to process ore at the face
and eliminate the unnecessary handling of waste since when processing is done
at the mining face the waste can be disposed of there. Despite the fact that
end-users will be required to pay royalties to the Company for using a
Softwall System, the Company anticipates that end-users will realize a
significant savings in the operation of a Softwall System compared to
traditional and/or current methods.
•Energy Conversation - In addition to the potential advantages mining
companies will experience through direct use of Softwall System, there are
also government agencies with interests aligned with the benefits such a
system can provide. The Department of Energy, for example, has available
government funding for the demonstration of applications which save energy
once the machine has progressed beyond prototype stage. The Softwall System
is very conservative of energy when compared with conventional stripping
because it does not require the removal of over burden nor the need to reclaim
it. In most strip mining, the work expended in the removal of overburden and
reclamation is the largest single cost component. These energy savings also
extend to coal and fossil fuels that would otherwise be burned to produce
energy to strip overburden. The Company believes that the Department of
Energy may be interested in its Softwall System both as a conservation of
energy and for its potential in non-conventional production of fossil fuels.
•Environmental Clean-up - Because of its ability to extract and process
the material at the mining face, and inject the processed material directly
behind it, softwall has the ability to wash subsurface soils insitu with
little disturbance to the surface or to the surface ecosystems. Thus,
softwall has a potential for cleaning up contaminated soils with out
transporting them long distances. Another aspect with respect to soil
clean-up is that softwall provides for hydrological blocking. This means that
clays, cement, or other impermeable materials can be mixed with washed soils
for re-injection behind the softwall face or such materials can simply be
injected behind the softwall to replace contaminated soil. This would permit
the leaving of a horizontal "slurry wall" or impermeable layer or lining to
block vertical water migration and protect the lower ground water aquifers
from further contamination. The Company intends to market the prototypes to
the EPA and other government agencies having responsibilities concerning
remediation of super fund sites.
•Construction and Real Estate Improvement - The ability to extract
material at the mining face and inject behind it offers the opportunity to
inject layers of materials such as gravel and other permeable materials.
Softwall provides the ability to install permeable layers beneath impermeable
ones to construct a way to drain areas and permanently protect structures from
ground water damage. With the injection of concrete of clay layer above and
injected sand and gravel below, softwall offers the opportunity to dewater or
drain wet or swampy areas which would otherwise not be suitable for
construction of real estate development. In addition, in areas where
differential compaction is a problem, such as those with mancos shale and
swelling clay beds, softwall offers a way to extract the clay and replace it
with sand, concrete, gravel or other incompressible silica based rock
materials. This could provide a way to improve areas for construction where
it would otherwise not be permitted.
•Waste Disposal - Conventional methods of municipal waste disposal
require evacuation of open pits in the same manner as that used in strip
mining. Softwall offers the opportunity to reduce the cost of waste disposal
because it only excavates the void into which the waste is placed while
leaving the surface material intact. Municipal waste can be crushed, slurried
or injected under pressure behind the Softwall Equipment the same way that
tailings can be injected in the mining case to limit surface subsidence. This
potential method of municipal waste disposal offers a cleaner environment for
disposal because the disposal is accomplished underground and would be
healthier than the open pit method because birds and rodents cannot come into
contact with the waste. Using the softwall method to dispose of waste creates
a decaying matter in decomposition which would provide for a later opportunity
to commercially recover methane. Since softwall can inject a permeable layer
above the waste layer and since methane is lighter than air and displaces
oxygen, the methane may be recovered by providing a conduit to the permeable
layer. An engineered plan to install layers above and below the waste can be
made a part of the softwall operating plan and the overall waste management
plan for the site. In addition, hazardous waste disposal projects may benefit
from the softwall. The injection of impermeable horizontal layers will
protect the vertical migration of fluids above and below the disposal zone and
can seal the disposal void from contact with ground water. Similarly, in the
horizontal direction, water migration can be blocked from the disposal zone by
backfilling the access trench with clay or other impermeable materials
effectively forming an impenetrable wall on both sides and above and below the
area.
Distribution Methods of the Softwall System
Because the Company has not yet built or tested its Softwall System, it
has not established any definitive methods for distribution. However, in
general, it initially expects to market directly to targeted end users in
certain industries and will likely not pursue sales through equipment
distributors. The Company will be selling a method as well as the equipment
and will rely on its ability to successfully demonstrate the same to potential
users. The Company intends to initially concentrate its marketing to
established mining companies which fit certain criteria, that is mining
companies which currently have ore reserves which favor softwall. It will
especially concentrate on those companies which have existing electrical,
hydraulic, water and slurry systems in place which can be adapted to use in
conjunction with the Softwall Equipment. In order to accomplish this initial
marketing, the Company intends to initiate discussions with mining companies
and earthwork companies to solicit interest as well as demonstrate the same to
interested companies. Distribution will largely be dependent on the Company's
ability to successfully build and demonstrate its prototype as well as finding
ways to finance the construction of modules for end users, as well as on
Peterson's connections, experience and contacts in the industry. The Company
will likely face a certain amount of resistance to the methodology because the
mining industry is generally resistant to new technology and methods.
Ultimately, the Company believes that it may have better success with other
areas such as in waste disposal and environmental clean up.
The Company intends to pursue a profit and cash flow maximization
strategy by marketing and demonstrating its prototype and direct sales to
end-user capable of supplying the ancillary systems. Systems will be
manufactured on a custom basis to suit the deposit and the Company will assist
in modifying the end-user's existing systems. The Company may also elect to
sub-license rights to the use of the Softwall System to other companies which
may have better ability to market and produce the same. In such case, the
Company will structure any such sub-license agreement so that it receives an
initial license fee and a production royalty. The Company hopes to achieve
revenues from production royalties, initial sale or lease of systems, and
sub-license fees along with a percentage of production royalties from
sub-licensees.
When and if the Company can get past the prototype stage, it intends to
apply with the Environmental Protection Agency for funding available to
companies with new products which are deemed to be useful in environmental
clean-up and protection under the Small Business Innovation Research (SBIR)
program.
State of Any Publicly Announced New Product - the Softwall System
The Company is not a public company and has made no public announcements
regarding its Softwall System. The Softwall System methodology has been
presented at the Society for Mining Metallurgy and Exploration Annual
Convention in March of 1998 and at the National Mining Association meeting in
September 1997. The Softwall System is still in the development and testing
stage and applications have been submitted for patent protection, both in the
United States and under the international PCT treaty. Currently, Brigham
Young University in Provo, Utah is building a bench test system. The Company
will utilize the funds from this offering to build and test a prototype.
Sources and Availability of Raw Materials and Principal Suppliers
The Company will rely on a variety of manufacturers for production of the
components of the Softwall System. The initial manufacturer of the prototype
system will be determined through a bid process.. If the Company is
successful in the testing of its prototype, it will rely on numerous suppliers
and manufacturers to produce Softwall System components These would mainly
include steel fabricators for the fabrication of the FSC and RBS and
additional related parts which comprise the softwall mining face. There are
numerous steel fabricators throughout the United States with the capability to
manufacture the Softwall System modules to the Company's specifications. In
addition, if the Company proceeds with the production of a complete system,
the Company would rely on various manufacturers and suppliers for slurry
pumps, water pumps, fabrication of winch anchors, and computer systems all of
which must be able to meet the design specifications of the Company. Although
the Company has received vendor quotations from various manufacturer/suppliers
in connection with its efforts to develop the Softwall System, the Company has
made no agreement with any of the same for production of the same. The
Company believes that when such manufacture and/or supplier is needed, there
are numerous companies with the ability and expertise to produce the same in
accordance with the Company's specifications and that it will have little or
no difficulty in making arrangements to manufacture and assemble its Softwall
System.
Dependence on a Few Major Customers
The Company, when and if it begins to market its Softwall Systems has
targeted numerous applications for its Softwall System. It does not believe
that it will be dependent on a few major customers.
Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements
Although Randall Peterson has assigned his rights to the Softwall System
to the Company, as of the date hereof, the precise extent of those rights
cannot be determined. Such rights granted to the Company will be affected by
the patent pending, the fact that IMCA will be assigned the rights to the
patent when the exclusive license is granted to Peterson, and that the exact
terms and conditions of that license agreement have not yet been established
although Peterson and IMCA did enter into a Letter of Intent regarding the
same on February 9, 1999. Any rights that Peterson has in the Softwall System
now belong, and will continue to belong, to the Company.
Patent-Pending/Trademarks -- The Company's Softwall System has a patent
pending pursuant to application made to the United States Patent and Trademark
office on May 6, 1997. In the application Randall Peterson is noted as the
inventor and IMCA is the assignee; the application covers both the device and
the method. The patent, when issued, will be assigned to IMCA as part of a
contemplated license agreement between IMCA and Peterson. While neither the
Company nor Peterson have applied for the use of the "softwall" name as a
trademark, Peterson has established original use and the award of trademark is
expected to be uncontested. (See below.)
Letter of Intent /Contemplated License Agreement - As of the date hereof,
Peterson and IMCA have entered into a Letter of Intent, executed on February
9, 1999, which sets forth the parties' understandings regarding the grant of
an exclusive license to Peterson to develop and market the Softwall System.
The Letter of Intent acknowledges that Peterson is the inventor and has not
been paid for his invention, and that the parties will enter into an
exclusive license agreement whereby Peterson will assign the patent, when
issued, to IMCA, and IMCA will grant Peterson an exclusive license to exploit
the invention, excepting phosphate applications. The Letter of Intent also
contemplates that Peterson will be required to pay a production royalty to
IMCA based on production royalties received by Peterson, or Peterson's
assignee(s), which is the Company and its sublicensees, if any. As of the
date hereof, no exclusive license agreement been entered into between IMCA and
Randall Peterson. Some of the other contemplated provisions of the license
agreement are (1)that Peterson desires to commercially develop the Softwall
System and that IMCA is willing to grant such license; (2) that IMCA will
grant an exclusive license to Peterson to develop and market the Softwall
System world-wide, and to sub-license the same although any assignment by
Peterson to an affiliate of Peterson's must have prior approval from IMCA; (3)
that the term of the contemplated license will be ten years with an extension
thereof for seven years provided Peterson has actively developed and
marketed the Softwall System; and, (4) that Peterson utilize his best efforts
to market the Softwall System worldwide and to attract users which will
include further development of the equipment, construction of the
demonstration machine, discussions with mining companies. One of the
contemplated provisions of the agreement will be that the use of the Softwall
System will require a cash royalty fee per ton of mined product negotiated on
a basis of "what is generally accepted in the industry for use of new
technology" and consistent with general business practices in the area of
technology licensing and that as consideration, Peterson, or his assignee,
shall pay to IMCA a per ton royalty fee based on all royalty fee proceeds
received by Peterson, or his assignee(s), from any and all mining
applications, excluding those used by IMCA or its affiliates as follows: (1)
12.5% of all royalty fees received by Peterson, or his assignee(s), to be paid
on a quarterly basis to IMCA and based on the tons mined the previous quarter
(2) provide IMCA with support documentation on all payments and
reconciliations of the tons mined. Because Peterson has assigned his
non-phosphate rights to the Softwall System to the Company, any license
agreement which is finally consummated will likewise be assigned to the
Company. (See Exhibit " F" - "Letter of Intent".)
All of the foregoing are proposed provisions of the contemplated license
agreement and there can be no assurance that the same will be made a part of
the final agreement or that a final agreement will be entered into. It is
possible that IMCA and Peterson will never be able to consummate an
agreement. Although Peterson believes that he is the rightful inventor or
owner of the Softwall System, he has acknowledged that IMCA has an interest
therein. If the parties do not consummate an agreement, the Company will have
several courses of action available to it, none of which will necessarily
prove to be favorable to the Company. The Company could initiate legal
action against IMCA and/or Peterson; however, the Company will not likely have
sufficient funds to pursue such legal action with significant results. The
Company could ultimately proceed with the development and marketing of the
Softwall System without an agreement between IMCA and Peterson, however it
would then face possible legal proceedings initiated against it by IMCA. Such
proceedings, if initiated, would be costly to defend. The ability of the
Company to develop and market the Softwall System is therefore dependent on
Peterson's ability to successfully enter into a license agreement with IMCA
with terms favorable for the commencement of the Company's development and
marketing of the Softwall System. The failure of the Peterson to consummate
such an agreement under terms favorable to the Company could result in a total
failure of the Company's business purpose and a total loss of investor's
funds.
In addition, there is no guarantee that another company will not allege
an interest to Peterson's invention. Peterson was employed by NorWest Mine
Services ("NorWest") at the time he performed the consulting services to IMCA
which resulted in his invention. The Company believes it is unlikely that
NorWest will assert an interest in Peterson's Softwall System because: (1)
there is no agreement or understanding between Peterson and NorWest that he
will assign any inventions made during his employment or a portion thereof to
NorWest, (2) NorWest has not asserted any interest in the Softwall System as
of this date; and (3) NorWest contractually agreed to grant IMCA any rights to
any inventions arising from Peterson's work. It is the Company's belief that
if NorWest, or any other entity asserted any such interest in the Softwall
System, it would be IMCA's responsibility as the owner of the technology, to
defend the same.
Need for Government Approval of Principal Product or Service
Although the Company will not be required to receive government approval
on either the methodology or technology in its Softwall System, the mining
industry in the United States is strictly regulated for safety and
environmental impact. The use of the Softwall System will be subject, as any
mining operation, to high safety and environmental impact standards by such
federal regulatory agencies as the Offices of Surface Mining , Mine Safety and
Health Administration (MSHA), the National Institute of Occupational Safety
and Health (NIOSH), in addition to various state regulatory agencies. As is
standard in the industry, it will be the operator/end-user which will be
required to obtain the necessary permits and meet these environmental and
safety standards. The Company, however, will be required to meet any special
manufacturing requirements of these agencies.
Effect of Existing Government Regulation on Business
As discussed in the prior paragraph, the mining industry is heavily
regulated by various federal and state agencies. Existing mining regulations
will be applicable to the use of the Softwall System. The Company believes
that its product/methodology will comply with existing regulations, and, in
fact, that it will actually prove a safer method of mining because there will
be less personnel involved in the actual mining process. However, the Company
is also aware that methodology involved does not have a classification as far
as mining industry standards because it is different from all existing
technology. This lack of classification will likely cause some delay in
obtaining the proper use permits and/or government approval regarding meeting
existing regulations. The Company anticipates that existing regulations may
have to be amended to take into account the new methodology of "softwall".
Moreover, since softwall combines aspects of surface and underground mining,
new regulations may be developed for it. The Company cannot predict just how
much existing government regulations will impact its development and marketing
of the Softwall Systems or how long it will take to establish guidelines for
the use of "softwall" methods. The heavy regulation of the mining industry
combined with the fact that Softwall System is a new methodology which does
not fit into standard industry classification could make the marketing of the
system difficult especially if initial attempts to utilize the system result
in the need for new regulations and the amendment of existing regulations.
Research and Development
The research and development of the Softwall System was completed by
Randall Peterson, partially while acting as a consultant for IMCA, and
partially on his own. Peterson was retained by IMCA to develop a new system
for use in phosphate mining in Florida. In addition to the time he has been
compensated for, Peterson has over $70,000 worth of his own time in the
development of the system to its current stage and application for a patent
thereon.
Cost and Effects of Compliance with Environmental Laws
As a manufacturer and licensing company, the Company itself will not have
to comply with environmental laws in the operation of its Softwall Systems.
The Company believes that its product/methodology will prove to comply with
environmental laws better than existing mining methods. In addition, it
believes that ultimately it will provide systems for municipal waste disposal
and environmental clean-up. Ultimately, however, it will be the end user
which will need to comply with environmental laws and these laws are stringent
especially with regards to mine tailings and waste. If end-users cannot
comply with environment regulations when utilizing the Softwall System, the
Company's ability to market the same, and therefore complete its business
purpose, could suffer a severe negative impact.
Competitive Business Conditions - Competitive Position in the Industry and
Methods of Competition.
The Company is aware that it will be in heavy competition with
conventional mining methods. Although it believes its Softwall System is a
unique and revolutionary system for shallow earth mining and that no similar
product/method exists, the Company will be in direct competition with
companies which market equipment for use in traditional drag line methods to
end users which are also target markets for the Company. Although the
Company believes that its mining equipment and process possess several
advantages over dragline methods/equipment and that it will be able to develop
its own market niche, it will face great difficulty in gaining market
penetration and acceptance. The Company will, therefore, be competing for
market share with a number of mining equipment companies which manufacture
equipment utilized in standard drag line mining, and which possess a much
greater name recognition, experience in the industry, and capitalization. In
addition, because these traditional methods are the accepted methodology in
the industry, the Company will face strong resistance to its newer and as yet
unproved Softwall System. The Company's only competitive edge, therefore,
will be its ability to develop and market its prototype, demonstrate its
successful operation, and prove that it has certain advantages over
traditional methods. In addition, end users in the mining industry will be
required to pay production royalties to the Company which such users would not
normally be required to pay with traditional methods If the Company's
prototype testing does not actually demonstrate distinct advantages,
including operational cost savings over traditional dragline methods, the
ability of the Company to compete with its product will likely be
non-existent. Even if the Company is able to demonstrate certain advantages
over dragline methods, there is no guarantee that it will be able to
successfully exploit these advantages. Mining equipment requires a large
outlay of capital and end users may be reluctant to purchase a system based on
new technology over known technology and equipment manufactured and marketed
by companies which are well recognized in the industry.
The Company's ability the compete in other areas such as environmental
clean-up and or municipal waste disposal will be largely dependent on its
success in obtaining an affiliation with a company established in the
industry. Again, the Company believes that it has a novel method for those
applications which will not have any direct competition. However, when and if
the Company is able to market to those industry sectors, it will again have
indirect competition from companies which use conventional and possibly other
new methods..
Number of Employees - Full and Part.
The Company has no employees. The Company does not intend to hire any
full or part time employees in the next 12 months although it will compensate
Randall Peterson as a consultant and/or for services performed for the
Company. The Company expects that Randall Peterson will expend approximately
30% of his time consulting for the Company in the first 12 months. (See
"MANAGEMENT, Executive Compensation" .)
Facilities
As of this date, the Company has no properties or facilities and conducts
its day to day business operations from an office in the home of two of the
Company's officers and directors, Randall and Sally Peterson. The Company
does not intend to acquire production facilities or properties.
MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
As of this date, the Company has had little or no operational history
other than organizational activity. It intends to operate in the product
development mode financed initially by the proceeds of this offering.
Accordingly, the Company has solicited interest from certain end-users but has
no firm orders for any of its Softwall Systems. The Company has no employees
and no commitments to compensate any consultants or officers and directors as
of this date excepting Randall Peterson. The Company, however, does not know
how much time will be spent by Peterson in the development and marketing of
the Softwall System and intends to compensate him as his services dictate.
Although Peterson has indicated that he anticipates spending approximately 30%
of his time performing services to the Company, the actual amount of time
could be more or less than that. The Company intends to utilize the first
proceeds from the offering for development, manufacture and testing of the
Softwall System. Peterson believes that to test the Softwall System, a
minimum of 50' of Softwall face must be built although he will build
approximately 100' of softwall face if the Company is successful in raising
more than the minimum funds in this offering. Once built, the Company will
store the Softwall System prototype on property owned by Peterson until such
time as it can be placed on a site where the Company will be able to test and
demonstrate it. If such testing and demonstration is successful, the
Company will begin to market the same on a limited basis as part of Phase One
of its Business plan. The Company will utilize the balance of the proceeds,
if any, to produce additional modules of the Softwall System, if needed; for
additional research and product development; and expenses associated with
initial marketing, including travel and shipping expenses associated with
product demonstration as well as to provide some compensation to Peterson.
Results of Operation
To date, the Company has operated only as a start-up company. From
inception on October 5, 1998, the Company has incurred a net loss of $ 50.00
in connection with certain organization costs. See Financial Statements,
Exhibit A. In the course of the invention and patent application of the
Softwall System, the costs of development were borne by IMCA. IMCA is
therefore the owner of the technology. Peterson did not incur any costs in
connection therewith although he has not been paid for the invention and will
be compensated through the grant of the exclusive license. He will also
receive some sort of further compensation from the Company although the same
will not be determined until a later date. The Company has no operating
results.
Liquidity
Management believes that the maximum proceeds from this offering will be
sufficient to support its present planned business operations over the next 12
months, that is to build and test the Softwall System prototype, and begin
demonstration and marketing thereof. The Company will be required to
compensate Peterson for his services to the Company in connection with the
continued development, testing and marketing of the prototype as well as
provide some additional compensation to Peterson for the assignment of his
rights to the Softwall System to the Company. If the Company raises only the
minimum proceeds, there will not be sufficient funds to compensate Peterson or
to pay for additional expenses associated therewith. Prior to this date,
the minimal funds which have been expended in organization have been paid by
officers and directors of the Company. These individuals may be required to
contribute loans and/or advances to the Company if it does not raise more than
the minimum proceeds in the offering. In addition, Management expects it will
require additional financing to complete Phase One of its business operations
and to begin Phase Two, if warranted. As of this date, Management has made
no decisions as to when and what such financing will be. Management's
decision on future financing will be based in part on the results of the prototy
pe testing, further market analysis, the result of the patent application, the
actual costs of production, the amount of research and development it expects
to continue to do both on this product and others; among other factors. The
Company could enter into a joint venture partnership with another company;
conduct a public offering of its securities, and/or finance through private
funding. The Company does not anticipate any revenues from operations within
the next 12 months.
SOURCES AND USES OF PROCEEDS
The proceeds from this Offering will be $30,000 if the minimum number of
shares are sold and $150,000 if the maximum number of shares are sold. The
Company intends to utilize its proceeds to commence operations. The following
chart illustrates the Company's specific plan for Use of Proceeds for a 12
month period, which includes, in additional to the foregoing, but also
expenses associated with this Offering.
Use of Proceeds
Minimum
Offering
Percentage
of Minimum
Offering
Maximum
Offering
Percentage
of Maximum
Offering
Cost of Prototype(1)
Additional research & development
Compensation to Randall Peterson
Travel Expenses
TOTAL
$ 23,000(1)
$ 0
$ 0
$ 0
$ 23,000
76.7%
0.0%
0.0%
0.0%
76.7%
$ 46,082(2)
$ 36,918
$ 50,000
$ 10,000
$ 143,000
30.72%
24.61%
33.33%
6.67%
95.33%
Offering Costs:
Legal
Accounting
Printing/Misc.
TOTAL
$ 5,500
$ 1,000
$ 500
$ 7,000
18.3%
3.3%
1.7%
23.3%
$ 5,500
$ 1,000
$ 500
$ 7,000
3.67%
.67%
.33%
4.67%
Total Use of Proceeds
$ 30,000
100.00%
$ 150,000
100.00%
(1) For 50' of softwall face. Management believes that 100' of Softwall
would be an ideal amount for testing and demonstration. Any proceeds over and
above the minimum will be utilized for building additional modules until the
Company has achieved a prototype system that consists of approximately 100' of
softwall face
(2) For 100' of softwall face.
MANAGEMENT
Set forth below is certain information concerning officers, directors and
key personnel of the Company. All directors serve for a term of one year or
until the next annual meeting of the Company or until their successors are
duly elected and qualified.
Name and Address Age Position(s) Since
Randall D. Peterson 44 President/Director October
5, 1998
11602 Colchester Drive
Sandy, Utah 84092
Roger Brockbank 50 Vice President/
October 5, 1998
5984 South 900 East Director
Salt Lake City, Utah
Sally W. Peterson 36 Secretary/Treasurer October 5,
1998
11602 Colchester Dr. Director
Sandy, Utah 84092
Biographical Information.
Randall Peterson is 44 years of age and is President, CEO and a
Director of the Company and has over 18 years of experience in working for
mining companies in underground coal and trona and surface metal mining. From
1997 to the present day he has acted as Managing Director/ Engineer and
principal consultant to South East International of Camden Australia and Salt
Lake City, Utah, and as an independent mining consultant. He has provided
consulting services during this time period to numerous companies including
Shell Coal of Brisbane, Australia; Allied Bellambi Colleries, Wollongong,
Australia; Savage Togara North of Brisbane, Qld, Australia; IMC Agrico Technolog
y Development Group, Mulberry, Florida; Wyoming and West Virginia Mining
Company, Rock Springs, Wyoming, in addition to Union Pacific Resources. His
consultation services for the foregoing companies covered a wide range
including such things as evaluations of mining methods and options, mining
training services, mine plan and project evaluations, and economic feasibility
evaluations and mine care and maintenance. From 1995 through 1997, Peterson
was project manager for NorWest Mines Services, Inc., Salt Lake City, Utah
where he acted as project manager, coordinator, engineer and consultant for a
wide variety of underground mine design, improvement, feasibility evaluation
projects. These projects involved numerous mining ventures throughout the
world. He was also a contracted Instructor of Mining Engineering for the
University of Utah where he taught senior level design courses for the
Department of Mining and Engineering. From 1990 through 1995, Peterson acted
as Superintendent of Mine Engineering for General Chemical Soda Ash Partners
in Green River Wyoming. His position included acting as Mine Manager on
weekends; management of 2-8 man engineering department; mine planning,
technical and design support services for underground operations; planning,
coordinating and supervision of new mine shaft construction, among other
responsibilities. From 1989 to 1990, he was Chief Engineer and Technical
Services Manager for Sunnyside Mines, Sunnyside, Utah and from 1988-89, he was
a mine shift supervisor for Barneys Canyon Mine, Kennecott Gold, Bingham,
Utah. He was project engineer for the Twentymile Park Project, Getty Mining
Company in Salt Lake from 1983-1985. Peterson was Mine Engineer for Plateau
Mining Company, a subsidiary of Getty Mining Company, in Price, Utah, from
1981 through 1983 and from 1979 through 1981 he was section foreman and mine
engineer for Hawks Nest Mines, Western Slope Carbon (a subsidiary of Northwest
Pipeline Corporation of Somerset, Colorado.
Peterson's education includes a Master of Science in Mining Engineering
from University of Utah in 1988 where he graduated at the top of his class.
He also received a Master of Business Administration from University of Utah
in 1988 with Honors. He received his Bachelors of Science in Mining
Engineering from that same university in 1979 and has completed continuing
education courses at Western Wyoming Community College in Auto CAD in 1993.
He is a Registered Professional Engineer in Utah, Colorado and Wyoming. He is
a certified MSHA Instructor for Underground Metal and Non Metal Mines. He is
also a Certified Underground Coal Mine Foreman in Colorado, Utah and Wyoming;
a Certified Underground Trona Foreman in Wyoming.
Peterson has been published on numerous occasions since 1988 and is the
author of Softwall Mining - New Mining Technology for Mining Phosphatic Clay
Beds and other deposits in soft shallow conditions, which was presented at the
mechanical mining session of the SME/AIME Annual Convention in Orlando,
Florida USA in March 1998. He is also the inventor of several mining
innovations including two which have US and International patents pending: the
Shaft Assisted Underground Mining Method for Coal and Hard Strata-bound Rock
Deposits and the Softwall Mining Process for Phosphatic Clays, and one which
has been awarded a patent, a wall-to-wall mining method for surface mining
transition to longwall.
For additional information on Randall E. Peterson's resume which gives a
more detailed description of his publications and work experience, see Exhibit
"D"-- "Resume of Randall D. Peterson." attached hereto.
Sally Peterson - 36, is the Company's Secretary/Treasurer and a
director. Although Sally Peterson currently is a homemaker, and has not been
employed since 1990, she was a kindergarten teacher from 1987 through 1990 at
Uintah Elementary School, in Salt Lake City, Utah. In 1986, she worked as a
clerk for Mountain Fuel Supply Company, in Salt Lake City. From 1979 through
1983, Mrs. Peterson was an insurance rater/underwriter for American National
General Agencies also in Salt Lake City, Utah. Mrs. Peterson has a Bachelor
of Science in Elementary Education from the University of Utah which she
received in 1986. She has also completed continuing education and training
associated with her field in 1989 and 1998.
Roger Brockbank - 50, is a director of the Company with a great deal of
experience in real estate development. From 1997 to the present date, he is
building a 10,000 square foot office space and a 10,500 foot strip center
along with a 13 lot Industrial Subdivision in Lindon, Utah. From 1996-97 he
built an 11,000 square foot strip center in Riverton, Utah which is now
leased. He also developed 54 lots in Tooele that have sold out and purchased
an 18,000 square foot building in Tooele which is now 80% leased. During 1994
and 1995, Mr. Brockbank developed 36 lots in Riverton, Utah which have sold
out and from 1991 through 1993, he developed three subdivisions with, 64 lots
in Riverton , and 32 lots in Murray all of which have sold out. From 1987
through 1990, he remodeled and sold 15 homes on the open market and bought 30
apartments which he sold as condos. Mr. Brockbank managed and did tenant
improvements at a shopping center at 90th South Redwood Road from 1984 - 1987;
and he also did the same for a 50 unit apartment building and other commercial
space, and developed 20 lots during that time period. In 1980 through 1984,
Roger Brockbank developed 30 lots and built 15 homes. From 1969 on, having
completed a mission for the LDS Church, Roger Brockbank owned and ran a
painting business and completed a multitude of building projects. He
attended Brigham Young University for 3½ years. Roger Brockbank is a
licensed general contractor doing business as R.B Construction.
Executive Compensation.
NO officer and director of the Company has received ANY compensation,
either directly or indirectly, including benefits in the past twelve months.
There are no formal employment contracts in effect which would result in any
of the officers or directors, including the CEO, receiving any compensation.
However, the Company does intend to compensate Mr. Randall Peterson for
consulting services rendered to the Company during the next twelve months and
thereafter. As of this date, Peterson anticipates expending approximately 30%
of his time in consulting services to the Company in the first 12 months of
operation. Accordingly, the Company will compensate Peterson at a rate which
is yet to be negotiated but will likely be what is fair and standard in the
industry for an individual with Peterson's expertise and experience. In
addition Peterson will be allowed the use of the Company's vehicle. If the
Company receives maximum proceeds, it believes it will have sufficient cash
flow to compensate Peterson for his services. However, Peterson may be
required to take compensation in the form of stock, or stock options; or, the
Company may be required to execute a promissory note in favor of Peterson in
lieu of wages. The Company has reached no understanding with Peterson as of
this date regarding compensation. In addition, the Company has and will
continue to allow Peterson to utilize the Company's vehicle for conducting
Company business and otherwise.
Familial Relationships
Randall Peterson, the President, CEO and a director of Company, who is
also the inventor of the Softwall System is the husband of Sally Peterson, a
director and the Company's Secretary/Treasurer. Roger Brockbank is a second
cousin to Randall Peterson.
Involvement in Other Corporations
Currently, none of the members of Management are involved with any other
corporation either privately or otherwise although Peterson continues to
provide consulting services. Although during the last year Peterson was
involved as a managing director of an Australian corporation, South East
International Pty Ltd.; the corporation is currently inactive.
Involvement in Certain Legal Proceedings
No member of Management or control person of the Company has, in the
past five years, been involved in any of the following events:
(1) any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that time;
(2) any conviction in a criminal proceeding or being subject to a
pending criminal proceeding (excluding traffic violations and other minor
offences;
(3) being subject to an order, judgment or decree not subsequently
reversed, suspended or vacated or any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise
limiting his involvement in any type of business, securities or banking
activities; and
(4) being found by a court of competent jurisdiction (in a civil
action), the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgement
has not been reversed, suspended or vacated.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Set forth below is certain information as of the date of this Memorandum
with respect to any persons known to the Company to be the beneficial owner of
more than 5% of the Company's common stock and of the common stock owned by
the officers and directors of the Company and all officers and director of the
Company as a group.
NAME AMOUNT OF SHARES PERCENT OF SHARES HELD
HELD & PERCENTAGE(1) AFTER CLOSING OF OFFERING
MAX.(2) MIN.(3)
Randall Peterson(4) 1,500,000(5) 92.31% 57.14%
82.19%
(President, CEO, Director )
Roger Brockbank(4) 100,000 6.15% 3.81% `
5.48%
(Director,
Vice-President)
___________________________________
Officers and Directors
as a group 1,600,000 98.46% 60.95% 87.67%
(1) Based on 1,625,000 shares issued and outstanding as of the date
hereof.
(2) Based on 1,825,000 shares issued and outstanding if minimum shares are
sold.
(3) Based on 2,625,000 shares issued and outstanding if maximum shares are
sold
(4) Each of these individuals also owns more than 5% of the Company's
issued and outstanding shares prior to the offering
(5) These 1,500,000 could also be deemed to be owned jointly by Sally
Peterson, the wife of Randall Peterson and Secretary/Treasurer and a director
of the Company
CERTAIN TRANSACTIONS
Prior to the date of this Memorandum, the Company issued 1,625,000 common
shares to its founding shareholders, which include 1,500,000 shares to Mr.
Randall Peterson who is both President and a director of the Company in
addition to being the Company's majority shareholder. Such shares were issued
to Peterson for the transfer of ownership of a vehicle from Peterson to the
Company valued at approximately $13,000 and the assignment of his rights to
the Softwall System. The Company has approved the issuance of such shares in
excess of par value. Because Peterson's rights to the system have yet to be
fully defined, and he has never been compensated for the invention, the shares
issued to Peterson for his rights may not constitute full payment for the
same. The Company has put no exact value on Peterson's rights although that
the Company has acknowledged that the same has over $70,000 worth of time
expended on it by Peterson for which he has not been compensated calculated at
his standard 1998 consulting rates of $105 per hour. Because of the
difficulty in evaluating such rights, the parties have agreed to reserve such
decision until a later date subsequent to the consummation of the final
license agreement between Peterson and IMCA, but prior to the Company engaging
in marketing of the prototype. Whether or not Peterson will be further
compensated for the grant of his rights to the Company is dependent on
numerous factors which include whether or not and how much Peterson will be
compensated by the Company for services rendered in research, development and
marketing of the Softwall System.
Peterson continues to provide consulting services in the mining
industry on his own and some of these services are performed for IMCA. IMCA
will be the assignee of the patent on the Softwall System when and if
issued. The Company's rights to develop the Softwall System will be dependent
on the consummation of an exclusive license agreement between Peterson and
IMCA, and the subsequent assignment thereof to the Company. Potential
conflicts of interest exist regarding the use and rights to the Softwall
System due to Peterson's involvement in both the Company and IMCA. There is
no guarantee that if such a conflict of interest arises, it will be resolved
in favor of the Company. Peterson has already derived certain benefits from
the assignment of his rights to the Company and may receive additional
compensation for the same. Additionally, the Company allows Peterson to
utilize the Company's vehicle initially owned by Peterson and sold to the
Company as discussed above. Peterson will allow the Company to store Softwall
System prototype modules, when built, on property he owns in Utah.
DILUTION
"Net tangible book value" is the amount that results from subtracting the
total liabilities and intangible assets of an entity from its total assets.
"Dilution" is the difference between the public offering price of a security
such as the Common Stock, and its net tangible book value per share
immediately after the offering, giving effect to the receipt of net proceeds
in the offering (minimum net proceeds being $ 23,000 and maximum net proceeds
being $143,000). As of the date of this Memorandum, the net tangible book
value of the Company is $13,150 or approximately $.008 per Share. Giving
effect to the sale by the Company of the minimum offered Shares at the public
offering price of $0.15 per Share (200,000 Shares - $30,000 less offering
costs of $7,000), and assuming no other changes in the Company's financial
position, the pro forma net tangible book value of the Company would be
approximately $36,150 or approximately $.02 per share, which would represent
an immediate increase in net tangible book value of approximately $.012 per
share to the present Shareholders and an immediate dilution of approximately
$.13 per share, or approximately 86.67% to new investors. Giving effect to
the sale by the Company of the maximum offered Shares at then public offering
price of $0.15 per Share (1,000,000 Shares - $150,000 less offering costs of
$7,000), and assuming no other changes in the Company's financial position,
the pro forma net tangible book value of the Company would be approximately
$156,150, or approximately $.059 per share, which would represent an immediate
increase in the net tangible book value of approximately $.051 per share to
the present Shareholders and an immediate dilution of approximately $.091 per
share, or approximately 60.67%, to new investors. The following table
illustrates the pro forma per share dilution assuming that all the Shares
offered are sold.
Assuming Assuming
Minimum Maximum
Shares Sold Shares
Sold
Price to Public
(1).............................................................................
.$ 0.15 $ 0.15
Net tangible book value before the
Offering.....................................$ 13,150.00 $
13,150.00
Net tangible book value after the Offering
(2)....................................$ 36,150.00 $ 156,250.00
Net tangible book value per Share before
Offering(3).........................$ .008 $
.008
Net tangible book value per Share after Offering
(2)(3)........................$ .020 $ .059
Increase Attributable to purchase of stock by new investors
(3)........$ .012 $ .051
Dilution to new
investors..................................................................$
.13 or 86.66% $ .091 or 60.66%
(1) Offering price before deduction of offering expenses.
(2) After deduction of offering expenses estimated at $7,000, assuming
maximum gross proceeds of $150,000 and minimum gross proceeds of $30,000.
(3) Determined by dividing the number of shares of common stock
outstanding into the net tangible book value of the Company
COMPARATIVE DATA
The following tables summarize under the assumption stated for such
tables, the number of shares of common stock purchased from the Company, the
number of shares purchased as a percentage of the Company's total outstanding
shares, the aggregate consideration for such shares, the aggregate
consideration as a percentage of total consideration, and the average
consideration per share for such shares by all existing shareholders and the
public investors in the event the maximum and minimum number of shares are
sold.
Assuming Maximum ( 1,000,000 Shares -- $150,000) Offering Sold:
Total Average
Number of Purchased Consideration Price
Per
Shares % Amount % Share
Present Shareholders 1,625,000 61.90% $ 13,200
8.1% $0.008
New Investors 1,000,000 38.10%
$150,000 91.9% $0.150
Assuming Minimum (200,000 Shares -- $30,000) Offering Sold:
Total Average
Number of Purchased Consideration Price Per
Shares % Amount % Share
Present Shareholders 1,625,000 89.04% $ 13,200
30.56 $0.008
New Investors 200,000 10.96% $
30,000 69.44 $0.150
THE OFFERING
Determination of Offering Price
Prior to this offering there has been no public market for the Company's
common stock. The public offering price of the common stock has arbitrarily
been determined. There is no relationship between the offering price and the
Company's assets, book value, net worth, or any other established investment
criteria. The offering price set forth on the cover page of this Memorandum
should not be considered an indication of the actual value of the common stock
of the Company or the Shares offered thereby.
General.
The Company is offering up to 1,000,000 common shares in the principal
amount of Fifteen Cents ($0.15) each
There is a MINIMUM OFFERING OF 200,000 SHARES or $30,000 and a MAXIMUM
OFFERING OF 1,000,000 SHARES or $150,000.
The price and amount of shares offered by the Company has been
established arbitrarily and bears no relationship to its asset value, book
value, net worth, or any other established criteria of value. The Company has
1,625,000 shares of its common stock issued and outstanding, the majority of
which is held by its President, CEO and a director, Randall Peterson. Each
share represents one vote at any meeting of the shareholders.
The Company has entered into a Sales Agent Agreement on best efforts
basis with Randall Peterson, the Company's President and a Director.
Peterson will be responsible for his own day to day operating expenses and
will receive no compensation or commission as a result of acting as a sales
agent. He has been authorized to offer shares to "accredited" or
"sophisticated" investors in Colorado and Florida where he frequently travels
and has developed relationships with persons capable of evaluating an
investment in mining technology. The Company has also entered into an
agreement with Mr. John Rosner, who will be responsible for some sales in the
State of Nevada.
The Company has 180 days to complete its minimum offer and sale of
200,000 Shares and up to 12 months to complete the entire offering. The
Company, in the event it does not sell the minimum 200,000 Shares ($30,000)
within 180 days, will terminate this offering. In the event less than 200,000
Shares ($30,000) are sold within 180 days (or 365 if extended), investors
funds will be returned without discount or interest said funds. The time
period allotted for the completion of the offering may be affected by proposed
rule changes by the Securities and Exchange Commission (the "SEC"). The SEC
is scheduled to vote on proposed changes to Rule 504 in the near future. Such
rule changes, if adopted, may required either (a) completion of the offering
earlier than anticipated and/ or (b) amending the offering memorandum and the
manner and terms under which the current offering can be conducted. The
Company reserves the right to close the offering at any time, and at its sole
discretion, once minimum proceeds are received.
The Company will escrow the minimum proceeds. (See "Escrow of Minimum
Proceeds" under "PLAN OF DISTRIBUTION")
Nature of the Offering
The offering has not been registered under the Securities Act of 1933, as
amended, (the "Act"), in reliance upon the exemption from such registration
as set forth under Rule 504 pf Regulation D as promulgated under the Act.
Generally, Rule 504 provides an exemption from the federal registration
requirements for companies which are not subject to the reporting requirements
of Section 13 or 15d of the Securities Exchange Act of 1934, as amended, and
which are not investment companies under the Act, provided certain conditions
are met. Under the provisions of Rule 504,offers and sales of up to
$1,000,000 of a company's securities may be made every twelve months. The
shares sold in the offering will be freely tradeable although an investor
should be aware that there is currently no public market in the Company's
common shares and the Company does not intend to establish a public market in
the Company's common shares after the close of the offering.. The Company
believes it is presently in compliance with Rule 504. However, proposed rule
changes by the SEC, if adopted, could affect the Company's ability to remain
in compliance with Rule 504 and may require substantial effort on the
Company's part to meet with new and/or amended provisions to the Rule if and
when adopted.
The Company has not registered the within securities for sale in any
state or jurisdiction and intends to offer these Shares in only those
jurisdictions where it believes it has an available exemption or pursuant to
the filing of the appropriate registration.
Authorization For The Offering.
The Company has authorized its officers and directors, pursuant to a
Sales Agent Agreement, to offer for sale up to 1,000,000 Shares of the
Company's common stock to persons in those states in which appropriate action
is taken to qualify or register the same or where an applicable exemption from
registration is available.
Plan of Distribution
The Company will offer the Shares on a "best efforts" basis through Mr.
Randall Peterson, an officer and director of the Company, and through Mr.
John Rosner, pursuant to Sales Agent Agreements between the Company and
those individuals. The sales agents will not be compensated for their
efforts and will bear their own costs. Mr. Peterson intends to offer and
sell the Shares to family and friends, through word-of-mouth and referrals
utilizing this Memorandum, and to some persons who are closely associated with
and/or have an established relationship to Peterson, the inventor of the
Softwall System. He will offer the same pursuant to available exemptions to
persons in the States of Florida and Colorado whom he believes to be
"accredited" and/or "sophisticated" with sufficient knowledge of mining
technology as to be capable of an informed investment. Mr. Rosner will offer
the Shares in the State of Nevada pursuant to an exemption from registration
and in the same manner as Peterson. The sales agents will not employ general
solicitation and will not use advertising, or general publication to solicit
investors.
How To Subscribe.
Each investor purchasing any of the Common Stock offered hereby will be
required to execute a Subscription Application which, among other provisions,
will contain representations as to the investor's qualifications to purchase
the Common Stock and his ability to evaluate and bear the risk of an
investment in the Company, and will contain an acknowledgment that the
investor is purchasing for investment purposes and has had an opportunity to
make inquiries and obtain additional information. Payment must be enclosed at
the time of subscription with checks made payable to Softwall Equipment
Company or funds may be wired directly to the Company's account in Salt Lake
City by contacting the Company for wire instructions.
Suitability Requirements
Because of the nature of the offering, the business of the Company and
the attendant risks of product development, a subscription to purchase shares
is not a suitable investment for all persons and is not intended as a complete
investment program by any person. Participation in the Company's offering by
subscription to purchase shares is intended only for those persons willing to
assume the risks of speculative, illiquid, long-term investment. Certain
exemptions set forth under the United States Securities Act of 1933,
Regulation D promulgated thereunder and applicable states securities laws
impose limitations on the persons to whom offers may be made and from whom
subscriptions may be accepted. Although Rule 504 of Regulation D does not
impose as limitations on the number of "unaccredited investors" who may invest
in an offered made pursuant thereto, the Company is limiting its offers to
"accredited investors" and persons who, by virtue of their investment acumen
and financial resources, or both, satisfy the authorized representative of the
Company that they meet the applicable suitability standards contained herein
and those that are part of the Subscription Agreements which are made a part
hereof.
The Shares offered by this Memorandum are offered to accredited investors
and non-accredited persons ("sophisticated investors") who, by reason of
education, experience, business acumen, or other factors, are capable of
evaluating the risks and merits of an investment in the Company and who
satisfy the authorized representatives of the Company that they meet the
applicable suitability standards contained herein and in the Subscription
documents.
"Accredited investor" shall mean any person who comes within any of the
following categories, or whom the Company reasonably believes comes within any
of the following categories, at the time of the sale of the Shares to that
person:
(1) Any bank as defined under Section 3(a)(2) of the Act, or any savings
and loan association or other institution as defined under Section 3(a)(5)(A)
of the Act, whether acting in its individual or fiduciary capacity; any broker
or dealer registered pursuant to Section 15 of the U.S. Securities Exchange
Act of 1934; any insurance company as defined under Section 2(13) of the Act;
and insurance company registered under the Investment Company Act of 1940 or a
business development company as defined under Section 2(a)(48) of that Act;
Small Business Investment Company licenses by the U.S. Small Business
Investment Act of 1958; any plan established and maintained by a state, its
political subdivisions, or any agency, instrumentality of a state or its
political subdivisions for the benefit of its employees, if such plan has
total assets in excess of $5,000,000; employee benefit plan within the meaning
of the Employee Retirement Income Security Act of 1974, if the investment
decision is made by a plan fiduciary, as defined in Section 3(21) of such Act,
which is either a bank, savings and loan association, insurance company or
registered investment advisor, or if the employee benefit plan has a total
assets in excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(2) Any private business development company as defined in Section
202(a)(22) of the Investment Advisors Act of 1940;
(3) Any organization described in Section 501(c)(3) of the U.S. Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring securities
offered, with total assets in excess of $5,000,000.
(4) Any director, executive officer or general partner of the issuer of
the securities being offered or sold, or any director, executive officer or
general partner of a general partner of that issuer;
(1)
(2) any natural person whose individual net worth, or joint net worth with
that person's spouse, at the time of his or her purchase exceeds $1,000,000;
(3) Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person's spouse
in excess of $300,000 in each of those years and has a reasonable expectation
of reaching that same income level in the current year;
(4) Any trust, with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring securities offered, whose purchase is
directed by a sophisticated person as described in Section 230.506(b)(2)(ii);
and
(5) Any entity in which all equity owners are accredited investors.
"Sophisticated investor" shall mean any person who by reason of
education, experience, business acumen, or other factors is capable of
evaluating the risks and merits of an investment in the Company, as determined
by the Company and based upon written representations and warranties by any
such person to the Company with respect to such sophistication.
In addition to meeting the foregoing suitability standards and the
guidelines established by the Company, prospective investors should consider
all of the adverse consequences of an investment in the Company's Shares.
Representations and Warranties of Subscribers
The Subscription Documents that each subscriber, singly or on behalf of
an entity, make certain representations and warranties, some of which are
summarized below. Each subscriber should review carefully the Subscription
Documents and fully understand the representations and warranties and
limitations of resale contained therein. By executing the subscription
Documents, each individual subscriber, singly or on behalf of and as a
representative of an entity, represents and warrants that:
(1) He/She is at least 18 years of age (or age of majority in his/her
place of residence) and has such knowledge and experience in financial and
business matters that he/she, either alone or with his/her subscriber
representative(s) is capable of evaluating the merits and risks of the
investment;
(2) He/Her/Its investment objective herein is long-term appreciation and
not the receipt of current income;
(3) His/Her/Its investment objective is for his/her/its own account and
not for resale to others;
(4) He/She/It has read the Memorandum and understands the financial risks
of this type of investment;
(5) He/She/It and his/her/its advisors have had an opportunity to ask
questions of and/or obtain any information from the Company to verify the
accuracy of the information furnished;
(6) He/She/It understands that this offering has not been registered with
or passed on by any securities regulatory agency in either the United States
or Canada, and the suitability questionnaire is a necessary prerequisite for
determining whether he/she/it is qualified to make this type of investment and
is a basis for the Company to rely on the exemption requirements of Section
3(b) and/or Rule 504 of Regulation D of the Act and similar exemptions
available under state laws, and his/her/its responses on such questionnaire
are true and correct in all respects as of the date of the Subscription
Documents; and
(7) He/She/It understands that the Company and other subscribers are
relying on his/her/its representations and warranties made thereunder.
The foregoing merely summarizes such representations and warranties,
which are modified in their entirety by the actual Subscription Documents,
which accompany this Memorandum and are made a part hereof as Exhibit "A".
Subscribers should review the Subscription Documents for a full understanding
of the representations and warranties.
Each subscribe of Shares shall agree to indemnify the Company and hold it
harmless from and against all damage, liability, cost, or expense incurred as
a result or arising out of any inaccuracy in the representations made by any
such subscriber in the Subscription Documents.
Acceptance Guidelines of the Company
Based upon the foregoing representations and other information provided
by the prospective subscribers, executive officers of the Company will make
the determination whether to proceed with the sale. The Company has the
absolute right to accept or reject any prospective subscriber, and may do so
on the basis of factors not related to the suitability of the subscriber. In
making the determination, executive officers of the Company will follow the
guidelines appropriate for reliance on exemptions from registration under
applicable securities laws, rules and regulations. If a Subscription
Agreement is accepted, at such time as determined by the Company, but prior
to use of the subscription funds related to such subscription, the Company
shall deliver to subscriber one certificate representing the Shares purchased,
duly executed by the Company. If the Subscription Agreement is not accepted,
appropriate notice thereof will be transmitted promptly to the Subscriber, the
Subscription Documents will be appropriately marked, and the Subscription
proceeds will be returned to the Subscriber without deduction therefrom or
interest thereon.
Opportunity to Make Inquiries
The Company will make available to each Offeree prior to any sale of the
Common Stock the opportunity to ask questions and receive answers from the
Company concerning any aspect of the investment and upon written request
obtain any additional information contained in this Memorandum, to the extent
that the Company possesses such information or can acquire it without
unreasonable effort or expense. See "ADDITIONAL INFORMATION."
Restrictions on Transferability of Securities
The Common Stock offered hereby has not been registered under the 1933
Act or the laws of any state or jurisdiction. The Common Stock is being
offered and sold in reliance on exemptions from registration provided by
Regulation D, Rule 504 promulgated under Sections 3(b) of the 1933 Act, and
regulations promulgated thereunder. Resales of the Common Stock may be subject
to restrictions imposed by such state Blue Sky Laws as well as U.S. federal
securities laws.
Escrow of Stock Subscription Funds
In connection with the sale of stock by the Company, an escrow account
has been established at Central Bank in American Fork, Utah. All subscription
funds are to be sent by the subscriber to the Company for eventual deposit in
such account, preferably within twenty-four hours of receipt, but as soon as
practicable. The funds in the escrow account will be held subject to the
Company meeting its minimum offering requirement of $30,000. The Company will
not escrow any funds once the minimum gross proceeds of $30,000 have been
acquired.
SALES MATERIAL
In addition to and apart from this Memorandum and its attached exhibits
, the Company will utilize no other sales materials in connection with this
offering of Shares.
CAPITALIZATION -- DESCRIPTION OF SECURITIES.
The Company is presently authorized to issue 50,000,000 of $0.001 par
value common stock. Presently 1,625,000 shares are issued and outstanding and
up to 1,000,000 additional shares are offered for sale pursuant to this
Memorandum. In the event the offering closes with the sale of the maximum
number of Shares offered pursuant to this Memorandum, a total of 2,625,000
shares will be issued and outstanding. The holders of the Company common
stock are entitled to one vote per share in each matter submitted to vote at
any meeting of shareholders. Shares of common stock do not carry cumulative
voting rights and, therefore, a majority of the outstanding common stock will
be able to elect the entire Board of Directors, and if they do so, minority
shareholders would not be able to elect any members to the Board of Directors.
Shareholders of the Company have no preemptive rights to acquire
additional shares of common stock or other securities. The common stock is
not subject to redemption and carries no subscription or conversion rights.
In the event of liquidation of the Company the shares of common stock are
entitled to share equally in corporate assets after satisfaction of all
liabilities. The shares of common stock when issued will be validly issued,
fully paid, and non assessable.
Holders of common stock are entitled to receive such dividends as the
Board of Directors may from time to time declare out of funds legally
available for the payment of dividends. The Company seeks growth and
expansion of its business through the reinvestment of profits, if any, and
does not anticipate that it will pay cash dividends in the foreseeable future.
SHARES ELIGIBLE FOR A FUTURE SALE.
Upon completion of this offering the Company will have outstanding
approximately 2,625,000 common shares providing the maximum amount offered
hereto is sold. The 1,000,000 shares of common stock, which are offered
pursuant to this Memorandum, when issued, will be freely tradeable without
restriction under the Securities Act unless purchased by affiliates of the
Company as that term is defined in Rule 144 under the Securities Act of 1933
and amendments thereto. The remaining 1,625,000 shares of common stock are
restricted securities as term is defined under Rule 144. Rule 144 regarding
restricted securities provides that a restricted security may not be sold in
market transactions until such shares have been held for at least one year,
and may only be resold in market transactions thereafter in a broker to broker
undirected trade provided the seller complies with all the terms and
conditions of Rule 144, and the applicable state securities laws.
MARKET PRICE AND DIVIDENDS ON THE COMPANY'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company is presently privately held and there is currently no market
for its shares. Management may, at some time, seek a market by listing the
Company's common stock on the NASD Over-the-Counter Bulletin Board. There can
be no assurance, however, that the Company will actually seek a listing on the
NASD OTC Bulletin Board, or, if it does, that such a market will ever develop
or be maintained. Accordingly, purchasers in this offering must be prepared
to hold their investment for an indeterminate amount of time. Furthermore, no
assurance can be given that any market for the Company's common stock will
ever develop or be maintained, and the sale of the Company's unregistered and
"restricted" common stock pursuant to Rule 144 by management or others could
have a substantial adverse impact on any such public market. See "RISK
FACTORS" and "SHARES ELIGIBLE FOR FUTURE SALE."
Holders
Currently there are only three shareholders.
Dividends
The Company has not declared any cash dividends with respect to its
common shares and does not intend to declare dividends in the foreseeable
future. The present intention of management is to utilize all available funds
for the development of the Company's business.
FIDUCIARY RESPONSIBILITY AND INDEMNIFICATION OF THE OFFICERS AND
DIRECTORS
The officers and directors of the Company are accountable to the Company
as fiduciaries, which means such officers and directors are required to
exercise good faith and integrity in handling the Company's affairs. A
shareholder may be able to institute legal action on behalf of himself and all
other similarly situated shareholders to recover damages where the Company has
failed or refused to observe the law.
Shareholders may, subject to applicable rules of civil procedure, be able
to bring a class action or derivative suit to enforce their rights, including
rights under certain federal and state securities laws and regulations.
Shareholders who have suffered losses in connection with the purchase or sale
of their interest in the Company due to a breach of a fiduciary duty by an
officer or director of the Company in connection with such sale or purchase,
including the misapplication by any such officer or director of the proceeds
from the sale of these securities, may be able to recover such losses from the
Company.
The Company and its affiliates may not be liable to its shareholders for
errors in judgment or other acts or omissions not amounting to intentional
misconduct, fraud or a knowing violation of the law, since provisions have
been made in the Articles of Incorporation and By-laws limiting such
liability. The Articles of Incorporation and By-laws also provide for
indemnification of the officers and directors of the Company in most cases for
any liability suffered by them or arising out of their activities as officers
and directors of the Company if they were not engaged in intentional
misconduct, fraud or a knowing violation of the law. Therefore, purchasers of
these securities may have a more limited right of action than they would have
except for this limitation in the Articles of Incorporation and By-laws. In
the opinion of the Securities and Exchange Commission, indemnification for
liabilities arising under the 1933 Act is contrary to public policy and,
therefore, unenforceable.
The Company will not acquire assets from its current management or any
entity in which such management has a five percent or greater equity interest
unless the Company has first received an independent opinion as to the
fairness of the terms of the acquisition. In negotiating the terms of the
acquisition of the assets, management may be influenced by the possibility of
future personal benefit from unrelated business dealings with such persons or
entities. The officers and directors are required to exercise good faith and
integrity in handling the Company' s affairs. Management of the Company has
agreed to abide by this fiduciary duty.
Section 16-10a-902(1) of the Utah Revised Business Corporation Act
authorizes a Utah corporation to indemnify any director against liability
incurred in any proceeding if he or she acted in good faith and in a manner he
or she 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 or her conduct was unlawful.
Section 16-10a-902(4) prohibits a Utah corporation from indemnifying a
director in a proceeding by or in the right of the corporation in which the
director was adjudged liable to the corporation or in a proceeding in which
the director was adjudged liable on the basis that he or she improperly
received a personal benefit. Otherwise, Section 16-10a-902(5) allows
indemnification for reasonable expenses incurred in connection with a
proceeding by or in the right of the corporation.
Unless limited by the Articles of Incorporation, Section 16-10a-905
authorizes a director to apply for indemnification to the court conducting the
proceeding or another court of competent jurisdiction. Section 16-10a-907(1)
extends this right to officers of a corporation as well.
Unless limited by the Articles of Incorporation, Section 16-10a-903
requires that a corporation indemnify a director who was successful, on the
merits or otherwise, in defending any proceeding to which he or she was a
party against reasonable expense incurred in connection therewith. Section
16-10a-907(1) extends this protection to officers of a corporation as well.
Pursuant to Section 16-10a-904(1), the corporation may advance a
director's expenses incurred in defending any proceeding upon receipt of an
undertaking and a written affirmation of his or her good faith belief that he
or she has met the standard of conduct specified in Section 16-10a-902.
Unless limited by the Articles of Incorporation, Section 16-10a-907(2) extends
this protection to officers, employees, fiduciaries and agents of a
corporation as well.
Regardless of whether a director, officer, employee, fiduciary or agent
has the right to indemnify under the Utah Revised Business Corporation Act,
Section 16-10a-908 allows the corporation to purchase and maintain insurance
on his or her behalf against liability resulting from his or her corporate
role.
The Articles of the Company do not provide for any specific
indemnification of officer, directors or employees of the Company. The
Company's bylaws, however , in Article VIII provide for indemnification of the
officers, directors and employees or agents of the Company but the
indemnification thereunder is not exclusive and does not limit the
indemnification provided by any bylaw, agreement, vote of stockholders, or
provision of law in addition to that provided under Article VIII of the
Bylaws.
It should be noted that this is a rapidly developing and changing area of
the law. Investors are urged to consult their own legal counsel.
LEGAL MATTERS
Legal matters for the Company will be passed on by Gerald M Conder Esq.,
466 South 500 East, Salt Lake City Utah, 84102. Telephone (801) 359-8622
LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened to which the
Company is a party.
EXPERTS
The financial statements of the Company in this Memorandum have been
audited by Crouch, Bierwolf & Chisholm, independent certified public
accountants, as stated in their report appearing herein, and are included in
reliance upon the report of such accountants given upon their authority as
experts in accounting and auditing.
FINANCIAL STATEMENTS
The Company's fiscal year end is December 31. Attached hereto as Exhibit
"C" are the Company's audited balance sheets for the period ended January 31,
1999, and the related statements of operations, stockholders' equity and cash
flows for the period then ended and from inception on October 5, 1998 through
January 31, 1999
EXHIBITS
EXHIBIT A Subscription Documents (Subscription Agreement and Suitability
Questionnaire)
EXHIBIT B Opinion of Counsel
EXHIBIT C Audited Financial Statements for the Company's Period Ended
January 31, 1999
EXHIBIT D Resume of Randall Peterson
EXHIBIT E Diagram of Softwall System Prototype
EXHIBIT F Letter of Intent, dated February 9, 1999
ARTICLES OF INCORPORATION
OF
SOFTWALL EQUIPMENT, CORP.
The undersigned, a person of the age of eighteen years or more, acting
as an incorporator of a corporation under the Utah Revised Business
Corporation, Act adopt the following Articles of
Incorporation for such corporation.
ARTICLE I
Name
The name of this corporation is SOFTWALL EQUIPMENT, CORP.
ARTICLE II
Duration
The duration of this corporation is perpetual.
ARTICLE III
Purpose
The purpose or purposes for which this corporation is organized are:
(a) To engage in any lawful act or activity for which the
corporation may be organized under the general corporation law of Utah.
(b) To engage in the manufacturing of mining equipment and research
and development of mining equipment and to do each and every act necessary to
accomplish said purpose.
(c) To do each and every thing necessary suitable or proper for the
accomplishment of any of the purposes or the attainment of any one or more of
the subjects herein enumerated or which at any time may appear conductive to
or expedient for the protection or benefit of this corporation and to do said
acts as fully and to the same extent as natural persons might or could do in
any part of the world ; as principals, agents, partners, trustees or
otherwise, either alone or in conjunction with any other person, association
or corporation.
ARTICLE IV
Stock
The Corporation shall have the authority to issue fifty million
(50,000,000) shares of common stock with a par value of $.001 per share, all
stock of the corporation shall be of the same class common and shall have the
same rights and preferences, fully paid stock of this corporation shall not be
liable to any further call or assessment.
ARTICLE V
Amendment
These Articles of incorporation may be amended by the affirmative vote of
a majority of the shares entitled to vote on each such amendment.
ARTICLE VI
Shareholder Rights
The authorized and treasury stock of this corporation may be issued at
such time, upon such terms and conditions and for such consideration as the
Board of Directors shall determine. Shareholders shall not have pre-emptive
rights to acquire unissued shares of the stock of this corporation and
cumulative voting is denied.
ARTICLE VII
Initial Office and Agent
The address of the initial registered office of the corporation is 11602
Colchester Drive Sandy, Utah 84092 and the name of the corporation's initial
registered agent at such address is Randall D. Peterson. I hereby acknowledge
and accept appointment as the corporation's registered Agent:
ARTICLE VIII
Incorporators
The name and address of each incorporator is:
Randall D Peterson
11602 Colchester Drive
Sandy, Utah 84092
ARTICLE IX
Common Directors - Transactions Between Corporations
No contract or other transaction between this corporation and one or more
of its directors or any other corporation , firm, association or entity in
which one or more of its directors or officers are financially interested,
shall be either void or voidable because of such relation or interest, or
because such director or directors are present at the meeting of the Board of
Directors, or a committee thereof which authorizes, approves or ratifies such
contract or transaction, or because his or their votes are counted for such
purpose if: (a) the f act of such relationship or interest is disclosed or
known to the Board of Directors or committee which authorizes, approves, or
ratifies this contract or transaction by vote or consent sufficient for the
purpose without counting the votes or consents of such interested directors;
or (b) the fact of such relationship or interest is disclosed or known to the
shareholders entitled to vote and they authorize, approve, or ratify such
contract or transaction by vote or written consent; or (c) the contract or
transaction is fair and reasonable to the corporation.
Common or interested directors may be counted in determining the presence
of a quorum at a meeting of the Board or Directors or committee thereof which
authorizes, approves or ratifies such contract or transaction.
ARTICLE X
LIMITED LIABILITY
The Directors of the corporation are afforded the maximum liability as
provided under Utah Code Annotated 16-10a-841 and said Directors liability is
limited as outlined under said section and applicable exemptions as found
under Utah Law.
In Witness Whereof, Randall D. Peterson has executed these Articles of
Incorporation in duplicate this 5th day of October, 1998, and say: That
Randall D. Peterson is an incorporator herein; that he has read the above and
foregoing Articles of Incorporation; know the contents thereof and that the
same is true to the best of his knowledge and belief, excepting as to matters
herein alleged upon information and belief and as to those matters he believes
to be true.
SOFTWALL EQUIPMENT, CORP.
BY:/s/ Randall D. Peterson
Incorporator/RANDALL D. PETERSON
BY-LAWS
OF
SOFTWALL EQUIPMENT, CORP.
OFFICES
Section 1. The principal office of the Corporation shall be located at 11602
Colchester Drive Sandy, Utah 84092. The corporation may have such other
offices, either within or without the state of Utah as the Board of Directors
may designate or as the business of the Corporation may require from time to
time.
The registered office of the Corporation required by the Utah Business
Corporation Act to be maintained in the State of Utah may be, but need not be,
identical with the principal offices in the State of Utah, and the address of
the registered office may be changed, from time to time, by the Board of
Directors.
ARTICLE II
STOCKHOLDERS
Section 1. Annual The annual meeting of stockholders shall be held
at the principal office of the Corporation at such other places on the Third
Friday of September or at such other times as the Board of Directors may, from
time to time, determine. If the day so designated falls upon a legal holiday
then the meeting shall be held upon the first day thereafter. The Secretary
shall serve personally or by mail a written notice thereof, not less than ten
(10) nor more than fifty (50) days previous to such meeting, addressed to each
stockholder at his address as it appears on the stock book; but at any meeting
at which all stockholders not present have waived notice in writing, the
giving of notice as above required may be dispensed with.
Section 2. Special Meetings. Special meeting of stockholders other
than those regulated by statute, may be called at any time by a majority of
the Directors. Notice of such meeting stating the place, day and hour and the
purpose for which it is called, shall be served personally or by mail, not
less than ten (10) days before the date set for such meeting. If mailed, it
shall be directed to a stockholder at his address as it appears on the stock
book; but at any meeting at which all stockholders not present have waived
notice in writing, the giving of notice as above described may be dispensed
with. The Board of Directors shall also, in like manner, call a special
meeting of stockholders representing not less than ten percent (10%) of the
capital stock of the Corporation entitled to vote at the meeting. The
President may in his direction call a special meeting of stockholders upon ten
(10) days notice.
Section 3. Closing of Transfer Books or Fixing of Record Date. For
the purpose of determining stockholders entitled to receive notice of or to
vote at any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend; or in order to make
a determination of stockholders for nay other proper purpose, the Board of
Directors of the corporation may provide that the stock transfer books shall
be closed for at least ten (10) days immediately preceding such meeting. In
lieu of closing the stock transfer books, the board of Directors may fix in
advance a date as the record date for any such determination of stockholders,
such date in any case to be not more than thirty (30) days, and in case of a
meeting of stockholders, not less than ten (10) days prior to the date on
which the particular action, requiring such determination of stockholders, is
to be taken. If the stock transfer books are not closed, and no record date
is fixed for the determination of stockholders entitled to receive notice of
or to vote at a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is mailed or
the date on which the resolution of the Board of Directors declaring such
dividend is adopted, as the case may be, shall be the record date for such
determination as to stockholders. When a determination of stockholders
entitled to vote at any meeting of stockholders has been made as provided in
this section, such determination shall apply to any adjournment thereof.
Section 4. Voting. At all meetings of the stockholder of record
having the right to vote, subject to the provisions of Section 3, each
stockholder of the Corporation is entitled to one (1) vote for each share of
stock having voting power standing in the name of such stockholder on the
books of the Corporation. Votes may be cast in person or by written
authorized proxy.
Section 5. Proxy. Each proxy must be executed in writing by the
stockholder of the Corporation or his duly authorized attorney. 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 the expiration of eleven (11)
months from the date of its execution unless it shall have specified therein
its duration.
Every proxy shall be revocable at -the discretion of the person executing
it or of his personal representatives or assigns.
Section 6. Voting of Shares by Certain Holders. Shares standing in the
name of another corporation may be voted by such officer, agent or proxy as
the by-laws of such corporation may prescribe, or, in the absence of such
provision, as the Board of Directors of such corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be
voted by him either in person or by proxy without a transfer of such shares
into his name. Shares tending in the name of a trustee may be voted by him
either in person or by proxy, but no trustee shall be entitled to vote shares
held by him without a transfer of such shares into his name.
Shares standing in the name of a receiver may be bored by such receiver,
and shares held by or under the control of a receiver may be voted by such
receiver without the transfer thereof into his name if authority so to do be
contained in an appropriate order of the Court by which such receiver was
appointed.
A stockholder 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 pledge shall be entitled to vote the shares so transferred.
Shares of its own stock belonging to the Corporation or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting,
and shall not be counted in determining the total number of outstanding shares
at any given time.
Section 7. Election of Directors. At each election for Directors, every
stockholder entitled to vote at such election shall have the right to vote, in
person or by proxy, the number of shares owned by him.
Section 8. Quorum. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy., shall
constitute a quorum at a meeting of the stockholders.
If a quorum shall not be present or represented, the stockholders
entitled to vote thereat, present in person or by proxy, shall have the power
to adjourn the meeting, from time to time, until the quorum shall be present
or represented. At such rescheduled meeting at which a quorum specified item
of business may be transacted which might have been transacted at the meeting
as originally notified.
The number of votes or consents of the holders of any class of stock
having voting power which shall be necessary for the transaction of any
business or any specified item of business at any meeting of stockholders, or
the giving of any consent, shall be a majority of the outstanding shares of
the Corporation entitled to vote, represented in person or by proxy.
Section 9. Informal Action by Stockholders. Any action required to be
taken at a meeting of the stockholders, or any other action which may be taken
at a meeting of the stockholders, may be taken at a meeting if a consent in
writing setting forth the action so taken shall be signed by all of the
stockholders entitled to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
Section 1. Number. The affairs and business of this Corporation shall be
managed by a Board of Directors. The first Board of Directors shall consist
of Three (3) members. Thereafter the number of directors may be increased to
not more than nine (9) by resolution of the Board of Directors. Directors
need not be residents of the State of Utah and need not be stockholders of the
Corporation.
Section 2. Election. The Directors shall be elected at each annual
meeting of the stockholders, but if any such annual meeting is not held, or
the Directors are not elected thereat, the Directors may be elected at any
special meeting of the Stockholders held for that purpose.
Section 3. Term of Of f ice. The term of off ice of each of the
Directors shall be one (1) year, which shall continue until his successor has
been elected and qualified.
Section 4. Duties. The Board of Directors shall have the control and
general management of the affairs and business of the Corporation. Such
Directors shall in all cases act as a Board, except as herein provided in
Section 1, regularly convened, by a majority, and may adopt such rules and
regulations for the conduct of meetings and the management of the Corporation,
as may be deemed proper, so long as it is not inconsistent with these Bylaws
and the Laws of the State of Utah.
Section 5. Directors' Meetings. Regular meetings of the Board of
Directors shall be held immediately following the annual meeting of the
stockholders, and at such other time and places as the Board of Directors may
determine. Special meetings of the Board of Directors may be called by the
President or the Secretary upon the written request of two (2) Directors.
Section 6. Notice of Meetings. Notice of meetings other than the regular
annual meeting shall be given by service upon each Director in person, or by
mailing to him at his last known address, at least three (3) days before the
date therein designated for such meeting, including the day of mailing, of a
written or printed notice thereof specifying the time and place of such
meeting, and the business to be brought before the meeting, and no business
other than that specified in such notice shall be transacted at any special
meeting. At any Directors' meeting at which a quorum of the Board of
Directors shall be present (although held without notice), any and all
business may be transacted which might have been transacted if the meeting had
been duly called if a quorum of the Directors waive or are willing to waive
the notice requirements of such meeting.
Any Directors may waive notice of any meeting under the provisions of
Article XII. The attendance of a Director at a meeting shall constitute a
waiver of notice of such meeting except where a Director attends a meeting for
the express purpose of objecting to the transaction of any business because
the meeting is not lawfully convened or called.
Section 7. Voting. At all meetings of the Board of Directors, each
Director is to have one (1) vote. The act of a majority of the directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors.
Section 8. Vacancies. Vacancies in the board occurring between annual
meetings shall be filled for the unexpired portion of the term by a majority
of the remaining Directors.
Section 9. Removal of Directors. Any one or more of the Directors may be
removed, with or without cause, at any time, by a vote of the stockholders
holding a majority of the stock, at any special meeting called for that
purpose.
Section 10. Quorum. The number of Directors who shall be present at any
meeting of the board of directors in order to constitute a quorum for the
transaction of any business or any specified item of business shall be a
majority.
The number or votes of directors that shall be necessary for the
transaction of any business of any specified item of business at any meeting
of the Board of Directors shall be a majority.
If a quorum shall not be present at any meeting of the board of
directors, those present may adjourn the meeting, from time to time, until a
quorum shall be present.
Section 11. Executive Committee. By resolution of the Board of
Directors and at their option, the Directors may designate an Executive
Committee which includes at least three (3) Directors, to manage and direct
the daily affairs of the Corporation. Said Executive Committee shall have and
may exercise all of the authority that is vested in the Board of Directors as
if the Board of Directors were regularly convened, except that the Executive
Committee shall not have authority to amend these By-Laws.
At all meetings of the Executive Committee, each member of said
committee shall have one (1) vote and the act of a majority of the members
present at a meeting at which a quorum is present shall be the act of the
Executive Committee.
The number of Executive Committee members who shall be present at any
meeting of the Executive Committee in order to constitute a quorum for the
transaction of business or any specified item of business shall be a majority.
The number of votes of Executive Committee members that shall be
necessary for the transaction of any business or any specified item of
business at any meeting of the Executive Committee shall be a majority.
Section 12. Compensation. By resolution of the Board of Directors, the
Directors may be paid their expenses, if any, of attendance at each meeting of
the Board of Directors or each may be paid a stated salary as Director. No
such payment shall preclude any Director from serving the Corporation in any
other capacity and receiving compensation therefor.
Section 13. Presumption of Assent. A Director of the Corporation who
is present at a meeting of the Board of Directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
taken unless his dissent is entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as the
Secretary of the meeting before the adjournment thereof or shall forward such
dissent by registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply
to a Director who voted in favor of such action.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the Corporation shall be: President,
Vice-President, Secretary, and Treasurer, and such assistant Secretaries as
the President shall determine. An officer may hold more than one (1) office.
Section 2. Election. All officers of the Corporation shall be elected
annually by the Board of Directors at its meeting held immediately following
the meeting of the stockholders, and shall hold office for the term of one (1)
year or until their successors are duly elected. Officers need not be members
of the Board of Directors.
The Board may appoint such other officers, agents and employees as it
shall deem necessary who shall have such authority and shall perform such
duties as, from time to time, shall be prescribed by the Board.
Section 3. Duties of Officers. The duties and powers of the officers of
the Corporation shall be as follows:
PRESIDENT
The President shall, when present, preside at all meetings of the stockholders
and Directors. He shall present at each annual meeting of the stockholders
and Directors, a report of the condition of the business of the Corporation.
He shall cause to be called regular and special meetings of the stockholders
and Directors in accordance with these Bylaws. He shall appoint and remove,
employ and discharge, and fix the compensation of all agents, employees, and
clerks of the corporation other than the duly appointed officers, subject to
the approval of the Board of Directors. He shall sign and make all contracts
and agreements in the name of the Corporation, subject to the approval of the
Board of Directors. He shall see that the books, reports, statements and
certificates required by the statutes are properly kept, made and filed
according to law. He shall sign all certificates of stock, notes, drafts, or
bills of exchange, warrants or other orders for the payment of money duly
drawn by the Treasurer; and he shall enforce these By-laws and perform all the
duties incident to the position and office, and which are required by law.
VICE PRESIDENT
During the absence or inability of the President to render and perform
his duties or exercise his powers, as set forth in these Bylaws or in the acts
under which the Corporation is organized, the same shall be performed and
exercised by the Vice-President; and when so acting, he shall have all the
powers and be subject to all the responsibilities hereby given to or imposed
upon such President.
SECRETARY
The Secretary shall keep the minutes of the meetings of the Board of
Directors and of the stockholders in appropriate books, provided for that
purpose. He shall give and serve all notices of the Corporation. He shall be
custodian of the records and of the corporate seal and affix the latter when
required. He shall keep the stock and transfer books in the manner prescribed
By-laws, so as to show at all times the amount of capital stock issued and
outstanding; the manner and the time compensation for the same was paid; the
names of the owners thereof, alphabetically arranged; the number of shares
owned by each; the time at which each person became such owner; and the amount
paid thereon; and keep such stock and transfer books open daily during the
business hours of the office of the corporation, subject to the inspection of
any stockholder of the corporation, and permit such stockholder to make
extracts from said books to the extent prescribed by law. He shall sign all
certificates of stock. He shall present to the Board of Directors their
stated meetings all communications addressed to him officially by the
President or any officer or stockholder of the Corporation; and he shall
attend to all correspondence and perform all the duties incident to the office
of Secretary.
TREASURER
The Treasurer shall have the care and custody of and be responsible for
all the funds and securities of the Corporation, and deposit all such funds in
the name of the Corporation in such bank or banks, trust company or trust
companies or safe deposit vaults as the Board of Directors may designate. He
shall exhibit at all reasonable times his books and accounts to any Director
or stockholder of the Corporation upon application at the office of the
Corporation during business hours. He shall render a statement of the
conditions of the finances of the Corporation at each regular meeting of the
Board of Directors, and at such other times as shall be required of him, and a
full financial report at the annual meeting of the Stockholders. He shall
keep, at the office of the Corporation, correct books of account of all its
business and transactions and such other books of account as the Board of
Directors may require. He shall do and perform all duties appertaining to the
office of Treasurer. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security or bond for the Faithful discha
rge of his duties as the Board may direct. He shall perform such other duties
as from time to time may be assigned to him by the President or by the
Directors.
Section 4. Bond. The Treasurer shall, if required by the Board of
Directors, give to the Corporation such security for the faithful discharge of
his duties as the board may direct.
Section 5. Vacancies. How Filled. All vacancies in any office shall be
filled by the Board of Directors without undue delay, either at its regular
meeting or at a meeting specifically called for that purpose. In the case of
the absence of any officer of the Corporation or for any reason that the Board
of Directors may deem sufficient, the Board may, except as specifically
otherwise provided in these By-laws, delegate the power or duties of such
officers to any other officer or Director for the time being; provided, a
majority of the entire Board concur therein.
Section 6. Compensation of Officers. The officers shall receive such
salary or compensation as may be determined by the Board of Directors.
Section 7. Removal of Officers. The Board of Directors may remove any
officer, by a majority vote, at any time with or without cause.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Description of Stock Certificates.- The certificates of stock
representing shares shall be in such form as shall be determined by the
Directors and shall be numbered and registered in the order in which they are
issued. They shall be bound in a book and shall be issued in consecutive
order therefrom, and in the margin thereof shall be entered the name of the
person owing the shares therein represented, with the number of shares and the
date thereof. Such certificates shall exhibit the holder's name, number of
shares and date of issue. They shall be signed by the President or
Vice-President, and countersigned by the Secretary or Treasurer and sealed
with the Seal of the Corporation.
Section 2. Transfer of Stock. The stock of the Corporation shall be
assignable and transferable on the books of the Corporation only by the person
in whose name it appears on said books, his legal representatives or by his
duly authorized agent. In case of transfer by attorney, the power of
attorney, duly executed and acknowledged, shall be deposited with the
secretary. In all cases of transfer, the former certificate must be
surrendered up and canceled before a new certificate may be issued. No
transfer shall be made upon the books of the corporation within ten (10) days
next preceding the annual meeting of the stockholders.
Section 3. Lost Certificates. If a stockholder shall claim to have lost
or destroyed a certificate or certificates of stock issued by the Corporation,
the Board of Directors may, at its discretion, direct a new certificate or
certificates to be issued, upon the making of an affidavit of that f act by
the person claiming the certificate of stock to be lost or destroyed, "and
upon the deposit of a bond or other indemnity in such form and with such
securities if any that the Board may require.
ARTICLE VI
SEAL
Section 1. Seal. The seal of the Corporation shall be as follows:
ARTICLE VII
DIVIDENDS
Section 1. When Declared. The Board of Directors shall by vote declare
dividends from the surplus profits of the Corporation whenever, in their
opinion, the condition of the Corporation's affairs will render it expedient
for such dividends to be declared.
Section 2. Reserve. The Board of Directors may set aside, out of the net
profits of the Corporation available for dividends, such sum or sums (before
payment of dividends) as the Board, in their absolute discretion, think proper
as a reserve fund, to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for such other
purpose as the Directors shall think conducive to the interest of the
Corporation, and they may abolish or modify any such reserve in the manner
which it was created.
ARTICLE VIII
INDEMNIFICATION
Section 1. Any person made a party to or involved in any civil, criminal
or administrative action, suit or proceeding by reason of the fact that he or
his testator or intestate is or was a Director, officer, or employee of the
Corporation, or of any corporation which he, the testator, or intestate served
as such at the request of the Corporation, shall be indemnified by the
Corporation against expenses reasonably incurred by him or imposed on him in
connection with or resulting from the defense of such action, suit, or
proceeding and in connection with or resulting from any appeal thereon, except
with respect to matters as to which it is adjudged in such action, suit or
proceeding that such officer, Director, or employee was liable to the
Corporation, or to such other corporation, for negligence of misconduct in the
performance of his duty. As used herein the term "expense" shall include all
obligations incurred by such person for the payment of money, including
without limitation, attorney's fees, judgments, awards, fines, penalties, and
amounts paid in satisfaction of judgment or in settlement of any such action,
suit, or proceedings, except amounts paid to the Corporation or such other
corporation by him.
A judgment or conviction whether based on plea of guilty or nolo
contenders or its equivalent, or after trial, shall not of itself be deemed an
adjudication that such Director, officer or employee is liable to the
Corporation, or such other corporation, for negligence of misconduct in the
performance of his duties. Determination of the rights of such
indemnification and the amount thereof may be made at the option of the person
to be indemnified pursuant to procedure set forth, from time to time, in the
By-laws or by any of the following procedures:
a) order of the Court or administrative body or agency having jurisdiction
on the action, suit, or proceeding
b) resolution adopted by a majority of the quorum of the Board of
Directors of the Corporation without counting in such majority any Directors
who have incurred expenses in connection with such action, suit or proceeding
C) if there is no quorum of Directors who have not incurred expense in
connection with such action, suit, or proceeding, then by resolution adopted
by a majority of the committee of stockholders and Directors who have not
incurred such expenses appointed by the Board of Directors
d) resolution adopted by a majority of the quorum of the Directors
entitled to vote at any meeting; or
e) order of any Court having jurisdiction over the Corporation.
Any such determination that a payment by way of indemnification should be
made will be binding upon the Corporation. Such right of indemnification
shall not be exclusive of any other right which such Directors, officers and
employees of the Corporation and other person above mentioned may have or
hereafter acquire, and without limiting the generality of such statement, they
shall be entitled to their respective rights of indemnification under any
By-law, Agreement, vote of stockholders, provision of law, or otherwise in
addition to their rights under this Article. The provisions of this Article
shall apply to any member of any committee appointed by the Board of Directors
as fully as though each person had been Director, officer or employee of the
Corporation.
ARTICLE X
AMENDMENTS
Section 1. How Amended. These By-laws may be altered, amended, repealed
or added to by the vote of the Board of Directors of the Corporation at any
regular meeting of said Board, or at a special meeting of Directors called for
that purpose, provided a quorum of the Directors as provided by law and by the
Articles of Incorporation, are present at such regular meeting or special
meeting. These By-laws and amendments thereto and new By-laws added by the
Directors may be amended, altered or replaced by the stockholders at any
annual or special meeting of the stockholders.
ARTICLE XI
FISCAL YEAR
Section 1. Fiscal Year. The fiscal year shall begin January 1 and end
December 31.
ARTICLE XII
WAIVER OF NOTICE
Section 1. Whenever any notice is required to be given to any
shareholders or Directors of the Corporation under the provisions of these
By-laws or under the Articles of Incorporation under the provisions of the
Utah Business Corporation Act, a waiver thereof in writing, signed by the
person or persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such notice.
ADOPTED this _______ th day of _____________, 1998.
SOFTWALL EQUIPMENT, CORP.
a Utah corporation
BY:
President / Randall D. Peterson
CERTIFICATE OF SECRETARY
I, the undersigned, do hereby certify:
1. That I am the duly elected and acting Secretary of Softwall
Equipment, Corp., a Utah corporation; and
2. That the foregoing By-Laws, comprising 19 pages, constitute the
By-Laws of said Corporation as duly adopted at a meeting of the Board of
Directors thereof duly held on the _____th day of ___________, 1998.
Secretary / Sally W. Peterson (Seal)
ASSIGNMENT
I, Randall D. Peterson, do hereby assign and transfer to Softwall
Equipment Corporation, a corporation of the state of Utah, having its
principal offices at 11602 Colchester Drive Sandy, Utah 84092, United States
of America, and to its successors assigns and legal representatives, the
entire right, title and interest to a certain invention called "Surface
Assisted Continuous Underground Mining Conveyor", described, illustrated and
claimed in an application for Letters Patent of the United States of America,
Serial No. 09/024,438 filed by me February 17, 1998, together with the entire
right, title and interest in and to said application, and in any division,
extension, continuation or reissue thereof, said Softwall Equipment
Corporation, bearing all current and future patent application expenses,
including attorneys fees which have not already been paid by me. This
assignment is executed in exchange for Softwall Equipment Corporation's
issuance of 5,000,000 (five million) shares of its common stock to me.
I also hereby assign and transfer unto Softwall Equipment Corporation,
the entire right title and interest in and to said inventions and in
applications for Letters Patent therefor in all countries foreign to the
United States of America including all rights under any and all international
conventions and treaties in respect of said inventions and said applications
for letters Patent in foreign countries; I further authorize said Softwall
Equipment Corporation, to apply for Letters Patent in foreign countries
directly in its own name and to claim the priority of the filing date of said
application for letters Patent of the United States of America under the
provisions of any and all international conventions and treaties.
I hereby authorize and request the Commissioner of Patents of the United
States of America to issue Letters Patent upon the aforesaid application,
division, extension, continuation or reissue, to Softwall Equipment
Corporation, for the sole use and behalf of said Softwall Equipment
Corporation. its successors, assigns and legal representatives, to the full
end of the term for which said Letters Patent may be granted. the same as they
would have been held and enjoyed by me had this assignment not been made,, and
I hereby authorize and request the equivalent authorities in foreign countries
to issue the patents of their respective countries to said Softwall Equipment
Corporation.
I agree that when requested, I will without charge to said Softwall
Equipment Corporation, but at its expense, sign all papers, take all rightful
oaths, and do all acts which may be necessary, desirable or convenient for
securing and/or maintaining patents for said invention in any and all
countries and for vesting title thereto in said Softwall Equipment
Corporation, its successors, assigns and legal representatives or nominees.
I covenant with said Softwall Equipment Corporation, its successors,
assigns and legal representatives, that the interest and property hereby
conveyed is free from all prior assignment grant, mortgage license or other
encumbrance except for the interest which has be granted to Roger Brockbank
for his contribution toward legal expenses,
Randall D. Peterson Date
STATE OF UTAH
ss.
COUNTY OF SALT LAKE
a Notary Public in and for the County and State aforesaid, do hereby
certify that Randall D. Peterson, whose name is subscribed to the foregoing
instrument, appeared before me this day in person and acknowledged that he
signed, scaled and delivered said instrument as his free and voluntary act and
deed for the uses and purposes set forth.
Given under my hand and notarial seal this day of 1999
My commission expires:
Notary Public Residing at
ASSIGNMENT
I, Roger Brockbank. having contributed to the legal expenses in the
prosecution of Letters Patent to a certain invention called "Surface Assisted
Continuous 'Underground Mining Conveyor" (the "invention"), described,
illustrated and claimed 'M an application for Letters Patent of the United
States of America, Serial No. 09/024,438 filed by Randall D. Peterson on
February 17, 1998, do hereby assign and transfer to Softwall Equipment
Corporation, a corporation of the state of Utah, having its principal offices
at 11602 Colchester Drive Sandy, Utah 84092, United States of America, and to
its successors assigns and legal representatives, my entire right, title and
interest to the invention together with the my right, title and interest in
and to said application, and in any division), extension, continuation or
reissue thereof, said Softwall Equipment Corporation, bearing all outstanding
current and future patent application expenses, including attorneys fees.
This assignment is executed in exchange for Softwall Equipment Corporation's
payment of $14,700 (fourteen thousand seven hundred dollars) and issuance of
10,000 (ten thousand) shares o f its common stock to me.
Roger R.
Brockbank Date
STATE, OF UTAH
SS.
COUNTY OF SALT LAKE
1, Bart Burnside, Notary Public in and for the County and State
aforesaid, do hereby certify that Roger Brockbank, whose name is subscribed to
the foregoing instrument, appeared before me this day in person and
acknowledged that he signed, sealed and delivered said instrument as hi
voluntary act and deed for the uses and purposes set forth. -
Given under my hand and notarial seat this 21st day of September, 1999.
Notary Public,
My commission expires: Residing at
